ePlus(US:PLUS)2023-08-06 16:00Part I. Financial Information Financial Statements Unaudited consolidated financial statements for the three months ended June 30, 2023, show significant growth in revenue and net earnings, with total assets increasing to $1.68 billion and a strategic reorganization of the technology segment Consolidated Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2023 (in thousands) | 2022 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Total Net Sales | $574,175 | $458,359 | +25.3% | | Gross Profit | $142,273 | $113,523 | +25.3% | | Operating Income | $46,332 | $33,183 | +39.6% | | Net Earnings | $33,847 | $22,339 | +51.5% | | Diluted EPS | $1.27 | $0.84 | +51.2% | Consolidated Balance Sheet Highlights | Metric | June 30, 2023 (in thousands) | March 31, 2023 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Current Assets | $1,276,133 | $1,095,130 | +16.5% | | Goodwill | $158,280 | $136,105 | +16.3% | | Total Assets | $1,680,806 | $1,414,826 | +18.8% | | Total Current Liabilities | $800,786 | $561,326 | +42.7% | | Total Liabilities | $867,515 | $632,561 | +37.1% | | Total Stockholders' Equity | $813,291 | $782,265 | +4.0% | - The company strategically split its technology segment into product, professional services, and managed services to better manage and allocate resources, effective June 30, 202329102 - ePlus acquired Network Solutions Group (NSG) for $48.6 million on April 30, 2023, recognizing $22.1 million in goodwill and $30.0 million in intangible assets979899 Management's Discussion and Analysis of Financial Condition and Results of Operations Strong first-quarter fiscal 2024 performance, driven by increased customer demand and acquisitions, resulted in 25.3% net sales growth to $574.2 million and a 51.5% increase in net earnings to $33.8 million, despite ongoing economic and supply chain challenges Consolidated Results of Operations (Three Months Ended June 30) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $574.2M | $458.4M | +25.3% | | Gross Profit | $142.3M | $113.5M | +25.3% | | Operating Income | $46.3M | $33.2M | +39.6% | | Adjusted EBITDA | $53.9M | $38.3M | +40.7% | - Key business trends include general economic concerns, IT product shortages, and a customer focus on security, cloud solutions, and legacy application modernization116 Technology Business Net Sales by Type (Three Months Ended June 30) | Type | 2023 (in thousands) | 2022 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Networking | $245,188 | $142,641 | +71.9% | | Cloud | $172,044 | $164,733 | +4.4% | | Security | $45,796 | $47,995 | -4.6% | | Professional Services | $35,556 | $37,168 | -4.3% | | Managed Services | $31,963 | $25,941 | +23.2% | - The Technology business's cash conversion cycle increased to 48 days from 44 days, primarily due to increases in Days Sales Outstanding (DSO) and Days Inventory Outstanding (DIO)179180 Cash Flow Summary (Three Months Ended June 30) | Cash Flow Activity | 2023 (in thousands) | 2022 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(20,900) | $(102,943) | | Net cash used in investing activities | $(63,097) | $(1,692) | | Net cash provided by financing activities | $82,605 | $31,111 | Quantitative and Qualitative Disclosures About Market Risk The company faces market risks primarily from fluctuations in short-term interest rates on its variable-rate credit facility and foreign currency exchange rates from international operations, though the latter has not been significant to date - The company's primary market risks stem from interest rate fluctuations on its variable-rate WFCDF Credit Facility and foreign currency exposure from international operations203204 Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded the company's disclosure controls and procedures were effective as of June 30, 2023205 - No material changes to internal control over financial reporting were identified during the quarter206 Part II. Other Information Legal Proceedings The company is involved in various legal proceedings arising from normal business operations but does not anticipate material losses beyond amounts already recognized as of June 30, 2023 - The company is involved in various legal proceedings from normal business operations but does not expect material losses beyond what has been accrued as of June 30, 202379209 Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023, were reported - No material changes to the company's risk factors were reported for the quarter210 Unregistered Sales of Equity Securities and Use of Proceeds During the three months ended June 30, 2023, the company repurchased 147,486 shares of common stock, including 93,541 shares under publicly announced plans and 53,945 shares for tax withholding obligations Common Stock Purchases (Three Months Ended June 30, 2023) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Plan | | :--- | :--- | :--- | :--- | | April 2023 | 40,180 | $48.14 | 40,180 | | May 2023 | 47,685 | $44.43 | 47,685 | | June 2023 | 59,621 | $55.64 | 5,676 | | Total | 147,486 | - | 93,541 | - A new share repurchase plan authorizing the repurchase of up to 1,000,000 shares became effective on May 28, 2023, for a 12-month period83212 Other Information No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2023 - No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading plans during the quarter215