Insight Enterprises, Inc. · NASDAQ:NSIT

Insight Enterprises — Q1 2023 Earnings Presentation

30 slides from Insight Enterprises's earnings presentation, May 2, 2023

  1. Slide 1: First Quarter 2023 Earnings Conference Call and Webcast

    Insight Enterprises, Inc. First Quarter 2023 Earnings Conference Call and Webcast Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2023 Insight Direct USA, Inc. All Rights Reserved. 1

  2. Slide 2: Disclosures

    Disclosures ◦ Safe harbor statement This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 related to Insight’s plans and expectations. Statements that are not historical facts, including those related to coronavirus strain

  3. Slide 3: Table of Contents

    Table of Contents ◦ Solutions Integrator Strategy ◦ Areas of Expertise ◦ Solutions at Work ◦ First Quarter 2023 Highlights and Performance ◦ 2027 KPIs for Success ◦ Liquidity and Debt Covenants ◦ 2023 Outlook ◦ Appendix Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2023 2022 Insig

  4. Slide 4: Our strategy is to become the leading Solutions Integrator

    Our strategy is to become THE leading SOLUTIONS INTEGRATOR The pillars of our strategy are: Captivate Sell Deliver Champion Clients Solutions Differentiation our Culture ≠ Systems Integrator Solutions Reseller Integrator Distributor Insight Proprietary & Confidential. Do Not Copy or Distribute. © 20

  5. Slide 5: Well Positioned to Help Organizations

    Well Positioned to Help Organizations Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2023 2022 Insight Direct USA, Inc. All Rights Reserved. 5

  6. Slide 6: Global Logistics, eCommerce and Business Services Company Modernizes Recruitment Experience

    Global Logistics, eCommerce and Business Services Company Modernizes Recruitment Experience The challenge: The solution: The results: • Time-consuming recruiting process Insight implemented a holistic revamp of • Reduction of recruiting time by 20% the HR recruiting process. Insight: • High rates of

  7. Slide 7: Corporate Citizenship Report

    Corporate Citizenship Report Four areas of impact: • Building a more sustainable world • Using technology for good • Fostering a culture of diversity and inclusion • Leading with heart Read our 2023 Insight Corporate Citizenship Report to learn how we use tech for good: www.insight.com/corporateciti

  8. Slide 8: Connecting 30,000 IoT Devices to Detect and Analyze Wastewater Levels

    Connecting 30,000 IoT Devices to Detect and Analyze Wastewater Levels The challenge: The solution: The results: • Pre-existing Wastewater Network Monitoring Wastewater monitoring platform built on • Reduced risk by replacing aging relied on proprietary systems Azure IoT: platform, reducing vendor lo

  9. Slide 9: Q1 2023 Performance

    Q1 2023 Performance (Changes against prior year period) NET SALES GROSS PROFIT EARNINGS 50% services gross EARNINGS FROM OPERATIONS DILUTED EARNINGS PER SHARE $2.3B $391M $77M $1.34 profit as a % of total gross profit***, including 22% from cloud decrease of 12% increase of 3% decrease of 3% decreas

  10. Slide 10: 2027 KPIs for Success

    2027 KPIs for Success KPIs TTM 3.31.2023 2027 Adjusted EBITDA Margin* 4.9% 6.5% - 7.0% Adjusted ROIC* 15.9% >25% Core services GP | 5-year CAGR** 12% 16% - 20% Cloud GP | 5-year CAGR** 22% 16% - 20% Adjusted DEPS* | 5-year CAGR** 13% 19% - 22% Adjusted free cash flow 153% >90% as % of Adjusted net e

  11. Slide 11: Net Sales and Gross Profit

    NET SALES Trailing twelve months $2.3B decrease of 12% y/y $10.1B* increase of 2% y/y $9.9B $10.4B $10.5B $10.4B $10.1B $9.4B $2.7B $2.7B $2.5B $2.5B $2.3B Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 2021 Q1-22 Q2-22 Q3-22 2022 Q1-23 GROSS PROFIT Trailing twelve months $391M increase of 3% y/y $1.6B* increase of

  12. Slide 12: Services Net Sales and Gross Profit

    SERVICES NET SALES Trailing twelve months $356M increase of 5% y/y $1.5B* increase of 11% y/y $1,410M $1,452M $1,483M $1,499M $1,316M $1,357M $394M $365M $384M $341M $356M Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 2021 Q1-22 Q2-22 Q3-22 2022 Q1-23 SERVICES GROSS PROFIT Trailing twelve months $196M increase of 1

  13. Slide 13: Insight Core Services and Cloud Gross Profit

    INSIGHT CORE SERVICES GROSS PROFIT Trailing twelve months $61M flat y/y $252M* increase of 9% y/y 27% 27% 27% 27% 27% 27% 27% 28% 28% 28% 25% $253M $252M Gross Margin $231M $241M $246M $221M $67M $65M $61M $59M $61M Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 2021 Q1-22 Q2-22 Q3-22 2022 Q1-23 CLOUD GROSS PROFIT T

  14. Slide 14: Adjusted Earnings from Operations

    ADJUSTED EARNINGS FROM OPERATIONS** Trailing twelve months $94M increase of 5% y/y $471M* increase of 23% y/y $441M $467M $471M $428M $362M $384M $142M $128M $107M $90M $94M Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 2021 Q1-22 Q2-22 Q3-22 2022 Q1-23 EARNINGS FROM OPERATIONS Trailing twelve months $77M decrease

  15. Slide 15: Adjusted Diluted Earnings Per Share

    ADJUSTED DILUTED EARNINGS PER SHARE** Trailing twelve months $1.78 decrease of 2% y/y $9.09* increase of 19% y/y $8.49 $8.61 $9.11 $9.09 $7.10 $7.61 $2.78 $2.53 $1.81 $1.99 $1.78 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 2021 Q1-22 Q2-22 Q3-22 2022 Q1-23 DILUTED EARNINGS PER SHARE Trailing twelve months $1.34 d

  16. Slide 16: Liquidity and Debt Covenants

    Liquidity and Debt Covenants Fixed Charge Coverage Twelve Months Ended March 31, $500,000 $465,770 US Dollars in $000s 2023 2022 $450,000 Adjusted Consolidated EBITDA $400,000 Net earnings $ 273,949 $ 232,808 $350,000 $300,000 Interest expense 44,917 39,460 $250,000 3.88x Taxes 92,221 77,706 $200,00

  17. Slide 17: Full Year 2023 Outlook

    Full Year 2023 Outlook Assumptions: As of May 2, 2023 As of February 9, 2023 Gross profit growth mid single digit high single digit Adjusted diluted EPS* $9.90 - $10.10 $9.90 - $10.10 Interest expense $46 - $50 million $48 - $52 million Effective tax rate 25% - 26% 25% - 26% Capital expenditures $55

  18. Slide 18: Appendix

    Appendix Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2023 Insight Direct USA, Inc. All Rights Reserved. 18

  19. Slide 19: Q1 2023 Financial Performance

    Q1 2023 | Financial Performance Three Months Ended March 31, US Dollars in $000s, except for per share data 2023 2022 Change Consolidated IEI Net sales $2,323,947 $2,650,850 (12)% Net sales, constant currency* (11)% Product net sales $1,967,645 $2,310,287 (15)% Services net sales $356,302 $340,563 5

  20. Slide 20: Consolidated IEI Financial Metrics

    Consolidated IEI Financial Metrics Three Months Ended Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Twelve Months Ended 2021 Q1-22 Q2-22 Q3-22 2022 Q1-23 Net Sales YoY 21% 23% 4% (2)% (12)% Net Sales YoY 13% 18% 20% 15% 11% 2% Gross Margin 14.3% 16.0% 15.8% 16.8% 16.8% Gross Margin 15.3% 15.1% 15.0% 15.3% 15.7% 16.

  21. Slide 21: Services Financial Metrics

    Services Financial Metrics Three Months Ended Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Twelve Months Ended 2021 Q1-22 Q2-22 Q3-22 2022 Q1-23 Services Revenue $341M $394M $365M $384M $356M Services Revenue $1,316M $1,357M $1,410M $1,452M $1,483M $1,499M Services Revenue YoY 14% 16% 13% 9% 5% Services Revenue Yo

  22. Slide 22: Reconciliation of GAAP to Non-GAAP Financial Measures

    Reconciliation of GAAP to Non-GAAP Financial Measures* Three Months Ended March 31, US Dollars in $000s, except per share data 2023 2022 2021 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 77,461 $ 79,849 $ 67,024 Amortization of intangible assets 8,310 7,925 8,041 Other 8,1

  23. Slide 23: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

    Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Three Months Ended March 31, US Dollars in $000s 2023 2022 Adjusted North America Earnings from Operations: GAAP EFO from North America segment $ 63,186 $ 64,560 Amortization of intangible assets 7,785 7,348 Other 7,337 715 Adjusted

  24. Slide 24: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

    Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Twelve Months Ended March 31, US Dollars in $000s 2023 Adjusted Free Cash Flow: Net cash provided by operating activities $ 542,505 Less: Purchases of property and equipment 54,300 Adjusted non-GAAP free cash flow $ 488,205 Adjusted

  25. Slide 25: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

    Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Twelve Months Ended March 31, US Dollars in $000s 2023 2022 Return on Invested Capital: GAAP consolidated EFO $ 411,312 $ 344,886 Amortization of intangible assets 33,277 31,929 Other 26,421 6,889 Adjusted non-GAAP consolidated EFO $

  26. Slide 26: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

    Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Three Months Ended Three Months Ended Three Months Ended June 30, September 30, December 31, US Dollars in $000s, except per share data 2022 2021 2022 2021 2022 2021 Adjusted Consolidated Earnings from Operations: GAAP consolidated E

  27. Slide 27: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

    Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) US Dollars in $000s, except per share data 2020 TTM Q1-21 TTM Q2-21 TTM Q3-21 2021 TTM Q1-22 TTM Q2-22 TTM Q3-22 2022 TTM Q1-23 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 271,575 $ 285,736 $ 300,017 $ 321

  28. Slide 28: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

    Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) US Dollars in $000s, except per share data 2018 Adjusted Consolidated Net Earnings: GAAP consolidated net earnings $ 163,677 Amortization of intangible assets 15,737 Other 3,706 Income taxes on non-GAAP adjustments (4,767) Adjusted n

  29. Slide 29: Financial Results by Offering Category

    Financial Results by Offering Category US Dollars in $000s Q1-21 Q2-21 Q3-21 Q4-21 FY 2021 Q1-22 Q2-22 Q3-22 Q4-22 FY 2022 Q1-23 Consolidated IEI by Offering Category Hardware $ 1,315,025 $ 1,350,944 $ 1,592,495 $ 1,631,046 $ 5,889,510 $ 1,673,588 $ 1,731,116 $ 1,572,275 $ 1,473,916 $ 6,450,895 $ 1,

  30. Slide 30: Convertible Senior Notes

    Convertible Senior Notes • Insight Convertible Senior Notes - $350 million principal • Required to settle the convertible notes principal/par value in cash • Excess required to be settled in shares resulting in dilution in GAAP reported Diluted Earnings Per Share (“DEPS”) • DEPS incremental shares f

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