ePlus inc.

We continue to closely monitor and adjust to the bottlenecks in the supply chain that may act as a headwind going forward. To date, Eplus has managed this situation effectively, drawing on our extensive channel partner relationships and our own internal flexibility to minimize the potential impact on our customers. Reflecting confidence in our growth strategy and market positioning, I am pleased to announce a two-for-one stock split of E-plus shares for shareholders of record at the close of business on November 29, 2021. I will now turn the call over to Elaine Marion, our CFO, to walk you through our financial results in more detail. Elaine?

Thank you, Mark, and thank you, everyone, for joining us today. We are pleased with our strong fiscal 2022 second quarter performance. Our consolidated net sales for the second quarter were $458 million, a 5.8% increase from the $433.1 million reported in last year's second quarter. In our technology segment, net sales increased 4% to $436.3 million compared to $419.4 million in the last year's second quarter. Adjusted gross billings increased 10.5% to $664.1 million from $601.1 million. The adjusted gross billings to net sales adjustment was 34.3% compared to 30.2% in the last year's second quarter due to an increase in the proportion of sales recognized on a net basis. Product and service revenues increased 1.5% and 23.1% respectively. Service revenue benefited from a broad-based increase in demand for both managed services and professional services, which includes project-based services as well as staff augmentation. This marks the sixth quarter in a row of sequential improvement in our services revenue. Financing segment revenue was up 58.3% to $21.7 million, primarily due to higher transactional gains from several large transactions we announced with last quarter's results. and increases in portfolio and post-contract revenue. As Mark noted, results from our financing segment tend to be uneven from period to period. Consolidated gross profit increased 24.3% to $123 million from $99 million in the last year's second quarter. Consolidated gross margin increased 400 basis points to 26.9% compared to 22.9% last year. Technology segment gross profit increased 20.5% to 105.1 million, and gross margin increased 330 basis points to 24.1%, mainly due to higher product margins and increased sales of third-party maintenance and software subscriptions recognized on a net basis. Service margins increased 160 basis points to 38.6%, due to increased revenues and improved margins from all service categories. The financing segments gross profit increased 52.4%, mainly due to large transactional gains. Consolidated operating expenses were up 11.7% to 78.7 million due to an increase in salaries and variable compensation and G&A expenses. Our total headcount at the end of September was 1,554, an increase of 3.8% compared to $1,497 in the year-ago second quarter and a modest increase sequentially. All of this came together to yield operating income growth at 55.5% to $44.3 million. Our effective tax rate for the quarter decreased to 28.6% from 30.8% last year. For the full year, we expect our tax rate to be between 28 and 30%. Our consolidated net earnings of $31.4 million, or $2.34 per diluted share, increased 58.3% and 58.1%, respectively, from up $19.8 million, or $1.48 per diluted share, last year's second quarter. Non-GAAP diluted earnings per share were up 54.2% to $2.59 per diluted share, compared to $1.68 per diluted share year over year. Adjusted EBITDA increased 49.6% to $50.2 million. Our diluted share count totaled $13.4 million, the same as in the year-ago quarter. Looking at our customer end markets in the technology segment on a trailing 12-month basis, telecom media and entertainment continues to be our largest end market, accounting for 28% of net sales. followed by SLED, healthcare, technology, and financial services, which represented 15, 15, 14, and 11% respectively. The remaining 17% is distributed among several other customer types. Now let's turn to our consolidated year-to-date results. Net sales for the first six months of fiscal 2022 increased 11% to $874.7 million. Net sales in the technology segment increased 10% to $836.7 million. And adjusted gross billings increased 13% to $1.3 billion. Consolidated gross profit was $228.5 million, up 15.7%. Consolidated gross margin was up 100 basis points to 26.1%, and our technology segment gross margin increased 110 basis points to 24%. Net earnings were $54.9 million, or $4.09 per diluted share, up 47.6% and 47.1% respectively. Adjusted EBITDA increased 37.6%, to $88.5 million, and non-GAAP diluted earnings per share increased 42.6% to $4.55 per diluted share. Moving to the balance sheet, we ended the quarter with $57 million in cash and cash equivalents compared to $129.6 million at the end of March, reflecting increased working capital needs in the technology segment as well as share repurchases. Inventory levels were up 92.3% to $134.5 million. While this is a significant increase, I want to remind you that our inventory levels vary based on ongoing customer projects. We currently have some large projects in inventory that we expect to complete over the next several quarters. In our financing portfolio, we have approximately $165 million that we could monetize if the need arises by funding with third-party financial institutions. We also recently expanded our credit line by $100 million to $375 million, providing additional financial flexibility and funding to pursue Eplus's growth strategy. Our cash conversion cycle at the end of the second quarter was 35 days, up from 21 days in the year-ago quarter and 32 days in the prior sequential quarter. As Mark mentioned, we are pleased to report that Eplus's Board of Directors has approved a two-for-one stock split of the company's common shares. The stock split will be in the form of a 100% stock dividend to shareholders of record at the close of business on November 29th, 2021, and will be payable on December 13th, 2021. In closing, I am pleased with our strong results for the quarter. Looking ahead, We remain focused on our strategic initiatives, including expanding our offerings and market share both organically and through acquisitions. I will now turn the call back over to Mark. Mark?

Thank you, Elaine. On behalf of Elaine, Darren, and myself, and the entire ePLUS management team, I would like to take a moment to express our gratitude and appreciation for the continued efforts of our global ePLUS team. who have performed admirably in serving our customers while adapting to changing and often challenging market dynamics. Through their dedication and pursuit of excellence, E-Plus has grown stronger and more resilient as an organization with enhanced capabilities that position us for continued growth and success in the years ahead. In conclusion, this was a solid quarter and first half for E-Plus. We believe we will continue to see operating leverage in our model based on the strength of our two business segments. Operator, let's now open for questions.