ePlus(US:PLUS)2022-05-25 23:53Financial Data and Key Metrics Changes - Fourth quarter net sales increased 28% to $451.5 million compared to $352.6 million in the same quarter of fiscal 2021 [24] - Adjusted gross billings for the fourth quarter rose approximately 21% year-over-year to $638.5 million [8] - Fiscal 2022 adjusted gross billings reached over $2.6 billion, representing a 16% growth from fiscal 2021 [9] - Consolidated net earnings for the fourth quarter were $24.2 million or $0.91 per diluted share, up 55.9% and 56.9% respectively from the previous year [29] - Non-GAAP diluted earnings per share increased 42.3% to $1.01 [30] Business Line Data and Key Metrics Changes - Technology segment net sales increased 26.4% to $419.4 million, with product revenue up 28.3% to $357.8 million and services revenue up 16.6% to $61.6 million [24] - Financing segment revenue grew 54.4% to $32.1 million, primarily due to higher proceeds from sales of off-lease equipment [26] - Services business generated sales growth of 19% for fiscal 2022, reflecting a shift towards recurring long-term services [14] Market Data and Key Metrics Changes - Telecom, Media & Entertainment and healthcare were the largest markets, representing 29% and 16% of segment net sales respectively [32] - The technology segment's gross margin expanded 60 basis points to 23.6% [34] Company Strategy and Development Direction - The company focuses on capturing emerging high-growth opportunities in fast-moving markets, leveraging a differentiated business model that combines technology services and financing [7] - Capital allocation priorities include evaluating potential acquisition targets to enhance growth and expand geographic presence [17] - The company aims to capitalize on long-term trends driving IT spending in key high-growth markets such as cloud, cybersecurity, and managed services [13] Management's Comments on Operating Environment and Future Outlook - Management noted that demand continues to outpace supply, with expectations for solid top-line growth in fiscal 2023 despite extended timelines for IT project implementations due to supply chain constraints [19][20] - The company is encouraged by the strength of open orders and backlog, which reflect high demand for products and services [18] - Management expressed confidence in the ability to outpace industry growth, supported by a favorable outlook for IT spending [38] Other Important Information - Consolidated gross profit increased 17.1% to $461 million, with gross profit in the technology segment up 17.9% to $408.2 million [33] - Cash and cash equivalents at the end of fiscal 2022 were $155.4 million, up 19.9% from the previous year [36] - Inventories increased 121.6% to $155.1 million, reflecting ongoing customer projects not yet completed due to supply chain constraints [37] Q&A Session Summary Question: Insights on client timelines for IT projects and budget factors - Management indicated that demand continues to outpace supply, with customers inquiring about lead times for solutions [42][44] Question: Impact of talent shortages on service offerings - Demand for services has increased, with service revenue up 16.6% for the quarter and 19% for the year, although margins were slightly affected by the talent shortage [45][46] Question: Growth in open order book and backlog - Management reported that open orders are over 100% up compared to last year, indicating strong demand [50] Question: Comparison of outlook with other technology vendors - Management believes their diversified offerings and ability to sell multiple OEM solutions contribute to a stronger outlook compared to peers [53][55] Question: Supply-demand environment and product constraints - Management noted that networking and wireless products have longer lead times, while storage and servers are relatively stable [61][63] Question: Expectations for leasing segment revenue normalization - Management expects leasing segment results to revert to more normalized levels, influenced by rising interest rates [68] Question: M&A pipeline opportunities - Management confirmed a strong pipeline of M&A opportunities across various markets [70]