Phillip G. Norton - Chairman, CEO and President Elaine D. Marion - CFO and Principal Accounting Officer Mark P. Marron - Chief Operating Officer and President of ePlus Technology Inc Erica S. Stoecker - Chief Compliance Officer and General Counsel Kleyton L. Parkhurst - SVP and Assistant Secretary.

Matthew Galinko - Sidoti & Company, LLC.

Good day, ladies and gentlemen, and welcome to the ePlus Third Quarter of Fiscal year 2014 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded.

I’d now like to introduce our host for today’s conference, Kley Parkhurst, Senior Vice President. You may begin..

Thank you, Jasmine. Thank you, everyone for joining us today. With me are Phil Norton, Chairman, President and CEO of ePlus; Mark Marron, Chief Operating Officer and President of ePlus Technology; Elaine Marion, Chief Financial Officer; 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, and our periodic filings with the Securities and Exchange Commission, including our Form 10-K for the year ended March 31, 2013, and subsequent Form 10-Q.

The Company undertakes no responsibility to update any of these forward-looking statements in light of new information or future events. I'd now like to turn the call over to Phil Norton.

Phil?.

Thank you, Kley. We had a very strong quarter. Revenues increased 10.4% to $267.2 million. Net earnings increased 17.5% to $10.6 million and fully diluted earnings per share increased 18.9% to $1.32 per share. During the quarter, we announced and implemented a 750,000 share repurchase plan.

We will go into more financial and operational details during the prepared remarks. But one highlight of the quarter was sharp increase in gross margin on products and services which increased 140 basis points to 18.9% based in part on our stated strategy of success in transitioning to a higher margin service led business model.

Our financial results just illustrate our ability to achieve double-digit revenue growth as a provider of complex integrated solutions at one of the highest gross margins in the industry. Our services led business model addresses our customers complex computing and business requirements for the entire IT life cycle.

From the upfront session page through managed services ultimately optimizing and securing and managing our customers IT environment. For the quarter, net earnings increased at a faster rate than revenues, which reflects an increase in gross profit from both higher gross margin and more revenue, as well as our ability to hold the line on costs.

As we discussed last quarter, we’re trimming underperforming personnel, while continuing to invest in sales and engineering talent to address the huge opportunity in security, storage, BYOD, Cloud and others.

We are continuing on to focus on our chief strategic objectives, expanding our national presence through organic growth and acquisitions, growing sales to existing customers by offering a full suite of products and services, becoming more operationally efficient.

First thing on profitability and continuing to hire, retain, and train the best employees. We continue to review many acquisition opportunities and given our balance sheet resources, we have the capital to execute acquisitions and expand new territories.

Our strategic growth plan of building a national footprint through a balanced program of acquisitions and new hires is an optimal way to build the Company effectively. We are also looking for acquisitions that can accelerate our growth in key technology and solution areas.

I would be happy to answer the questions at the end of the call, but for more detail on the quarter, I would like to turn the call over to Mark Marron, Chief Operating Officer of the Company and President of ePlus Technology, our largest segment.

Mark?.

Thank you, Phil. I would like to address some of our accomplishments we made during the quarter, both from an operational as well as from a sales and services standpoint.

We as a management team and as a Company are very focused on corporate objectives that Phil highlighted and I will touch on some of those progress we’ve made in each of these objectives over the last -- over this past quarter.

As it relates to expanding our national presence in footprint, in November we acquired AdviStor, a storage focused solution provider in the Rochester market. Now this transaction pleased to both of our primary acquisition strategies.

One, expand this geographically and two, it brings in additional technology capabilities that we didn’t have in that area.

Now while we’re already hired a strong group in Rochester as a Greenfield network to start a new office a few years back, our customers and vender partners were actually looking for us to expand our capabilities and reach in this market.

AdviStor and its principles have a long history in the greater Rochester market and this deal instantly increased our presence, it created new customer relationships and increased our sales and engineering delivery capabilities.

So while we already had a strong engineering and sales folks focused around Cisco technologies in this market, we really wanted a need of additional storage expertise that AdviStor was able to provide.

So if you think about AdviStor’s focus in this area is a great addition to our portfolio because it allows us to expand our multi vendor solution capabilities, it expand our customer base and we on boarded some great employees. This AdviStor transaction is also a perfect example of ways we’ve improved and enhanced our operational efficiency.

So we believe we’ve created an excellent platform to integrate acquisitions and enhance operational efficiency. So on day one, all of AdviStor’s customers, yields and progress accounts receivable, accounts payable have been loaded into our systems.

All their personnel have been trained on our systems, we had support staff onsite and dedicated online resources for post closing support.

So if you think about it on day one that you’re fully integrated, which ensured compliance and efficiencies and provided leading opportunities to cross sell our entire portfolio of goods and services to their customers. We have used this process and methodology with a little of our technology segment acquisitions.

I think it’s a key differentiator for us. While I’m in the upstate area in the Rochester and upstate New York region, during the quarter we announced the multi-year managed services and staffing with Eastman Kodak Company. So Kodak is a company in transition and it outsource IT functions to us to reduce cost and gain efficiency.

Some of the services we provide to Kodak are the following. Our managed service team is monitoring and managing Kodak’s entire Cisco route switch and wireless infrastructure. We have the help desk staff onsite for service delivery management and engineering support.

This includes everything from responding to trouble tickets, loose edge, changes, configuration and network architecture engineering design. We are also providing a 24/7 onsite prefix coverage for 17 sites around the United States and Canada.

So this is a great example in my mind of the services led business model that Phil mentioned little bit earlier, we provide the support and services to our customers are looking for across many areas.

It is the strategic focus for us as we look to provide customers the helping guidance they need from the discovery and assessment phase, all the way through optimization of their environment. At this point, I would like to take the time and just recognize Dan Farrell for his contribution in building our services business.

Dan was our Senior Vice President of Services and we really made some great strides over the last three years under his leadership. He has done a great job in enhancing our service offerings in building our capabilities to design and implement solutions to our customers need in today’s challenging environment.

But most importantly I think Dan has improved the customer experience and our customer satisfaction levels by developing a project management approach and reporting methodology that ensure successful deployments and provide the transparency our customers require in order to understand what is occurring in their IT environment and ultimately find ways to reduce their total cost of ownership driven the most complex IT platforms.

I guess a good example of this would be that we recently won 11 customer satisfaction award from Cisco. So within our services business, as Phil said, we’re moving more towards the services led model. One area we’re focused on building out is our value added recurring revenue streams.

Examples of this including -- include expanding our managed service offerings and our staffing capabilities such as the Kodak example I highlighted a little earlier.

Yesterday in fact we announced our newest managed service center to handle expanding demand for our managed service offerings and to prepare for our soon to announce enhance managed services which is a vendor certified Tier 1 First-Wall program. The new managed service center is actually our third in the United States.

It’s located in Raleigh, North Carolina. We feel that’s a vibrant market with a depot of technically talented people. We are also confident that our managed services will continue to drive customer loyalty by providing the real-time support that many of our customers require, while continuing to support our overall growth and profitability goals.

Phil also mentioned our plan to grow sales to our existing customers by offering the full suite of products and services. It’s really a good thing able to provide all of the traditional solutions around compute storage and network, but also being able to support the emerging technologies like Cloud, Big Data, BYOD and Security.

One of the biggest challenges our customers face today is how to utilize different cloud technologies with security being a key component of any solution. The cloud solution market continues to provide us ample opportunities to engage our customers with Cloud readiness assessments consulting and Cloud enabled end services.

Our services methodology of plan build, support and optimize actually helps our customers address the uncertainty and confusion about what Cloud solution is right for them.

So whether it’s public, hybrid or private, we hope our customers move their workloads to the correct safe and secure environment, which meets their business needs cost effectively.

Also in last quarter’s call, Phil also mentioned one of our focus areas was to build out our national security practice that I’m pleased to report that we’ve continued to add resources in our regions to provide our customers with the contemplated services and support they required to help secure their applications in IT environments from hacking and other malicious attacks.

It is also important to note that we leverage the security expertise and knowledge of NCC Networks, which is the previous acquisition we did in the Midwest about 2.5 to 3 years ago, that help us build out our national security practice. This is how we leveraged the strength in resources of an acquisition.

In this case, they help us build out our overall security offerings to all ePlus customers. A good example of some of the things that we’re building out in the securities phase from an expertise standpoint is the fast emerging technology such as next gen -- next generation firewall through (indiscernible) the accelerating security risk.

To give you an example of the opportunity in this market, Gartner group estimate that only 10% of the firewalls in place today meet the requirements to protect against sophisticated attacks and project that 35% will meet requirements by the end of 2014.

Both these older firewalls will need to be replaced; the security is expected to be one of the highest growth areas in IT. Security is a growing concern for all of our customers, whether big, small, public or private.

In addition, if you think about that security touches almost every one of our technologically complex integrated solutions, including datacenter, networking, infrastructure, giving us a broader array of products and services on which we can leverage sales and security products and services.

We are also keenly focused on building and investing in relevant technologies that will keep ePlus on the forefront of delivering value to customers. For example in the Big Data arena we were selected as one of the first company in Cloudera’s Connect Partners Program.

Cloudera provides one of the most innovative uses of Apache Hadoop for a range of business applications and we will look for ways to market and sell Apache Hadoop based Big Data management software and services.

What is important to note is we will always look to leverage our existing technology resources and capabilities to supplement what we do in some of these new emerging technology areas.

For example we were chosen for Cloudera’s program in part because ePlus is the top NetApp FlexPod reseller in the United States and with those expertise and engineering capability over many years, FlexPod is a reference architecture that has been optimized for Cloudera deployment.

So by using our expertise in legacy technology with a hot technology of an emerging vendor, we really achieved the ability to protect our base business as well as capture high growth opportunities.

There are many examples of this throughout the business, but it's important to know that ePlus is cognizant enough and investing it rapidly advancing technologies that our customers demand.

Turning now to our finance segment, we’re continuing to find that customers and manufacture partners are valuing our process automation, our responsiveness and our ability to offer customized financing solutions that are tailored to their unique requirements.

In this segment our manufacturer partners are relying us more than ever to meet their requirements for rapid turnaround on financing transactions.

We remain focused on increasing volumes, to increase profitability, to regain on sale transactions and build our unbalance sheet portfolios for the long-term to create recurring portfolio earnings and increase earnings from post-contract transactions. Elaine, will cover leasing in more detail during her presentation.

So, in summary if I could, we remain focused on our corporate objectives of building out our national footprint, expanding and enhancing the solutions, services and supportive offering that our customers expect from ePlus in both traditional and emerging technologies while executing our growth plans and improving shareholder value.

At the end of this call I would be happy to any questions. But first I want to turn it over to Elaine Marion our CFO who will discuss our financial results. Elaine..

Thank you, Mark. As Phil mentioned, for the quarter ended December 31, 2013, consolidated revenues grew 10.4% to $26.2 million, the 16th quarter of consolidated revenue growth on a year-over-year basis.

Our financial results were strong compared to prior-year’s quarter as net earnings increased 17.5% to $10.6 million and fully diluted earnings per share increased 18.9% to $1.32 per share. For the nine month period consolidated revenues increased 6.8%, $797.6 million while net earnings were consistent at $27.1 million.

Diluted earnings per share was $3.34 with $8 million diluted shares outstanding for the nine month ended December 31, 2013 compared to $3.38 per share based on $7.9 million diluted shares outstanding for the same period last year.

Moving to the technology segment, revenue for the quarter increased 12.4% to $257.9 million compared to the same quarter last year and for the nine months ended December 31, 2013 the technology segment had revenues of $769.5 million, an increase of 7.3% as compared to the prior-year.

Our revenue growth comes from increases in demand by our Fortune 100 customers as well as overall increases in our ePlus professional service revenue.

In the technology segment, gross margin on sales and products and services increased to 140 basis points to 18.9% for the quarter ended December 31, 2013 driven by an increase in sales of third party software assurance, maintenance and services which are presented on a net basis as well as improvements in product margins.

For the nine months ended December 31, 2013 our gross margin on sales of product and services increased 60 basis points to 18.1% from 17.5% in the prior-year primarily due to higher ePlus services revenue as well as higher sales of third party software assurance, maintenance and services.

Earnings from our technology segment were $15.2 million for the quarter up 49.5% or $5.1 million from the prior-year’s quarter. Total overhead expenses increased 13.5% to $35.3 million for the quarter compared to $31.1 million in the same quarter last year. Our year-to-date basis, overhead cost increased 12.4% to $105.4 million.

These increases were attributable to increases in salary and benefits. Due to increases in personal, higher commissions and higher healthcare cost. We had 903 employees in our technology segment as of December 31, 2013 an increase of 93 employees from the prior-year.

Most of the increase in these -- in personnel relates to sales and engineering position as we continue to invest to expand our geographic presence and solutions offerings. Turning to the financing segment, revenue decreased 26.7% to $9.2 million compared to $12.6 million in the quarter ended December 31, 2012.

The comparative prior period had net gains from the early termination of certain lease agreements in the buyoff of the related equipment. As of December 31, 2013 we had $140.1 million in investments and notes and leases compared to $123.1 million at December 31, 2012 an increase of $17 million or 13.8%.

For the nine months ending December 31, 2012 revenues in our financing segment decreased 4.3% to $28.1 million primarily due to decreases in remarketing income and broker fee income. Total cost and expenses decreased $900,000 during the quarter due to lower commissions and broker fees.

For the nine months total cost and expenses increased $1.3 million due to increases in direct lease cost of $2.2 million which was primarily offset by lower commissions and broker fess.

As a result earnings from our financing segment were $2.8 million for the quarter compared to $5.3 million in the prior-year period and $7.6 million in the nine month period compared to $10.1 million in the prior-year. Cash and cash equivalents were $40.5 million at December 31, 2013 down from $52.7 million at March 31, 2013.

In part due to share repurchases of $7.8 million and purchases of equipment and software that we finance for our customers. Our total share stockholders equity was $259.7 million as of December 31, 2013 compared to $238.2 million as of March 31, 2013.

In summary, ePlus experienced robust financial performance this quarter and is well positioned to execute our strategic growth plan. Operator, this concludes our prepared remarks. Please open the line for questions..

(Operator Instructions) Our first question comes from the line of (indiscernible) from Canaccord. Your line is open..

Hi. Thanks for taking my question. Two quick questions. On the technology segment you highlighted the strong growth.

Is there a particular segment given that if you saw stronger growth like (indiscernible) or if you can just add some color on what the subsequent (indiscernible)?.

Well, (indiscernible) this is Mark Marron here. It was in terms of -- the growth was across a couple of different areas, some of our larger enterprise customers. We had nice growth in our services business. Security, we had nice growth in our security numbers around the quarter as well.

So those are the three off the top of my head that we had some nice growth year-over-year..

And the second question I had was, given your growth margins I know you pointed to it's a huge bump up from the other go quarter, I know obviously you benefit from services, but (indiscernible) two higher margins they’re across the product portfolio or different from (indiscernible)?.

(Indiscernible) did you say across the portfolio?.

Across your product portfolio was to -- I know the services added benefited it, but was it also better margins in products?.

Well, okay.

Then probably this one is a little tougher to answer just for one reason is I think it is across the product portfolio because we -- in the areas that we’re focused on which in the data center cloud space infrastructure management you’d see in collaboration space we’re providing all the services that our customers look for both from inflation, implementation, configuration, managed services and staffing.

So that increased our blended margins across all of our focus areas that we’re looking for. And we also had one other thing that played into that, and we had a very strong quarter with our maintenance renewals which we feel pretty good about some of the processes and plans we put in place that helped as well..

Great.

And the last question I had was on your North Carolina managed services data center; if you can just give us some color on how you plan to roll it out? What type of customers you’re looking for on these managed services?.

Well in terms of rolling it out, we’ve already rolled it out perhaps. So we’ve got offices in Pennsylvania, California and now in North Carolina mainly because there’s a demand that we were seeing from our existing customers as well as some of the new customers that we’ve been pitching our service capabilities to.

We’re also as I’ve mentioned in my presentation, we’re rolling out basically an enhanced maintenance program, we’re providing Tier 1 support to our customers and we’re finding a lot of customers are looking for that one place to go or one (indiscernible) that can go across multiple vendor solutions providing both the Tier 1 support that they need and then the proactive management and monitoring that they need.

So, we’re building out these capabilities across all three managed service centers. What it does for us, if you think about it East Coast, West Coast from a timing standpoint it also gives us the capability to provide the support in the timeframes that our customers are looking for across the entire U.S..

Okay, great.

And I have one more on just IT spending that you’re seeing out there in terms of do you expect growth or do you expect half year GDP growth? Could you provide any color and what you have seen for IT spending?.

Well, we haven't seen anything that would dictate that we’ve seen IT spending slowdown at this point (indiscernible), but I don’t have any material percentages from an IDC or Gartner that I can share with you. But in our customer base and potential new customers we haven't seen any slowdown..

Okay, great. Thanks a lot..

Thanks, [Rob] [ph]..

Thank you. Our next question comes from the line of Matthew Galinko. Your line is open..

Hi. Thanks for taking my questions..

Hi, Matt..

Hi.

I guess following up on the (indiscernible) question; do you have I guess additional headcount to add there going forward, just curious how many and sort of how long you would expect it to be fully ramped?.

Yes, we -- hey Matt for that is Mark Marron here. We have added most of the headcounts that we need to support our managed services offerings and capabilities across the three sites. In fact that’s where we had some of our SG&A what I’d say headcount and expense heads has been in the managed service center.

And the way that we’ll do it as we go forward is we have metrics in place as the business grows. We’re adding capacity as it needs. So as the business grows and the customers that we’re supporting grows we’ll continue to add people.

The good news is that we have sales in each of the offices now to add incremental headcount as business grows or as we hope the business improves..

Okay, got it. Thanks.

And then on the Kodak plan, can you share a little bit more around who you compete against, who you’re I guess in general seeing in terms of the competitors and these sorts of offerings with larger customers and what was the hook or key to winning that one in particular?.

Well I think there are few things that were the hook or the key as it relates to the Kodak needs, is one I don’t remember off the top of my head who the competitor was, I wouldn’t want a comparison on this well if you will, so I'll keep that to ourselves.

We run across the traditional players that play in the space, maybe somebody like a Datalink when you mention storage would be somebody that we go against from a managed service capacity.

But I think what set it apart was we had some local resources that Kodak to us were very talented and capable individuals that could lead a team, supervise all the things that they were looking for onsite.

So maybe when I talk about the 24/7 onsite prefix and some of the other things we’re dealing with the helpdesk they felt very comfortable with the resources that we had and what we could bring to the table.

The other thing that we think kind of set it apart was but we want them through our managed service offerings and what we need to do from a proactive monitoring and management. And then also the reporting that we provide back to them.

So some of the deskwork and reporting that we provide back to them so they can understand what was happening in their environment and adjust accordingly. So we do quarterly business reviews with them and we actually walk through, where things stands, where things might improve, anything they need to be aware of as we progress with this contract..

Okay, helpful.

And then, did you sense there, can you talk to any pockets of strength or weakness in terms of your customer vertical?.

I am sorry, it sounded like you said something about customer verticals?.

Yes, just any strength or weakness that you’re seeing across now that the industry fell into..

Yes, we haven't seen any downturn in any of the markets. What's nice about our business for the most part we are not depending on any one vertical. Each quarter a different vertical will be up or down versus another, but we haven't seen anything significant in any of the verticals either significantly up or significantly down from past history..

Great, all right. Thanks for taking my question..

No problem. Thanks for your time..

Thanks, Matt..

(Operator Instructions) And I’m showing no further questions. I would like to turn it back over to management for closing remarks..

We like to thank you for joining us and we will see in another quarter..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. You may all disconnect. Everyone have a great day..