Insight Enterprises, Inc. (Nasdaq: NSIT) (the "Company") today reported financial results for the quarter ended September 30, 2021. Highlights include:
In the third quarter of 2021, net sales increased 26%, year over year. Gross profit increased 19% while gross margin contracted 100 basis points compared to the third quarter of 2020. Earnings from operations of $83.2 million increased 35% compared to $61.5 million in the third quarter of 2020. Adjusted earnings from operations of $93.5 million increased 30% compared to $71.8 million in the third quarter of 2020. Diluted earnings per share for the quarter were $1.51, up 37%, year over year, and adjusted diluted earnings per share were $1.87, up 36% year over year.
"During the third quarter we delivered a double digit increase in adjusted earnings from operations, up 30% compared to last year's third quarter. Significant top line growth was driven by hardware net sales, which were up 36% compared to prior year," stated Ken Lamneck, President and Chief Executive Officer. "We exited the third quarter with elevated hardware backlog above levels at the start of the quarter. We expect about 50% of this backlog will ship in Q4 this year. We are pleased to see the pipeline for future sales continue to build to healthy levels into 2022," stated Lamneck.
KEY HIGHLIGHTS
In discussing financial results for the three and nine months ended September 30, 2021 and 2020 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 and earnings from operations on a consolidated basis and in North America, EMEA and APAC excluding the effects of fluctuating foreign currency exchange rates. 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 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 2021, the Company now expects to deliver low double digit net sales growth over the prior year, and Adjusted diluted earnings per share is now expected to be between $7.00 and $7.10.
This outlook assumes
This outlook excludes acquisition-related intangibles amortization expense of approximately $32 million and the non-cash convertible debt discount and issuance costs, reported as part of interest expense, of approximately $12 million and assumes no acquisition-related or severance and restructuring expenses. Due to the inherent difficulty of forecasting some of these types of expenses, which impact net earnings, diluted earnings per share and Adjusted 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 Adjusted 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 2021 forecast.
CONFERENCE CALL AND WEBCAST
The Company will host a conference call and live web cast today at 9:00 a.m. ET to discuss third quarter 2021 results of operations. A live web cast 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 web cast 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 this event link. 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, (ii) certain acquisition and integration related expenses, (iii) amortization of intangible assets, and (iv) the tax effects of each of these items, as applicable. Adjusted net earnings and Adjusted diluted earnings per share also exclude amortization of debt discount and issuance costs associated with the issuance of the Company's convertible senior notes due 2025. 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 2021 was in excess of $68.32, which is the initial conversion price of the convertible senior notes. Adjusted EBITDA adds back (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization of property and equipment, (iv) amortization of intangibles, (v) non-cash stock based compensation (vi) severance and restructuring expenses and (vii) certain acquisition and integration related expenses. Adjusted return on invested capital ("ROIC") excludes (i) severance and restructuring expenses, (ii) certain acquisition and integration related expenses, (iii) impairment of construction in progress, (iv) loss on sale of property, (v) litigation settlement proceeds, and (vi) the tax effects of each of these items, as applicable.
These non-GAAP measures are used by the Company and its management to evaluate financial performance against budgeted amounts, to calculate incentive compensation, to assist in forecasting future performance and to compare the Company's results to those of the Company's competitors. The Company believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency, facilitate comparisons to prior periods and the Company's competitors' results and assist in forecasting performance for future periods. These non-GAAP financial measures are not prepared in accordance with 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.
Financial Summary Table (dollars in thousands, except per share data) (Unaudited) |
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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|
2021 |
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|
2020 |
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|
change |
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2021 |
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|
2020 |
|
|
change |
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Insight Enterprises, Inc. |
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Net sales: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
$ |
2,124,239 |
|
|
$ |
1,661,568 |
|
|
28% |
|
|
$ |
5,906,437 |
|
|
$ |
5,182,817 |
|
|
14% |
|
||
Services |
|
$ |
323,282 |
|
|
$ |
274,910 |
|
|
18% |
|
|
$ |
963,653 |
|
|
$ |
866,447 |
|
|
11% |
|
||
Total net sales |
|
$ |
2,447,521 |
|
|
$ |
1,936,478 |
|
|
26% |
|
|
$ |
6,870,090 |
|
|
$ |
6,049,264 |
|
|
14% |
|
||
Gross profit |
|
$ |
364,545 |
|
|
$ |
307,563 |
|
|
19% |
|
|
$ |
1,062,702 |
|
|
$ |
957,288 |
|
|
11% |
|
||
Gross margin |
|
|
14.9 |
% |
|
|
15.9 |
% |
|
(100 bps) |
|
|
|
15.5 |
% |
|
|
15.8 |
% |
|
(30 bps) |
|
||
Selling and administrative expenses |
|
$ |
278,998 |
|
|
$ |
245,155 |
|
|
14% |
|
|
$ |
827,275 |
|
|
$ |
756,598 |
|
|
9% |
|
||
Severance and restructuring expenses |
|
$ |
2,396 |
|
|
$ |
808 |
|
|
> 100% |
|
|
$ |
(3,217 |
) |
|
$ |
9,962 |
|
|
(> 100%) |
|
||
Acquisition and integration related expenses |
|
$ |
? |
|
|
$ |
118 |
|
|
* |
|
|
$ |
? |
|
|
$ |
2,195 |
|
|
* |
|
||
Earnings from operations |
|
$ |
83,151 |
|
|
$ |
61,482 |
|
|
35% |
|
|
$ |
238,644 |
|
|
$ |
188,533 |
|
|
27% |
|
||
Net earnings |
|
$ |
55,483 |
|
|
$ |
38,906 |
|
|
43% |
|
|
$ |
157,212 |
|
|
$ |
119,252 |
|
|
32% |
|
||
Diluted earnings per share |
|
$ |
1.51 |
|
|
$ |
1.10 |
|
|
37% |
|
|
$ |
4.27 |
|
|
$ |
3.37 |
|
|
27% |
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||
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North America |
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Net sales: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
$ |
1,756,775 |
|
|
$ |
1,334,970 |
|
|
32% |
|
|
$ |
4,675,581 |
|
|
$ |
4,078,791 |
|
|
15% |
|
||
Services |
|
$ |
263,101 |
|
|
$ |
223,198 |
|
|
18% |
|
|
$ |
758,705 |
|
|
$ |
692,905 |
|
|
9% |
|
||
Total net sales |
|
$ |
2,019,876 |
|
|
$ |
1,558,168 |
|
|
30% |
|
|
$ |
5,434,286 |
|
|
$ |
4,771,696 |
|
|
14% |
|
||
Gross profit |
|
$ |
295,982 |
|
|
$ |
247,168 |
|
|
20% |
|
|
$ |
828,368 |
|
|
$ |
748,992 |
|
|
11% |
|
||
Gross margin |
|
|
14.7 |
% |
|
|
15.9 |
% |
|
(120 bps) |
|
|
|
15.2 |
% |
|
|
15.7 |
% |
|
(50 bps) |
|
||
Selling and administrative expenses |
|
$ |
219,714 |
|
|
$ |
192,033 |
|
|
14% |
|
|
$ |
640,420 |
|
|
$ |
590,549 |
|
|
8% |
|
||
Severance and restructuring expenses |
|
$ |
1,999 |
|
|
$ |
773 |
|
|
> 100% |
|
|
$ |
(4,361 |
) |
|
$ |
7,799 |
|
|
(> 100%) |
|
||
Acquisition and integration related expenses |
|
$ |
? |
|
|
$ |
118 |
|
|
* |
|
|
$ |
? |
|
|
$ |
1,991 |
|
|
* |
|
||
Earnings from operations |
|
$ |
74,269 |
|
|
$ |
54,244 |
|
|
37% |
|
|
$ |
192,309 |
|
|
$ |
148,653 |
|
|
29% |
|
||
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Sales Mix |
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|
** |
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** |
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||
Hardware |
|
|
70 |
% |
|
|
66 |
% |
|
38% |
|
|
|
68 |
% |
|
|
67 |
% |
|
16% |
|
||
Software |
|
|
17 |
% |
|
|
20 |
% |
|
10% |
|
|
|
18 |
% |
|
|
19 |
% |
|
9% |
|
||
Services |
|
|
13 |
% |
|
|
14 |
% |
|
18% |
|
|
|
14 |
% |
|
|
14 |
% |
|
9% |
|
||
|
|
|
100 |
% |
|
|
100 |
% |
|
30% |
|
|
|
100 |
% |
|
|
100 |
% |
|
14% |
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||
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EMEA |
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|
|
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|
|
|
|
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|
|
|
|
|
|
|
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|
|
Net sales: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
$ |
339,513 |
|
|
$ |
303,986 |
|
|
12% |
|
|
$ |
1,125,299 |
|
|
$ |
1,020,073 |
|
|
10% |
|
||
Services |
|
$ |
41,935 |
|
|
$ |
37,294 |
|
|
12% |
|
|
$ |
152,359 |
|
|
$ |
132,110 |
|
|
15% |
|
||
Total net sales |
|
$ |
381,448 |
|
|
$ |
341,280 |
|
|
12% |
|
|
$ |
1,277,658 |
|
|
$ |
1,152,183 |
|
|
11% |
|
||
Gross profit |
|
$ |
55,447 |
|
|
$ |
50,300 |
|
|
10% |
|
|
$ |
195,011 |
|
|
$ |
177,254 |
|
|
10% |
|
||
Gross margin |
|
|
14.5 |
% |
|
|
14.7 |
% |
|
(20 bps) |
|
|
|
15.3 |
% |
|
|
15.4 |
% |
|
(10 bps) |
|
||
Selling and administrative expenses |
|
$ |
50,062 |
|
|
$ |
45,438 |
|
|
10% |
|
|
$ |
159,466 |
|
|
$ |
143,859 |
|
|
11% |
|
||
Severance and restructuring expenses |
|
$ |
397 |
|
|
$ |
19 |
|
|
> 100% |
|
|
$ |
1,135 |
|
|
$ |
2,118 |
|
|
(46%) |
|
||
Acquisition and integration related expenses |
|
$ |
? |
|
|
$ |
? |
|
|
* |
|
|
$ |
? |
|
|
$ |
204 |
|
|
* |
|
||
Earnings from operations |
|
$ |
4,988 |
|
|
$ |
4,843 |
|
|
3% |
|
|
$ |
34,410 |
|
|
$ |
31,073 |
|
|
11% |
|
||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Mix |
|
|
|
|
|
|
|
|
|
** |
|
|
|
|
|
|
|
|
|
|
** |
|
||
Hardware |
|
|
42 |
% |
|
|
41 |
% |
|
16% |
|
|
|
41 |
% |
|
|
41 |
% |
|
13% |
|
||
Software |
|
|
47 |
% |
|
|
48 |
% |
|
8% |
|
|
|
47 |
% |
|
|
48 |
% |
|
8% |
|
||
Services |
|
|
11 |
% |
|
|
11 |
% |
|
12% |
|
|
|
12 |
% |
|
|
11 |
% |
|
15% |
|
||
|
|
|
100 |
% |
|
|
100 |
% |
|
12% |
|
|
|
100 |
% |
|
|
100 |
% |
|
11% |
|
||
* Percentage change not considered meaningful. |
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** 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. |
Financial Summary Table (continued) (dollars in thousands, except per share data) (Unaudited) |
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|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
change |
|
|
2021 |
|
|
2020 |
|
|
change |
|
||||||
APAC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
$ |
27,951 |
|
|
$ |
22,612 |
|
|
24% |
|
|
$ |
105,557 |
|
|
$ |
83,953 |
|
|
26% |
|
||
Services |
|
$ |
18,246 |
|
|
$ |
14,418 |
|
|
27% |
|
|
$ |
52,589 |
|
|
$ |
41,432 |
|
|
27% |
|
||
Total net sales |
|
$ |
46,197 |
|
|
$ |
37,030 |
|
|
25% |
|
|
$ |
158,146 |
|
|
$ |
125,385 |
|
|
26% |
|
||
Gross profit |
|
$ |
13,116 |
|
|
$ |
10,095 |
|
|
30% |
|
|
$ |
39,323 |
|
|
$ |
31,042 |
|
|
27% |
|
||
Gross margin |
|
|
28.4 |
% |
|
|
27.3 |
% |
|
110 bps |
|
|
|
24.9 |
% |
|
|
24.8 |
% |
|
10 bps |
|
||
Selling and administrative expenses |
|
$ |
9,222 |
|
|
$ |
7,684 |
|
|
20% |
|
|
$ |
27,389 |
|
|
$ |
22,190 |
|
|
23% |
|
||
Severance and restructuring expenses |
|
$ |
? |
|
|
$ |
16 |
|
|
* |
|
|
$ |
9 |
|
|
$ |
45 |
|
|
(80%) |
|
||
Earnings from operations |
|
$ |
3,894 |
|
|
$ |
2,395 |
|
|
63% |
|
|
$ |
11,925 |
|
|
$ |
8,807 |
|
|
35% |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Mix |
|
|
|
|
|
|
|
|
|
** |
|
|
|
|
|
|
|
|
|
|
** |
|
||
Hardware |
|
|
29 |
% |
|
|
17 |
% |
|
> 100% |
|
|
|
22 |
% |
|
|
17 |
% |
|
66% |
|
||
Software |
|
|
31 |
% |
|
|
44 |
% |
|
(11%) |
|
|
|
45 |
% |
|
|
50 |
% |
|
12% |
|
||
Services |
|
|
40 |
% |
|
|
39 |
% |
|
27% |
|
|
|
33 |
% |
|
|
33 |
% |
|
27% |
|
||
|
|
|
100 |
% |
|
|
100 |
% |
|
25% |
|
|
|
100 |
% |
|
|
100 |
% |
|
26% |
|
||
* 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. |
FORWARD-LOOKING INFORMATION
Certain statements in this release and the related conference call, web cast 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 our future responses to and the potential impact of coronavirus strain COVID-19 ("COVID-19") on our Company, the Company's future financial performance and results of operations, including net sales growth, Adjusted diluted earnings per share, Adjusted selling and administrative expenses, the Company's anticipated effective tax rate, capital expenditures, expected average share count, the Company's expectations regarding cash flow, the Company's expectations regarding current supply constraints pipeline, and shipment of backlog, future trends in the IT market, including due to COVID-19, our business strategy and our strategic initiatives, 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 "Risk Factors" in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2020:
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. NSIT-F
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, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
|
2,124,239 |
|
|
$ |
1,661,568 |
|
|
$ |
5,906,437 |
|
|
$ |
5,182,817 |
|
Services |
|
|
323,282 |
|
|
|
274,910 |
|
|
|
963,653 |
|
|
|
866,447 |
|
Total net sales |
|
|
2,447,521 |
|
|
|
1,936,478 |
|
|
|
6,870,090 |
|
|
|
6,049,264 |
|
Costs of goods sold: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
|
1,930,096 |
|
|
|
1,500,312 |
|
|
|
5,367,083 |
|
|
|
4,688,497 |
|
Services |
|
|
152,880 |
|
|
|
128,603 |
|
|
|
440,305 |
|
|
|
403,479 |
|
Total costs of goods sold |
|
|
2,082,976 |
|
|
|
1,628,915 |
|
|
|
5,807,388 |
|
|
|
5,091,976 |
|
Gross profit |
|
|
364,545 |
|
|
|
307,563 |
|
|
|
1,062,702 |
|
|
|
957,288 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative expenses |
|
|
278,998 |
|
|
|
245,155 |
|
|
|
827,275 |
|
|
|
756,598 |
|
Severance and restructuring expenses, net |
|
|
2,396 |
|
|
|
808 |
|
|
|
(3,217 |
) |
|
|
9,962 |
|
Acquisition and integration related expenses |
|
|
? |
|
|
|
118 |
|
|
|
? |
|
|
|
2,195 |
|
Earnings from operations |
|
|
83,151 |
|
|
|
61,482 |
|
|
|
238,644 |
|
|
|
188,533 |
|
Non-operating (income) expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
10,332 |
|
|
|
9,115 |
|
|
|
29,884 |
|
|
|
31,160 |
|
Other (income) expense, net |
|
|
(1,589 |
) |
|
|
1,301 |
|
|
|
(855 |
) |
|
|
836 |
|
Earnings before income taxes |
|
|
74,408 |
|
|
|
51,066 |
|
|
|
209,615 |
|
|
|
156,537 |
|
Income tax expense |
|
|
18,925 |
|
|
|
12,160 |
|
|
|
52,403 |
|
|
|
37,285 |
|
Net earnings |
|
$ |
55,483 |
|
|
$ |
38,906 |
|
|
$ |
157,212 |
|
|
$ |
119,252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.59 |
|
|
$ |
1.11 |
|
|
$ |
4.49 |
|
|
$ |
3.40 |
|
Diluted |
|
$ |
1.51 |
|
|
$ |
1.10 |
|
|
$ |
4.27 |
|
|
$ |
3.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per share calculations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
34,855 |
|
|
|
35,077 |
|
|
|
35,050 |
|
|
|
35,123 |
|
Diluted |
|
|
36,745 |
|
|
|
35,348 |
|
|
|
36,860 |
|
|
|
35,418 |
|
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands) (Unaudited) |
||||||||
|
|
September 30, |
|
|
December 31, |
|
||
2021 |
2020 |
|||||||
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
107,350 |
|
|
$ |
128,313 |
|
Accounts receivable, net |
|
|
2,754,153 |
|
|
|
2,685,448 |
|
Inventories |
|
|
269,471 |
|
|
|
185,650 |
|
Other current assets |
|
|
192,018 |
|
|
|
177,039 |
|
Total current assets |
|
|
3,322,992 |
|
|
|
3,176,450 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
152,070 |
|
|
|
146,016 |
|
Goodwill |
|
|
428,637 |
|
|
|
429,368 |
|
Intangible assets, net |
|
|
223,496 |
|
|
|
246,915 |
|
Other assets |
|
|
308,183 |
|
|
|
311,983 |
|
|
|
$ |
4,435,378 |
|
|
$ |
4,310,732 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable ? trade |
|
$ |
1,363,325 |
|
|
$ |
1,461,312 |
|
Accounts payable ? inventory financing facilities |
|
|
403,094 |
|
|
|
356,930 |
|
Accrued expenses and other current liabilities |
|
|
379,302 |
|
|
|
408,117 |
|
Current portion of long-term debt |
|
|
38 |
|
|
|
1,105 |
|
Total current liabilities |
|
|
2,145,759 |
|
|
|
2,227,464 |
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
527,499 |
|
|
|
437,581 |
|
Deferred income taxes |
|
|
37,140 |
|
|
|
33,209 |
|
Other liabilities |
|
|
276,058 |
|
|
|
270,049 |
|
|
|
|
2,986,456 |
|
|
|
2,968,303 |
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
Preferred stock |
|
|
? |
|
|
|
? |
|
Common stock |
|
|
349 |
|
|
|
351 |
|
Additional paid-in capital |
|
|
364,699 |
|
|
|
364,288 |
|
Retained earnings |
|
|
1,105,557 |
|
|
|
993,245 |
|
Accumulated other comprehensive loss ? foreign currency translation adjustments |
|
|
(21,683 |
) |
|
|
(15,455 |
) |
Total stockholders' equity |
|
|
1,448,922 |
|
|
|
1,342,429 |
|
|
|
$ |
4,435,378 |
|
|
$ |
4,310,732 |
|
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
||||||||
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
157,212 |
|
|
$ |
119,252 |
|
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
42,151 |
|
|
|
51,375 |
|
Provision for losses on accounts receivable |
|
|
5,781 |
|
|
|
8,093 |
|
Non-cash stock-based compensation |
|
|
13,950 |
|
|
|
11,754 |
|
Deferred income taxes |
|
|
3,374 |
|
|
|
(2,883 |
) |
Amortization of debt discount and issuance costs |
|
|
12,615 |
|
|
|
12,091 |
|
Other adjustments |
|
|
(4,753 |
) |
|
|
4,087 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
(Increase) decrease in accounts receivable |
|
|
(85,853 |
) |
|
|
247,659 |
|
(Increase) decrease in inventories |
|
|
(88,119 |
) |
|
|
28,002 |
|
(Increase) decrease in other assets |
|
|
(20,844 |
) |
|
|
19,643 |
|
Decrease in accounts payable |
|
|
(119,525 |
) |
|
|
(4,842 |
) |
Decrease in accrued expenses and other liabilities |
|
|
(33,777 |
) |
|
|
(32,137 |
) |
Net cash (used in) provided by operating activities |
|
|
(117,788 |
) |
|
|
462,094 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Proceeds from sale of assets |
|
|
29,221 |
|
|
|
14,218 |
|
Purchases of property and equipment |
|
|
(28,011 |
) |
|
|
(20,688 |
) |
Acquisitions, net of cash and cash equivalents acquired |
|
|
? |
|
|
|
(6,405 |
) |
Net cash provided by (used in) investing activities |
|
|
1,210 |
|
|
|
(12,875 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Borrowings on ABL revolving credit facility |
|
|
3,167,044 |
|
|
|
2,111,674 |
|
Repayments on ABL revolving credit facility |
|
|
(3,085,044 |
) |
|
|
(2,682,562 |
) |
Net borrowings under inventory financing facilities |
|
|
76,422 |
|
|
|
114,321 |
|
Repurchases of treasury stock |
|
|
(50,000 |
) |
|
|
(25,000 |
) |
Other payments |
|
|
(9,330 |
) |
|
|
(7,520 |
) |
Net cash provided by (used in) financing activities |
|
|
99,092 |
|
|
|
(489,087 |
) |
Foreign currency exchange effect on cash, cash equivalents and restricted cash balances |
|
|
(3,601 |
) |
|
|
718 |
|
Decrease in cash, cash equivalents and restricted cash |
|
|
(21,087 |
) |
|
|
(39,150 |
) |
Cash, cash equivalents and restricted cash at beginning of period |
|
|
130,582 |
|
|
|
116,297 |
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
109,495 |
|
|
$ |
77,147 |
|
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, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
Adjusted Consolidated Earnings from Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP consolidated EFO |
|
$ |
83,151 |
|
|
$ |
61,482 |
|
|
$ |
238,644 |
|
|
$ |
188,533 |
|
Amortization of intangible assets |
|
|
7,988 |
|
|
|
9,433 |
|
|
|
24,097 |
|
|
|
29,555 |
|
Other |
|
|
2,396 |
|
|
|
926 |
|
|
|
(3,217 |
) |
|
|
12,157 |
|
Adjusted non-GAAP consolidated EFO |
|
$ |
93,535 |
|
|
$ |
71,841 |
|
|
$ |
259,524 |
|
|
$ |
230,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP EFO as a percentage of net sales |
|
|
3.4 |
% |
|
|
3.1 |
% |
|
|
3.5 |
% |
|
|
3.1 |
% |
Adjusted non-GAAP EFO as a percentage of net sales |
|
|
3.8 |
% |
|
|
3.7 |
% |
|
|
3.8 |
% |
|
|
3.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Consolidated Net Earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP consolidated net earnings |
|
$ |
55,483 |
|
|
$ |
38,906 |
|
|
$ |
157,212 |
|
|
$ |
119,252 |
|
Amortization of intangible assets |
|
|
7,988 |
|
|
|
9,433 |
|
|
|
24,097 |
|
|
|
29,555 |
|
Amortization of debt discount and issuance costs |
|
|
3,049 |
|
|
|
2,919 |
|
|
|
9,045 |
|
|
|
8,636 |
|
Other |
|
|
2,396 |
|
|
|
926 |
|
|
|
(3,217 |
) |
|
|
12,157 |
|
Income taxes on non-GAAP adjustments |
|
|
(3,172 |
) |
|
|
(3,335 |
) |
|
|
(7,133 |
) |
|
|
(12,562 |
) |
Adjusted non-GAAP consolidated net earnings |
|
$ |
65,744 |
|
|
$ |
48,849 |
|
|
$ |
180,004 |
|
|
$ |
157,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Diluted Earnings Per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted EPS |
|
$ |
1.51 |
|
|
$ |
1.10 |
|
|
$ |
4.27 |
|
|
$ |
3.37 |
|
Amortization of intangible assets |
|
|
0.22 |
|
|
|
0.27 |
|
|
|
0.65 |
|
|
|
0.83 |
|
Amortization of debt discount and issuance costs |
|
|
0.08 |
|
|
|
0.08 |
|
|
|
0.25 |
|
|
|
0.24 |
|
Other |
|
|
0.07 |
|
|
|
0.02 |
|
|
|
(0.09 |
) |
|
|
0.34 |
|
Income taxes on non-GAAP adjustments |
|
|
(0.09 |
) |
|
|
(0.09 |
) |
|
|
(0.19 |
) |
|
|
(0.35 |
) |
Impact of benefit from note hedge |
|
|
0.08 |
|
|
|
? |
|
|
|
0.19 |
|
|
|
? |
|
Adjusted non-GAAP diluted EPS |
|
$ |
1.87 |
|
|
$ |
1.38 |
|
|
$ |
5.08 |
|
|
$ |
4.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in diluted EPS calculation |
|
|
36,745 |
|
|
|
35,348 |
|
|
|
36,860 |
|
|
|
35,418 |
|
Impact of benefit from note hedge |
|
|
(1,509 |
) |
|
|
? |
|
|
|
(1,403 |
) |
|
|
? |
|
Shares used in Adjusted non-GAAP diluted EPS calculation |
|
|
35,236 |
|
|
|
35,348 |
|
|
|
35,457 |
|
|
|
35,418 |
|
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, |
||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Adjusted North America Earnings from Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP EFO from North America segment |
|
$ |
74,269 |
|
|
$ |
54,244 |
|
|
$ |
192,309 |
|
|
$ |
148,653 |
|
Amortization of intangible assets |
|
|
7,372 |
|
|
|
8,730 |
|
|
|
22,229 |
|
|
|
27,594 |
|
Other |
|
|
1,999 |
|
|
|
891 |
|
|
|
(4,361 |
) |
|
|
9,790 |
|
Adjusted non-GAAP EFO from North America segment |
|
$ |
83,640 |
|
|
$ |
63,865 |
|
|
$ |
210,177 |
|
|
$ |
186,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP EFO as a percentage of net sales |
|
|
3.7 |
% |
|
|
3.5 |
% |
|
|
3.5 |
% |
|
|
3.1 |
% |
Adjusted non-GAAP EFO as a percentage of net sales |
|
|
4.1 |
% |
|
|
4.1 |
% |
|
|
3.9 |
% |
|
|
3.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EMEA Earnings from Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP EFO from EMEA segment |
|
$ |
4,988 |
|
|
$ |
4,843 |
|
|
$ |
34,410 |
|
|
$ |
31,073 |
|
Amortization of intangible assets |
|
|
494 |
|
|
|
585 |
|
|
|
1,491 |
|
|
|
1,625 |
|
Other |
|
|
397 |
|
|
|
19 |
|
|
|
1,135 |
|
|
|
2,322 |
|
Adjusted non-GAAP EFO from EMEA segment |
|
$ |
5,879 |
|
|
$ |
5,447 |
|
|
$ |
37,036 |
|
|
$ |
35,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP EFO as a percentage of net sales |
|
|
1.3 |
% |
|
|
1.4 |
% |
|
|
2.7 |
% |
|
|
2.7 |
% |
Adjusted non-GAAP EFO as a percentage of net sales |
|
|
1.5 |
% |
|
|
1.6 |
% |
|
|
2.9 |
% |
|
|
3.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted APAC Earnings from Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP EFO from APAC segment |
|
$ |
3,894 |
|
|
$ |
2,395 |
|
|
$ |
11,925 |
|
|
$ |
8,807 |
|
Amortization of intangible assets |
|
|
122 |
|
|
|
118 |
|
|
|
377 |
|
|
|
336 |
|
Other |
|
|
? |
|
|
|
16 |
|
|
|
9 |
|
|
|
45 |
|
Adjusted non-GAAP EFO from APAC segment |
|
$ |
4,016 |
|
|
$ |
2,529 |
|
|
$ |
12,311 |
|
|
$ |
9,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP EFO as a percentage of net sales |
|
|
8.4 |
% |
|
|
6.5 |
% |
|
|
7.5 |
% |
|
|
7.0 |
% |
Adjusted non-GAAP EFO as a percentage of net sales |
|
|
8.7 |
% |
|
|
6.8 |
% |
|
|
7.8 |
% |
|
|
7.3 |
% |
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, |
||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP consolidated net earnings |
|
$ |
55,483 |
|
|
$ |
38,906 |
|
|
$ |
157,212 |
|
|
$ |
119,252 |
|
Interest expense |
|
|
10,529 |
|
|
|
9,186 |
|
|
|
30,291 |
|
|
|
31,366 |
|
Income tax expense |
|
|
18,925 |
|
|
|
12,160 |
|
|
|
52,403 |
|
|
|
37,285 |
|
Depreciation and amortization of property and equipment |
|
|
5,665 |
|
|
|
7,319 |
|
|
|
18,054 |
|
|
|
21,820 |
|
Amortization of intangible assets |
|
|
7,988 |
|
|
|
9,433 |
|
|
|
24,097 |
|
|
|
29,555 |
|
Non-cash stock-based compensation |
|
|
4,575 |
|
|
|
4,513 |
|
|
|
13,950 |
|
|
|
11,754 |
|
Other |
|
|
2,396 |
|
|
|
926 |
|
|
|
(3,217 |
) |
|
|
12,157 |
|
Adjusted non-GAAP EBITDA |
|
$ |
105,561 |
|
|
$ |
82,443 |
|
|
$ |
292,790 |
|
|
$ |
263,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP consolidated net earnings as a percentage of net sales |
|
|
2.3 |
% |
|
|
2.0 |
% |
|
|
2.3 |
% |
|
|
2.0 |
% |
Adjusted non-GAAP EBITDA as a percentage of net sales |
|
|
4.3 |
% |
|
|
4.3 |
% |
|
|
4.3 |
% |
|
|
4.4 |
% |
|
|
Twelve Months Ended September 30, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
Adjusted return on invested capital: |
|
|
|
|
|
|
|
|
GAAP consolidated EFO |
|
$ |
321,679 |
|
|
$ |
255,549 |
|
Other |
|
|
5,917 |
|
|
|
17,654 |
|
Adjusted non-GAAP consolidated EFO* |
|
|
327,596 |
|
|
|
273,203 |
|
Income tax expense** |
|
|
85,175 |
|
|
|
71,033 |
|
Adjusted non-GAAP consolidated EFO, net of tax |
|
$ |
242,421 |
|
|
$ |
202,170 |
|
Average stockholders' equity*** |
|
$ |
1,367,940 |
|
|
$ |
1,176,754 |
|
Average debt*** |
|
|
432,693 |
|
|
|
636,215 |
|
Average cash*** |
|
|
(111,493 |
) |
|
|
(109,396 |
) |
Invested Capital |
|
$ |
1,689,140 |
|
|
$ |
1,703,573 |
|
|
|
|
|
|
|
|
|
|
Adjusted non-GAAP ROIC (from GAAP consolidated EFO) **** |
|
|
14.09 |
% |
|
|
11.10 |
% |
Adjusted non-GAAP ROIC (from non-GAAP consolidated EFO) ***** |
|
|
14.35 |
% |
|
|
11.87 |
% |
* The adjusted non-GAAP consolidated EFO amount used for the Adjusted non-GAAP ROIC calculation does not exclude amortization of intangible assets. This calculation remains consistent with the metric utilized in management's compensation plan.
** Assumed tax rate of 26.0%.
*** Average of previous five quarters.
**** Computed as GAAP consolidated EFO, net of tax of $83,637 and $66,443 for the twelve months ended September 30, 2021 and 2020, respectively, divided by invested capital.
***** Computed as Adjusted non-GAAP consolidated EFO, net of tax, divided by invested capital.
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