Insight Enterprises, Inc. · NASDAQ:NSIT
Insight Enterprises — Q4 2020 Earnings Presentation
24 slides from Insight Enterprises's earnings presentation, Feb 11, 2021
Slide 1: Fourth Quarter and Full Year 2020 Earnings Conference Call and Webcast
Exhibit 99.2 Insight Enterprises, Inc. Fourth Quarter and Full Year 2020 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 • Disclosures • CEO Commentary • Fourth Quarter and Full Year 2020 Consolidated Financials • 2020 Full Year Highlights • Commitment to Long-Term Priorities • CFO Commentary • Fourth Quarter and Full Year 2020 Financial Results by Region • Business Strategy Impacts to Profitability • Cashflow
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 those related to Coronavirus strain
Slide 4: Q4 2020 Year over Year Results
Q4 2020 Year over Year Results Net Sales Gross Profit Gross Margin 0% YoY +1% YoY +30 bps YoY $0.34B 15.0% $2.29B 2019 2020 2019 2020 2019 2020 SG&A % of Net Sales Adj EFO* Adj Diluted EPS* -40 bps YoY +12% YoY +12% YoY $92M $1.76 11.2% 2019 2020 2019 2020 2019 2020 GAAP Earnings from operations $83
Slide 5: 2020 Full Year Financial Highlights
2020 Full Year Financial Highlights • Record net sales of $8.3 billion • 15.6% - New record gross margins • 20% - Cloud as a percent of gross profit • 130bps - Mix of Services gross profit growth (YOY) • 48% - Services gross profit as a percent of total gross profit • $356M - Cash Flow from Operatio
Slide 6: FY 2020 Year over Year Results
FY 2020 Year over Year Results Net Sales Gross Profit Gross Margin +8% YoY +14% YoY +90 bps YoY $8.34B $1.30B 15.6% 2019 2020 2019 2020 2019 2020 SG&A % of Net Sales Adj EFO* Adj Diluted EPS* +80 bps YoY +14% YoY +14% YoY 12.2% $322M $6.19 2019 2020 2019 2020 2019 2020 GAAP Earnings from operations
Slide 7: 2020 Full Year Highlights
2020 Full Year Highlights • Completed integration of PCM • Retired 9 ERP systems • Exited year with approximately $70 million in annualized run rate cost savings, ahead of schedule to meet 2-year target • Response to COVID-19 was solutions focused • Modernized online experience ensured strong client
Slide 8: Digital Innovation at Work
Digital Innovation at Work Product quality AI The challenge A manufacturer of commercial generators wanted to improve quality and reduce scrap. The company depended on operators for visual inspections during production, but most defects weren’t identified until final testing. The solution Insight Di
Slide 9: Solutions Focused
Solutions Focused Digital Innovation Cloud + Data Center Connected Workforce Transformation Supply Chain Optimization Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 9
Slide 10: Commitment to Long-Term Priorities
Commitment to Long-Term Priorities • Continue to innovate to capture market share in high growth areas • Develop and deliver solutions that drive better business outcomes for clients • Expand and scale business with strategic clients and end markets • Continue to optimize client experience • Deliver
Slide 11: CFO Commentary
CFO Commentary • Fourth Quarter and Full Year 2020 Financial Highlights by Region • Business Strategy Impacts to Profitability • Cashflow and Debt Covenants • 2020 Business Highlights Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved.
Slide 12: Q4 2020 North America | Financial Results
Q4 2020 North America | Financial Results Net Sales Gross Profit Gross Margin -1% YoY +1% YoY +20 bps YoY 14.8% $272M $1.84B 2019 2020 2019 2020 2019 2020 SG&A % of Net Sales Adj EFO* Sales Mix -50 bps YoY +13% YoY 13% $78M Hardware 20% Software 10.9% 67% Services 2019 2020 2019 2020 GAAP Earnings f
Slide 13: FY 2020 North America | Financial Results
FY 2020 North America | Financial Results Net Sales Gross Profit Gross Margin +10% YoY +17% YoY +90 bps YoY $6.62B $1.0B 15.4% 2019 2020 2019 2020 2019 2020 SG&A % of Net Sales Adj EFO* Sales Mix +100 bps YoY +15% YoY 14% $264M Hardware 12.0% 19% Software 67% Services 2019 2020 2019 2020 GAAP Earnin
Slide 14: Q4 2020 EMEA | Financial Results
Q4 2020 EMEA | Financial Results Net Sales Gross Profit Gross Margin -5% YoY (in constant $**) -3% YoY (in constant $**) +20 bps YoY 14.6% $0.40B $59M 2019 2020 2019 2020 2019 2020 SG&A % of Net Sales Adj EFO* Sales Mix +20 bps YoY +1% YoY (in constant $**) 11% $11M 37% Hardware 12.1% Software 52% S
Slide 15: FY 2020 EMEA | Financial Results
FY 2020 EMEA | Financial Results Net Sales Gross Profit Gross Margin +1% YoY (in constant $**) +3% YoY (in constant $**) +30 bps YoY $1.56B $236M 15.2% 2019 2020 2019 2020 2019 2020 SG&A % of Net Sales Adj EFO* Sales Mix +20 bps YoY +12% YoY (in constant $**) 11% 12.4% $46M Hardware 40% Software 49%
Slide 16: Q4 2020 APAC | Financial Results
Q4 2020 APAC | Financial Results Net Sales Gross Profit Gross Margin +24% YoY (in constant $**) +16% YoY (in constant $**) -190 bps YoY $45M $12M 25.5% 2019 2020 2019 2020 2019 2020 SG&A % of Net Sales Adj EFO* Sales Mix -350 bps YoY +58% YoY (in constant $**) $3M 32% 24% Hardware Software 18.2% Ser
Slide 17: FY 2020 APAC | Financial Results
FY 2020 APAC | Financial Results Net Sales Gross Profit Gross Margin -4% YoY (in constant $**) +8% YoY (in constant $**) +290 bps YoY $43M 25.0% $170M 2019 2020 2019 2020 2019 2020 SG&A % of Net Sales Adj EFO* Sales Mix +150 bps YoY +17% YoY (in constant $**) 17.8% $13M 19% Hardware 33% Software Ser
Slide 18: Q4 2020 | Cash Flows and Cash Cycle
Q4 2020 | Cash Flows and Cash Cycle Net cash from operations Adj Free Cash Flow* Cash Conversion Cycle -8 days YoY $435M 30 $356M 2019 2020 2019 2020 2019 2020 Days sales outstanding Days inventory outstanding Days purchases outstanding +8 days YoY -2 days YoY +14 days YoY 108 86 8 2019 2020 2019 20
Slide 19: Liquidity and Debt Covenants
Liquidity and Debt Covenants Fixed Charge Coverage Twelve Months Ended 400,000 342,746 Dec 31, 350,000 US Dollar in $000s 2020 2019 300,000 Adjusted Consolidated EBITDA: 250,000 Net Income $ 172,640 $ 159,407 200,000 4.69x Interest Expense 41,913 29,614 150,000 Taxes 55,812 52,309 100,000 73,065 Dep
Slide 20: 2020 Expense Controls
2020 Expense Controls • Reduced discretionary spending across the business • Right-sized operational and delivery platforms • Accelerated existing PCM integration plans • Exited the year with run-rate savings of $70 million • Cost discipline while investing in business • SG&A, excluding amortization
Slide 21: Full Year 2021 Outlook
Full Year 2021 Outlook • 2021 net sales expected to grow between 4% and 8% • Adjusted diluted earnings per share* are expected to be between $6.60 and $6.80 per share for the full year 2021 • Assumptions: • Interest expense between $25 and $28 million • Effective tax rate of 25% to 26% for the full
Slide 22: Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended Twelve Months Ended Dec 31, Dec 31, US Dollar in $000s, except per share data 2020 2019 2020 2019 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 83,042 $ 67,016 $ 271,575 $ 240,594 Amortizati
Slide 23: Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Three Months Ended Twelve Months Ended Dec 31, Dec 31, US Dollar in $000s 2020 2019 2020 2019 Adjusted North America Earnings from Operations: GAAP EFO from North America segment $ 70,545 $ 54,902 $ 219,198 $ 190,452 Amorti
Slide 24: Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Twelve Months Ended Dec 31, US Dollar in $000s 2020 2019 Adjusted free cash flow: Net cash provided by operating activities $ 355,582 $ 127,876 Purchases of property and equipment (24,184) (69,086) Net borrowings (repayment