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Insight Enterprises, Inc. Reports Record First Quarter Results

Insight Enterprises, Inc. (NASDAQ: NSIT) (the “Company”) today reported financial results for the quarter ended March 31, 2024. Highlights include:

  • Gross profit increased 13% year over year to a record $440.9 million with gross margin expanding 170 basis points to a first quarter record 18.5%
    • Insight Core services gross profit grew 24% year over year
    • Cloud gross profit grew 33% year over year
  • First quarter record results:
    • Earnings from operations increased 29% year over year to $100.0 million
    • Adjusted earnings from operations increased 30% year over year to $121.8 million
    • Diluted earnings per share of $1.74 increased 30% year over year
    • Adjusted diluted earnings per share of $2.37 increased 33% year over year

In the first quarter of 2024, net sales increased 2%, year over year, and we achieved record gross profit of $440.9 million, an increase of 13%, year over year. Gross margin expanded 170 basis points compared to the first quarter of 2023, to a first quarter record of 18.5%. Earnings from operations of $100.0 million increased 29% compared to $77.5 million in the first quarter of 2023. Adjusted earnings from operations of $121.8 million increased 30% compared to $94.0 million in the first quarter of 2023. Consolidated net earnings were $67.0 million, or 2.8% of net sales, in the first quarter of 2024, and Adjusted consolidated net earnings were $83.4 million, or 3.5% of net sales. Diluted earnings per share for the quarter was $1.74, up 30%, year over year, and Adjusted diluted earnings per share was another first quarter record of $2.37, up 33%, year over year.

“We are pleased to announce another record setting first quarter with very strong performance in our key strategic areas of cloud and Insight Core services, fortified by continued operating expense discipline,” stated Joyce Mullen, President and Chief Executive Officer. “We also achieved several first quarter records including gross profit, gross margin and Adjusted diluted earnings per share, demonstrating we are executing well against our strategic objective of becoming the leading solutions integrator,” Mullen stated.

KEY HIGHLIGHTS

Results for the Quarter:

  • Consolidated net sales for the first quarter of 2024 of $2.4 billion increased 2%, year over year, when compared to the first quarter of 2023. Product net sales was flat, year to year, while services net sales increased 17%, year over year.
    • Net sales in North America increased 4%, year over year, to $1.9 billion;
      • Product net sales increased 2%, year over year, to $1.6 billion;
      • Services net sales increased 12%, year over year, to $318.5 million;
    • Net sales in EMEA decreased 3%, year to year, to $412.8 million; and
    • Net sales in APAC decreased 2%, year to year, to $61.8 million.
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales increased 2%, year over year, with increases in net sales in North America and APAC of 4% and 1% year over year, respectively, partially offset by a decrease in net sales in EMEA of 6% year to year.
  • Consolidated gross profit increased 13% compared to the first quarter of 2023 to $440.9 million, with consolidated gross margin expanding 170 basis points to a first quarter record of 18.5% of net sales. Product gross profit decreased 1%, year to year, and services gross profit increased 27%, year over year. Cloud gross profit grew 33%, year over year, and Insight Core Services gross profit increased 24%, year over year. By segment, gross profit:
    • increased 11% in North America, year over year, to $349.8 million (18.4% gross margin);
    • increased 23% in EMEA, year over year, to $75.0 million (18.2% gross margin); and
    • increased 5% in APAC, year over year, to $16.1 million (26.0% gross margin).
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit was up 12%, year over year, with gross profit growth in North America, EMEA and APAC of 11%, 20% and 8%, respectively, year over year.
  • Consolidated earnings from operations increased 29% compared to the first quarter of 2023 to $100.0 million, or 4.2% of net sales. By segment, earnings from operations:
    • increased 33% in North America, year over year, to $84.0 million, or 4.4% of net sales;
    • increased 9% in EMEA, year over year, to $11.2 million, or 2.7% of net sales; and
    • increased 20% in APAC, year over year, to $4.8 million, or 7.7% of net sales.
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations were up 28%, year over year, with increased earnings from operations in North America, EMEA and APAC of 33%, 5% and 22%, year over year, respectively.
  • Adjusted earnings from operations increased 30% compared to the first quarter of 2023 to $121.8 million, or 5.1% of net sales. By segment, Adjusted earnings from operations:
    • increased 31% in North America, year over year, to $102.8 million, or 5.4% of net sales;
    • increased 22% in EMEA, year over year, to $14.0 million, or 3.4% of net sales; and
    • increased 20% in APAC, year over year, to $5.0 million, or 8.0% of net sales.
  • Excluding the effects of fluctuating foreign currency exchange rates, Adjusted consolidated earnings from operations were up 29%, year over year, with increased Adjusted earnings from operations in North America, EMEA and APAC of 31%, 17% and 22%, respectively, year over year.
  • Consolidated net earnings and diluted earnings per share for the first quarter of 2024 were $67.0 million and $1.74, respectively, at an effective tax rate of 24.0%.
  • Adjusted consolidated net earnings and Adjusted diluted earnings per share for the first quarter of 2024 were $83.4 million and $2.37, respectively. Excluding the effects of fluctuating foreign currency exchange rates, Adjusted diluted earnings per share increased 32% year over year.

In discussing financial results for the three months ended March 31, 2024 and 2023 in this press release, the Company refers to certain financial measures that are adjusted from the financial results prepared in accordance with United States generally accepted accounting principles (“GAAP”). When referring to non-GAAP measures, the Company refers to them as “Adjusted.” See “Use of Non-GAAP Financial Measures” for additional information. A tabular reconciliation of financial measures prepared in accordance with GAAP to the non-GAAP financial measures is included at the end of this press release.

In some instances, the Company refers to changes in net sales, gross profit, earnings from operations and Adjusted earnings from operations on a consolidated basis and in North America, EMEA and APAC excluding the effects of fluctuating foreign currency exchange rates. In addition, the Company refers to changes in Adjusted diluted earnings per share on a consolidated basis excluding the effects of fluctuating foreign currency exchange rates. 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 2024, the Company now expects Adjusted diluted earnings per share to be between $10.60 and $10.90. We expect to deliver gross profit growth in the mid to high teens and expect that our gross margin will be approximately 19%.

This outlook assumes:

  • interest expense of $52 to $54 million;
  • an effective tax rate of 26% for the full year;
  • capital expenditures of $50 to $55 million; and
  • an average share count for the full year of 35.3 million shares.

This outlook excludes acquisition-related intangibles amortization expense of approximately $60 million, assumes no acquisition or integration related expenses, transformation or severance and restructuring expenses, net and no significant change in our debt instruments or the macroeconomic environment. Due to the inherent difficulty of forecasting some of these types of expenses, which impact net earnings, diluted earnings per share and selling and administrative expenses, the Company is unable to reasonably estimate the impact of such expenses, if any, to net earnings, diluted earnings per share and selling and administrative expenses. Accordingly, the Company is unable to provide a reconciliation of GAAP to non-GAAP diluted earnings per share for the full year 2024 forecast.

CONFERENCE CALL AND WEBCAST

The Company will host a conference call and live webcast today at 9:00 a.m. ET to discuss first quarter 2024 results of operations. A live webcast of the conference call (in listen-only mode) will be available on the Company’s web site at http://investor.insight.com/, and a replay of the webcast will be available on the Company’s web site for a limited time following the call. To access the live conference call, please register in advance using the event link on the Company's web site. Upon registering, participants will receive dial-in information via email, as well as a unique registrant ID, event passcode, and detailed instructions regarding how to join the call.

USE OF NON-GAAP FINANCIAL MEASURES

The non-GAAP financial measures are referred to as “Adjusted”. Adjusted earnings from operations, Adjusted net earnings and Adjusted diluted earnings per share exclude (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration related expenses, (vi) gains and losses from revaluation of acquisition related earnout liabilities, and (vii) the tax effects of each of these items, as applicable. Transformation costs represent costs we are incurring to transform our business, to help us achieve our strategic objectives, including becoming a leading solutions integrator. The Company excludes these items when internally evaluating earnings from operations, tax expense, net earnings and diluted earnings per share for the Company and earnings from operations for each of the Company’s operating segments. Adjusted diluted earnings per share also includes the impact of the benefit from the note hedge where the Company’s average stock price for the first quarter of 2024 was in excess of $68.32, which is the initial conversion price of the convertible senior notes. Adjusted EBITDA excludes (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization of property and equipment, (iv) amortization of intangible assets, (v) severance and restructuring expenses, net, (vi) certain executive recruitment and hiring related expenses, (vii) transformation costs, (viii) certain acquisition and integration related expenses, (ix) certain third-party data center service outage related expenses and recoveries, and (x) gains and losses from revaluation of acquisition related earnout liabilities. Adjusted return on invested capital (“ROIC”) excludes (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration related expenses, (vi) certain third-party data center service outage related expenses and recoveries, (vii) gains and losses from revaluation of acquisition related earnout liabilities, and (viii) the tax effects of each of these items, as applicable.

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

March 31,

 

 

2024

 

2023

 

change

Insight Enterprises, Inc.

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

Products

 

$

1,963,955

 

 

$

1,967,645

 

 

—%

Services

 

$

415,530

 

 

$

356,302

 

 

17%

Total net sales

 

$

2,379,485

 

 

$

2,323,947

 

 

2%

Gross profit

 

$

440,928

 

 

$

391,315

 

 

13%

Gross margin

 

 

18.5

%

 

 

16.8

%

 

170 bps

Selling and administrative expenses

 

$

337,434

 

 

$

310,001

 

 

9%

Severance and restructuring expenses

 

$

2,227

 

 

$

3,802

 

 

(41%)

Acquisition and integration related expenses

 

$

1,281

 

 

$

51

 

 

> 100%

Earnings from operations

 

$

99,986

 

 

$

77,461

 

 

29%

Net earnings

 

$

67,027

 

 

$

49,972

 

 

34%

Diluted earnings per share

 

$

1.74

 

 

$

1.34

 

 

30%

 

 

 

 

 

 

 

Sales Mix

 

 

 

 

 

**

Hardware

 

 

48

%

 

 

57

%

 

(15%)

Software

 

 

35

%

 

 

28

%

 

30%

Services

 

 

17

%

 

 

15

%

 

17%

 

 

 

100

%

 

 

100

%

 

2%

 

 

 

 

 

 

 

North America

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

Products

 

$

1,586,306

 

 

$

1,550,436

 

 

2%

Services

 

$

318,516

 

 

$

283,528

 

 

12%

Total net sales

 

$

1,904,822

 

 

$

1,833,964

 

 

4%

Gross profit

 

$

349,843

 

 

$

315,144

 

 

11%

Gross margin

 

 

18.4

%

 

 

17.2

%

 

120 bps

Selling and administrative expenses

 

$

262,920

 

 

$

248,820

 

 

6%

Severance and restructuring expenses

 

$

1,619

 

 

$

3,087

 

 

(48%)

Acquisition and integration related expenses

 

$

1,281

 

 

$

51

 

 

> 100%

Earnings from operations

 

$

84,023

 

 

$

63,186

 

 

33%

 

 

 

 

 

 

 

Sales Mix

 

 

 

 

 

**

Hardware

 

 

52

%

 

 

63

%

 

(14%)

Software

 

 

31

%

 

 

22

%

 

51%

Services

 

 

17

%

 

 

15

%

 

12%

 

 

 

100

%

 

 

100

%

 

4%

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

Products

 

$

339,566

 

 

$

377,451

 

 

(10%)

Services

 

$

73,275

 

 

$

49,553

 

 

48%

Total net sales

 

$

412,841

 

 

$

427,004

 

 

(3%)

Gross profit

 

$

75,033

 

 

$

60,888

 

 

23%

Gross margin

 

 

18.2

%

 

 

14.3

%

 

390 bps

Selling and administrative expenses

 

$

63,305

 

 

$

49,905

 

 

27%

Severance and restructuring expenses

 

$

538

 

 

$

702

 

 

(23%)

Earnings from operations

 

$

11,190

 

 

$

10,281

 

 

9%

 

 

 

 

 

 

 

Sales Mix

 

 

 

 

 

**

Hardware

 

 

33

%

 

 

38

%

 

(16%)

Software

 

 

49

%

 

 

50

%

 

(5%)

Services

 

 

18

%

 

 

12

%

 

48%

 

 

 

100

%

 

 

100

%

 

(3%)

 

 

 

 

 

 

 

APAC

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

Products

 

$

38,083

 

 

$

39,758

 

 

(4%)

Services

 

$

23,739

 

 

$

23,221

 

 

2%

Total net sales

 

$

61,822

 

 

$

62,979

 

 

(2%)

Gross profit

 

$

16,052

 

 

$

15,283

 

 

5%

Gross margin

 

 

26.0

%

 

 

24.3

%

 

170 bps

Selling and administrative expenses

 

$

11,209

 

 

$

11,276

 

 

(1)%

Severance and restructuring expenses

 

$

70

 

 

$

13

 

 

> 100%

Earnings from operations

 

$

4,773

 

 

$

3,994

 

 

20%

 

 

 

 

 

 

 

Sales Mix

 

 

 

 

 

**

Hardware

 

 

12

%

 

 

16

%

 

(29%)

Software

 

 

50

%

 

 

47

%

 

4%

Services

 

 

38

%

 

 

37

%

 

2%

 

 

 

100

%

 

 

100

%

 

(2%)

**

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, webcast and presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including those related to the impact of inflation and higher interest rates, the Company’s future financial performance and results of operations, including gross profit growth, Adjusted diluted earnings per share, and Adjusted selling and administrative expenses, as well as the Company’s other key performance indicators, the Company’s anticipated effective tax rate, capital expenditures, and expected average share count, the Company’s expectation that the majority of holders of our convertible senior notes (the “Notes”) will not opt to convert their Notes early, the Company’s expectations regarding cash flow, the Company’s expectations regarding supply constraints and shipment of backlog, future trends in the IT market, the Company’s business strategy and strategic initiatives, which are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. There can be no assurances that the results discussed by the forward-looking statements will be achieved, and actual results may differ materially from those set forth in the forward-looking statements. Some of the important factors that could cause the Company’s actual results to differ materially from those projected in any forward-looking statements include, but are not limited to, the following, which are discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including in the “Risk Factors” sections of the Company’s most recently filed periodic report on Form 10-K and subsequent filings with the SEC:

  • actions of our competitors, including manufacturers and publishers of products we sell;
  • our reliance on our partners for product availability, competitive products to sell and marketing funds and purchasing incentives, which can change significantly in the amounts made available and in the requirements year over year;
  • our ability to keep pace with rapidly evolving technological advances and the evolving competitive marketplace;
  • general economic conditions, economic uncertainties and changes in geopolitical conditions, including the possibility of a recession or a decline in market activity as a result of the ongoing conflicts in Ukraine and Gaza;
  • changes in the IT industry and/or rapid changes in technology;
  • our ability to provide high quality services to our clients;
  • our reliance on independent shipping companies;
  • the risks associated with our international operations;
  • supply constraints for products;
  • natural disasters or other adverse occurrences, including public health issues such as pandemics or epidemics;
  • disruptions in our IT systems and voice and data networks;
  • cyberattacks, outages, or third-party breaches of data privacy as well as related breaches of government regulations;
  • intellectual property infringement claims and challenges to our registered trademarks and trade names;
  • potential liability and competitive risk based on the development, adoption, and use of Generative Artificial Intelligence;
  • legal proceedings, client audits and failure to comply with laws and regulations;
  • risks of termination, delays in payment, audits and investigations related to our public sector contracts;
  • exposure to changes in, interpretations of, or enforcement trends related to tax rules and regulations;
  • our potential to draw down a substantial amount of indebtedness;
  • the conditional conversion feature of the Notes, which has been triggered, and may adversely affect the Company’s financial condition and operating results;
  • the Company is subject to counterparty risk with respect to certain hedge and warrant transactions entered into in connection with the issuance of the Notes (the "Call Spread Transactions");
  • increased debt and interest expense and the possibility of decreased availability of funds under our financing facilities;
  • possible significant fluctuations in our future operating results as well as seasonality and variability in client demands;
  • potential contractual disputes with our clients and third-party suppliers;
  • our dependence on certain key personnel and our ability to attract, train and retain skilled teammates;
  • risks associated with the integration and operation of acquired businesses, including achievement of expected synergies and benefits; and
  • future sales of the Company’s common stock or equity-linked securities in the public market could lower the market price for our common stock.

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.

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

 

 

 

 

Three Months Ended

March 31,

 

 

2024

 

2023

Net sales:

 

 

 

Products

$

1,963,955

 

 

$

1,967,645

 

Services

 

415,530

 

 

 

356,302

 

Total net sales

 

2,379,485

 

 

 

2,323,947

 

Costs of goods sold:

 

 

 

Products

 

1,771,584

 

 

 

1,772,729

 

Services

 

166,973

 

 

 

159,903

 

Total costs of goods sold

 

1,938,557

 

 

 

1,932,632

 

Gross profit

 

440,928

 

 

 

391,315

 

Operating expenses:

 

 

 

Selling and administrative expenses

 

337,434

 

 

 

310,001

 

Severance and restructuring expenses

 

2,227

 

 

 

3,802

 

Acquisition and integration related expenses

 

1,281

 

 

 

51

 

Earnings from operations

 

99,986

 

 

 

77,461

 

Non-operating expense (income):

 

 

 

Interest expense, net

 

12,557

 

 

 

10,348

 

Other (income) expense, net

 

(763

)

 

 

752

 

Earnings before income taxes

 

88,192

 

 

 

66,361

 

Income tax expense

 

21,165

 

 

 

16,389

 

Net earnings

$

67,027

 

 

$

49,972

 

 

 

 

 

Net earnings per share:

 

 

 

Basic

$

2.06

 

 

$

1.48

 

Diluted

$

1.74

 

 

$

1.34

 

 

 

 

 

Shares used in per share calculations:

 

 

 

Basic

 

32,596

 

 

 

33,706

 

Diluted

 

38,435

 

 

 

37,207

 

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In THOUSANDS)

(UNAUDITED)

 

 

 

 

 

 

 

March 31,

2024

 

December 31,

2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

379,111

 

 

$

268,730

 

Accounts receivable, net

 

3,573,253

 

 

 

3,568,290

 

Inventories

 

169,457

 

 

 

184,605

 

Contract assets, net

 

100,648

 

 

 

120,518

 

Other current assets

 

218,882

 

 

 

189,158

 

Total current assets

 

4,441,351

 

 

 

4,331,301

 

 

 

 

 

Long-term contract assets, net

 

121,994

 

 

 

132,780

 

Property and equipment, net

 

208,365

 

 

 

210,061

 

Goodwill

 

680,876

 

 

 

684,345

 

Intangible assets, net

 

354,146

 

 

 

369,687

 

Long-term accounts receivable

 

618,672

 

 

 

412,666

 

Other assets

 

141,835

 

 

 

145,510

 

 

$

6,567,239

 

 

$

6,286,350

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable – trade

$

2,422,632

 

 

$

2,255,183

 

Accounts payable – inventory financing facilities

 

227,062

 

 

 

231,850

 

Accrued expenses and other current liabilities

 

517,707

 

 

 

538,346

 

Current portion of long-term debt

 

331,566

 

 

 

348,004

 

Total current liabilities

 

3,498,967

 

 

 

3,373,383

 

 

 

 

 

Long-term debt

 

550,006

 

 

 

592,517

 

Deferred income taxes

 

23,306

 

 

 

27,588

 

Long-term accounts payable

 

566,233

 

 

 

353,794

 

Other liabilities

 

173,236

 

 

 

203,335

 

 

 

4,811,748

 

 

 

4,550,617

 

Stockholders’ equity:

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

325

 

 

 

326

 

Additional paid-in capital

 

326,539

 

 

 

328,607

 

Retained earnings

 

1,482,330

 

 

 

1,448,412

 

Accumulated other comprehensive loss – foreign currency translation adjustments

 

(53,703

)

 

 

(41,612

)

Total stockholders’ equity

 

1,755,491

 

 

 

1,735,733

 

 

$

6,567,239

 

 

$

6,286,350

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

 

 

 

 

 

Three Months Ended

March 31,

 

 

2024

 

2023

Cash flows from operating activities:

 

 

 

Net earnings

$

67,027

 

 

$

49,972

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

21,886

 

 

 

14,663

 

Provision for losses on accounts receivable

 

3,246

 

 

 

1,484

 

Non-cash stock-based compensation

 

8,043

 

 

 

6,896

 

Deferred income taxes

 

(4,423

)

 

 

(4,284

)

Amortization of debt issuance costs

 

1,224

 

 

 

1,213

 

Other adjustments

 

2,471

 

 

 

2,122

 

Changes in assets and liabilities:

 

 

 

(Increase) decrease in accounts receivable

 

(25,294

)

 

 

197,918

 

Decrease (increase) in inventories

 

12,115

 

 

 

(1,146

)

Decrease in contract assets

 

32,142

 

 

 

45

 

Increase in long-term accounts receivable

 

(206,154

)

 

 

(14,434

)

Increase in other assets

 

(26,821

)

 

 

(8,405

)

Increase (decrease) in accounts payable

 

184,511

 

 

 

(76,783

)

Increase in long-term accounts payable

 

212,577

 

 

 

18,568

 

Decrease in accrued expenses and other liabilities

 

(35,371

)

 

 

(27,669

)

Net cash provided by operating activities:

 

247,179

 

 

 

160,160

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(6,482

)

 

 

(9,106

)

Net cash used in investing activities:

 

(6,482

)

 

 

(9,106

)

Cash flows from financing activities:

 

 

 

Borrowings on ABL revolving credit facility

 

1,144,826

 

 

 

1,016,980

 

Repayments on ABL revolving credit facility

 

(1,186,997

)

 

 

(1,140,774

)

Net (repayments) borrowings under inventory financing facilities

 

(4,545

)

 

 

108,257

 

Repurchases of common stock

 

(35,000

)

 

 

(117,129

)

Repayment of principal on the Notes

 

(16,895

)

 

 

 

Earnout and acquisition related payments

 

(18,296

)

 

 

 

Other payments

 

(8,360

)

 

 

(7,988

)

Net cash used in financing activities:

 

(125,267

)

 

 

(140,654

)

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

 

(5,074

)

 

 

1,652

 

Increase in cash, cash equivalents and restricted cash

 

110,356

 

 

 

12,052

 

Cash, cash equivalents and restricted cash at beginning of period

 

270,785

 

 

 

165,718

 

Cash, cash equivalents and restricted cash at end of period

$

381,141

 

 

$

177,770

 

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

 

 

 

 

Three Months Ended

March 31,

 

 

2024

 

2023

Adjusted Consolidated Earnings from Operations:

 

 

 

 

GAAP consolidated EFO

 

$

99,986

 

 

$

77,461

 

Amortization of intangible assets

 

 

14,925

 

 

 

8,310

 

Other*

 

 

6,839

 

 

 

8,186

 

Adjusted non-GAAP consolidated EFO

 

$

121,750

 

 

$

93,957

 

 

 

 

 

 

GAAP EFO as a percentage of net sales

 

 

4.2

%

 

 

3.3

%

Adjusted non-GAAP EFO as a percentage of net sales

 

 

5.1

%

 

 

4.0

%

 

 

 

 

 

Adjusted Consolidated Net Earnings:

 

 

 

 

GAAP consolidated net earnings

 

$

67,027

 

 

$

49,972

 

Amortization of intangible assets

 

 

14,925

 

 

 

8,310

 

Other*

 

 

6,839

 

 

 

8,186

 

Income taxes on non-GAAP adjustments

 

 

(5,439

)

 

 

(4,201

)

Adjusted non-GAAP consolidated net earnings

 

$

83,352

 

 

$

62,267

 

 

 

 

 

 

GAAP net earnings as a percentage of net sales

 

 

2.8

%

 

 

2.2

%

Adjusted non-GAAP net earnings as a percentage of net sales

 

 

3.5

%

 

 

2.7

%

 

 

 

 

 

Adjusted Diluted Earnings Per Share:

 

 

 

 

GAAP diluted EPS

 

$

1.74

 

 

$

1.34

 

Amortization of intangible assets

 

 

0.39

 

 

 

0.22

 

Other

 

 

0.18

 

 

 

0.22

 

Income taxes on non-GAAP adjustments

 

 

(0.14

)

 

 

(0.11

)

Impact of benefit from note hedge

 

 

0.20

 

 

 

0.11

 

Adjusted non-GAAP diluted EPS

 

$

2.37

 

 

$

1.78

 

 

 

 

 

 

Shares used in diluted EPS calculation

 

 

38,435

 

 

 

37,207

 

Impact of benefit from Note hedge

 

 

(3,228

)

 

 

(2,310

)

Shares used in Adjusted non-GAAP diluted EPS calculation

 

 

35,207

 

 

 

34,897

 

 

 

 

 

 

Adjusted North America Earnings from Operations:

 

 

 

 

GAAP EFO from North America segment

 

$

84,023

 

 

$

63,186

 

Amortization of intangible assets

 

 

13,146

 

 

 

7,785

 

Other*

 

 

5,615

 

 

 

7,337

 

Adjusted non-GAAP EFO from North America segment

 

$

102,784

 

 

$

78,308

 

 

 

 

 

 

GAAP EFO as a percentage of net sales

 

 

4.4

%

 

 

3.4

%

Adjusted non-GAAP EFO as a percentage of net sales

 

 

5.4

%

 

 

4.3

%

 

 

 

 

 

Adjusted EMEA Earnings from Operations:

 

 

 

 

GAAP EFO from EMEA segment

 

$

11,190

 

 

$

10,281

 

Amortization of intangible assets

 

 

1,670

 

 

 

412

 

Other

 

 

1,154

 

 

 

836

 

Adjusted non-GAAP EFO from EMEA segment

 

$

14,014

 

 

$

11,529

 

 

 

 

 

 

GAAP EFO as a percentage of net sales

 

 

2.7

%

 

 

2.4

%

Adjusted non-GAAP EFO as a percentage of net sales

 

 

3.4

%

 

 

2.7

%

 

 

 

 

 

Adjusted APAC Earnings from Operations:

 

 

 

 

GAAP EFO from APAC segment

 

$

4,773

 

 

$

3,994

 

Amortization of intangible assets

 

 

109

 

 

 

113

 

Other

 

 

70

 

 

 

13

 

Adjusted non-GAAP EFO from APAC segment

 

$

4,952

 

 

$

4,120

 

 

 

 

 

 

GAAP EFO as a percentage of net sales

 

 

7.7

%

 

 

6.3

%

Adjusted non-GAAP EFO as a percentage of net sales

 

 

8.0

%

 

 

6.5

%

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

GAAP consolidated net earnings

 

$

67,027

 

 

$

49,972

 

Interest expense

 

 

15,269

 

 

 

11,688

 

Income tax expense

 

 

21,165

 

 

 

16,389

 

Depreciation and amortization of property and equipment

 

 

6,961

 

 

 

6,353

 

Amortization of intangible assets

 

 

14,925

 

 

 

8,310

 

Other*

 

 

6,839

 

 

 

8,186

 

Adjusted non-GAAP EBITDA

 

$

132,186

 

 

$

100,898

 

 

 

 

 

 

GAAP consolidated net earnings as a percentage of net sales

 

 

2.8

%

 

 

2.2

%

Adjusted non-GAAP EBITDA as a percentage of net sales

 

 

5.6

%

 

 

4.3

%

*

Includes transformation costs of $2.3 million and $4.0 million for the three months ended March 31, 2024 and 2023, respectively.

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

 

 

 

 

Twelve Months Ended

March 31,

 

 

2024

 

2023

Adjusted return on invested capital:

 

 

 

 

GAAP consolidated EFO

 

$

442,320

 

 

$

411,312

 

Amortization of intangible assets

 

 

42,846

 

 

 

33,277

 

Other5

 

 

34,754

 

 

 

26,421

 

Adjusted non-GAAP consolidated EFO

 

 

519,920

 

 

 

471,010

 

Income tax expense1

 

 

135,179

 

 

 

122,463

 

Adjusted non-GAAP consolidated EFO, net of tax

 

$

384,741

 

 

$

348,547

 

Average stockholders’ equity2

 

$

1,651,965

 

 

$

1,596,949

 

Average debt2

 

 

739,136

 

 

 

744,068

 

Average cash2

 

 

(252,769

)

 

 

(145,661

)

Invested Capital

 

$

2,138,332

 

 

$

2,195,356

 

 

 

 

 

 

Adjusted non-GAAP ROIC (from GAAP consolidated EFO)3

 

 

15.31

%

 

 

13.86

%

Adjusted non-GAAP ROIC (from non-GAAP consolidated EFO)4

 

 

17.99

%

 

 

15.88

%

1

Assumed tax rate of 26.0%.

2

Average of previous five quarters.

3

Computed as GAAP consolidated EFO, net of tax of $115,003 and $106,941 for the twelve months ended March 31, 2024 and 2023, respectively, divided by invested capital.

4

Computed as Adjusted non-GAAP consolidated EFO, net of tax, divided by invested capital.

5

Includes transformation costs of $14.8 million and $16.4 million for the twelve months ended March 31, 2024 and 2023, respectively. Includes certain third-party data center service outage related expenses, net of recoveries of $5.0 million for the twelve months ended March 31, 2024.

 

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