ePlus(US:PLUS)2021-05-21 02:01Financial Data and Key Metrics Changes - Consolidated net sales for Q4 2021 declined 3.8% to $352.6 million compared to $366.5 million in Q4 2020 [25] - Gross profit increased 6.6% to $97.9 million, with gross margin expanding by 270 basis points to 27.8%, the highest in company history [9][29] - Operating income for Q4 increased 31.9% to $23.6 million, while adjusted EBITDA rose 25.7% to $29.6 million [10][32] Business Line Data and Key Metrics Changes - Technology segment net sales decreased 6.1% to $331.8 million, with product revenue down 8.4% [25] - Services revenue increased 8.2% to $52.9 million, contributing to the overall financial performance [12][26] - Financing segment revenue grew 57.4% to $20.8 million, driven by off-lease equipment sales [28] Market Data and Key Metrics Changes - Telecom, media, and entertainment, along with technology, were the largest markets, representing 25% and 17% of segment net sales, respectively [34] - SLED, healthcare, and financial services accounted for 16%, 13%, and 13% of net sales, respectively [34] Company Strategy and Development Direction - The company is focusing on expanding capabilities in security solutions, which accounted for 20.8% of adjusted gross billings, up from 19.3% [15] - Continued investment in managed services and remote services is expected to drive long-term growth [16] - The company plans to pursue strategic acquisitions to enhance growth and technology offerings [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate challenges posed by component shortages and anticipated a recovery in IT spending as the economy normalizes [24][23] - The order backlog is up approximately 70% year-over-year, indicating strong demand for technology solutions [64] - Management noted that the focus is shifting from COVID-related spending to IT modernization and infrastructure improvements [61] Other Important Information - The company ended the fiscal year with cash and cash equivalents of $129.6 million, a 50.2% increase [37] - Inventory levels increased 39.2% to $70 million year-over-year, reflecting ongoing customer projects [38] Q&A Session Summary Question: Update on access to customer sites - Management noted limited access to customer sites due to varying state regulations, but remote service provision is increasing [48] Question: Impact of inflation and component shortages - Management indicated that while inflation has not yet significantly impacted pricing, it may become a factor in the future [50] Question: Performance of the services business - Services revenue grew 8.2% year-over-year, with positive momentum in managed services and staffing [52] Question: Quantifying impact of component shortages on revenue - Management stated that open orders are significantly up year-over-year, but the duration of shortages remains uncertain [58] Question: Insights on gross margin and future expectations - Management acknowledged that the current gross margin is an outlier and suggested looking at annualized metrics for future expectations [66] Question: Performance in specific end markets - Management reported mixed results across end markets, with healthcare down and SLED showing growth [78]