0000932696false00009326962024-10-312024-10-31
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): October 31, 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 October 31, 2024, Insight Enterprises, Inc. announced by press release its results of operations for the third quarter ended September 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: | October 31, 2024 | By: | | /s/ Rachael A. Crump |
| | | | Rachael A. Crump |
| | | | Chief Accounting Officer |
| | | | | |
FOR IMMEDIATE RELEASE | NASDAQ: NSIT |
INSIGHT ENTERPRISES, INC. REPORTS
THIRD QUARTER RESULTS
CHANDLER, AZ – October 31, 2024 – Insight Enterprises, Inc. (NASDAQ: NSIT) (the “Company”) today reported financial results for the quarter ended September 30, 2024. Highlights include:
•Gross profit increased 6% year over year to $432.1 million with gross margin expanding 270 basis points to 20.7%
•Insight Core services gross profit grew 14% year over year
•Cloud gross profit grew 33% year over year
•Consolidated net earnings decreased 3% to $58.2 million, year to year
•Adjusted earnings before interest, tax, depreciation and amortization (“EBITDA”) was flat at $128.8 million, year over year
•Diluted earnings per share of $1.52 decreased 6% year to year
•Adjusted diluted earnings per share of $2.19 decreased 8% year to year
In the third quarter of 2024, net sales decreased 8%, year to year, to $2.1 billion, while gross profit increased 6%, year over year, to $432.1 million. Gross margin expanded 270 basis points compared to the third quarter of 2023 to 20.7%. Earnings from operations of $92.9 million increased 1% compared to $91.9 million in the third quarter of 2023. Adjusted earnings from operations of $120.1 million was relatively flat compared to $119.8 million in the third quarter of 2023. Consolidated net earnings were $58.2 million, or 2.8% of net sales, in the third quarter of 2024, and Adjusted consolidated net earnings were $77.0 million, or 3.7% of net sales. Diluted earnings per share for the quarter was $1.52, down 6%, year to year, and Adjusted diluted earnings per share was $2.19, down 8%, year to year.
“We are optimistic about the business’s long-term health; however, the third quarter did not meet our expectations, and we anticipate the information technology spending environment will remain cautious in the near term,” stated Joyce Mullen, President and Chief Executive Officer. “We continue to execute on our solutions integrator strategy, delivering strong cloud growth and solid Insight Core Services results fueled by our acquisitions,” Mullen stated.
KEY HIGHLIGHTS
Results for the Quarter:
•Consolidated net sales for the third quarter of 2024 of $2.1 billion decreased 8%, year to year, when compared to the third quarter of 2023. Product net sales decreased 11%, year to year, while services net sales increased 10%, year over year.
•Net sales in North America decreased 8%, year to year, to $1.7 billion;
◦Product net sales decreased 11%, year to year, to $1.4 billion;
◦Services net sales increased 9%, year over year, to $325.4 million;
•Net sales in EMEA decreased 12%, year to year, to $312.6 million; and
•Net sales in APAC increased 15%, year over year, to $58.7 million.
•Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales also decreased 8%, year to year, with decreases in net sales in North America and EMEA of 8% and 13% year to year, respectively, while net sales in APAC increased 13%, 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 6% compared to the third quarter of 2023 to $432.1 million, with consolidated gross margin expanding 270 basis points to 20.7% of net sales. Product gross profit decreased 3%, year to year, and services gross profit increased 13%, year over year. Cloud gross profit grew 33%, year over year, and Insight Core services gross profit increased 14%, year over year. By segment, gross profit:
•increased 4% in North America, year over year, to $348.1 million (20.3% gross margin);
•increased 11% in EMEA, year over year, to $66.4 million (21.2% gross margin); and
•increased 15% in APAC, year over year, to $17.6 million (30.1% 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 4%, 9% and 13%, respectively, year over year.
•Consolidated earnings from operations increased 1% compared to the third quarter of 2023 to $92.9 million, or 4.4% of net sales. By segment, earnings from operations:
•decreased 6% in North America, year to year, to $80.8 million, or 4.7% of net sales;
•increased by more than 100% in EMEA, year over year, to $6.7 million, or 2.1% of net sales; and
•increased 31% in APAC, year over year, to $5.4 million, or 9.1% of net sales.
•Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations were also up 1%, year over year, with increased earnings from operations in EMEA and APAC of over 100% and 28%, year over year, respectively, partially offset by a decrease in earnings from operations in North America of 6%, year to year.
•Adjusted earnings from operations was relatively flat compared to the third quarter of 2023 at $120.1 million, or 5.8% of net sales. By segment, Adjusted earnings from operations:
•decreased 3% in North America, year to year, to $106.6 million, or 6.2% of net sales;
•increased 30% in EMEA, year over year, to $8.1 million, or 2.6% of net sales; and
•increased 30% in APAC, year over year, to $5.5 million, or 9.3% of net sales.
•Excluding the effects of fluctuating foreign currency exchange rates, Adjusted consolidated earnings from operations was flat compared to the third quarter of 2023, with increased Adjusted earnings from operations in EMEA and APAC of 25% and 28%, year over year, respectively, offset by a decrease in Adjusted earnings from operations in North America of 2%, year to year.
•Consolidated net earnings and diluted earnings per share for the third quarter of 2024 were $58.2 million and $1.52, respectively, at an effective tax rate of 22.5%.
•Adjusted consolidated net earnings and Adjusted diluted earnings per share for the third quarter of 2024 were $77.0 million and $2.19, respectively. Excluding the effects of fluctuating foreign currency exchange rates, Adjusted diluted earnings per share decreased 8% year to year.
In discussing financial results for the three and nine months ended September 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. The Company believes providing this information excluding the effects of fluctuating foreign currency exchange rates provides valuable supplemental information to investors regarding its underlying business and results of operations, consistent with how the Company and its management evaluate the Company’s 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.
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| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
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.
GUIDANCE
For the full year 2024, we now expect Adjusted diluted earnings per share to be between $9.40 and $9.70. We also now expect to deliver mid single-digit gross profit growth and continue to expect that our gross margin will be in the 19% to 20% range.
This outlook assumes:
•interest expense of $58 to $60 million;
•an effective tax rate of approximately 25.5% 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 $70 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 third 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 third 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.
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| | - MORE - | | |
| Insight Enterprises, Inc. | 2701 E. Insight Way | Chandler, Arizona 85286 | 800.467.4448 | FAX 480.760.8958 |
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.
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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
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | | | | | | | | | |
| | | | | | | | 2024 | | 2023 | | change | | 2024 | | 2023 | | change | | | | | | | | | | |
| Insight Enterprises, Inc. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Products | | | | | | | | $ | 1,673,779 | | $ | 1,890,154 | | (11%) | | $ | 5,364,169 | | $ | 5,803,408 | | (8%) | | | | | | | | | | |
| Services | | | | | | | | $ | 414,107 | | $ | 376,132 | | 10% | | $ | 1,264,864 | | $ | 1,136,421 | | 11% | | | | | | | | | | |
| Total net sales | | | | | | | | $ | 2,087,886 | | $ | 2,266,286 | | (8%) | | $ | 6,629,033 | | $ | 6,939,829 | | (4%) | | | | | | | | | | |
| Gross profit | | | | | | | | $ | 432,085 | | $ | 408,870 | | 6% | | $ | 1,326,378 | | $ | 1,233,375 | | 8% | | | | | | | | | | |
| Gross margin | | | | | | | | 20.7% | | 18.0% | | 270 bps | | 20.0% | | 17.8% | | 220 bps | | | | | | | | | | |
| Selling and administrative expenses | | | | | | | | $ | 329,996 | | $ | 309,793 | | 7% | | $ | 984,664 | | $ | 938,037 | | 5% | | | | | | | | | | |
| Severance and restructuring expenses, net | | | | | | | | $ | 8,543 | | $ | 2,923 | | > 100% | | $ | 15,638 | | $ | 2,955 | | > 100% | | | | | | | | | | |
| Acquisition and integration related expenses | | | | | | | | $ | 695 | | $ | 4,292 | | (84%) | | $ | 2,166 | | $ | 4,449 | | (51%) | | | | | | | | | | |
| Earnings from operations | | | | | | | | $ | 92,851 | | $ | 91,862 | | 1% | | $ | 323,910 | | $ | 287,934 | | 12% | | | | | | | | | | |
| Net earnings | | | | | | | | $ | 58,208 | | $ | 60,247 | | (3%) | | $ | 212,679 | | $ | 190,701 | | 12% | | | | | | | | | | |
| Diluted earnings per share | | | | | | | | $ | 1.52 | | $ | 1.62 | | (6%) | | $ | 5.53 | | $ | 5.13 | | 8% | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales Mix | | | | | | | | | | | | ** | | | | | | ** | | | | | | | | | | |
| Hardware | | | | | | | | 54 | % | | 57 | % | | (13%) | | 52 | % | | 57 | % | | (13%) | | | | | | | | | | |
| Software | | | | | | | | 26 | % | | 26 | % | | (9%) | | 29 | % | | 27 | % | | 3% | | | | | | | | | | |
| Services | | | | | | | | 20 | % | | 17 | % | | 10% | | 19 | % | | 16 | % | | 11% | | | | | | | | | | |
| | | | | | | | 100 | % | | 100 | % | | (8%) | | 100 | % | | 100 | % | | (4%) | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| North America | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Products | | | | | | | | $ | 1,391,176 | | $ | 1,562,861 | | (11%) | | $ | 4,380,214 | | $ | 4,695,751 | | (7%) | | | | | | | | | | |
| Services | | | | | | | | $ | 325,407 | | $ | 298,011 | | 9% | | $ | 973,548 | | $ | 896,251 | | 9% | | | | | | | | | | |
| Total net sales | | | | | | | | $ | 1,716,583 | | $ | 1,860,872 | | (8%) | | $ | 5,353,762 | | $ | 5,592,002 | | (4%) | | | | | | | | | | |
| Gross profit | | | | | | | | $ | 348,057 | | $ | 333,857 | | 4% | | $ | 1,052,007 | | $ | 992,143 | | 6% | | | | | | | | | | |
| Gross margin | | | | | | | | 20.3% | | 17.9% | | 240 bps | | 19.6% | | 17.7% | | 190 bps | | | | | | | | | | |
| Selling and administrative expenses | | | | | | | | $ | 259,954 | | $ | 244,154 | | 6% | | $ | 771,066 | | $ | 745,259 | | 3% | | | | | | | | | | |
| Severance and restructuring expenses, net | | | | | | | | $ | 7,242 | | $ | 2,650 | | > 100% | | $ | 12,783 | | $ | 1,052 | | > 100% | | | | | | | | | | |
| Acquisition and integration related expenses | | | | | | | | $ | 25 | | $ | 970 | | (97%) | | $ | 1,486 | | $ | 1,127 | | 32% | | | | | | | | | | |
| Earnings from operations | | | | | | | | $ | 80,836 | | $ | 86,083 | | (6%) | | $ | 266,672 | | $ | 244,705 | | 9% | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales Mix | | | | | | | | | | | | ** | | | | | | ** | | | | | | | | | | |
| Hardware | | | | | | | | 58 | % | | 62 | % | | (13%) | | 57 | % | | 62 | % | | (13%) | | | | | | | | | | |
| Software | | | | | | | | 23 | % | | 22 | % | | (5%) | | 25 | % | | 22 | % | | 11% | | | | | | | | | | |
| Services | | | | | | | | 19 | % | | 16 | % | | 9% | | 18 | % | | 16 | % | | 9% | | | | | | | | | | |
| | | | | | | | 100 | % | | 100 | % | | (8%) | | 100 | % | | 100 | % | | (4%) | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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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
September 30, | | Nine Months Ended
September 30, | | | | | | | | | | |
| | | | | | | | 2024 | | 2023 | | change | | 2024 | | 2023 | | change | | | | | | | | | | |
| EMEA | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Products | | | | | | | | $ | 249,642 | | $ | 300,485 | | (17%) | | $ | 881,464 | | $ | 1,006,216 | | (12%) | | | | | | | | | | |
| Services | | | | | | | | $ | 62,964 | | $ | 53,911 | | 17% | | $ | 212,856 | | $ | 166,910 | | 28% | | | | | | | | | | |
| Total net sales | | | | | | | | $ | 312,606 | | $ | 354,396 | | (12%) | | $ | 1,094,320 | | $ | 1,173,126 | | (7%) | | | | | | | | | | |
| Gross profit | | | | | | | | $ | 66,381 | | $ | 59,709 | | 11% | | $ | 220,556 | | $ | 192,644 | | 14% | | | | | | | | | | |
| Gross margin | | | | | | | | 21.2% | | 16.8% | | 440 bps | | 20.2% | | 16.4% | | 380 bps | | | | | | | | | | |
| Selling and administrative expenses | | | | | | | | $ | 57,808 | | $ | 54,435 | | 6% | | $ | 178,377 | | $ | 159,253 | | 12% | | | | | | | | | | |
| Severance and restructuring expenses | | | | | | | | $ | 1,240 | | $ | 271 | | > 100% | | $ | 2,639 | | $ | 1,840 | | 43% | | | | | | | | | | |
| Acquisition and integration related expenses | | | | | | | | $ | 668 | | $ | 3,322 | | (80%) | | $ | 678 | | $ | 3,322 | | (80%) | | | | | | | | | | |
| Earnings from operations | | | | | | | | $ | 6,665 | | $ | 1,681 | | > 100% | | $ | 38,862 | | $ | 28,229 | | 38% | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales Mix | | | | | | | | | | | | ** | | | | | | ** | | | | | | | | | | |
| Hardware | | | | | | | | 40 | % | | 39 | % | | (8%) | | 35 | % | | 37 | % | | (10%) | | | | | | | | | | |
| Software | | | | | | | | 40 | % | | 46 | % | | (24%) | | 45 | % | | 49 | % | | (14%) | | | | | | | | | | |
| Services | | | | | | | | 20 | % | | 15 | % | | 17% | | 20 | % | | 14 | % | | 28% | | | | | | | | | | |
| | | | | | | | 100 | % | | 100 | % | | (12%) | | 100 | % | | 100 | % | | (7%) | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| APAC | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Products | | | | | | | | $ | 32,961 | | $ | 26,808 | | 23% | | $ | 102,491 | | $ | 101,441 | | 1% | | | | | | | | | | |
| Services | | | | | | | | $ | 25,736 | | $ | 24,210 | | 6% | | $ | 78,460 | | $ | 73,260 | | 7% | | | | | | | | | | |
| Total net sales | | | | | | | | $ | 58,697 | | $ | 51,018 | | 15% | | $ | 180,951 | | $ | 174,701 | | 4% | | | | | | | | | | |
| Gross profit | | | | | | | | $ | 17,647 | | $ | 15,304 | | 15% | | $ | 53,815 | | $ | 48,588 | | 11% | | | | | | | | | | |
| Gross margin | | | | | | | | 30.1% | | 30.0% | | 10 bps | | 29.7% | | 27.8% | | 190 bps | | | | | | | | | | |
| Selling and administrative expenses | | | | | | | | $ | 12,234 | | $ | 11,204 | | 9% | | $ | 35,221 | | $ | 33,525 | | 5% | | | | | | | | | | |
| Severance and restructuring expenses | | | | | | | | $ | 61 | | $ | 2 | | > 100% | | $ | 216 | | $ | 63 | | > 100% | | | | | | | | | | |
| Acquisition and integration related expenses | | | | | | | | $ | 2 | | $ | — | | * | | $ | 2 | | $ | — | | * | | | | | | | | | | |
| Earnings from operations | | | | | | | | $ | 5,350 | | $ | 4,098 | | 31% | | $ | 18,376 | | $ | 15,000 | | 23% | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales Mix | | | | | | | | | | | | ** | | | | | | ** | | | | | | | | | | |
| Hardware | | | | | | | | 18 | % | | 21 | % | | (3%) | | 16 | % | | 19 | % | | (18)% | | | | | | | | | | |
| Software | | | | | | | | 38 | % | | 31 | % | | 41% | | 41 | % | | 39 | % | | 11% | | | | | | | | | | |
| Services | | | | | | | | 44 | % | | 48 | % | | 6% | | 43 | % | | 42 | % | | 7% | | | | | | | | | | |
| | | | | | | | 100 | % | | 100 | % | | 15% | | 100 | % | | 100 | % | | 4% | | | | | | | | | | |
* 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, gross margin, 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
September 30, | | Nine Months Ended
September 30, | | |
| 2024 | | 2023 | | 2024 | | 2023 | | | | |
| Net sales: | | | | | | | | | | | |
| Products | $ | 1,673,779 | | | $ | 1,890,154 | | | $ | 5,364,169 | | | $ | 5,803,408 | | | | | |
| Services | 414,107 | | | 376,132 | | | 1,264,864 | | | 1,136,421 | | | | | |
| Total net sales | 2,087,886 | | | 2,266,286 | | | 6,629,033 | | | 6,939,829 | | | | | |
| Costs of goods sold: | | | | | | | | | | | |
| Products | 1,486,271 | | | 1,697,543 | | | 4,794,125 | | | 5,219,720 | | | | | |
| Services | 169,530 | | | 159,873 | | | 508,530 | | | 486,734 | | | | | |
| Total costs of goods sold | 1,655,801 | | | 1,857,416 | | | 5,302,655 | | | 5,706,454 | | | | | |
| Gross profit | 432,085 | | | 408,870 | | | 1,326,378 | | | 1,233,375 | | | | | |
| Operating expenses: | | | | | | | | | | | |
| Selling and administrative expenses | 329,996 | | | 309,793 | | | 984,664 | | | 938,037 | | | | | |
| Severance and restructuring expenses, net | 8,543 | | | 2,923 | | | 15,638 | | | 2,955 | | | | | |
| Acquisition and integration related expenses | 695 | | | 4,292 | | | 2,166 | | | 4,449 | | | | | |
| Earnings from operations | 92,851 | | | 91,862 | | | 323,910 | | | 287,934 | | | | | |
| Non-operating expense (income): | | | | | | | | | | | |
| Interest expense, net | 16,629 | | | 12,013 | | | 43,376 | | | 31,766 | | | | | |
Other expense (income), net | 1,104 | | | (203) | | | (128) | | | 489 | | | | | |
| Earnings before income taxes | 75,118 | | | 80,052 | | | 280,662 | | | 255,679 | | | | | |
| Income tax expense | 16,910 | | | 19,805 | | | 67,983 | | | 64,978 | | | | | |
| Net earnings | $ | 58,208 | | | $ | 60,247 | | | $ | 212,679 | | | $ | 190,701 | | | | | |
| | | | | | | | | | | |
| Net earnings per share: | | | | | | | | | | | |
| Basic | $ | 1.81 | | | $ | 1.85 | | | $ | 6.55 | | | $ | 5.76 | | | | | |
| Diluted | $ | 1.52 | | | $ | 1.62 | | | $ | 5.53 | | | $ | 5.13 | | | | | |
| | | | | | | | | | | |
| Shares used in per share calculations: | | | | | | | | | | | |
| Basic | 32,216 | | | 32,574 | | | 32,459 | | | 33,127 | | | | | |
| Diluted | 38,331 | | | 37,203 | | | 38,445 | | | 37,149 | | | | | |
| | | | | | | | | | | | | | |
| | - 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)
| | | | | | | | | | | |
| September 30,
2024 | | December 31,
2023 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 317,449 | | | $ | 268,730 | |
| Accounts receivable, net | 3,897,481 | | | 3,568,290 | |
| Inventories | 151,013 | | | 184,605 | |
| Contract assets, net | 85,767 | | | 120,518 | |
| Other current assets | 208,798 | | | 189,158 | |
| Total current assets | 4,660,508 | | | 4,331,301 | |
| | | |
| Long-term contract assets, net | 105,273 | | | 132,780 | |
| Property and equipment, net | 214,878 | | | 210,061 | |
| Goodwill | 888,808 | | | 684,345 | |
| Intangible assets, net | 448,680 | | | 369,687 | |
| Long-term accounts receivable | 828,465 | | | 412,666 | |
| Other assets | 139,831 | | | 145,510 | |
| $ | 7,286,443 | | | $ | 6,286,350 | |
| | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable – trade | $ | 2,683,323 | | | $ | 2,255,183 | |
| Accounts payable – inventory financing facilities | 235,192 | | | 231,850 | |
| | | |
| Accrued expenses and other current liabilities | 493,175 | | | 538,346 | |
| Current portion of long-term debt | 332,439 | | | 348,004 | |
| Total current liabilities | 3,744,129 | | | 3,373,383 | |
| | | |
| | | |
| Long-term debt | 754,377 | | | 592,517 | |
| Deferred income taxes | 72,849 | | | 27,588 | |
| Long-term accounts payable | 788,078 | | | 353,794 | |
| Other liabilities | 160,710 | | | 203,335 | |
| 5,520,143 | | | 4,550,617 | |
| Stockholders’ equity: | | | |
| Preferred stock | — | | | — | |
| Common stock | 318 | | | 326 | |
| Additional paid-in capital | 334,337 | | | 328,607 | |
| Retained earnings | 1,471,546 | | | 1,448,412 | |
Accumulated other comprehensive loss – foreign currency translation adjustments | (39,901) | | | (41,612) | |
| Total stockholders’ equity | 1,766,300 | | | 1,735,733 | |
| $ | 7,286,443 | | | $ | 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)
| | | | | | | | | | | |
| Nine Months Ended
September 30, |
| 2024 | | 2023 |
| Cash flows from operating activities: | | | |
| Net earnings | $ | 212,679 | | | $ | 190,701 | |
| Adjustments to reconcile net earnings to net cash provided by operating activities: | | | |
| Depreciation and amortization | 72,357 | | | 44,698 | |
| Provision for losses on accounts receivable | 7,440 | | | 3,754 | |
| Provision for losses on contract assets | 2,474 | | | — | |
| Non-cash stock-based compensation | 26,216 | | | 26,211 | |
| Gain on revaluation of earnout liabilities | (30,648) | | | — | |
| Deferred income taxes | 16,342 | | | (9,062) | |
| Amortization of debt issuance costs | 4,090 | | | 3,649 | |
| Other adjustments | (3,155) | | | (1,356) | |
| Changes in assets and liabilities: | | | |
| (Increase) decrease in accounts receivable | (291,692) | | | 201,628 | |
| Decrease in inventories | 28,407 | | | 75,124 | |
| Decrease (increase) in contract assets | 49,798 | | | (1,810) | |
| Increase in long-term accounts receivable | (434,966) | | | (73,451) | |
| Decrease in other assets | 13,626 | | | 5,392 | |
| Increase (decrease) in accounts payable | 374,166 | | | (57,882) | |
| Increase in long-term accounts payable | 428,081 | | | 52,479 | |
| Decrease in accrued expenses and other liabilities | (57,484) | | | (46,333) | |
| Net cash provided by operating activities: | 417,731 | | | 413,742 | |
| Cash flows from investing activities: | | | |
| Proceeds from sale of assets | 13,751 | | | 15,515 | |
| Purchases of property and equipment | (32,371) | | | (29,070) | |
| Acquisitions, net of cash and cash equivalents acquired | (270,248) | | | (82,875) | |
| Net cash used in investing activities: | (288,868) | | | (96,430) | |
| Cash flows from financing activities: | | | |
| Borrowings on ABL revolving credit facility | 3,631,660 | | | 3,416,737 | |
| Repayments on ABL revolving credit facility | (3,964,940) | | | (3,382,444) | |
| Net borrowings (repayments) under inventory financing facilities | 3,102 | | | (32,451) | |
| Proceeds from issuance of senior unsecured notes | 500,000 | | | — | |
| Payment of debt issuance costs | (8,647) | | | — | |
| Repurchases of common stock | (200,020) | | | (217,108) | |
| Repayment of principal on the Convertible Notes | (16,895) | | | — | |
| Earnout and acquisition related payments | (18,297) | | | (10,748) | |
| Other payments | (8,486) | | | (9,614) | |
| Net cash used in financing activities: | (82,523) | | | (235,628) | |
| Foreign currency exchange effect on cash, cash equivalents and restricted cash balances | 2,660 | | | (1,074) | |
| Increase in cash, cash equivalents and restricted cash | 49,000 | | | 80,610 | |
| Cash, cash equivalents and restricted cash at beginning of period | 270,785 | | | 165,718 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 319,785 | | | $ | 246,328 | |
| | | | | | | | | | | | | | |
| | - 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
September 30, | | Nine Months Ended
September 30, | | |
| | 2024 | | 2023 | | 2024 | | 2023 | | | | |
| Adjusted Consolidated Earnings from Operations: | | | | | | | | | | | | |
| GAAP consolidated EFO | | $ | 92,851 | | $ | 91,862 | | $ | 323,910 | | $ | 287,934 | | | | |
| Amortization of intangible assets | | 18,702 | | 8,648 | | 50,984 | | 25,243 | | | | |
| Gain on revaluation of earnout liabilities | | (6,442) | | — | | (30,649) | | — | | | | |
| Other* | | 15,006 | | 19,280 | | 28,714 | | 30,278 | | | | |
| Adjusted non-GAAP consolidated EFO | | $ | 120,117 | | $ | 119,790 | | $ | 372,959 | | $ | 343,455 | | | | |
| | | | | | | | | | | | |
| GAAP EFO as a percentage of net sales | | 4.4% | | 4.1% | | 4.9% | | 4.1% | | | | |
| Adjusted non-GAAP EFO as a percentage of net sales | | 5.8% | | 5.3% | | 5.6% | | 4.9% | | | | |
| | | | | | | | | | | | |
| Adjusted Consolidated Net Earnings: | | | | | | | | | | | | |
| GAAP consolidated net earnings | | $ | 58,208 | | $ | 60,247 | | $ | 212,679 | | $ | 190,701 | | | | |
| Amortization of intangible assets | | 18,702 | | 8,648 | | 50,984 | | 25,243 | | | | |
| | | | | | | | | | | | |
| Gain on revaluation of earnout liabilities | | (6,442) | | — | | (30,649) | — | — | | | | |
| Other* | | 15,006 | | 19,280 | | 28,714 | | 30,278 | | | | |
| Income taxes on non-GAAP adjustments | | (8,505) | | (6,496) | | (14,678) | | (13,729) | | | | |
| Adjusted non-GAAP consolidated net earnings | | $ | 76,969 | | $ | 81,679 | | $ | 247,050 | | $ | 232,493 | | | | |
| | | | | | | | | | | | |
| GAAP net earnings as a percentage of net sales | | 2.8% | | 2.7% | | 3.2% | | 2.7% | | | | |
| Adjusted non-GAAP net earnings as a percentage of net sales | | 3.7% | | 3.6% | | 3.7% | | 3.4% | | | | |
| | | | | | | | | | | | |
| Adjusted Diluted Earnings Per Share: | | | | | | | | | | | | |
| GAAP diluted EPS | | $ | 1.52 | | | $ | 1.62 | | | $ | 5.53 | | | $ | 5.13 | | | | | |
| Amortization of intangible assets | | 0.49 | | | 0.23 | | | 1.33 | | | 0.68 | | | | | |
| | | | | | | | | | | | |
| Gain on revaluation of earnout liabilities | | (0.17) | | | — | | | (0.80) | | | — | | | | | |
| Other | | 0.39 | | | 0.52 | | | 0.75 | | | 0.82 | | | | | |
| Income taxes on non-GAAP adjustments | | (0.22) | | | (0.17) | | | (0.38) | | | (0.37) | | | | | |
| Impact of benefit from note hedge | | 0.18 | | | 0.17 | | | 0.59 | | | 0.46 | | | | | |
| Adjusted non-GAAP diluted EPS | | $ | 2.19 | | | $ | 2.37 | | | $ | 7.02 | | | $ | 6.72 | | | | | |
| | | | | | | | | | | | |
| Shares used in diluted EPS calculation | | 38,331 | | 37,203 | | 38,445 | | 37,149 | | | | |
Impact of benefit from note hedge | | (3,258) | | (2,774) | | (3,269) | | (2,533) | | | | |
| Shares used in Adjusted non-GAAP diluted EPS calculation | | 35,073 | | 34,429 | | 35,176 | | 34,616 | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Adjusted North America Earnings from Operations: | | | | | | | | | | | | |
| GAAP EFO from North America segment | | $ | 80,836 | | | $ | 86,083 | | | $ | 266,672 | | | $ | 244,705 | | | | | |
| Amortization of intangible assets | | 16,823 | | | 7,718 | | | 45,557 | | | 23,269 | | | | | |
| Gain on revaluation of earnout liabilities | | (4,000) | | | — | | | (24,219) | | | — | | | | | |
| Other* | | 12,891 | | | 15,547 | | | 24,753 | | | 24,641 | | | | | |
| Adjusted non-GAAP EFO from North America segment | | $ | 106,550 | | | $ | 109,348 | | | $ | 312,763 | | | $ | 292,615 | | | | | |
| | | | | | | | | | | | |
| GAAP EFO as a percentage of net sales | | 4.7 | % | | 4.6 | % | | 5.0 | % | | 4.4 | % | | | | |
| Adjusted non-GAAP EFO as a percentage of net sales | | 6.2 | % | | 5.9 | % | | 5.8 | % | | 5.2 | % | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | - 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
September 30, | | Nine Months Ended
September 30, | | |
| | 2024 | | 2023 | | 2024 | | 2023 | | | | |
| | | | | | | | | | | | |
| Adjusted EMEA Earnings from Operations: | | | | | | | | | | | | |
| GAAP EFO from EMEA segment | | $ | 6,665 | | | $ | 1,681 | | | $ | 38,862 | | | $ | 28,229 | | | | | |
| Amortization of intangible assets | | 1,805 | | | 822 | | | 5,135 | | | 1,642 | | | | | |
| Gain on revaluation of earnout liabilities | | (2,442) | | | — | | | (6,430) | | | — | | | | | |
| Other | | 2,052 | | | 3,731 | | | 3,743 | | | 5,574 | | | | | |
| Adjusted non-GAAP EFO from EMEA segment | | $ | 8,080 | | | $ | 6,234 | | | $ | 41,310 | | | $ | 35,445 | | | | | |
| | | | | | | | | | | | |
| GAAP EFO as a percentage of net sales | | 2.1 | % | | 0.5 | % | | 3.6 | % | | 2.4 | % | | | | |
| Adjusted non-GAAP EFO as a percentage of net sales | | 2.6 | % | | 1.8 | % | | 3.8 | % | | 3.0 | % | | | | |
| | | | | | | | | | | | |
| Adjusted APAC Earnings from Operations: | | | | | | | | | | | | |
| GAAP EFO from APAC segment | | $ | 5,350 | | | $ | 4,098 | | | $ | 18,376 | | | $ | 15,000 | | | | | |
| Amortization of intangible assets | | 74 | | | 108 | | | 292 | | | 332 | | | | | |
| Other | | 63 | | | 2 | | | 218 | | | 63 | | | | | |
| Adjusted non-GAAP EFO from APAC segment | | $ | 5,487 | | | $ | 4,208 | | | $ | 18,886 | | | $ | 15,395 | | | | | |
| | | | | | | | | | | | |
| GAAP EFO as a percentage of net sales | | 9.1 | % | | 8.0 | % | | 10.2 | % | | 8.6 | % | | | | |
| Adjusted non-GAAP EFO as a percentage of net sales | | 9.3 | % | | 8.2 | % | | 10.4 | % | | 8.8 | % | | | | |
| | | | | | | | | | | | |
| Adjusted EBITDA: | | | | | | | | | | | | |
| GAAP consolidated net earnings | | $ | 58,208 | | $ | 60,247 | | $ | 212,679 | | $ | 190,701 | | | | |
| Interest expense | | 19,184 | | 13,874 | | 51,312 | | 36,618 | | | | |
| Income tax expense | | 16,910 | | 19,805 | | 67,983 | | 64,978 | | | | |
| Depreciation and amortization of property and equipment | | 7,204 | | 6,902 | | 21,373 | | 19,455 | | | | |
| Amortization of intangible assets | | 18,702 | | 8,648 | | 50,984 | | 25,243 | | | | |
| | | | | | | | | | | | |
| Gain on revaluation of earnout liabilities | | (6,442) | | — | | (30,649) | | — | | | | |
| Other* | | 15,006 | | 19,280 | | 28,714 | | 30,278 | | | | |
| Adjusted non-GAAP EBITDA | | $ | 128,772 | | $ | 128,756 | | $ | 402,396 | | $ | 367,273 | | | | |
| | | | | | | | | | | | |
| GAAP consolidated net earnings as a percentage of net sales | | 2.8% | | 2.7% | | 3.2% | | 2.7% | | | | |
| Adjusted non-GAAP EBITDA as a percentage of net sales | | 6.2% | | 5.7% | | 6.1% | | 5.3% | | | | |
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* Includes transformation costs of $5.1 million and $3.7 million for the three months ended September 30, 2024 and 2023, respectively and $13.0 million and $14.0 million for the nine months ended September 30, 2024 and 2023, respectively. Includes certain third-party data center service outage expenses of $8.0 million for both the three and nine months ended September 30, 2023 and related recoveries of $3.4 million for the nine months ended September 30, 2024.
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| 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 September 30, |
| | 2024 | | 2023 |
| Adjusted return on invested capital: | | | | |
| GAAP consolidated EFO | | $ | 455,771 | | $ | 401,950 |
| Amortization of intangible assets | | 61,972 | | 33,320 |
| Gain on revaluation of earnout liabilities | | (30,649) | | — |
Other5 | | 34,537 | | 36,450 |
| Adjusted non-GAAP consolidated EFO | | 521,631 | | 471,720 |
Income tax expense1 | | 135,624 | | 122,647 |
| Adjusted non-GAAP consolidated EFO, net of tax | | $ | 386,007 | | $ | 349,073 |
Average stockholders’ equity2 | | $ | 1,746,223 | | $ | 1,605,492 |
Average debt2 | | 915,391 | | 659,161 |
Average cash2 | | (293,184) | | (183,259) |
| Invested Capital | | $ | 2,368,430 | | $ | 2,081,394 |
| | | | |
Adjusted non-GAAP ROIC (from GAAP consolidated EFO)3 | | 14.24 | % | | 14.29 | % |
Adjusted non-GAAP ROIC (from non-GAAP consolidated EFO)4 | | 16.30 | % | | 16.77 | % |
1 Assumed tax rate of 26.0%.
2 Average of previous five quarters.
3 Computed as GAAP consolidated EFO, net of tax of $118,500 and $104,507 for the twelve months ended September 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 $15.6 million and $18.1 million for the twelve months ended September 30, 2024 and 2023, respectively. Includes certain third-party data center service outage related expenses of $8.0 million for the twelve months ended September 30, 2023 and related recoveries of $6.4 million for the twelve months ended September 30, 2024. Includes severance and restructuring costs of $18.8 million and $4.4 million for the twelve months ended September 30, 2024 and 2023, respectively.
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2024 Insight Direct USA, Inc. All Rights Reserved. 1 Insight Enterprises, Inc. Third 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. The Company believes providing this information excluding the effects of fluctuating foreign currency exchange rates provides valuable supplemental information to investors regarding its underlying business and results of operations, consistent with how the Company and its management evaluate the Company’s 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.
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 ◦ Third 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 our 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 The challenge: The results: • As part of its ambition for economic diversification, the Royal Kingdom of Saudi Arabia announced its intent to turn the Kingdom into a tourism powerhouse, creating 50,000 new jobs and competing with well established, regional hotspots such as Dubai, alongside global favorites • A modern, scalable and flexible private cloud enabling critical systems to provide the digital foundation for a world class guest experience, aboard its luxury cruise liner and critical shipping systems • Modern, scalable and highly flexible private cloud powering: ◦ Outstanding Guest Experience ◦ Increased Operational Efficiency ◦ Enhanced Cybersecurity ◦ Greater Data Visibility and Business Analytics • Insight was commissioned to define and design a state of the art infrastructure, with the purpose of supporting critical ship management applications and bringing to life a best-in-class digital experience for all guests • Deliver an integrated private cloud solution consisting of technologies from a variety of partners, coupled with Insight Professional Services and its Client Fulfilment Centers across EMEA, to design, test and deploy a purpose built datacenter on the sea • Partnered with multiple ISVs and others to form a partner ecosystem The solution: Modernizing Cruise Liner’s IT Infrastructure
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 74 The challenge: The results: • Our client needed to promote greater agility and innovation within their healthcare organization by enabling quick deployment of new technologies, applications, and services • They wanted to leverage HashiCorp's tool, integrated with Microsoft GitHub® repositories, to manage their Azure® and Google Cloud (GC) environments effectively • Our client also needed guidance implementing HashiCorp® Vault™ for secure secrets management • Streamlined compliance with healthcare regulations • Improved organizational agility • Fortified security • Enhanced collaboration & innovation • Time savings & process efficiencies The solution: Unlocking Agility & Innovation With Cloud Infrastructure Provisioning • Our team collaborated with the client to architect and build their approach, which included: ◦ Designing team structure and workspace organization, including 750+ workspaces ◦ Implementing 300+ Sentinel policies for policy-as- code ◦ Developing a GitHub repository strategy with reusable workflows, branching, and change log processes ◦ Creating 150+ Terraform modules with a testing framework and module creation automation ◦ Defining cloud governance ◦ Implementing HashiCorp Vault for secrets management
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 84 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. 5 | Italy Best Workplaces No. 16 | UK Best Workplaces for Wellbeing No. 17 | Spain Best Workplaces No. 28 | UK Best Workplaces No. 33 | UK Best Workplaces for Women 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 Australia, China, Hong Kong, New Zealand, Philippines, India AWS Premier Tier Service Partner 2024 Gartner Magic Quadrant for Software Asset Management Managed Services 2024 Keystone Partner of the Year 2024 Acquisition Partner of the Year • 2024 Infrastructure Solutions Group US Partner of the Year • 2024 Services and Solutions Canada Partner of the Year • Global Customer Experiences Partner of the Year • Americas Enterprise Partner of the Year • US Partner of the Year
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 94 Q3 2024 Performance (Changes against prior year period) * See Appendix for reconciliation of non-GAAP measures ** For the twelve months ended September 30, 2024 NET SALES $2.1B decrease of 8% GROSS PROFIT $432M increase of 6% MARGINS GROSS MARGIN 20.7% up 270 bps EFO MARGIN 4.4% up 30 bps ADJUSTED EFO* MARGIN 5.8% up 50 bps EARNINGS CLOUD GROSS PROFIT CLOUD $129M increase of 33% 57% services gross profit as a % of total gross profit** INSIGHT CORE SERVICES GROSS PROFIT $81M increase of 14% EARNINGS FROM OPERATIONS EARNINGS FROM OPERATIONS $93M increase of 1% DILUTED EARNINGS PER SHARE DILUTED EARNINGS PER SHARE $1.52 decrease of 6% NET EARNINGS NET EARNINGS $58M decrease of 3% ADJUSTED EARNINGS FROM OPERATIONS* $120M flat YoY ADJUSTED DILUTED EARNINGS PER SHARE* $2.19 decrease of 8% ADJUSTED EBITDA* NET EARNINGS ADJUSTED EBITDA* $129M flat YoY CASH FLOWS AND CASH CYCLE CASH CONVERSION CYCLE 18 DAYS down 17 days Days sales outstanding (DSO) +47 days Days inventory outstanding (DIO) -1 days Days purchases outstanding (DPO) +(63) days NET CASH FROM OPERATIONS $125M QTD 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. 104 YTD Q3 2024 Performance (Changes against prior year period) * See Appendix for reconciliation of non-GAAP measures NET SALES $6.6B decrease of 4% GROSS PROFIT $1.3B increase of 8% MARGINS GROSS MARGIN 20.0% up 220 bps EFO MARGIN 4.9% up 80 bps ADJUSTED EFO* MARGIN 5.6% up 70 bps EARNINGS CLOUD GROSS PROFIT CLOUD $384M increase of 29% INSIGHT CORE SERVICES GROSS PROFIT $237M increase of 16% EARNINGS FROM OPERATIONS EARNINGS FROM OPERATIONS $324M increase of 12% DILUTED EARNINGS PER SHARE DILUTED EARNINGS PER SHARE $5.53 increase of 8% NET EARNINGS NET EARNINGS $213M increase of 12% ADJUSTED EARNINGS FROM OPERATIONS* $373M increase of 9% ADJUSTED DILUTED EARNINGS PER SHARE* $7.02 increase of 4% ADJUSTED EBITDA* NET EARNINGS ADJUSTED EBITDA* $402M increase of 10% CASH FLOWS NET CASH FROM OPERATIONS $418M
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 114 Debt US Dollars in millions Description Net payments SADA (December 2023) $424 InfoCenter (May 2024) $265 NWT* (July 2024) $5 Total payments for acquisitions** $694 Total share repurchases $200 Cash from operations used to pay down debt $480 Increase in total debt $414 • In May 2024, raised $500 million aggregate principal of senior notes due 2032 • Total debt balance at September 30, 2024 - $1.1 billion • Total debt balance at September 30, 2023 - $673 million • YoY increase in total debt of $414 million * Acquired entity in our EMEA segment ** 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. 124 2027 KPIs for Success KPIs TTM Q3 2024 2027 Cloud GP Growth** 32% 16% - 20% 5-year CAGR*** Core services GP Growth** 14% 16% - 20% 5-year CAGR*** Adjusted EBITDA Margin* 6.3% 6.5% - 7.0% Adjusted DEPS* Growth** 8% 19% - 22% 5-year CAGR*** Adjusted ROIC* 16.3% >25% Adjusted free cash flow as % of Adjusted net earnings* 166% >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 margin, diluted earnings per share, earnings from operations and net cash provided by operating activities as a percentage of net earnings, the Company is unable to reasonably estimate the impact of these adjustments, if any, to such GAAP measures. 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 as a percentage of adjusted net earnings, ROIC and EBITDA margin. See Appendix and elsewhere in this presentation for reconciliation of historical non-GAAP measures ** Growth baseline period is TTM Q3 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. 134 Full Year 2024 Outlook Assumptions: As of October 31, 2024 As of August 1, 2024 Gross profit growth mid single-digit low double-digit Gross margin 19% - 20% range 19% - 20% range Adjusted diluted EPS* $9.40 - $9.70 $10.60 - $10.90 Interest expense $58 - $60 million $60 - $62 million Effective tax rate approximately 25.5% 26% Capital expenditures $35 - $40 million $35 - $40 million Average share count 35.1 million 35.1 million Other Exclusions and Assumptions: • Excludes acquisition-related intangibles amortization expense of approximately $70 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. 144 NET SALES GROSS PROFIT * For the twelve months ended September 30, 2024 Trailing twelve months Trailing twelve months $2.1B decrease of 8% y/y $2.3B $2.2B $2.4B $2.2B $2.1B Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 $9.7B $9.4B $9.2B $9.2B $9.0B $8.9B Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 $8.9B* decrease of 6% y/y $432M increase of 6% y/y 18.0% 19.5% 18.5% 21.0% 20.7% $409M $436M $441M $453M $432M Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 $1.8B* increase of 7% y/y 16.9% 17.5% 18.2% 18.6% 19.2% 19.9% $1.6B $1.7B $1.7B $1.7B $1.7B $1.8B Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 Gross Margin
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 154 Gross Margin SERVICES NET SALES SERVICES GROSS PROFIT * For the twelve months ended September 30, 2024 Trailing twelve months Trailing twelve months $414M increase of 10% y/y $376M $408M $416M $435M $414M Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 $1,509M $1,520M $1,544M $1,604M $1,635M $1,673M Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 $1.7B* increase of 10% y/y $216M $248M $249M $263M $245M Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 57% 61% 60% 60% 59% $245M increase of 13% y/y $833M $863M $897M $949M $976M $1,004M Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 $1.0B* increase of 16% y/y 55% 57% 58% 59% 60% 60%
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 164 INSIGHT CORE SERVICES GROSS PROFIT CLOUD GROSS PROFIT * For the twelve months ended September 30, 2024 Note: Insight Core services is defined as services Insight delivers and manages Trailing twelve months Trailing twelve months $71M $69M $76M $81M $81M Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 31% 30% 31% 32% 32% $81M increase of 14% y/y Gross Margin $257M $269M $273M $288M $297M $307M Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 28% 29% 30% 31% 31% 31% $307M* increase of 14% y/y $96M $130M $117M $139M $129M Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 $376M $390M $429M $458M $482M $514M Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 $129M increase of 33% y/y $514M* increase of 32% y/y
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 174 EARNINGS FROM OPERATIONS ADJUSTED EARNINGS FROM OPERATIONS** * For the twelve months ended September 30, 2024 ** See Appendix for reconciliation of non-GAAP measures Trailing twelve months Trailing twelve months $92M $132M $100M $131M $93M Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 $400M $402M $420M $442M $455M $456M Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 $93M increase of 1% y/y $456M* increase of 13% y/y $120M $149M $122M $131M $120M Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 $120M flat y/y $459M $472M $492M $520M $521M $522M Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 $522M* increase of 11% y/y
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 184 DILUTED EARNINGS PER SHARE ADJUSTED DILUTED EARNINGS PER SHARE** * For the twelve months ended September 30, 2024 ** See Appendix for reconciliation of non-GAAP measures Trailing twelve months Trailing twelve months $1.62 $2.42 $1.74 $2.27 $1.52 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 $7.22 $7.26 $7.55 $7.95 $8.05 $7.94 Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 $2.37 $2.98 $2.37 $2.46 $2.19 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 $8.86 $9.25 $9.69 $10.28 $10.17 $9.99 Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 $1.52 decrease of 6% y/y $7.94* increase of 9% y/y $2.19 decrease of 8% y/y $9.99* increase of 8% y/y
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2024 Insight Direct USA, Inc. All Rights Reserved. 19 Appendix
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 204 Q3 2024 YTD | Financial Performance Nine Months Ended September 30, US Dollars in $000s, except for per share data 2024 2023 Change Consolidated IEI Net sales $6,629,033 $6,939,829 (4) % Net sales, constant currency* (5) % Product net sales $5,364,169 $5,803,408 (8) % Services net sales $1,264,864 $1,136,421 11 % Gross profit $1,326,378 $1,233,375 8 % Gross margin 20.0 % 17.8 % 220 bps Gross profit, constant currency* 7 % Product gross profit $570,044 $583,688 (2) % Services gross profit $756,334 $649,687 16 % GAAP earnings from operations $323,910 $287,934 12 % Adjusted earnings from operations** $372,959 $343,455 9 % GAAP diluted earnings per share $5.53 $5.13 8 % Adjusted diluted earnings per share** $7.02 $6.72 4 % * 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. 214 * See Appendix for reconciliation of non-GAAP measures Consolidated IEI Financial Metrics Three Months Ended Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Net Sales YoY (11) % (11) % 2 % (8) % (8) % Gross Margin 18.0 % 19.5 % 18.5 % 21.0 % 20.7 % GAAP EFO $91.9M $131.9M $100.0M $131.1M $92.9M GAAP EFO YoY 2 % 16 % 29 % 11 % 1 % GAAP EFO Margin 4.1 % 5.9 % 4.2 % 6.1 % 4.4 % Adjusted EFO* $119.8M $148.7M $121.8M $131.1M $120.1M Adjusted EFO* YoY 12 % 16 % 30 % 1 % — % Adjusted EFO* Margin 5.3 % 6.6 % 5.1 % 6.1 % 5.8 % GAAP Diluted EPS $1.62 $2.42 $1.74 $2.27 $1.52 GAAP Diluted EPS YoY 3 % 14 % 30 % 5 % (6) % Adjusted Diluted EPS* $2.37 $2.98 $2.37 $2.46 $2.19 Adjusted Diluted EPS* YoY 19 % 18 % 33 % (4) % (8) % Twelve Months Ended Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 Net Sales YoY (7) % (10) % (12) % (9) % (7) % (6) % Gross Margin 16.9 % 17.5 % 18.2 % 18.6 % 19.2 % 19.9 % GAAP EFO $400.4M $402.0M $419.8M $442.3M $454.8M $455.8M GAAP EFO YoY 4 % 2 % 1 % 8 % 14 % 13 % GAAP EFO Margin 4.1 % 4.3 % 4.6 % 4.8 % 5.0 % 5.1 % Adjusted EFO* $459.0M $471.7M $492.1M $519.9M $521.3M $521.6M Adjusted EFO* YoY 7 % 7 % 5 % 10 % 14 % 11 % Adjusted EFO* Margin 4.7 % 5.0 % 5.4 % 5.6 % 5.8 % 5.9 % GAAP Diluted EPS $7.22 $7.26 $7.55 $7.95 $8.05 $7.94 GAAP Diluted EPS YoY 1 % 1 % (1) % 6 % 11 % 9 % Adjusted Diluted EPS* $8.86 $9.25 $9.69 $10.28 $10.17 $9.99 Adjusted Diluted EPS* YoY 4 % 7 % 6 % 13 % 15 % 8 %
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 224 Services Financial Metrics Three Months Ended Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Services Revenue $376M $408M $416M $435M $414M Services Revenue YoY 3% 6% 17% 8% 10% Services Gross Profit $216M $248M $249M $263M $245M Insight Core Services Gross Profit $71M $69M $76M $81M $81M Agent Services* Gross Profit $145M $178M $173M $182M $164M Services Gross Profit YoY 16% 16% 27% 11% 13% Insight Core Services Gross Profit YoY 20% 7% 24% 12% 14% Agent Services* Gross Profit YoY 14% 20% 28% 11% 13% Services Gross Margin 57% 61% 60% 60% 59% Insight Core Services Gross Margin 31% 30% 31% 32% 32% Agent Services* Gross Margin 100% 100% 100% 100% 100% Twelve Months Ended Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 Services Revenue $1,509M $1,520M $1,544M $1,604M $1,635M $1,673M Services Revenue YoY 7% 5% 4% 7% 8% 10% Services Gross Profit $833M $863M $897M $949M $976M $1,004M Insight Core Services Gross Profit $257M $269M $273M $288M $297M $307M Agent Services* Gross Profit $576M $594M $624M $662M $679M $697M Services Gross Profit YoY 10% 12% 12% 16% 17% 16% Insight Core Services Gross Profit YoY 6% 9% 8% 14% 15% 14% Agent Services* Gross Profit YoY 12% 13% 14% 16% 18% 17% Services Gross Margin 55% 57% 58% 59% 60% 60% Insight Core Services Gross Margin 28% 29% 30% 31% 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. 234 * 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 September 30, 2024 Nine Months Ended September 30, 2024 North America EMEA APAC North America EMEA APAC Net Sales $1.7B $312.6M $58.7M $5.4B $1,094.3M $181.0M Net Sales YoY** (8%) (13%) 13% (4%) (8%) 5% Gross Profit $348.1M $66.4M $17.6M $1,052.0M $220.6M $53.8M Gross Profit YoY** 4% 9% 13% 6% 13% 12% Gross Margin 20.3% 21.2% 30.1% 19.6% 20.2% 29.7% Gross Margin YoY 240 bps 440 bps 10 bps 190 bps 380 bps 190 bps GAAP EFO $80.8M $6.7M $5.4M $266.7M $38.9M $18.4M GAAP EFO YoY** (6%) >100% 28% 9% 35% 23% Adjusted EFO* $106.6M $8.1M $5.5M $312.8M $41.3M $18.9M Adjusted EFO* YoY** (3%) 25% 28% 7% 14% 23%
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 244 Adjusted EBITDA and Debt Covenants Twelve Months Ended September 30, US Dollars in $000s 2024 2023 Adjusted Consolidated EBITDA: Net earnings $ 303,287 $ 268,178 Interest expense 63,270 47,889 Taxes 99,550 90,673 Depreciation and amortization of property and equipment 28,163 25,788 Amortization of intangible assets 61,972 33,320 Gain on revaluation of earnout liabilities (30,649) — Other* 34,537 36,450 Adjusted consolidated EBITDA $ 560,130 $ 502,298 Net earnings as a % of net sales 3.4 % 2.8 % Adjusted consolidated EBITDA margin 6.3 % 5.3 % Add: Non-cash stock-based compensation 28,956 32,397 Adjusted consolidated EBITDAS 589,086 534,695 Less: Capital expenditures (42,553) (40,739) Adjusted consolidated EBITDAS for FCCR Ratio $ 546,533 $ 493,956 Taxes and interest** $ 152,074 $ 122,445 Fixed Charge Coverage Ratio 3.6 4.0 Fixed Charge Coverage $546,533 $152,074 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 $1,086,816 $589,086 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 3.59x 1.84x
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 254 Reconciliation of GAAP to Non-GAAP Financial Measures* Three Months Ended September 30, Nine Months Ended September 30, US Dollars in $000s 2024 2023 2022 2024 2023 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 92,851 $ 91,862 $ 90,279 $ 323,910 $ 287,934 Amortization of intangible assets 18,702 8,648 8,986 50,984 25,243 Gain on revaluation of earnout liabilities (6,442) — — (30,649) — Other** 15,006 19,280 7,829 28,714 30,278 Adjusted non-GAAP consolidated EFO $ 120,117 $ 119,790 $ 107,094 $ 372,959 $ 343,455 GAAP EFO as a percentage of net sales 4.4 % 4.1 % 3.6 % 4.9 % 4.1 % Adjusted non-GAAP EFO as a percentage of net sales 5.8 % 5.3 % 4.2 % 5.6 % 4.9 % * 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 $5.1 million and $3.7 million for the three months ended September 30, 2024 and 2023, respectively, and $13.0 million and $14.0 million for the nine months ended September 30, 2024 and 2023, respectively. Includes certain third-party data center service outage expenses of $8.0 million for both the three and nine months ended September 30, 2023 and related recoveries of $3.4 million for the nine months ended September 30, 2024
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 264 Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Three Months Ended September 30, Nine Months Ended September 30, US Dollars in $000s, except per share data 2024 2023 2022 2024 2023 Adjusted Consolidated Net Earnings: GAAP consolidated net earnings $ 58,208 $ 60,247 $ 57,316 $ 212,679 $ 190,701 Amortization of intangible assets 18,702 8,648 8,986 50,984 25,243 Gain on revaluation of earnout liabilities (6,442) — — (30,649) — Other** 15,006 19,280 7,829 28,714 30,278 Income taxes on non-GAAP adjustments (8,505) (6,496) (4,295) (14,678) (13,729) Adjusted non-GAAP consolidated net earnings $ 76,969 $ 81,679 $ 69,836 $ 247,050 $ 232,493 Adjusted Diluted Earnings Per Share: GAAP diluted EPS $ 1.52 $ 1.62 $ 1.58 $ 5.53 $ 5.13 Amortization of intangible assets 0.49 0.23 0.25 1.33 0.68 Gain on revaluation of earnout liabilities (0.17) — — (0.80) — Other 0.39 0.52 0.22 0.75 0.82 Income taxes on non-GAAP adjustments (0.22) (0.17) (0.12) (0.38) (0.37) Impact of benefit from note hedge 0.18 0.17 0.06 0.59 0.46 Adjusted non-GAAP diluted EPS $ 2.19 $ 2.37 $ 1.99 $ 7.02 $ 6.72 Shares used in diluted EPS calculation 38,331 37,203 36,340 38,445 37,149 Impact of benefit from note hedge (3,258) (2,774) (1,187) (3,269) (2,533) Shares used in Adjusted non-GAAP diluted EPS calculation 35,073 34,429 35,153 35,176 34,616 * 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 $5.1 million and $3.7 million for the three months ended September 30, 2024 and 2023, respectively, and $13.0 million and $14.0 million for the nine months ended September 30, 2024 and 2023, respectively. Includes certain third-party data center service outage expenses of $8.0 million for both the three and nine months ended September 30, 2023 and related recoveries of $3.4 million for the nine months ended September 30, 2024
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* (continued) Three Months Ended September 30, Nine Months Ended September 30, US Dollars in $000s 2024 2023 2024 2023 Adjusted North America Earnings from Operations: GAAP EFO from North America segment $ 80,836 $ 86,083 $ 266,672 $ 244,705 Amortization of intangible assets 16,823 7,718 45,557 23,269 Gain on revaluation of earnout liabilities (4,000) — (24,219) — Other** 12,891 15,547 24,753 24,641 Adjusted non-GAAP EFO from North America segment $ 106,550 $ 109,348 $ 312,763 $ 292,615 Adjusted EMEA Earnings from Operations: GAAP EFO from EMEA segment $ 6,665 $ 1,681 $ 38,862 $ 28,229 Amortization of intangible assets 1,805 822 5,135 1,642 Gain on revaluation of earnout liabilities (2,442) — (6,430) — Other 2,052 3,731 3,743 5,574 Adjusted non-GAAP EFO from EMEA segment $ 8,080 $ 6,234 $ 41,310 $ 35,445 Adjusted APAC Earnings from Operations: GAAP EFO from APAC segment $ 5,350 $ 4,098 $ 18,376 $ 15,000 Amortization of intangible assets 74 108 292 332 Other 63 2 218 63 Adjusted non-GAAP EFO from APAC segment $ 5,487 $ 4,208 $ 18,886 $ 15,395 * 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 $5.1 million and $3.7 million for the three months ended September 30, 2024 and 2023, respectively, and $13.0 million and $14.0 million for the nine months ended September 30, 2024 and 2023, respectively. Includes certain third-party data center service outage expenses of $8.0 million for both the three and nine months ended September 30, 2023 and related recoveries of $3.4 million for the nine months ended September 30, 2024
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 284 Three Months Ended Nine Months Ended September 30, September 30, US Dollars in $000s 2024 2023 2024 2023 Adjusted Consolidated EBITDA: GAAP consolidated net earnings $ 58,208 $ 60,247 $ 212,679 $ 190,701 Interest expense 19,184 13,874 51,312 36,618 Income tax expense 16,910 19,805 67,983 64,978 Depreciation and amortization of property and equipment 7,204 6,902 21,373 19,455 Amortization of intangible assets 18,702 8,648 50,984 25,243 Gain on revaluation of earnout liabilities (6,442) — (30,649) — Other* 15,006 19,280 28,714 30,278 Adjusted non-GAAP EBITDA $ 128,772 $ 128,756 $ 402,396 $ 367,273 Net earnings as a % of net sales 2.8 % 2.7 % 3.2 % 2.7 % Adjusted non-GAAP EBITDA margin 6.2 % 5.7 % 6.1 % 5.3 % * Includes transformation costs of $5.1 million and $3.7 million for the three months ended September 30, 2024 and 2023, respectively, and $13.0 million and $14.0 million for the nine months ended September 30, 2024 and 2023, respectively. Includes certain third-party data center service outage expenses of $8.0 million for both the three and nine months ended September 30, 2023 and related recoveries of $3.4 million for the nine months ended September 30, 2024 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. 294 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 $118,500 and $104,507 for the twelve months ended September 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 $15.6 million and $18.1 million for the twelve months ended September 30, 2024 and 2023, respectively. Includes certain third-party data center service outage related expenses of $8.0 million for the twelve months ended September 30, 2023 and related recoveries of $6.4 million for the twelve months ended September 30, 2024. Includes severance and restructuring costs of $18.8 million and $4.4 million for the twelve months ended September 30, 2024 and 2023, respectively Twelve Months Ended September 30, US Dollars in $000s 2024 2023 Adjusted Return on Invested Capital: GAAP consolidated EFO $ 455,771 $ 401,950 Amortization of intangible assets 61,972 33,320 Gain on revaluation of earnout liabilities (30,649) — Other5 34,537 36,450 Adjusted non-GAAP consolidated EFO $ 521,631 $ 471,720 Income tax expense1 135,624 122,647 Adjusted non-GAAP consolidated EFO, net of tax $ 386,007 $ 349,073 Average stockholders’ equity2 $ 1,746,223 $ 1,605,492 Average debt2 915,391 659,161 Average cash2 (293,184) (183,259) Invested Capital $ 2,368,430 $ 2,081,394 Adjusted non-GAAP ROIC (from GAAP consolidated EFO)3 14.2 % 14.3 % Adjusted non-GAAP ROIC (from non-GAAP consolidated EFO)4 16.3 % 16.8 %
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 304 Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Three Months Ended September 30, Nine Months Ended September 30, US Dollars in $000s 2024 2023 2024 2023 Adjusted Consolidated Selling and Administrative Expenses: GAAP selling and administrative expenses $ 329,996 $ 309,793 $ 984,664 $ 938,037 Less: Gain on revaluation of earnout liabilities (6,442) — (30,649) — Less: Other* 24,471 20,713 61,896 48,117 Adjusted non-GAAP selling and administrative expenses $ 311,967 $ 289,080 $ 953,417 $ 889,920 GAAP selling and administrative expenses** 15.9 % 13.7 % 14.9 % 13.5 % Adjusted non-GAAP selling and administrative expenses** 14.9 % 12.8 % 14.4 % 12.8 % $ 6,629,033 $ 6,939,829 * “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 expenses and recoveries ** As a percentage of IEI net sales
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) Twelve Months Ended September 30, US Dollars in $000s 2024 Adjusted Free Cash Flow: Net cash provided by operating activities $ 623,520 Less: Purchases of property and equipment 42,553 Adjusted non-GAAP free cash flow $ 580,967 Net cash used in investing activities $ (697,639) Net cash provided by financing activities $ 136,393 Adjusted Consolidated Net Earnings: GAAP consolidated net earnings $ 303,287 Amortization of intangible assets 61,972 Gain on revaluation of earnout liabilities (30,649) Other 34,537 Income taxes on non-GAAP adjustments (18,965) Adjusted non-GAAP consolidated net earnings $ 350,182 Net cash provided by operating activities as % net earnings 206 % Adjusted free cash flow as % of adjusted net earnings 166 % * 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. 324 Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Three Months Ended Three Months Ended Three Months Ended December 31, March 31, June 30, US Dollars in $000s, except per share data 2023 2022 2024 2023 2024 2023 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 131,861 $ 114,016 $ 99,986 $ 77,461 $ 131,073 $ 118,611 Amortization of intangible assets 10,988 8,077 14,925 8,310 17,357 8,285 Change in fair value of earnout liabilities — — 941 — (25,148) — Other 5,823 6,172 5,898 8,186 7,810 2,812 Adjusted non-GAAP consolidated EFO $ 148,672 $ 128,265 $ 121,750 $ 93,957 $ 131,092 $ 129,708 GAAP EFO as a percentage of net sales 5.9 % 4.6 % 4.2 % 3.3 % 6.1% 5.0% Adjusted non-GAAP EFO as a percentage of net sales 6.6 % 5.1 % 5.1 % 4.0 % 6.1% 5.5% Adjusted Consolidated Net Earnings: GAAP consolidated net earnings $ 90,608 $ 77,477 $ 67,027 $ 49,972 $ 87,444 $ 80,482 Amortization of intangible assets 10,988 8,077 14,925 8,310 17,357 8,285 Change in fair value of earnout liabilities — — 941 — (25,148) — Other 5,823 6,172 5,898 8,186 7,810 2,812 Income taxes on non-GAAP adjustments (4,287) (3,533) (5,439) (4,201) (734) (3,032) Adjusted non-GAAP consolidated net earnings $ 103,132 $ 88,193 $ 83,352 $ 62,267 $ 86,729 $ 88,547 Adjusted Diluted Earnings Per Share: GAAP diluted EPS $ 2.42 $ 2.13 $ 1.74 $ 1.34 $ 2.27 $ 2.17 Amortization of intangible assets 0.29 0.22 0.39 0.22 0.45 0.22 Change in fair value of earnout liabilities — — 0.02 — (0.65) — Other 0.16 0.17 0.16 0.22 0.20 0.08 Income taxes on non-GAAP adjustments (0.11) (0.10) (0.14) (0.11) (0.02) (0.08) Impact of benefit from note hedge 0.22 0.11 0.20 0.11 0.21 0.17 Adjusted non-GAAP diluted EPS $ 2.98 $ 2.53 $ 2.37 $ 1.78 $ 2.46 $ 2.56 Shares used in diluted EPS calculation 37,513 36,336 38,435 37,207 38,567 37,039 Impact of benefit from note hedge (2,874) (1,459) (3,228) (2,310) (3,322) (2,516) Shares used in Adjusted non-GAAP diluted EPS calculation 34,639 34,877 35,207 34,897 35,245 34,523 * 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. 334 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 Q2-22 TTM Q3-22 2022 TTM Q1-23 TTM Q2-23 TTM Q3-23 2023 TTM Q1-24 TTM Q2-24 TTM Q3-24 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 385,973 $ 393,101 $ 413,700 $ 411,312 $ 400,367 $ 401,950 $ 419,795 $ 442,320 $ 454,782 $ 455,771 Amortization of intangible assets 31,765 32,763 32,892 33,277 33,658 33,320 36,231 42,846 51,918 61,972 Change in fair value of earnout liabilities — — — — — — — 941 (24,207) (30,649) Other 9,996 15,429 20,018 26,421 24,999 36,450 36,101 33,813 38,811 34,537 Adjusted non-GAAP consolidated EFO $ 427,734 $ 441,293 $ 466,610 $ 471,010 $ 459,024 $ 471,720 $ 492,127 $ 519,920 $ 521,304 $ 521,631 GAAP EFO as a percentage of net sales 3.7 % 3.7 % 4.0 % 4.1 % 4.1 % 4.3 % 4.6 % 4.8 % 5.0 % 5.1 % Adjusted non-GAAP EFO as a percentage of net sales 4.1 % 4.2 % 4.5 % 4.7 % 4.7 % 5.0 % 5.4 % 5.6 % 5.8 % 5.9 %
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) * 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 Q2-22 TTM Q3-22 2022 TTM Q1-23 TTM Q2-23 TTM Q3-23 2023 TTM Q1-24 TTM Q2-24 TTM Q3-24 Adjusted Consolidated Net Earnings: GAAP consolidated net earnings $ 263,431 $ 265,264 $ 280,608 $ 273,949 $ 265,247 $ 268,178 $ 281,309 $ 298,364 $ 305,326 $ 303,287 Amortization of intangible assets 31,765 32,763 32,892 33,277 33,658 33,320 36,231 42,846 51,918 61,972 Amortization of debt discount and issuance costs 6,128 3,079 — — — — — — — — Change in fair value of earnout liabilities — — — — — — — 941 (24,207) (30,649) Other 9,996 15,429 20,018 26,421 24,999 36,450 36,101 33,813 38,811 34,537 Income taxes on non-GAAP adjustments (11,843) (12,966) (13,306) (15,107) (15,061) (17,262) (18,016) (19,254) (16,956) (18,965) Adjusted non-GAAP consolidated net earnings $ 299,477 $ 303,569 $ 320,212 $ 318,540 $ 308,843 $ 320,686 $ 335,625 $ 356,710 $ 354,892 $ 350,182 Adjusted Diluted Earnings Per Share: GAAP diluted EPS $ 7.15 $ 7.22 $ 7.66 $ 7.47 $ 7.22 $ 7.26 $ 7.55 $ 7.95 $ 8.05 $ 7.94 Amortization of intangible assets 0.86 0.89 0.90 0.91 0.92 0.90 0.97 1.14 1.37 1.62 Amortization of debt discount and issuance costs 0.17 0.08 — — — — — — — — Change in fair value of earnout liabilities — — — — — — — 0.03 (0.64) (0.80) Other 0.27 0.42 0.55 0.72 0.68 0.99 0.97 0.90 1.02 0.90 Income taxes on non-GAAP adjustments (0.32) (0.35) (0.36) (0.41) (0.41) (0.47) (0.48) (0.51) (0.45) (0.50) Impact of benefit from note hedge 0.36 0.35 0.36 0.40 0.45 0.57 0.68 0.77 0.82 0.83 Adjusted non-GAAP diluted EPS $ 8.49 $ 8.61 $ 9.11 $ 9.09 $ 8.86 $ 9.25 $ 9.69 $ 10.28 $ 10.17 $ 9.99 Shares used in diluted EPS calculation 36,855 36,753 36,620 36,676 36,731 36,946 37,241 37,548 37,930 38,212 Impact of benefit from note hedge (1,583) (1,501) (1,466) (1,624) (1,868) (2,264) (2,619) (2,848) (3,050) (3,171) Shares used in Adjusted non-GAAP diluted EPS calculation 35,272 35,252 35,154 35,052 34,863 34,682 34,622 34,700 34,880 35,041
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2022 Insight Direct USA, Inc. All Rights Reserved. 354 Financial Results by Offering Category US Dollars in $000s Q3-22 Q4-22 FY 2022 Q1-23 Q2-23 Q3-23 Q4-23 FY 2023 Q1-24 Q2-24 Q3-24 Consolidated IEI by Offering Category: Hardware $ 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 $ 1,137,518 Software 596,922 645,145 2,496,892 638,800 635,336 588,999 679,316 2,542,451 829,228 553,794 536,261 Total Products 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 1,673,779 Agent Services 138,617 159,546 592,585 143,543 178,948 154,168 188,305 664,964 183,634 197,798 175,605 Insight Delivered Services 226,540 224,003 890,819 212,759 225,039 221,964 219,726 879,488 231,896 237,429 238,502 Total Services 365,157 383,549 1,483,404 356,302 403,987 376,132 408,031 1,544,452 415,530 435,227 414,107 Total Net Sales $ 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 $ 2,087,886 Product Cost $ 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 $ 1,486,271 Services Cost 178,417 170,582 683,372 159,903 166,958 159,873 160,403 647,137 166,973 172,027 169,530 Total Cost of Goods Sold $ 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 $ 1,655,801 Product Gross Profit $ 212,518 $ 207,592 $ 836,535 $ 194,916 $ 196,161 $ 192,611 $ 188,522 $ 772,210 $ 192,371 $ 190,165 $ 187,508 Services Gross Profit 186,740 212,967 800,032 196,399 237,029 216,259 247,628 897,315 248,557 263,200 244,577 Total Gross Profit $ 399,258 $ 420,559 $ 1,636,567 $ 391,315 $ 433,190 $ 408,870 $ 436,150 $ 1,669,525 $ 440,928 $ 453,365 $ 432,085 % of Total Net Sales: Hardware 62 % 59 % 62 % 57 % 56 % 57 % 51 % 55 % 48 % 54 % 54 % Software 24 % 26 % 24 % 27 % 27 % 26 % 30 % 28 % 35 % 26 % 26 % Total Products 86 % 85 % 86 % 85 % 83 % 83 % 82 % 83 % 83 % 80 % 80 % Agent Services 5 % 6 % 6 % 6 % 8 % 7 % 8 % 7 % 8 % 9 % 8 % Insight Delivered Services 9 % 9 % 9 % 9 % 10 % 10 % 10 % 10 % 10 % 11 % 11 % Total Services 14 % 15 % 14 % 15 % 17 % 17 % 18 % 17 % 17 % 20 % 20 % % of Total Services Net Sales: Agent Services 38 % 42 % 40 % 40 % 44 % 41 % 46 % 43 % 44 % 45 % 42 % Insight Delivered Services 62 % 58 % 60 % 60 % 56 % 59 % 54 % 57 % 56 % 55 % 58 % 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. 364 Cloud Gross Profit Reconciliation US Dollars in $000s Q3-22 Q4-22 FY 2022 Q1-23 Q2-23 Q3-23 Q4-23 FY 2023 Q1-24 Q2-24 Q3-24 Cloud Gross Profit Reconciliation: Agency Cloud Gross Profit* $ 75,611 $ 85,651 $ 315,528 $ 84,132 $ 105,210 $ 89,005 $ 121,478 $ 399,825 $ 106,993 $ 129,933 $ 122,310 Cloud Services Gross Profit** 6,827 5,238 24,465 3,639 9,536 7,392 8,412 28,979 9,703 9,013 6,218 Total Cloud Gross Profit*** $ 82,438 $ 90,889 $ 339,993 $ 87,771 $ 114,746 $ 96,397 $ 129,890 $ 428,804 $ 116,696 $ 138,946 $ 128,528 * Reported in agent services gross profit - includes SaaS, IaaS and partner program fees ** 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. 374 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
v3.24.3
Cover
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Oct. 31, 2024 |
| Cover [Abstract] |
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| Document Type |
8-K
|
| Document Period End Date |
Oct. 31, 2024
|
| Entity Registrant Name |
INSIGHT ENTERPRISES, INC.
|
| Entity Incorporation, State or Country Code |
DE
|
| Entity File Number |
0-25092
|
| Entity Tax Identification Number |
86-0766246
|
| Entity Address, Address Line One |
2701 East Insight Way,
|
| Entity Address, City or Town |
Chandler,
|
| Entity Address, State or Province |
AZ
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| Entity Address, Postal Zip Code |
85286
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480
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333-3000
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| Title of 12(b) Security |
Common stock, par value $0.01
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| Trading Symbol |
NSIT
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| Security Exchange Name |
NASDAQ
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