QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company
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Emerging growth company
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Part I. Financial Information:
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Item 1.
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Financial Statements
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5
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6
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7
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|||
8
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10
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|||
11
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Item 2.
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27
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Item 3.
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44
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Item 4.
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45
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Part II. Other Information:
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|||
Item 1.
|
46
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Item 1A.
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46
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Item 2.
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46
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Item 3.
|
47
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Item 4.
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47
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Item 5.
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47
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Item 6.
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48
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||
49
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• |
the duration and ongoing impact of the novel coronavirus (“COVID-19”) pandemic, which could materially adversely affect our financial condition and results of operations and has
resulted in governmental authorities imposing numerous unprecedented measures and court opinions concerning the legality thereof, to contain the virus that has impacted and may further impact our workforce and operations, the operations of
our customers, and those of our respective vendors, suppliers, and partners;
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• |
national and international political instability fostering uncertainty and volatility in the global economy including exposure to fluctuation in foreign currency rates, interest
rates, and pressure on prices;
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• |
significant adverse changes in, reductions in, or loss of our largest volume customer or one or more of our large volume customers, or vendors;
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• |
the creditworthiness of our customers and our ability to reserve adequately for credit losses;
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• |
loss of our credit facility or credit lines with our vendors may restrict our current and future operations;
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• |
uncertainty regarding the phase out of LIBOR may negatively affect our operating results;
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• |
a possible decrease in the capital spending budgets of our customers or a decrease in purchases from us;
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• |
our ability to raise capital, maintain or increase as needed our lines of credit with vendors or floor planning facility, obtain debt for our financing transactions, or the effect of those changes on our common stock price;
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• |
reliance on third parties to perform some of our service obligations to our customers;
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• |
changes in the Information Technology (“IT”) industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service (“IaaS”),
software as a service (“SaaS”) and platform as a service (“PaaS”);
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• |
our dependency on continued innovations in hardware, software, and services offerings by our vendors and our ability to partner with them;
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• |
availability of products from our vendors;
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• |
significant and rapid inflation may cause price and wage increases, as well as increases in operating costs which may impact the arrangements that have pricing commitments over the
term of the agreement.
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• |
future growth rates in our core businesses;
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• |
reduction of vendor incentives provided to us;
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• |
rising interest rates or the loss of key lenders or the constricting of credit markets;
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• |
the possibility of goodwill impairment charges in the future;
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• |
maintaining and increasing advanced professional services by recruiting and retaining highly skilled, competent personnel, and vendor certifications;
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• |
adapting to meet changes in markets and competitive developments;
|
• |
increasing the total number of customers using integrated solutions by up-selling within our customer base and gaining new customers;
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• |
our ability to secure our own and our customers’ electronic and other confidential information, and remain secure during a cyber-security attack;
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• |
managing a diverse product set of solutions in highly competitive markets with a number of key vendors;
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• |
increasing the total number of customers who use our managed services and professional services and continuing to enhance our managed services offerings to remain competitive in the
marketplace;
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• |
performing professional and managed services competently;
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• |
our ability to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration, and other key strategies;
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• |
changes to or loss of members of our senior management team and/or failure to successfully implement succession plans;
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• |
exposure to changes in, interpretations of, or enforcement trends in legislation and regulatory matters;
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• |
domestic and international economic regulations uncertainty (e.g., tariffs, and trade agreements);
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• |
our contracts may not be adequate to protect us, and we are subject to audit which we may not pass, and our professional and liability insurance policies coverage may be insufficient
to cover a claim;
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• |
failure to comply with public sector contracts, or applicable laws or regulations;
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• |
our dependence on key personnel to maintain certain customer relationships, and our ability to hire, train, and retain sufficient qualified personnel;
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• |
maintaining our proprietary software and updating our technology infrastructure to remain competitive in the marketplace;
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• |
disruptions or a security breach in our or our vendors’ IT systems and data and audio communication networks;
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• |
our ability to realize our investment in leased equipment;
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• |
our ability to successfully perform due diligence and integrate acquired businesses;
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• |
our ability to protect our intellectual property rights and successfully defend any challenges to the validity of our patents or allegations that we are infringing upon any
third-party patents, and the costs associated with those actions, and, when appropriate, license required technology.
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Item 1. |
Financial Statements
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December 31, 2021
|
March 31, 2021
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|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Accounts receivable—trade, net
|
|
|
||||||
Accounts receivable—other, net
|
|
|
||||||
Inventories
|
|
|
||||||
Financing receivables—net, current
|
|
|
||||||
Deferred costs
|
|
|
||||||
Other current assets
|
|
|
||||||
Total current assets
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|
|
||||||
Financing receivables and operating leases—net
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||||||
Deferred tax asset—net
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|
|
||||||
Property, equipment and other assets
|
|
|
||||||
Goodwill
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|
|
||||||
Other intangible assets—net
|
|
|
||||||
TOTAL ASSETS
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$
|
|
$
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
LIABILITIES
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
|
$
|
|
||||
Accounts payable—floor plan
|
|
|
||||||
Salaries and commissions payable
|
|
|
||||||
Deferred revenue
|
|
|
||||||
Recourse notes payable—current
|
|
|
||||||
Non-recourse notes payable—current
|
|
|
||||||
Other current liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Recourse notes payable - long-term
|
|
|
||||||
Non-recourse notes payable - long-term
|
|
|
||||||
Other liabilities
|
|
|
||||||
TOTAL LIABILITIES
|
|
|
||||||
COMMITMENTS AND CONTINGENCIES (Note 9)
|
|
|
||||||
STOCKHOLDERS’ EQUITY
|
||||||||
Preferred stock, $
|
|
|
||||||
Common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Treasury stock, at cost,
|
(
|
)
|
(
|
)
|
||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive income—foreign currency translation adjustment
|
|
|
||||||
Total Stockholders’ Equity
|
|
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
|
$
|
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Net sales
|
||||||||||||||||
Product
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Services
|
|
|
|
|
||||||||||||
Total
|
|
|
|
|
||||||||||||
Cost of sales
|
||||||||||||||||
Product
|
|
|
|
|
||||||||||||
Services
|
|
|
|
|
||||||||||||
Total
|
|
|
|
|
||||||||||||
Gross profit
|
|
|
|
|
||||||||||||
Selling, general, and administrative
|
|
|
|
|
||||||||||||
Depreciation and amortization
|
|
|
|
|
||||||||||||
Interest and financing costs
|
|
|
|
|
||||||||||||
Operating expenses
|
|
|
|
|
||||||||||||
Operating income
|
|
|
|
|
||||||||||||
Other income (expense)
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Earnings before tax
|
|
|
|
|
||||||||||||
Provision for income taxes
|
|
|
|
|
||||||||||||
Net earnings
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Net earnings per common share—basic
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Net earnings per common share—diluted
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Weighted average common shares outstanding—basic
|
|
|
|
|
||||||||||||
Weighted average common shares outstanding—diluted
|
|
|
|
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
NET EARNINGS
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
OTHER COMPREHENSIVE INCOME, NET OF TAX:
|
||||||||||||||||
Foreign currency translation adjustments
|
|
|
(
|
)
|
|
|||||||||||
Other comprehensive income (loss)
|
|
|
(
|
)
|
|
|||||||||||
TOTAL COMPREHENSIVE INCOME
|
$
|
|
$
|
|
$
|
|
$
|
|
Nine Months Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Cash flows from operating activities:
|
||||||||
Net earnings
|
$
|
|
$
|
|
||||
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Provision for credit losses
|
|
|
||||||
Share-based compensation expense
|
|
|
||||||
Deferred taxes
|
(
|
)
|
|
|||||
Payments from lessees directly to lenders—operating leases
|
(
|
)
|
(
|
)
|
||||
Gain on disposal of property, equipment, and operaing lease equipment
|
(
|
)
|
(
|
)
|
||||
Changes in:
|
||||||||
Accounts receivable
|
(
|
)
|
(
|
)
|
||||
Inventories-net
|
(
|
)
|
(
|
)
|
||||
Financing receivables—net
|
(
|
)
|
(
|
)
|
||||
Deferred costs and other assets
|
(
|
)
|
(
|
)
|
||||
Accounts payable-trade
|
|
|
||||||
Salaries and commissions payable, deferred revenue, and other liabilities
|
|
|
||||||
Net cash provided by (used in) operating activities
|
(
|
)
|
|
|||||
Cash flows from investing activities:
|
||||||||
Proceeds from sale of property, equipment, and operating lease equipment
|
|
|
||||||
Purchases of property, equipment and operating lease equipment
|
(
|
)
|
(
|
)
|
||||
Cash used in acquisitions, net of cash acquired
|
( |
) | ||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Borrowings of non-recourse and recourse notes payable
|
|
|
||||||
Repayments of non-recourse and recourse notes payable
|
(
|
)
|
(
|
)
|
||||
Repurchase of common stock
|
(
|
)
|
(
|
)
|
||||
Repayments of financing of acquisitions
|
|
(
|
)
|
|||||
Net borrowings on floor plan facility
|
|
|
||||||
Net cash provided by financing activities
|
|
|
||||||
Effect of exchange rate changes on cash
|
(
|
)
|
(
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
(
|
)
|
|
|||||
Cash and cash equivalents, beginning of period
|
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
|
$
|
|
Nine Months Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Supplemental disclosures of cash flow
information:
|
||||||||
Cash paid for interest
|
$
|
|
$
|
|
||||
Cash paid for income taxes
|
$
|
|
$
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities
|
$
|
|
$
|
|
||||
Schedule of non-cash investing and
financing activities:
|
||||||||
Proceeds from sale of property, equipment, and leased equipment
|
$
|
|
$
|
|
||||
Purchases of property, equipment, and operating lease equipment
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Borrowing of non-recourse and recourse notes payable
|
$
|
|
$
|
|
||||
Repayments of non-recourse and recourse notes payable
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Vesting of share-based compensation
|
$
|
|
$
|
|
||||
New operating lease assets obtained in exchange for lease obligations
|
$
|
|
$
|
|
Nine Months Ended December 31, 2021
|
||||||||||||||||||||||||||||
Common Stock
|
Additional
Paid-In
|
Treasury
|
Retained
|
Accumulated
Other
Comprehensive
|
||||||||||||||||||||||||
Shares
|
Par Value
|
Capital
|
Stock
|
Earnings
|
Income
|
Total
|
||||||||||||||||||||||
Balance, March 31, 2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Issuance of restricted stock awards
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Share-based compensation
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Repurchase of common stock
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||
Net earnings
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Foreign currency translation adjustment
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance, June 30, 2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Issuance of restricted stock awards
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Share-based compensation
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Repurchase of common stock
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||
Net earnings
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Foreign currency translation adjustment
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Balance, September 30, 2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Issuance of restricted stock awards | ( |
) | ||||||||||||||||||||||||||
Share-based compensation | ||||||||||||||||||||||||||||
Repurchase of common stock | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Stock split effected in the form of a dividend
|
- | ( |
) | |||||||||||||||||||||||||
Retirement of treasury stock | - | ( |
) | ( |
) | |||||||||||||||||||||||
Net earnings | - | |||||||||||||||||||||||||||
Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
Balance, December 31, 2021 | $ | $ | $ | ( |
) | $ | $ | $ |
|
Nine Months Ended December 31, 2020
|
|||||||||||||||||||||||||||
Common Stock
|
Additional
Paid-In
|
Treasury
|
Retained
|
Accumulated
Other
Comprehensive
|
||||||||||||||||||||||||
|
Shares
|
Par Value
|
Capital
|
Stock
|
Earnings
|
Income
|
Total
|
|||||||||||||||||||||
Balance, March 31, 2020
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||
Issuance of restricted stock awards
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Share-based compensation
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Repurchase of common stock
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||
Net earnings
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Foreign currency translation adjustment
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance, June 30, 2020
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||
Issuance of restricted stock awards
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Share-based compensation
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Repurchase of common stock
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||
Net earnings
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Foreign currency translation adjustment
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance, September 30, 2020
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||
Issuance of restricted stock awards | ||||||||||||||||||||||||||||
Share-based compensation | ||||||||||||||||||||||||||||
Repurchase of common stock | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Net earnings | - | |||||||||||||||||||||||||||
Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
Balance, December 31, 2020 | $ | $ | $ | ( |
) | $ | $ | $ |
1.
|
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
2. |
REVENUES
|
December 31, 2021
|
March 31, 2021
|
|||||||
Current (included in deferred revenue)
|
$
|
|
$
|
|
||||
Non-current (included in other liabilities)
|
$
|
|
$
|
|
|
$
|
|
||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
Total remaining performance obligations
|
$
|
|
3. |
FINANCING RECEIVABLES AND OPERATING LEASES
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Cost of sales
|
|
|
|
|
||||||||||||
Gross profit
|
$
|
|
$
|
|
$
|
|
$
|
|
Three months ended December 31,
|
Nine months ended December 31,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Interest income on sales-type leases
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Lease income on operating leases
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31,
2021
|
Notes
Receivable
|
Lease
Receivables
|
Financing
Receivables
|
|||||||||
Gross receivables
|
$
|
|
$
|
|
$
|
|
||||||
Unguaranteed residual value (1)
|
|
|
|
|||||||||
Initial direct costs, net of amortization
|
|
|
|
|||||||||
Unearned income
|
|
(
|
)
|
(
|
)
|
|||||||
Allowance for credit losses (2)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Total, net
|
$
|
|
$
|
|
$
|
|
||||||
Reported as:
|
||||||||||||
Current
|
$
|
|
$
|
|
$
|
|
||||||
Long-term
|
|
|
|
|||||||||
Total, net
|
$
|
|
$
|
|
$
|
|
(1) |
|
(2) |
|
March 31,
2021
|
Notes
Receivable
|
Lease
Receivables
|
Financing
Receivables
|
|||||||||
Gross receivables
|
$
|
|
$
|
|
$
|
|
||||||
Unguaranteed residual value (1)
|
|
|
|
|||||||||
Initial direct costs, net of amortization
|
|
|
|
|||||||||
Unearned income
|
|
(
|
)
|
(
|
)
|
|||||||
Allowance for credit losses (2)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Total, net
|
$
|
|
$
|
|
$
|
|
||||||
Reported as:
|
||||||||||||
Current
|
$
|
|
$
|
|
$
|
|
||||||
Long-term
|
|
|
|
|||||||||
Total, net
|
$
|
|
$
|
|
$
|
|
(1) |
|
(2) |
|
December 31,
2021
|
March 31,
2021
|
|||||||
Cost of equipment under operating leases
|
$
|
|
$
|
|
||||
Accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
Investment in operating lease equipment—net (1)
|
$
|
|
$
|
|
(1) |
|
4. |
LESSEE ACCOUNTING
|
5. |
GOODWILL AND OTHER INTANGIBLE ASSETS
|
Nine months ended December 31, 2021
|
||||||||||||
Goodwill
|
Accumulated
Impairment
Loss
|
Net
Carrying
Amount
|
||||||||||
Beginning balance
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Foreign currency translations
|
(
|
)
|
-
|
(
|
)
|
|||||||
Ending balance
|
$
|
|
$
|
(
|
)
|
$
|
|
December 31, 2021
|
March 31, 2021
|
|||||||||||||||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
|||||||||||||||||||
Customer relationships & other intangibles
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
Capitalized software development
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||
Total
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
6. |
ALLOWANCE FOR CREDIT LOSSES
|
Accounts
Receivable
|
Notes
Receivable
|
Lease
Receivables
|
Total
|
|||||||||||||
Balance April 1, 2021
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Provision for credit losses
|
|
|
(
|
)
|
|
|||||||||||
Write-offs and other
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Balance December 31,
2021
|
$
|
|
$
|
|
$
|
|
$
|
|
Accounts
Receivable
|
Notes
Receivable
|
Lease
Receivables
|
Total
|
|||||||||||||
Balance April 1, 2020
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Provision for credit losses
|
|
|
|
|
||||||||||||
Write-offs and other
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Balance December 31,
2020
|
$
|
|
$
|
|
$
|
|
$
|
|
•
|
High CQR: This rating includes accounts with excellent to good business credit, asset quality and
capacity to meet financial obligations. Loss rates in this category are generally less than
|
•
|
Average CQR: This rating includes accounts with average credit risk that are more susceptible to
loss in the event of adverse business or economic conditions. Loss rates in this category are generally in the range of
|
•
|
Low CQR: This rating includes accounts that have marginal credit risk such that the customer’s
ability to make repayment is impaired or may likely become impaired. The loss rates in this category in the normal course are generally in the range of
|
Amortized cost basis by origination year ending March 31,
|
||||||||||||||||||||||||||||||||||||
2022
|
2021
|
2020
|
2019
|
2018
|
2017
|
Total
|
Transfers
(2)
|
Net credit
exposure
|
||||||||||||||||||||||||||||
Notes receivable:
|
||||||||||||||||||||||||||||||||||||
High CQR
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||||
Average CQR
|
|
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||||||||
Low CQR
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||||
Lease receivables:
|
||||||||||||||||||||||||||||||||||||
High CQR
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||||
Average CQR
|
|
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||||||||
Low CQR
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||||
Total amortized cost (1)
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
(1) |
|
(2) |
|
Amortized cost basis by origination year ending March 31,
|
||||||||||||||||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
Total
|
Transfers
(2)
|
Net credit
exposure
|
|||||||||||||||||||||||||
Notes receivable:
|
||||||||||||||||||||||||||||||||
High CQR
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Average CQR
|
|
|
|
|
|
|
(
|
)
|
|
|||||||||||||||||||||||
Low CQR
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Lease receivables:
|
||||||||||||||||||||||||||||||||
High CQR
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Average CQR
|
|
|
|
|
|
|
(
|
)
|
|
|||||||||||||||||||||||
Low CQR
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Total amortized cost (1)
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
(1) |
|
(2) |
|
31-60
Days Past
Due
|
61-90
Days Past
Due
|
> 90
Days Past
Due
|
Total
Past Due
|
Current
|
Total
Billed
|
Unbilled
|
Amortized
Cost
|
|||||||||||||||||||||||||
Notes receivable
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Lease receivables
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
31-60
Days Past
Due
|
61-90
Days Past
Due
|
> 90
Days Past
Due
|
Total
Past Due
|
Current
|
Total
Billed
|
Unbilled
|
Amortized
Cost
|
|||||||||||||||||||||||||
Notes receivable
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Lease receivables
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
7. |
PROPERTY, EQUIPMENT, OTHER ASSETS AND LIABILITIES
|
December 31,
2021
|
March 31,
2021
|
|||||||
Other current assets:
|
||||||||
Deposits & funds held in escrow
|
$
|
|
$
|
|
||||
Prepaid assets
|
|
|
||||||
Other
|
|
|
||||||
Total
|
$
|
|
$
|
|
||||
|
||||||||
Property and equipment, net
|
$
|
|
$
|
|
||||
Deferred costs - non-current
|
|
|
||||||
Right-of-use assets
|
|
|
||||||
Other
|
|
|
||||||
Total
|
$
|
|
$
|
|
||||
:
|
||||||||
Accrued expenses
|
$
|
|
$
|
|
||||
Accrued income taxes payable
|
|
|
||||||
Short-term lease liability
|
|
|
||||||
Other
|
|
|
||||||
Total
|
$
|
|
$
|
|
||||
:
|
||||||||
Deferred revenue - non-current
|
$
|
|
$
|
|
||||
Long-term lease liability
|
|
|
||||||
Other
|
|
|
||||||
Total
|
$
|
|
$
|
|
8. |
CREDIT FACILITY AND NOTES PAYABLE
|
9. |
COMMITMENTS AND CONTINGENCIES
|
10. |
EARNINGS PER SHARE
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Net earnings attributable to common shareholders - basic and diluted
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Basic and diluted common shares outstanding:
|
||||||||||||||||
Weighted average common shares outstanding — basic
|
|
|
|
|
||||||||||||
Effect of dilutive shares
|
|
|
|
|
||||||||||||
Weighted average shares common outstanding — diluted
|
|
|
|
|
||||||||||||
Earnings per common share - basic
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Earnings per common share - diluted
|
$
|
|
$
|
|
$
|
|
$
|
|
11. |
STOCKHOLDERS’ EQUITY
|
12. |
SHARE-BASED COMPENSATION
|
Number of
Shares
|
Weighted Average
Grant-date Fair Value
|
|||||||
Nonvested April 1, 2021
|
|
$
|
|
|||||
Granted
|
|
$
|
|
|||||
Vested
|
(
|
)
|
$
|
|
||||
Forfeited | ( |
) | $ | |||||
Nonvested December 31,
2021
|
|
|
|
13. |
INCOME TAXES
|
14. |
FAIR VALUE OF FINANCIAL INSTRUMENTS
|
Fair Value Measurement Using
|
||||||||||||||||
Recorded
Amount
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
December 31, 2021
|
||||||||||||||||
Assets:
|
||||||||||||||||
Money market funds
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
March 31, 2021
|
||||||||||||||||
Assets:
|
||||||||||||||||
Money market funds
|
$
|
|
$
|
|
$
|
|
$
|
|
15.
|
BUSINESS COMBINATIONS
|
Acquisition
Date Amount
|
||||
Accounts receivable
|
$
|
|
||
Other assets
|
|
|||
Identified intangible assets
|
|
|||
Accounts payable and other current liabilities
|
(
|
)
|
||
Performance obligations
|
(
|
)
|
||
Total identifiable net assets
|
|
|||
Goodwill
|
|
|||
Total purchase consideration
|
$
|
|
16. |
SEGMENT REPORTING
|
Three Months Ended
|
||||||||||||||||||||||||
December 31, 2021
|
December 31, 2020
|
|||||||||||||||||||||||
Technology
|
Financing
|
Total
|
Technology
|
Financing
|
Total
|
|||||||||||||||||||
Net Sales
|
||||||||||||||||||||||||
Product
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Service
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
|
|
|
|
|
|
||||||||||||||||||
Cost of Sales
|
||||||||||||||||||||||||
Product
|
|
|
|
|
|
|
||||||||||||||||||
Service
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
|
|
|
|
|
|
||||||||||||||||||
Gross Profit
|
|
|
|
|
|
|
||||||||||||||||||
Selling, general, and administrative
|
|
|
|
|
|
|
||||||||||||||||||
Depreciation and amortization
|
|
|
|
|
|
|
||||||||||||||||||
Interest and financing costs
|
|
|
|
|
|
|
||||||||||||||||||
Operating expenses
|
|
|
|
|
|
|
||||||||||||||||||
Operating income
|
|
|
|
|
|
|
||||||||||||||||||
Other income (expense)
|
(
|
)
|
|
|||||||||||||||||||||
Earnings before tax
|
$
|
|
$
|
|
||||||||||||||||||||
Net Sales
|
||||||||||||||||||||||||
Contracts with customers
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Financing and other
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Selected Financial Data - Statement of Cash Flow
|
||||||||||||||||||||||||
Depreciation and amortization
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Purchases of property, equipment and operating lease equipment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Selected Financial Data - Balance Sheet
|
||||||||||||||||||||||||
Total assets
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Nine Months Ended
|
||||||||||||||||||||||||
December 31, 2021
|
December 31, 2020
|
|||||||||||||||||||||||
Technology
|
Financing
|
Total
|
Technology
|
Financing
|
Total
|
|||||||||||||||||||
Net Sales
|
||||||||||||||||||||||||
Product
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Service
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
|
|
|
|
|
|
||||||||||||||||||
Cost of Sales
|
||||||||||||||||||||||||
Product
|
|
|
|
|
|
|
||||||||||||||||||
Service
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
|
|
|
|
|
|
||||||||||||||||||
Gross Profit
|
|
|
|
|
|
|
||||||||||||||||||
Selling, general, and administrative
|
|
|
|
|
|
|
||||||||||||||||||
Depreciation and amortization
|
|
|
|
|
|
|
||||||||||||||||||
Interest and financing costs
|
|
|
|
|
|
|
||||||||||||||||||
Operating expenses
|
|
|
|
|
|
|
||||||||||||||||||
Operating income
|
|
|
|
|
|
|
||||||||||||||||||
Other income (expense)
|
(
|
)
|
|
|||||||||||||||||||||
Earnings before tax
|
$
|
|
$
|
|
||||||||||||||||||||
Net Sales
|
||||||||||||||||||||||||
Contracts with customers
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Financing and other
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Selected Financial Data - Statement of Cash Flow
|
||||||||||||||||||||||||
Depreciation and amortization
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Purchases of property, equipment and operating lease equipment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Selected Financial Data - Balance Sheet
|
||||||||||||||||||||||||
Total assets
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended December 31,
|
Nine Months Ended December 31,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Customer end market:
|
||||||||||||||||
Telecom, Media & Entertainment
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Technology
|
|
|
|
|
||||||||||||
State and local government and educational institutions
|
|
|
|
|
||||||||||||
Healthcare
|
|
|
|
|
||||||||||||
Financial Services
|
|
|
|
|
||||||||||||
All others
|
|
|
|
|
||||||||||||
Net sales
|
|
|
|
|
||||||||||||
Less: Revenue from financing and other
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Revenue from contracts with customers
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended December 31,
|
Nine Months Ended December 31,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Vendor
|
||||||||||||||||
Cisco Systems
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Dell / EMC
|
|
|
|
|
||||||||||||
Juniper Networks
|
|
|
|
|
||||||||||||
HP Inc. & HPE
|
|
|
|
|
||||||||||||
Arista Networks
|
|
|
|
|
||||||||||||
NetApp
|
|
|
|
|
||||||||||||
All others
|
|
|
|
|
||||||||||||
Net sales
|
|
|
|
|
||||||||||||
Less: Revenue from financing and other
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Revenue from contracts with customers
|
$
|
|
$
|
|
$
|
|
$
|
|
Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
Consolidated
|
2021
|
2020
|
2021
|
2020
|
||||||||||||
Net sales
|
$
|
494,834
|
$
|
427,604
|
$
|
1,369,500
|
$
|
1,215,716
|
||||||||
|
||||||||||||||||
Gross profit
|
$
|
117,117
|
$
|
98,151
|
$
|
345,631
|
$
|
295,670
|
||||||||
Gross margin
|
23.7
|
%
|
23.0
|
%
|
25.2
|
%
|
24.3
|
%
|
||||||||
Operating income margin
|
7.3
|
%
|
6.8
|
%
|
8.2
|
%
|
6.8
|
%
|
||||||||
|
||||||||||||||||
Net earnings
|
$
|
26,424
|
$
|
21,638
|
$
|
81,355
|
$
|
58,844
|
||||||||
Net earnings margin
|
5.3
|
%
|
5.1
|
%
|
5.9
|
%
|
4.8
|
%
|
||||||||
Net earnings per common share - diluted
|
$
|
0.98
|
$
|
0.81
|
$
|
3.03
|
$
|
2.20
|
||||||||
|
||||||||||||||||
Non-GAAP: Net earnings (1)
|
$
|
29,711
|
$
|
23,929
|
$
|
90,870
|
$
|
66,606
|
||||||||
Non-GAAP: Net earnings per common share - diluted (1)
|
$
|
1.10
|
$
|
0.89
|
$
|
3.38
|
$
|
2.48
|
||||||||
|
||||||||||||||||
Adjusted EBITDA (2)
|
$
|
41,797
|
$
|
34,395
|
$
|
130,264
|
$
|
98,670
|
||||||||
Adjusted EBITDA margin
|
8.4
|
%
|
8.0
|
%
|
9.5
|
%
|
8.1
|
%
|
||||||||
|
||||||||||||||||
Purchases of property and equipment used internally
|
$
|
1,339
|
$
|
959
|
$
|
3,594
|
$
|
4,060
|
||||||||
Purchases of equipment under operating leases
|
3,793
|
1
|
17,781
|
167
|
||||||||||||
Total capital expenditures
|
$
|
5,132
|
$
|
960
|
$
|
21,375
|
$
|
4,227
|
||||||||
Technology Segment
|
||||||||||||||||
Net sales
|
$
|
476,975
|
$
|
415,570
|
$
|
1,313,634
|
$
|
1,176,153
|
||||||||
Adjusted gross billings (3)
|
$
|
685,031
|
$
|
587,825
|
$
|
1,982,162
|
$
|
1,735,283
|
||||||||
|
||||||||||||||||
Gross profit
|
$
|
104,483
|
$
|
88,321
|
$
|
304,994
|
$
|
262,359
|
||||||||
Gross margin
|
21.9
|
%
|
21.3
|
%
|
23.2
|
%
|
22.3
|
%
|
||||||||
|
||||||||||||||||
Operating income
|
$
|
27,166
|
$
|
22,829
|
$
|
82,640
|
$
|
61,658
|
||||||||
Adjusted EBITDA (2)
|
$
|
32,794
|
$
|
27,876
|
$
|
99,811
|
$
|
77,312
|
||||||||
Financing Segment
|
||||||||||||||||
Net sales
|
$
|
17,859
|
$
|
12,034
|
$
|
55,866
|
$
|
39,563
|
||||||||
|
||||||||||||||||
Gross profit
|
$
|
12,634
|
$
|
9,830
|
$
|
40,637
|
$
|
33,311
|
||||||||
|
||||||||||||||||
Operating income
|
$
|
8,919
|
$
|
6,434
|
$
|
30,200
|
$
|
21,087
|
||||||||
Adjusted EBITDA (2)
|
$
|
9,003
|
$
|
6,519
|
$
|
30,453
|
$
|
21,358
|
(1) |
Non-GAAP Net earnings and Non-GAAP Net earnings per common share – diluted is based on net earnings calculated in accordance with GAAP, adjusted to exclude other income (expense), share-based
compensation, and acquisition and integration expenses, and the related tax effects.
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
GAAP: Earnings before tax
|
$
|
35,910
|
$
|
30,076
|
$
|
112,463
|
$
|
83,840
|
||||||||
Share based compensation
|
1,780
|
1,756
|
5,355
|
5,427
|
||||||||||||
Acquisition and integration expense
|
-
|
233
|
-
|
232
|
||||||||||||
Acquisition related amortization expense
|
2,497
|
1,986
|
7,854
|
6,386
|
||||||||||||
Other (income) expense
|
175
|
(813
|
)
|
377
|
(1,095
|
)
|
||||||||||
Non-GAAP: Earnings before provision for income taxes
|
40,362
|
33,238
|
126,049
|
94,790
|
||||||||||||
GAAP: Provision for income taxes
|
9,486
|
8,438
|
31,108
|
24,996
|
||||||||||||
Share based compensation
|
470
|
493
|
1,494
|
1,621
|
||||||||||||
Acquisition and integration expense
|
-
|
65
|
-
|
65
|
||||||||||||
Acquisition related amortization expense
|
649
|
541
|
2,156
|
1,856
|
||||||||||||
Other (income) expense
|
46
|
(228
|
)
|
104
|
(314
|
)
|
||||||||||
Tax benefit (expense) on restricted stock
|
-
|
-
|
317
|
(40
|
)
|
|||||||||||
Non-GAAP: Provision for income taxes
|
10,651
|
9,309
|
35,179
|
28,184
|
||||||||||||
Non-GAAP: Net earnings
|
$
|
29,711
|
$
|
23,929
|
$
|
90,870
|
$
|
66,606
|
||||||||
GAAP: Net earnings per common share - diluted
|
$
|
0.98
|
$
|
0.81
|
$
|
3.03
|
$
|
2.20
|
||||||||
Non-GAAP: Net earnings per common share - diluted
|
$
|
1.10
|
$
|
0.89
|
$
|
3.38
|
$
|
2.48
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
GAAP: Net earnings per common share - diluted
|
$
|
0.98
|
$
|
0.81
|
$
|
3.03
|
$
|
2.20
|
||||||||
Share based compensation
|
0.05
|
0.05
|
0.14
|
0.14
|
||||||||||||
Acquisition related amortization expense
|
0.07
|
0.05
|
0.21
|
0.16
|
||||||||||||
Other (income) expense
|
-
|
(0.02
|
)
|
0.01
|
(0.02
|
)
|
||||||||||
Tax benefit (expense) on restricted stock
|
-
|
-
|
(0.01
|
)
|
-
|
|||||||||||
Total non-GAAP adjustments - net of tax
|
0.12
|
0.08
|
0.35
|
0.28
|
||||||||||||
Non-GAAP: Net earnings per common share - diluted
|
$
|
1.10
|
$
|
0.89
|
$
|
3.38
|
$
|
2.48
|
(2) |
We define Adjusted EBITDA as net earnings calculated in accordance with GAAP, adjusted for the following: interest expense, depreciation and amortization, share-based compensation, acquisition and
integration expenses, provision for income taxes, and other income. Segment Adjusted EBITDA is defined as operating income calculated in accordance with GAAP, adjusted for interest expense, share-based compensation, acquisition and
integration expenses, and depreciation and amortization. We consider the interest on notes payable from our financing segment and depreciation expense presented within cost of sales, which includes depreciation on assets financed as
operating leases, to be operating expenses. As such, they are not included in the amounts added back to net earnings in the Adjusted EBITDA calculation. We provide below a reconciliation of Adjusted EBITDA to net earnings, which is the most
directly comparable financial measure to this Non-GAAP financial measure. Adjusted EBITDA margin is our calculation of Adjusted EBITDA divided by net sales. The presentation of Adjusted EBITDA has been changed from prior period
presentations to include adjustments for expenses related to acquisitions such as legal, accounting, tax, and adjustments to the fair value of contingent purchase price consideration as well as stock compensation.
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
Consolidated
|
2021
|
2020
|
2021
|
2020
|
||||||||||||
Net earnings
|
$
|
26,424
|
$
|
21,638
|
$
|
81,355
|
$
|
58,844
|
||||||||
Provision for income taxes
|
9,486
|
8,438
|
31,108
|
24,996
|
||||||||||||
Share based compensation
|
1,780
|
1,756
|
5,355
|
5,427
|
||||||||||||
Interest and financing costs
|
335
|
-
|
693
|
266
|
||||||||||||
Acquisition and integration expense
|
-
|
233
|
-
|
232
|
||||||||||||
Depreciation and amortization
|
3,597
|
3,143
|
11,376
|
10,000
|
||||||||||||
Other income (expense)
|
175
|
(813
|
)
|
377
|
(1,095
|
)
|
||||||||||
Adjusted EBITDA
|
$
|
41,797
|
$
|
34,395
|
$
|
130,264
|
$
|
98,670
|
||||||||
Technology Segment
|
||||||||||||||||
Operating income
|
$
|
27,166
|
$
|
22,829
|
$
|
82,640
|
$
|
61,658
|
||||||||
Depreciation and amortization
|
3,569
|
3,115
|
11,292
|
9,916
|
||||||||||||
Share based compensation
|
1,724
|
1,699
|
5,186
|
5,240
|
||||||||||||
Interest and financing costs
|
335
|
-
|
693
|
266
|
||||||||||||
Acquisition and integration expense
|
-
|
233
|
-
|
232
|
||||||||||||
Adjusted EBITDA
|
$
|
32,794
|
$
|
27,876
|
$
|
99,811
|
$
|
77,312
|
||||||||
Financing Segment
|
||||||||||||||||
Operating income
|
$
|
8,919
|
$
|
6,434
|
$
|
30,200
|
$
|
21,087
|
||||||||
Depreciation and amortization
|
28
|
28
|
84
|
84
|
||||||||||||
Share based compensation
|
56
|
57
|
169
|
187
|
||||||||||||
Adjusted EBITDA
|
$
|
9,003
|
$
|
6,519
|
$
|
30,453
|
$
|
21,358
|
(3) |
We define Adjusted gross billings as our technology segment net sales calculated in accordance with US GAAP, adjusted to exclude the costs incurred related to
sales of third-party maintenance, software assurance, subscription/SaaS licenses, and services. We have provided below a reconciliation of Adjusted gross billings to technology segment net sales, which is the most directly comparable
financial measure to this Non-GAAP financial measure.
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Technology segment net sales
|
$
|
476,975
|
$
|
415,570
|
$
|
1,313,634
|
$
|
1,176,153
|
||||||||
Costs incurred related to sales of third party maintenance, software assurance and subscription/Saas licenses, and services
|
208,056
|
172,255
|
668,528
|
$
|
559,130
|
|||||||||||
Adjusted gross billings
|
$
|
685,031
|
$
|
587,825
|
$
|
1,982,162
|
$
|
1,735,283
|
• |
Portfolio income: Interest income from financing receivables and rents due under operating leases;
|
• |
Transactional gains: Net gains or losses on the sale of financial assets; and
|
• |
Post-contract earnings: Month-to-month rents; early termination, prepayment, make-whole, or buyout fees; and the sale of off-lease (used) equipment.
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Net sales
|
||||||||||||||||
Product
|
$
|
414,448
|
$
|
363,478
|
$
|
1,134,658
|
$
|
1,026,845
|
||||||||
Services
|
62,527
|
52,092
|
178,976
|
149,308
|
||||||||||||
Total
|
476,975
|
415,570
|
1,313,634
|
1,176,153
|
||||||||||||
Cost of sales
|
||||||||||||||||
Product
|
334,585
|
295,310
|
899,437
|
820,859
|
||||||||||||
Services
|
37,907
|
31,939
|
109,203
|
92,935
|
||||||||||||
Total
|
372,492
|
327,249
|
1,008,640
|
913,794
|
||||||||||||
Gross profit
|
104,483
|
88,321
|
304,994
|
262,359
|
||||||||||||
Selling, general, and administrative
|
73,413
|
62,377
|
210,369
|
190,519
|
||||||||||||
Depreciation and amortization
|
3,569
|
3,115
|
11,292
|
9,916
|
||||||||||||
Interest and financing costs
|
335
|
-
|
693
|
266
|
||||||||||||
Operating expenses
|
77,317
|
65,492
|
222,354
|
200,701
|
||||||||||||
Operating income
|
$
|
27,166
|
$
|
22,829
|
$
|
82,640
|
$
|
61,658
|
||||||||
Adjusted gross billings
|
$
|
685,031
|
$
|
587,825
|
$
|
1,982,162
|
$
|
1,735,283
|
||||||||
Adjusted EBITDA
|
$
|
32,794
|
$
|
27,876
|
$
|
99,811
|
$
|
77,312
|
Twelve Months Ended
December 31, |
Change
|
|||||||||||
Revenue by customer end market:
|
2021
|
2020
|
||||||||||
Telecom, Media & Entertainment
|
29
|
%
|
23
|
%
|
6
|
%
|
||||||
Healthcare
|
16
|
%
|
14
|
%
|
2
|
%
|
||||||
SLED
|
15
|
%
|
16
|
%
|
(1
|
%)
|
||||||
Technology
|
15
|
%
|
18
|
%
|
(3
|
%)
|
||||||
Financial Services
|
9
|
%
|
13
|
%
|
(4
|
%)
|
||||||
All others
|
16
|
%
|
16
|
%
|
0
|
%
|
||||||
Total
|
100
|
%
|
100
|
%
|
Twelve Months Ended
December 31, |
Change
|
|||||||||||
Revenue by vendor:
|
2021
|
2020
|
||||||||||
Cisco Systems
|
38
|
%
|
36
|
%
|
2
|
%
|
||||||
Dell EMC
|
8
|
%
|
8
|
%
|
0
|
%
|
||||||
Juniper Networks
|
6
|
%
|
5
|
%
|
1
|
%
|
||||||
NetApp
|
5
|
%
|
4
|
%
|
1
|
%
|
||||||
HP Inc. & HPE
|
3
|
%
|
4
|
%
|
(1
|
%)
|
||||||
Arista Networks
|
3
|
%
|
4
|
%
|
(1
|
%)
|
||||||
All others
|
37
|
%
|
39
|
%
|
(2
|
%)
|
||||||
Total
|
100
|
%
|
100
|
%
|
Three Months Ended
December 31,
|
Nine Months Ended
December 31, |
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Net sales
|
$
|
17,859
|
$
|
12,034
|
$
|
55,866
|
$
|
39,563
|
||||||||
Cost of sales
|
5,225
|
2,204
|
15,229
|
6,252
|
||||||||||||
Gross profit
|
12,634
|
9,830
|
40,637
|
33,311
|
||||||||||||
Selling, general, and administrative
|
3,461
|
3,013
|
9,784
|
11,227
|
||||||||||||
Depreciation and amortization
|
28
|
28
|
84
|
84
|
||||||||||||
Interest and financing costs
|
226
|
355
|
569
|
913
|
||||||||||||
Operating expenses
|
3,715
|
3,396
|
10,437
|
12,224
|
||||||||||||
Operating income
|
$
|
8,919
|
$
|
6,434
|
$
|
30,200
|
$
|
21,087
|
||||||||
Adjusted EBITDA
|
$
|
9,003
|
$
|
6,519
|
$
|
30,453
|
$
|
21,358
|
Nine Months Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Net cash provided by (used in) operating activities
|
$
|
(121,542
|
)
|
$
|
5,244
|
|||
Net cash used in investing activities
|
(18,448
|
)
|
(30,659
|
)
|
||||
Net cash provided by financing activities
|
115,996
|
26,382
|
||||||
Effect of exchange rate changes on cash
|
(2
|
)
|
(735
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
$
|
(23,996
|
)
|
$
|
232
|
Nine Months Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Technology segment
|
$
|
(112,740
|
)
|
$
|
43,694
|
|||
Financing segment
|
(8,802
|
)
|
(38,450
|
)
|
||||
Net cash provided by (used in) operating activities
|
$
|
(121,542
|
)
|
$
|
5,244
|
As of December 31,
|
||||||||
2021
|
2020
|
|||||||
(DSO) Days sales outstanding (1)
|
67
|
62
|
||||||
(DIO) Days inventory outstanding (2)
|
21
|
13
|
||||||
(DPO) Days payable outstanding (3)
|
(41
|
)
|
(51
|
)
|
||||
Cash conversion cycle
|
47
|
24
|
(1) |
Represents the rolling three month average of the balance of trade accounts receivable-trade, net for our technology segment at the end of the period divided by adjusted gross billings for the same
three month period.
|
(2) |
Represents the rolling three month average of the balance of inventory, net for our technology segment at the end of the period divided by cost of adjusted gross billings for the same three month
period.
|
(3) |
Represents the rolling three month average of the combined balance of accounts payable-trade and accounts payable-floor plan for our technology segment at the end of the period divided by cost of
adjusted gross billings for the same three month period.
|
Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4. |
CONTROLS AND PROCEDURES
|
Item 1. |
LEGAL PROCEEDINGS
|
Item 1A. |
RISK FACTORS
|
Item 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
Total
number of
shares
purchased
(1)
|
Average
price
paid per
share
|
Total number of
shares purchased
as part of publicly
announced plans
or programs
|
Maximum number (or
approximate dollar
value) of shares that
may yet be purchased
under the plans or
programs
|
|||||||||||||||
April 1, 2021 through April 30, 2021
|
-
|
$
|
-
|
-
|
881,798
|
(2
|
)
|
||||||||||||
May 1, 2021 through May 27, 2021
|
1,998
|
$
|
50.40
|
-
|
881,798
|
(3
|
)
|
||||||||||||
May 28, 2021 through May 31, 2021
|
-
|
$
|
-
|
-
|
1,000,000
|
(4
|
)
|
||||||||||||
June 1, 2021 through June 30, 2021
|
88,690
|
$
|
45.21
|
35,258
|
964,742
|
(5
|
)
|
||||||||||||
July 1, 2021 through July 31, 2021
|
62,798
|
$
|
44.00
|
62,798
|
901,944
|
(6
|
)
|
||||||||||||
August 1, 2021 through August 31, 2021
|
-
|
$
|
-
|
-
|
901,944
|
(7
|
)
|
||||||||||||
September 1, 2021 through September 30, 2021
|
-
|
$
|
-
|
-
|
901,944
|
(8
|
)
|
||||||||||||
October 1, 2021 through October 31, 2021
|
-
|
$
|
-
|
-
|
901,944
|
(9
|
)
|
||||||||||||
November 1, 2021 through November 30, 2021
|
-
|
$
|
-
|
-
|
901,944
|
(10
|
)
|
||||||||||||
December 1, 2021 through December 31, 2021
|
49,943
|
$
|
51.90
|
49,943
|
852,001
|
(11
|
)
|
(1) |
All shares acquired were in open-market purchases, except for 55,430 shares, out of which 1,998 were repurchased in May 2021 and 53,432 in June 2021 to satisfy tax withholding
obligations that arose due to the vesting of shares of restricted stock.
|
(2) |
The share purchase authorization in place for the month ended April 30, 2021, had purchase limitations on the number of shares of up to 1,000,000 shares. As of April 30, 2021, the remaining
authorized shares to be purchased were 881,798.
|
(3) |
As of May 27, 2021, the authorization under the then-existing share repurchase plan expired.
|
(4) |
On March 18, 2021, the board of directors authorized the company to repurchase up to 1,000,000 shares of our outstanding common stock commencing on May 28, 2021, and continuing to May 27, 2022. As
of May 31, 2021, the remaining authorized shares to be purchased were 1,000,000.
|
(5) |
The share purchase authorization in place for the month ended June 30, 2021, had purchase limitations on the number of shares of up to 1,000,000 shares. As of June 30, 2021, the remaining
authorized shares to be purchased were 964,742.
|
(6) |
The share purchase authorization in place for the month ended July 31, 2021, had purchase limitations on the number of shares of up to 1,000,000 shares. As of July 31, 2021, the remaining
authorized shares to be purchased were 901,944.
|
(7) |
The share purchase authorization in place for the month ended August 31, 2021, had purchase limitations on the number of shares of up to 1,000,000 shares. As of August 31, 2021, the remaining
authorized shares to be purchased were 901,944.
|
(8) |
The share purchase authorization in place for the month ended September 30, 2021, had purchase limitations on the number of shares of up to 1,000,000 shares. As of September 30, 2021, the remaining
authorized shares to be purchased were 901,944.
|
(9) |
The share purchase authorization in place for the month ended October 31, 2021, had purchase limitations on the number of shares of up to 1,000,000 shares. As of October 31, 2021, the remaining
authorized shares to be purchased were 901,944.
|
(10) |
The share purchase authorization in place for the month ended November 30, 2021, had purchase limitations on the number of shares of up to 1,000,000 shares. As of November 30, 2021, the remaining
authorized shares to be purchased were 901,944.
|
(11) |
The share purchase authorization in place for the month ended December 31, 2021, had purchase limitations on the number of shares of up to 1,000,000 shares. As of December 31, 2021, the remaining
authorized shares to be purchased were 852,001.
|
Item 3. |
DEFAULTS UPON SENIOR SECURITIES
|
Item 4. |
MINE SAFETY DISCLOSURES
|
Item 5. |
OTHER INFORMATION
|
Exhibit
Number
|
Exhibit Description
|
|
|
|
|
ePlus inc. Amended and Restated Certificate of Incorporation, as
last amended November 9, 2021.
|
||
|
|
|
Amended and Restated Bylaws of ePlus inc., as of September 1, 2021. (Incorporated herein by reference to Exhibit 3.2 to our Quarterly Report on Form 10-Q
for the period ended September 30, 2021)
|
||
|
|
|
ePlus 2021 Employee Long-Term Incentive Plan (updated to reflect the
stock split effected December 13, 2021) as amended.
|
||
|
|
|
First Amended and Restated Credit Agreement, dated as of October 13, 2021, by and among ePlus Technology, inc., ePlus
Technology Services, inc., SLAIT Consulting, LLC, certain of ePlus inc. subsidiaries as guarantors, Wells Fargo Commercial Distribution Finance, LLC as administrative agent and the Lenders party thereto (Incorporated herein by reference
to Exhibit 10.1 to our Current Report in Form 8-K filed on October 19, 2021).
|
||
|
|
|
Guaranty and Security Agreement, dated as of October 13, 2021, by and among ePlus Technology, inc., ePlus
Technology Services, inc., SLAIT Consulting, LLC, certain future subsidiaries of ePlus inc., as guarantors, Wells Fargo Commercial Distribution Finance, LLC as administrative agent for the benefit of Secured Parties (Incorporated herein
by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on October 19, 2021).
|
||
|
|
|
First Amended and Restated Collateralized Guaranty, dated as of October 13, 2021, by and among ePlus Group, inc. and Wells Fargo Commercial Distribution
Finance, LLC as agent for the benefit of Secured Parties (Incorporated herein by reference to Exhibit 10.3 to our Current Report on Form 8-K filed on October 19, 2021).
|
||
|
|
|
First Amended and Restated Limited Guaranty, dated as of October 13, 2021, by and between ePlus inc. and Wells Fargo Commercial Distribution Finance, LLC
as agent for the benefit of Secured Parties (Incorporated herein by reference to Exhibit 10.4 to our Current Report on Form 8-K filed on October 19, 2021).
|
||
|
|
|
ePlus inc. 2017 Non-Employee Director Long-Term Incentive Plan
(updated to reflect the stock split effected December 13, 2021) as amended.
|
||
|
|
|
Certification of the Chief Executive Officer of ePlus inc. pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a).
|
||
|
||
Certification of the Chief Financial Officer of ePlus inc. pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a).
|
||
|
||
Certification of the Chief Executive Officer and Chief Financial Officer of ePlus inc. pursuant to 18 U.S.C. § 1350.
|
||
|
|
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
|
|
|
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
104
|
Cover Page Interactive Data File (embedded within the Exhibit 101 Inline XBRL document)
|
ePlus inc.
|
||
Date: February 3, 2022
|
/s/ MARK P. MARRON
|
|
By: Mark P. Marron
|
||
Chief Executive Officer and
President
|
||
(Principal Executive Officer)
|
||
Date: February 3, 2022
|
/s/ ELAINE D. MARION
|
|
By: Elaine D. Marion
|
||
Chief Financial Officer
|
||
(Principal Financial Officer)
|