Earnings call transcript Q4 2023

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Operator

Good day, ladies and gentlemen, and welcome to the ePlus Earnings Results Conference Call.

As a reminder, this conference is being recorded.

And I would like to introduce your host for today's conference, Mr. Kley Parkhurst, SVP. Sir, you may begin.

Kley Parkhurst

us joining for you today. Thank

is On Elaine CEO President; Marron, CFO; the and call Marion, Erica and Counsel. Mark Stoecker, General

I be on deemed management's to moment be forward-looking we that take plans, are that to not to based and are may statements afternoon make estimates remind facts historical current statements the this want you a and projections.

on periodic this results may and including certain reports with uncertainties Form in may detailed documents and to afternoon Securities vary risks issued any XX-K, XX-Q we our due future that we the materially anticipated with Exchange release and file our SEC. filings annual Actual the most quarterly and earnings report other Form and Commission, on recent on the

the of date Company events forward-looking information, as only or of and the statements new is any speaks statement no in forward-looking undertakes of statement the future otherwise. to made, responsibility update these of which light Any

will using is the addition, posted In which of measures Investor financial included on release, a our during We've the call. www.eplus.com. Information be in earnings at GAAP section we reconciliation our website certain non-GAAP

I'd turn now over call Mark Mark? like the Marron. to to

Mark Marron

in Thank very fourth quarter you thank Kley, for call year-end results. We everyone and fourth quarter you, discuss to pleased our and participating results. and XXXX our fiscal today's were with

even despite earnings supply For enhance future growth made fiscal we to diluted XX%. the and income challenges share capture per XXXX, our solid as in IT and net in sales XX%, grew growth increased achieved XX.X% capabilities net to $X.X opportunities significant chain. increased billion, our team We investments this

opportunities cloud. financial networking our underscore the artificial higher-value billion, capture and solution transformation, security, innovation a execution growth such the of market where focusing prior to areas, higher-growth continued grew year. XX% core nearly billings on offerings and workplace of by $X.X increase share and gross incremental as and intelligence in we strategy, our success over achievements These Our

increased strong XXXX. driven our both diluted products to fiscal XX.X% sales quarter fuel services. particularly growth X% net Improved quarter growth per earnings by of nearly and from of fourth earnings and Fourth of fourth quarter the helped in as compared margins, net business, share contributions services XX.X%

in product rose Looking double-digit fourth Technology quarter financial that primarily by net security for detail. for XXXX. were solutions transformation. more sales both enable segment rate at These driven results at and a our and fiscal networking our workplace gains the

the demands and work workplace past While over to specialized been that the models years, technology widely and multifaceted hybrid few process expertise. knowledge complex and a is support adopted remote has transformation

ePlus enhanced facilitate From serves performance. partner, enabling design cybersecurity to implementation, our as network risks reduces collaboration, and to a trusted workplace customers

Services strength XX% day-to-day increasingly the in their to organizations net for customers efficiency. risk enhance ePlus, a their sales requirements. improve year. IT source approximately represented as XX% fourth services outsource quarter to Managed operational of mitigate full decisions, and the particular drive outsourcing better to opt By increased and functions ability these

Managed year services, customer also market our services us a also new differentiating providing create of are of and managed satisfaction. a solutions. to annuity-like and brought had value while number strong innovative and we Within high streams desirable revenue both peers bookings from

and our operational customers build to provide metrics through continue managed devices capabilities provide executive and our their life providing our that out visibility for improved support the asset real-time cycle dashboards under service management. We This that outcomes IT need. services includes management

environments. health learning monitoring on provides Our their performance the IT updates of XXxXxXXX regular with and customers and

opportunity but to customers. with and provides our our service financial also capabilities, built Through relationships a greater an expanded to revenue. recurring of solid managed not we only contributes have base This strengthen stream performance, build our revenue long-term predictability

Security our of driver growth remains business. overall key a

demand the suite for towards operations their shifted of solutions. have have security organizations fueled and our heightened comprehensive risks enterprises As cloud, cybersecurity

Over for accounted gross XX.X% the our our billings. of past gross months, product and product XX.X% security increased billings XX

for a our as design maintain and cycle support. positive customized to our to life continue from security ongoing We with solutions business maintenance needs strategic outlook our are customers' aligned

our fiscal XXXX generated in segment expected largely some outsized not exceptional and to this were certain As you'll customer-driven due which recall, year. recur results fiscal were financing transactions, to of

we've of to results operating transactional over our peers, the time, As is compared business. the technology has a as stated of nature lumpy financing differentiator business because our but

to growth. a strategic with M&A talented and companies Over Through played disciplined customer the bases growth. drive financials, to drive our years, and look team for our role an have acquisitions process, solid important we strategy strong

qualities unique offering the compelling that for our of Network we expand ePlus, believe a unit believe enhanced business market to We providing this and will presence April We are opportunity improved by fit in products telecom array great services and reliability security performance, these found and have customers. our to a in the a which CCI on Systems, we XXXX. is XX, of for and more pleased Solutions Group, acquired drive

Throughout a that assistant fiscal year number an solutions powered our for automated collaboration. for ePlus internally well by developed example, cost-effective brought and by XXXX, market of customers, Storage-as-a-Service Storage; Pure virtual ePlus received AVA, to were and

several we such and AWS. managed top powered announced Microsoft, Additionally, cloud vendors services as by VMware

Services first American the Lifecycle were branded and Cisco market providing to the adjacent the qualified We multi-vendor partner support Support, We Partner by and solution, technologies. a for support which brought call, be be Services Cisco to multiproduct, North Cisco Lifecycle pleased Support. experience architecture customer's named technical centralizes own then streamlines ePlus our first in

the were Partner U.S. Year. addition, Global Partner In named we the Year Cisco of and Cisco U.S. Marketing of

of multiple many by Social Advocate Impact We the Americas America's Customer Pure Partner Alto's across Palo Partner, Year. Nutanix vendors as with Global the and along Reseller were recognized Year, of also areas, Storage other such

in our our forward, believe Looking the and we are reflecting model are fundamental strength to positionings. which recession-resilient, of provide market positioned well we business the market IT solutions,

that towards faster and uncertainty, in directed fiscal economic our improve heightened IT returns to products Given yield believe likely is efficiencies. year be we spending XXXX

strengthening proliferation IT of the that an also likely With threats, cybersecurity is programs remain anticipate to of corporate cyber priority. the we

In to longer-term and them address that we closely and with IT advance our objectives. needs this their providing will timely cost-effective to will immediate environment, enable continue work customers, solutions help

I consistent to would execution and team environment. challenging for ePlus in a entire the their commend like dedication

as team year, than deliver needs. customers' Even was able throughout faced the innovative constraints X,XXX more persistent our products to that we our supply and the chain solutions met

I and Elaine fourth will results. now CFO, over year on details XXXX turn full to our to our the call Marion, Elaine? quarter provide fiscal

Elaine Marion

XXXX, everyone. providing from pleased afternoon, good our and solutions. strategic XXXX. technology continue to strong to Mark, a the fiscal and you, fiscal higher-growth In am to report of finish I fourth we benefit quarter on higher-value focus year Thank

up growth and million, $XXX.X net product segment increased services were sales X% year-over-year XX.X% and net XX.X% million sales by $XXX.X to in revenue. revenue in Consolidated driven growth technology to XX.X%

returns new year period charges and that billings, customer the XX.X% net value of total ago million, during dollar and other credit totaled a operational a memos, Gross including reflects shipping of quarter. sales the of taxes, increase customer from metric purchases the services, and goods representing $XXX.X

Due year's below our million revenue fourth financing to leased equipment, of last million, sales fewer quarter. segment the in $XX.X totaled reported exceptional $X

be last we not noted, previously expect As year's replicable. performance to did

driven increased points million, to Consolidated on XXX XXX of $XXX.X gross year-over-year. services. showed a profit million, by and expanded our higher margin and segment, XX.X% both gross to by gross segment basis increased profit point Within XX.X% to gross product and basis improvement technology margins $XXX.X our technology XX.X% margin XX.X%

from gross increase margin professional points mix, due expanded and More both in to XX.X% gross to to profit specifically, product in margin to XXX basis gross and XXX an points basis changes services. services due managed expanded XX.X%

year the of that Financing benefited last lease million not segment gross lower did quarter leased buyouts profit from to was this $X.X million to amounted year. in recur profit ago that expected to as from compared due equipment fourth quarter early $XX.X year's sales

our led benefits, invested customer-facing meet quarters, for XX.X% past the driving fourth To up several SG&A and we year-over-year. needs to quarter that higher customers' personnel in have salaries

At improvement rates due quarter efficiently, income our year-over-year operating the count managed Interest million. higher end, increased $XX.X XX% quarter. to We interest facility. on year-over-year to our in and leading X,XXX totaled borrowing prior X,XXX compared of to was head expenses expense up credit to year

fiscal lower-than-forecasted adjustments. The to effective ago sales, in return quarter benefits foreign state from year XX.X% in XXXX quarter to rate increased was favorable the of to provision fourth expenses, due with compared the non-deductible along tax XX.X% and

Fourth or $X.XX EBITDA fiscal were million to net $XX.X per comparable diluted per million, share earnings XX.X% diluted $XX.X of share was the consolidated quarter. million XXXX. $XX.X year in in Adjusted quarter compared or ago were a year XX.X% the increase $X.XX diluted ago share per earnings quarter from the ahead $X.XX, Non-GAAP quarter.

growth sales prior were $X.XX to of the sales year year. billion compared our service me to Fiscal financing brings $XX.X $X.XX review. net grew to million fiscal $XX net our increase. reflected net sales Technology million. That billion with in $XXX.X million XXXX revenue to segment of a And XX.X% XX.X% X.X% year-over-year full segment

Our to of gross billion, ahead amounted billings XXXX. fiscal XX.X% $X.X

Our services respectively, financial other XX%, the of end from entertainment accounted technology, and media for sales, SLED and and segment telecom, two XX% with largest XX% and technology markets, XX% Health represented respectively. and end care, XX% X%, net remaining markets.

Technology Gross profit in consolidated to The gross compared in grew million, the and compared was XX.X%. consolidated $XX.X gross the remained profit XX.X% $XXX.X at million XXXX to gross XX% from segment was previous XXXX. technology in the margin million segment gross XXXX. fiscal XX.X% up profit was in to Fiscal $XXX.X XX.X% million, $XX financing year. constant margin

business We operating million, in are favorable our XX% of with pleased million, to operating to even $XXX.X consolidated expenses with demonstrating the growth up income XX.X% $XXX.X leverage operating model.

of compared effective drive net also Our or EPS XX.X% XX.X% growth increases year to grew to and diluted ago. strong $X.XX. representing per earnings XX% fiscal XXXX XX%, of a saw leverage we as $XXX.X $X.XX million share, rate Non-GAAP was XX.X% earnings tax for respectively. Operating helped

of levels mainly the $XXX.X remain and from needs. XXXX the the fiscal decrease our at $XXX.X at cash of million equivalents of capital Future and balance fiscal working In attributable The is healthy to XXXX end increased purchase terms million. cash end at of repurchases, sheet, Com share totaling

customer liquidity supply year were large customer Fargo not the ongoing flat flexibility. $XXX.X driven and completed variance at with Wells our projects. million quarter. continued with ending Inventories by of have and million, partly projects we constraints and third periods, XX.X%, yet is facility Together to the up to this expanded chain financial due sequentially prior credit $XXX Similar ample

conversion we cash XX good the cycle of are the for delivering in results. Overall, primarily quarters. have ePlus, quarter, our XX higher result XXXX compared inventory very levels also been strong to Our we of in such proud the year past days several for a days ago team and was was experiencing that year

over turn I the that, Mark? to will call back Mark. With

Mark Marron

Thank pleased another for quarter results that you, fourth with Elaine. our strong In are year closing, ePlus. concluded we successful

segments market to resilient is working, complex IT we strategy our where to capture growth share higher-growth, objectives. customers Our us meet solutions require innovative provide enabling their the in and

We investments have continued through to build through team shareholders. value long-term add acquisitions in to our both for that capabilities our help targeted and

line for Operator, please questions. open the

Operator

[Operator Instructions] our We'll Maggie question take with William Blair. first Nolan from

Jesse Wilson

on circle back This here. Wilson a is really nice to for return. the your Nolan. Mark, to Jesse faster Congrats quarter wanted about Maggie I on comments

deliver supply delivering chain will So a how how positioned Company of the projects? you these to role play of in And work? big the on do this is types think

Mark Marron

Jesse, Sorry, referring faster are to? return, what saying you're you when portion

Jesse Wilson

about for I faster deliver think were clients talking prioritizing them? that you projects returns

Mark Marron

I Yes, it. Oh, got okay.

did here's saw bit. supply chain The quarter. this So little a what we ease

fluctuating our in networking and a as pull of see we bit we did vendor, some our uptick nice down gear. specifically by orders space, the of of open well. still on saw pull-through networking little It's a some So but

So, our in think And environment. just have in we play, the the of space. will solutions that this we bit of of type play pull-through services specifically networking in we little and a things other then saw some there, that well

Jesse Wilson

XXs Okay. helped QX the How it? of kind just you services? can And versus high back you margins, get then to kind on of sustainable the what is rest And in the about of talk level year?

Mark Marron

Yes.

nice had the we services So margins strong had do for are with revenues, what quarter services the we with -- a in managed us. side, uptick to some our of saw which

on of professional open our the that margins to we we based which some within up, -- able strongest have see saw supply the also We were chain, are services Company. our

some our help saw there then end, price some of margins. that that And from we made well So were increases that. with as we that

Operator

back Congrats hop queue. again. I'll it. Got in

Mark Marron

All thanks. right, Jesse,

Operator

Burns Sidoti. We'll Greg take from with next our question

Greg Burns

that still some we're generate 'XX Could you order seeing? given into you're maybe guess. on headwinds the macro just backlog current current your demand there, And demand trends, going patterns what I to the versus start of the to on relative leaning backlog? business, fiscal so view about able We talk is based what's forward of could

Mark Marron

Yes. That's fine, Greg.

about price play supply headwinds. shortages staffing I'm sure interest assuming talking tech but chain, So and nothing rising, not right? macro inflation, through. -- increases, layoffs, rates we to I'm So you're have what

you. Here's tell what I'd

Our year-over-year, in our terms open orders significantly than of are normal but still orders. strong. back They our were still down higher

and backlog Our still and product both is our is very pipeline services, strong. solid on

on So, easing that we do well the some I think help. as supply see chain will

you interest their power. rates as -- reduces purchasing when in market, customers But it sometimes know, this rise,

some are longer We cycles. seeing sales

do So although we're it have forward. willingness some to may cautiously optimistic, as we concern customers' we some spend impact that move

Greg Burns

made Or mind, year to you slow Okay. maybe, at next this a year? then investment count? year? add? do know, don't how are lot And And intend look of continue Do in to of for head Obviously, investments count down you so you -- try that grow the terms with you that in head you and going to year. I this next added off

Mark Marron

Yes. Greg, do Right a open question. reqs. good have it's we now,

So, closely our continuing based every count that solutions. on the hire. out it every that we and we quarter need metrics, to we But do and of operating terms with very building in, watch adding make year, like adjustments we're new just plan whether make the we'll or head anything, said, but economy in to in on not

year, income saw well. nice margins our both decent as But we our a amount up operating by based revenues this uptick were on and a and

will be very build So, if watch from closely that south head adjust or we're and start But things continue solutions. to to it a in the we to things go mindful going recession invest count standpoint. out

Greg Burns

terms or capabilities obviously like there? AI, of strong area over you've And that in last where of a expand? be years. Is that organic can built the Okay. would security practice And are couple an your you inorganic? Where you

Mark Marron

beginning in Well, organic. the we're Two, would one, here. be stages it Yes. I think

of partners just that. those optimizing along to really And So and a things we work it with like HP and and about automating others and lot NVIDIA related a few is lines. processes

the technology are two biggest out trends going I AI would of are automation really that think and forward. there

solid forward, drive streamlines error, data be So processes leverages human reduces or a business think, business, will going most that I your anything Greg. for to folks

Operator

next Matt Stifel. take our with We'll question from Sheerin

Matthew Sheerin

a it last strength the on the was up margin you significantly from quarter, Just Mark, gross question that the of quarter. saw in

you talking next product in one talked about And about here product for your what are being we talk margin mix? we're You terms mix quarter? Could factor. exactly expectations about as what of gross into get

Mark Marron

Yes.

our year-over-year our two margins as One, Matt, were earlier, quarter. the up this margins So were noted quarter. were for service in margins up nicely in reasons. our up Also, product Jesse

our So that's in uptick happened margins the big gross where overall.

Matthew Sheerin

at And out. trying to up the you be would mix, business year-over-year? increases? quarter, high But specifically product servers are like high-volume these as into December you two, in the figure is the margins of we a it terms and or because expecting mix like more of to which the price there's did, quarter indicate different next in I'm just with get levels,

Mark Marron

Yes.

So a Matt. couple things here, of

off, look, about, One services continue up margins helps first two build is So things. being are talk revenues, we is, managed a nice business our which to services the our on as margin annuity-quality side. for services us, enhance which the we

business are helped up mentioned for for was And margin I had earlier, think I which as there. think then networking our us us, up high-margin well, were as which professional nice nice services well. I which significantly,

the the margins So that would I on some those areas had effect think be overall.

I But briefly And based from other raise to across services, margins prices seasonality. on know, the which goes the we then increased our expect there. quarter-to-quarter you in on the mentioned we'd forward, it is margins did thing line. -- as be going that changes it And

Matthew Sheerin

'XX Okay. end from And I no in you of markets. other growth market, a technology by of really noticed had in and terms health fiscal significant revenue your in media and couple growth and from care

what outlook drove me tell 'XX fiscal you what's And could also, those markets? then for chose So you for that? your

Mark Marron

Yes.

of So Matt. things a couple there,

XX.X% look year. XX.X% the operating actually quarter segment, you in for and if up income at this So our our technology was

a solutions the terms year the selling So, had segment we were customer our and solid by we to board technology in the vertical. of with very base across

of couple high a things a here's So at very level.

verticals in gross unless quarter significant. first a year it's for five up off, and I for don't top net billings. drove or And both our the vertical were SLED the So What is up down sales technology in about worry and on specifically, being quarter a that.

a on deals based that have to going in of or going on market. maybe the couple You're what's

execution, both was segments gross and a interesting and the by What from size up the good a thing from customer was really in that for the the were of our team net that quarter both was year terms another billing for standpoint. sales all

doing the all my of team really is segment So from go-to-market what our our a key verticals. across nice to from job size enterprise means, that is the mind, in into mid-market five the a selling customer

net was up -- then data security cloud, we across for the our networking, perspective. well of sales by a sales that all actually as thing interesting as well and net year other center cloud type, and our were And from the

what at year did also a I execution, by I meaning So by you and in Hopefully, type, team when a vertical. think job customer solution really by for set, look there. set, the it overall nice were that from looking covered

Matthew Sheerin

that of a spending particularly hardware to If suppliers, really about, inventory like press Yes. and bit that have sound you've out. that on doesn't there's the in I things Yes. pushing got outlook, talked It your a of fill going just concern, the waiting the terms backlog, customers, orders. that's been mean enterprise-level little I you're can lot you OEMs, digesting got

from significant or sound doesn't you're really anything any push outs customers. it like So, seeing

Mark Marron

in we're the cycle. We're seeing Yes. delays sales not --

earlier. I think I mentioned So, it

impacted. all we and and is competitors about be everybody the could things going all we we So listen Matt, the worry through. that to vendors

we're selling. some everybody, what the the quarter we're a longer job seeing not recession-resilient, So, like sales But executing really nice on and recession-proof, based maybe But team for board. the for the did we're across cycles. year,

Matthew Sheerin

just lastly, would the on contribution that annual what you Okay. And did, tell on that Great. us just expected be? revenue basis an acquisition you could

Mark Marron

is They of that. size, feel terms in they've disclose employees, just overall XX They're customer don't got got in think a you can what to we But the for base. Matt, provider a think about across and immaterial we it's numbers. our from give to ePlus and solid service accreditations in that rest service we we Cisco leverage master they've specialization space, some the provider space. the had of

And also, into we what the going back all and to have, and base collaboration upsell and to their and security other we cross-sell. and them able think with to solutions customer ePlus brings go finance we're be

think of talented kind We ePlus it's we're So, go forward. for and team as excited. a make difference a we will

Operator

question-and-answer I Marron to the Mark conclude like would closing the that for additional And call does session. back to or over turn remarks.

Mark Marron

happy everybody, your Okay. speaking we with today. joining next weekend look you Day And everybody Memorial Thanks, to enjoy operator. Thanks, care. with long I forward call. Take and and friends. family a for to us wish on the

Operator

And that Thank you and participation your for concludes you today's now disconnect. presentation. may

Kley Parkhurst	Senior Vice President
Mark Marron	Chief Executive Officer & President
Elaine Marion	Chief Financial Officer
Erica Stoecker	General Counsel
Jesse Wilson	William Blair
Greg Burns	Sidoti
Matt Sheerin	Stifel

ePlus (PLUS) 24 May 232023 Q4 Earnings call transcript