EPLUS INC

Previous wording

We are a leading solutions provider in the areas of security, cloud, networking, collaboration, artificial intelligence, and emerging technologies to domestic and foreign organizations across all industry segments. We deliver actionable outcomes for organizations by using information technology (“IT”) and consulting solutions to drive business agility and innovation. Leveraging our engineering talent, we assess, plan, deliver, and secure solutions comprised of leading technologies and consumption models aligned with our customers’ needs. Our expertise and experience enable us to craft optimized solutions that take advantage of the cost, scale, and efficiency of private, public and hybrid cloud in an evolving market. As part of our solutions, we provide consulting, professional services, managed services, IT staff augmentation, and complete lifecycle management services in the areas of security, cloud, networking, collaboration, and emerging technologies. Additionally, we offer flexible financing for purchases from us and from third parties. We have been in the business of selling, leasing, financing, and managing IT and other assets for more than 30 years.

Current wording

We are a leading solutions provider in the areas of security, cloud, networking, collaboration, artificial intelligence (“AI”), and emerging technologies to domestic and foreign organizations across all industry segments. We deliver actionable outcomes for organizations by using information technology (“IT”) and consulting solutions to drive business agility and innovation. Leveraging our engineering talent, we assess, plan, deliver, and secure solutions comprised of leading technologies and consumption models aligned with our customers’ needs. Our expertise and experience enable us to craft optimized solutions that take advantage of the cost, scale, and efficiency of private, public and hybrid cloud services in an evolving market. As part of our solutions, we provide consulting, professional services, managed services, IT staff augmentation, and complete lifecycle management services in the areas of security, cloud, networking, collaboration, and emerging technologies. With our acquisition of Bailiwick Services, LLC (“Bailiwick”) on August 19, 2024, our professional services segment also includes projects supporting digital signage, EV charging solutions, loss prevention and security, store openings, and store closings. Additionally, we offer flexible financing for purchases from us and from third parties. We have been in the business of selling, leasing, financing, and managing IT and other assets for more than 30 years.

Previous wording

Our primary focus is to deliver integrated solutions that address our customers’ business needs, leveraging the appropriate technologies, both on-premises and in the cloud. Our approach is to lead with advisory consulting to understand our customers’ needs, and then design, deploy, and manage solutions aligned to their objectives. Underpinning the broader areas of cloud, security, networking, and collaboration are specific skills in orchestration and automation, application modernization, DevSecOps, zero-trust architectures, data management, data visualization, analytics, network modernization, edge compute and other advanced and emerging technologies. These solutions are comprised of class-leading technologies from partners such as Amazon Web Services, Arista Networks, Check Point, Cisco Systems, Citrix, Commvault, Crowdstrike, Deepwatch, Dell EMC, F5 Networks, Foresite, Fortinet, Gigamon, HPE, Juniper Networks, Lenovo, Microsoft, NetApp, Nutanix, NVIDIA, Oracle, Palo Alto Networks, Proficio, Pure Storage, Rubrik, Splunk, Varonis, and VMware by Broadcom, among many others. We are an authorized reseller of over 1,800 vendors, which enable us to provide our customers with new and evolving IT solutions. We possess top-level engineering certifications with a broad range of leading IT vendors that enable us to offer multi-vendor IT solutions that are optimized for each of our customers’ specific requirements. Our hosted, proprietary software solutions are focused on giving our customers more control over their IT supply chain, by automating and optimizing the procurement and management of their owned, leased, and consumption-based assets.

Current wording

Our primary focus is to deliver integrated solutions that address our customers’ business needs, leveraging the appropriate technologies, both on-premises and in the cloud. Our approach is to lead with advisory consulting to understand our customers’ needs, and then design, deploy, and manage solutions aligned to their objectives. Underpinning the broader areas of cloud, security, networking, and collaboration are specific skills in orchestration and automation, application modernization, DevSecOps, zero-trust architectures, data management, data visualization, analytics, network modernization, edge computing and other advanced and emerging technologies. These solutions are comprised of class-leading technologies from partners such as Amazon Web Services, Arista Networks, Check Point, Cisco Systems, Citrix, Commvault, Crowdstrike, Deepwatch, Dell EMC, F5 Networks, Foresite, Fortinet, Gigamon, HPE, Juniper Networks, Lenovo, Microsoft, NetApp, Nutanix, NVIDIA, Oracle, Palo Alto Networks, Proficio, Pure Storage, Rubrik, Splunk, Varonis, and VMware by Broadcom, among many others. We are an authorized reseller for thousands of vendors, which enables us to provide our customers with new and evolving IT solutions. Our employees possess top-level engineering certifications with a broad range of leading IT vendors that enable us to offer multi-vendor IT solutions that are optimized for each of our customers’ specific requirements. Our hosted, proprietary software solutions are focused on giving our customers more control over their IT supply chain, by automating and optimizing the procurement and management of their owned, leased, and consumption-based assets.

Previous wording

Our scale and financial resources have enabled us to continue investing in engineering and technology resources to stay at the forefront of technology trends. Our expertise in core and emerging technologies, buttressed by our robust portfolio of consulting, professional, and managed services, has enabled us to remain a trusted advisor for our customers. In addition, we offer a wide range of consumption options including leasing and financing for technology and other capital assets. We believe our lifecycle approach offering of integrated solutions, services and financing, asset management and our proprietary supply chain software, is unique in the industry. This broad portfolio enables us to deliver a customized customer experience that spans the continuum from fast delivery of competitively priced products and services to subsequent management and maintenance, and through to end-of-life disposal services. This approach permits us to deploy sophisticated solutions to enable our customers’ business outcomes.

Current wording

Our scale and financial resources have enabled us to continue investing in engineering and technology resources to stay at the forefront of technology trends. Our expertise in core and emerging technologies, buttressed by our robust portfolio of consulting, professional, and managed services, has enabled us to remain a trusted advisor for our customers. With the addition of Bailiwick, we can support large scale multi-site retailers with professional and managed services relating todigital signage, EV charging solutions, loss prevention and security, store openings, and store closings. In addition, we offer a wide range of consumption options including leasing and financing for technology and other capital assets. We believe our lifecycle approach offering of integrated solutions, services and financing, asset management and our proprietary supply chain software, is unique in the industry. This broad portfolio enables us to deliver a customized customer experience that spans the continuum from fast delivery of competitively priced products and services to subsequent management and maintenance, and through to end-of-life disposal services. This approach permits us to deploy sophisticated solutions to enable our customers’ business outcomes.

Previous wording

Our go-to-market strategy focuses primarily on diverse end-markets for middle market to large enterprises. We serve customers in markets including telecom, media and entertainment, technology, state and local government and educational institutions (“SLED”), healthcare, and financial services. We sell to customers in the United States (“US”), which account for most of our sales, and to customers in select international markets including the United Kingdom (“UK”), the European Union (“EU”), India, Singapore, and Israel. Our technology business segments accounted for 98% of our net sales and 90% of our operating income, while our financing business segment accounted for 2% of our net sales and 10% of our operating income, for the three months ended June 30, 2024.

Current wording

Our go-to-market strategy focuses primarily on diverse end-markets for middle market to large enterprises. We serve customers in markets including telecom, media and entertainment, technology, state and local government and educational institutions (“SLED”), healthcare, retail, and financial services. We sell to customers in the United States (“US”), which account for most of our sales, and to customers in select international markets including the United Kingdom (“UK”), the European Union (“EU”), India, and Singapore. Our technology business segments accounted for 97% of our net sales and 77% of our operating income, while our financing business segment accounted for 3% of our net sales and 23% of our operating income, for the six months ended September 30, 2024.

Previous wording

We also use a variety of operating and other information to evaluate the operating performance of our business, develop financial forecasts, make strategic decisions, and prepare and approve annual budgets. We use gross billings as an operational metric to assess the volume of transactions or market share for our technology business segments—product, professional services, and managed services—as well as to understand changes in our accounts receivable and accounts payable. We believe gross billings will aid investors in the same manner.

Current wording

We also use a variety of operating and other information to evaluate the operating performance of our business, develop financial forecasts, make strategic decisions, and prepare and approve annual budgets. We use gross billings as an operational metric to assess the volume of transactions or market share for our technology business segments—product, professional services, and managed services—as well as to understand changes in our accounts receivable and accounts payable balances and our statement of cash flows. We believe gross billings will aid investors in the same manner.

Previous wording

The following tables provide our key business metrics for our consolidated entity, our technology business- consisting of our product, professional services, and managed services segments- and our financing business segment (in thousands, except per share amounts):

Current wording

The following tables provide our key business metrics for our consolidated entity, our technology business segments- consisting of our product, professional services, and managed services segments- and our financing business segment (in thousands, except per share amounts):

Previous wording

We use Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted as supplemental measures of our performance to gain insight into our operating performance and performance trends. We believe that the exclusion of other income and acquisition-related amortization expense in calculating Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted provides management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted provide useful information to investors and others in understanding and evaluating our operating results. However, 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 US GAAP. In addition, other companies, including companies in our industry, might calculate similar 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.

Current wording

We use Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted as supplemental measures of our performance to gain insight into our operating performance and performance trends. We believe that the exclusion of other income and acquisition-related amortization expense in calculating Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted provides management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted provide useful information to investors and others in understanding and evaluating our operating results. However, 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 US GAAP. In addition, other companies, including companies in our industry, might calculate similar 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. Our acquisition related expenses for the three and six months ended September 30, 2024 are related to our acquisition of Bailiwick.

Previous wording

Net sales: Net sales for the three months ended June 30, 2024, decreased 5.2% to $544.5 million, or a decrease of $29.7 million compared to $574.2 million in the same three-month period in the prior year. The decrease in net sales was driven by lower product revenues offset by higher managed services and professional services revenue from our technology business segments, and higher revenues from our financing business segment. For additional information, see the “Segment Results of Operations” below.

Current wording

Net sales: Net sales for the three months ended September 30, 2024, decreased 12.3% to $515.2 million, or a decrease of $72.4 million compared to $587.6 million in the same three-month period in the prior year. The decrease in net sales was driven by lower product revenues offset by higher managed services and professional services revenue from our technology business segments, and higher revenues from our financing business segment. For additional information, see the “Segment Results of Operations” below.

Previous wording

Operating expenses: Operating expenses for the three months ended June 30, 2024, increased $3.1 million, or 3.2%, to $99.0 million, as compared to $95.9 million for the same three-month period in the prior year. Our increase in operating expenses was primarily due to an increase in salaries and benefits offset by a decrease in provision for credit losses, and interest and financing costs. As of June 30, 2024, we had 1,907 employees, an increase of 2.9% from 1,853 as of June 30, 2023. For additional information, see the “Segment Results of Operations” below.

Current wording

Operating expenses: Operating expenses for the three months ended September 30, 2024, increased $5.8 million, or 5.8%, to $105.3 million, as compared to $99.5 million for the same three-month period in the prior year. Our increase in operating expenses was primarily due to an increase in salaries and benefits, acquisition related expenses and provision for credit losses, offset by a decrease in interest and financing costs. As of September 30, 2024, we had 2,323 employees, an increase of 23.8% from 1,877 as of September 30, 2023. For additional information, see the “Segment Results of Operations” below.

Previous wording

Operating income: As a result of the foregoing, operating income for the three months ended June 30, 2024, decreased $10.8 million, or 23.3%, to $35.5 million, as compared to $46.3 million for the same three-month period in the prior year, and operating income margin decreased by 160 basis points to 6.5%.

Current wording

Operating income: As a result of the foregoing, operating income for the three months ended September 30, 2024, decreased $2.2 million, or 4.9%, to $42.7 million, as compared to $44.9 million for the same three-month period in the prior year, and operating income margin increased by 70 basis points to 8.3%.

Previous wording

Adjusted EBITDA for the three months ended June 30, 2024, was $43.1 million, a decrease of $10.8 million, or 20.0%, compared to $53.9 million for the same three-month period in the prior year. Adjusted EBITDA margin for the three months ended June 30, 2024, decreased 150 basis points to 7.9%, as compared to the three months ended June 30, 2023, of 9.4%. The decrease in Adjusted EBITDA margin was due to a decrease in gross profit and an increase in operating expenses.

Current wording

Adjusted EBITDA for the six months ended September 30, 2024, was $95.3 million, a decrease of $12.1 million, or 11.3%, compared to $107.4 million for the same six-month period in the prior year. Adjusted EBITDA margin for the six months ended September 30, 2024, decreased 20 basis points to 9.0%, as compared to the six months ended September 30, 2023, of 9.2%. The decrease in Adjusted EBITDA margin was due to a decrease in gross profit and an increase in operating expenses.

Previous wording

Net earnings per common share—diluted for the three months ended June 30, 2024, decreased $0.25, or 19.7%, to $1.02 per share, as compared to $1.27 per share in the same three-month period in the prior year. Non-GAAP: Net earnings per common share—diluted for the three months ended June 30, 2024, decreased $0.28, or 19.9%, to $1.13 per share, as compared to $1.41 per share for the three months ended June 30, 2023.

Current wording

Net earnings per common share—diluted for the three months ended September 30, 2024, decreased $0.05, or 4.1%, to $1.17 per share, as compared to $1.22 per share in the same three-month period in the prior year. Non-GAAP: Net earnings per common share—diluted for the three months ended September 30, 2024, decreased $0.04, or 2.9%, to $1.36 per share, as compared to $1.40 per share for the three months ended September 30, 2023.

Previous wording

Our financing business segment offers financing solutions to corporations, government contractors, and SLED institutions in the US, which accounts for most of our transactions, and to corporations in select international markets including Canada, the UK, and the EU. The financing business segment derives revenue from leasing IT equipment, medical equipment, and other equipment, and the disposition of that equipment at the end of the lease. The financing business segment also derives revenues from the financing of third-party software licenses, software assurance, maintenance, and other services.

Current wording

Our financing business segment offers financing solutions to corporations, government contractors, and SLED institutions in the US, which accounts for most of our transactions, and to corporations in select international markets including Canada, the UK, and the EU. Our financing business segment leases IT equipment, medical equipment, and other equipment, and sells the off-lease equipment at the end of the lease. Additionally, our financing business segment finances purchases of third-party software licenses, software assurance, maintenance, and other services.

Previous wording

The results of operations for our technology business segments were as follows (dollars in thousands):

Current wording

The results of operations for our technology business segments were as follows (in thousands):

Previous wording

Net sales: Net sales of the combined technology business segments for the three months ended June 30, 2024, decreased compared to the three months ended June 30, 2023, driven by decreased demand from customers in telecom, media and entertainment, financial services, SLED, and healthcare industries, offset by increased demand from customers in the technology industry.

Current wording

Net sales: Net sales of the combined technology business segments for the three months ended September 30, 2024, decreased compared to the three months ended September 30, 2023, driven by decreased demand for products from customers in telecom, media, and entertainment, technology, and financial services industries, offset by increased demand from customers in the SLED and healthcare industries.

Previous wording

Product segment sales for the three months ended June 30, 2024, decreased compared to the same three-month period in the prior year, due to lower sales of networking equipment and cloud products, offset by an increase in sales of collaboration and security products. These changes were driven by the timing of purchases by existing customers, which are determined by their buying cycles, and the timing of specific IT related initiatives.

Current wording

Product segment sales for the three and six months ended September 30, 2024, decreased compared to the same three- and six-month period in the prior year, due to lower sales of networking equipment, cloud, collaboration, and security products. These changes were driven by the timing of purchases by existing customers, which are determined by their buying cycles, and the timing of specific IT related initiatives.

Previous wording

Managed services segment sales for the three months ended June 30, 2024, increased compared to the same three-month period in the prior year, due to ongoing expansion of these service offerings primarily related to ongoing growth in enhanced maintenance support, and service desk revenues.

Current wording

Managed services segment sales for the three months ended September 30, 2024, increased compared to the same three-month period in the prior year, due to ongoing expansion of these service offerings primarily related to ongoing growth in enhanced maintenance support, and cloud services.

Previous wording

Gross profit: Gross profit of the combined technology business segments for the three months ended June 30, 2024, decreased compared to the three months ended June 30, 2023, due to a decrease in product sales, offset by an increase in professional service, and managed service sales. Gross profit margin decreased by 30 basis points to 23.7% due to lower product margin, offset by higher managed service margin and professional service margin.

Current wording

Gross profit of the combined technology business segments for the six months ended September 30, 2024, decreased compared to the six months ended September 30, 2023, due to a decrease in product sales, offset by an increase in professional and managed services. Gross margin increased by 130 basis points to 24.7% due to higher product margin, offset by lower managed service margin.

Previous wording

Product segment margin for the three months ended June 30, 2024, decreased by 90 basis points from the same three-month period in the prior year due to a shift in product mix resulting in lower up-front margins. Vendor incentives earned as a percentage of sales for the three months ended June 30, 2024, increased by 20 basis points, which has a positive effect on gross margin, as compared to the same three-month period in the prior year.

Current wording

Product segment margin for the three months ended September 30, 2024, increased by 200 basis points from the same three-month period in the prior year due to a shift in product mix resulting in a higher proportion of sales of third party maintenance and subscriptions which are recorded on a net basis.

Previous wording

Selling, general, and administrative: Selling, general, and administrative expenses for thethree months ended June 30, 2024, for the technology business, increased compared to the three months ended June 30, 2023, mainly due to increases in salaries and benefits offset by a decrease in provision for credit losses.

Current wording

Selling, general, and administrative: Selling, general, and administrative expenses for the three and six months ended September 30, 2024, for the technology business increased compared to the three and six months ended September 30, 2023, mainly due to increases in salaries and benefits.

Previous wording

Salaries and benefits, including variable compensation and share-based compensation for the three months ended June 30, 2024, increased $3.5 million, or 4.7% to $77.6 million, as compared to $74.1 million for the same three-month period in the prior year, due to an increase of $3.7 million in salaries and benefits, mainly driven by increased headcount and salary increases, and an increase of $0.6 million in share-based compensation, driven by increases in employee awards as well as increases from the employee stock purchase plan. Our technology business had an aggregate of 1,872 employees as of June 30, 2024, an increase of 54 from 1,818 as of June 30, 2023. In total, we added 60 additional customer-facing employees in the technology business for the three months ended June 30, 2024, compared to the same three-month period in the prior year, of which 29 were professional services and technical support personnel due to demand for our services. Offsetting these increases was a decrease in variable compensation of $0.8 million, which was a result of the corresponding decrease in gross profit.

Current wording

Salaries and benefits for the three months ended September 30, 2024, increased $4.3 million, or 5.8% to $78.3 million, as compared to $74.0 million for the same three-month period in the prior year, due to an increase of $5.1 million in salaries and benefits, mainly driven by increased headcount, offset by a decrease of $0.8 million in variable compensation. Our technology business had an aggregate of 2,289 employees as of September 30, 2024, an increase of 447 from 1,842 employees as of September 30, 2023. We added 441 employees from our acquisition of Bailiwick. In total, we added 329 additional customer-facing employees in the technology business for the three months ended September 30, 2024, compared to the same three-month period in the prior year, of which 291 were professional services and technical support personnel.

Previous wording

Provision for credit losses for our technology business for the three months ended June 30, 2024, was $0.1 million, as compared to $0.5 million for the same three-month period in the prior year. Our lower provision for credit losses for the three months ended June 30, 2024, was due to changes in our net credit exposure.

Current wording

Provision for credit losses for our technology business for the three months ended September 30, 2024, was an expense of $0.2 million, as compared to a benefit of $0.1 million for the same three-month period in the prior year. Our higher provision for credit losses for the three months ended September 30, 2024, was due to changes in our net credit exposure.

Previous wording

Depreciation and amortization: Depreciation and amortization for our technology business for the three months ended June 30, 2024, increased compared to the three months ended June 30, 2023, primarily due to more amortization from intangible assets acquired in the NSG acquisition.

Current wording

Depreciation and amortization: Depreciation and amortization for our technology business for the three and six months ended September 30, 2024, increased compared to the three and six months ended September 30, 2023, primarily due to amortization from intangible assets acquired in the Bailiwick acquisition during the current three-month period.

Previous wording

Interest and financing costs: Interest and financing costs for our technology business for the three months ended June 30, 2024, decreased compared to the three months ended June 30, 2023, due to lower average borrowings outstanding under our WFCDF Credit Facility.

Current wording

Interest and financing costs: Interest and financing costs for our technology business for the three and six months ended September 30, 2024, decreased compared to the three and six months ended September 30, 2023, as we had no outstanding borrowings under our WFCDF Credit Facility as of September 30, 2024.

Previous wording

The results of operations for our financing business segment were as follows (dollars in thousands):

Current wording

The results of operations for our financing business segment were as follows (in thousands):

Previous wording

Net sales: Net sales for the three months ended June 30, 2024, increased due to higher portfolio earnings offset by lower post-contract earnings. Portfolio earnings increased due to higher average investments outstanding as well as a higher average earnings rate. Post-contract earnings decreased due to lower proceeds from sales of off-lease equipment, and lower month-to-month rents.

Current wording

Net sales: Net sales for the three and six months ended September 30, 2024, increased compared to the three and six months ended September 30, 2023, due to higher transactional gains and portfolio earnings offset by lower post-contract earnings. Transactional gains increased due to increased volume and higher gains on the sale of financial assets due in part to several large transactions in the current quarter. Total proceeds from sales of financing receivables were $277.0 million and $220.8 million for the three months ended September 30, 2024, and 2023, respectively. Total proceeds from sales of financing receivables were $324.9 million and $282.2 million for the six months ended September 30, 2024, and 2023, respectively. Portfolio earnings increased due to higher average investments outstanding as well as a higher average earnings rate. Post-contract earnings decreased due to lower proceeds from sales of off-lease equipment, and lower month-to-month rents.

Previous wording

Selling, general and administrative: Selling, general, and administrative expenses for the three months ended June 30, 2024, increased compared to the three months ended June 30, 2023, due to an increase in variable compensation attributable to the increase in gross profit.

Current wording

Selling, general and administrative: Selling, general, and administrative expenses for the three and six months ended September 30, 2024, increased compared to the three and six months ended September 30, 2023, primarily due to an increase in variable compensation attributable to the increase in gross profit.

Previous wording

Our financing business segment employed 35 people as of both June 30, 2024, and June 30, 2023. Certain support functions for the financing business segment are shared resources with the technology business and expenses are allocated accordingly.

Current wording

Our financing business segment employed 34 people as of September 30, 2024, compared to 35 people as of September 30, 2023. Certain support functions for the financing business segment are shared resources with the technology business and expenses are allocated accordingly.

Previous wording

Interest and financing costs: Interest and financing costs for the three months ended June 30, 2024, increased compared to the three months ended June 30, 2023, due to higher average borrowings outstanding and higher interest rates. Our weighted average interest rate for non-recourse notes payable was 6.52% and 5.22% as of June 30, 2024, and June 30, 2023, respectively.

Current wording

Interest and financing costs: Interest and financing costs for the three months ended September 30, 2024, remained flat compared to the three months ended September 30, 2023. Interest and financing costs for the six months ended September 30, 2024, increased compared to the six months ended September 30, 2023, due to higher average outstanding borrowings offset by lower interest rates. As of September 30, 2024, our non-recourse notes payable decreased to $38.7 million from $51.5 million as of September 30, 2023. Our weighted average interest rate for non-recourse notes payable was 5.75% and 5.84% as of September 30, 2024, and 2023, respectively.

Previous wording

Other income (expense), net: Other income (expense), net, for the three months ended June 30, 2024, was income of $2.1 million, compared to income of $0.2 million for the three months ended June 30, 2023. Higher operating income was driven by increased interest income offset slightly by increased foreign exchange losses. We had $2.6 million in interest income for the three months ended June 30, 2024, compared to $0.4 for the three months ended June 30, 2023. We had foreign exchange losses of $0.5 millionfor the three months ended June 30, 2024, compared to losses of $0.2 million for the same three-month period in the prior year.

Current wording

Other income: Other income for the three months ended September 30, 2024, was $0.6 million, compared to $0.1 million for the three months ended September 30, 2023. Higher other income was driven by increased interest income offset by increased foreign exchange losses. We had $2.4 million in interest income for the three months ended September 30, 2024, compared to $0.4 million for the three months ended September 30, 2023. We had foreign exchange losses of $1.8 millionfor the three months ended September 30, 2024, compared to losses of $0.3 million for the same three-month period in the prior year.

Previous wording

Provision for income taxes: Our provision for income tax expense for the three months ended June 30, 2024, was $10.2 million, as compared to $12.7 million for the same three-month period in the prior year. Our effective income tax rate for the three months ended June 30, 2024, and 2023, were both 27.2%.

Current wording

Provision for income taxes: Our provision for income tax expense for the three and six months ended September 30, 2024, was $12.0 million and $22.2 million, respectively, as compared to $12.3 million and $25.0 million for the same three-and six-month periods in the prior year, respectively. Our effective income tax rates for the three and six months ended September 30, 2024, were 27.7% and 27.4%, respectively, compared to 27.4% and 27.3% for the three and six months ended September 30, 2023, respectively. Our effective tax rate was higher for the three and six months ended September 30, 2024, as compared to the same three- and six-month periods in the prior year, primarily due to higher state effective tax rates and more non-deductible executive compensation in the current period.

Previous wording

Net earnings: Net earnings for thethree months ended June 30, 2024, were $27.3 million, a decrease of 19.2% or $6.5 million, as compared to $33.8 million for the same three-month period in the prior year. The net earnings decrease was due to the decrease in operating profits from our technology business, offset by an increase in other income, driven by increased interest income, and a decrease in provision for income taxes.

Current wording

Net earnings: Net earnings for thethree months ended September 30, 2024, were $31.3 million, a decrease of 4.3% or $1.4 million, as compared to $32.7 million for the same three-month period in the prior year. The net earnings decrease was due to a decrease in operating profits from our technology business, offset by an increase in operating profits from our financing business segment, an increase in other income, driven by increased interest income, and a decrease in provision for income taxes. Net earnings for thesix months ended September 30, 2024, were $58.6 million, a decrease of 11.9% or $7.9 million, as compared to $66.5 million in the same six-month period in the prior year. The net earnings decrease was due to the decrease in operating profits from our technology business, offset by an increase in operating profits from our financing business segment, an increase in other income, driven by increased interest income, and a decrease in provision for income taxes.

Previous wording

Basic earnings per common share and diluted earnings per common share for the three months ended June 30, 2024, were $1.03 and $1.02, respectively, a decrease of 18.9% and 19.7%, as compared to $1.27 for both our basic earnings per common share and diluted earnings per common share for the three months ended June 30, 2023.

Current wording

Basic earnings per common share and diluted earnings per common share for the three months ended September 30, 2024, were $1.18 and $1.17, respectively, a decrease of 4.1%, as compared to $1.23 and $1.22 for our basic earnings per common share and diluted earnings per common share, respectively, for the three months ended September 30, 2023. Basic earnings per common share and diluted earnings per common share for the six months ended September 30, 2024, were $2.20 and $2.19, respectively, a decrease of 12.0%, as compared to $2.50 and $2.49 for our basic earnings per common share and diluted earnings per common share, respectively, for the six months ended September 30, 2023.

Previous wording

Weighted average common shares outstanding used in the calculation of basic and diluted earnings per common share were 26.6 million and 26.8 million, respectively, for the three months ended June 30, 2024. Weighted average common shares outstanding used in the calculation of basic and diluted earnings per common share were both 26.6 million for the three months ended June 30, 2023.

Current wording

Weighted average common shares outstanding used in the calculation of basic and diluted earnings per common share were 26.6 million and 26.7 million, respectively, for both the three and six months ended September 30, 2024, and 2023.

Previous wording

The following table summarizes our sources and uses of cash for the three months ended June 30, 2024, and 2023 (in thousands):

Current wording

The following table summarizes our sources and uses of cash for the six months ended September 30, 2024, and 2023 (in thousands):

Previous wording

Cash flows from operating activities: We provided $97.1 million from operating activities during the three months ended June 30, 2024, compared to using $20.9 million for the three months ended June 30, 2023. See below for a breakdown of operating cash flows by segment (in thousands):

Current wording

Cash flows from operating activities: We had cash provided by operating activities of $75.5 million during the six months ended September 30, 2024, compared to cash provided by operating activities of $10.3 million for the six months ended September 30, 2023. See below for a breakdown of operating cash flows by business (in thousands):

Previous wording

Technology business: For the three months ended June 30, 2024, our combined technology business segments provided $103.0 million primarily from operating activities due to net earnings adjusted for decreases in our accounts receivable and inventories of $67.8 million and $50.6 million, respectively, offset by decreases in our accounts payable - trade of $40.9 million.

Current wording

Technology business: For the six months ended September 30, 2024, our combined technology business segments had cash provided by operating activities of $110.7 million primarily due to net earnings, decreases in accounts receivable and inventory, offset by decreases in accounts payable.

Previous wording

For the three months ended June 30, 2023, our combined technology business segments used $48.3 million from operating activities primarily due to increases in our accounts receivable of $159.3 million, offset by an increase in accounts payable - trade of $60.2 million and net earnings.

Current wording

For the six months ended September 30, 2023, our combined technology business segments had cash provided by operating activities of $15.8 million primarily due to net earnings and increases in accounts payable – trade and salaries and commissions payable, offset by increases in our accounts receivable.

Previous wording

Our cash conversion cycle decreased to 37 days as of June 30, 2024, as compared to 48 days as of June 30, 2023. Our standard payment term for customers is between 30-60 days; however, certain customer orders may be approved for extended payment terms. Our DSO increased 6 days to 68 days as of June 30, 2024, compared to 62 days as of June 30, 2023, reflecting higher sales to customers with terms greater than or equal to net 60 days. Our DIO decreased to 14 days as of June 30, 2024, compared to 32 days as of June 30, 2023. Our DPO decreased 1 day as of June 30, 2024. Invoices processed through our WFCDF Credit Facility, or the A/P-floor plan balance, are typically paid within 45 to 60 days from the invoice date, while A/P trade invoices are typically paid around 30 days from the invoice date.

Current wording

Our cash conversion cycle decreased to 32 days as of September 30, 2024, as compared to 51 days as of September 30, 2023. Our standard payment term for customers is between 30-60 days; however, certain customer orders may be approved for extended payment terms. Our DSO decreased 3 days to 66 days as of September 30, 2024, compared to 69 days as of September 30, 2023, reflecting lower sales to customers with terms greater than or equal to net 60 days. Our DIO decreased to 12 days as of September 30, 2024, compared to 29 days as of September 30, 2023. Our DPO decreased by 1 day as of September 30, 2024. Invoices processed through our credit facility, or the A/P-floor plan balance, are typically paid within 45-60 days from the invoice date, while A/P trade invoices are typically paid around 30 days from the invoice date.

Previous wording

Financing business segment: For the three months ended June 30, 2024, our financing business segment used $5.9 million from operating activities, primarily due to increases in accounts receivable and financing receivables-net and decreases in accounts payable-trade.

Current wording

Financing business segment: For the six months ended September 30, 2024, our financing business segment used $35.2 million from operating activities, primarily due to changes in financing receivables, offset by net earnings and increases in accounts payable. For the six months ended September 30, 2023, our financing business segment used $5.4 million from operating activities, primarily due to changes in financing receivables and accounts receivable, offset by net earnings.