Press release

Insight Enterprises, Inc. Reports First Quarter 2021 Results

0
Sponsored by Businesswire

Insight Enterprises, Inc. (Nasdaq: NSIT) (the “Company”) today reported financial results for the quarter ended March 31, 2021. Highlights include:

  • Net sales increased 2% year over year to $2.2 billion
  • Earnings from operations increased 27% to $67.0 million
  • Adjusted earnings from operations increased 3% to $68.3 million
  • Diluted earnings per share of $1.18 increased 24% year over year
  • Adjusted diluted earnings per share of $1.30 was flat with prior year

In the first quarter of 2021, net sales increased 2%, year over year. Gross profit also increased 2%, while gross margin contracted 10 basis points compared to the first quarter of 2020. Earnings from operations of $67.0 million increased 27% compared to $52.9 million in the first quarter of 2020. Adjusted earnings from operations of $68.3 million increased 3% compared to $66.6 million in the first quarter of 2020. Diluted earnings per share for the quarter was $1.18, up 24%, year over year, and adjusted diluted earnings per share was $1.30, flat year to year.

“In the first quarter, with the launch of COVID-19 vaccines, parts of the world began to awaken from the year-long quarantine and economic pause. I’m happy to report that our business returned to organic top line growth year over year in the first quarter,” stated Ken Lamneck, President and Chief Executive Officer. “Largely consistent gross margins, year over year, combined with operating leverage, drove earnings from operations up 27% and Adjusted earnings from operations up 3%. Our performance for the quarter sets a good base for what we expect will be a strong year.” stated Lamneck.

KEY HIGHLIGHTS

  • Consolidated net sales for the first quarter of 2021 of $2.19 billion increased 2%, year over year, when compared to the first quarter of 2020.

    • Net sales in North America decreased 1%, year to year, to $1.65 billion;
    • Net sales in EMEA increased 14%, year over year, to $478.8 million; and
    • Net sales in APAC increased 17%, year over year, to $59.5 million.
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales were flat, year to year, with growth in net sales in EMEA and APAC of 5% and 2%, respectively, year over year, partially offset by a decline in North America of 2%, year to year.
  • Consolidated gross profit increased to $331.5 million, an increase of 2% compared to the first quarter of 2020, with consolidated gross margin contracting 10 basis points to 15.1% of net sales.

    • Gross profit in North America decreased 1%, year to year, to $253.5 million (15.3% gross margin);
    • Gross profit in EMEA increased 12%, year over year, to $66.0 million (13.8% gross margin); and
    • Gross profit in APAC increased 24%, year over year, to $12.0 million (20.1% gross margin).
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit was flat, year to year, with gross profit growth in EMEA and APAC of 3% and 10%, respectively, year over year, partially offset by a decline in North America of 4%, year to year.
  • Consolidated earnings from operations increased 27% compared to the first quarter of 2020 to $67.0 million, or 3.1% of net sales.

    • Earnings from operations in North America increased 27%, year over year, to $53.9 million, or 3.3% of net sales;
    • Earnings from operations in EMEA increased 21%, year over year, to $10.1 million, or 2.1% of net sales; and
    • Earnings from operations in APAC increased 37%, year over year, to $3.0 million, or 5.1% of net sales.
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations increased 22%, year over year, with increased earnings from operations in North America, EMEA and APAC of 24%, 9% and 23%, respectively, year over year.
  • Adjusted earnings from operations increased 3% compared to the first quarter of 2020 to $68.3 million, or 3.1% of net sales.

    • Adjusted earnings from operations in North America decreased 2%, year to year, to $54.1 million, or 3.3% of net sales;
    • Adjusted earnings from operations in EMEA increased 23%, year over year, to $11.1 million, or 2.3% of net sales; and
    • Adjusted earnings from operations in APAC increased 35%, year over year, to $3.1 million, or 5.3% of net sales.
  • Consolidated net earnings and diluted earnings per share for the first quarter of 2021 were $43.2 million and $1.18, respectively, at an effective tax rate of 23.8%.
  • Adjusted consolidated net earnings and Adjusted diluted earnings per share for the first quarter of 2021 were $46.5 million and $1.30, respectively.

In discussing financial results for the three months ended March 31, 2021 and 2020 in this press release, the Company refers to certain financial measures that are adjusted from the financial results prepared in accordance with United States generally accepted accounting principles (“GAAP”). When referring to non-GAAP measures, the Company refers to 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.

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.

STOCK REPURCHASE

On May 3, 2021, the Company’s Board of Directors authorized the Company to increase amounts available under the existing stock repurchase program, pursuant to which the Company may purchase up to an aggregate of $125 million of the Company’s common stock, including $25 million that was previously authorized in February 2020. The Company’s share repurchases will be made on the open market, through block trades, through 10b5-1 plans or otherwise. The number of shares purchased, and the timing of the purchases will be based on working capital requirements, general business conditions and other factors. The Company intends to retire the repurchased shares.

GUIDANCE

For the full year 2021, the Company expects to deliver net sales growth in the 4% to 8% range and Adjusted diluted earnings per share is expected to be between $6.60 and $6.80. This forecast is unchanged from the previously communicated outlook.

This outlook assumes

  • interest expense between $25 million and $28 million;
  • an effective tax rate of 25% to 26% for the full year 2021;
  • capital expenditures of $75 to $85 million, including the build out of our new corporate headquarters; and
  • an average share count for the full year of approximately 36 million shares.

This outlook excludes acquisition-related intangibles amortization expense of approximately $32 million and the non-cash convertible debt discount and issuance costs, reported as part of interest expense, of approximately $12 million and assumes no acquisition-related or severance and restructuring expenses. Due to the inherent difficulty of forecasting some of these types of expenses, which impact net earnings and diluted earnings per share, the Company is unable to reasonably estimate the 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 2021 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 2021 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 this event link. Upon registering, participants will receive dial-in information via email, as well as a unique registrant ID, event passcode, and detailed instructions regarding how to join the call.

USE OF NON-GAAP FINANCIAL MEASURES

The non-GAAP financial measures are referred to as “Adjusted”. Adjusted consolidated earnings from operations, Adjusted consolidated net earnings and Adjusted diluted earnings per share exclude (i) severance and restructuring expenses, (ii) certain acquisition and integration related expenses, (iii) amortization of intangible assets, and (iv) the tax effects of each of these items, as applicable. Adjusted consolidated net earnings and Adjusted diluted earnings per share also exclude amortization of debt discount and issuance costs associated with the issuance of the Company’s convertible senior notes due 2025. The Company excludes these items when internally evaluating earnings from operations, tax expense, net earnings and diluted earnings per share for the Company and earnings from operations for each of the Company’s operating segments. Adjusted diluted earnings per share also includes the impact of the benefit from the note hedge where the Company’s average stock price for the first quarter of 2021 was in excess of $68.32, which is the initial conversion price of the convertible senior notes. Adjusted EBITDA adds back (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization of property and equipment, (iv) amortization of intangibles, (v) non-cash stock based compensation (vi) severance and restructuring expenses and (vii) certain acquisition and integration related expenses. Adjusted free cash flow is the Company’s net cash provided by operating activities adjusted for (i) purchases of property and equipment and (ii) the net borrowings or repayments under the inventory financing facilities. Adjusted return on invested capital (“ROIC”) excludes (i) severance and restructuring expenses, (ii) certain acquisition and integration related expenses, (iii) impairment of construction in progress, (iv) loss on sale of property, (v) litigation settlement proceeds, and (vi) the tax effects of each of these items, as applicable.

These non-GAAP measures are used by the Company and its management to evaluate financial performance against budgeted amounts, to calculate incentive compensation, to assist in forecasting future performance and to compare the Company’s results to those of the Company’s competitors. The Company believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency, facilitate comparisons to prior periods and the Company’s competitors’ results and assist in forecasting performance for future periods. These non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

Financial Summary Table

(dollars in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

change

 

Insight Enterprises, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

1,893,020

 

 

$

1,848,316

 

 

2

%

 

Services

 

$

300,048

 

 

$

295,735

 

 

1

%

 

Total net sales

 

$

2,193,068

 

 

$

2,144,051

 

 

2

%

 

Gross profit

 

$

331,474

 

 

$

325,336

 

 

2

%

 

Gross margin

 

 

15.1

%

 

 

15.2

%

 

(10 bps)

 

Selling and administrative expenses

 

$

271,190

 

 

$

268,863

 

 

1

%

 

Severance and restructuring expenses

 

$

(6,740

)

 

$

2,144

 

 

(> 100%)

 

Acquisition and integration related expenses

 

$

 

 

$

1,466

 

 

*

 

Earnings from operations

 

$

67,024

 

 

$

52,863

 

 

27

%

 

Net earnings

 

$

43,168

 

 

$

33,961

 

 

27

%

 

Diluted earnings per share

 

$

1.18

 

 

$

0.95

 

 

24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

1,418,227

 

 

$

1,433,649

 

 

(1

%)

 

Services

 

$

236,554

 

 

$

240,732

 

 

(2

%)

 

Total net sales

 

$

1,654,781

 

 

$

1,674,381

 

 

(1

%)

 

Gross profit

 

$

253,489

 

 

$

256,928

 

 

(1

%)

 

Gross margin

 

 

15.3

%

 

 

15.3

%

 

 

 

 

Selling and administrative expenses

 

$

206,806

 

 

$

211,203

 

 

(2

%)

 

Severance and restructuring expenses

 

$

(7,238

)

 

$

2,122

 

 

(> 100%)

 

Acquisition and integration related expenses

 

$

 

 

$

1,262

 

 

*

 

Earnings from operations

 

$

53,921

 

 

$

42,341

 

 

27

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Mix

 

 

 

 

 

 

 

 

 

**

 

Hardware

 

 

67

%

 

 

68

%

 

(2

%)

 

Software

 

 

19

%

 

 

18

%

 

1

%

 

Services

 

 

14

%

 

 

14

%

 

(2

%)

 

 

 

 

100

%

 

 

100

%

 

(1

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

430,394

 

 

$

376,051

 

 

14

%

 

Services

 

$

48,442

 

 

$

42,835

 

 

13

%

 

Total net sales

 

$

478,836

 

 

$

418,886

 

 

14

%

 

Gross profit

 

$

66,035

 

 

$

58,774

 

 

12

%

 

Gross margin

 

 

13.8

%

 

 

14.0

%

 

(20 bps)

 

Selling and administrative expenses

 

$

55,447

 

 

$

50,244

 

 

10

%

 

Severance and restructuring expenses

 

$

498

 

 

$

6

 

 

> 100%

 

Acquisition and integration related expenses

 

$

 

 

$

204

 

 

*

 

Earnings from operations

 

$

10,090

 

 

$

8,320

 

 

21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Mix

 

 

 

 

 

 

 

 

 

**

 

Hardware

 

 

41

%

 

 

42

%

 

12

%

 

Software

 

 

49

%

 

 

48

%

 

17

%

 

Services

 

 

10

%

 

 

10

%

 

13

%

 

 

 

 

100

%

 

 

100

%

 

14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*

Percentage change not considered meaningful.

**

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

Financial Summary Table (continued)

(dollars in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

change

 

APAC

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

44,399

 

 

$

38,616

 

 

15

%

 

Services

 

$

15,052

 

 

$

12,168

 

 

24

%

 

Total net sales

 

$

59,451

 

 

$

50,784

 

 

17

%

 

Gross profit

 

$

11,950

 

 

$

9,634

 

 

24

%

 

Gross margin

 

 

20.1

%

 

 

19.0

%

 

110 bps

 

Selling and administrative expenses

 

$

8,937

 

 

$

7,416

 

 

21

%

 

Severance and restructuring expenses

 

$

 

 

$

16

 

 

*

 

Earnings from operations

 

$

3,013

 

 

$

2,202

 

 

37

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Mix

 

 

 

 

 

 

 

 

 

**

 

Hardware

 

 

16

%

 

 

15

%

 

23

%

 

Software

 

 

59

%

 

 

61

%

 

13

%

 

Services

 

 

25

%

 

 

24

%

 

24

%

 

 

 

 

100

%

 

 

100

%

 

17

%

 

*

Percentage change not considered meaningful.

**

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

FORWARD-LOOKING INFORMATION

Certain statements in this release and the related conference call, 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 our future responses to and the potential impact of coronavirus strain COVID-19 (“COVID-19”) on our Company, the Company’s future financial performance and results of operations, the Company’s anticipated effective tax rate, capital expenditures, expected average share count, the Company’s expectations regarding cash flow, the Company’s expectations regarding current supply constraints, future trends in the IT market, including due to COVID-19, our business strategy and our strategic initiatives, are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. There can be no assurances that the results discussed by the forward-looking statements will be achieved, and actual results may differ materially from those set forth in the forward-looking statements. Some of the important factors that could cause the Company’s actual results to differ materially from those projected in any forward-looking statements, include, but are not limited to, the following, which are discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including in “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020:

  • 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 in the requirements year over year;
  • the duration and severity of the COVID-19 pandemic and its effects on the Company’s business, results of operations and financial condition, as well as the widespread outbreak of any other illnesses or communicable diseases;
  • general economic conditions, economic uncertainties and changes in geopolitical conditions;
  • changes in the IT industry and/or rapid changes in technology;
  • supply constraints for devices;
  • 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 risks associated with the Company’s international operations;
  • natural disasters or other adverse occurrences;
  • disruptions in the Company’s IT systems and voice and data networks;
  • cyberattacks or breaches of data privacy and security regulations;
  • intellectual property infringement claims and challenges to the Company’s registered trademarks and trade names;
  • legal proceedings, including PCM related litigation, client audits and failure to comply with laws and regulations;
  • failure to comply with the terms and conditions of the Company’s commercial and public sector contracts;
  • exposure to changes in, interpretations of, or enforcement trends related to tax rules and regulations;
  • the Company’s potential to draw down a substantial amount of indebtedness;
  • the conditional conversion feature of the convertible notes, which if triggered, may adversely affect the Company’s financial condition and operating results;
  • the accounting method for convertible debt securities that may be settled in cash, such as the convertible notes, could have a material effect on the Company’s reported financial results;
  • the Company is subject to counterparty risk with respect to the convertible note hedge transactions;
  • risks associated with the discontinuation of LIBOR as a benchmark rate;
  • increased debt and interest expense and availability of funds under the Company’s financing facilities;
  • possible significant fluctuations in the Company’s future operating results as well as seasonality and variability in customer demands;
  • the Company’s dependence on certain key personnel;
  • risks associated with the integration and operation of acquired businesses, including the 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,

 

 

 

2021

 

 

2020

 

Net sales:

 

 

 

 

 

 

 

 

Products

 

 

1,893,020

 

 

$

1,848,316

 

Services

 

 

300,048

 

 

 

295,735

 

Total net sales

 

 

2,193,068

 

 

 

2,144,051

 

Costs of goods sold:

 

 

 

 

 

 

 

 

Products

 

 

1,721,258

 

 

 

1,670,238

 

Services

 

 

140,336

 

 

 

148,477

 

Total costs of goods sold

 

 

1,861,594

 

 

 

1,818,715

 

Gross profit

 

 

331,474

 

 

 

325,336

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling and administrative expenses

 

 

271,190

 

 

 

268,863

 

Severance and restructuring expenses, net

 

 

(6,740

)

 

 

2,144

 

Acquisition and integration related expenses

 

 

 

 

 

1,466

 

Earnings from operations

 

 

67,024

 

 

 

52,863

 

Non-operating (income) expense:

 

 

 

 

 

 

 

 

Interest expense, net

 

 

9,969

 

 

 

11,826

 

Other expense (income), net

 

 

388

 

 

 

(1,563

)

Earnings before income taxes

 

 

56,667

 

 

 

42,600

 

Income tax expense

 

 

13,499

 

 

 

8,639

 

Net earnings

 

$

43,168

 

 

$

33,961

 

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

1.23

 

 

$

0.96

 

Diluted

 

$

1.18

 

 

$

0.95

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

Basic

 

 

35,199

 

 

 

35,233

 

Diluted

 

 

36,699

 

 

 

35,646

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

March 31,

2021

 

 

December 31,

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

138,753

 

 

$

128,313

 

Accounts receivable, net

 

 

2,583,716

 

 

 

2,685,448

 

Inventories

 

 

253,297

 

 

 

185,650

 

Other current assets

 

 

177,927

 

 

 

177,039

 

Total current assets

 

 

3,153,693

 

 

 

3,176,450

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

148,531

 

 

 

146,016

 

Goodwill

 

 

429,757

 

 

 

429,368

 

Intangible assets, net

 

 

239,833

 

 

 

246,915

 

Other assets

 

 

282,793

 

 

 

311,983

 

 

 

$

4,254,607

 

 

$

4,310,732

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable – trade

 

$

1,460,172

 

 

$

1,461,312

 

Accounts payable – inventory financing facilities

 

 

309,075

 

 

 

356,930

 

Accrued expenses and other current liabilities

 

 

404,995

 

 

 

408,117

 

Current portion of long-term debt

 

 

830

 

 

 

1,105

 

Total current liabilities

 

 

2,175,072

 

 

 

2,227,464

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

416,401

 

 

 

437,581

 

Deferred income taxes

 

 

33,963

 

 

 

33,209

 

Other liabilities

 

 

246,005

 

 

 

270,049

 

 

 

 

2,871,441

 

 

 

2,968,303

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

Common stock

 

 

353

 

 

 

351

 

Additional paid-in capital

 

 

361,935

 

 

 

364,288

 

Retained earnings

 

 

1,036,413

 

 

 

993,245

 

Accumulated other comprehensive loss – foreign currency translation adjustments

 

 

(15,535

)

 

 

(15,455

)

Total stockholders’ equity

 

 

1,383,166

 

 

 

1,342,429

 

 

 

$

4,254,607

 

 

$

4,310,732

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net earnings

 

$

43,168

 

 

$

33,961

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

14,222

 

 

 

17,397

 

Provision for losses on accounts receivable

 

 

2,178

 

 

 

3,136

 

Non-cash stock-based compensation

 

 

4,716

 

 

 

4,409

 

Deferred income taxes

 

 

643

 

 

 

(509

)

Amortization of debt discount and issuance costs

 

 

4,172

 

 

 

3,965

 

Other adjustments

 

 

(7,617

)

 

 

1,297

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Decrease in accounts receivable

 

 

93,485

 

 

 

22,648

 

Increase in inventories

 

 

(67,946

)

 

 

(48,332

)

Decrease in other assets

 

 

16,759

 

 

 

57,241

 

(Decrease) increase in accounts payable

 

 

(25,315

)

 

 

23,277

 

Decrease in accrued expenses and other liabilities

 

 

(35,759

)

 

 

(25,364

)

Net cash provided by operating activities

 

 

42,706

 

 

 

93,126

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Proceeds from sale of assets held for sale

 

 

27,211

 

 

 

14,218

 

Purchases of property and equipment

 

 

(7,847

)

 

 

(7,382

)

Acquisitions, net of cash and cash equivalents acquired

 

 

 

 

 

(6,406

)

Net cash provided by investing activities

 

 

19,364

 

 

 

430

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Borrowings on ABL revolving credit facility

 

 

897,848

 

 

 

678,197

 

Repayments on ABL revolving credit facility

 

 

(921,848

)

 

 

(788,443

)

Net repayments under inventory financing facilities

 

 

(17,782

)

 

 

(764

)

Repurchases of treasury stock

 

 

 

 

 

(25,000

)

Other payments

 

 

(7,485

)

 

 

(5,756

)

Net cash used in financing activities

 

 

(49,267

)

 

 

(141,766

)

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

 

 

(2,445

)

 

 

(3,615

)

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

 

 

10,358

 

 

 

(51,825

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

130,582

 

 

 

116,297

 

Cash, cash equivalents and restricted cash at end of period

 

$

140,940

 

 

$

64,472

 

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,

 

 

 

2021

 

 

2020

 

Adjusted Consolidated Earnings from Operations:

 

 

 

 

 

 

 

 

GAAP consolidated EFO

 

$

67,024

 

 

$

52,863

 

Amortization of intangible assets

 

 

8,041

 

 

 

10,108

 

Other

 

 

(6,740

)

 

 

3,610

 

Adjusted non-GAAP consolidated EFO

 

$

68,325

 

 

$

66,581

 

 

 

 

 

 

 

 

 

 

Adjusted Consolidated Net Earnings:

 

 

 

 

 

 

 

 

GAAP consolidated net earnings

 

$

43,168

 

 

$

33,961

 

Amortization of intangible assets

 

 

8,041

 

 

 

10,108

 

Amortization of debt discount and issuance costs

 

 

2,983

 

 

 

2,831

 

Other

 

 

(6,740

)

 

 

3,610

 

Income taxes on non-GAAP adjustments

 

 

(919

)

 

 

(4,160

)

Adjusted non-GAAP consolidated net earnings

 

$

46,533

 

 

$

46,350

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted Earnings Per Share:

 

 

 

 

 

 

 

 

GAAP diluted EPS

 

$

1.18

 

 

$

0.95

 

Amortization of intangible assets

 

 

0.22

 

 

 

0.28

 

Amortization of debt discount and issuance costs

 

 

0.08

 

 

 

0.08

 

Other

 

 

(0.18

)

 

 

0.10

 

Income taxes on non-GAAP adjustments

 

 

(0.03

)

 

 

(0.11

)

Impact of benefit from note hedge

 

 

0.03

 

 

 

 

Adjusted non-GAAP diluted EPS

 

$

1.30

 

 

$

1.30

 

 

 

 

 

 

 

 

 

 

Shares used in diluted EPS calculation

 

 

36,699

 

 

 

35,646

 

Impact of benefit from note hedge

 

 

(1,039

)

 

 

 

Shares used in Adjusted non-GAAP diluted EPS calculation

 

 

35,660

 

 

 

35,646

 

 

 

 

 

 

 

 

 

 

Adjusted North America Earnings from Operations:

 

 

 

 

 

 

 

 

GAAP EFO from North America segment

 

$

53,921

 

 

$

42,341

 

Amortization of intangible assets

 

 

7,417

 

 

 

9,493

 

Other

 

 

(7,238

)

 

 

3,384

 

Adjusted non-GAAP EFO from North America segment

 

$

54,100

 

 

$

55,218

 

 

 

 

 

 

 

 

 

 

Adjusted EMEA Earnings from Operations:

 

 

 

 

 

 

 

 

GAAP EFO from EMEA segment

 

$

10,090

 

 

$

8,320

 

Amortization of intangible assets

 

 

496

 

 

 

506

 

Other

 

 

498

 

 

 

210

 

Adjusted non-GAAP EFO from EMEA segment

$

11,084

$

9,036

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Reconciliation of GAAP to NON-GAAP Financial Measures (Continued)

(In thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Adjusted APAC Earnings from Operations:

 

 

 

 

 

 

 

 

GAAP EFO from APAC segment

 

$

3,013

 

 

$

2,202

 

Amortization of intangible assets

 

 

128

 

 

 

109

 

Other

 

 

 

 

 

16

 

Adjusted non-GAAP EFO from APAC segment

 

$

3,141

 

 

$

2,327

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

 

 

 

GAAP consolidated net earnings

 

$

43,168

 

 

$

33,961

 

Interest expense

 

 

10,086

 

 

 

11,918

 

Income tax expense

 

 

13,499

 

 

 

8,639

 

Depreciation and amortization of property and equipment

 

 

6,181

 

 

 

7,289

 

Amortization of intangible assets

 

 

8,041

 

 

 

10,108

 

Non-cash stock-based compensation

 

 

4,716

 

 

 

4,409

 

Other

 

 

(6,740

)

 

 

3,610

 

Adjusted non-GAAP EBITDA

 

$

78,951

 

 

$

79,934

 

 

 

 

 

 

 

 

 

 

GAAP consolidated net earnings as a percentage of net sales

 

 

2.0

%

 

 

1.6

%

Adjusted non-GAAP EBITDA as a percentage of net sales

 

 

3.6

%

 

 

3.7

%

 

 

Twelve Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Adjusted return on invested capital:

 

 

 

 

 

 

 

 

GAAP consolidated EFO

 

$

285,736

 

 

$

236,418

 

Other

 

 

2,928

 

 

 

21,508

 

Adjusted non-GAAP consolidated EFO*

 

 

288,664

 

 

 

257,926

 

Income tax expense**

 

 

75,053

 

 

 

67,061

 

Adjusted non-GAAP consolidated EFO, net of tax

 

$

213,611

 

 

$

190,865

 

Average stockholders’ equity***

 

$

1,269,282

 

 

$

1,103,865

 

Average debt***

 

 

468,330

 

 

 

522,016

 

Average cash***

 

 

(111,766

)

 

 

(110,957

)

Invested Capital

 

$

1,625,846

 

 

$

1,514,924

 

 

 

 

 

 

 

 

 

 

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

 

 

13.01

%

 

 

11.55

%

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

 

 

13.14

%

 

 

12.60

%

*

The adjusted non-GAAP consolidated EFO amount used for the Adjusted non-GAAP ROIC calculation does not exclude amortization of intangible assets. This calculation remains consistent with the metric utilized in management’s compensation plan.

**

Assumed tax rate of 26.0%.

***

Average of previous five quarters.

****

Computed as GAAP consolidated EFO, net of tax of $74,291 and $61,469 for the twelve months ended March 31, 2021 and 2020, respectively, divided by invested capital.

*****

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

NSIT-F