Insight Enterprises, Inc. · NASDAQ:NSIT

Insight Enterprises — Q2 2023 Earnings Presentation

30 slides from Insight Enterprises's earnings presentation, Aug 3, 2023

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

    Insight Enterprises, Inc. Second 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 ◦ Second Quarter 2023 Highlights and Performance ◦ 2027 KPIs for Success ◦ Adjusted EBITDA and Debt Covenants ◦ 2023 Outlook ◦ Appendix Insight Proprietary & Confidential. D

  4. Slide 4: 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: Early AI Client Stories

    Early AI Client Stories The challenge: The solution: Information Synthesis • A recruiting firm wants to augment its recruiting • Insight Lens for GenAI will be deployed process to retrieve job postings and other hiring to quickly design, build and deploy for Faster Hiring: metadata to reduce time to

  7. Slide 7: Machine Learning Brings New Hope for Better Patient Outcomes

    Machine Learning Brings New Hope for Better Patient Outcomes The challenge: The solution: The results: • A healthcare service provider wanted • Insight engaged to conduct a viability and workflow • Significantly improved predictive targeted treatment recommendations for assessment of current hyperte

  8. Slide 8: Industry and Partner Recognitions

    Industry and Partner Recognitions No. 379 • U.S. Azure Cloud Native App Development Partner of the Year • U.S. Retail & Consumer Goods Partner of the Year • Australia Partner of the Year • Hong Kong Partner of the Year • Western Europe Managed Service Provider Partner of the Year • EMEA Surface Rese

  9. Slide 9: Q2 2023 Performance

    Q2 2023 Performance (Changes against prior year period) NET SALES GROSS PROFIT EARNINGS 51% services gross EARNINGS FROM OPERATIONS DILUTED EARNINGS PER SHARE $2.3B $433M $119M $2.17 profit as a % of total gross profit***, including 23% from cloud decrease of 14% decrease of 1% decrease of 8% decrea

  10. Slide 10: 2027 KPIs for Success

    2027 KPIs for Success KPIs TTM Q2 2023 2027 Adjusted EBITDA Margin* 5.0% 6.5% - 7.0% Adjusted ROIC* 15.6% >25% Core services GP | 5-year CAGR** 13% 16% - 20% Cloud GP | 5-year CAGR** 23% 16% - 20% Adjusted DEPS* | 5-year CAGR** 12% 19% - 22% Adjusted free cash flow 224% >90% as % of Adjusted net ear

  11. Slide 11: Net Sales

    NET SALES Trailing twelve months $2.3B decrease of 14% y/y $9.7B* decrease of 7% y/y $9.9B $10.4B $10.5B $10.4B $10.1B $9.7B $2.7B $2.5B $2.5B $2.3B $2.3B Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q1-22 Q2-22 Q3-22 2022 Q1-23 Q2-23 GROSS PROFIT Trailing twelve months $433M decrease of 1% y/y $1.6B* increase of

  12. Slide 12: Services Net Sales and Gross Profit

    SERVICES NET SALES Trailing twelve months $404M increase of 2% y/y $1.5B* increase of 7% y/y $1,452M $1,483M $1,499M $1,509M $1,357M $1,410M $394M $384M $404M $365M $356M Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q1-22 Q2-22 Q3-22 2022 Q1-23 Q2-23 SERVICES GROSS PROFIT Trailing twelve months $237M increase of 6

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

    INSIGHT CORE SERVICES GROSS PROFIT Trailing twelve months $72M increase of 7% y/y $257M* increase of 6% y/y 27% 27% 27% 27% 27% 28% 28% 28% 28% 30% 25% $241M $246M $253M $252M $257M Gross Margin $231M $67M $72M $59M $65M $61M Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q1-22 Q2-22 Q3-22 2022 Q1-23 Q2-23 CLOUD GRO

  14. Slide 14: Earnings from Operations

    EARNINGS FROM OPERATIONS Trailing twelve months $119M decrease of 8% y/y $400M* increase of 4% y/y $393M $414M $411M $400M $386M $345M $130M $119M $114M $90M $77M Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q1-22 Q2-22 Q3-22 2022 Q1-23 Q2-23 ADJUSTED EARNINGS FROM OPERATIONS** Trailing twelve months $130M decreas

  15. Slide 15: Diluted Earnings Per Share

    DILUTED EARNINGS PER SHARE Trailing twelve months $2.17 decrease of 10% y/y $7.22* increase of 1% y/y $7.22 $7.66 $7.47 $7.22 $7.15 $6.30 $2.42 $2.13 $2.17 $1.58 $1.34 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q1-22 Q2-22 Q3-22 2022 Q1-23 Q2-23 ADJUSTED DILUTED EARNINGS PER SHARE** Trailing twelve months $2.56

  16. Slide 16: Adjusted EBITDA and Debt Covenants

    Adjusted EBITDA and Debt Covenants Twelve Months Ended Fixed Charge Coverage June 30, US Dollars in $000s 2023 2022 $500,000 $478,012 Adjusted Consolidated EBITDA $450,000 Net earnings $ 265,247 $ 263,431 $400,000 $350,000 Interest expense 46,391 39,366 $300,000 Taxes 90,328 88,404 $250,000 3.98x De

  17. Slide 17: Full Year 2023 Outlook

    Full Year 2023 Outlook Assumptions: As of August 3, 2023 As of May 2, 2023 Gross profit growth low to mid single digit mid single digit Adjusted diluted EPS* $9.40 - $9.60 $9.90 - $10.10 Interest expense $46 - $48 million $46 - $50 million Effective tax rate 26% 25% - 26% Capital expenditures $45 -

  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: Q2 2023 YTD Financial Performance

    Q2 2023 YTD | Financial Performance Six Months Ended June 30, US Dollars in $000s, except for per share data 2023 2022 Change Consolidated IEI Net sales $4,673,543 $5,394,227 (13)% Net sales, constant currency* (12)% Product net sales $3,913,254 $4,659,529 (16)% Services net sales $760,289 $734,698

  20. Slide 20: Consolidated IEI Financial Metrics

    Consolidated IEI Financial Metrics Three Months Ended Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Twelve Months Ended Q1-22 Q2-22 Q3-22 2022 Q1-23 Q2-23 Net Sales YoY 23% 4% (2)% (12)% (14)% Net Sales YoY 18% 20% 15% 11% 2% (7)% Gross Margin 16.0% 15.8% 16.8% 16.8% 18.4% Gross Margin 15.1% 15.0% 15.3% 15.7% 16.3%

  21. Slide 21: Services Financial Metrics

    Services Financial Metrics Three Months Ended Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Twelve Months Ended Q1-22 Q2-22 Q3-22 2022 Q1-23 Q2-23 Services Revenue $394M $365M $384M $356M $404M Services Revenue $1,357M $1,410M $1,452M $1,483M $1,499M $1,509M Services Revenue YoY 16% 13% 9% 5% 2% 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 Six Months Ended June 30, June 30, US Dollars in $000s, except per share data 2023 2022 2021 2023 2022 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 118,611 $ 129,556 $ 88,469 196,072 $ 209,405 Amorti

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

    Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Three Months Ended June 30, US Dollars in $000s 2023 2022 Adjusted North America Earnings from Operations: GAAP EFO from North America segment $ 95,436 $ 104,273 Amortization of intangible assets 7,766 7,356 Other 1,757 4,027 Adjuste

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

    Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Twelve Months Ended June 30, US Dollars in $000s 2023 Adjusted Free Cash Flow: Net cash provided by operating activities $ 728,063 Less: Purchases of property and equipment 36,885 Adjusted non-GAAP free cash flow $ 691,178 Net cash u

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

    Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Twelve Months Ended June 30, US Dollars in $000s 2023 2022 Return on Invested Capital: GAAP consolidated EFO $ 400,367 $ 385,973 Amortization of intangible assets 33,658 31,765 5 Other 24,999 9,996 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 September 30, December 31, March 31, US Dollars in $000s, except per share data 2022 2021 2022 2021 2023 2022 Adjusted Consolidated Earnings from Operations: GAAP consolidated

  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 TTM Q1-21 TTM Q2-21 TTM Q3-21 2021 TTM Q1-22 TTM Q2-22 TTM Q3-22 2022 TTM Q1-23 TTM Q2-23 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 285,736 $ 300,017 $ 321,686

  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 Q2-21 Q3-21 Q4-21 FY 2021 Q1-22 Q2-22 Q3-22 Q4-22 FY 2022 Q1-23 Q2-23 Consolidated IEI by Offering Category Hardware $ 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 $ 1,328,845 $ 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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