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ePlus Reports Fourth Quarter and Fiscal Year 2019 Financial Results

ePlus inc.May 22, 2019

Fourth Quarter Ended March 31, 2019

-- Net sales decreased 1.3% to $325.4 million; service revenues increased 22.8% to $45.0 million; technology segment net sales decreased 1.9% to $313.2 million. -- Adjusted gross billings increased 6.8% to $472.4 million. -- Consolidated gross profit decreased 0.4% to $81.3 million. -- Consolidated gross margin was 25.0%, an increase of 30 basis points. -- Net earnings increased 69.2% to $15.1 million. -- Adjusted EBITDA decreased 16.0% to $19.6 million. -- Diluted earnings per share increased 72.3% to $1.12. Non-GAAP diluted earnings per share decreased 2.8% to $1.03.

Fiscal Year Ended March 31, 2019

-- Net sales decreased 3.3% to $1,372.7 million; service revenues increased 15.4% to $149.5 million; technology segment net sales decreased 3.2% to $1,329.5 million. -- Adjusted gross billings increased 1.0% to $1,919.0 million. -- Consolidated gross profit increased 2.1% to $330.4 million. -- Consolidated gross margin was 24.1%, an increase of 130 basis points. -- Net earnings increased 14.6% to $63.2 million. -- Adjusted EBITDA decreased 2.3% to $100.4 million. -- Diluted earnings per share increased 17.7% to $4.65. Non-GAAP diluted earnings per share increased 1.6% to $5.12.

HERNDON, Va., May 22, 2019 (GLOBE NEWSWIRE) -- ePlus inc. (NASDAQ:PLUS), a leading provider of technology solutions, today announced financial results for the three months and fiscal year ended March 31, 2019.

Management Comment

“Strong growth in adjusted gross billings and an industry-leading gross margin of 25% were the highlights of this year’s fourth quarter. While product mix was not optimal and impacted gross profit in the fourth quarter, we closed the fiscal year well positioned for future growth in our key solution areas of cloud, security, and digital infrastructure. We also continue to build an annuity-quality revenue base to support consistent revenue growth,” said Mark Marron, President and Chief Executive Officer.

“For fiscal 2019, consolidated gross margin increased 130-basis points to 24.1%, primarily reflecting a 15.4% increase in higher-margin services revenues, which accounted for 10.9% of total annual revenue. Services have increased at a CAGR of 24% over the last three years, reflecting the success of our strategy to provide innovative IT solutions to middle market and enterprise customers.

“To support customer demand for our solutions, we continue to make focused investments on consultative, technical and client facing resources, as well as through strategic acquisitions,” noted Mr. Marron.

Fourth Quarter Results

For the fourth quarter ended March 31, 2019 as compared to the fourth quarter of the prior fiscal year:

Consolidated net sales decreased 1.3% to $325.4 million, from $329.9 million primarily due to a larger portion of our sales that were recognized on a net basis.

Technology segment net sales decreased 1.9% to $313.2 million, from $319.1 million. Service revenues increased 22.8% to $45.0 million, from $36.6 million. Service revenues includes revenues from professional services, managed services, and staff augmentation.

Adjusted gross billings increased 6.8% to $472.4 million due, in part, to the acquisition of SLAIT Consulting, LLC in January 2019 as well as organic growth.

Financing segment net sales increased 14.2% to $12.3 million, from $10.7 million, due to an increase in transactional gains.

Consolidated gross profit decreased 0.4% to $81.3 million, from $81.6 million. Consolidated gross margin improved 30 basis points to 25.0%, compared with 24.7% last year, due to a shift in mix towards third-party maintenance and software subscriptions, as well as higher services revenues.

Operating expenses increased 5.8% to $66.8 million, from $63.1 million, primarily due to an increase in healthcare costs and additional expenses associated with the acquisition and operation of SLAIT Consulting, LLC in January 2019.

Consolidated operating income decreased 21.8% to $14.5 million.

Other income of $5.6 million includes receipt of distributions of $5.4 million from a customer’s bankruptcy case and $0.2 million of interest income and foreign currency gains.

Our effective tax rate for the current quarter was 24.8%, compared with 51.0% in the prior year quarter. The higher effective tax rate in the prior year quarter was due to an adjustment to the remeasurement of our deferred tax assets and liabilities as a result of the Tax Cuts and Jobs Act.

Net earnings increased 69.2% to $15.1 million.

Adjusted EBITDA decreased 16.0% to $19.6 million, from $23.3 million.

Diluted earnings per share was $1.12, compared with $0.65 in the prior year quarter. Non-GAAP diluted earnings per share was $1.03, compared with $1.06 last year.

Fiscal Year 2019 Results

For the fiscal year ended March 31, 2019 as compared to the fiscal year ended March 31, 2018:

Consolidated net sales decreased 3.3% to $1,372.7 million, from $1,418.8 million.

Technology segment net sales decreased 3.2% to $1,329.5 million, from $1,372.8 million primarily due to an increase in sales reported on a net basis. Service revenues increased 15.4% to $149.5 million, from $129.5 million, due to an increase in managed services and staff augmentation.

Adjusted gross billings increased 1.0% to $1,919.0 million due, in part, to acquisitions completed during the year.

Financing segment net sales decreased 6.3% to $43.2 million, from $46.0 million due to a decrease in post contract earnings from the prior year’s early termination of several large leases, and the sale of off lease assets.

Consolidated gross profit increased 2.1% to $330.4 million, from $323.5 million. Consolidated gross margin improved 130 basis points to 24.1%, compared with 22.8% last year, due to a shift in mix towards third-party maintenance and software subscriptions. Also contributing were higher product margins and service revenues.

Operating expenses increased 4.9% to $250.9 million, from $239.2 million, due, in part to increases in variable compensation, healthcare costs and software license and maintenance, as well as the expenses associated with the acquisitions of IDS in September 2017 and SLAIT Consulting in January 2019. Our headcount was 1,537, an increase of 277 or 22.0%, from 1,260 as of March 31, 2018, of which 256 was related to the acquisition of SLAIT Consulting, LLC.

Consolidated operating income decreased 5.6% to $79.5 million.

Our effective tax rate for fiscal year 2019 was 26.7%, compared with 34.3% in the prior year. Our effective tax rate for fiscal year 2018 included a partial year of the lower U.S. federal statutory rate from the Tax Cuts and Jobs Act.

Net earnings rose 14.6% to $63.2 million.

Adjusted EBITDA decreased 2.3% to $100.4 million, from $102.8 million.

Diluted earnings per share was $4.65, compared with $3.95 in the prior year. Non-GAAP diluted earnings per share was $5.12, compared with $5.04 last year.

Balance Sheet Highlights

As of March 31, 2019, ePlus had cash and cash equivalents of $79.8 million, compared with $118.2 million as of March 31, 2018. The decrease in cash and cash equivalents was primarily due to the purchase of SLAIT Consulting, LLC, increases in working capital in the technology segment, investments in our financing portfolio, and share repurchases. Total stockholders’ equity was $424.3 million, compared with $372.6 million as of March 31, 2018. Total shares outstanding were 13.6 million and 13.8 million on March 31, 2019 and March 31, 2018, respectively.

Summary and Outlook

“Looking ahead, market conditions remain favorable, and ePlus is entering our fiscal 2020 with many strategic and operational advantages,” noted Mr. Marron. “The industry continues to transition toward different types of consumption, subscription, and ratable revenue models, and within that environment, ePlus is well positioned to benefit, given our investment in these areas and our overall size and scale. Additionally, we believe we are aligned closely with the solutions and services our customers need in today’s IT environment. For example, security products and services represented 19.5% of adjusted gross billings, up from 18.6% in fiscal year 2018 and 16.1% in fiscal year 2017. We expect security to continue to be an important growth driver for us.

“The January acquisition of SLAIT Consulting boosted our geographic footprint in the Mid-Atlantic and extended our security consulting, staff augmentation, and managed services capabilities. We continue to be disciplined in seeking out acquisitions to drive our strategy and expand our reach,” Mr. Marron concluded.

Recent Corporate Developments/Recognitions

-- On May 6-9th, ePlus hosted its 14th annual Transform sales and services meeting in Nashville, TN, with over 776 attendees including 79 vendor partners. -- On May 7th, ePlus announced its Multi-Cloud Architecture Framework to help organizations design and optimize their enterprise architecture to support multi-cloud solutions. -- On May 6th, ePlus announced that it expanded its Managed Services capabilities to support the Cisco Viptela SD-WAN Solution. -- On March 13th, ePlus announced its wholly owned subsidiary, ePlus Technology inc., was named to the CRN ® 2019 Managed Service Provider (MSP) 500 list in the Elite 150 Category. -- On February 19th, ePlus announced the completion of the Type 2 SSAE 18 exam for managed services and the OneSource family of software products. -- On January 22nd, ePlus announced the acquisition of SLAIT Consulting, a Mid-Atlantic IT services provider.

Conference Call Information

ePlus will hold a conference call and webcast at 4:30 p.m. ET on May 22, 2019:

Date: Wednesday, May 22, 2019 Time: 4:30 p.m. ET Live Call: (877) 870-9226, domestic, (973) 890-8320, international Replay: (855) 859-2056, domestic, (404) 537-3406, international Passcode: 2767069 (live and replay) Webcast: http://www.eplus.com/investors (live and replay)

The replay of this webcast will be available approximately two hours after the call and be available through May 29, 2019.

About ePlus inc.

ePlus is a leading consultative technology solutions provider that helps customers imagine, implement, and achieve more from their technology. With the highest certifications from top technology partners and expertise in key technologies from data center to security, cloud, and collaboration, ePlus transforms IT from a cost center to a business enabler. Founded in 1990, ePlus has more than 1,500 associates serving a diverse set of customers in the U.S., Europe, and Asia-Pac. The Company is headquartered at 13595 Dulles Technology Drive, Herndon, VA, 20171. For more information, visit www.eplus.com, call 888-482-1122, or email info@eplus.com. Connect with ePlus on Facebook at www.facebook.com/ePlusinc and on Twitter at www.twitter.com/ePlus.

ePlus. Where Technology Means More®.

ePlus® and ePlus products referenced herein are either registered trademarks or trademarks of ePlus inc. in the United States and/or other countries. OneCloud is a trademark of OneCloud Consulting, Inc. in the United States and/or other countries. The names of other companies and products mentioned herein may be the trademarks of their respective owners.

Forward-looking statements

Statements in this press release that are not historical facts may be deemed to be “forward-looking statements.” Actual and anticipated future results may vary materially due to certain risks and uncertainties, including, without limitation, national and international political instability fostering uncertainty and volatility in the global economy including exposure to fluctuation in foreign currency rates, interest rates and downward pressure on prices; reduction of vendor incentive programs; and restrictions on our access to capital necessary to fund our operations; our ability to successfully perform due diligence and integrate acquired businesses; disruptions or a security breach in our or our vendor’s IT systems and data and audio communication networks; the possibility of goodwill impairment charges in the future; significant adverse changes in, reductions in, or losses of relationships with one or more of our largest volume customers or vendors; the demand for and acceptance of, our products and services; our ability to adapt our services to meet changes in market developments; our ability to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration and other key strategies; our ability to reserve adequately for credit losses; our ability to secure our own and our customers’ electronic and other confidential information and remain secure during a cyber-security attack; future growth rates in our core businesses; the impact of competition in our markets; our reliance on third parties to perform some of our service obligations to our customers; the possibility of defects in our products or catalog content data; our ability to adapt to changes in the IT industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service and software as a service; our ability to realize our investment in leased equipment; maintaining and increasing advanced professional services by recruiting and retaining highly skilled, competent personnel and vendor certifications; and other risks or uncertainties detailed in our reports filed with the Securities and Exchange Commission. All information set forth in this press release is current as of the date of this release and ePlus undertakes no duty or obligation to update this information.

Contact: Kleyton Parkhurst, SVPePlus inc. kparkhurst@eplus.com 703-984-8150

ePlus inc. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) March 31, 2019 March 31, 2018 -------------- -------------- ASSETS (as adjusted) Current assets: Cash and cash equivalents $79,816 $118,198 Accounts receivable—trade, net 299,899 268,287 Accounts receivable—other, net 41,328 28,401 Inventories 50,493 39,855 Financing receivables—net, current 63,767 69,936 Deferred costs 17,301 16,589 Other current assets 7,499 23,625 -------------- -------------- Total current assets 560,103 564,891 Financing receivables and operating leases—net 59,032 68,511 Property, equipment and other assets 17,328 19,143 Goodwill 110,807 76,624 Other intangible assets—net 38,928 26,302 TOTAL ASSETS $786,198 $755,471 -------------- -------------- LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Current liabilities: Accounts payable $86,801 $106,933 Accounts payable—floor plan 116,083 112,109 Salaries and commissions payable 21,286 19,801 Deferred revenue 47,251 35,648 Recourse notes payable—current 28 1,343 Non-recourse notes payable—current 38,117 40,863 Other current liabilities 19,285 33,370 Total current liabilities 328,851 350,067 Non-recourse notes payable—long term 10,502 10,072 Deferred tax liability—net 4,919 1,662 Other liabilities 17,673 21,067 TOTAL LIABILITIES 361,945 382,868 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY Preferred stock, $.01 per share par value; 2,000 shares authorized; none - - outstanding Common stock, $.01 per share par value; 25,000 shares authorized; 13,611 143 142 outstanding at March 31, 2019 and 13,761 outstanding at March 31, 2018 Additional paid-in capital 137,243 130,000 Treasury stock, at cost, 693 shares at March 31, 2019 and 467 shares at March (53,999) (36,016) 31, 2018 Retained earnings 341,137 277,945 Accumulated other comprehensive income—foreign currency (271) 532 Total Stockholders’ Equity 424,253 372,603 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $786,198 $755,471 -------------- --------------

ePlus inc. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Three Months Ended Year Ended March 31, March 31, ----------------------- ------------------------- 2019 2018 2019 2018 -------- ------------- ---------- ------------- (as adjusted) (as adjusted) Net sales Product $280,460 $293,232 $1,223,195 $1,289,307 Services 44,974 36,625 149,478 129,495 -------- ------------- ---------- ------------- Total 325,434 329,857 1,372,673 1,418,802 -------- ------------- ---------- ------------- Cost of sales Product 216,662 228,212 952,464 1,023,590 Services 27,500 20,015 89,821 71,730 -------- ------------- ---------- ------------- Total 244,162 248,227 1,042,285 1,095,320 -------- ------------- ---------- ------------- Gross profit 81,272 81,630 330,388 323,482 Selling, general, and administrative expenses 62,683 59,989 237,082 228,127 Depreciation and amortization 3,574 2,835 11,824 9,921 Interest and financing costs 545 292 1,948 1,195 -------- ------------- ---------- ------------- Operating expenses 66,802 63,116 250,854 239,243 Operating income 14,470 18,514 79,534 84,239 Other income (expense) 5,556 (347) 6,696 (348) -------- ------------- ---------- ------------- Earnings before taxes 20,026 18,167 86,230 83,891 Provision for income taxes 4,974 9,270 23,038 28,769 -------- ------------- ---------- ------------- Net earnings $ 15,052 $8,897 $ 63,192 $55,122 -------- ------------- ---------- ------------- Net earnings per common share—basic $ 1.12 $0.65 $ 4.70 $4.00 -------- ------------- ---------- ------------- Net earnings per common share—diluted $ 1.12 $0.65 $ 4.65 $3.95 -------- ------------- ---------- ------------- Weighted average common shares outstanding—basic 13,391 13,620 13,448 13,790 Weighted average common shares outstanding—diluted 13,491 13,767 13,578 13,967

Technology Segment Three Months Ended Year Ended March 31, March 31, ------------------ -------- ---------------------- -------- 2019 2018 % Change 2019 2018 % Change -------- -------- -------- ---------- ---------- -------- (in thousands) Net sales Product $268,203 $282,502 (5.1%) $1,180,042 $1,243,270 (5.1%) Services 44,974 36,625 22.8% 149,478 129,495 15.4% -------- -------- -------- ---------- -------- Total 313,177 319,127 (1.9%) 1,329,520 1,372,765 (3.2%) -------- -------- -------- ---------- ---------- -------- Cost of sales Product 214,726 226,451 (5.2%) 945,037 1,013,748 (6.8%) Services 27,500 20,015 37.4% 89,821 71,730 25.2% -------- -------- -------- ---------- ---------- -------- Total 242,226 246,466 (1.7%) 1,034,858 1,085,478 (4.7%) -------- -------- -------- ---------- ---------- -------- Gross profit 70,951 72,661 (2.4%) 294,662 287,287 2.6% Selling, general, and administrative expenses 59,913 56,142 6.7% 226,112 214,980 5.2% Depreciation and amortization 3,569 2,834 25.9% 11,812 9,918 19.1% Operating expenses 63,482 58,976 7.6% 237,924 224,898 5.8% Operating income $7,469 $13,685 (45.4%) $56,738 $62,389 (9.1%) -------- -------- -------- ---------- ---------- -------- Key Business Metrics Adjusted gross billings $472,391 $442,468 6.8% $1,918,995 $1,899,685 1.0% -------- -------- -------- ---------- ---------- -------- Adjusted EBITDA $12,503 $18,422 (32.1%) $77,202 $80,555 (4.2%) -------- -------- -------- ---------- ---------- --------

Technology Segment Net Sales by Customer End Market Year Ended March 31, ---------- ------ 2019 2018 Change ---- ---- ------ 22% 24% (2%) Technology State & Local Government & Educational Institutions 17% 17% - Telecom, Media, and Entertainment 13% 14% (1%) Financial Services 15% 15% - ​Healthcare 15% 14% 1% ​All others 18% 16% 2% ---- ---- Total 100% 100%

Financing Segment Three Months Year Ended March Ended March 31, 31, ---------------- -------- ---------------- -------- 2019 2018 % Change 2019 2018 % Change ------- ------- -------- ------- ------- -------- (in thousands) Net sales $12,257 $10,730 14.2% $43,153 $46,037 (6.3%) Cost of sales 1,936 1,761 9.9% 7,427 9,842 (24.5%) ------- ------- -------- ------- ------- -------- Gross profit 10,321 8,969 15.1% 35,726 36,195 (1.3%) Selling, general, and administrative expenses 2,770 3,847 (28.0%) 10,970 13,147 (16.6%) Depreciation and amortization 5 1 400.0% 12 3 300.0% Interest and financing costs 545 292 86.6% 1,948 1,195 63.0% Operating expenses 3,320 4,140 (19.8%) 12,930 14,345 (9.9%) Operating income $7,001 $4,829 45.0% $22,796 $21,850 4.3% ------- ------- -------- ------- ------- -------- Key Business Metrics Adjusted EBITDA $7,108 $4,923 44.4% $23,213 $22,219 4.5% ------- ------- -------- ------- ------- --------

ePlus inc. AND SUBSIDIARIESRECONCILIATION OF NON-GAAP INFORMATION

We included reconciliations below for the following non-GAAP information: (i) Adjusted Gross Billings, (ii) Adjusted EBITDA, (iii) Segment Adjusted EBITDA, (iv) non-GAAP Net Earnings and (v) Non-GAAP Net Earnings per Common Share - Diluted.

We define adjusted gross billings as our technology segment net sales calculated in accordance with GAAP, adjusted to exclude the costs incurred related to sales of third-party maintenance, software assurance and subscription/SaaS licenses, and services.

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.

Non-GAAP net earnings and Non-GAAP net earnings per common share – diluted are based on net earnings calculated in accordance with GAAP, adjusted to exclude other income, share based compensation, and acquisition related amortization expense, and the related tax effects. The presentation of non-GAAP net earnings and non-GAAP net earnings per common share – diluted have been changed from prior period presentations to adjust our tax expense assuming a statutory income tax rate of 21.0% for U.S. operations.

Our use of non-GAAP information as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under GAAP. In addition, other companies, including companies in our industry, might calculate similar non-GAAP Adjusted Gross Billings, Adjusted EBITDA, non-GAAP Net Earnings and non-GAAP Net Earnings per Common Share - Diluted or similarly titled measures differently, which may reduce their usefulness as comparative measures.

Three Months Ended Year Ended March 31, March 31, ------------------ ---------------------- 2019 2018 2019 2018 -------- -------- ---------- ---------- (in thousands) Technology segment net sales $313,177 $319,127 $1,329,520 $1,372,765 Costs incurred related to sales of third party maintenance, 159,214 123,341 589,475 526,920 software assurance and subscription/Saas licenses, and services -------- -------- ---------- ---------- Adjusted gross billings $472,391 $442,468 $1,918,995 $1,899,685 -------- -------- ---------- ----------

Three Months Year Ended March Ended March 31, 31, ---------------- ------------------- 2019 2018 2019 2018 ------- ------- -------- -------- (in thousands) Consolidated Net earnings $15,052 $8,897 $63,192 $55,122 Provision for income taxes 4,974 9,270 23,038 28,769 Depreciation and amortization [1] 3,574 2,835 11,824 9,921 Share based compensation 1,826 1,608 7,244 6,464 Acquisition related expenses (259) 388 1,813 2,150 Other (income) expense [2] (5,556) 347 (6,696) 348 Adjusted EBITDA $19,611 $23,345 $100,415 $102,774 ------- ------- -------- -------- Three Months Year Ended March Ended March 31, 31, ---------------- ------------------- 2019 2018 2019 2018 ------- ------- -------- -------- (in thousands) Technology Segment Operating income $7,469 $13,685 $56,738 $62,389 Depreciation and amortization [1] 3,569 2,834 11,812 9,918 Share based compensation 1,724 1,515 6,839 6,098 Acquisition and integration expenses (259) 388 1,813 2,150 ------- ------- --------- ------- Segment Adjusted EBITDA $12,503 $18,422 $77,202 $80,555 ------- ------- --------- ------- Financing Segment Operating income $7,001 $4,829 $22,796 $21,850 Depreciation and amortization [1] 5 1 12 3 Share based compensation 102 93 405 366 ------- ------- --------- ------- Segment Adjusted EBITDA $7,108 $4,923 $23,213 $22,219 ------- ------- --------- -------

Three Months Year Ended March Ended March 31, 31, ---------------- ---------------- 2019 2018 2019 2018 ------- ------- ------- ------- (in thousands) GAAP: Earnings before taxes $20,026 $18,167 $86,230 $83,891 Share based compensation 1,826 1,608 7,244 6,464 Acquisition and integration expense (259) 388 1,813 2,150 Acquisition related amortization expense [3] 2,388 1,800 7,423 5,978 Other (income) expense [2] (5,556) 347 (6,696) 348 ------- ------- ------- ------- Non-GAAP: Earnings before taxes 18,425 22,310 96,014 98,831 GAAP: Provision for income taxes 4,974 9,270 23,038 28,769 Share based compensation 454 464 1,988 1,866 Acquisition and integration expense (64) 112 522 621 Acquisition related amortization expense [3] 573 490 1,916 1,598 Other (income) expense [2] (1,380) 100 (1,702) 101 Re-measurement of deferred taxes [4] - (1,753) - 1,654 Adjustment to US federal income tax rate to 21% - (1,017) - (7,635) Tax benefit on restricted stock - - 672 1,444 Non-GAAP: Provision for income taxes 4,557 7,666 26,434 28,418 ------- ------- ------- ------- Non-GAAP: Net earnings $13,868 $14,644 $69,580 $70,413 ------- ------- ------- ------- Three Month Year Ended March Ended March 31, 31, ---------------- ---------------- 2019 2018 2019 2018 ------- ------- ------- ------- GAAP: Net earnings per common share – diluted $1.12 $0.65 $4.65 $3.95 Share based compensation 0.10 0.08 0.38 0.33 Acquisition and integration expense (0.01) 0.02 0.09 0.11 Acquisition related amortization expense [3] 0.13 0.09 0.40 0.32 Other (income) expense [2] (0.31) 0.02 (0.35) 0.01 Re-measurement of deferred taxes [4] - 0.13 - (0.12) Adjustment to US federal income tax rate to 21% - 0.07 - 0.54 Tax benefit on restricted stock - - (0.05) (0.10) ------- ------- ------- ------- Total non-GAAP adjustments – net of tax ($0.09) $0.41 $0.47 $1.09 ------- ------- ------- ------- Non-GAAP: Net earnings per common share – diluted $1.03 $1.06 $5.12 $5.04 ------- ------- ------- -------

[1] Amount consists of depreciation and amortization for assets used internally. [2] Interest income and foreign currency transaction gains and losses. [3] Amount consists of amortization of intangible assets from acquired businesses. [4] Tax benefit (expense) for the re-measurement of U.S. deferred income tax assets and liabilities at 21% federal income tax rate for U.S. operations.

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