ePlus inc.

earnings release which is posted on the investor information section of our website at www.eplus.com i'd now like to turn the call over to mark marin mark thank you clay and thanks everyone for joining for today's call to discuss our fiscal 2021 third quarter results

Our third quarter financial performance speaks to the strength and resilience of our diversified business model and the success we are seeing from our longer-term strategic focus on cloud, security, collaboration, and related service offerings, all areas that have increased in importance and relevance in today's business environment. Our financing segment continues to provide a unique differentiator in the market and is helping to drive technology sales. Let me give you some key takeaways from our third quarter results. First, our business continues to perform well in a challenging business environment. Net sales and adjusted gross billings remain steady. Our higher margin services business grew 3.3%, and with lower operating expense levels, we were able to report third quarter net earnings growth of 10.7%. Next, our revenue performance benefited from several factors. We have a broadly diversified customer base, and in the third quarter, we saw specific areas of strength coming from our large enterprise and upper mid-market customers. Within our key areas of focus, security increased to over 23% of our third quarter adjusted gross billings, up from just over 20% last year. While security has been a long-time priority area for E+, it has been in even greater demand during this period of hybrid work models, and we expect this trend to continue. Similarly, demand for our services, especially annuity-quality managed services, continue to grow. This is even more impressive given the COVID challenges of limited on-site customer access for our professional services and staffing. Our customers are taking advantage of our remote-managed services, and we have the capabilities to provide security services and support solutions to create reliable hybrid work environments. Post-pandemic, work-from-home options are expected to be more prevalent than they were a year ago, and with that, we expect this trend to become a longer-term growth driver. Third, we continue to grow our footprint and service offerings via selective acquisitions. In late December, we acquired Systems Management Planning, which expanded our geographic footprint in upstate New York and the Northeast and is expected to add between $85 million and $100 million in annual adjusted gross billings. S&P builds on our collaboration expertise, staffing solutions, and our remote management capabilities while adding to our growing base of enterprise and SLED customers. We continue to evaluate synergistic acquisitions like S&P to broaden our geographic footprint and add offerings and high-quality professional staff. Finally, third quarter results highlight the benefit of E-plus diversified business model in our technology and financing segments. The positive performance of our technology segment more than offset the impact of a difficult quarter-over-quarter comparison in our financing segment. And the market's trend towards X as a service and alternative payment structures is really playing to our strengths in the financing business, as we have long offered unique customer payment alternatives that are becoming even more appealing in today's business environment. Now, let me speak more specifically about our third quarter results. In technology, there were several bright spots worth highlighting. First, our services business continues to grow both year over year and sequentially, in part because customers have become more comfortable with our ability to provide professional services remotely. These projects tend to be higher margin and enable us to achieve higher staff utilization. Turning to our financing segment, revenue declined 34.5% as compared to a very strong comparative quarter the prior year, which had 67.7% revenue growth due to several large transactions. We have long noted that our financing segment generates lumpy financial results, and we remain positive about the financing business. In today's business and technology environment, financing options are especially relevant, and we continue to build synergies between our two segments. Financing gives customers the ability to purchase or upgrade technology, even with constrained budgets or cash flow, and our ability to provide flexible financing options can facilitate our technology business and is a competitive differentiator in the market. Third quarter operating expenses were 11% lower than the similar period last year. While some of this expense reduction is directly attributable to COVID-19, such as reduced travel and entertainment, we have also realized some systemic savings which should continue post-pandemic from lower facilities costs and a realignment of our workforce. We also believe that travel and entertainment expenses will continue to be lower as we utilize virtual options, and we should benefit from ongoing opportunities to optimize our facilities expense. We will continue to add customer-facing sales and engineering talent as demand levels increase to ensure that we have the capabilities in-house to capture new business and execute effectively on complex projects. That said, we will work to closely align increased headcount with long-term revenue opportunities to maintain operating leverage over time. Elaine will now provide more detail on our third quarter and nine-month financial results. Elaine?

Thank you, Mark, and thank you everyone for joining us today. We continue to be pleased with our performance, especially given the backdrop of the COVID environment. Our consolidated net sales for the third quarter were $427.6 million, a decline of 0.3%, mainly due to a tough comparison from the strong performance in our financing segment the prior year. In the technology segment, net sales increased 1.2% year-over-year to $415.6 million. with product and services revenues increasing 0.9% and 3.3%, respectively. Our service revenues have continued to show improvement for the third quarter in a row due to our continued emphasis on managed services, including enhanced maintenance support. Adjusted gross billings increased 0.3% to $587.8 million from $586.3 million in the year-ago quarter, showing stability despite the continued challenging COVID business environment. The adjustment from adjusted gross billings to net sales was 29.3% compared to 30% last year due to a larger proportion of hardware sales than software maintenance and third-party services. which are recorded on a net basis. Financing segment revenue decreased 34.5% to $12 million, which was expected as we had a tough comparison from the prior year, which contained several large transactional gains. Results from our financing segment tend to be uneven from period to period. COVID-19 continues to impact our customer base, particularly in the lower mid-market customer category and the SLED and healthcare verticals. That said, we are fortunate to have a diversified base of customer end markets. Telecom, media, and entertainment and technology continue to be our two largest customer end markets, accounting for 23% and 18% of net sales on a trailing 12-month basis, respectively. State, local, and education, healthcare, and financial services followed, accounting for 16%, 14%, and 13% respectively. The remaining 16% was distributed among several other customer types. Consolidated gross profit decreased 5.3% to $98.2 million from $103.7 million in the prior year quarter. Consolidated gross margin of 23% was down 120 basis points from 24.2% last year. Gross profit for the technology segment increased 0.9% to $88.3 million. Product margin was 18.8%, a decrease of 40 basis points due to the reduction in revenues recorded as net and also a larger proportion of sales to enterprise customers, which tend to be more competitive. Service margin increased 230 basis points to 38.7% as we saw an increase in demand for managed services and higher managed services margins. In the financing segment, gross profit decreased 39.1% to 9.8 million, which was due to the decrease in net sales as we had several large transactional gains in the prior year. Consolidated operating expenses decreased 11%. to $68.9 million due to prudent cost management and COVID-19 restrictions as we continue to benefit from lower travel and entertainment and advertising and marketing expenses. Our consolidated headcount at the end of December 2020 was 1,586. Excluding 102 employees from the system management planning acquisition on December 31, 2020, our headcount declined 7.4% compared to 1,602 last year and a decline of 0.9% from the prior sequential quarter. Consolidated operating income increased 11.4% to $29.3 million. Our effective tax rate for the quarter was 28.1% compared to 28.3% in the year-ago quarter. Our consolidated net earnings was $21.6 million or $1.62 per diluted share of 10.7% and 11% from $19.6 million or $1.46 per diluted share respectively last year. Non-GAAP diluted earnings per share were $1.79, an increase of 9.1% from $1.64 last year. Adjusted EBITDA increased 8% to $34.4 million. Our diluted shares outstanding totaled $13.4 million, the same as the year-ago quarter. Now let's look at our consolidated year-to-date results. Net sales for the first nine months of fiscal 2021 decreased 0.5% to $1.22 billion. Net sales in the technology segment were relatively even at $1.18 billion, while adjusted gross billings increased 1.3% to $1.74 billion. Consolidated gross profit amounted to $295.7 million, a 1.2% decrease primarily attributed to the tough compare in our financing segment. Our consolidated gross margin was down 20 basis points to 24.3%, and our technology segment gross margin increased 10 basis points to 22.3%. Net earnings grew 5.4% to 58.8 million. Diluted earnings per share were $4.39, up 5.5% ahead of last year. Adjusted EBITDA increased 3% to 98.7 million, and non-GAAP diluted earnings per share increased 1.6% to $4.97. Now shifting to the balance sheet, we ended the quarter with cash and cash equivalents of $86.5 million flat with March 31, 2020. As a reminder, we also have $146 million in our financing portfolio that we could largely monetize by funding with third-party financial institutions. Inventory levels increased 61.7% to $81.3 million, reflecting projects underway. Our inventory levels vary as we work through existing projects and initiate new customer projects. Our cash conversion cycle at the end of the quarter was 24 days, a decrease of two days compared to the year-ago quarter, and an increase of three days sequentially. On December 31, 2020, we acquired certain assets and liabilities of system management planning. Our preliminary consideration transferred was $27.1 million, and we incurred approximately $233,000 in acquisition-related expenses during the third quarter. We expect the contribution from S&P to be between $85 and $100 million in adjusted gross billings over the next 12 months. While we continue to consider the effect of COVID-19 and the uncertainty surrounding its duration on our near-term business trends and our investment considerations, Acquisitions and organic investment initiatives remain high on our list of capital allocation priorities. We certainly could not have achieved our year-to-date successes without the exceptional efforts and support of our employees whose talents and dedication have enabled us to seamlessly serve our large and diverse customer base. I'd like to extend my thanks to all E-Plus employees for their efforts. I'll now turn the call back to Mark. Mark?