Insight Enterprises, Inc. · NASDAQ:NSIT

Insight Enterprises — Q3 2023 Earnings Presentation

32 slides from Insight Enterprises's earnings presentation, Nov 2, 2023

  1. Slide 1: Insight Enterprises, Inc. Third Quarter 2023 Earnings Conference Call

    Insight Enterprises, Inc. Third 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 our expectations ab

  3. Slide 3: Table of Contents

    Table of Contents ◦ Solutions Integrator Strategy ◦ Areas of Expertise ◦ Solutions at Work ◦ Industry and Partner Recognitions ◦ Third Quarter 2023 Highlights and Performance ◦ 2027 KPIs for Success ◦ Adjusted EBITDA and Debt Covenants ◦ 2023 Outlook ◦ Appendix Insight Proprietary & Confidential. Do

  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 Intelligent Edge Our services Modern Workplace Gather and utilize data in the most efficient Create a productive, flexible and secure workplace way possible to enable real-time decision- Managed Services making and affect pivotal outcomes Eliminate business disr

  6. Slide 6: Accelerated Multisite Deployment

    Accelerated Multisite Deployment The challenge: The solution: The results: • Rapid growth required a strategic • Implement a customized solution • Enable our client to go to market partner that could deliver outcomes combining routers, cameras and faster with their products to meet demand and addres

  7. Slide 7: Insurance Company Drives Agile Culture for Next-Gen Claims

    Insurance Company Drives Agile Culture for Next- Gen Claims The challenge: The solution: The results: • Internal directive to mobilize a team • Introduce proven Agile and Scrum • Development and rollout of a of in-house developers to build a practices while guiding the competitive next-gen claims ne

  8. Slide 8: Industry and Partner Recognitions

    Industry and Partner Recognitions • Included in 2023 Gartner Magic Quadrant for: ◦ Software Asset Management Managed Services ◦ Public Cloud IT Transformation Services • EMEA Innovation Partner at this year's Canalys Forum U.S. Best Places to Work International Best Places to Work No. 1 | Inland Nor

  9. Slide 9: Q3 2023 Performance

    Q3 2023 Performance (Changes against prior year period) NET SALES GROSS PROFIT EARNINGS 52% services gross EARNINGS FROM OPERATIONS DILUTED EARNINGS PER SHARE $2.3B $409M $92M $1.62 profit as a % of total gross profit***, including 24% from cloud decrease of 11% increase of 2% increase of 2% increas

  10. Slide 10: 2027 KPIs for Success

    2027 KPIs for Success KPIs TTM Q3 2023 2027 Cloud GP | 5-year CAGR** 24% 16% - 20% Core services GP | 5-year CAGR** 14% 16% - 20% Adjusted EBITDA Margin* 5.3% 6.5% - 7.0% Adjusted DEPS* | 5-year CAGR** 13% 19% - 22% Adjusted ROIC* 16.8% >25% Adjusted free cash flow 211% >90% as % of Adjusted net ear

  11. Slide 11: Net Sales and Gross Profit

    NET SALES Trailing twelve months $2.3B decrease of 11% y/y $9.4B* decrease of 10% y/y $10.4B $10.5B $10.4B $10.1B $9.7B $9.4B $2.5B $2.5B $2.3B $2.3B $2.3B Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q2-22 Q3-22 2022 Q1-23 Q2-23 Q3-23 GROSS PROFIT Trailing twelve months $409M increase of 2% y/y $1.7B* increase of

  12. Slide 12: Services Net Sales and Gross Profit

    SERVICES NET SALES Trailing twelve months $376M increase of 3% y/y $1.5B* increase of 5% y/y $1,452M $1,483M $1,499M $1,509M $1,520M $1,410M $384M $404M $376M $365M $356M Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q2-22 Q3-22 2022 Q1-23 Q2-23 Q3-23 SERVICES GROSS PROFIT Trailing twelve months $216M increase of 1

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

    INSIGHT CORE SERVICES GROSS PROFIT Trailing twelve months $71M increase of 20% y/y $269M* increase of 9% y/y 27% 27% 27% 27% 28% 29% 28% 28% 30% 31% 25% $253M $252M $257M $269M Gross Margin $241M $246M $72M $71M $59M $65M $61M Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q2-22 Q3-22 2022 Q1-23 Q2-23 Q3-23 CLOUD GR

  14. Slide 14: Earnings from Operations

    EARNINGS FROM OPERATIONS Trailing twelve months $92M increase of 2% y/y $402M* increase of 2% y/y $393M $414M $411M $400M $402M $386M $114M $119M $90M $92M $77M Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q2-22 Q3-22 2022 Q1-23 Q2-23 Q3-23 ADJUSTED EARNINGS FROM OPERATIONS** Trailing twelve months $120M increase

  15. Slide 15: Diluted Earnings Per Share

    DILUTED EARNINGS PER SHARE Trailing twelve months $1.62 increase of 3% y/y $7.26* increase of 1% y/y $7.22 $7.66 $7.47 $7.22 $7.26 $7.15 $2.13 $2.17 $1.58 $1.62 $1.34 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q2-22 Q3-22 2022 Q1-23 Q2-23 Q3-23 ADJUSTED DILUTED EARNINGS PER SHARE** Trailing twelve months $2.37 i

  16. Slide 16: Adjusted EBITDA and Debt Covenants

    Adjusted EBITDA and Debt Covenants Twelve Months Ended Fixed Charge Coverage September 30, $493,956 US Dollars in $000s 2023 2022 $500,000 Adjusted Consolidated EBITDA $450,000 Net earnings $ 268,178 $ 265,264 $400,000 $350,000 Interest expense 47,889 41,213 $300,000 Taxes 90,673 88,939 $250,000 4.0

  17. Slide 17: Full Year 2023 Outlook

    Full Year 2023 Outlook Assumptions: As of November 2, 2023 As of August 3, 2023 Gross profit growth low single digit low to mid single digit Adjusted diluted EPS* $9.40 - $9.60 $9.40 - $9.60 Interest expense $45 - $47 million $46 - $48 million Effective tax rate 25% - 26% 26% Capital expenditures $4

  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: Q3 2023 YTD Financial Performance

    Q3 2023 YTD | Financial Performance Nine Months Ended September 30, US Dollars in $000s, except for per share data 2023 2022 Change Consolidated IEI Net sales $6,939,829 $7,928,581 (12)% Net sales, constant currency* (12)% Product net sales $5,803,408 $6,828,726 (15)% Services net sales $1,136,421 $

  20. Slide 20: Consolidated IEI Financial Metrics

    Consolidated IEI Financial Metrics Three Months Ended Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Twelve Months Ended Q2-22 Q3-22 2022 Q1-23 Q2-23 Q3-23 Net Sales YoY 4% (2)% (12)% (14)% (11)% Net Sales YoY 20% 15% 11% 2% (7)% (10)% Gross Margin 15.8% 16.8% 16.8% 18.4% 18.0% Gross Margin 15.0% 15.3% 15.7% 16.3% 1

  21. Slide 21: Services Financial Metrics

    Services Financial Metrics Three Months Ended Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Twelve Months Ended Q2-22 Q3-22 2022 Q1-23 Q2-23 Q3-23 Services Revenue $365M $384M $356M $404M $376M Services Revenue $1,410M $1,452M $1,483M $1,499M $1,509M $1,520M Services Revenue YoY 13% 9% 5% 2% 3% Services Revenue YoY

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

    Reconciliation of GAAP to Non-GAAP Financial Measures* Three Months Ended Nine Months Ended September 30, September 30, US Dollars in $000s, except per share data 2023 2022 2021 2023 2022 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 91,862 $ 90,279 $ 83,151 287,934 $ 299,6

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

    Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Three Months Ended September 30, US Dollars in $000s 2023 2022 Adjusted North America Earnings from Operations: GAAP EFO from North America segment $ 86,083 $ 82,262 Amortization of intangible assets 7,718 8,468 Other** 15,547 7,792

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

    Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Twelve Months Ended September 30, US Dollars in $000s 2023 Adjusted Free Cash Flow: Net cash provided by operating activities $ 717,733 Less: Purchases of property and equipment 40,739 Adjusted non-GAAP free cash flow $ 676,994 Net c

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

    Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Twelve Months Ended September 30, US Dollars in $000s 2023 2022 Return on Invested Capital: GAAP consolidated EFO $ 401,950 $ 393,101 Amortization of intangible assets 33,320 32,763 5 Other 36,450 15,429 Adjusted non-GAAP consolidated

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

    Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Three Months Ended September 30, US Dollars in $000s 2023 2022 Adjusted Consolidated EBITDA GAAP consolidated net earnings $ 60,247 $ 57,316 Interest expense 13,874 12,376 Income tax expense 19,805 19,460 Depreciation and amortization

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

    Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Three Months Ended September 30, US Dollars in $000s 2023 2022 Adjusted North America Selling and Administrative Expenses: GAAP selling and administrative expenses $ 244,154 $ 249,745 Less: Other* 19,645 15,571 Adjusted non-GAAP selli

  28. Slide 28: 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 December 31, March 31, June 30, US Dollars in $000s, except per share data 2022 2021 2023 2022 2023 2022 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $

  29. Slide 29: 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 TTM Q2-21 TTM Q3-21 2021 TTM Q1-22 TTM Q2-22 TTM Q3-22 2022 TTM Q1-23 TTM Q2-23 TTM Q3-23 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 300,017 $ 321,686 $ 332,061

  30. Slide 30: 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

  31. Slide 31: Financial Results by Offering Category

    Financial Results by Offering Category US Dollars in $000s Q3-21 Q4-21 FY 2021 Q1-22 Q2-22 Q3-22 Q4-22 FY 2022 Q1-23 Q2-23 Q3-23 Consolidated IEI by Offering Category Hardware $ 1,592,495 $ 1,631,046 $ 5,889,510 $ 1,673,588 $ 1,731,116 $ 1,572,275 $ 1,473,916 $ 6,450,895 $ 1,328,845 $ 1,310,273 $ 1,

  32. Slide 32: 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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