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EX-99.2 - EX-99.2 - INSIGHT ENTERPRISES INCd590155dex992.htm
8-K - 8-K - INSIGHT ENTERPRISES INCd590155d8k.htm
    

 

Exhibit 99.1

 

LOGO

 

FOR IMMEDIATE RELEASE    NASDAQ: NSIT

INSIGHT ENTERPRISES, INC. REPORTS SECOND QUARTER 2018 RESULTS AND INCREASES FULL YEAR 2018 GUIDANCE

TEMPE, AZ – August 1, 2018 – Insight Enterprises, Inc. (NASDAQ: NSIT) (the “Company”) today reported strong financial results for the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017.

 

    Diluted earnings per share of $1.44 increased 30% year over year

 

    Adjusted diluted earnings per share of $1.45 increased 27% year over year

 

    Cash flows provided by operations in the first half of 2018 were $351.0 million compared to cash used in operations of $99.3 million in the first half of 2017

In the second quarter of 2018, consolidated net sales increased 9% and consolidated gross profit increased 5% year over year. These results are primarily driven by continued strong growth in the hardware category as a result of the ongoing device refresh cycle as well as a 22% increase in services sales year over year, which includes professional services as well as cloud and maintenance offerings. Earnings from operations (“EFO”) increased 7% year over year and EFO margin was 4.1%.

The Company also announced that it has acquired Cardinal Solution Group. Inc. (“Cardinal”) effective August 1, 2018. Cardinal is a digital solutions provider based in Cincinnati, Ohio with expertise in mobile applications development, IOT and cloud enabled business intelligence. Cardinal will complement the capabilities the Company has been building within the digital innovation solution area, following the acquisitions of BlueMetal and Ignia in 2015 and 2016, respectively. The Company expects the acquisition to be neutral to earnings from operations for the balance of 2018, including projected intangible amortization.

“We are pleased with our top and bottom line financial results in the second quarter and with our team’s execution in optimizing working capital in the business, which led to Adjusted free cash flow of more than $300 million in the first half of the year,” stated Ken Lamneck, President and Chief Executive Officer. “Our strategy to grow organically while consistently driving operational efficiency across the business allows us to invest for the long term, including strategic acquisitions like Cardinal that will bring scale and reach to our already strong Digital Innovations solution area,” stated Lamneck.

KEY HIGHLIGHTS

 

    Consolidated net sales for the second quarter of 2018 increased 9% compared to the second quarter of 2017 to $1.84 billion.

 

    Net sales in North America increased 7% year over year to $1.4 billion;

 

    Net sales in EMEA increased 17% year over year to $406.3 million; and

 

    Net sales in APAC increased 8% year over year to $61.2 million.

 

    Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales increased 7% year over year, with net sales growth in North America, EMEA and APAC of 7%, 10% and 7%, respectively, year over year.

 

- MORE -

 

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


Insight Q2 2018 Results, Page 2      August 1, 2018

 

    Consolidated gross profit increased 5% compared to the second quarter of 2017 to $264.4 million, with consolidated gross margin contracting 50 basis points to 14.4% of net sales.

 

    Gross profit in North America increased 4% year over year to $190.5 million (13.9% gross margin);

 

    Gross profit in EMEA increased 11% year over year to $62.0 million (15.3% gross margin); and

 

    Gross profit in APAC decreased 7% year to year to $11.9 million (19.4% gross margin).

 

    Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit increased 3% year over year, with gross profit growth in North America and EMEA of 4% each, year over year, and gross profit decreasing in APAC 8%, year to year.

 

    Consolidated earnings from operations increased 7% compared to the second quarter of 2017 to $74.4 million, or 4.1% of net sales.

 

    Earnings from operations in North America increased 9% year over year to $54.9 million, or 4.0% of net sales;

 

    Earnings from operations in EMEA increased 11% year over year to $15.0 million, or 3.7% of net sales; and

 

    Earnings from operations in APAC decreased 17% year to year to $4.5 million, or 7.4% of net sales.

 

    Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations increased 6% year over year, with earnings from operations growth in North America and EMEA of 8% and 6%, respectively, year over year and earnings from operations decreasing in APAC 17% year to year.

 

    Adjusted consolidated earnings from operations increased 6% year over year to $74.9 million, or 4.1% of net sales for the second quarter of 2018.

 

    Consolidated net earnings and diluted earnings per share for the second quarter of 2018 were $51.5 million and $1.44, respectively, at an effective tax rate of 25.9%.

 

    Adjusted consolidated net earnings and Adjusted diluted earnings per share for the second quarter of 2018 were $51.8 million and $1.45, respectively.

 

    Adjusted free cash flow generation was $324.5 million in the first six months of 2018, up from a use of cash of $84.1 million in the same period last year.

 

    Adjusted return on invested capital was 16.0%, up 40 basis points year over year.

As services have become a larger portion of the Company’s consolidated net sales, beginning with our results of operations 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 sold. The Company continued this presentation in the three and six months ended June 30, 2018, and expects to continue this presentation in future periods. For comparability purposes, net sales and costs of goods sold for the 2017 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 now 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 categories for the three and six months ended June 30, 2017, 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 ended June 30, 2018 and 2017 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.

 

- MORE -

 

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


Insight Q2 2018 Results, Page 3      August 1, 2018

 

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 2018, the Company expects to deliver sales growth in the high single to low double digit range compared to 2017. The Company is also increasing its Adjusted diluted earnings per share outlook for the full year of 2018 to be between $4.50 and $4.60.

This outlook assumes:

 

    an effective tax rate of between 26% and 27% for the balance of 2018;

 

    capital expenditures of $15 to $20 million for the full year; and

 

    an average share count for the full year of approximately 36.0 million shares.

This outlook does not reflect the repurchase of any additional shares under the Company’s currently authorized share repurchase program, assumes no current year acquisition-related expenses and excludes severance and restructuring expenses incurred during the first half of 2018 and those that may be incurred during the balance of 2018. 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.

CONFERENCE CALL AND WEBCAST

The Company will host a conference call and live web cast today at 9:00 a.m. ET to discuss second quarter 2018 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 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 4892118.

 

- MORE -

 

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


Insight Q2 2018 Results, Page 4      August 1, 2018

 

USE OF NON-GAAP FINANCIAL MEASURES

The non-GAAP financial measures are referred to as “Adjusted.” 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, and (iii) the tax effects of each of these items, as applicable. 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 free cash flow is the Company’s net cash provided or used by operating activities adjusted for (i) purchases of property and equipment and (ii) the net borrowings or repayments on the inventory financing facility. Adjusted return on invested capital (“ROIC”) excludes (i) severance and restructuring expenses, (ii) certain acquisition-related expenses, and (iii) a loss on sale of the Company’s Russia business in the 2017 period.

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 Q2 2018 Results, Page 5      August 1, 2018

 

FINANCIAL SUMMARY TABLE

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2018     2017     change     2018     2017     change  

Insight Enterprises, Inc.

 

Net sales:

            

Products

   $ 1,619,774     $ 1,505,464       8   $ 3,201,929     $ 2,827,433       13

Services

   $ 217,146     $ 178,568       22   $ 397,894     $ 334,142       19
  

 

 

   

 

 

     

 

 

   

 

 

   

Total net sales

   $ 1,836,920     $ 1,684,032       9   $ 3,599,823     $ 3,161,575       14

Gross profit

   $ 264,377     $ 251,379       5   $ 504,382     $ 459,606       10

Gross margin

     14.4     14.9     (50 b ps)      14.0     14.5     (50 b ps) 

Selling and administrative expenses

   $ 189,464     $ 180,752       5   $ 377,644     $ 358,384       5

Severance and restructuring expenses

   $ 382     $ 1,022       (63 %)    $ 2,026     $ 5,717       (65 %) 

Acquisition-related expenses

   $ 94     $ 276       (66 %)    $ 94     $ 3,223       (97 %) 

Earnings from operations

   $ 74,437     $ 69,329       7   $ 124,618     $ 92,282       35

Net earnings

   $ 51,479     $ 40,255       28   $ 84,224     $ 54,103       56

Diluted earnings per share

   $ 1.44     $ 1.11       30   $ 2.34     $ 1.50       56

North America

 

Net sales:

            

Products

   $ 1,206,413     $ 1,145,032       5   $ 2,370,230     $ 2,129,878       11

Services

   $ 163,037     $ 136,280       20   $ 306,618     $ 262,386       17
  

 

 

   

 

 

     

 

 

   

 

 

   

Total net sales

   $ 1,369,450     $ 1,281,312       7   $ 2,676,848     $ 2,392,264       12

Gross profit

   $ 190,517     $ 182,786       4   $ 365,888     $ 341,087       7

Gross margin

     13.9     14.3     (40 b ps)      13.6     14.3     (70 b ps) 

Selling and administrative expenses

   $ 135,206     $ 131,560       3   $ 267,846     $ 262,570       2

Severance and restructuring expenses

   $ 338     $ 543       (38 %)    $ 781     $ 1,647       (53 %) 

Acquisition-related expenses

   $ 94     $ 276       (66 %)    $ 94     $ 3,223       (97 %) 

Earnings from operations

   $ 54,879     $ 50,407       9   $ 97,167     $ 73,647       32

Sales Mix

         *         *

Hardware

     66     63     12     66     63     17

Software

     22     26     (10 %)      22     26     (3 %) 

Services

     12     11     20     12     11     17
  

 

 

   

 

 

     

 

 

   

 

 

   
     100     100     7     100     100     12
  

 

 

   

 

 

     

 

 

   

 

 

   

EMEA

 

Net sales:

            

Products

   $ 364,453     $ 314,108       16   $ 736,381     $ 622,303       18

Services

   $ 41,827     $ 31,952       31   $ 70,314     $ 54,112       30
  

 

 

   

 

 

     

 

 

   

 

 

   

Total net sales

   $ 406,280     $ 346,060       17   $ 806,695     $ 676,415       19

Gross profit

   $ 61,964     $ 55,733       11   $ 117,756     $ 98,279       20

Gross margin

     15.3     16.1     (80 b ps)      14.6     14.5     10 b ps 

Selling and administrative expenses

   $ 46,894     $ 41,772       12   $ 95,177     $ 81,915       16

Severance and restructuring expenses

   $ 41     $ 479       (91 %)    $ 1,115     $ 4,009       (72 %) 

Earnings from operations

   $ 15,029     $ 13,482       11   $ 21,464     $ 12,355       74

Sales Mix

         *         *

Hardware

     42     36     38     44     39     36

Software

     48     55     2     47     53     5

Services

     10     9     31     9     8     30
  

 

 

   

 

 

     

 

 

   

 

 

   
     100     100     17     100     100     19
  

 

 

   

 

 

     

 

 

   

 

 

   

 

** 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 Q2 2018 Results, Page 6      August 1, 2018

 

FINANCIAL SUMMARY TABLE (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2018     2017     change     2018     2017     change  

APAC

 

Net sales:

            

Products

   $ 48,908     $ 46,325       6   $ 95,318     $ 75,252       27

Services

   $ 12,282     $ 10,335       19   $ 20,962     $ 17,644       19
  

 

 

   

 

 

     

 

 

   

 

 

   

Total net sales

   $ 61,190     $ 56,660       8   $ 116,280     $ 92,896       25

Gross profit

   $ 11,896     $ 12,860       (7 %)    $ 20,738     $ 20,240       2

Gross margin

     19.4     22.7     (330 b ps)      17.8     21.8     (400 b ps) 

Selling and administrative expenses

   $ 7,364     $ 7,420       (1 %)    $ 14,621     $ 13,899       5

Severance and restructuring expenses

   $ 3     $ —         *     $ 130     $ 61       113

Earnings from operations

   $ 4,529     $ 5,440       (17 %)    $ 5,987     $ 6,280       (5 %) 

Sales Mix

         *         *

Hardware

     15     12     35     14     12     50

Software

     65     70     —         68     69     23

Services

     20     18     19     18     19     19
  

 

 

   

 

 

     

 

 

   

 

 

   
     100     100     8     100     100     25
  

 

 

   

 

 

     

 

 

   

 

 

   

 

* 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 Q2 2018 Results, Page 7      August 1, 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, sales growth and Adjusted diluted earnings per share for the full year 2018, and the assumptions relating thereto, as well as the Company’s anticipated effective tax rate, capital expenditures and plans concerning repurchases under the Company’s currently authorized share repurchase program, the Company’s expectations for earnings from operations and amortization of intangibles from the Cardinal acquisition, the Company’s expectations regarding cash flow, and the Company’s expectations for the future presentation of services net sales, 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, 2017 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 marketing funds and purchasing incentives, which can change significantly in the amounts made available and the requirements 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;

 

    legal proceedings and the results of client and public sector audits and failure to comply with laws and regulations;

 

    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 key personnel;

 

    natural disasters or other adverse occurrences;

 

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

 

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

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 Q2 2018 Results, Page 8      August 1, 2018

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2018     2017     2018     2017  

Net sales:

        

Products

   $ 1,619,774     $ 1,505,464     $ 3,201,929     $ 2,827,433  

Services

     217,146       178,568       397,894       334,142  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales

     1,836,920       1,684,032       3,599,823       3,161,575  
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs of goods sold:

        

Products

     1,488,921       1,372,015       2,927,655       2,573,072  

Services

     83,622       60,638       167,786       128,897  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs of goods sold

     1,572,543       1,432,653       3,095,441       2,701,969  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     264,377       251,379       504,382       459,606  

Operating expenses:

        

Selling and administrative expenses

     189,464       180,752       377,644       358,384  

Severance and restructuring expenses

     382       1,022       2,026       5,717  

Acquisition-related expenses

     94       276       94       3,223  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings from operations

     74,437       69,329       124,618       92,282  

Non-operating (income) expense:

        

Interest income

     (170     (205     (323     (636

Interest expense

     5,102       4,326       11,117       8,259  

Net foreign currency exchange (gain) loss

     (275     251       (520     631  

Other expense, net

     324       326       626       641  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before income taxes

     69,456       64,631       113,718       83,387  

Income tax expense

     17,977       24,376       29,494       29,284  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings

   $ 51,479     $ 40,255     $ 84,224     $ 54,103  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings per share:

        

Basic

   $ 1.45     $ 1.13     $ 2.36     $ 1.52  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 1.44     $ 1.11     $ 2.34     $ 1.50  
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in per share calculations:

        

Basic

     35,483       35,765       35,698       35,684  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     35,815       36,169       36,039       36,177  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

- MORE -

 

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


Insight Q2 2018 Results, Page 9      August 1, 2018

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

(UNAUDITED)

 

     June 30,
2018
    December 31,
2017
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 248,122     $ 105,831  

Accounts receivable, net

     2,161,077       1,814,560  

Inventories

     174,099       194,529  

Inventories not available for sale

     4,528       36,956  

Other current assets

     122,397       152,467  
  

 

 

   

 

 

 

Total current assets

     2,710,223       2,304,343  

Property and equipment, net

     74,694       75,252  

Goodwill

     130,841       131,431  

Intangible assets, net

     93,300       100,778  

Deferred income taxes

     14,936       17,064  

Other assets

     68,736       56,783  
  

 

 

   

 

 

 
   $ 3,092,730     $ 2,685,651  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable—trade

   $ 1,395,934     $ 899,075  

Accounts payable—inventory financing facility

     303,702       319,468  

Accrued expenses and other current liabilities

     199,069       175,860  

Current portion of long-term debt

     16,924       16,592  

Deferred revenue

     66,179       88,979  
  

 

 

   

 

 

 

Total current liabilities

     1,981,808       1,499,974  

Long-term debt

     144,888       296,576  

Deferred income taxes

     588       717  

Other liabilities

     58,955       44,915  
  

 

 

   

 

 

 
     2,186,239       1,842,182  
  

 

 

   

 

 

 

Stockholders’ equity:

    

Preferred stock

     —         —    

Common stock

     355       358  

Additional paid-in capital

     315,619       317,155  

Retained earnings

     625,212       550,220  

Accumulated other comprehensive loss – foreign currency translation adjustments

     (34,695     (24,264
  

 

 

   

 

 

 

Total stockholders’ equity

     906,491       843,469  
  

 

 

   

 

 

 
   $ 3,092,730     $ 2,685,651  
  

 

 

   

 

 

 

 

- MORE -

 

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


Insight Q2 2018 Results, Page 10      August 1, 2018

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

 

     Six Months Ended June 30,  
     2018     2017  

Cash flows from operating activities:

    

Net earnings

   $ 84,224     $ 54,103  

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

    

Depreciation and amortization of property and equipment

     10,712       12,729  

Amortization of intangible assets

     7,214       8,433  

Provision for losses on accounts receivable

     1,336       2,225  

Write-downs of inventories

     1,396       1,077  

Write-off of property and equipment

     309       —    

Non-cash stock-based compensation

     7,047       6,749  

Deferred income taxes

     2,020       (25

Changes in assets and liabilities:

    

Increase in accounts receivable

     (283,930     (230,762

Decrease (increase) in inventories

     18,281       (54,276

Decrease (increase) in other assets

     13,714       (64,875

Increase in accounts payable

     450,471       163,451  

Increase in deferred revenue

     13,733       4,944  

Increase (decrease) in accrued expenses and other liabilities

     24,428       (3,039
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     350,955       (99,266
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property and equipment

     (10,644     (10,274

Acquisitions, net of cash and cash equivalents acquired

     —         (180,894
  

 

 

   

 

 

 

Net cash used in investing activities

     (10,644     (191,168
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Borrowings on senior revolving credit facility

     280,184       386,609  

Repayments on senior revolving credit facility

     (397,684     (386,609

Borrowings on accounts receivable securitization financing facility

     1,696,500       1,802,889  

Repayments on accounts receivable securitization financing facility

     (1,721,500     (1,718,389

Borrowings under Term Loan A

     —         175,000  

Repayments under Term Loan A

     (6,563     (4,375

Repayments under other financing agreements

     (1,835     (3,957

Payments on capital lease obligations

     (580     (255

Net (repayments) borrowings under inventory financing facility

     (15,766     25,470  

Payment of debt issuance costs

     (270     (1,123

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

     (2,925     (4,548

Repurchases of common stock

     (22,069     —    
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (192,508     270,712  
  

 

 

   

 

 

 

Foreign currency exchange effect on cash, cash equivalents and restricted cash balances

     (5,541     11,739  
  

 

 

   

 

 

 

Increase (decrease) in cash, cash equivalents and restricted cash

     142,262       (7,983

Cash, cash equivalents and restricted cash at beginning of period

     107,445       205,946  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of period

   $ 249,707     $ 197,963  
  

 

 

   

 

 

 

 

- MORE -

 

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


Insight Q2 2018 Results, Page 11      August 1, 2018

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2018     2017     2018     2017  

Adjusted Consolidated Earnings from Operations:

 

GAAP consolidated EFO

   $ 74,437     $ 69,329     $ 124,618     $ 92,282  

Severance and restructuring expenses

     382       1,022       2,026       5,717  

Acquisition-related expenses

     94       276       94       3,223  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted non-GAAP consolidated EFO

   $ 74,913     $ 70,627     $ 126,738     $ 101,222  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Consolidated Net Earnings:

 

GAAP consolidated net earnings

   $ 51,479     $ 40,255     $ 84,224     $ 54,103  

Severance and restructuring expenses

     382       1,022       2,026       5,717  

Acquisition-related expenses

     94       276       94       3,223  

Income taxes on non-GAAP adjustments

     (117     (310     (408     (1,597
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted non-GAAP consolidated net earnings

   $ 51,838     $ 41,243     $ 85,936     $ 61,446  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Diluted EPS:

 

GAAP diluted EPS

   $ 1.44     $ 1.11     $ 2.34     $ 1.50  

Severance and restructuring expenses

     0.01       0.03       0.05       0.16  

Acquisition-related expenses

     —         0.01       —         0.09  

Income taxes on non-GAAP adjustments

     —         (0.01     (0.01     (0.05
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted non-GAAP diluted EPS

   $ 1.45     $ 1.14     $ 2.38     $ 1.70  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted North America Earnings from Operations:

 

GAAP EFO from North America segment

   $ 54,879     $ 50,407     $ 97,167     $ 73,647  

Severance and restructuring expenses

     338       543       781       1,647  

Acquisition-related expenses

     94       276       94       3,223  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted non-GAAP EFO from North America segment

   $ 55,311     $ 51,226     $ 98,042     $ 78,517  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EMEA Earnings from Operations:

 

GAAP EFO from EMEA segment

   $ 15,029     $ 13,482     $ 21,464     $ 12,355  

Severance and restructuring expenses

     41       479       1,115       4,009  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted non-GAAP EFO from EMEA segment

   $ 15,070     $ 13,961     $ 22,579     $ 16,364  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted APAC Earnings from Operations:

 

GAAP consolidated EFO

   $ 4,529     $ 5,440     $ 5,987     $ 6,280  

Severance and restructuring expenses

     3       —         130       61  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted non-GAAP consolidated EFO

   $ 4,532     $ 5,440     $ 6,117     $ 6,341  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

- MORE -

 

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


Insight Q2 2018 Results, Page 12      August 1, 2018

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

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

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

     Six Months Ended
June 30,
 
     2018     2017  

Adjusted free cash flow:

 

Net cash provided by (used in) operating activities

   $ 350,955     $ (99,266

Purchases of property and equipment

     (10,644     (10,274

Net (repayments) borrowings under inventory financing facility

     (15,766     25,470  
  

 

 

   

 

 

 

Adjusted non-GAAP free cash flow

   $ 324,545     $ (84,070
  

 

 

   

 

 

 
     Twelve Months Ended
June 30,
 
     2018     2017  

Adjusted return on invested capital:

 

GAAP consolidated EFO

   $ 211,469     $ 169,359  

Severance and restructuring expenses

     5,311       8,032  

Acquisition-related expenses

     200       7,670  

Loss on sale of foreign entity

     3,120       —    
  

 

 

   

 

 

 

Adjusted non-GAAP consolidated EFO

     220,100       185,061  

Income tax expense*

     61,628       68,473  
  

 

 

   

 

 

 

Adjusted non-GAAP consolidated EFO, net of tax

   $ 158,472     $ 116,588  
  

 

 

   

 

 

 

Average stockholders’ equity**

   $ 848,730     $ 723,534  

Average debt**

     317,536       209,718  

Average cash**

     (177,077     (186,443
  

 

 

   

 

 

 

Invested Capital

   $ 989,189     $ 746,809  
  

 

 

   

 

 

 

Adjusted non-GAAP ROIC***

     16.02     15.61

 

* Assumed tax rate of 28% for 2018 and 37% for 2017.
** Average of previous five quarters.
*** Computed as Adjusted non-GAAP consolidated EFO, net of tax divided by invested capital.

 

- ### -

 

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