ePlus (PLUS) 4 Feb 222022 Q3 Earnings call transcript

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

As a reminder, this conference call is being recorded. I would like to introduce your host for today's conference. Mr. SVP. Parkhurst, Kley begin. may Sir, you

Thank you today. joining us for

risks materially XX-Q light want including On any Elaine detailed and including the Marion, is or XXXX, that with Mark new XXXX, no the reports, and the December Counsel. President remind to moment and year President, Marron, CEO I Form earnings General certain CFO, XX, may projections. results company Form are statements filings management's in based this afternoon Stoecker, facts current ePlus and and subsequently filed. Commission, the Exchange are Actual update the future be uncertainties XX, take future you responsibility our Technology, release to to due this quarterly plans, statements we not that ended March of our issued make deemed vary a Security when forward-looking forward-looking quarter and to periodic and The call undertakes of on may XX-K information the events. our and Erica anticipated to these for we historical Darren in estimates, afternoon for be statements Raiguel, of filed ended COO and

website is the we on Mark. financial make a which section non-GAAP our Mark call Marron. the addition, included during In investor the over call, www.eplus.com. And posted our measures. like in of release, may at now earnings we've reference to to to GAAP reconciliation information I'd financial turn

delivered results of our for quarter. And in today's Kley. to in fiscal strong for discuss our results third you, you, third the everyone, quarter financial participating Thank thank XXXX. ePlus call

including nearly end the of growth in in demand mid-market, segments quarter, to and resilient the customer was customer across the growth markets. Our markets, broad-based enterprise, all our in marketplace spend strategy performance focused public and all Notably, successful end size IT sector. execution and capture share third our highlights with

Our our security, supply consultant, chain challenges, demand delivering higher-than-market that management continuing services, hybrid growth and solutions customers demonstrate drive is to today. and our strategy cloud rates, despite advisory what

the financing are ePlus Sheet, value-added We that with alternatives. unique deep well-positioned a Balance expertise, engineering future and remains strong confident for

billings on increased third XX.X% the XX.X% quarter year-to-date by million more basis Our $XXX in XX% by billion. in million, $X sales sales adjusted the year-over-year increased to quarter XX.X% billion. to year-over-year $X.XX and year-to-date a gross than $XXX to nearly and Net grew to increased

per the to profitability. and again, earnings non-GAAP to strong increased operating In share, growth the strong contribute our leverage growth. inherent that XX% year highlight period. nearly business Given few margins third a I'd sales and like significantly quarter, prior outpaced from improved per model, areas share to XX% top-line gross positive in diluted earnings continue the and earnings our share per

services sticking strengthening was only up increased XX% Our added the value services, both type and not creates revenue have services quarter professional bookings, continuing the with a we for project-based increase which annuity business future customer improvement. our year-to-date, reflecting and managed XX% in quarter, ties relationships, higher predictable year-to-date profiles. is gross more revenue growth, as Along XXX which driving customers, our and basis a with third and is achieving as margins, revenue services the but in well point profit XX.X% gross generating

security dealing basis. a we contributor a to our revenue, billings adjusted continues solutions programs, and margins functional more benefits sustainable map key with as associated trailing an provide ransomware shortages. incremental and each our the impact scales We've expensive providing help gross to develop increases programs area. be of built road service along provide our simple may with with staffing manage a XX% profitability of organizations requirements, -security insurance to which and to deliverables their on as expect favorable deliverable are the Customers that revenue accounting consolidated concerns, analysis post-incident key for and to approximately [Indiscernible] new continued regulations, a business be full-time percentage with earnings. of As proper our total response, as XX-month our cyber GAAP on implementation Security resources and

of an see transactions increased for $XX that continued underscores year-to-date third We helped XX% a growing scalable. solid dynamic than margin and continue financing benefit year-over-year nearly segment customers On to our of operating in services, financing income market, our our solid customer services. large which turn, its advisory and consultant IT and has from in performance The are both quarter. gross increase our has our includes $X.X demand income million, outsized the which, value several architect foundations basis, today's our second has seek million, in segment of technology flexible more quarter. to generated operating In from

to we processes move that business move road streamline environment. This new network implementation. and multifaceted our able applications complex, competitive that to centers for provides networking the At to modernize map differentiation to unique through from tailored support networking a meet increasingly strategy standpoint. launched financing information time, models provides business customers help more example, customer's integrated their legacy requirements. December, our cloud security and segment same past As a our adaptable with a We're their to a hybrid approach is data or specific

additional scope [Indiscernible] in offer capabilities as grow flexibility and manage plans. complexity, spending initiatives customers our might financing they IT tighter, As

are that of by strength favorable we are enter fourth and in reflected encouraged fiscal market quarter, in the our backlog. continued services growing open we orders fundamentals our As our

customer’s our our which strategic right that a continue and We gives we our balance road investments continue ensure sheet improving solutions in ability acquire to needs. us support will expertise, services maps focus disciplined in acquisitions. future and on technology investments, have integration and acquisitions, robust technology be while to our making on the right approach including to we partnerships, And the to the to targets, hires

an year. this remain supply constraints ongoing have we challenge are a throughout discussed remain As to chain and calendar calls, likely on headwind prior

equipment, close in customer strong large navigate our customers require to deployments. with hold We customer cases, This and demand vendors dynamic, in issues, of continue partnership work IT with for in advance continued will inventory diminish coupled which, these has completed. ordered In some constraints and us to I'm pleased to inventory that chain our in financial are ease expect heightened summary, supply and quarter our operational with basis. as led year-to-date very the to projects we third customer levels and performance on

growth Elaine over our our a Marion, execute walk customers. more results turn now for while and I to high strong deliver and our to We in financial effective innovative Elaine? continue to our investing revenue competitive solutions through earnings strengthen cost will CFO, delivering capabilities our and level, at to in the call position detail.

strong Mark. Good thank growth. The strong financial demand everyone. more afternoon, you, of we performance And happy in quarter XXXX, insight third the delivered double-digit net where about for to our fiscal share top-line earnings is across-the-board ePlus I'm Mark Performance discussed technology in quarter year products both in that and and third services to ' fiscal $XXX.X financing net was up consolidated million. evident XXXX segments. our our strong growth XX.X% and sales

fiscal strong Our streak pleased increased compared XX% service net growth. billings and to The quarter, third last third Product demand million $XXX.X managed increase quarter and our staff, our gains. last performance adjusted third business in the particularly offerings. net sales by We're was continued sales strong we focus our and for adjustment our same in market to for very gross quarter third $XXX.X revenues areas broad XX%, service driven compared to XX.X% in was million to and year's trends segment, growth with as of the sixth This supported service party technology in XXXX. of the maintenance, revenue supported growth quarter. XX.X% year's had professional sales strategy million $XXX million subscription. of quarter evidencing XX.X% These of a $XXX of the and adjusted share this billings XX.X% of on respectively, increase gross compared and consecutive to continued

million Consolidated segment's year-over-year. to profit basis were million, gross quarter. similar segment, XX XX.X% increase. third-quarter gross profit widened basis the compared XX.X%, widened Service to up expanded points under primarily yield to the main margin Increased and segment a points higher $XX.X points operating and the gross products to reflecting contract reflecting SG&A $XXX.X due $XX.X from increase post the And from $XX.X XXXX, several increased Technology then compensation to million, margins to variable XXXX, of in XX.X% basis revenue XX drivers services. expenses. expanding million $XXX.X early year-ago margin volume growth Fiscal financing margin. to margins services XX.X% XX.X% XX.X% was $XX.X For was XX.X% and year-on-year. higher to for third that The in million. year of And professional for salaries consolidated reflecting XX% financing up XX gross million, gross buy-outs lease. sales assets profit amounted fiscal quarter increased XX.X%

with X% included employees sequentially flat Our December total quarter, XX, headcount and in XXXX added to at which the end XXXX. December, XXXX XXXX the decrease third from a year acquisition XXX on the a ago S&P compared of

leverage to $XX.X top-line growth income strong operating million. growth and operating Our XX.X% to led in

Our decreased related the tax an last adjustment to year's taxes. year the prior for XX.X% to due effective quarter to return tax rate foreign to XX.X% from

tax For between to XX%. the be rate we full and expect our year, XX%

in respectively, to million, $X.XX $XX.X XX.X% quarter. consolidated $X.XX same or or the XX.X% increased $XX.X diluted $X.XX last year's a the to the year-ago compared of share, share per per increases just mentioned, diluted For $X.XX I net million, third earnings of represented earnings Non-GAAP XX%, quarter. diluted reasons share, and in from per

of that EBITDA September million on to diluted effect $XX.X split As a X-for-X $XX.X the took for reflect Also count reminder, EPS quarter. XX, the share increased stock XX.X% XXXX. and million the adjusted

million increased to the increased to our million profit XX, share. and non-GAAP and sales per consolidated Adjusted $XXX.X XX.X% $X.XX technology sales adjusted XX% an earnings This, increased to to Year-to-date of and the $X.XX gross inherent segment and to to XXXX. in increase up diluted segment technology to to margin in nine-month XX XX.X% per effective XX.X% increased XX.X%, of to months $X.XX $XXX.X nine net $X.XX million basis respectively, year-to-date billion. earnings per led XX.X%, increased Net points Consolidated the Consolidated December results operating were billion. the share our gross XX.X% reflecting to increased net share execution for billings expanded billion. points XX.X% margin combined period. the growth XX $XX.X ended leverage XX.X% or our in EBITDA XX.X% Moving basis over to gross gross our diluted $X.XX model, earnings business strategy. with million.

is XX% market, by which XX% other entertainment technology, and SLED, of among services, The and the XX% continues net a distributed on XX%, healthcare financial to trailing Telecom accounting followed XX-month our market, be X%, largest XX%, respectively. for basis, remaining end end media types. As several for customer and sales, represented

to a approximately continued that at was March the our in the for to to due portfolio $XXX additional when inventory, and than This due of the it sheet, projects, supply with the related equivalents balance demands constraints. repurchases ended more with $XXX.X quarter $X.X increase end liquidity fuel impact share services working want I compared to that remind an third-parties a to for funded is a This from XXXX. could $XXX.X be ongoing million million compared lower we coupled particularly level customer in of committed with Looking financing million million to needs the have cash and XXXX. segment, the cash we some our as you at totaling in strong to doubled technology and our products in to support growth. million, end capital increased an portion to fiscal chain which $XXX.X of

expanded facility we million. recently credit addition, Fargo to Wells In our $XXX

prior will our to up and their gives business, our the the Our the sharp in ability thanks was in now our us value cycle entire our increase year-to-date back increase sales to up, turn This XX unwavering in than continue increase performance I team inventory extend shareholders. to mainly XX sum end XX gain day the quarter to days to grow terms. my market sequential Mark. cash perseverance I call and strong at Mark. to With in performance. due To conversion over days like would and the in an with to year-ago deliver ePlus from share, is days, customers and confidence XX to the to of quarter. third quarter that, greater for

Thank you, Elaine.

and to supply call thank hard dedication the rapidly Operator? to like and support challenges expertise chain customers to open our the evolving ever like the to while flexibility and would metrics. take strong Their us customers well-positioned work constraints. to execution Before meet in questions. team I for needs. we questions, allowed moment would global We our we have their key for change despite environment solid delivering our and operating believe open initiatives I continued that business a COVID call to the the are

Your this of At I [Operator everyone remind comes William Maggie Nolan first time, with line would question Instructions] from like the Blair. to

line open. is Your

Thank you, nice performance.

Thanks, Maggie (ph).

hoping I'm bit and more the it a little could on give stands. (ph), backlog us Mark where you maybe detail

that I think products record What does looking as here you helpful? color would any well versus on quarter. had be as last out like it services levels from maybe within look you're and

So Maggie, our continue to open grow. orders

year. In fact, over XXX% they are last up about a

backlog, as so for it all customers relates now. as beyond pipeline. pretty across significantly. Our orders, are backlog QX and the into both I'll well is up to, We're surge services seeing at of right pipeline call open our strong point, opportunities visible strong visibility pretty it this demand And

Mark. I to couple maybe of thanks, gross of little services margin. a you in kind here services. of strong Okay, mix be pattern there alluded then think a bit gross was margin quarters of But that on the a And does of within seem pretty a Elaine, services. to

trend is be should or becoming that mix note a we a taking So shift of? pricing in there trends of any bit that are

Yeah.

onsite to was as last as COVID; it I higher couldn't those really an had wasn't where was related in year we so project quite much, high margin services year. think compared quarter, project related this services we come it This a with increase and to as get

a the trending, sales. across services; managed And terms just up of of well our as are percentage project-based our In as service total growing is net board. all augmentation staff as they

staffing. I if lot we're Maggie, a think, on of to what are add Elaine's short companies market I could seeing is the piece, in

need routers, to both lines. what So and staffing out they and have go resources is we're for switches, on-demand seeing those resources, along and install things

LogXj see also going other of looking everything services. types that with with there security the they're are on threats that We and security all out for

across up up on And it's nice the our XX.X% upticks but you nice alluded at some is, if services. to, services, XX% seen the year. actually for gross we've the as for increasing. what's So board quarter, Elaine And margins look are it's the

us a that's now. for mix So nice right

Thank you for taking my questions.

Thanks, Maggie.

Company. of Your Greg Burns SIDOTI with from next comes line question the and

open. is line Your

When the complexion In what think and what's projects in rise working tied capital, point do be the them regards expect the forward? to to do decline the inventory, working to rise start the in timing that do that? you capitals to of to on starts at delivered going you the you --

Hey, Greg.

relates a on it going bit. think this to is I inventory, to for the little go As

quarter this seeing of you're that's chain based think similar I relates to to of us as are too think that I through quarters of chain supply think issues everything really the the in year, the going supply things, see the a for to We're going as relates to hearing, of it previous place, so affect with I chain. some much the lucky continue end in the calendar to them it supply we're enough period time. didn't year it on and

I will So then we wind to near the forward, time think inventory. for future related start it'll over down continue this as and move to

labor to are there forward? maybe in issues up. you labor feel Okay, hire going cost that in terms availability, of the able do then thanks. terms And you as well being about seeing any of How as going of

it's bit an a years. attrition up I to to compared a honest, we've From been Greg, it's market be lucky. little think competitive standpoint, previous

being that terms as up, is expensive it's more well new people and market little new leave do labor it either I on. a as think say think with hires with a potentially I'll for competitive both replacements costs I hires. or

a at it this bit little So challenging point. is

see more going in And drive chasing to the I feel recently in it mind, business. able Okay. do investing started is -- some we to for to the be historically leverage a of about continuing are and that sales then you leverage to I with And headcount. business? in guess more mean, be you I technological know operating how to

forward, going this you balancing feel how about So that environment? current in do

of couple to that a continue spot touched with going on it's on. things a there, are customers. invest. and pretty solutions street have, more touch think good Greg, about to so you to in We think really I we services we're One, the getting feet more we the

Consolidated SG&A, So at the, is I'll we up the actually, if margin an think in year, drive basis it we'll headcount, in up operating continue from But points. And year-over-year. the income to we've XX% our if of you will, you look so been income. operating OpEx S drive up that'll this income able perspective. some to invest XXX is call

we I'll anything to managed I some have within for of So through line leverage think and still say bottom from get to it continue lack model increases else to an perspective. operating grow have still both some room top-line a calling of that operating nice -- the salary

you. Thank Great.

Thanks, see Greg. you. We'll

Your of Sheerin with next Stifel. from is question the Matt line

Your line is open.

Thank words, the pushed left me. Was of meet to there you out on start, have for that demand strength that the and talked set Were a or product in the A orders? questions Yes. you Mark, constraining revenue that you. to did just able you strong the table, missed? all quarter. about in you other demand couple

things. the we leave not Well, but there's table, tried definitely to Matt, revenue on

chain, With the interesting with supply the it's an -- look, dynamic.

supply. I think obviously outpacing demand is

expectation. setting really extending working -- customers Lead has our we've a all there's both vendor the time, enough team our partners think been changing and done of and obviously on with Matt. I But the times job constraints. nice are lucky

hasn't from and think to there I'm and QX in not this anything So then I I it's it point, QX into QX. it to material But at be material expect leaks don't QX may material that this or think point. at been be over QX some

and seeing revenue passing contributing you Are your increases them inflation growth? price that Is to just along?

it but could. yet, Not

price increases, could it potentially, the With go as forward. we

We pass have it been changes just at recently. able to pricing play come lot but this the a have on of point, into

to haven't in you but were quarter, if just place of Xst, just able pass things vendors in where the January of pricing, it it some revenues pricing honoring play So on, there affect it and pricing there. old yet, so so each uptick came starting this into as and some some see the would new their should we're increase seen

that haven't given the forward But Okay. And demand product outlook give March down different sequentially. guidance I the -- anything trends of or constraints the seasonally. because Down for you're down don't that year and you more double-digits Is quarter. that? seasonal expectations of typically appreciate than were last

on Yes -- last December play, tough compare a no, does year-end I for us the is comes so, think year. our group calendar always It think versus seasonality play. side, also in have QX in Matt. for think into we side, financing March quarter I the still our year every I seasonality to

seeing I there there. compare few all got and that things as the things earlier, a jumped mentioned we of the other a would we're tough were number think the strong. pipeline, up I Those equipment little year so again, last and backlog, But two the still things. that other some leased once are that sales be

that. Elaine, question And Thanks Okay. a regarding have OpEx. I for modeling

we expect us March OpEx an quarter? for idea you talked what SG&A. about contributing Could of the should You give acquisition or an to

be in you variable lines based same running think the the I like, follow the gross quarter if comp in quarter. looks except obviously it vacillate should will on what profit this

or take. flattish, so Okay, give

Yes.

Okay.

Okay. a from That's thanks lot. me, it

you. Thank See Matt. you, Alright. Matt.

the will Marron, are There back Mark Mr. time. at over questions CEO. this I to further no turn call

during that and We everyone. speak and joining safe of QX U.S. for being look and to at coming will. the if today. end everybody both for results, to the year-end sound some you Alright. storms are then abroad, the Thank take you our QX care. And forward of you, through Thanks we'll us

today's your call. you thank This for gentlemen, participation. conference and concludes Ladies

disconnect. now may You