Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Insight Enterprises, Inc. Reports Third Quarter 2021 Results


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)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

change

 

 

2021

 

 

2020

 

 

change

 

Insight Enterprises, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Mix

 

 

 

 

 

 

 

 

 

**

 

 

 

 

 

 

 

 

 

 

**

 

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%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

** 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)

 

 

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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