0000932696false00009326962024-08-012024-08-01
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 2024
INSIGHT ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
_____________________________
| | | | | | | | | | | | | | | | | |
| Delaware | | 0-25092 | | 86-0766246 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
| | | | |
| 2701 East Insight Way, | | | | |
| Chandler, | Arizona | | | | 85286 |
| (Address of principal executive offices) | | | | (Zip Code) |
Registrant's telephone number, including area code:
(480) 333-3000
Not Applicable
(Former name or former address, if changed since last report)
_____________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| | | | | |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
| Title of each class | | Trading Symbol | | Name of each exchange on which registered |
| Common stock, par value $0.01 | | NSIT | | The NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On August 1, 2024, Insight Enterprises, Inc. announced by press release its results of operations for the second quarter ended June 30, 2024. A copy of the press release and accompanying investor presentation are attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated by reference herein. The information disclosed under this Item 2.02, including Exhibits 99.1 and 99.2 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| | | | | | | | |
Exhibit Number | | Description |
| | |
| 99.1 | | |
| | |
| 99.2 | | |
| | |
| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | Insight Enterprises, Inc. |
| | | | |
| Date: | August 1, 2024 | By: | | /s/ Rachael A. Crump |
| | | | Rachael A. Crump |
| | | | Chief Accounting Officer |
| | | | | |
FOR IMMEDIATE RELEASE | NASDAQ: NSIT |
INSIGHT ENTERPRISES, INC. REPORTS
SECOND QUARTER RESULTS
CHANDLER, AZ – August 1, 2024 – Insight Enterprises, Inc. (NASDAQ: NSIT) (the “Company”) today reported financial results for the quarter ended June 30, 2024. Highlights include:
•Gross profit increased 5% year over year to $453.4 million with gross margin expanding 260 basis points to 21.0%
•Insight Core services gross profit grew 12% year over year
•Cloud gross profit grew 21% year over year
•Consolidated net earnings grew 9% to $87.4 million, year over year
•Adjusted earnings before interest, tax, depreciation and amortization (“EBITDA”) grew 3% to $141.4 million, year over year
•Diluted earnings per share of $2.27 increased 5% year over year
•Adjusted diluted earnings per share of $2.46 decreased 4% year to year
In the second quarter of 2024, net sales decreased 8%, year to year, and gross profit increased 5%, year over year to $453.4 million. Gross margin expanded 260 basis points compared to the second quarter of 2023 to 21.0%. Earnings from operations of $131.1 million increased 11% compared to $118.6 million in the second quarter of 2023. Adjusted earnings from operations of $131.1 million increased 1% compared to $129.7 million in the second quarter of 2023. Consolidated net earnings were $87.4 million, or 4.0% of net sales, in the second quarter of 2024, and Adjusted consolidated net earnings were $86.7 million, or 4.0% of net sales. Diluted earnings per share for the quarter was $2.27, up 5%, year over year, and Adjusted diluted earnings per share was $2.46, down 4%, year to year.
“Our strategy to focus on cloud, services, and the fastest growing areas of the market has delivered improved economics to our shareholders and supports our transformation to become the leading Solutions Integrator,” stated Joyce Mullen, President and Chief Executive Officer. “We delivered double-digit cloud and Insight Core services gross profit growth and expanded gross margin, year over year. We also grew Adjusted EBITDA, year over year, despite a choppy product demand environment,” Mullen stated.
KEY HIGHLIGHTS
Results for the Quarter:
•Consolidated net sales for the second quarter of 2024 of $2.2 billion decreased 8%, year to year, when compared to the second quarter of 2023. Product net sales decreased 11%, year to year, while services net sales increased 8%, year over year.
•Net sales in North America decreased 9%, year to year, to $1.7 billion;
◦Product net sales decreased 11%, year to year, to $1.4 billion;
◦Services net sales increased 5%, year over year, to $329.6 million;
•Net sales in EMEA decreased 6%, year to year, to $368.9 million; and
•Net sales in APAC was flat, year to year, at $60.4 million.
•Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales decreased 8%, year to year, with decreases in net sales in North America and EMEA of 9% and 6% year to year, respectively, while net sales in APAC increased 1%, year over year.
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| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
•Consolidated gross profit increased 5% compared to the second quarter of 2023 to $453.4 million, with consolidated gross margin expanding 260 basis points to 21.0% of net sales. Product gross profit decreased 3%, year to year, and services gross profit increased 11%, year over year. Cloud gross profit grew 21%, year over year, and Insight Core services gross profit increased 12%, year over year. By segment, gross profit:
•increased 3% in North America, year over year, to $354.1 million (20.4% gross margin);
•increased 10% in EMEA, year over year, to $79.1 million (21.5% gross margin); and
•increased 12% in APAC, year over year, to $20.1 million (33.3% gross margin).
•Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit was up 5%, year over year, with gross profit growth in North America, EMEA and APAC of 3%, 10% and 13%, respectively, year over year.
•Consolidated earnings from operations increased 11% compared to the second quarter of 2023 to $131.1 million, or 6.1% of net sales. By segment, earnings from operations:
•increased 7% in North America, year over year, to $101.8 million, or 5.9% of net sales;
•increased 29% in EMEA, year over year, to $21.0 million, or 5.7% of net sales; and
•increased 19% in APAC, year over year, to $8.3 million, or 13.7% of net sales.
•Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations were up 11%, year over year, with increased earnings from operations in North America, EMEA and APAC of 7%, 30% and 21%, year over year, respectively.
•Adjusted earnings from operations increased 1% compared to the second quarter of 2023 to $131.1 million, or 6.1% of net sales. By segment, Adjusted earnings from operations:
•decreased 1% in North America, year to year, to $103.4 million, or 6.0% of net sales;
•increased 9% in EMEA, year over year, to $19.2 million, or 5.2% of net sales; and
•increased 20% in APAC, year over year, to $8.4 million, or 14.0% of net sales.
•Excluding the effects of fluctuating foreign currency exchange rates, Adjusted consolidated earnings from operations were up 2%, year over year, with increased Adjusted earnings from operations in EMEA and APAC of 9% and 21%, year over year, respectively, partially offset by a decrease in Adjusted earnings from operations in North America of 1%, year to year.
•Consolidated net earnings and diluted earnings per share for the second quarter of 2024 were $87.4 million and $2.27, respectively, at an effective tax rate of 25.5%.
•Adjusted consolidated net earnings and Adjusted diluted earnings per share for the second quarter of 2024 were $86.7 million and $2.46, respectively. Excluding the effects of fluctuating foreign currency exchange rates, Adjusted diluted earnings per share decreased 4% year to year.
In discussing financial results for the three and six months ended June 30, 2024 and 2023 in this press release, the Company refers to certain financial measures that are adjusted from the financial results prepared in accordance with United States generally accepted accounting principles (“GAAP”). When referring to non-GAAP measures, the Company refers to them as “Adjusted.” See “Use of Non-GAAP Financial Measures” for additional information. A tabular reconciliation of financial measures prepared in accordance with GAAP to the non-GAAP financial measures is included at the end of this press release.
In some instances, the Company refers to changes in net sales, gross profit, earnings from operations and Adjusted earnings from operations on a consolidated basis and in North America, EMEA and APAC excluding the effects of fluctuating foreign currency exchange rates. In addition, the Company refers to changes in Adjusted diluted earnings per share on a consolidated basis excluding the effects of fluctuating foreign currency exchange rates. These are also considered to be non-GAAP measures. We believe providing
this information excluding the effects of fluctuating foreign currency exchange rates provides valuable supplemental information regarding our underlying business and results of operations, consistent with how we evaluate our performance. In computing these changes and percentages, the Company compares the current year amount as translated into U.S. dollars under the applicable accounting standards to the prior year amount in local currency translated into U.S. dollars utilizing the weighted average translation rate for the current period. The performance measures excluding the effects of fluctuating foreign currency exchange rates should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.
The tax effect of Adjusted amounts referenced herein were computed using the statutory tax rate for the taxing jurisdictions in the operating segment in which the related expenses were recorded, adjusted for the effects of valuation allowances on net operating losses in certain jurisdictions.
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| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
GUIDANCE
For the full year 2024, the Company expects Adjusted diluted earnings per share to be between $10.60 and $10.90. We expect to deliver low double digit gross profit growth and expect that our gross margin will be in the 19% to 20% range.
This outlook assumes:
•interest expense of $60 to $62 million;
•an effective tax rate of 26% for the full year;
•capital expenditures of $35 to $40 million; and
•an average share count for the full year of 35.1 million shares.
This outlook excludes acquisition-related intangibles amortization expense of approximately $69 million, assumes no acquisition or integration related expenses, transformation or severance and restructuring expenses, net and no significant change in our debt instruments or the macroeconomic environment. Due to the inherent difficulty of forecasting some of these types of expenses, which impact net earnings, diluted earnings per share and selling and administrative expenses, the Company is unable to reasonably estimate the impact of such expenses, if any, to net earnings, diluted earnings per share and selling and administrative expenses. Accordingly, the Company is unable to provide a reconciliation of GAAP to non-GAAP diluted earnings per share for the full year 2024 forecast.
CONFERENCE CALL AND WEBCAST
The Company will host a conference call and live webcast today at 9:00 a.m. ET to discuss second quarter 2024 results of operations. A live webcast of the conference call (in listen-only mode) will be available on the Company’s web site at http://investor.insight.com/, and a replay of the webcast will be available on the Company’s web site for a limited time following the call. To access the live conference call, please register in advance using the event link on the Company's web site. Upon registering, participants will receive dial-in information via email, as well as a unique registrant ID, event passcode, and detailed instructions regarding how to join the call.
USE OF NON-GAAP FINANCIAL MEASURES
The non-GAAP financial measures are referred to as “Adjusted”. Adjusted earnings from operations, Adjusted net earnings and Adjusted diluted earnings per share exclude (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration related expenses, (vi) gains and losses from revaluation of acquisition related earnout liabilities, (vii) certain third-party data center service outage related expenses and recoveries, and (viii) the tax effects of each of these items, as applicable. Transformation costs represent costs we are incurring to transform our business, to help us achieve our strategic objectives, including becoming a leading solutions integrator. The Company excludes these items when internally evaluating earnings from operations, tax expense, net earnings and diluted earnings per share for the Company and earnings from operations for each of the Company’s operating segments. Adjusted diluted earnings per share also includes the impact of the benefit from the note hedge where the Company’s average stock price for the second quarter of 2024 was in excess of $68.32, which is the initial conversion price of our convertible senior notes (the “Convertible Notes”). Adjusted EBITDA excludes (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization of property and equipment, (iv) amortization of intangible assets, (v) severance and restructuring expenses, net, (vi) certain executive recruitment and hiring related expenses, (vii) transformation costs (viii) certain acquisition and integration related expenses, (ix) certain third-party data center service outage related expenses and recoveries, and (x) gains and losses from revaluation of acquisition related earnout liabilities. Adjusted return on invested capital (“ROIC”) excludes (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration related expenses, (vi) certain third-party data center service outage related expenses and recoveries, (vii) gains and losses from revaluation of acquisition related earnout liabilities, and (viii) the tax effects of each of these items, as applicable.
These non-GAAP measures are used by the Company and its management to evaluate financial performance against budgeted amounts, to calculate incentive compensation, to assist in forecasting future performance and to compare the Company’s results to those of the Company’s competitors. The Company believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency, facilitate comparisons to prior periods and the Company’s competitors’ results and assist in forecasting performance for future periods. These non-GAAP financial measures are not prepared in accordance with
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| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
GAAP and may be different from non-GAAP financial measures presented by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
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| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
FINANCIAL SUMMARY TABLE
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Three Months Ended
June 30, | | Six Months Ended
June 30, | | | | | | | | | | |
| | | | | | | | 2024 | | 2023 | | change | | 2024 | | 2023 | | change | | | | | | | | | | |
| Insight Enterprises, Inc. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Products | | | | | | | | $ | 1,726,435 | | $ | 1,945,609 | | (11%) | | $ | 3,690,390 | | $ | 3,913,254 | | (6%) | | | | | | | | | | |
| Services | | | | | | | | $ | 435,227 | | $ | 403,987 | | 8% | | $ | 850,757 | | $ | 760,289 | | 12% | | | | | | | | | | |
| Total net sales | | | | | | | | $ | 2,161,662 | | $ | 2,349,596 | | (8%) | | $ | 4,541,147 | | $ | 4,673,543 | | (3%) | | | | | | | | | | |
| Gross profit | | | | | | | | $ | 453,365 | | $ | 433,190 | | 5% | | $ | 894,293 | | $ | 824,505 | | 8% | | | | | | | | | | |
| Gross margin | | | | | | | | 21.0% | | 18.4% | | 260 bps | | 19.7% | | 17.6% | | 210 bps | | | | | | | | | | |
| Selling and administrative expenses | | | | | | | | $ | 317,234 | | $ | 318,243 | | —% | | $ | 654,668 | | $ | 628,244 | | 4% | | | | | | | | | | |
| Severance and restructuring expenses, net | | | | | | | | $ | 4,868 | | $ | (3,770) | | * | | $ | 7,095 | | $ | 32 | | > 100% | | | | | | | | | | |
| Acquisition and integration related expenses | | | | | | | | $ | 190 | | $ | 106 | | 79% | | $ | 1,471 | | $ | 157 | | > 100% | | | | | | | | | | |
| Earnings from operations | | | | | | | | $ | 131,073 | | $ | 118,611 | | 11% | | $ | 231,059 | | $ | 196,072 | | 18% | | | | | | | | | | |
| Net earnings | | | | | | | | $ | 87,444 | | $ | 80,482 | | 9% | | $ | 154,471 | | $ | 130,454 | | 18% | | | | | | | | | | |
| Diluted earnings per share | | | | | | | | $ | 2.27 | | $ | 2.17 | | 5% | | $ | 4.01 | | $ | 3.51 | | 14% | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales Mix | | | | | | | | | | | | ** | | | | | | ** | | | | | | | | | | |
| Hardware | | | | | | | | 54 | % | | 56 | % | | (11%) | | 51 | % | | 57 | % | | (13%) | | | | | | | | | | |
| Software | | | | | | | | 26 | % | | 27 | % | | (13%) | | 30 | % | | 27 | % | | 9% | | | | | | | | | | |
| Services | | | | | | | | 20 | % | | 17 | % | | 8% | | 19 | % | | 16 | % | | 12% | | | | | | | | | | |
| | | | | | | | 100 | % | | 100 | % | | (8%) | | 100 | % | | 100 | % | | (3%) | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| North America | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Products | | | | | | | | $ | 1,402,732 | | $ | 1,582,454 | | (11%) | | $ | 2,989,038 | | $ | 3,132,890 | | (5%) | | | | | | | | | | |
| Services | | | | | | | | $ | 329,625 | | $ | 314,712 | | 5% | | $ | 648,141 | | $ | 598,240 | | 8% | | | | | | | | | | |
| Total net sales | | | | | | | | $ | 1,732,357 | | $ | 1,897,166 | | (9%) | | $ | 3,637,179 | | $ | 3,731,130 | | (3%) | | | | | | | | | | |
| Gross profit | | | | | | | | $ | 354,107 | | $ | 343,142 | | 3% | | $ | 703,950 | | $ | 658,286 | | 7% | | | | | | | | | | |
| Gross margin | | | | | | | | 20.4% | | 18.1% | | 230 bps | | 19.4% | | 17.6% | | 180 bps | | | | | | | | | | |
| Selling and administrative expenses | | | | | | | | $ | 248,192 | | $ | 252,285 | | (2%) | | $ | 511,112 | | $ | 501,105 | | 2% | | | | | | | | | | |
| Severance and restructuring expenses, net | | | | | | | | $ | 3,922 | | $ | (4,685) | | * | | $ | 5,541 | | $ | (1,598) | | * | | | | | | | | | | |
| Acquisition and integration related expenses | | | | | | | | $ | 180 | | $ | 106 | | 70% | | $ | 1,461 | | $ | 157 | | >100% | | | | | | | | | | |
| Earnings from operations | | | | | | | | $ | 101,813 | | $ | 95,436 | | 7% | | $ | 185,836 | | $ | 158,622 | | 17% | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales Mix | | | | | | | | | | | | ** | | | | | | ** | | | | | | | | | | |
| Hardware | | | | | | | | 60 | % | | 61 | % | | (11%) | | 56 | % | | 62 | % | | (13%) | | | | | | | | | | |
| Software | | | | | | | | 21 | % | | 22 | % | | (12%) | | 26 | % | | 22 | % | | 18% | | | | | | | | | | |
| Services | | | | | | | | 19 | % | | 17 | % | | 5% | | 18 | % | | 16 | % | | 8% | | | | | | | | | | |
| | | | | | | | 100 | % | | 100 | % | | (9%) | | 100 | % | | 100 | % | | (3%) | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
FINANCIAL SUMMARY TABLE (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Three Months Ended
June 30, | | Six Months Ended
June 30, | | | | | | | | | | |
| | | | | | | | 2024 | | 2023 | | change | | 2024 | | 2023 | | change | | | | | | | | | | |
| EMEA | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Products | | | | | | | | $ | 292,256 | | $ | 328,280 | | (11%) | | $ | 631,822 | | $ | 705,731 | | (10%) | | | | | | | | | | |
| Services | | | | | | | | $ | 76,617 | | $ | 63,446 | | 21% | | $ | 149,892 | | $ | 112,999 | | 33% | | | | | | | | | | |
| Total net sales | | | | | | | | $ | 368,873 | | $ | 391,726 | | (6%) | | $ | 781,714 | | $ | 818,730 | | (5%) | | | | | | | | | | |
| Gross profit | | | | | | | | $ | 79,142 | | $ | 72,047 | | 10% | | $ | 154,175 | | $ | 132,935 | | 16% | | | | | | | | | | |
| Gross margin | | | | | | | | 21.5% | | 18.4% | | 310 bps | | 19.7% | | 16.2% | | 350 bps | | | | | | | | | | |
| Selling and administrative expenses | | | | | | | | $ | 57,264 | | $ | 54,913 | | 4% | | $ | 120,569 | | $ | 104,818 | | 15% | | | | | | | | | | |
| Severance and restructuring expenses | | | | | | | | $ | 861 | | $ | 867 | | (1%) | | $ | 1,399 | | $ | 1,569 | | (11%) | | | | | | | | | | |
| Acquisition and integration related expenses | | | | | | | | $ | 10 | | $ | — | | * | | $ | 10 | | $ | — | | * | | | | | | | | | | |
| Earnings from operations | | | | | | | | $ | 21,007 | | $ | 16,267 | | 29% | | $ | 32,197 | | $ | 26,548 | | 21% | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales Mix | | | | | | | | | | | | ** | | | | | | ** | | | | | | | | | | |
| Hardware | | | | | | | | 34 | % | | 34 | % | | (5%) | | 34 | % | | 36 | % | | (11%) | | | | | | | | | | |
| Software | | | | | | | | 45 | % | | 50 | % | | (15%) | | 47 | % | | 50 | % | | (10%) | | | | | | | | | | |
| Services | | | | | | | | 21 | % | | 16 | % | | 21% | | 19 | % | | 14 | % | | 33% | | | | | | | | | | |
| | | | | | | | 100 | % | | 100 | % | | (6%) | | 100 | % | | 100 | % | | (5%) | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| APAC | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Products | | | | | | | | $ | 31,447 | | $ | 34,875 | | (10%) | | $ | 69,530 | | $ | 74,633 | | (7%) | | | | | | | | | | |
| Services | | | | | | | | $ | 28,985 | | $ | 25,829 | | 12% | | $ | 52,724 | | $ | 49,050 | | 7% | | | | | | | | | | |
| Total net sales | | | | | | | | $ | 60,432 | | $ | 60,704 | | —% | | $ | 122,254 | | $ | 123,683 | | (1%) | | | | | | | | | | |
| Gross profit | | | | | | | | $ | 20,116 | | $ | 18,001 | | 12% | | $ | 36,168 | | $ | 33,284 | | 9% | | | | | | | | | | |
| Gross margin | | | | | | | | 33.3% | | 29.7% | | 360 bps | | 29.6% | | 26.9% | | 270 bps | | | | | | | | | | |
| Selling and administrative expenses | | | | | | | | $ | 11,778 | | $ | 11,045 | | 7% | | $ | 22,987 | | $ | 22,321 | | 3% | | | | | | | | | | |
| Severance and restructuring expenses | | | | | | | | $ | 85 | | $ | 48 | | 77% | | $ | 155 | | $ | 61 | | > 100% | | | | | | | | | | |
| Earnings from operations | | | | | | | | $ | 8,253 | | $ | 6,908 | | 19% | | $ | 13,026 | | $ | 10,902 | | 19% | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales Mix | | | | | | | | | | | | ** | | | | | | ** | | | | | | | | | | |
| Hardware | | | | | | | | 17 | % | | 21 | % | | (22%) | | 14 | % | | 19 | % | | (25)% | | | | | | | | | | |
| Software | | | | | | | | 35 | % | | 36 | % | | (2%) | | 43 | % | | 41 | % | | 1% | | | | | | | | | | |
| Services | | | | | | | | 48 | % | | 43 | % | | 12% | | 43 | % | | 40 | % | | 7% | | | | | | | | | | |
| | | | | | | | 100 | % | | 100 | % | | —% | | 100 | % | | 100 | % | | (1%) | | | | | | | | | | |
* Percentage change not considered meaningful
** Change in sales mix represents growth/decline in category net sales on a U.S. dollar basis and does not exclude the effects of fluctuating foreign currency exchange rates
| | | | | | | | | | | | | | |
| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
FORWARD-LOOKING INFORMATION
Certain statements in this release and the related conference call, webcast and presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including those related to the impact of inflation and higher interest rates, the Company’s future financial performance and results of operations, including gross profit growth, Adjusted diluted earnings per share, and Adjusted selling and administrative expenses, as well as the Company’s other key performance indicators, the Company’s anticipated effective tax rate, capital expenditures, and expected average share count, the Company’s expectations regarding cash flow, the Company’s expectations regarding supply constraints and shipment of backlog, future trends in the IT market, the Company’s business strategy and strategic initiatives, which are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. There can be no assurances that the results discussed by the forward-looking statements will be achieved, and actual results may differ materially from those set forth in the forward-looking statements. Some of the important factors that could cause the Company’s actual results to differ materially from those projected in any forward-looking statements include, but are not limited to, the following, which are discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including in the “Risk Factors” sections of the Company’s most recently filed periodic report on Form 10-K and subsequent filings with the SEC:
•actions of our competitors, including manufacturers and publishers of products we sell;
•our reliance on our partners for product availability, competitive products to sell and marketing funds and purchasing incentives, which can change significantly in the amounts made available and in the requirements year over year;
•our ability to keep pace with rapidly evolving technological advances and the evolving competitive marketplace;
•general economic conditions, economic uncertainties and changes in geopolitical conditions, including the possibility of a recession or a decline in market activity as a result of the ongoing conflicts in Ukraine and Gaza;
•changes in the IT industry and/or rapid changes in technology;
•our ability to provide high quality services to our clients;
•our reliance on independent shipping companies;
•the risks associated with our international operations;
•supply constraints for products;
•natural disasters or other adverse occurrences, including public health issues such as pandemics or epidemics;
•disruptions in our IT systems and voice and data networks;
•cyberattacks, outages, or third-party breaches of data privacy as well as related breaches of government regulations;
•intellectual property infringement claims and challenges to our registered patents, trademarks and trade names;
•potential liability and competitive risk based on the development, adoption, and use of Generative Artificial Intelligence;
•legal proceedings, client audits and failure to comply with laws and regulations;
•risks of termination, delays in payment, audits and investigations related to our public sector contracts;
•exposure to changes in, interpretations of, or enforcement trends related to tax rules and regulations;
•our potential to draw down a substantial amount of indebtedness;
•the conditional conversion feature of the Convertible Notes, which has been triggered, and may adversely affect the Company’s financial condition and operating results;
•the Company is subject to counterparty risk with respect to certain hedge and warrant transactions entered into in connection with the issuance of the Convertible Notes;
•increased debt and interest expense and the possibility of decreased availability of funds under our financing facilities;
•possible significant fluctuations in our future operating results as well as seasonality and variability in client demands;
•potential contractual disputes with our clients and third-party suppliers;
•our dependence on certain key personnel and our ability to attract, train and retain skilled teammates;
•risks associated with the integration and operation of acquired businesses, including achievement of expected synergies and benefits; and
•future sales of the Company’s common stock or equity-linked securities in the public market could lower the market price for our common stock.
| | | | | | | | | | | | | | |
| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
Additionally, there may be other risks that are otherwise described from time to time in the reports that the Company files with the SEC. Any forward-looking statements in this release, the related conference call, webcast and presentation speak only as of the date on which they are made and should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others. The Company assumes no obligation to update, and, except as may be required by law, does not intend to update, any forward-looking statements. The Company does not endorse any projections regarding future performance that may be made by third parties.
| | | | | | | | |
| CONTACT: | GLYNIS BRYAN | |
| CHIEF FINANCIAL OFFICER | |
| TEL. 480.333.3390 | |
| EMAIL glynis.bryan@insight.com | |
| | | | | | | | | | | | | | |
| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | Six Months Ended
June 30, | | |
| 2024 | | 2023 | | 2024 | | 2023 | | | | |
| Net sales: | | | | | | | | | | | |
| Products | $ | 1,726,435 | | | $ | 1,945,609 | | | $ | 3,690,390 | | | $ | 3,913,254 | | | | | |
| Services | 435,227 | | | 403,987 | | | 850,757 | | | 760,289 | | | | | |
| Total net sales | 2,161,662 | | | 2,349,596 | | | 4,541,147 | | | 4,673,543 | | | | | |
| Costs of goods sold: | | | | | | | | | | | |
| Products | 1,536,270 | | | 1,749,448 | | | 3,307,854 | | | 3,522,177 | | | | | |
| Services | 172,027 | | | 166,958 | | | 339,000 | | | 326,861 | | | | | |
| Total costs of goods sold | 1,708,297 | | | 1,916,406 | | | 3,646,854 | | | 3,849,038 | | | | | |
| Gross profit | 453,365 | | | 433,190 | | | 894,293 | | | 824,505 | | | | | |
| Operating expenses: | | | | | | | | | | | |
| Selling and administrative expenses | 317,234 | | | 318,243 | | | 654,668 | | | 628,244 | | | | | |
| Severance and restructuring expenses, net | 4,868 | | | (3,770) | | | 7,095 | | | 32 | | | | | |
| Acquisition and integration related expenses | 190 | | | 106 | | | 1,471 | | | 157 | | | | | |
| Earnings from operations | 131,073 | | | 118,611 | | | 231,059 | | | 196,072 | | | | | |
| Non-operating expense (income): | | | | | | | | | | | |
| Interest expense, net | 14,190 | | | 9,405 | | | 26,747 | | | 19,753 | | | | | |
| Other (income) expense, net | (469) | | | (60) | | | (1,232) | | | 692 | | | | | |
| Earnings before income taxes | 117,352 | | | 109,266 | | | 205,544 | | | 175,627 | | | | | |
| Income tax expense | 29,908 | | | 28,784 | | | 51,073 | | | 45,173 | | | | | |
| Net earnings | $ | 87,444 | | | $ | 80,482 | | | $ | 154,471 | | | $ | 130,454 | | | | | |
| | | | | | | | | | | |
| Net earnings per share: | | | | | | | | | | | |
| Basic | $ | 2.69 | | | $ | 2.43 | | | $ | 4.74 | | | $ | 3.91 | | | | | |
| Diluted | $ | 2.27 | | | $ | 2.17 | | | $ | 4.01 | | | $ | 3.51 | | | | | |
| | | | | | | | | | | |
| Shares used in per share calculations: | | | | | | | | | | | |
| Basic | 32,565 | | | 33,101 | | | 32,580 | | | 33,403 | | | | | |
| Diluted | 38,567 | | | 37,039 | | | 38,501 | | | 37,123 | | | | | |
| | | | | | | | | | | | | | |
| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In THOUSANDS)
(UNAUDITED)
| | | | | | | | | | | |
| June 30,
2024 | | December 31,
2023 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 256,307 | | | $ | 268,730 | |
| Accounts receivable, net | 4,143,400 | | | 3,568,290 | |
| Inventories | 145,456 | | | 184,605 | |
| Contract assets, net | 89,179 | | | 120,518 | |
| Other current assets | 265,141 | | | 189,158 | |
| Total current assets | 4,899,483 | | | 4,331,301 | |
| | | |
| Long-term contract assets, net | 119,332 | | | 132,780 | |
| Property and equipment, net | 211,852 | | | 210,061 | |
| Goodwill | 872,785 | | | 684,345 | |
| Intangible assets, net | 460,809 | | | 369,687 | |
| Long-term accounts receivable | 648,162 | | | 412,666 | |
| Other assets | 140,390 | | | 145,510 | |
| $ | 7,352,813 | | | $ | 6,286,350 | |
| | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable – trade | $ | 2,973,317 | | | $ | 2,255,183 | |
| Accounts payable – inventory financing facilities | 218,553 | | | 231,850 | |
| | | |
| Accrued expenses and other current liabilities | 487,556 | | | 538,346 | |
| Current portion of long-term debt | 331,997 | | | 348,004 | |
| Total current liabilities | 4,011,423 | | | 3,373,383 | |
| | | |
| | | |
| Long-term debt | 663,075 | | | 592,517 | |
| Deferred income taxes | 52,357 | | | 27,588 | |
| Long-term accounts payable | 608,298 | | | 353,794 | |
| Other liabilities | 170,115 | | | 203,335 | |
| 5,505,268 | | | 4,550,617 | |
| Stockholders’ equity: | | | |
| Preferred stock | — | | | — | |
| Common stock | 326 | | | 326 | |
| Additional paid-in capital | 334,573 | | | 328,607 | |
| Retained earnings | 1,569,774 | | | 1,448,412 | |
Accumulated other comprehensive loss – foreign currency translation adjustments | (57,128) | | | (41,612) | |
| Total stockholders’ equity | 1,847,545 | | | 1,735,733 | |
| $ | 7,352,813 | | | $ | 6,286,350 | |
| | | | | | | | | | | | | | |
| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
| | | | | | | | | | | |
| Six Months Ended
June 30, |
| 2024 | | 2023 |
| Cash flows from operating activities: | | | |
| Net earnings | $ | 154,471 | | | $ | 130,454 | |
| Adjustments to reconcile net earnings to net cash provided by operating activities: | | | |
| Depreciation and amortization | 46,451 | | | 29,148 | |
| Provision for losses on accounts receivable | 5,196 | | | 2,585 | |
| Provision for losses on contract assets | 3,038 | | | — | |
| Non-cash stock-based compensation | 16,900 | | | 16,663 | |
| Gain on revaluation of earnout liabilities | (24,207) | | | — | |
| Deferred income taxes | (3,535) | | | (1,231) | |
| Amortization of debt issuance costs | 2,590 | | | 2,430 | |
| Other adjustments | (289) | | | (2,801) | |
| Changes in assets and liabilities: | | | |
| Increase in accounts receivable | (598,219) | | | (368,612) | |
| Decrease in inventories | 34,366 | | | 14,596 | |
| Decrease in contract assets | 42,911 | | | 1,570 | |
| (Increase) decrease in long-term accounts receivable | (235,690) | | | 12,704 | |
| Increase in other assets | (52,087) | | | (49,151) | |
| Increase in accounts payable | 734,222 | | | 420,349 | |
| Increase (decrease) in long-term accounts payable | 237,652 | | | (10,251) | |
| Decrease in accrued expenses and other liabilities | (70,806) | | | (10,493) | |
| Net cash provided by operating activities: | 292,964 | | | 187,960 | |
| Cash flows from investing activities: | | | |
| Proceeds from sale of assets | 3,970 | | | 15,515 | |
| Purchases of property and equipment | (18,644) | | | (13,202) | |
| Acquisitions, net of cash and cash equivalents acquired | (264,374) | | | — | |
| Net cash (used in) provided by investing activities: | (279,048) | | | 2,313 | |
| Cash flows from financing activities: | | | |
| Borrowings on ABL revolving credit facility | 2,451,966 | | | 2,259,356 | |
| Repayments on ABL revolving credit facility | (2,872,410) | | | (2,214,246) | |
| Net (repayments) borrowings under inventory financing facilities | (12,987) | | | 30,848 | |
| Proceeds from issuance of senior unsecured notes | 500,000 | | | — | |
| Payment of debt issuance costs | (7,854) | | | — | |
| Repurchases of common stock | (35,000) | | | (217,108) | |
| Repayment of principal on the Convertible Notes | (16,895) | | | — | |
| Earnout and acquisition related payments | (18,296) | | | (10,748) | |
| Other payments | (9,147) | | | (9,161) | |
| Net cash used in financing activities: | (20,623) | | | (161,059) | |
| Foreign currency exchange effect on cash, cash equivalents and restricted cash balances | (5,728) | | | 3,050 | |
| (Decrease) increase in cash, cash equivalents and restricted cash | (12,435) | | | 32,264 | |
| Cash, cash equivalents and restricted cash at beginning of period | 270,785 | | | 165,718 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 258,350 | | | $ | 197,982 | |
| | | | | | | | | | | | | | |
| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
June 30, | | Six Months Ended
June 30, | | |
| | 2024 | | 2023 | | 2024 | | 2023 | | | | |
| Adjusted Consolidated Earnings from Operations: | | | | | | | | | | | | |
| GAAP consolidated EFO | | $ | 131,073 | | $ | 118,611 | | $ | 231,059 | | $ | 196,072 | | | | |
| Amortization of intangible assets | | 17,357 | | 8,285 | | 32,282 | | 16,595 | | | | |
| Gain on revaluation of earnout liabilities | | (25,148) | | — | | (24,207) | | — | | | | |
| Other* | | 7,810 | | 2,812 | | 13,708 | | 10,998 | | | | |
| Adjusted non-GAAP consolidated EFO | | $ | 131,092 | | $ | 129,708 | | $ | 252,842 | | $ | 223,665 | | | | |
| | | | | | | | | | | | |
| GAAP EFO as a percentage of net sales | | 6.1% | | 5.0% | | 5.1% | | 4.2% | | | | |
| Adjusted non-GAAP EFO as a percentage of net sales | | 6.1% | | 5.5% | | 5.6% | | 4.8% | | | | |
| | | | | | | | | | | | |
| Adjusted Consolidated Net Earnings: | | | | | | | | | | | | |
| GAAP consolidated net earnings | | $ | 87,444 | | $ | 80,482 | | $ | 154,471 | | $ | 130,454 | | | | |
| Amortization of intangible assets | | 17,357 | | 8,285 | | 32,282 | | 16,595 | | | | |
| | | | | | | | | | | | |
| Gain on revaluation of earnout liabilities | | (25,148) | | — | | (24,207) | — | — | | | | |
| Other* | | 7,810 | | 2,812 | | 13,708 | | 10,998 | | | | |
| Income taxes on non-GAAP adjustments | | (734) | | (3,032) | | (6,173) | | (7,233) | | | | |
| Adjusted non-GAAP consolidated net earnings | | $ | 86,729 | | $ | 88,547 | | $ | 170,081 | | $ | 150,814 | | | | |
| | | | | | | | | | | | |
| GAAP net earnings as a percentage of net sales | | 4.0% | | 3.4% | | 3.4% | | 2.8% | | | | |
| Adjusted non-GAAP net earnings as a percentage of net sales | | 4.0% | | 3.8% | | 3.7% | | 3.2% | | | | |
| | | | | | | | | | | | |
| Adjusted Diluted Earnings Per Share: | | | | | | | | | | | | |
| GAAP diluted EPS | | $ | 2.27 | | | $ | 2.17 | | | $ | 4.01 | | | $ | 3.51 | | | | | |
| Amortization of intangible assets | | 0.45 | | | 0.22 | | | 0.84 | | | 0.45 | | | | | |
| | | | | | | | | | | | |
| Gain on revaluation of earnout liabilities | | (0.65) | | | — | | | (0.63) | | | — | | | | | |
| Other | | 0.20 | | | 0.08 | | | 0.36 | | | 0.30 | | | | | |
| Income taxes on non-GAAP adjustments | | (0.02) | | | (0.08) | | | (0.16) | | | (0.19) | | | | | |
| Impact of benefit from note hedge | | 0.21 | | | 0.17 | | | 0.41 | | | 0.27 | | | | | |
| Adjusted non-GAAP diluted EPS | | $ | 2.46 | | | $ | 2.56 | | | $ | 4.83 | | | $ | 4.34 | | | | | |
| | | | | | | | | | | | |
| Shares used in diluted EPS calculation | | 38,567 | | 37,039 | | 38,501 | | 37,123 | | | | |
| Impact of benefit from Note hedge | | (3,322) | | (2,516) | | (3,275) | | (2,413) | | | | |
| Shares used in Adjusted non-GAAP diluted EPS calculation | | 35,245 | | 34,523 | | 35,226 | | 34,710 | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Adjusted North America Earnings from Operations: | | | | | | | | | | | | |
| GAAP EFO from North America segment | | $ | 101,813 | | | $ | 95,436 | | | $ | 185,836 | | | $ | 158,622 | | | | | |
| Amortization of intangible assets | | 15,588 | | | 7,766 | | | 28,734 | | | 15,551 | | | | | |
| Gain on revaluation of earnout liabilities | | (20,684) | | | — | | | (20,219) | | | — | | | | | |
| Other* | | 6,712 | | | 1,757 | | | 11,862 | | | 9,094 | | | | | |
| Adjusted non-GAAP EFO from North America segment | | $ | 103,429 | | | $ | 104,959 | | | $ | 206,213 | | | $ | 183,267 | | | | | |
| | | | | | | | | | | | |
| GAAP EFO as a percentage of net sales | | 5.9 | % | | 5.0 | % | | 5.1 | % | | 4.3 | % | | | | |
| Adjusted non-GAAP EFO as a percentage of net sales | | 6.0 | % | | 5.5 | % | | 5.7 | % | | 4.9 | % | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
June 30, | | Six Months Ended
June 30, | | |
| | 2024 | | 2023 | | 2024 | | 2023 | | | | |
| | | | | | | | | | | | |
| Adjusted EMEA Earnings from Operations: | | | | | | | | | | | | |
| GAAP EFO from EMEA segment | | $ | 21,007 | | | $ | 16,267 | | | $ | 32,197 | | | $ | 26,548 | | | | | |
| Amortization of intangible assets | | 1,660 | | | 408 | | | 3,330 | | | 820 | | | | | |
| Gain on revaluation of earnout liabilities | | (4,464) | | | — | | | (3,988) | | | — | | | | | |
| Other | | 1,013 | | | 1,007 | | | 1,691 | | | 1,843 | | | | | |
| Adjusted non-GAAP EFO from EMEA segment | | $ | 19,216 | | | $ | 17,682 | | | $ | 33,230 | | | $ | 29,211 | | | | | |
| | | | | | | | | | | | |
| GAAP EFO as a percentage of net sales | | 5.7 | % | | 4.2 | % | | 4.1 | % | | 3.2 | % | | | | |
| Adjusted non-GAAP EFO as a percentage of net sales | | 5.2 | % | | 4.5 | % | | 4.3 | % | | 3.6 | % | | | | |
| | | | | | | | | | | | |
| Adjusted APAC Earnings from Operations: | | | | | | | | | | | | |
| GAAP EFO from APAC segment | | $ | 8,253 | | | $ | 6,908 | | | $ | 13,026 | | | $ | 10,902 | | | | | |
| Amortization of intangible assets | | 109 | | | 111 | | | 218 | | | 224 | | | | | |
| Other | | 85 | | | 48 | | | 155 | | | 61 | | | | | |
| Adjusted non-GAAP EFO from APAC segment | | $ | 8,447 | | | $ | 7,067 | | | $ | 13,399 | | | $ | 11,187 | | | | | |
| | | | | | | | | | | | |
| GAAP EFO as a percentage of net sales | | 13.7 | % | | 11.4 | % | | 10.7 | % | | 8.8 | % | | | | |
| Adjusted non-GAAP EFO as a percentage of net sales | | 14.0 | % | | 11.6 | % | | 11.0 | % | | 9.0 | % | | | | |
| | | | | | | | | | | | |
| Adjusted EBITDA: | | | | | | | | | | | | |
| GAAP consolidated net earnings | | $ | 87,444 | | $ | 80,482 | | $ | 154,471 | | $ | 130,454 | | | | |
| Interest expense | | 16,859 | | 11,056 | | 32,128 | | 22,744 | | | | |
| Income tax expense | | 29,908 | | 28,784 | | 51,073 | | 45,173 | | | | |
| Depreciation and amortization of property and equipment | | 7,208 | | 6,200 | | 14,169 | | 12,553 | | | | |
| Amortization of intangible assets | | 17,357 | | 8,285 | | 32,282 | | 16,595 | | | | |
| | | | | | | | | | | | |
| Gain on revaluation of earnout liabilities | | (25,148) | | — | | (24,207) | | — | | | | |
| Other* | | 7,810 | | 2,812 | | 13,708 | | 10,998 | | | | |
| Adjusted non-GAAP EBITDA | | $ | 141,438 | | $ | 137,619 | | $ | 273,624 | | $ | 238,517 | | | | |
| | | | | | | | | | | | |
| GAAP consolidated net earnings as a percentage of net sales | | 4.0% | | 3.4% | | 3.4% | | 2.8% | | | | |
| Adjusted non-GAAP EBITDA as a percentage of net sales | | 6.5% | | 5.9% | | 6.0% | | 5.1% | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
* Includes transformation costs of $5.6 million and $6.2 million for the three months ended June 30, 2024 and 2023, respectively and $7.9 million and $10.3 million for the six months ended June 30, 2024 and 2023, respectively.
| | | | | | | | | | | | | | |
| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| | | | | | | | | | | | | | |
| | Twelve Months Ended June 30, |
| | 2024 | | 2023 |
| Adjusted return on invested capital: | | | | |
| GAAP consolidated EFO | | $ | 454,782 | | $ | 400,367 |
| Amortization of intangible assets | | 51,918 | | 33,658 |
| Gain on revaluation of earnout liabilities | | (24,207) | | — |
Other5 | | 38,811 | | 24,999 |
| Adjusted non-GAAP consolidated EFO | | 521,304 | | 459,024 |
Income tax expense1 | | 135,539 | | 119,346 |
| Adjusted non-GAAP consolidated EFO, net of tax | | $ | 385,765 | | $ | 339,678 |
Average stockholders’ equity2 | | $ | 1,706,754 | | $ | 1,602,902 |
Average debt2 | | 835,041 | | 737,496 |
Average cash2 | | (268,885) | | (161,900) |
| Invested Capital | | $ | 2,272,910 | | $ | 2,178,498 |
| | | | |
Adjusted non-GAAP ROIC (from GAAP consolidated EFO)3 | | 14.81 | % | | 13.60 | % |
Adjusted non-GAAP ROIC (from non-GAAP consolidated EFO)4 | | 16.97 | % | | 15.59 | % |
1 Assumed tax rate of 26.0%.
2 Average of previous five quarters.
3 Computed as GAAP consolidated EFO, net of tax of $118,243 and $104,095 for the twelve months ended June 30, 2024 and 2023, respectively, divided by invested capital.
4 Computed as Adjusted non-GAAP consolidated EFO, net of tax, divided by invested capital.
5 Includes transformation costs of $14.2 million and $21.1 million for the twelve months ended June 30, 2024 and 2023, respectively. Includes certain third-party data center service outage related expenses, net of recoveries of $1.6 million for the twelve months ended June 30, 2024.
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2024 Insight Direct USA, Inc. All Rights Reserved. 1 Insight Enterprises, Inc. Second Quarter 2024 Earnings Conference Call and Webcast
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 24 Disclosures ◦ Safe harbor statement This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 related to Insight’s plans and expectations. Statements that are not historical facts, including those related to our expectations about future financial results and the assumptions related thereto, including expectations related to SADA, our expectations regarding supply constraints, our expectations regarding backlog shipments, our expectations regarding future expected trends in the IT market and our opportunities for growth, are forward-looking statements. These forward-looking statements are subject to assumptions, risks and uncertainties which could cause actual results or future events to differ materially from such statements. Insight Enterprises, Inc. (the "Company") undertakes no obligation to update publicly or revise any of the forward-looking statements, except as otherwise required by law. More detailed information about forward-looking statements and risk factors is included in today’s press release and discussed in the Company’s most recently filed periodic reports and subsequent filings with the Securities and Exchange Commission. ◦ Non-GAAP measures This presentation will reference certain non-GAAP financial information as ‘Adjusted’. A reconciliation of non-GAAP financial measures presented in this document to our actual GAAP results is attached to the back of this presentation and included in the press release issued today, which you may find on the Investor Relations section of our website at investor.insight.com. These non-GAAP measures are used by the Company and its management to evaluate financial performance against budgeted amounts, to calculate incentive compensation, to assist in forecasting future performance and to compare the Company’s results to those of the Company’s competitors. The Company believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency, facilitate comparisons to prior periods and the Company’s competitors’ results and assist in forecasting performance for future periods. These non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. ◦ Constant currency In some instances, the Company refers to changes in net sales, gross profit, earnings from operations and Adjusted earnings from operations on a consolidated basis and in North America, EMEA and APAC excluding the effects of fluctuating foreign currency exchange rates. In addition, the Company refers to changes in Adjusted diluted earnings per share on a consolidated basis excluding the effects of fluctuating foreign currency exchange rates. These are also considered to be non-GAAP measures. In computing these changes and percentages, the Company compares the current year amount as translated into U.S. dollars under the applicable accounting standards to the prior year amount in local currency translated into U.S. dollars utilizing the weighted average translation rate for the current period.
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 34 Table of Contents ◦ Solutions Integrator Strategy ◦ Solutions at Work ◦ Awards and Recognitions ◦ Second Quarter 2024 Highlights and Performance ◦ 2027 KPIs for Success ◦ 2024 Outlook ◦ Appendix
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 44 Put clients first We put our clients first, delivering essential value that contributes to their success and making us the partner they can't live without. Deliver differentiation Our combination of innovative and scalable solutions, exceptional talent and unique portfolio strategy gives us a differentiated advantage. Champion culture Our teammates and our culture are our biggest assets. We champion them to deliver the best. Put Clients first Deliver Differentiation Champion our Culture Drive Profitable Growth Solutions Int grator ≠ Systems Integrator Reseller Distributor Our strategy is to become THE leading SOLUTIONS INTEGRATOR The pillars of our strategy are:
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 54 Our strategy is to become THE leading SOLUTIONS INTEGRATOR DRIVE PROFITABLE GROWTH We relentlessly pursue high performance, operational excellence and profitable growth. Put clients first We put our clients first, delivering essential value that contributes to their success and making us the partner they can't live without. Deliver differentiation Our combination of innovative and scalable solutions, exceptional talent and unique portfolio strategy gives us a differentiated advantage. Champion culture Our teammates and our culture are our biggest assets. We champion them to deliver the best.
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 64 Q2 2024 Performance (Changes against prior year period) * See Appendix for reconciliation of non-GAAP measures ** For the twelve months ended June 30, 2024 NET SALES $2.2B decrease of 8% GROSS PROFIT $453M increase of 5% MARGINS GROSS MARGIN 21.0% up 260 bps EFO MARGIN 6.1% up 110 bps ADJUSTED EFO* MARGIN 6.1% up 60 bps EARNINGS CLOUD GROSS PROFIT CLOUD $139M increase of 21% 56% services gross profit as a % of total gross profit** INSIGHT CORE SERVICES GROSS PROFIT $81M increase of 12% EARNINGS FROM OPERATIONS EARNINGS FROM OPERATIONS $131M increase of 11% DILUTED EARNINGS PER SHARE DILUTED EARNINGS PER SHARE $2.27 increase of 5% NET EARNINGS NET EARNINGS $87M increase of 9% ADJUSTED EARNINGS FROM OPERATIONS* $131M increase of 1% ADJUSTED DILUTED EARNINGS PER SHARE* $2.46 decrease of 4% ADJUSTED EBITDA* NET EARNINGS ADJUSTED EBITDA* $141M increase of 3% CASH FLOWS AND CASH CYCLE CASH CONVERSION CYCLE 12 DAYS down 20 days Days sales outstanding (DSO) +33 days Days inventory outstanding (DIO) -4 days Days purchases outstanding (DPO) +(49) days NET CASH FROM OPERATIONS $46M SERVICE DELIVERY SCALE HEADCOUNT Skilled, certified consulting and service delivery professionals 6,500+
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 74 YTD Q2 2024 Performance (Changes against prior year period) * See Appendix for reconciliation of non-GAAP measures NET SALES $4.5B decrease of 3% GROSS PROFIT $894M increase of 8% MARGINS GROSS MARGIN 19.7% up 210 bps EFO MARGIN 5.1% up 90 bps ADJUSTED EFO* MARGIN 5.6% up 80 bps EARNINGS CLOUD GROSS PROFIT CLOUD $256M increase of 26% INSIGHT CORE SERVICES GROSS PROFIT $156M increase of 18% EARNINGS FROM OPERATIONS EARNINGS FROM OPERATIONS $231M increase of 18% DILUTED EARNINGS PER SHARE DILUTED EARNINGS PER SHARE $4.01 increase of 14% NET EARNINGS NET EARNINGS $154M increase of 18% ADJUSTED EARNINGS FROM OPERATIONS* $253M increase of 13% ADJUSTED DILUTED EARNINGS PER SHARE* $4.83 increase of 11% ADJUSTED EBITDA* NET EARNINGS ADJUSTED EBITDA* $274M increase of 15% CASH FLOWS NET CASH FROM OPERATIONS $293M
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 84 The challenge: The results: • A major payment processing company, post-separation from its parent company, faced the challenge of establishing an entirely new IT infrastructure within a short timeframe • The client needed to transition to its own instance of ServiceNow for IT service management, a critical platform for their operations • Establishment of new IT infrastructure within the required (accelerated) timeframe • Efficient completion of transition, enabling the client to effectively manage their IT service management, supported by InfoCenter • Planned future provision of managed services to support client on their new platform Insight's InfoCenter team: • Conducted specialized workshops to understand the client's requirements and challenges • Implemented a phased rollout strategy across all areas of the ServiceNow platform to ensure smooth transition and integration The solution: Infocenter's ServiceNow Expertise
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 94 Amdaris Enhances Solutions in EMEA with Stripe Partnership The challenge: The results: • Stripe offers a comprehensive suite of financial and payment products for businesses worldwide, processing over $1 trillion in payments last year • Businesses using Stripe can leverage their partner network to accept online and in-person payments, embed financial services, create custom revenue models, and build a more profitable business • Our Stripe partnership enables us to offer customized software development services to Stripe's diverse client base, showcasing the strength of our M&A strategy and expertise in financial technology solutions The solution: • Through our Amdaris acquisition, Insight has become an elite global implementation partner with Stripe, accredited with Stripe’s Services Implementation Specialization certification • Our team of Stripe Certified implementation experts help businesses in maximizing the benefits of Stripe’s product suite, including billing for complex subscription models and connected platforms and marketplaces
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 104 • 2024 America’s Best Employers for Diversity 2024 (#298 overall and #23 among IT companies) • 2024 Best Large Employers • 2024 Canada's Best Employers • 2023 Best Employers for Women Awards and Recognitions U.S. Best Places to Work International Best Places to Work No. 1 | Inland Northwest No. 3 | Phoenix Business Journal No. 9 | Phoenix Healthiest Workplaces No. 13 | Forbes Best Employers in Ohio Montréal's Top Employers No. 7 | Italy Best Workplaces No. 13 | Spain Best Workplaces No. 16 | UK Best Workplaces for Wellbeing No. 27 | UK Best Workplaces for Women No. 28 | UK Best Workplaces UK Best Workplaces in Tech No. 2 | Singapore Best Workplaces No. 8 | Australia Best Workplaces in Tech No. 15 | Australia Best Workplaces No. 27 | Australia Best Workplaces for Women Certified | Great Place to Work in China, Hong Kong, New Zealand, Philippines
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 114 Q2 2024 Performance (Changes against prior year period) * See Appendix for reconciliation of non-GAAP measures ** For the twelve months ended June 30, 2024 NET SALES $2.2B decrease of 8% GROSS PROFIT $453M increase of 5% MARGINS GROSS MARGIN 21.0% up 260 bps EFO MARGIN 6.1% up 110 bps ADJUSTED EFO* MARGIN 6.1% up 60 bps EARNINGS CLOUD GROSS PROFIT CLOUD $139M increase of 21% 56% services gross profit as a % of total gross profit** INSIGHT CORE SERVICES GROSS PROFIT $81M increase of 12% EARNINGS FROM OPERATIONS EARNINGS FROM OPERATIONS $131M increase of 11% DILUTED EARNINGS PER SHARE DILUTED EARNINGS PER SHARE $2.27 increase of 5% NET EARNINGS NET EARNINGS $87M increase of 9% ADJUSTED EARNINGS FROM OPERATIONS* $131M increase of 1% ADJUSTED DILUTED EARNINGS PER SHARE* $2.46 decrease of 4% ADJUSTED EBITDA* NET EARNINGS ADJUSTED EBITDA* $141M increase of 3% CASH FLOWS AND CASH CYCLE CASH CONVERSION CYCLE 12 DAYS down 20 days Days sales outstanding (DSO) +33 days Days inventory outstanding (DIO) -4 days Days purchases outstanding (DPO) +(49) days NET CASH FROM OPERATIONS $46M SERVICE DELIVERY SCALE HEADCOUNT Skilled, certified consulting and service delivery professionals 6,500+
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 124 SADA Consumption • Consumption of cloud services occurs monthly and flows through operating cash flow • SADA generates strong operating cash flows based on this consumption dynamic ◦ Contract asset value, net at June 30, 2024 - $208.5 million ▪ Short-term and long-term contract asset net balances of $89.2 million and $119.3 million, respectively ◦ Standard contract life - 3 to 5 years
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 134 Long-Term Debt US Dollars in millions Acquisition Payments for acquisition** Amdaris (August 2023) $83 SADA (December 2023) $423 InfoCenter (May 2024) $264 Total $770 Cash from operations used to pay down debt $445 Increase in long-term debt $325 • Raised $500 million aggregate principal of senior notes due 2032 • Long-term debt balance at June 30, 2024 - $663 million* • Long-term debt balance at June 30, 2023 - $338 million • YoY increase in long-term debt of $325 million * Includes ABL and senior notes ** Cash paid, net of cash and cash equivalents acquired (from Statement of Cash Flows)
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 144 2027 KPIs for Success KPIs TTM Q2 2024 2027 Cloud GP Growth** 28% 16% - 20% 5-year CAGR*** Core services GP Growth** 15% 16% - 20% 5-year CAGR*** Adjusted EBITDA Margin* 6.2% 6.5% - 7.0% Adjusted DEPS* Growth** 15% 19% - 22% 5-year CAGR*** Adjusted ROIC* 17.0% >25% Adjusted free cash flow as % of Adjusted net earnings* 192% >90% * Adjusted non-GAAP basis excludes (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring-related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration-related expenses, (vi) certain third-party data center service outage related expenses and recoveries, (vii) gains and losses from revaluation of acquisition related earnout liabilities, and (viii) the tax effects of each of these items, as applicable. Due to the inherent difficulty of forecasting these adjustments, which impact net earnings, diluted earnings per share, adjusted free cash flow, ROIC and EBITDA margin, the Company is unable to reasonably estimate the impact of such adjustments, if any, to net earnings, diluted earnings per share, adjusted free cash flow, ROIC and EBITDA. Accordingly, the Company is unable to provide a reconciliation for the 2027 forecast of GAAP to non-GAAP net earnings, diluted earnings per share, adjusted free cash flow, ROIC and EBITDA margin. See Appendix and elsewhere in this presentation for reconciliation of historical non- GAAP measures ** Growth baseline period is TTM Q2 2023 *** CAGR baseline year is 2022 Note: Insight Core services is defined as services Insight delivers and manages. Adjusted free cash flow is defined as cash flow from operations minus capital expenditures
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 154 Full Year 2024 Outlook Assumptions: As of August 1, 2024 As of May 2, 2024 Gross profit growth low double digit mid to high teens Gross margin 19% - 20% range approximately 19% Adjusted diluted EPS* $10.60 - $10.90 $10.60 - $10.90 Interest expense $60 - $62 million $52 - $54 million Effective tax rate 26% 26% Capital expenditures $35 - $40 million $50 - $55 million Average share count 35.1 million 35.3 million Other Exclusions and Assumptions: • Excludes acquisition-related intangibles amortization expense of approximately $69 million (posted on website) • Assumes no acquisition or integration-related, transformation or severance and restructuring expenses, net • Assumes no significant change in our debt instruments or the macroeconomic environment * Adjusted diluted earnings per share excludes severance and restructuring expense, net and other unique items as well as amortization expense related to acquired intangibles. Due to the inherent difficulty of forecasting some of these types of expenses, which impact net earnings, diluted earnings per share and selling and administrative expenses, the Company is unable to reasonably estimate the impact of such expenses, if any, to net earnings, diluted earnings per share and selling and administrative expenses. Accordingly, the Company is unable to provide a reconciliation of GAAP to non-GAAP diluted earnings per share for the full year 2024 forecast
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 164 NET SALES GROSS PROFIT * For the twelve months ended June 30, 2024 Trailing twelve months Trailing twelve months $2.2B decrease of 8% y/y $2.3B $2.3B $2.2B $2.4B $2.2B Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 $10.1B $9.7B $9.4B $9.2B $9.2B $9.0B Q1-23 Q2-23 Q3-23 2023 Q1-24 Q2-24 $9.0B* decrease of 7% y/y $453M increase of 5% y/y 18.4% 18.0% 19.5% 18.5% 21.0% $433M $409M $436M $441M $453M Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 $1.7B* increase of 6% y/y 16.3% 16.9% 17.5% 18.2% 18.6% 19.2% $1.6B $1.6B $1.7B $1.7B $1.7B $1.7B Q1-23 Q2-23 Q3-23 2023 Q1-24 Q2-24 Gross Margin
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 174 Gross Margin SERVICES NET SALES SERVICES GROSS PROFIT * For the twelve months ended June 30, 2024 Trailing twelve months Trailing twelve months $435M increase of 8% y/y $404M $376M $408M $416M $435M Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 $1,499M $1,509M $1,520M $1,544M $1,604M $1,635M Q1-23 Q2-23 Q3-23 2023 Q1-24 Q2-24 $1.6B* increase of 8% y/y $237M $216M $248M $249M $263M Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 59% 57% 61% 60% 60% $263M increase of 11% y/y $821M $833M $863M $897M $949M $976M Q1-23 Q2-23 Q3-23 2023 Q1-24 Q2-24 $976M* increase of 17% y/y 55% 55% 57% 58% 59% 60%
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 184 INSIGHT CORE SERVICES GROSS PROFIT CLOUD GROSS PROFIT * For the twelve months ended June 30, 2024 Note: Insight Core services is defined as services Insight delivers and manages Trailing twelve months Trailing twelve months $72M $71M $69M $76M $81M Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 30% 31% 30% 31% 32% $81M increase of 12% y/y Gross Margin $252M $257M $269M $273M $288M $297M Q1-23 Q2-23 Q3-23 2023 Q1-24 Q2-24 27% 28% 29% 30% 31% 31% $297M* increase of 15% y/y $115M $96M $130M $117M $139M Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 $364M $376M $390M $429M $458M $482M Q1-23 Q2-23 Q3-23 2023 Q1-24 Q2-24 $139M increase of 21% y/y $482M* increase of 28% y/y
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 194 EARNINGS FROM OPERATIONS ADJUSTED EARNINGS FROM OPERATIONS** * For the twelve months ended June 30, 2024 ** See Appendix for reconciliation of non-GAAP measures Trailing twelve months Trailing twelve months $119M $92M $132M $100M $131M Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 $411M $400M $402M $420M $442M $455M Q1-23 Q2-23 Q3-23 2023 Q1-24 Q2-24 $131M increase of 11% y/y $455M* increase of 14% y/y $130M $120M $149M $122M $131M Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 $131M increase of 1% y/y $471M $459M $472M $492M $520M $521M Q1-23 Q2-23 Q3-23 2023 Q1-24 Q2-24 $521M* increase of 14% y/y
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 204 DILUTED EARNINGS PER SHARE ADJUSTED DILUTED EARNINGS PER SHARE** * For the twelve months ended June 30, 2024 ** See Appendix for reconciliation of non-GAAP measures Trailing twelve months Trailing twelve months $2.17 $1.62 $2.42 $1.74 $2.27 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 $7.47 $7.22 $7.26 $7.55 $7.95 $8.05 Q1-23 Q2-23 Q3-23 2023 Q1-24 Q2-24 $2.56 $2.37 $2.98 $2.37 $2.46 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 $9.09 $8.86 $9.25 $9.69 $10.28 $10.17 Q1-23 Q2-23 Q3-23 2023 Q1-24 Q2-24 $2.27 increase of 5% y/y $8.05* increase of 11% y/y $2.46 decrease of 4% y/y $10.17* increase of 15% y/y
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2024 Insight Direct USA, Inc. All Rights Reserved. 21 Appendix
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 224 Q2 2024 YTD | Financial Performance Six Months Ended June 30, US Dollars in $000s, except for per share data 2024 2023 Change Consolidated IEI Net sales $4,541,147 $4,673,543 (3) % Net sales, constant currency* (3) % Product net sales $3,690,390 $3,913,254 (6) % Services net sales $850,757 $760,289 12 % Gross profit $894,293 $824,505 8 % Gross margin 19.7 % 17.6 % 210 bps Gross profit, constant currency* 8 % Product gross profit $382,536 $391,077 (2) % Services gross profit $511,757 $433,428 18 % GAAP earnings from operations $231,059 $196,072 18 % Adjusted earnings from operations** $252,842 $223,665 13 % GAAP diluted earnings per share $4.01 $3.51 14 % Adjusted diluted earnings per share** $4.83 $4.34 11 % * Reference “Constant currency” section on slide 2 of this presentation ** See Appendix for reconciliation of non-GAAP measures
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 234 * See Appendix for reconciliation of non-GAAP measures Consolidated IEI Financial Metrics Three Months Ended Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 Net Sales YoY (14) % (11) % (11) % 2 % (8) % Gross Margin 18.4 % 18.0 % 19.5 % 18.5 % 21.0 % GAAP EFO $118.6M $91.9M $131.9M $100.0M $131.1M GAAP EFO YoY (8) % 2 % 16 % 29 % 11 % GAAP EFO Margin 5.0 % 4.1 % 5.9 % 4.2 % 6.1 % Adjusted EFO* $129.7M $119.8M $148.7M $121.8M $131.1M Adjusted EFO* YoY (8) % 12 % 16 % 30 % 1 % Adjusted EFO* Margin 5.5 % 5.3 % 6.6 % 5.1 % 6.1 % GAAP Diluted EPS $2.17 $1.62 $2.42 $1.74 $2.27 GAAP Diluted EPS YoY (10) % 3 % 14 % 30 % 5 % Adjusted Diluted EPS* $2.56 $2.37 $2.98 $2.37 $2.46 Adjusted Diluted EPS* YoY (8) % 19 % 18 % 33 % (4) % Twelve Months Ended Q1-23 Q2-23 Q3-23 2023 Q1-24 Q2-24 Net Sales YoY 2 % (7) % (10) % (12) % (9) % (7) % Gross Margin 16.3 % 16.9 % 17.5 % 18.2 % 18.6 % 19.2 % GAAP EFO $411.3M $400.4M $402.0M $419.8M $442.3M $454.8M GAAP EFO YoY 19 % 4 % 2 % 1 % 8 % 14 % GAAP EFO Margin 4.1 % 4.1 % 4.3 % 4.6 % 4.8 % 5.0 % Adjusted EFO* $471.0M $459.0M $471.7M $492.1M $519.9M $521.3M Adjusted EFO* YoY 23 % 7 % 7 % 5 % 10 % 14 % Adjusted EFO* Margin 4.7 % 4.7 % 5.0 % 5.4 % 5.6 % 5.8 % GAAP Diluted EPS $7.47 $7.22 $7.26 $7.55 $7.95 $8.05 GAAP Diluted EPS YoY 19 % 1 % 1 % (1) % 6 % 11 % Adjusted Diluted EPS* $9.09 $8.86 $9.25 $9.69 $10.28 $10.17 Adjusted Diluted EPS* YoY 19 % 4 % 7 % 6 % 13 % 15 %
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 244 Services Financial Metrics Three Months Ended Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 Services Revenue $404M $376M $408M $416M $435M Services Revenue YoY 2% 3% 6% 17% 8% Services Gross Profit $237M $216M $248M $249M $263M Insight Core Services Gross Profit $72M $71M $69M $76M $81M Agent Services* Gross Profit $165M $145M $178M $173M $182M Services Gross Profit YoY 6% 16% 16% 27% 11% Insight Core Services Gross Profit YoY 7% 20% 7% 24% 12% Agent Services* Gross Profit YoY 5% 14% 20% 28% 11% Services Gross Margin 59% 57% 61% 60% 60% Insight Core Services Gross Margin 30% 31% 30% 31% 32% Agent Services* Gross Margin 100% 100% 100% 100% 100% Twelve Months Ended Q1-23 Q2-23 Q3-23 2023 Q1-24 Q2-24 Services Revenue $1,499M $1,509M $1,520M $1,544M $1,604M $1,635M Services Revenue YoY 11% 7% 5% 4% 7% 8% Services Gross Profit $821M $833M $863M $897M $949M $976M Insight Core Services Gross Profit $252M $257M $269M $273M $288M $297M Agent Services* Gross Profit $568M $576M $594M $624M $662M $679M Services Gross Profit YoY 13% 10% 12% 12% 16% 17% Insight Core Services Gross Profit YoY 9% 6% 9% 8% 14% 15% Agent Services* Gross Profit YoY 15% 12% 13% 14% 16% 18% Services Gross Margin 55% 55% 57% 58% 59% 60% Insight Core Services Gross Margin 27% 28% 29% 30% 31% 31% Agent Services* Gross Margin 100% 100% 100% 100% 100% 100% * Represents agent services other than those included in Insight Core services Note 1: Insight Core services is defined as services Insight delivers and manages Note 2: Numbers may not foot due to immaterial rounding
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 254 * See Appendix for reconciliation of non-GAAP measures ** In constant currency for EMEA and APAC. Reference “Constant currency” section on slide 2 of this presentation GEO Financial Metrics Three Months Ended June 30, 2024 Six Months Ended June 30, 2024 North America EMEA APAC North America EMEA APAC Net Sales $1.7B $368.9M $60.4M $3.6B $781.7M $122.3M Net Sales YoY** (9%) (6%) 1% (3%) (6%) 1% Gross Profit $354.1M $79.1M $20.1M $704.0M $154.2M $36.2M Gross Profit YoY** 3% 10% 13% 7% 14% 11% Gross Margin 20.4% 21.5% 33.3% 19.4% 19.7% 29.6% Gross Margin YoY 230 bps 310 bps 360 bps 180 bps 350 bps 270 bps GAAP EFO $101.8M $21.0M $8.3M $185.8M $32.2M $13.0M GAAP EFO YoY** 7% 30% 21% 17% 20% 21% Adjusted EFO* $103.4M $19.2M $8.4M $206.2M $33.2M $13.4M Adjusted EFO* YoY** (1%) 9% 21% 13% 12% 22%
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 264 Adjusted EBITDA and Debt Covenants Twelve Months Ended June 30, US Dollars in $000s 2024 2023 Adjusted Consolidated EBITDA: Net earnings $ 305,326 $ 265,247 Interest expense 57,960 46,391 Taxes 102,445 90,328 Depreciation and amortization of property and equipment 27,861 25,335 Amortization of intangible assets 51,918 33,658 Gain on revaluation of earnout liabilities (24,207) — Other* 38,811 24,999 Adjusted consolidated EBITDA $ 560,114 $ 485,958 Net earnings as a % of net sales 3.4 % 2.7 % Adjusted consolidated EBITDA margin 6.2 % 5.0 % Add: Non-cash stock-based compensation 29,188 28,939 Adjusted Consolidated EBITDAS 589,302 514,897 Less: Capital expenditures (44,694) (36,885) Adjusted consolidated EBITDAS for FCCR Ratio $ 544,608 $ 478,012 Taxes and interest** $ 148,566 $ 120,022 Fixed Charge Coverage Ratio 3.7 4.0 Fixed Charge Coverage $544,608 $148,566 EBITDA-Dividends-CAPEX Fixed Charges $— $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 $550,000 Total Leverage Ratio $995,072 $589,302 Consolidated Funded Indebtedness Adjusted Consolidated EBITDAS $— $300,000 $600,000 $900,000 $1,200,000 * “Other” includes (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring related expenses, (iii) transformation costs, (iv) certain acquisition and integration related expenses, and (v) certain third-party data center service outage related expenses and recoveries, as applicable ** Tax expense plus interest expense less non-cash imputed interest under the Company’s inventory financing facilities 3.67x 1.69x
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 274 Reconciliation of GAAP to Non-GAAP Financial Measures* Three Months Ended June 30, Six Months Ended June 30, US Dollars in $000s 2024 2023 2022 2024 2023 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 131,073 $ 118,611 $ 129,556 $ 231,059 $ 196,072 Amortization of intangible assets 17,357 8,285 7,904 32,282 16,595 Gain on revaluation of earnout liabilities (25,148) — — (24,207) — Other** 7,810 2,812 4,234 13,708 10,998 Adjusted non-GAAP consolidated EFO $ 131,092 $ 129,708 $ 141,694 $ 252,842 $ 223,665 GAAP EFO as a percentage of net sales 6.1 % 5.0 % 4.7 % 5.1 % 4.2 % Adjusted non-GAAP EFO as a percentage of net sales 6.1 % 5.5 % 5.2 % 5.6 % 4.8 % * The non-GAAP financial measures are referred to as “Adjusted”. Adjusted earnings from operations, Adjusted net earnings and Adjusted diluted earnings per share exclude (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring-related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration-related expenses, (vi) gains and losses from revaluation of acquisition related earnout liabilities, (vii) certain third-party data center service outage related expenses and recoveries, and (viii) the tax effects of each of these items, as applicable ** Includes transformation costs of $5.6 million and $6.2 million for the three months ended June 30, 2024 and 2023, respectively, and $7.9 million and $10.3 million for the six months ended June 30, 2024 and 2023, respectively
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 284 Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Three Months Ended June 30, Six Months Ended June 30, US Dollars in $000s, except per share data 2024 2023 2022 2024 2023 Adjusted Consolidated Net Earnings: GAAP consolidated net earnings $ 87,444 $ 80,482 $ 89,184 $ 154,471 $ 130,454 Amortization of intangible assets 17,357 8,285 7,904 32,282 16,595 Gain on revaluation of earnout liabilities (25,148) — — (24,207) — Other** 7,810 2,812 4,234 13,708 10,998 Income taxes on non-GAAP adjustments (734) (3,032) (3,078) (6,173) (7,233) Adjusted non-GAAP consolidated net earnings $ 86,729 $ 88,547 $ 98,244 $ 170,081 $ 150,814 Adjusted Diluted Earnings Per Share: GAAP diluted EPS $ 2.27 $ 2.17 $ 2.42 $ 4.01 $ 3.51 Amortization of intangible assets 0.45 0.22 0.21 0.84 0.45 Gain on revaluation of earnout liabilities (0.65) — — (0.63) — Other 0.20 0.08 0.11 0.36 0.30 Income taxes on non-GAAP adjustments (0.02) (0.08) (0.08) (0.16) (0.19) Impact of benefit from note hedge 0.21 0.17 0.12 0.41 0.27 Adjusted non-GAAP diluted EPS $ 2.46 $ 2.56 $ 2.78 $ 4.83 $ 4.34 Shares used in diluted EPS calculation 38,567 37,039 36,821 38,501 37,123 Impact of benefit from note hedge (3,322) (2,516) (1,539) (3,275) (2,413) Shares used in Adjusted non-GAAP diluted EPS calculation 35,245 34,523 35,282 35,226 34,710 * The non-GAAP financial measures are referred to as “Adjusted”. Adjusted earnings from operations, Adjusted net earnings and Adjusted diluted earnings per share exclude (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring-related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration-related expenses, (vi) gains and losses from revaluation of acquisition related earnout liabilities, (vii) certain third-party data center service outage related expenses and recoveries, and (viii) the tax effects of each of these items, as applicable ** Includes transformation costs of $5.6 million and $6.2 million for the three months ended June 30, 2024 and 2023, respectively, and $7.9 million and $10.3 million for the six months ended June 30, 2024 and 2023, respectively
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 294 Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Three Months Ended June 30, Six Months Ended June 30, US Dollars in $000s 2024 2023 2024 2023 Adjusted North America Earnings from Operations: GAAP EFO from North America segment $ 101,813 $ 95,436 $ 185,836 $ 158,622 Amortization of intangible assets 15,588 7,766 28,734 15,551 Gain on revaluation of earnout liabilities (20,684) — (20,219) — Other** 6,712 1,757 11,862 9,094 Adjusted non-GAAP EFO from North America segment $ 103,429 $ 104,959 $ 206,213 $ 183,267 Adjusted EMEA Earnings from Operations: GAAP EFO from EMEA segment $ 21,007 $ 16,267 $ 32,197 $ 26,548 Amortization of intangible assets 1,660 408 3,330 820 Gain on revaluation of earnout liabilities (4,464) — (3,988) — Other 1,013 1,007 1,691 1,843 Adjusted non-GAAP EFO from EMEA segment $ 19,216 $ 17,682 $ 33,230 $ 29,211 Adjusted APAC Earnings from Operations: GAAP EFO from APAC segment $ 8,253 $ 6,908 $ 13,026 $ 10,902 Amortization of intangible assets 109 111 218 224 Other 85 48 155 61 Adjusted non-GAAP EFO from APAC segment $ 8,447 $ 7,067 $ 13,399 $ 11,187 * The non-GAAP financial measures are referred to as “Adjusted”. Adjusted earnings from operations, Adjusted net earnings and Adjusted diluted earnings per share exclude (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring-related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration-related expenses, (vi) gains and losses from revaluation of acquisition related earnout liabilities, (vii) certain third-party data center service outage related expenses and recoveries, and (viii) the tax effects of each of these items, as applicable ** Includes transformation costs of $5.6 million and $6.2 million for the three months ended June 30, 2024 and 2023, respectively, and $7.9 million and $10.3 million for the six months ended June 30, 2024 and 2023, respectively
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 304 Three Months Ended Six Months Ended June 30, June 30, US Dollars in $000s 2024 2023 2024 2023 Adjusted Consolidated EBITDA: GAAP consolidated net earnings $ 87,444 $ 80,482 $ 154,471 $ 130,454 Interest expense 16,859 11,056 32,128 22,744 Income tax expense 29,908 28,784 51,073 45,173 Depreciation and amortization of property and equipment 7,208 6,200 14,169 12,553 Amortization of intangible assets 17,357 8,285 32,282 16,595 Gain on revaluation of earnout liabilities (25,148) — (24,207) — Other* 7,810 2,812 13,708 10,998 Adjusted non-GAAP EBITDA $ 141,438 $ 137,619 $ 273,624 $ 238,517 Net earnings as a % of net sales 4.0 % 3.4 % 3.4 % 2.8 % Adjusted non-GAAP EBITDA margin 6.5 % 5.9 % 6.0 % 5.1 % * Includes transformation costs of $5.6 million and $6.2 million for the three months ended June 30, 2024 and 2023, respectively, and $7.9 million and $10.3 million for the six months ended June 30, 2024 and 2023, respectively Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 314 Reconciliation of GAAP to Non-GAAP Financial Measures (continued) 1 Assumed tax rate of 26.0% 2 Average of previous five quarters 3 Computed as GAAP consolidated EFO, net of tax of $118,243 and $104,095 for the twelve months ended June 30, 2024 and 2023, respectively, divided by invested capital 4 Computed as Adjusted non-GAAP consolidated EFO, net of tax, divided by invested capital 5 Includes transformation costs of $14.2 million and $21.1 million for the twelve months ended June 30, 2024 and 2023, respectively. Includes certain third-party data center service outage related expenses, net of recoveries of $1.6 million for the twelve months ended June 30, 2024 Twelve Months Ended June 30, US Dollars in $000s 2024 2023 Adjusted Return on Invested Capital: GAAP consolidated EFO $ 454,782 $ 400,367 Amortization of intangible assets 51,918 33,658 Gain on revaluation of earnout liabilities (24,207) — Other5 38,811 24,999 Adjusted non-GAAP consolidated EFO $ 521,304 $ 459,024 Income tax expense1 135,539 119,346 Adjusted non-GAAP consolidated EFO, net of tax $ 385,765 $ 339,678 Average stockholders’ equity2 $ 1,706,754 $ 1,602,902 Average debt2 835,041 737,496 Average cash2 (268,885) (161,900) Invested Capital $ 2,272,910 $ 2,178,498 Adjusted non-GAAP ROIC (from GAAP consolidated EFO)3 14.8 % 13.6 % Adjusted non-GAAP ROIC (from non-GAAP consolidated EFO)4 17.0 % 15.6 %
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 324 Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Three Months Ended June 30, Six Months Ended June 30, US Dollars in $000s 2024 2023 2024 2023 Adjusted Consolidated Selling and Administrative Expenses: GAAP selling and administrative expenses $ 317,234 $ 318,243 $ 654,668 $ 628,244 Less: Gain on revaluation of earnout liabilities (25,148) — (24,207) — Less: Other* 20,109 14,761 37,424 27,404 Adjusted non-GAAP selling and administrative expenses $ 322,273 $ 303,482 $ 641,451 $ 600,840 GAAP selling and adminstrative expenses** 14.7 % 13.5 % 14.4 % 13.4 % Adjusted non-GAAP selling and administrative expenses** 14.9 % 12.9 % 14.1 % 12.9 % * “Other” includes (i) amortization of intangible assets, (ii) certain executive recruitment and hiring-related expenses, (iii) transformation costs, and (v) certain third-party data center service outage related expense recoveries ** As a percentage of IEI net sales
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 334 Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Twelve Months Ended June 30, US Dollars in $000s 2024 Adjusted Free Cash Flow: Net cash provided by operating activities $ 724,535 Less: Purchases of property and equipment 44,694 Adjusted non-GAAP free cash flow $ 679,841 Net cash used in investing activities $ (786,562) Net cash provided by financing activities $ 123,724 Adjusted Consolidated Net Earnings: GAAP consolidated net earnings $ 305,326 Amortization of intangible assets 51,918 Gain on revaluation of earnout liabilities (24,207) Other 38,811 Income taxes on non-GAAP adjustments (16,956) Adjusted non-GAAP consolidated net earnings $ 354,892 Net cash provided by operating activities as % net earnings 237 % Adjusted free cash flow as % of adjusted net earnings 192 % * The non-GAAP financial measures are referred to as “Adjusted”. Adjusted earnings from operations, Adjusted net earnings and Adjusted diluted earnings per share exclude (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring-related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration-related expenses, (vi) gains and losses from revaluation of acquisition related earnout liabilities, (vii) certain third-party data center service outage related expenses and recoveries, and (viii) the tax effects of each of these items, as applicable
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 344 Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Three Months Ended Three Months Ended Three Months Ended September 30, December 31, March 31, US Dollars in $000s, except per share data 2023 2022 2023 2022 2024 2023 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 91,862 $ 90,279 $ 131,861 $ 114,016 $ 99,986 $ 77,461 Amortization of intangible assets 8,648 8,986 10,988 8,077 14,925 8,310 Other 19,280 7,829 5,823 6,172 6,839 8,186 Adjusted non-GAAP consolidated EFO $ 119,790 $ 107,094 $ 148,672 $ 128,265 $ 121,750 $ 93,957 GAAP EFO as a percentage of net sales 4.1 % 3.6 % 5.9 % 4.6 % 4.2% 3.3% Adjusted non-GAAP EFO as a percentage of net sales 5.3 % 4.2 % 6.6 % 5.1 % 5.1% 4.0% Adjusted Consolidated Net Earnings: GAAP consolidated net earnings $ 60,247 $ 57,316 $ 90,608 $ 77,477 $ 67,027 $ 49,972 Amortization of intangible assets 8,648 8,986 10,988 8,077 14,925 8,310 Other 19,280 7,829 5,823 6,172 6,839 8,186 Income taxes on non-GAAP adjustments (6,496) (4,295) (4,287) (3,533) (5,439) (4,201) Adjusted non-GAAP consolidated net earnings $ 81,679 $ 69,836 $ 103,132 $ 88,193 $ 83,352 $ 62,267 Adjusted Diluted Earnings Per Share: GAAP diluted EPS $ 1.62 $ 1.58 $ 2.42 $ 2.13 $ 1.74 $ 1.34 Amortization of intangible assets 0.23 0.25 0.29 0.22 0.39 0.22 Other 0.52 0.22 0.16 0.17 0.18 0.22 Income taxes on non-GAAP adjustments (0.17) (0.12) (0.11) (0.10) (0.14) (0.11) Impact of benefit from note hedge 0.17 0.06 0.22 0.11 0.20 0.11 Adjusted non-GAAP diluted EPS $ 2.37 $ 1.99 $ 2.98 $ 2.53 $ 2.37 $ 1.78 Shares used in diluted EPS calculation 37,203 36,340 37,513 36,336 38,435 37,207 Impact of benefit from note hedge (2,774) (1,187) (2,874) (1,459) (3,228) (2,310) Shares used in Adjusted non-GAAP diluted EPS calculation 34,429 35,153 34,639 34,877 35,207 34,897 * The non-GAAP financial measures are referred to as “Adjusted”. Adjusted earnings from operations, Adjusted net earnings and Adjusted diluted earnings per share exclude (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring-related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration-related expenses, (vi) gains and losses from revaluation of acquisition related earnout liabilities, (vii) certain third-party data center service outage related expenses and recoveries, and (viii) the tax effects of each of these items, as applicable
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 354 Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) * The non-GAAP financial measures are referred to as “Adjusted”. Adjusted earnings from operations, Adjusted net earnings and Adjusted diluted earnings per share exclude (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring-related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration-related expenses, (vi) gains and losses from revaluation of acquisition related earnout liabilities, (vii) certain third-party data center service outage related expenses and recoveries, and (viii) the tax effects of each of these items, as applicable US Dollars in $000s TTM Q1-22 TTM Q2-22 TTM Q3-22 2022 TTM Q1-23 TTM Q2-23 TTM Q3-23 2023 TTM Q1-24 TTM Q2-24 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 344,886 $ 385,973 $ 393,101 $ 413,700 $ 411,312 $ 400,367 $ 401,950 $ 419,795 $ 442,320 $ 454,782 Amortization of intangible assets 31,929 31,765 32,763 32,892 33,277 33,658 33,320 36,231 42,846 51,918 Change in fair value of earnout liabilities — — — — — — — — 941 (24,207) Other 6,889 9,996 15,429 20,018 26,421 24,999 36,450 36,101 33,813 38,811 Adjusted non-GAAP consolidated EFO $ 383,704 $ 427,734 $ 441,293 $ 466,610 $ 471,010 $ 459,024 $ 471,720 $ 492,127 $ 519,920 $ 521,304 GAAP EFO as a percentage of net sales 3.5 % 3.7 % 3.7 % 4.0 % 4.1 % 4.1 % 4.3 % 4.6 % 4.8 % 5.0 % Adjusted non-GAAP EFO as a percentage of net sales 3.9 % 4.1 % 4.2 % 4.5 % 4.7 % 4.7 % 5.0 % 5.4 % 5.6 % 5.8 %
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 364 Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) * The non-GAAP financial measures are referred to as “Adjusted”. Adjusted earnings from operations, Adjusted net earnings and Adjusted diluted earnings per share exclude (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring-related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration-related expenses, (vi) gains and losses from revaluation of acquisition related earnout liabilities, (vii) certain third-party data center service outage related expenses and recoveries, and (viii) the tax effects of each of these items, as applicable US Dollars in $000s, except per share data TTM Q1-22 TTM Q2-22 TTM Q3-22 2022 TTM Q1-23 TTM Q2-23 TTM Q3-23 2023 TTM Q1-24 TTM Q2-24 Adjusted Consolidated Net Earnings: GAAP consolidated net earnings $ 232,808 $ 263,431 $ 265,264 $ 280,608 $ 273,949 $ 265,247 $ 268,178 $ 281,309 $ 298,364 $ 305,326 Amortization of intangible assets 31,929 31,765 32,763 32,892 33,277 33,658 33,320 36,231 42,846 51,918 Amortization of debt discount and issuance costs 9,141 6,128 3,079 — — — — — — — Change in fair value of earnout liabilities — — — — — — — — 941 (24,207) Other 6,889 9,996 15,429 20,018 26,421 24,999 36,450 36,101 33,813 38,811 Income taxes on non-GAAP adjustments (11,806) (11,843) (12,966) (13,306) (15,107) (15,061) (17,262) (18,016) (19,254) (16,956) Adjusted non-GAAP consolidated net earnings $ 268,961 $ 299,477 $ 303,569 $ 320,212 $ 318,540 $ 308,843 $ 320,686 $ 335,625 $ 356,710 $ 354,892 Adjusted Diluted Earnings Per Share: GAAP diluted EPS $ 6.30 $ 7.15 $ 7.22 $ 7.66 $ 7.47 $ 7.22 $ 7.26 $ 7.55 $ 7.95 $ 8.05 Amortization of intangible assets 0.86 0.86 0.89 0.90 0.91 0.92 0.90 0.97 1.14 1.37 Amortization of debt discount and issuance costs 0.25 0.17 0.08 — — — — — — — Change in fair value of earnout liabilities — — — — — — — — 0.03 (0.64) Other 0.19 0.27 0.42 0.55 0.72 0.68 0.99 0.97 0.90 1.02 Income taxes on non-GAAP adjustments (0.32) (0.32) (0.35) (0.36) (0.41) (0.41) (0.47) (0.48) (0.51) (0.45) Impact of benefit from note hedge 0.33 0.36 0.35 0.36 0.40 0.45 0.57 0.68 0.77 0.82 Adjusted non-GAAP diluted EPS $ 7.61 $ 8.49 $ 8.61 $ 9.11 $ 9.09 $ 8.86 $ 9.25 $ 9.69 $ 10.28 $ 10.17 Shares used in diluted EPS calculation 36,933 36,855 36,753 36,620 36,676 36,731 36,946 37,241 37,548 37,930 Impact of benefit from note hedge (1,612) (1,583) (1,501) (1,466) (1,624) (1,868) (2,264) (2,619) (2,848) (3,050) Shares used in Adjusted non-GAAP diluted EPS calculation 35,321 35,272 35,252 35,154 35,052 34,863 34,682 34,622 34,700 34,880
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 374 Financial Results by Offering Category US Dollars in $000s Q2-22 Q3-22 Q4-22 FY 2022 Q1-23 Q2-23 Q3-23 Q4-23 FY 2023 Q1-24 Q2-24 Consolidated IEI by Offering Category Hardware $ 1,731,116 $ 1,572,275 $ 1,473,916 $ 6,450,895 $ 1,328,845 $ 1,310,273 $ 1,301,155 $ 1,148,664 $ 5,088,937 $ 1,134,727 $ 1,172,641 Software 618,126 596,922 645,145 2,496,892 638,800 635,336 588,999 679,316 2,542,451 829,228 553,794 Total Products 2,349,242 2,169,197 2,119,061 8,947,787 1,967,645 1,945,609 1,890,154 1,827,980 7,631,388 1,963,955 1,726,435 Agent Services 168,373 138,617 159,546 592,585 143,543 178,948 154,168 188,305 664,964 183,634 197,798 Insight Delivered Services 225,762 226,540 224,003 890,819 212,759 225,039 221,964 219,726 879,488 231,896 237,429 Total Services 394,135 365,157 383,549 1,483,404 356,302 403,987 376,132 408,031 1,544,452 415,530 435,227 Total Net Sales $ 2,743,377 $ 2,534,354 $ 2,502,610 $ 10,431,191 $ 2,323,947 $ 2,349,596 $ 2,266,286 $ 2,236,011 $ 9,175,840 $ 2,379,485 $ 2,161,662 Product Cost $ 2,135,895 $ 1,956,679 $ 1,911,469 $ 8,111,252 $ 1,772,729 $ 1,749,448 $ 1,697,543 $ 1,639,458 $ 6,859,178 $ 1,771,584 $ 1,536,270 Services Cost 169,593 178,417 170,582 683,372 159,903 166,958 159,873 160,403 647,137 166,973 172,027 Total Cost of Goods Sold $ 2,305,488 $ 2,135,096 $ 2,082,051 $ 8,794,624 $ 1,932,632 $ 1,916,406 $ 1,857,416 $ 1,799,861 $ 7,506,315 $ 1,938,557 $ 1,708,297 Product Gross Profit $ 213,347 $ 212,518 $ 207,592 $ 836,535 $ 194,916 $ 196,161 $ 192,611 $ 188,522 $ 772,210 $ 192,371 $ 190,165 Services Gross Profit 224,542 186,740 212,967 800,032 196,399 237,029 216,259 247,628 897,315 248,557 263,200 Total Gross Profit $ 437,889 $ 399,258 $ 420,559 $ 1,636,567 $ 391,315 $ 433,190 $ 408,870 $ 436,150 $ 1,669,525 $ 440,928 $ 453,365 % of Total Net Sales Hardware 63 % 62 % 59 % 62 % 57 % 56 % 57 % 51 % 55 % 48 % 54 % Software 23 % 24 % 26 % 24 % 27 % 27 % 26 % 30 % 28 % 35 % 26 % Total Products 86 % 86 % 85 % 86 % 85 % 83 % 83 % 82 % 83 % 83 % 80 % Agent Services 6 % 5 % 6 % 6 % 6 % 8 % 7 % 8 % 7 % 8 % 9 % Insight Delivered Services 8 % 9 % 9 % 9 % 9 % 10 % 10 % 10 % 10 % 10 % 11 % Total Services 14 % 14 % 15 % 14 % 15 % 17 % 17 % 18 % 17 % 17 % 20 % % of Total Services Net Sales Agent Services 43 % 38 % 42 % 40 % 40 % 44 % 41 % 46 % 43 % 44 % 45 % Insight Delivered Services 57 % 62 % 58 % 60 % 60 % 56 % 59 % 54 % 57 % 56 % 55 % Note: Numbers may not foot or cross foot due to immaterial rounding
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 384 Cloud Gross Profit Reconciliation US Dollars in $000s Q2-22 Q3-22 Q4-22 FY 2022 Q1-23 Q2-23 Q3-23 Q4-23 FY 2023 Q1-24 Q2-24 Cloud Gross Profit Reconciliation Cloud Gross Profit* $ 94,590 $ 75,611 $ 85,651 $ 315,528 $ 84,132 $ 105,210 $ 89,005 $ 121,478 $ 399,825 $ 106,993 $ 129,933 Cloud Services Gross Profit** 8,321 6,827 5,238 24,465 3,639 9,536 7,392 8,412 28,979 9,703 9,013 Cloud and Cloud Services Gross Profit*** $ 102,911 $ 82,438 $ 90,889 $ 339,993 $ 87,771 $ 114,746 $ 96,397 $ 129,890 $ 428,804 $ 116,696 $ 138,946 * Reported in agent services gross profit ** Includes managed cloud services and certain partner cloud incentive fees and reported in Insight Core services gross profit *** Reported in services gross profit
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 394 Convertible Senior Notes (Illustrative example) • Insight Convertible Senior Notes - $350 million principal • Required to settle the convertible notes principal/par value in cash • Excess required to be settled in shares resulting in dilution in GAAP reported Diluted Earnings Per Share (“DEPS”) • DEPS incremental shares for GAAP reporting purposes are not issued at the time of reporting and are a non-GAAP exclusion for the Company (up to the strike price of the warrants of $103.12) • The bond hedge effectively raises the potential dilution point of the convertible notes and call spread from $68.32 up to $103.12, as illustrated below: NSIT stock price Relevance of stock price Net shares owed on Convertible Notes Net shares received from bond hedge Net shares owed on Warrants GAAP additional dilution * Non-GAAP additional dilution * $ 51.56 Price at issuance of Notes — — — — — $ 68.32 Conversion price of Notes — — — — — $ 88.82 Market trigger price 1,182,606 (1,182,606) — 1,182,606 — $ 103.12 Warrants strike price 1,729,056 (1,729,056) — 1,729,056 — $ 120.00 Example average quarterly stock price 2,206,493 (2,206,493) 720,658 2,927,151 720,658 $ 140.00 Example average quarterly stock price 2,623,160 (2,623,160) 1,349,587 3,972,747 1,349,587 $ 150.00 Example average quarterly stock price 2,789,827 (2,789,827) 1,601,158 4,390,985 1,601,158 Example calculation - net shares owed on Warrants Warrants issued [a] Excess ave. share price [b] Value of excess [c = a x b] Dilutive shares [d = c / $120] $120 average share price for quarter 5,123,160 $ 16.88 $ 86,478,941 720,658 *Additional shares to be included in our weighted average shares outstanding calculation for each quarter
v3.24.2.u1
Cover
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Aug. 01, 2024 |
| Cover [Abstract] |
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8-K
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| Document Period End Date |
Aug. 01, 2024
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| Entity Registrant Name |
INSIGHT ENTERPRISES, INC.
|
| Entity Incorporation, State or Country Code |
DE
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| Entity File Number |
0-25092
|
| Entity Tax Identification Number |
86-0766246
|
| Entity Address, Address Line One |
2701 East Insight Way,
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| Entity Address, City or Town |
Chandler,
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AZ
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85286
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480
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333-3000
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Common stock, par value $0.01
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NSIT
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NASDAQ
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