ePlus(US:PLUS)2023-02-08 02:38Financial Data and Key Metrics Changes - Consolidated net sales increased by 26% year-over-year to $623.5 million, with adjusted gross billings rising by 29.7% to $888.6 million [13][37] - Non-GAAP diluted earnings per share were $1.38, up from $1.10 in the same quarter last year, while adjusted EBITDA increased by 27.6% to $53.3 million [16][34] - Consolidated gross profit rose by 18.1% to $138.4 million, with a gross margin of 22.2%, down from 23.7% in the previous year [38] Business Line Data and Key Metrics Changes - Technology segment net sales grew by 28.3% to $611.8 million, driven by a 31% increase in product revenue and a 7.9% increase in services revenue [13][24] - Managed services revenue increased by 7.9% in the quarter and over 9% year-to-date, contributing to higher-margin annuity quality revenue [7][8] - Financing segment revenue decreased to $11.7 million from $17.9 million year-over-year, primarily due to lower proceeds from sales of leased equipment [9][14] Market Data and Key Metrics Changes - The healthcare, SLED, and financial services markets accounted for 14%, 13%, and 9% of net sales, respectively, with the remaining 18% from other end markets [14] - The two largest markets, telecom, media and entertainment, and technology represented 28% and 18% of technology segment net sales [31] Company Strategy and Development Direction - The company is focused on digital transformation, hybrid workforce plans, security, and cloud solutions, positioning itself to capture growth opportunities in these areas [4][10] - ePlus aims to leverage its capabilities in managed services and specialized IT expertise to broaden market opportunities, particularly in cloud and security advisory services [26][28] - The company is actively monitoring the labor market for tech workers to optimize solutions delivery and staffing levels [28] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about future growth despite an uncertain economic environment, noting that IT spending is expected to grow at a low single-digit rate [10][89] - There is recognition of budget tightening and longer sales cycles among larger customers due to economic uncertainties [56][74] - The company remains well-positioned for long-term growth, supported by a strong balance sheet and strategic partnerships [29][89] Other Important Information - SG&A expenses increased by 12.8% year-over-year, reflecting strategic investments in the team to meet growing IT needs [15] - The effective tax rate for the quarter was 27.7%, compared to 26.4% in the previous year [33] Q&A Session Summary Question: What types of projects or solutions were fulfilled for large enterprise customers? - Management indicated that several large projects were fulfilled, contributing positively to financial results, with a strong focus on getting products out quickly [90] Question: How does the company view the impact of supply chain constraints on future performance? - Management acknowledged ongoing supply chain issues but noted some easing, particularly in networking, which has the longest lead times [60][68] Question: What is the outlook for operational expenses moving forward? - Management is closely monitoring operational expenses and will adjust based on market conditions and economic uncertainties [72] Question: How is the company addressing the recent tech layoffs in the industry? - Management sees potential opportunities arising from tech layoffs, suggesting that the company could benefit from the demand for its solutions and skill sets [55][74]