Insight Enterprises, Inc. · NASDAQ:NSIT
Insight Enterprises — Q3 2021 Earnings Presentation
24 slides from Insight Enterprises's earnings presentation, Nov 4, 2021
Slide 1: Insight Enterprises, Inc. Third Quarter 2021 Earnings Conference Call
Insight Enterprises, Inc. Third Quarter 2021 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 • Commitment to Long-Term Priorities • Third Quarter 2021 Highlights • Cloud Migration – Shift to Digital Headquarters • Diverse Solutions Offerings • Business and Leadership Recognitions • CFO Commentary • Third Quarter 2021 Financial Highlights by Region • Cas
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: 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 in end markets • Continue to optimize client experience Insigh
Slide 5: Third Quarter 2021 Highlights and Expectations
Third Quarter 2021 Highlights and Expectations • Top line growth driven by hardware net sales which were up 36% compared to prior year • Gross margin 14.9% • GAAP EFO up 35% from last year • Adjusted EFO* up 30% from last year • Adjusted return on invested capital* 14.4%, up from 11.9% last year • H
Slide 6: Cloud Migration Enables Shift to Digital Headquarters
Cloud Migration Enables Shift to Digital Headquarters Business Challenges New cloud- • Client wanted to eliminate brick-and-mortar headquarters and based transition all headquartered employees to 100% remote work infrastructure • Transition on-premises data centers to the cloud Solution • Cloud Econ
Slide 7: Connectivity: Changing How Clients do Business
Connectivity: Changing How Clients do Business • Wireless connectivity becoming increasingly critical part of everyday life • Strategic partnerships create full suite of integrated network and security solutions • Insight and Cradlepoint partnership represents Insight’s commitment to offering innova
Slide 8: Outlook and Long-Term Commitments
Outlook and Long-Term Commitments • Remain optimistic about prospects for the supply chain and market recovery continuing to strengthen into 2022 • Increased outlook for 2021 • Continued progress toward long-term goals highlighted at 2019 Investor Day • Deliver on 5-year key initiatives* • Grow sale
Slide 9: CFO Commentary
CFO Commentary • Third Quarter 2021 Financial Highlights by Region • Cashflow and Debt Covenants • 2021 Outlook Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 9
Slide 10: Third Quarter 2021 Highlights
Third Quarter 2021 Highlights • Net Sales of $2.4 billion • Gross margin 14.9% • SG&A up 13.8% in US dollars, up 12.6% year over year in constant currency • 11.4% - GAAP SG&A as a percent of net sales • 11.1% - Adjusted SG&A as a percent of net sales* • GAAP EFO of $83 million • Adjusted EFO* of $94
Slide 11: Q3 2021 Year over Year Results
Q3 2021 Year over Year Results Net Sales Net Sales Gross Profit Gross Margin +26% YoY +25% YoY (in constant $**) +19% YoY -100 bps YoY $2.45B $2.45B $0.36B 14.9% 2020 2021 2020 2021 2020 2021 2020 2021 SG&A % of Net Sales Adjusted SG&A % of Net Sales* Adj EFO* Adj Diluted EPS* -130 bps YoY -110 bps
Slide 12: Q3 2021 North America | Financial Results
Q3 2021 North America | Financial Results Net Sales Gross Profit Gross Margin +30% YoY +20% YoY -120 bps YoY $296M $2.02B 14.7% 2020 2021 2020 2021 2020 2021 SG&A % of Net Sales Adj SG&A % of Net Sales* Adj EFO* Sales Mix -140 bps YoY -130 bps YoY +31% YoY 13% Hardware $84M 17% Software 10.9% 10.5%
Slide 13: Q3 2021 EMEA | Financial Results
Q3 2021 EMEA | Financial Results Net Sales Gross Profit Gross Margin +7% YoY (in constant $**) +6% YoY (in constant $**) -20 bps YoY $55M $0.38B 14.5% 2020 2021 2020 2021 2020 2021 SG&A % of Net Sales Adj EFO* Sales Mix -20 bps YoY +3% YoY (in constant $**) 11% $6M Hardware 42% 13.1% Software 47% Se
Slide 14: Q3 2021 APAC | Financial Results
Q3 2021 APAC | Financial Results Net Sales Gross Profit Gross Margin +21% YoY (in constant $**) +26% YoY (in constant $**) +110 bps YoY 28.4% $13M $46M 2020 2021 2020 2021 2020 2021 SG&A % of Net Sales Adj EFO* Sales Mix -80 bps YoY +52% YoY (in constant $**) 29% Hardware $4M 40% Software 20.0% Serv
Slide 15: Q3 2021 | Cash Flows and Cash Cycle
Q3 2021 | Cash Flows and Cash Cycle Net cash from operations Cash Conversion Cycle +11 days YoY 36 $-118M 2020 2021 2020 2021 Days sales outstanding Days inventory outstanding Days purchases outstanding -4 days YoY +0 days YoY -15 days YoY 10 104 78 2020 2021 2020 2021 2020 2021 * See Appendix for r
Slide 16: Liquidity and Debt Covenants
Liquidity and Debt Covenants Twelve Months Ended Fixed Charge Coverage Sep 30, 400,000 373,037 US Dollar in $000s 2021 2020 350,000 Adjusted Consolidated EBITDA: 300,000 Net Income $ 210,600 $ 162,202 250,000 Interest Expense 40,838 43,469 200,000 Taxes 70,930 49,912 4.27x 150,000 Depreciation and a
Slide 17: Full Year 2021 Outlook
Full Year 2021 Outlook • Adjusted diluted earnings per share* is expected to be between $7.00 and $7.10 per share for the full year 2021 • 2021 net sales expected to grow low double digits over prior year • Assumptions: • Interest expense between $25 and $28 million • Adjusted SG&A as a percent of n
Slide 18: Appendix
Appendix 18 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. 18
Slide 19: Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures* Three Months Ended Nine Months Ended Sep 30, Sep 30, US Dollar in $000s, except per share data 2021 2020 2021 2020 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 83,151 $ 61,482 $ 238,644 $ 188,533 Amortizatio
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 Nine Months Ended Sep 30, Sep 30, US Dollar in $000s 2021 2020 2021 2020 Adjusted North America Earnings from Operations: GAAP EFO from North America segment $ 74,269 $ 54,244 $ 192,309 $ 148,653 Amortiz
Slide 21: Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Twelve Months Ended Sep 30, US Dollar in $000s 2021 2020 Adjusted Return on Invested Capital: GAAP consolidated EFO $ 321,679 $ 255,549 Other 5,917 17,654 Adjusted non-GAAP consolidated EFO* 327,596 273,203 Income tax expen
Slide 22: Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Three Months Ended Sep 30, US Dollar in $000s 2021 2020 Adjusted Consolidated Selling and Administrative Expenses: GAAP selling and administrative expenses $ 278,998 $ 245,155 Less: Amorization of intangible assets (7,988)
Slide 23: Appendix - Convertible Senior Notes
Appendix - Convertible Senior Notes Insight’s policy elected for settlement of the convertible notes is principal/par value in cash with the excess being settled in shares resulting in dilution in GAAP reported Diluted Earnings Per Share (“DEPS”). The DEPS incremental shares for GAAP reporting purpo
Slide 24: Appendix - Convertible Senior Notes
Appendix - Convertible Senior Notes Insight Convertible Senior Notes - $350 Million Relevant NSIT stock prices: • Price at issuance - $51.56 • Conversion ratio price equivalent - $68.32 Triggered potential additional shares in GAAP DEPS* • Sales price conversion trigger - $88.82 • Bond hedge strike