Slide 1: Insight Enterprises, Inc. Second Quarter 2020 Earnings Conference Call
Insight Enterprises, Inc. Second Quarter 2020 Earnings Conference Call and Webcast Insight Presentation Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2020 Insight Direct USA, Inc. All Rights Reserved. 1
Slide 2: Agenda
Agenda • Opening Comments • CEO Commentary • Q2 2020 Priorities • Second Quarter 2020 Financial Results • PCM Integration Update • Impact of COVID-19 on Client Engagement • Current Demand Environment • CFO Commentary • Recent Cost Reductions • Liquidity and Debt Covenants • Financial Results by Regi
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: Q2 2020 Priorities
Q2 2020 Priorities • Ensure safe work environment, ability to serve client • Reduce discretionary operating costs • Focus on cash flow generation • Optimize financial results Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2020 Insight Direct USA, Inc. All Rights Reserved. 4
Slide 5: Q2 2020 Year over Year Results
Q2 2020 Year over Year Results Net Sales Gross Profit Gross Margin +7% YoY +18% YoY +150 bps YoY $1.97B $0.32B 16.5% 2019 2020 2019 2020 2019 2020 SG&A % of Net Sales Adj EFO* Adj Diluted EPS* +140 bps YoY +15% YoY +11% YoY $92M $1.75 12.3% 2019 2020 2019 2020 2019 2020 GAAP Earnings from operations
Slide 6: PCM Integration Update
PCM Integration Update • Effectively completed the onboarding of all PCM clients to SAP platform • Aligned PCM team to North America and EMEA go-to-market structure • Well positioned to compete as single brand in marketplace • Expect ~$50-$55 million in annualized run-rate cost savings by year end I
Slide 7: Impact of COVID-19 on Client Engagement
Impact of COVID-19 on Client Engagement Supply Chain Connected Cloud + Data Center Digital Optimization Workforce Transformation Innovation Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2020 Insight Direct USA, Inc. All Rights Reserved. 7
Slide 8: Current Demand Environment
Current Demand Environment • Most markets remain in work from home mode • Hardware bookings in North America down> 10% year over year in July • Currently expect consolidated net sales to be up in the third quarter year over year due to the addition of PCM for additional two months this year • On a c
Slide 9: CFO Commentary
CFO Commentary • Recent Cost Reductions • Liquidity and Debt Covenants • Financial Results by Region • Taxes and Cash Flow Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2020 Insight Direct USA, Inc. All Rights Reserved. 9
Slide 10: Recent Cost Reductions
Recent Cost Reductions Reduced discretionary operating costs driven by: • Integration and demand • Travel and other discretionary • Variable compensation Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2020 Insight Direct USA, Inc. All Rights Reserved. 10
Slide 11: Liquidity and Debt Covenants
Liquidity and Debt Covenants Fixed Charge Coverage 300,000 270,134 Twelve Months Ended 250,000 Jun 30, US Dollar in $000s 2020 2019 200,000 Adjusted Consolidated EBITDA: 150,000 Net Income $ 150,428 $ 168,520 4.0x Interest Expense 42,370 21,119 100,000 69,837 Taxes 47,887 48,278 50,000 Depreciation
Slide 12: Q2 2020 North America | Financial Results
Q2 2020 North America | Financial Results Net Sales Gross Profit Gross Margin +10% YoY +23% YoY +170 bps YoY $1.54B $245M 15.9% 2019 2020 2019 2020 2019 2020 SG&A % of Net Sales Adj EFO* Sales Mix +190 bps YoY +15% YoY 15% 12.2% $67M Hardware 19% Software 66% Services 2019 2020 2019 2020 GAAP Earnin
Slide 13: Q2 2020 EMEA | Financial Results
Q2 2020 EMEA | Financial Results Net Sales Gross Profit Gross Margin +6% YoY in constant $** +8% YoY in constant $** +40 bps YoY $0.39B $68M 17.4% 2019 2020 2019 2020 2019 2020 SG&A % of Net Sales Adj EFO* Sales Mix -30 bps YoY +26% YoY in constant $** 13% Hardware 39% $21M Software 12.3% 48% Servic
Slide 14: Q2 2020 APAC | Financial Results
Q2 2020 APAC | Financial Results Net Sales Gross Profit Gross Margin -23% YoY in constant $** 0% YoY in constant $** +680 bps YoY $11M 30.1% $38M 2019 2020 2019 2020 2019 2020 SG&A % of Net Sales Adj EFO* Sales Mix +460 bps YoY -4% YoY in constant $** 18.9% 18% Hardware 40% Software $4M 42% Services
Slide 15: Q2 2020 | Cash Flows and Cash Cycle
Q2 2020 | Cash Flows and Cash Cycle Net cash from operations Adj Free Cash Flow* Cash Conversion Cycle -4 days YoY $498M $490M 22 2019 2020 2019 2020 2019 2020 Days sales outstanding Days inventory outstanding Days purchases outstanding +11 days YoY +1 days YoY +16 days YoY 124 12 114 2019 2020 2019
Slide 16: Closing Commentary
Closing Commentary Manage Today Transform Tomorrow Clients Suppliers Supply Connected Workforce Cloud + Data Center Digital Innovation Chain Optimization Transformation Product- Outcome- focused based CapEx OpEx Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2020 Insight Direct USA
Slide 17: Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended Six Months Ended Jun 30, Jun 30, US Dollar in $000s, except per share data 2020 2019 2020 2019 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 74,188 $ 72,117 $ 127,051 $ 129,156 Severance and
Slide 18: Non-GAAP Financial Measures (continued)
Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Three Months Ended Six Months Ended Jun 30, Jun 30, US Dollar in $000s 2020 2019 2020 2019 Adjusted North America Earnings from Operations: GAAP EFO from North America segment $ 52,068 $ 50,918 $ 94,409 $ 96,244 Severance a
Slide 19: Non-GAAP Financial Measures (continued)
Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Twelve Months Ended Jun 30, US Dollar in $000s 2020 2019 Return on invested capital: GAAP consolidated EFO $ 238,489 $ 237,762 Severance and restructuring expenses 13,529 2,448 Acquisition and integration related expenses 1