Good day, everyone, and welcome to the ePlus Earnings Release Conference Call. At this time, all participants are in a listen-only mode and later we will take your questions. I would now like to hand the call over to Mr. Kley Parkhurst. Please go ahead.

Thank you for joining us today. On the call is Mark Marron, CEO and President; Darren Raiguel, COO and President of ePlus Technology; Elaine Marion, CFO; and Erica Stoecker, General Counsel. 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 in 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 may file with the SEC. Any forward-looking statement speaks only as of the date on 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 like to turn the call over to Mark Marron. Mark?

Thank you, Kley. And thank you, everyone, for participating in today's call to discuss our first quarter fiscal 2024 results. I will start with some key takeaways. ePlus delivered strong results in the first quarter, marking a great start to our fiscal year. Double-digit sales growth was driven by solid execution, our land and expand strategy, supply chain improvements, and contributions from acquisitions. Our team performed at a high level, executing consistently across all end markets. Our net sales growth of 25%, along with our scalable operating platform and disciplined cost management, drove significant operating leverage. Adjusted EBITDA rose 41%, and diluted EPS improved 51% compared to the same period last year. The strength of our performance again highlighted how our strategic positioning and focus on serving faster-growing solution areas enables us to generate growth well in excess of the overall market for IT spending. In today's environment, where enterprises and organizations are prioritizing investments that optimize cost and security, we have continued to meet our customers' needs with a suite of products and services that deliver value rapidly and efficiently. During the first quarter, we continued to see an easing in supply chain constraints. With the improved product availability, we were able to complete a number of previously delayed customer projects, benefiting overall sales growth. Based on our conversations with our partners, we anticipate continued improvement in product availability and lead times over the remainder of the year. As you know, acquisitions represent the fundamental component of our growth strategy, and our first quarter results benefited from the contributions of our Network Solutions Group and Future Com, whom we acquired in July of 2022. On a combined basis, these acquisitions contributed approximately one-third of our net sales growth in the first quarter. Our technology business sales increased 26% with demand improving across all end markets and across most product categories. We continue to get operating leverage in our technology business segment, as evidenced by our operating income being up almost 50% versus last year. We experienced a broadening of customer demand trends in the first quarter across all customer size segments, led by strength in the mid-market segment. The mid-market, which we define as organizations with 500 to 10,000 employees, is primarily focused on adopting cost-optimized cloud-based architectures as well as enhancing cloud security to accommodate remote and hybrid work. Mid-market customers are particularly well suited to partner with ePlus as their key areas of need align with our strengths in areas such as workplace transformation, cybersecurity, and technology modernization. Our customers are continuing to evaluate AI technologies, and we see it as an emerging growth driver. Many of our partners have incorporated AI into their core offerings to simplify and optimize operations as well as provide faster detection, response, and remediation on the security front. We empower customers with cutting-edge AI-optimized infrastructure solutions through strategic partnerships with industry leaders such as NVIDIA. Our AI services are designed to help customers adopt the latest technologies while increasing their speed to market. Our customers utilize our expertise to manage the complexity of designing, deploying, supporting, and managing AI. This can include building out an AI strategy plan, identifying priority projects, providing resources to help structure and implement AI projects, and ensuring proper governance and policies are applied and monitored. We believe the expansion of data overall and the benefits of AI being embedded in hardware and networking platforms will continue to provide modernization opportunities for infrastructure related to networking, security, cloud, and collaboration. Networking was the standout performer this quarter as gross billings increased 67%. The growth drivers included solid organic growth reflecting demand for networking solutions that facilitate collaboration and enable workplace transformation, as well as improved product availability that allowed us to complete certain customer projects and the contribution from recent acquisitions. Security product gross billings increased 24% year-over-year on a trailing 12-month basis and is approximately 21% of total gross billings. We believe cybersecurity remains an IT priority for organizations of all sizes, and we remain focused on providing the products and services that enable our customers to mitigate risk. Our services revenues improved by 7% as a slight decline in professional services was more than offset by robust revenue growth in Managed Services. We saw a particularly strong demand for our enhanced maintenance support and SOC services. These and other managed services offer significant value to customers who face complex challenges in terms of managing cybersecurity risk, keeping pace with technological change, and recruiting and retaining IT talent. We continue to build out our annuity managed services with proprietary new offerings that expand our capabilities in our focused markets, such as ePlus cloud managed services, storage-as-a-service, and ePlus life cycle services support. Several months ago, we introduced the ePlus automated virtual assistant for collaboration spaces. This innovative solution utilizes robotic automation processes in conjunction with ePlus managed services to enhance the user experience in video-enabled meeting rooms and workspaces. By building out our portfolio of unique offerings, we are differentiating ePlus against our competition while strengthening our value proposition. Managed Services revenues increased 23.2% over last year and have generated a CAGR of 24.1% over the last five years. To put this in perspective, annuity quality services have almost doubled over the last three years. Moving to our finance segments, results for the quarter were consistent with our expectation, given last year's first quarter produced outsized transactional gains from specific financing deals, creating a tough comparison quarter-over-quarter. As a reminder, the financing business provides flexibility for our customers and is a competitive differentiator compared to our technology market peers. Earlier, I noted the positive contributions from our recent acquisitions. As we look forward, acquisitions will remain an important element in our growth strategy, and the strength of our balance sheet affords us the flexibility to pursue additional value-accretive transactions. Our M&A pipeline remains active, and we are currently evaluating a variety of targets that can further extend our capabilities and supplement our organic growth. I'd like to thank all our ePlus teammates for their efforts this quarter to drive our strong financial results, innovation, as well as numerous customer success stories. 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. Elaine?

Thank you, Mark, and good afternoon, everyone. I am pleased to report on our strong start to fiscal year 2024, reflecting the success of our growth strategy as well as the contribution from our recent acquisitions. Broad-based strength across key end markets and revenue from acquisitions led to a consolidated net sales increase of 25.3% to $574.2 million. These factors are also evident in our technology business net sales, which grew 26% to $565.7 million. Beginning with this quarter, we have introduced three operating segments, which comprise our technology business, product, professional services, and managed services. Our product segment includes sales of third-party products, including software and services. Our professional service segment contains our project-related services, staff augmentation, consulting engagements, and project management services. Our Managed Services segment comprises various services offerings, such as our infrastructure and cloud managed services, managed security, and service desk. Going forward, we will reference these new business segments collectively as our technology business. In our Products segment, revenues increased by 29.2% to $498.2 million, led by sales of networking products in the Managed Services segment. Revenue grew 23.2% to $32 million from sustained growth and enhanced maintenance support and security operation center services. In our Professional Services segment, revenue declined 4.3% to $35.6 million year-over-year, primarily due to reduced demand for staff augmentation services. Our strategy of focusing on faster-growing areas boosted by acquisition contributions and easing supply chains led to technology business gross billings growing by 17.6% to $842 million year-over-year. As a reminder, gross billings denote the total dollar value of customer purchases of goods and services, including shipping charges during the period, net of customer returns and credit memos and sales and other taxes. Within our technology business, our two largest markets continue to be telecom, media and entertainment, and technology, representing 26% and 19%, respectively, of our technology business net sales on a trailing 12-month basis. SLED, healthcare, and financial services accounted for 16%, 14%, and 9%, respectively, with the remaining 16% from other end markets. In our financing segment, lower post-contract earnings and transactional gains in the first quarter of fiscal 2024 led to financing segment revenue of $8.5 million, a decline from $9.6 million in the last year's first quarter, which resulted in lower gross profit of $6.4 million compared to $7.9 million. As we have mentioned, results in our financing segment can vary widely due to the transactional nature of the business. Our consolidated gross profit increased 25.3% to $142.3 million, with a consolidated gross margin of 24.8%, in line with that of the prior year. Within our Technology business, gross profit increased 28.6% to $135.9 million, and gross margin expanded by 50 basis points to 24% driven by higher margins across all three technology segments. Due to a more profitable mix, product gross margin expanded 80 basis points to 22.4%, and professional service gross margin expanded 90 basis points to 41.4%. Benefiting from our increased scale, managed services gross margin improved 210 basis points to 30.7%. SG&A expenses increased 17.6% year-over-year, reflecting the addition of team members from our Network Solutions Group, organic hires, and higher variable compensation expense, still lower than gross profit, which increased 25.3%. At quarter end, our headcount increased to 1,853 from 1,637 in the prior year quarter, mainly reflecting additions of customer-facing employees. Through continual operational discipline, operating income grew 39.6% to $46.3 million. The effective tax rate was 27.2% in the first quarter of fiscal 2024 compared to 28% in the year-ago quarter. Fiscal 2024 first quarter consolidated net earnings were $33.8 million or $1.27 per diluted share, both up 51.5% and 51.2%, respectively, from the year-ago quarter. Non-GAAP diluted earnings per share were $1.41, a 42.4% increase from the year-ago period. Adjusted EBITDA was $53.9 million, or 40.7% ahead of the comparable quarter in fiscal 2023. We ended the quarter with cash and cash equivalents of $101.6 million compared to $103.1 million at the end of fiscal 2023. Over the past three years, operating cash flow has been impacted by the growth in inventories, which partly reflects supply chain constraints. With supply chains now improving, we expect inventory to remain flat or decrease, reducing our working capital needs and enhancing operating cash flows. First quarter inventories remained flat relative to the level at the close of fiscal 2023. Inventory turns improved to 32 days versus 38 days in the preceding quarter. Our cash conversion cycle was 48 days compared to 44 days in the year-ago quarter but significantly improved from the 59 days at the end of March 2023. Finally, I want to thank our ePlus team for solid execution in the first quarter and their persistent efforts to drive growth. With that, I will turn the call back over to Mark. Mark?

Thank you, Elaine. ePlus is off to a strong start this year, benefiting from our diversified base of customers and our strategic focus on serving faster-growing end markets. In an environment where our customers are prioritizing more rapid payback on their IT investments, ePlus remains well-positioned for continued growth. We are leveraging our extensive capabilities across the technology stack to deliver effective solutions that enable our customers to optimize costs, enhance security, and focus on their core business operations. As a result, we remain confident in our ability to deliver sales growth in fiscal 2024 that exceeds the projected growth in the IT spending market. We are, therefore, initiating fiscal 2024 net sales guidance of $2.23 billion to $2.33 billion. We expect adjusted EBITDA to be between $200 million to $215 million, representing an adjusted EBITDA margin of 9.2%. Our guidance assumes, in part, a continued gradual easing of supply chain constraints that enables us to complete previously delayed customer projects. In closing, ePlus remains focused on building long-term shareholder value through the execution of our growth strategy and efficient allocation of capital. I want to thank the ePlus team for their dedication, which is again evident in our strong performance. Operator, please open the call for questions.

Thank you, sir. And everyone, we will now take your questions. First up is Jesse Wilson, William Blair.

This is Jesse on for Maggie. Congrats on the results, and I guess, first, it's nice to see you initiate full-year guidance, but just to dig in, it seems like a bit of a range in terms of the calculated growth at the upper and lower end. Can you talk about some of the assumptions you've made, and what kind of gets you to the upper end versus the lower end?

Sure, Jesse. It's Mark here. Let me start by explaining why we're providing guidance now. We had intended to give guidance a few years ago, but then COVID happened, so we held back. After discussing with investors like yourself, we realized that providing guidance would be beneficial. We have clear visibility into our pipeline and backlog, and we believe this will assist in modeling, especially since there are significant variations in growth projections among analysts. We're aiming to add some granularity. Regarding our numbers, we had a solid Q1, but a few factors influenced that quarter. Firstly, we noticed some easing in the supply chain, which allowed us to secure several deals, particularly in the networking sector, that were anticipated earlier. Additionally, about one-third of our net sales came from acquisitions. I should mention that one of these acquisitions will not contribute going forward and is already included in your forecasts. There were also some substantial land and expand deals that impacted the quarterly results. Overall, these factors resulted in an estimated top-line growth of approximately 7% to 11% compared to last year, and we feel confident about our pipeline and backlog after the first quarter. I want to emphasize that Q2 will be challenging for various reasons, especially in our finance segment, where we had a strong operating income last year. Matching that performance will be difficult this quarter. Typically, Q2 is a solid quarter, but given the tough comparisons and some of the pull-forward issues, we anticipate it may be somewhat tighter this time. That summarizes our thought process. We also believe that a margin percentage of 9% to 9.2% on adjusted EBITDA aligns with our expectations based on planned investments for the rest of the year.

Got it. That's all really helpful. And then a couple of follow-up questions just because you hit on both in your first answer. So you are seeing some of those land and expand deals ramp up. Are you thinking about that on a multiyear basis? Or kind of over a few quarters, which seems like that might be the case? And then my second follow-up...

Go ahead, Jesse. Sorry.

Yes. My second follow-up was on the acquisition. So did you just acquire some very talented salespersons that are winning new business? Or were some recently acquired customers spending more? That's it for me.

That's a good question. Our land and expand strategy has been in place for some time, focusing on both enterprise and mid-market customers. We aim to establish a presence within the accounts and then work to increase sales of our entire portfolio. Sometimes we see significant growth in a quarter due to major opportunities, but these deals typically have tighter margins. We then seek to enhance our offerings with value-added solutions and services, which can benefit us over multiple quarters or even years. It’s not just a short-term focus; the advantages of this strategy can span several years. Regarding acquisitions, we are focused on bringing in talented individuals, especially in sales. We believe our recent acquisitions have been beneficial. For instance, Future Com, which we purchased in July 2022, primarily in the security sector, has helped us gain new customers in Texas. Network Service Systems Group, involved in the service provider space, had a strong performance this quarter. Typically, acquisitions face challenges in their initial quarter, but they performed well, likely aided by improvements in the network supply chain and successful deals. However, I anticipate a bit of slowdown as we move ahead, although it was a solid start for Q1.

Next, we'll take a question from Greg Burns. Sidoti.

Can you just delve into where your pipeline and backlog stands now? Because it sounds like you did deliver on some of those backlog projects this quarter, but the inventory didn't really go down too much? So how much is left that I guess would still be in process?

Yes. So Greg, what I was talking about is both in our CRM systems as well as looking at our open orders and backlog, we've got very good visibility. As it relates to our backlog/open orders, they're down about $60 million sequentially. So that's where we saw some of the runoff into the quarter. There were also some, what I'll say, lead times that improved on the networking side that helped our networking numbers, which were up about 67%. So there was some pull forward in my opinion that I don't know if we'll see as much as we move throughout the year. But that's kind of the high level on the quarter there.

It appears that demand is expanding, with widespread demand across various products and customer segments. Are you noticing any signs of caution or indications that companies are scaling back? Or are they merely shifting priorities, with your products and services being where the funding is directed? Could you share your perspective on the market outlook?

Yes, it's interesting, Greg. There are a few points to consider. First, we believe we will continue to align with the IT spending market. We have done that and expect to keep doing it. We are experiencing longer deal cycles due to economic uncertainty, and some major tech companies have undergone significant layoffs. We also observe that some of our public peers are projecting declining revenues. While I wouldn't say we're completely unaffected, we are resilient in our business. Additionally, we don't operate in the commodity space; we decided long ago to exit the PC laptop market, although we still serve some of our larger customers. This has helped us avoid some of the headwinds faced by others in that sector. Regarding customer segments, all segments showed growth, particularly the mid-market, which has a genuine need for our solutions. We are optimistic about our guidance and the quarter ahead, but we remain cautious about the economic conditions in the second half of the year.

Okay. And then lastly, why did you split out professional managed services into their own segments? Is there like an expectation for a difference in terms of growth rates or margins? Like why provide that extra granularity now?

Yes. You know what, Greg, it's to help with some of the modeling. We've talked about our managed services/annuity quality revenues for years. We thought it made sense as we decided to give guidance to break out services as well. I would think what I'd call transactional services or professional services and staffing over time, you'll start to see an uptick. Some of that is held back by supply chain overall. So that's one thing. As it relates to our managed services, we saw that this quarter was up 23% year-over-year. As I think I mentioned, the CAGR over the last five years is 24%. It's a very visible revenue stream, and it's a profitable reverse. I would expect our transactional professional services over time to pick up as well.

And we'll take the next question from Matthew Sheerin, Stifel.

Thank you. Good afternoon, Mark, and everyone. I appreciate the disclosure, outlook, and guidance, as well as the breakdown of your revenue streams. Regarding your guidance for the year, it appears conservative since you're up 25% year-on-year but guiding for just a 10% increase in the first quarter. This suggests the second half might be flat or decline, especially considering the strong December quarter you had last year. I'm curious if this conservatism stems from a lack of visibility into the full year or the earlier comments you made about being more cautious. I'm trying to understand your perspective for the remainder of the year. Additionally, for the September quarter, you're usually up sequentially, but given the pull-ins you mentioned, will that trend remain flat or decrease sequentially?

Yes. So that was a lot in there, Matt. A couple of different things. One is, I think I called out, we're starting to see some of the tough comps on the finance piece. We had a really big quarter; I believe it was $12.2 million in operating income in Q2. That's going to be really tough to replicate. So that's the first thing as it relates to Q2. You are right. Q3 is normally our strongest quarter. Q2 is normally a solid quarter, but I do believe we had some pull forward in this quarter. We saw some things that popped in at the end of the quarter that we weren't expecting. I think that's part of what may be throwing you off a little bit because the quarter was so big. The other thing is, yes, we are a little reserved as it relates to our guidance, but we feel very good about the guidance based on what we're hearing in the market from our competitors and from others down single to double digits. We're just trying to make sure that we put something out that's fair based on our pipeline, based on our backlog, based on everything that we're seeing. The other thing I will highlight is it is up 7% to 11% over last year in this market, which I don't think you're seeing in most of the companies that have announced results. Quite honestly, that ballpark is $150 million to $250 million in terms of guidance above what we did last year. I think it's a somewhat aggressive but realistic target, so not undercutting it. I don't know if that gave you everything you need there, Matt.

Well, I have some follow-ups, but just regarding backlog, is it still elevated? It sounds like it was down. Was it down $60 million quarter-on-quarter? And is it still elevated, and how much relative to your normal backlog?

Yes, it's still elevated to our normal backlog, Matt. Quite honestly, it's almost pre-COVID, almost double our normal in terms of open orders, but it's down sequentially $60 million.

Okay. And then on the EBITDA guidance, the margin guidance 9% to 9.2%, that's basically flat year-over-year, but you're going to be up significantly year-on-year in UR in Q1. I'm wondering is that because you expect maybe some OpEx going up? Why not continue to see that leverage play through the year?

Yes, I think there are two points to address, Matt. First, we acquired the network service group. In this quarter, you've only seen two months of the operating expenses, so I expect that to increase a bit as we move ahead. We are confident in our ability to continue gaining market share, which is why we plan to invest in our practices by increasing our customer-facing workforce. For instance, when considering developments in artificial intelligence, I believe we are just at the beginning stages. While it's not a substantial revenue source for us yet, we see it as a potential growth driver. Over time, we will invest in this area by offering advisory services to help customers navigate the risks and regulations they need to be aware of and to take advantage of AI solutions from our partners. Therefore, we intend to make additional investments in personnel, along with incurring further expenses related to the Network Services Group we acquired in May.

Okay. That's very helpful. Just one last question from me. Regarding the pricing trends, I know that in recent quarters you have been able to pass on the vendor price increases. Are you starting to see that level off at all? Or is there any pricing pressure as component availability improves?

Yes. No, Matt, I haven't seen anything. We've been able to pass it on and haven't seen there are certain deals where you'll have some pressure from competitors that will go in aggressively with discounts. But as it relates to any pricing pressures, we've been able to pass that on; we had a strong quarter related to our product sales, which I think Elaine mentioned was up 29%. So didn't see much of that change in that space.

And everyone, at this time, there are no further questions. I'll hand things back to our speakers for any additional or closing remarks.

Okay. Thanks, Lisa. So if I could close, it was a really nice start to our fiscal year. It was a solid quarter, and I want to congratulate and thank the ePlus team for everything they did to produce the results that we did. And with that, I'd like to thank everybody for joining us for this call and look forward to our next earnings call. Take care and be safe.

Once again, everyone that does conclude today's conference. Thank you for your participation. You may now disconnect.