Slide 1: Insight Enterprises, Inc. Second Quarter 2019 Earnings Conference Call and Webcast
Insight Enterprises, Inc. Second Quarter 2019 Earnings Conference Call and Webcast 1 Insight Presentation Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved.
Slide 2: Agenda
Agenda • Opening Comments • Highlights • Second quarter 2019 consolidated financials • Case study • Forrester Wave recognition • PCM acquisition review • Business Review • Second quarter 2019 financial results by region • Taxes and cash flow • PCM acquisition forward looking update • Closing Comment
Slide 3: 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 statements about future trends in th
Slide 4: Highlights
Highlights 4 Insight Presentation Insight Insight Proprietary Proprietary & & Confidential. Confidential. Do Do Not Not Copy Copy or or Distribute. Distribute. © © 2019 2019 Insight Insight Direct Direct USA, USA, Inc. Inc. All All Rights Rights Reserved. Reserved. 4
Slide 5: Q2 2019 Year over Year Results
Q2 2019 Year over Year Results Net Sales Gross Profit Gross Margin 0% YoY +4% YoY +60 bps YoY $1.84B $275.4M 15.0% 2018 2019 2018 2019 2018 2019 Three Months Ended 6/30 Three Months Ended 6/30 Three Months Ended 6/30 Adjusted Earnings from operations* Adjusted Diluted EPS* SG&A as a % of Net Sales +
Slide 6: Digital Innovation case study
Digital Innovation case study Challenge • Reduce patient length of stay • Improve the overall patient experience Solution • Implemented role-based access control utilizing Microsoft Azure • Provided HIPPA-compliant encryption for enhanced security • Developed a unified data monitoring platform lever
Slide 7: Insight recognized in Forrester Wave
Insight recognized in Forrester Wave • Recognized as a Strong Performer for Midsize Agile Software Development Service Providers • Based on 22 criteria evaluated by Forrester • Insight included in the 13 most significant Agile development service providers. Key differentiators include helping client
Slide 8: Insight's Acquisition of PCM
Insight’s Acquisition of PCM • Insight to acquire PCM (Nasdaq: “PCMI”) for $35.00 per share • Enterprise value (net of cash and debt acquired) of approximately $581 million • Implying a synergized EBITDA multiple of ~ 4.5x* • Premium of 36% to 1-month average closing share price • Strengthens positi
Slide 9: Business Review
Business Review 9 Insight Presentation Insight Insight Proprietary Proprietary & & Confidential. Confidential. Do Do Not Not Copy Copy or or Distribute. Distribute. © © 2019 2019 Insight Insight Direct Direct USA, USA, Inc. Inc. All All Rights Rights Reserved. Reserved. 9
Slide 10: Q2 2019 North America | Financial Results
Q2 2019 North America | Financial Results Net Sales Gross Profit Gross Margin +3% YoY +4% YoY +30 bps YoY $199.1M 14.2% $1.41B 2018 2019 2018 2019 2018 2019 Three Months Ended 6/30 Three Months Ended 6/30 Three Months Ended 6/30 Adjusted Earnings from operations* SG&A as a % of Net Sales +40 bps YoY
Slide 11: Q2 2019 EMEA | Financial Results
Q2 2019 EMEA | Financial Results Net Sales Gross Profit Gross Margin -3% YoY constant currency** +9% YoY constant currency** +190 bps YoY 17.0% $379.2M $64.5M 2018 2019 2018 2019 2018 2019 Three Months Ended 6/30 Three Months Ended 6/30 Three Months Ended 6/30 Adjusted Earnings from operations* SG&A
Slide 12: Q2 2019 APAC | Financial Results
Q2 2019 APAC | Financial Results Net Sales Gross Profit Gross Margin -12% YoY constant currency** +7% YoY constant currency** +430 bps YoY 23.3% $11.9M $51.3M 2018 2019 2018 2019 2018 2019 Three Months Ended 6/30 Three Months Ended 6/30 Three Months Ended 6/30 Adjusted Earnings from operations* SG&A
Slide 13: Cash Flows and Cash Cycle
Cash Flows and Cash Cycle Net cash from operations Adjusted free cash flow* Cash conversion cycle On track with expectations On track with expectations +6 days YoY 26 days $183M $129M 2018 2019 2018 2019 2018 2019 Three Months Ended 6/30 Three Months Ended 6/30 Three Months Ended 6/30 Days sales out
Slide 14: PCM Acquisition Forward-Looking Update
PCM Acquisition Forward- Looking Update ** For modeling purposes only ** • We believe PCM could contribute $530M - $560M in Net Sales in Q4 2019 • We believe PCM could contribute $3M - $5M in Adjusted earnings from operations in Q4 2019 • Excludes deal related expenses and severance and restructurin
Slide 15: Closing Comments & 2019 Guidance
Closing Comments & 2019 Guidance 15 Insight Presentation Insight Insight Proprietary Proprietary & & Confidential. Confidential. Do Do Not Not Copy Copy or or Distribute. Distribute. © © 2019 2019 Insight Insight Direct Direct USA, USA, Inc. Inc. All All Rights Rights Reserved. Reserved. 15
Slide 16: Our priorities are clear
Our priorities are clear Drive profitable growth. Maintain discipline. Optimize use of capital. • Solution Areas focus • Profitability first • Organic growth • New client acquisition • Metric and information- • M&A focused on skills and based culture geographic markets • Digital marketing enablement
Slide 17: We are well positioned to compete
We are well positioned to compete Our value drivers • Deep knowledge in client-relevant solution areas with opportunity for growth • History of adapting business model to respond to new technology trends, including the cloud • Differentiated consulting, technology and managed services offerings • Ab
Slide 18: Closing Comments
Closing Comments This Outlook assumes: • 2019 sales expected to grow in the low single digit range • Adjusted diluted earnings per share expected to be between $4.85 and $4.95 per share for the full year 2019 • Effective tax rate expected between 25% and 26% over the balance of 2019 • Capital expend
Slide 19: Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended Six Months Ended June 30, June 30, US Dollar in $000s, except per share data 2019 2018 2019 2018 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 72,117 $ 74,437 $ 129,156 $ 124,876 Severance a
Slide 20: Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Three Months Ended Six Months Ended June 30, June 30, US Dollar in $000s 2019 2018 2019 2018 Adjusted North America Earnings from Operations: GAAP EFO from North America segment $ 50,918 $ 54,879 $ 96,244 $ 97,167 Severance
Slide 21: Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Three Months Ended June 30, US Dollar in $000s 2019 2018 Adjusted free cash flow: Net cash provided by operating activities $ 182,538 $ 350,955 Purchases of property and equipment (10,584) (10,644) Net repayments under inve
Slide 22: Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (PCM)
Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (PCM) Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 22