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EX-99.2 - EXHIBIT 99.2 - INSIGHT ENTERPRISES INCd539030dex992.htm
8-K - FORM 8-K - INSIGHT ENTERPRISES INCd539030d8k.htm

Exhibit 99.1

 

LOGO

 

 

FOR IMMEDIATE RELEASE    NASDAQ: NSIT

INSIGHT ENTERPRISES, INC. REPORTS FOURTH QUARTER AND

RECORD FULL YEAR 2017 RESULTS

TEMPE, AZ – February 14, 2018 – Insight Enterprises, Inc. (NASDAQ: NSIT) (the “Company”) today reported results of operations for the quarter and full year ended December 31, 2017.

 

    Net sales up 22% year over year to $1.8 billion for the fourth quarter and also up 22% for the full year

 

    Net sales up 30% year over year in North America for the fourth quarter and full year

 

    Gross profit up 22% year over year to $232.9 million for the fourth quarter and up 24% for the full year

 

    Earnings from operations up 12% year over year to $45.5 million for the fourth quarter and up 20% for the full year

 

    Adjusted earnings from operations up 5% year over year for the fourth quarter and up 24% for the full year

In the fourth quarter of 2017, consolidated net sales increased 22% year over year, reflecting growth in the Company’s core business of 12% and the addition of Datalink, which the Company acquired in January 2017. Gross profit also grew 22% year over year, with gross margins increasing 10 basis points in the quarter. Selling and administrative expenses increased 27% year over year, primarily related to the addition of Datalink. Overall, earnings from operations increased 12% year over year and Adjusted earnings from operations increased 5% year over year.

The Company’s fourth quarter results reflect additional income tax expense of $13.4 million recognized as a result of the U.S. Tax Cuts and Jobs Act that was enacted in December 2017. The incremental income tax expense primarily relates to the remeasurement of the Company’s deferred tax asset balances and withholding taxes. The Company expects its effective tax rate will be between 27% and 28% for the full year 2018, primarily related to a 14% decrease in the U.S. federal income tax rate as a result of the U.S. Tax Cuts and Jobs Act.

“Our fourth quarter results reflect a strong close to a very good year,” stated Ken Lamneck, President and Chief Executive Officer. “We reported strong organic growth in our core business in 2017 and gained market share from competitors in North America, according to third party data, reflecting growth in data center solutions as well as devices. Our acquisition of Datalink in January 2017 complemented the growth in our core business. We realized expense synergies ahead of our expectations and are pleased with the overall financial results of the Datalink business in its first year as part of Insight. I am pleased to report that gross profit growing faster than sales and tight cost management across the business in 2017 produced an impressive increase in earnings from operations year over year,” stated Lamneck.

For the full year 2017, consolidated net sales were $6.7 billion, up 22% year over year, reflecting strong growth in the Company’s core business and the addition of Datalink. Gross profit was $918.6 million in 2017, and grew faster than net sales at 24% year over year. That increase drove margins up 20 basis points to 13.7% for the full year 2017. Selling and administrative expenses increased 24% year over year, primarily related to the addition of Datalink. Selling and administrative expenses in the Company’s core business increased 5% year over year. Overall, earnings from operations increased 20% year over year and Adjusted earnings from operations increased 24% year over year.

 

- MORE -

Insight Enterprises, Inc.        6820 South Harl Avenue        Tempe, Arizona 85283        800.467.4448        FAX 480.760.8958


Insight Q4 2017 Results, Page 2    February 14, 2018

 

“Our plans for 2018 are focused on driving growth in excess of the market across our operating segments,” stated Lamneck. “The IT industry is healthy and growing. More than ever, clients are challenged to efficiently manage their day-to-day IT operations while they leverage technology to transform their business to bring value to their own customers. We have a full suite of solutions that we developed over time and have acquired through recent acquisitions, which position us to provide value to our clients throughout their technology journey and provide a strong foundation for us to compete in the marketplace in 2018,” stated Lamneck.

KEY HIGHLIGHTS

Results for the Quarter:

 

    Consolidated net sales of $1.8 billion for the fourth quarter of 2017 increased 22% compared to the fourth quarter of 2016.

 

    Net sales in North America of $1.4 billion were up 30% year over year;

 

    Net sales in EMEA of $366.8 million increased 1% year over year; and

 

    Net sales in APAC of $38.9 million were down 20% year to year.

 

    Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales increased 19% year over year, with net sales growth in North America of 30% year over year and a decline in net sales in EMEA and APAC of 6% and 22%, respectively, year to year.

 

    Consolidated gross profit of $232.9 million increased 22% compared to the fourth quarter of 2016, with consolidated gross margin increasing 10 basis points to 13.1% of net sales.

 

    Gross profit in North America of $174.6 million (12.7% gross margin) increased 31% year over year;

 

    Gross profit in EMEA of $50.4 million (13.7% gross margin) increased 3% year over year; and

 

    Gross profit in APAC of $7.9 million (20.3% gross margin) decreased 7% year to year, with margin expansion of 270 basis points.

 

    Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit increased 19% year over year, and gross profit in North America increased 30% year over year, while gross profit in EMEA and APAC decreased 5% and 10%, respectively, year to year.

 

    Consolidated earnings from operations increased 12% compared to the fourth quarter of 2016 to $45.5 million, or 2.6% of net sales.

 

    Earnings from operations in North America increased 28% year over year to $37.2 million, or 2.7% of net sales;

 

    Earnings from operations in EMEA decreased 23% year to year to $7.1 million, or 1.9% of net sales; and

 

    Earnings from operations in APAC decreased 48% year to year to $1.2 million, or 3.0% of net sales.

 

    Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations increased 9% year over year, and earnings from operations in North America increased 27% year over year while earnings from operations decreased in EMEA and APAC by 30% and 50%, respectively, year to year.

 

    Adjusted consolidated earnings from operations increased 5% year over year to $48.3 million, or 2.7% of net sales for the fourth quarter of 2017.

 

    Consolidated net earnings and diluted earnings per share for the fourth quarter of 2017 were $14.2 million and $0.39, respectively, at an effective tax rate of 64.8%, which includes income tax expense of $13.4 million recognized during the quarter as a result of U.S. federal tax reform enacted in December 2017.

 

    Adjusted consolidated net earnings and Adjusted diluted earnings per share for the fourth quarter of 2017 were $29.5 million and $0.81, respectively.

 

- MORE -

Insight Enterprises, Inc.         6820 South Harl Avenue         Tempe, Arizona 85283         800.467.4448         FAX 480.760.8958


Insight Q4 2017 Results, Page 3    February 14, 2018

 

Results for the Year:

 

    Consolidated net sales of $6.7 billion for 2017 increased 22% compared to 2016.

 

    Net sales in North America of $5.2 billion were up 30% year over year;

 

    Net sales in EMEA of $1.4 billion increased 1% year over year; and

 

    Net sales in APAC of $166.5 million decreased 5% year to year.

 

    Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales increased 22% year over year, with net sales growth in North America and EMEA of 30% and 2%, respectively, year over year, while net sales in APAC decreased 7% year to year.

 

    Consolidated gross profit of $918.6 million increased 24% compared to 2016, with consolidated gross margin increasing approximately 20 basis points to 13.7% of net sales.

 

    Gross profit in North America of $691.7 million (13.3% gross margin) increased 32% year over year;

 

    Gross profit in EMEA of $190.3 million (14.0% gross margin) increased 2% year over year; and

 

    Gross profit in APAC of $36.6 million (22.0% gross margin) increased 15% year over year.

 

    Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit increased 24% year over year, and gross profit in North America, EMEA and APAC increased 31%, 4% and 13%, respectively, year over year.

 

    Consolidated earnings from operations increased 20% compared to 2016 to $179.3 million, or 2.7% of net sales.

 

    Earnings from operations in North America increased 31% year over year to $153.7 million, or 3.0% of net sales;

 

    Earnings from operations in EMEA decreased 27% year to year to $17.4 million, or 1.3% of net sales; and

 

    Earnings from operations in APAC increased 3% year over year to $8.2 million, or 5.0% of net sales.

 

    Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations increased 20% year over year, and earnings from operations in North America and APAC increased 31% and 2%, respectively, year over year, while earnings from operations in EMEA declined 27% year to year.

 

    Adjusted consolidated earnings from operations increased 24% year over year to $195.2 million, or 2.9% of net sales, for 2017.

 

    Consolidated net earnings and diluted earnings per share for 2017 were $90.7 million and $2.50, respectively, at an effective tax rate of 43.0%, which reflects the income tax expense recorded in the fourth quarter of 2017 as a result of U.S. federal tax reform, noted previously, and non-deductible acquisition-related expenses incurred during the year.

 

    Adjusted consolidated net earnings and Adjusted diluted earnings per share for 2017 were $117.5 million and $3.24, respectively.

As services have become a larger portion of the Company’s consolidated net sales, for the year ended December 31, 2017, the Company began reporting net sales from the provision of services and the related costs of goods sold separately from net sales of products and the related costs of goods. For comparability purposes, net sales and costs of goods sold for the 2016 periods have been expanded to conform to the current year presentation. These changes in presentation had no effect on previously reported total net sales, total costs of goods sold or gross profit amounts.

In conjunction with these changes in presentation, because fees earned from activities reported net are considered services revenues, the Company reclassified certain revenue streams for which the Company acts as the agent in the transaction to net sales from services. Previously, the Company included these net revenue streams within its software and, to a lesser extent, hardware sales mix categories based on the type of product being sold (e.g., fees earned for the sale of software maintenance and certain software licenses were included in software sales and fees earned for the sale of certain third-party provided training and warranty services were included in hardware sales when the Company historically disclosed and analyzed its sales mix). For comparability purposes, the Company’s sales mix among its hardware, software and services

 

- MORE -

Insight Enterprises, Inc.         6820 South Harl Avenue         Tempe, Arizona 85283         800.467.4448         FAX 480.760.8958


Insight Q4 2017 Results, Page 4    February 14, 2018

 

categories for the three months and year ended December 31, 2016, as presented in the Financial Summary Table in this press release, has been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported total net sales amounts.

In discussing financial results for the three months and years ended December 31, 2017 and 2016 in this press release, the Company refers to certain financial measures that are not prepared in accordance with United States generally accepted accounting principles (“GAAP”). When referring to non-GAAP measures, the Company refers to such measures 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.

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.

STOCK REPURCHASE PROGRAM

On February 13, 2018, the Company’s Board of Directors authorized the repurchase of up to $50 million of the Company’s common stock. The Company’s share repurchases will be made on the open market, subject to Rule 10b-18 or in privately negotiated transactions, through block trades, through 10b5-1 plans or otherwise, at management’s discretion. The amount of shares purchased and the timing of the purchases will be based on market conditions, working capital requirements, general business conditions and other factors. The Company intends to retire the repurchased shares.

GUIDANCE

For the full year 2018, the Company expects to deliver net sales growth in the low single digit range compared to 2017. The Company also expects Adjusted diluted earnings per share for the full year 2018 to be between $3.90 and $4.00.

This outlook assumes:

 

    the effects of the Company’s adoption of the new revenue recognition standard effective January 1, 2018;

 

    an effective tax rate between 27% and 28%; and

 

    capital expenditures of $15 to $20 million.

This outlook does not include the completion of our recently authorized share repurchase program and assumes no severance and restructuring or acquisition-related expenses. Due to the inherent difficulty of forecasting these types of expenses, which impact net earnings and diluted earnings per share, the Company is unable to reasonably estimate the related impact of such expenses, if any, to net earnings and diluted earnings per share. Accordingly, the Company is unable to provide a reconciliation of GAAP to non-GAAP diluted earnings per share for the full year 2018 forecast.

 

- MORE -

Insight Enterprises, Inc.         6820 South Harl Avenue         Tempe, Arizona 85283         800.467.4448         FAX 480.760.8958


Insight Q4 2017 Results, Page 5    February 14, 2018

 

CONFERENCE CALL AND WEBCAST

The Company will host a conference call and live web cast today at 5:00 p.m. ET to discuss fourth quarter and full year 2017 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://nsit.client.shareholder.com/events.cfm, and a replay of the web cast will be available on the Company’s web site for a limited time following the call. To listen to the live web cast by telephone, call 1-877-402-8904 if located in the U.S., 678-809-1029 for international callers, and enter the access code 2789109.

USE OF NON-GAAP FINANCIAL MEASURES

The non-GAAP financial measures (referred to as Adjusted consolidated earnings from operations, Adjusted consolidated net earnings and Adjusted diluted earnings per share) exclude (i) severance and restructuring expenses, (ii) certain acquisition-related expenses, (iii) a loss on the sale of the Company’s Russia business in the year ended December 31, 2017, (iv) a gain on the sale of real estate in the year ended December 31, 2016 and (v) the tax effects of each of these items as well as income tax expense recognized as a result of U.S. federal tax reform laws enacted in December 2017. 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. These non-GAAP measures are used 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.

 

- MORE -

Insight Enterprises, Inc.         6820 South Harl Avenue         Tempe, Arizona 85283         800.467.4448         FAX 480.760.8958


Insight Q4 2017 Results, Page 6    February 14, 2018

 

FINANCIAL SUMMARY TABLE

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Three Months Ended December 31,     Years Ended December 31,  
     2017     2016     change     2017     2016     change  

Insight Enterprises, Inc.

 

Net sales:

 

     

Products

   $ 1,612,338     $ 1,344,024       20   $ 6,038,744     $ 4,997,263       21

Services

   $ 171,737     $ 123,559       39   $ 664,879     $ 488,252       36
  

 

 

   

 

 

     

 

 

   

 

 

   

Total net sales

   $ 1,784,075     $ 1,467,583       22   $ 6,703,623     $ 5,485,515       22

Gross profit

   $ 232,883     $ 190,969       22   $ 918,570     $ 743,102       24

Gross margin

     13.1     13.0     10  bps      13.7     13.5     20  bps 

Selling and administrative expenses

   $ 184,554     $ 145,066       27   $ 723,328     $ 585,243       24

Severance and restructuring expenses

   $ 2,791     $ 1,527       83   $ 9,002     $ 4,580       97

Loss on sale of foreign entity

   $ —       $ —         —       $ 3,646     $ —         *  

Acquisition-related expenses

   $ —       $ 3,706       *     $ 3,329     $ 4,447       (25 %) 

Earnings from operations

   $ 45,538     $ 40,670       12   $ 179,265     $ 148,832       20

Net earnings

   $ 14,168     $ 21,100       (33 %)    $ 90,683     $ 84,690       7

Diluted earnings per share

   $ 0.39     $ 0.59       (34 %)    $ 2.50     $ 2.32       8

North America

 

Net sales:

            

Products

   $ 1,249,420     $ 969,487       29   $ 4,662,473     $ 3,601,697       29

Services

   $ 128,971     $ 87,866       47   $ 519,261     $ 370,131       40
  

 

 

   

 

 

     

 

 

   

 

 

   

Total net sales

   $ 1,378,391     $ 1,057,353       30   $ 5,181,734     $ 3,971,828       30

Gross profit

   $ 174,569     $ 133,552       31   $ 691,677     $ 525,481       32

Gross margin

     12.7     12.6     10  bps      13.3     13.2     10  bps 

Selling and administrative expenses

   $ 135,369     $ 100,169       35   $ 530,792     $ 401,316       32

Severance and restructuring expenses

   $ 1,965     $ 515       282   $ 4,010     $ 2,966       35

Acquisition-related expenses

   $ —       $ 3,703       *     $ 3,223     $ 4,278       (25 %) 

Earnings from operations

   $ 37,235     $ 29,165       28   $ 153,652     $ 116,921       31

Sales Mix

         *         *

Hardware

     64     62     34     65     62     37

Software

     27     30     18     25     29     14

Services

     9     8     47     10     9     40
  

 

 

   

 

 

     

 

 

   

 

 

   
     100     100     30     100     100     30
  

 

 

   

 

 

     

 

 

   

 

 

   

EMEA

 

Net sales:

            

Products

   $ 333,540     $ 335,149       (1 %)    $ 1,246,952     $ 1,243,932       —    

Services

   $ 33,267     $ 26,611       25   $ 108,464     $ 94,628       15
  

 

 

   

 

 

     

 

 

   

 

 

   

Total net sales

   $ 366,807     $ 361,760       1   $ 1,355,416     $ 1,338,560       1

Gross profit

   $ 50,413     $ 48,877       3   $ 190,310     $ 185,687       2

Gross margin

     13.7     13.5     20  bps      14.0     13.9     10  bps 

Selling and administrative expenses

   $ 42,442     $ 38,606       10   $ 164,305     $ 160,269       3

Severance and restructuring expenses

   $ 826     $ 1,009       (18 %)    $ 4,888     $ 1,496       227

Loss on sale of foreign entity

   $ —       $ —         —       $ 3,646     $ —         *  

Acquisition-related expenses

   $ —       $ —         —       $ 106     $ —         *  

Earnings from operations

   $ 7,145     $ 9,262       (23 %)    $ 17,365     $ 23,922       (27 %) 

Sales Mix

         *         *

Hardware

     37     34     12     40     36     11

Software

     54     59     (7 %)      52     57     (7 %) 

Services

     9     7     25     8     7     15
  

 

 

   

 

 

     

 

 

   

 

 

   
     100     100     1     100     100     1
  

 

 

   

 

 

     

 

 

   

 

 

   

 

* Percentage change not considered meaningful.
** Change in sales mix represents growth/decline in category net sales on a U.S. dollar basis and does not exclude the effects of fluctuating foreign currency exchange rates.

 

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Insight Enterprises, Inc.         6820 South Harl Avenue         Tempe, Arizona 85283         800.467.4448         FAX 480.760.8958


Insight Q4 2017 Results, Page 7    February 14, 2018

 

FINANCIAL SUMMARY TABLE (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Three Months Ended
December 31,
    Years Ended
December 31,
 
     2017     2016     change     2017     2016     change  

APAC

 

Net sales:

            

Products

   $ 29,378     $ 39,388       (25 %)    $ 129,319     $ 151,634       (15 %) 

Services

   $ 9,499     $ 9,082       5   $ 37,154     $ 23,493       58
  

 

 

   

 

 

     

 

 

   

 

 

   

Total net sales

   $ 38,877     $ 48,470       (20 %)    $ 166,473     $ 175,127       (5 %) 

Gross profit

   $ 7,901     $ 8,540       (7 %)    $ 36,583     $ 31,934       15

Gross margin

     20.3     17.6     270  bps      22.0     18.2     380  bps 

Selling and administrative expenses

   $ 6,743     $ 6,291       7   $ 28,231     $ 23,658       19

Severance and restructuring expenses

   $ —       $ 3       *     $ 104     $ 118       (12 %) 

Acquisition-related expenses

   $ —       $ 3       *     $ —       $ 169       *  

Earnings from operations

   $ 1,158     $ 2,243       (48 %)    $ 8,248     $ 7,989       3

Sales Mix

         *         *

Hardware

     25     11     82     17     11     48

Software

     51     70     (42 %)      61     76     (24 %) 

Services

     24     19     5     22     13     58
  

 

 

   

 

 

     

 

 

   

 

 

   
     100     100     (20 %)      100     100     (5 %) 
  

 

 

   

 

 

     

 

 

   

 

 

   

 

* 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.         6820 South Harl Avenue         Tempe, Arizona 85283         800.467.4448         FAX 480.760.8958


Insight Q4 2017 Results, Page 8    February 14, 2018

 

FORWARD-LOOKING INFORMATION

Certain statements in this release and the related conference call and web cast are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including the Company’s expected 2018 financial results, including sales growth rates and Adjusted diluted earnings per share for the full year 2018, and the assumptions relating thereto, including the Company’s anticipated effective tax rate and capital expenditures for 2018, the Company’s plans for driving growth and the strength of its position to compete in the marketplace in 2018, the Company’s plans to leverage its four solutions areas strategy, focus on profitability and invest in digital marketing, cloud and ecommerce platforms, the Company’s expected working capital trends, gross margin and APAC growth trends and the Company’s plans concerning its recently authorized share repurchase program, 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 “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and in other of the Company’s subsequent filings with the Securities and Exchange Commission:

 

    actions of the Company’s competitors, including manufacturers and publishers of products the Company sells;

 

    the Company’s reliance on partners for product availability, competitive products to sell and related marketing funds and purchasing incentives, the amounts and terms of which can fluctuate significantly year over year;

 

    changes in the information technology (“IT”) industry and/or rapid changes in technology;

 

    risks associated with the integration and operation of acquired businesses;

 

    possible significant fluctuations in the Company’s future operating results;

 

    the risks associated with the Company’s international operations;

 

    general economic conditions;

 

    increased debt and interest expense and decreased availability of funds under the Company’s financing facilities;

 

    the security of the Company’s electronic and other confidential information;

 

    disruptions in the Company’s IT systems and voice and data networks;

 

    failure to comply with the terms and conditions of the Company’s commercial and public sector contracts;

 

    accounts receivable risks, including increased credit loss experience or extended payment terms with the Company’s clients;

 

    the Company’s reliance on independent shipping companies;

 

    the Company’s dependence on certain personnel;

 

    natural disasters or other adverse occurrences;

 

    exposure to changes in, interpretations of, or enforcement trends related to tax rules and regulations;

 

    intellectual property infringement claims and challenges to the Company’s registered trademarks and trade names; and

 

    legal proceedings and audits and failure to comply with laws and regulations.

Additionally, there may be other risks that are otherwise described from time to time in the reports that the Company files with the Securities and Exchange Commission. Any forward-looking statements in this release 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.

 

CONTACTS:    GLYNIS BRYAN    HELEN JOHNSON
   CHIEF FINANCIAL OFFICER    SENIOR VP, FINANCE
   TEL. 480.333.3390    TEL. 480.333.3234
   EMAIL glynis.bryan@insight.com    EMAIL helen.johnson@insight.com

 

- MORE -

Insight Enterprises, Inc.         6820 South Harl Avenue         Tempe, Arizona 85283         800.467.4448         FAX 480.760.8958


Insight Q4 2017 Results, Page 9    February 14, 2018

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Three Months Ended
December 31,
    Years Ended
December 31,
 
     2017     2016     2017     2016  

Net sales:

        

Products

   $ 1,612,338     $ 1,344,024     $ 6,038,744     $ 4,997,263  

Services

     171,737       123,559       664,879       488,252  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales

     1,784,075       1,467,583       6,703,623       5,485,515  
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs of goods sold:

        

Products

     1,475,916       1,234,039       5,512,402       4,571,462  

Services

     75,276       42,575       272,651       170,951  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs of goods sold

     1,551,192       1,276,614       5,785,053       4,742,413  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     232,883       190,969       918,570       743,102  

Operating expenses:

        

Selling and administrative expenses

     184,554       145,066       723,328       585,243  

Severance and restructuring expenses

     2,791       1,527       9,002       4,580  

Loss on sale of foreign entity

     —         —         3,646       —    

Acquisition-related expenses

     —         3,706       3,329       4,447  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings from operations

     45,538       40,670       179,265       148,832  

Non-operating (income) expense:

        

Interest income

     (346     (282     (1,209     (1,066

Interest expense

     5,360       2,271       19,174       8,628  

Net foreign currency exchange (gain) loss

     (117     (520     855       522  

Other expense, net

     367       311       1,347       1,290  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before income taxes

     40,274       38,890       159,098       139,458  

Income tax expense

     26,106       17,790       68,415       54,768  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings

   $ 14,168     $ 21,100     $ 90,683     $ 84,690  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings per share:

        

Basic

   $ 0.40     $ 0.59     $ 2.54     $ 2.35  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.39     $ 0.59     $ 2.50     $ 2.32  
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in per share calculations:

        

Basic

     35,809       35,479       35,741       36,102  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     36,272       35,963       36,207       36,438  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

- MORE -

Insight Enterprises, Inc.         6820 South Harl Avenue         Tempe, Arizona 85283         800.467.4448         FAX 480.760.8958


Insight Q4 2017 Results, Page 10    February 14, 2018

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

(UNAUDITED)

 

     December 31,  
     2017     2016  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 105,831     $ 202,882  

Accounts receivable, net

     1,814,560       1,436,742  

Inventories

     194,529       148,203  

Inventories not available for sale

     36,956       68,619  

Other current assets

     152,467       127,159  
  

 

 

   

 

 

 

Total current assets

     2,304,343       1,983,605  

Property and equipment, net

     75,252       70,910  

Goodwill

     131,431       62,645  

Intangible assets, net

     100,778       20,707  

Deferred income taxes

     17,064       52,347  

Other assets

     56,783       29,086  
  

 

 

   

 

 

 
   $ 2,685,651     $ 2,219,300  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable – trade

   $ 899,075     $ 1,070,259  

Accounts payable – inventory financing facility

     319,468       154,930  

Accrued expenses and other current liabilities

     175,860       151,895  

Current portion of long-term debt

     16,592       480  

Deferred revenue

     88,979       61,098  
  

 

 

   

 

 

 

Total current liabilities

     1,499,974       1,438,662  

Long-term debt

     296,576       40,251  

Deferred income taxes

     717       900  

Other liabilities

     44,915       26,044  
  

 

 

   

 

 

 
     1,842,182       1,505,857  
  

 

 

   

 

 

 

Stockholders’ equity:

    

Preferred stock

     —         —    

Common stock

     358       355  

Additional paid-in capital

     317,155       309,650  

Retained earnings

     550,220       459,537  

Accumulated other comprehensive loss – foreign currency translation adjustments

     (24,264     (56,099
  

 

 

   

 

 

 

Total stockholders’ equity

     843,469       713,443  
  

 

 

   

 

 

 
   $ 2,685,651     $ 2,219,300  
  

 

 

   

 

 

 

 

- MORE -

Insight Enterprises, Inc.         6820 South Harl Avenue         Tempe, Arizona 85283         800.467.4448         FAX 480.760.8958


Insight Q4 2017 Results, Page 11    February 14, 2018

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

 

     Years Ended December 31,  
     2017     2016  

Cash flows from operating activities:

    

Net earnings

   $ 90,683     $ 84,690  

Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:

    

Depreciation and amortization of property and equipment

     25,787       27,493  

Amortization of intangible assets

     16,812       10,637  

Provision for losses on accounts receivable

     5,245       2,452  

Write-downs of inventories

     2,776       2,934  

Write-off of property and equipment

     418       —    

Non-cash stock-based compensation

     12,826       11,058  

Deferred income taxes

     19,139       10,517  

Loss on sale of foreign entity

     3,646       —    

Gain on sale of real estate

     —         (338

Changes in assets and liabilities:

    

Increase in accounts receivable

     (208,065     (168,966

Increase in inventories

     (14,046     (50,712

Decrease (increase) in other assets

     4,982       (50,130

(Decrease) increase in accounts payable

     (237,457     193,582  

(Decrease) increase in deferred revenue

     (27,184     10,633  

(Decrease) increase in accrued expenses and other liabilities

     (988     12,278  
  

 

 

   

 

 

 

Net cash (used in) provided by operating activities

     (305,426     96,128  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Acquisitions, net of cash and cash equivalents acquired

     (186,932     (10,297

Purchases of property and equipment

     (19,230     (12,266

Proceeds from sale of foreign entity

     1,517       —    

Proceeds from sale of real estate, net

     —         1,378  
  

 

 

   

 

 

 

Net cash used in investing activities

     (204,645     (21,185
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Borrowings on senior revolving credit facility

     1,151,216       772,218  

Repayments on senior revolving credit facility

     (1,033,716     (772,218

Borrowings on accounts receivable securitization financing facility

     3,961,389       2,802,000  

Repayments on accounts receivable securitization financing facility

     (3,975,889     (2,851,500

Borrowings under Term Loan A

     175,000       —    

Repayments under Term Loan A

     (8,750     —    

Repayments under other financing agreements

     (5,636     (1,309

Payments on capital lease obligations

     (1,089     (445

Net borrowings (repayments) under inventory financing facility

     141,037       48,603  

Payment of debt issuance costs

     (1,123     (3,360

Payment of payroll taxes on stock-based compensation through shares withheld

     (5,318     (2,219

Repurchases of common stock

     —         (50,000
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     397,121       (58,230
  

 

 

   

 

 

 

Foreign currency exchange effect on cash and cash equivalent balances

     15,899       (1,809
  

 

 

   

 

 

 

(Decrease) increase in cash and cash equivalents

     (97,051     14,904  

Cash and cash equivalents at beginning of year

     202,882       187,978  
  

 

 

   

 

 

 

Cash and cash equivalents at end of year

   $ 105,831     $ 202,882  
  

 

 

   

 

 

 

 

- MORE -

Insight Enterprises, Inc.         6820 South Harl Avenue         Tempe, Arizona 85283         800.467.4448         FAX 480.760.8958


Insight Q4 2017 Results, Page 12    February 14, 2018

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Three Months Ended
December 31,
    Years Ended
December 31,
 
     2017     2016     2017     2016  

Adjusted Consolidated Earnings from Operations:

 

GAAP consolidated EFO

   $ 45,538     $ 40,670     $ 179,265     $ 148,832  

Severance and restructuring expenses

     2,791       1,527       9,002       4,580  

Loss on sale of foreign entity

     —         —         3,646       —    

Gain on sale of real estate for which a non-cash impairment charge was previously reported

     —         —         —         (338

Acquisition-related expenses

     —         3,706       3,329       4,447  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted non-GAAP consolidated EFO

   $ 48,329     $ 45,903     $ 195,242     $ 157,521  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Consolidated Net Earnings:

 

GAAP consolidated net earnings

   $ 14,168     $ 21,100     $ 90,683     $ 84,690  

Severance and restructuring expenses

     2,791       1,527       9,002       4,580  

Loss on sale of foreign entity

     —         —         3,646       —    

Gain on sale of real estate for which a non-cash impairment charge was previously reported

     —         —         —         (338

Acquisition-related expenses

     —         3,706       3,329       4,447  

Income taxes on non-GAAP adjustments

     (806     (331     (2,552     (1,414

Tax expense related to U.S. federal tax reform

     13,363       —         13,363       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted non-GAAP consolidated net earnings

   $ 29,516     $ 26,002     $ 117,471     $ 91,965  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Consolidated Diluted EPS:

 

GAAP consolidated diluted EPS

   $ 0.39     $ 0.59     $ 2.50     $ 2.32  

Severance and restructuring expenses

     0.08       0.04       0.25       0.13  

Loss on sale of foreign entity

     —         —         0.10       —    

Gain on sale of real estate for which a non-cash impairment charge was previously reported

     —         —         —         (0.01

Acquisition-related expenses

     —         0.10       0.09       0.12  

Income taxes on non-GAAP adjustments

     (0.03     (0.01     (0.07     (0.04

Tax expense related to U.S. federal tax reform

     0.37       —         0.37       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted non-GAAP consolidated diluted EPS

   $ 0.81     $ 0.72     $ 3.24     $ 2.52  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted North America Earnings from Operations:

 

GAAP EFO from North America segment

   $ 37,235     $ 29,165     $ 153,652     $ 116,921  

Severance and restructuring expenses

     1,965       515       4,010       2,966  

Gain on sale of real estate for which a non-cash impairment charge was previously reported

     —         —         —         (338

Acquisition-related expenses

     —         3,703       3,223       4,278  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted non-GAAP EFO from North America segment

   $ 39,200     $ 33,383     $ 160,885     $ 123,827  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EMEA Earnings from Operations:

 

GAAP EFO from EMEA segment

   $ 7,145     $ 9,262     $ 17,365     $ 23,922  

Severance and restructuring expenses

     826       1,009       4,888       1,496  

Loss on sale of foreign entity

     —         —         3,646       —    

Acquisition-related expenses

     —         —         106       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted non-GAAP EFO from EMEA segment

   $ 7,971     $ 10,271     $ 26,005     $ 25,418  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

- MORE -

Insight Enterprises, Inc.         6820 South Harl Avenue         Tempe, Arizona 85283         800.467.4448         FAX 480.760.8958


Insight Q4 2017 Results, Page 13    February 14, 2018

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Three Months Ended
December 31,
     Years Ended
December 31,
 
     2017      2016      2017      2016  

Adjusted APAC Earnings from Operations:

 

GAAP EFO from APAC segment

   $ 1,158      $ 2,243      $ 8,248      $ 7,989  

Severance and restructuring expenses

     —          3        104        118  

Acquisition-related expenses

     —          3        —          169  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted non-GAAP EFO from APAC segment

   $ 1,158      $ 2,249      $ 8,352      $ 8,276  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

- ### -

Insight Enterprises, Inc.         6820 South Harl Avenue         Tempe, Arizona 85283         800.467.4448         FAX 480.760.8958