ePlus(US:PLUS)2023-08-07 23:32Financial Data and Key Metrics Changes - The company reported a consolidated net sales increase of 25.3% to $574.2 million, with technology business net sales growing 26% to $565.7 million [78][46] - Adjusted EBITDA rose 41% to $53.9 million, and diluted EPS improved 51% to $1.27 per share compared to the same period last year [56][68] - Gross profit increased 25.3% to $142.3 million, with a consolidated gross margin of 24.8% [66] Business Line Data and Key Metrics Changes - In the product segment, revenues increased by 29.2% to $498.2 million, driven by strong sales of networking products [3] - Managed services segment revenue grew 23.2% to $32 million, supported by enhanced maintenance support and security operation center services [3][61] - Professional services segment revenue declined 4.3% to $35.6 million due to reduced demand for staff augmentation services [80] Market Data and Key Metrics Changes - The technology business saw broad-based demand across key end markets, with telecom, media, and entertainment, and technology being the largest markets, representing 26% and 19% of net sales, respectively [81] - Networking gross billings increased 67%, while security product gross billings rose 24% year-over-year [59][60] - Managed services revenues increased 23.2% year-over-year, with a CAGR of 24.1% over the last five years [63] Company Strategy and Development Direction - The company remains focused on building long-term shareholder value through a growth strategy and efficient capital allocation, with acquisitions being a fundamental component of this strategy [7][65] - The company plans to invest in areas such as artificial intelligence, which is seen as an emerging growth driver [22][48] - The introduction of new operating segments aims to provide better granularity for modeling and understanding growth rates and margins [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver sales growth in fiscal 2024 that exceeds projected growth in the IT spending market, despite economic uncertainties [70][100] - The company noted that while there are longer deal cycles due to economic uncertainty, they believe they will continue to pace the IT spend market [100] - Management highlighted the importance of supply chain improvements and the successful execution of their land and expand strategy as key drivers of growth [39][56] Other Important Information - The company’s cash conversion cycle improved to 48 days from 59 days at the end of March 2023 [69] - The effective tax rate was 27.2% in the first quarter of fiscal 2024, slightly down from 28% in the previous year [52] Q&A Session Summary Question: Can you provide insights on your pipeline and backlog? - Management indicated that the backlog is still elevated compared to pre-COVID levels, although it decreased by $60 million sequentially [94] Question: What are the assumptions behind your guidance? - The guidance reflects a conservative approach due to tough comparisons from the previous year and the impact of supply chain easing [102][84] Question: Are you seeing any signs of caution in customer spending? - Management noted that while there is some economic uncertainty, they believe demand for their products and services remains strong [100]