ePlus inc.

Good day, ladies and gentlemen. Welcome to the E-Plus Earnings Results Conference Call. As a reminder, this conference call is being recorded. I would like to introduce your host for today's conference, Ms. Erica Stoker, General Counsel. Ma'am, you may begin.

Thank you for joining us today. On the call is Mark Maron, CEO and President, Darren Raguel, Chief Operating Officer and President of E-Plus Technology, and Elaine Marion, Chief Financial Officer. I want to take a moment to remind you that the statements we make this afternoon that are not historical facts may be deemed to be forward-looking statements and are based on management's current plans, estimates, and projections. Actual and anticipated future results may vary materially due to certain risks and uncertainties detailed in the earnings release we issued this afternoon and our periodic filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K, quarterly reports on Form 10-Q and in other documents that we file with the SEC, including the Form 8-K we filed on October 6, 2023, recasting certain disclosures in our most recent annual report. Any forward-looking statement speaks only as of the date of which the statement is made, and the company undertakes no responsibility to update any of these forward-looking statements in light of new information, future events, or otherwise. In addition, We will be using certain non-GAAP measures during the call. We have included a GAAP financial reconciliation in our 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 Maron. Mark?

Thank you, Erica, and thank you, everyone, for participating in today's call to discuss our third quarter fiscal 2024 results. Our year-to-date performance has been solid, with net sales growth of 6%, outpacing the industry and our peers. Customers' adoption of digital transformation technologies, security solutions, and IT infrastructure to support AI remains strong. Quarter-to-quarter top-line performance has been more variable than in prior years, mostly due to supply chain fluctuations, which affected both customer behavior as well as our ability to ship equipment. Over the past few years, large enterprise customers ordered equipment well in advance of expected need in order to safeguard their mission-critical projects. As a result, we built a backlog of booked orders, and as the supply chain eased, we were able to ship this backlog of equipment, helping to drive strong 22% sales growth in the first half of the fiscal year. Following that wave of shipments, we saw some customers pause new orders in Q3 as they deployed these delivered products. As a result, in our third quarter, net sales were down 18%, but it's important to note that our gross profit held more stable and was down only 3.3%. A contributing factor to the gross profit was our service revenues, which were up 10.7% as we deployed projects for our customers, and our services gross profit increased 21% year over year, driven by double-digit gross profit gains in both professional and managed services. Overall, our services gross margin was up 340 basis points, and we had another strong quarter with our managed services revenue up 22%. Given the mission critical nature of managed services we provide, this business is characterized by recurring and predictable revenue streams. This revenue not only enhances our financial visibility, but also offers new opportunities for growth as we provide existing customers with additional managed service offerings that address their evolving IT needs. The services growth noted above along with solid product margins and strong contribution from our financing segment helped our consolidated gross margin increase by 410 basis points. It's also important to note that our year-to-date consolidated gross profit increased 9% on an increase of 6% in net sales. Net income declined 23.6% for the quarter and increased 8.4% year to date. Net earnings were affected by lower product sales, higher acquisition-related amortization expenses, and higher personnel costs. We continue to invest strategically in building out our AI sales and consultative resources, AI-optimized solutions and lab capabilities, which underscores our confidence in our growth prospects. While sales cycles have lengthened somewhat, we do not view this quarter's sales decline as a trend, and our annual guidance remains unchanged. It is worth noting again that we faced a tough compare with gross billings up almost 30% last year and this quarter. We believe fundamental demand parameters remain intact and consider the variability in our quarterly sales this year as primarily a timing issue on when and how deals fell between quarters. We expect sales growth in our fourth quarter, enabling us to achieve the lower end of our guidance range. While still early in its evolution, Generative AI represents a promising long-term growth opportunity for both our product and services business. We have deep credentials in the AI world, and AI isn't a new solution set for E+. We have been strategizing, building engineering expertise, and aligning with top vendors for years. In March of 2018, we were named Elite Level as a deep learning partner for NVIDIA. We were also an early distribution partner for AIRI, the AI-ready infrastructure architected by Pure Storage and NVIDIA, which recognized our vision and integration capabilities. We are excited about the possibilities for AI, and we recently announced our AI Ignite program that will help customers explore, adopt, and optimize AI. It will help show what is possible with their data and applications, ensure their business and strategy is aligned, and help drive scale, efficiencies, and cost savings. Our AI capabilities, including consulting, managed services, and training, enable our customers to implement complex AI architectures that are cost effective, scalable, and secure. We continue to work closely with our AI partners to develop innovative AI-optimized infrastructure for our customers. That can include working on voice recognition projects, autonomous driving initiatives, scanning physical images to provide a better patient experience, or just help customers embark on their artificial intelligence and machine learning plans. Our financing segment reported solid third quarter results. fueled primarily by high transactional gains and portfolio earnings. During the quarter, we executed on several large contracts, resulting in strong year-on-year volume growth, accompanied by even higher growth in the third quarter segment adjusted EBITDA. Financing remains an important competitive differentiator for Eplus, offering flexibility for our customers, particularly in more challenging economic periods. Acquisitions remain a key element of our growth strategy, and we continuously evaluate potential opportunities that would enhance our offerings, strengthen our capabilities, and expand our geographical presence. We were also pleased to complete the acquisition of Peak Resources on January 26th. Peak is a solution provider in Denver and the Mountain West with enterprise customers and a corporate culture that parallels our own. This is another example of a geographic strategic acquisition that provides a platform for us to build out the Mountain West region. We believe we can deploy our broader solutions portfolio to their customer base, which should help drive incremental growth in the future. Our strong balance sheet, including third quarter ending cash of 142 million, The highest level in the past seven quarters provides us with the flexibility to opportunistically pursue acquisitions that both align with our strategic objectives and are financially accretive. I would like to thank the Eplus team for their continued dedication in a challenging operating environment. I will now turn the call over to Elaine to discuss our financial results in more detail. After Elaine's remarks, I will provide our financial outlook for fiscal 2024.