Insight Enterprises, Inc. · NASDAQ:NSIT
Insight Enterprises — Q3 2019 Earnings Presentation
22 slides from Insight Enterprises's earnings presentation, Nov 6, 2019
Slide 1: Insight Enterprises Third Quarter 2019 Earnings Conference Call
Insight Enterprises Third Quarter 2019 Earnings Conference Call 1
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 statements about future trends in the
Slide 3: Agenda
Agenda • Opening Comments • Highlights • Third quarter 2019 consolidated results • PCM integration update • Case study • Strategic assets & priorities • Business Review • Third quarter 2019 financial results by region • Taxes and cash flow • Capital allocation priorities • Closing Comments & 2019 Gu
Slide 4: Q3 2019 Year over Year Results
Q3 2019 Year over Year Results Net Sales Gross Profit Gross Margin +9% YoY +18% YoY +100 bps YoY $1.91B $276M 14.4% 2018 2019 2018 2019 2018 2019 SG&A % of Net Sales Adj EFO* Adj Diluted EPS* +120 bps YoY 7% YoY +10% YoY $58.9M 11.7% $1.10 2018 2019 2018 2019 2018 2019 GAAP Earnings from operations
Slide 5: PCM Integration Timeline
PCM Integration Timeline Day 1 - 30 Day 31-120 Day 120 + • System integration plan • Brand migration • IT systems onboard • Integration complete • Leadership team • Team alignment • Common service delivery • $70 million of expected run rate platforms cost synergies by 2021 • Client / partner/ teamma
Slide 6: Solving Client Challenges through Digital Innovation
Solving Client Challenges through Digital Innovation The challenge • Translating financial services offerings into rich and engaging solutions • Attract and appeal to millennial generation The solution • Single back-end, multichannel conversational experience delivered via chatbot • Integrates with
Slide 7: Our Strategic Assets Support Continued Growth
Our Strategic Assets Support Continued Growth Strategic Assets Strategic Priorities Culture, People and Leadership • Continue to Innovate to capture share in high growth areas Innovation Led | Solution Area Expertise • Grow with solutions that drive business outcomes for clients Global Reach and Sca
Slide 8: Key Imperatives to Deliver Value
Key Imperatives to Deliver Value 8% – 10% (CAGR) 5.0% – 5.5% 19% – 21% 50% – 52% Grow Sales Faster Expand EBITDA Optimize Return on Grow Services Gross than the Market Margin Invested Capital Profit as % of Total GP Value Creation for Insight Shareholders, Clients, Partners and Teammates 8
Slide 9: Business Review
— nal Insight. Business Review
Slide 10: Change in methodology for Adjusted items
Change in methodology for Adjusted items Previous Methodology New Methodology US Dollar in $000s US Dollar in $000s Adjusted Consolidated Earnings from Operations: Q3 2019 Adjusted Consolidated Earnings from Operations: Q3 2019 GAAP consolidated EFO $ 44,422 GAAP consolidated EFO $ 44,422 Severance
Slide 11: Q3 2019 North America | Financial Results
Q3 2019 North America | Financial Results Net Sales Gross Profit Gross Margin +10% YoY +22% YoY +130 bps YoY $1.52B 14.4% $219M 2018 2019 2018 2019 2018 2019 SG&A % of Net Sales Adj EFO* Sales Mix +150 bps YoY +10% YoY 11.3% 13% $53.4M Hardware 20% Software 67% Services 2018 2019 2018 2019 GAAP Earn
Slide 12: Q3 2019 EMEA | Financial Results
Q3 2019 EMEA | Financial Results Net Sales Gross Profit Gross Margin +9% YoY in constant $** +7% YoY in constant $** -20 bps YoY 13.5% $356M $47.9M 2018 2019 2018 2019 2018 2019 SG&A % of Net Sales Adj EFO* Sales Mix -30 bps YoY -29% YoY in constant $** 9% 12.5% Hardware 39% $3.4M Software 52% Servi
Slide 13: Q3 2019 APAC | Financial Results
Q3 2019 APAC | Financial Results Net Sales Gross Profit Gross Margin +40% YoY in constant $** +21% YoY in constant $** -370 bps YoY $9.7M $41.7M 23.2% 2018 2019 2018 2019 2018 2019 SG&A % of Net Sales Adj EFO* Sales Mix -440 bps YoY +53% YoY in constant $** $2.1M 22% 31% Hardware 18.4% Software Serv
Slide 14: Cash Flows and Cash Conversion Cycle
Cash Flows and Cash Conversion Cycle Net cash from operations Adj Free Cash Flow* Cash Conversion Cycle On track with expectations On track with expectations +4 days YoY 42 $169M $55M 2018 2019 2018 2019 2018 2019 Days sales outstanding Days inventory outstanding Days purchases outstanding +22 days
Slide 15: Disciplined Capital Allocation Aligned with Shareholder Interests
Disciplined Capital Allocation Aligned with Shareholder Interests Scalable IT and service delivery platforms 1 Invest organically Digital Marketing and client facing tools Technical and sales talent 2 Pay down debt Maintain modest leverage Cultural / strategic / financial / integration 3 Pursue stra
Slide 16: Closing Comments & 2019 Guidance
Closing Comments & 2019 Guidance 16 16
Slide 17: 2019 Guidance
2019 Guidance • 2019 sales expected to grow between 9% and 11%, including PCM • Adjusted diluted earnings per share expected to be between $5.45 and $5.50 per share for the full year 2019 • Effective tax rate expected to be between 25% and 26% for Q4 2019 • Capital expenditures of $70 to $75 million
Slide 18: Appendix
Appendix 18
Slide 19: Reconciliation of GAAP to Adjusted Non-GAAP Financial Measures
Reconciliation of GAAP to Adjusted Non-GAAP Financial Measures Three Months Ended Nine Months Ended Sep 30, Sep 30, US Dollar in $000s, except per share data 2019 2018 2019 2018 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 44,422 $ 49,948 $ 173,578 $ 174,824 Severance and
Slide 20: Reconciliation of GAAP to Adjusted Non-GAAP Financial Measures
Reconciliation of GAAP to Adjusted Non-GAAP Financial Measures Three Months Ended Nine Months Ended Sep 30, Sep 30, US Dollar in $000s 2019 2018 2019 2018 Adjusted North America Earnings from Operations: GAAP EFO from North America segment $ 39,306 $ 44,094 $ 135,550 $ 141,261 Severance and restruct
Slide 21: Reconciliation of GAAP to Adjusted Non-GAAP Financial Measures
Reconciliation of GAAP to Adjusted Non-GAAP Financial Measures Nine Months Ended Sep 30, US Dollar in $000s 2019 2018 Adjusted free cash flow: Net cash provided by operating activities $ 168,595 $ 247,241 Purchases of property and equipment (16,922) (13,046) Net repayments under inventory financing
Slide 22: Reconciliation of GAAP to Adjusted Non-GAAP Financial Measures
Reconciliation of GAAP to Adjusted Non-GAAP Financial Measures Twelve Months Ended Sep 30, US Dollar in $000s 2019 2018 Return on invested capital: GAAP consolidated EFO $ 232,237 $ 220,362 Severance and restructuring expenses 4,427 5,500 Acquisition-related expenses 9,059 282 Adjusted non-GAAP cons