Insight Enterprises, Inc. · NASDAQ:NSIT
Insight Enterprises — Investor Day (October 2022)
31 slides from Insight Enterprises's investor day presentation, Oct 11, 2022
Slide 1: Glynis Bryan
GLYNIS BRYAN
Slide 2: Ambition in Action
Slide 3: Why Insight
Why Insight Leading Solutions Above-market Increased cash generation Integrator profitable growth and value creation • A new category, offering a • Expand gross margins through • Strong cash generation differentiated value proposition laser focus on cloud and Insight core services • $300M share repu
Slide 4: Five-year performance
Five-year performance 2017 – June 30, 2022 TTM
Slide 5: Five-year performance 2017-2022 TTM
Five-year performance 2017-2022 TTM** ** Trailing twelve months as of 06/30/22 NET SALES EBITDA* $10.4B 9% CAGR vs. 2017 $USD in $455M 14% CAGR vs. 2017 4.1% 4.4% billions 4.5 % 4.0% $USD in $50 0 $9.4 $10.4 $40 0 3.5% millions 4.0 % $7.7 $455 $388 3.5 % $30 0 $6.7 $20 0 $306 3.0 % $10 0 $237 2.5 %
Slide 6: Five-year projections
Five-year projections Profitable growth and sustainable margin expansion 2022–2027
Slide 7: 2027 KPIs for success
2027 KPIs for success KPIs TTM Q2 2022 RESULTS 2027 PROJECTIONS EXISTING: EBITDA margin* 4.4% 6.5% - 7.0% ROIC* 15.7% >25% NEW METRICS: Core services GP | 5-year CAGR 14% 16% - 20% Cloud GP | 5-year CAGR 28% 16% - 20% EPS* | 5-year CAGR 19% 19% - 22% Free cash flow as a % of net income* Not meaningf
Slide 8: Key drivers
Key drivers Profitable growth and sustainable margin expansion Enablers • Insight core services GP growth • Sales transformation • Cloud GP growth • Portfolio optimization • Product and pricing optimization • Automation & efficiency Gross profit is a better metric to evaluate our performance and pro
Slide 9: Profitable growth and sustainable margin expansion
Profitable growth and sustainable margin expansion INSIGHT CORE CLOUD PRODUCT & PRICING SERVICES GP SERVICES OPTIMIZATION • Grow GP at > 2x product GP. • Grow GP at 2x product GP. • Increase share of wallet. • Focus our portfolio of offerings. • Accelerate digital through • Increase % integrated sol
Slide 10: Gross profit growth ($B)
Gross profit growth ($B) ** Trailing twelve months as of June 30, 2022 $USD in billions 10% - 12% CAGR vs. 2022** $3 $3 $2 $2 $1 $1.6 $1 $- 2022** Base Product Cloud Core + Partner Services Services Optimization Product Optimization 2027 Gross Profit GP GP GP GP GP Gross Profit
Slide 11: Enablers
Enablers SALES PORTFOLIO AUTOMATION TRANSFORMATION OPTIMIZATION
Slide 12: Sales transformation
Enablers Sales transformation SALES PORTFOLIO AUTOMATION TRANSFORMATION OPTIMIZATION • Compensation model incentivizes solutions selling. • Delivering benefits as expected • Expansion plans for 2023
Slide 13: Portfolio optimization
Enablers Portfolio optimization SALES PORTFOLIO AUTOMATION TRANSFORMATION OPTIMIZATION • Compensation model • Eliminate low-value incentivizes solutions offerings. selling. • Leverage strengths of • Delivering benefits as emerging partners. expected • Stay ahead of technology • Expansion plans for 2
Slide 14: Automation
Enablers Automation SALES PORTFOLIO AUTOMATION TRANSFORMATION OPTIMIZATION • Compensation model • Eliminate low-value • Leverage our IP and incentivizes solutions offerings. technology. selling. • Leverage strengths of • Focus on quick wins – • Delivering benefits as emerging partners. largest areas
Slide 15: ACCA Video
ACCA (Association of Chartered Certified Accountants) Video
Slide 16: Outcomes/benefits
Key drivers Outcomes/benefits All roads lead to higher solutions sales and margin expansion. • Improved pricing drives profitability. Strategic initiatives • Sales comp aligns with strategic priorities. work together to • Process optimization delivers efficiency. deliver outcomes. • Technology enabl
Slide 17: Sustainable margin expansion
Sustainable margin expansion Total Sales Growth Total Gross Continuous Operational Above Market Margin Expansion Improvements Core Cloud Product services Insight core Portfolio/pricin Sales Operating Automation & Digital & big Productivity services & cloud g optimization transformation leverage proc
Slide 18: EBITDA growth
EBITDA* growth ** Trailing twelve months as of June 30, 2022 $USD in millions 17% - 20% CAGR vs. 2022** $1,8 00 $1,6 00 $1,4 00 $1,2 00 $1,0 00 $80 0 $60 0 $40 0 $20 0 $455 $- EBITDA Base Product Cloud Core + Services Product Base & Investments EBITDA *Adjusted non-GAAP basis excludes (i) Partner Op
Slide 19: Debt
Debt ABL • $1.8B effective July 2022; increase of $600M • Matures July 2027 2 PRIMARY DEBT • Supports working capital needs INSTRUMENTS Convertible note • $350M • Coupon 0.75% fixed • Matures February 2025
Slide 20: Cash flow
Cash flow • 2019–2022 significant working capital swings related to hardware growth FREE CASH • Expect normalized cash generation in 2023 FLOW (FCF) • Capital expenditures in the range of $30M – $35M each year • Business generates a lot of cash Cash generation and debt capacity provide significant c
Slide 21: Capital allocation priorities
Capital allocation priorities Invest to accelerate Increase above-market growth Debt shareholder returns Organic M&A • Automation to increase • Seek out cultural / • Increase cash flow • Limited debt usage efficiency and capacity strategic / financial fit. generation. • Full capacity to • Scalable I
Slide 22: 2027 KPIs for success
2027 KPIs for success KPIs TTM Q2 2022 RESULTS 2027 PROJECTIONS EXISTING: EBITDA margin* 4.4% 6.5% - 7.0% ROIC* 15.7% >25% NEW METRICS: Core services GP | 5-year CAGR 14% 16% - 20% Cloud GP | 5-year CAGR 28% 16% - 20% EPS* | 5-year CAGR 19% 19% - 22% Free cash flow as a % of net income* Not meaningf
Slide 23: Why Insight
Why Insight Leading Solutions Above-market Increased cash generation Integrator profitable growth and value creation • A new category, offering a • Expand gross margins through • Strong cash generation differentiated value proposition laser focus on cloud and Insight core services • $300M share repu
Slide 24: Thank you
Thank you
Slide 25: ' s+ iin
' s+ iin
Slide 26: Appendix
Appendix
Slide 27: Assumptions
Assumptions General Capital • Lower growth in 2023 due to • Capital expenditures = $30M – $35M macro environment annually • Tax rate = 25% – 26% each year • M&A is not factored into projections • 2022 figures represent TTM June • $300M share repurchase 30, 2022 authorization across the 5-year period
Slide 28: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures * Assumed tax rate of 26.0%. ** Average of previous five quarters. *** Computed as Adjusted non-GAAP consolidated EFO, net of tax, divided by invested capital
Slide 29: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Slide 30: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Reconciliation of GAAP to Non-GAAP Financial Measures (continued) **Amoritzation of intangibles, a portion of interest (debt discount) and the associated income tax are part of non-gaap adjustments to earnings; only any incremental added for EBITDA.
Slide 31: Safe harbor statement
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 about future fin