Insight Enterprises, Inc. Reports Third Quarter 2022 Results
Insight Enterprises, Inc. (NASDAQ: NSIT) reported strong financial results for Q3 2022, with gross profit rising 10% to $399.3 million and earnings from operations increasing 9% to $90.3 million. Net sales reached $2.53 billion, a 4% year-over-year growth. Adjusted diluted earnings per share improved by 6% to $1.99, despite foreign currency and interest rate challenges. The company expects low double-digit net sales growth and adjusted diluted EPS between $8.65 and $8.75 for the full year 2022. Cloud solutions drove a remarkable 27% increase, showcasing robust performance amid economic volatility.
- Gross profit increased by 10% year-over-year to $399.3 million.
- Earnings from operations rose 9% year-over-year to $90.3 million.
- Adjusted diluted earnings per share grew by 6%, reaching $1.99.
- Net sales increased 4% year-over-year to $2.53 billion.
- Cloud solutions segment grew by 27%.
- Earnings from operations in EMEA decreased 16% year-over-year.
- Gross profit in EMEA declined by 7% year-over-year.
-
Gross profit increased
10% year over year to$399.3 million -
Earnings from operations increased
9% year over year to$90.3 million -
Adjusted earnings from operations increased
14% year over year to$107.1 million -
Diluted earnings per share of
increased$1.58 5% year over year -
Adjusted diluted earnings per share of
increased$1.99 6% year over year
In the third quarter of 2022, net sales increased
“I am pleased to report that we delivered another quarter of solid results driven by double-digit gross profit growth and continued strength in cloud solutions which grew
KEY HIGHLIGHTS
Results for the Quarter:
-
Consolidated net sales for the third quarter of 2022 of
increased$2.53 billion 4% , year over year, when compared to the third quarter of 2021. Product net sales increased2% , year over year and services net sales increased13% , year over year.-
Net sales in
North America increased4% , year over year, to ;$2.10 billion -
Product net sales increased
3% , year over year, to ;$1.80 billion -
Services net sales increased
14% , year over year, to ;$298.7 million
-
Product net sales increased
-
Net sales in EMEA was relatively flat, year to year, at
; and$379.6 million -
Net sales in APAC increased
19% , year over year, to .$54.9 million
-
Net sales in
-
Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales were up
6% , year over year, with growth in net sales inNorth America , EMEA and APAC of4% ,16% and27% , respectively, year over year. -
Consolidated gross profit increased to
, an increase of$399.3 million 10% compared to the third quarter of 2021, with consolidated gross margin expanding 90 basis points to15.8% of net sales. Product gross profit increased9% , year over year, and services gross profit increased10% , year over year.-
Gross profit in
North America increased12% , year over year, to ($332.7 million 15.8% gross margin); -
Gross profit in EMEA decreased
7% , year to year, to ($51.8 million 13.6% gross margin); and -
Gross profit in APAC increased
13% , year over year, to ($14.8 million 26.9% gross margin).
-
Gross profit in
-
Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit was up
11% , year over year, with gross profit growth inNorth America , EMEA and APAC of13% ,9% and21% , respectively, year over year. -
Consolidated earnings from operations increased
9% compared to the third quarter of 2021 to , or$90.3 million 3.6% of net sales.-
Earnings from operations in
North America increased11% , year over year, to , or$82.3 million 3.9% of net sales; -
Earnings from operations in EMEA decreased
16% , year to year, to , or$4.2 million 1.1% of net sales; and -
Earnings from operations in APAC decreased
2% , year to year, to , or$3.8 million 6.9% of net sales.
-
Earnings from operations in
-
Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations were up
10% , year over year, with increased earnings from operations inNorth America and APAC of11% and5% , year over year, respectively, partially offset by decreased earnings from operations in EMEA of2% , year to year. -
Adjusted earnings from operations increased
14% compared to the third quarter of 2021 to , or$107.1 million 4.2% of net sales.-
Adjusted earnings from operations in
North America increased18% , year over year, to , or$98.5 million 4.7% of net sales; -
Adjusted earnings from operations in EMEA decreased
21% , year to year, to , or$4.6 million 1.2% of net sales; and -
Adjusted earnings from operations in APAC decreased
2% , year to year, to , or$3.9 million 7.1% of net sales.
-
Adjusted earnings from operations in
-
Excluding the effects of fluctuating foreign currency exchange rates, Adjusted consolidated earnings from operations were up
16% , year over year, with increased Adjusted earnings from operations inNorth America and APAC of18% and5% , respectively, year over year, partially offset by decreased Adjusted earnings from operations in EMEA of8% , year to year. -
Consolidated net earnings and diluted earnings per share for the third quarter of 2022 were
and$57.3 million , respectively, at an effective tax rate of$1.58 25.3% . -
Adjusted consolidated net earnings and Adjusted diluted earnings per share for the third quarter of 2022 were
and$69.8 million , respectively. Excluding the effects of fluctuating foreign currency exchange rates, Adjusted diluted earnings per share was up$1.99 8% , year over year.
In discussing financial results for the three and nine months ended
In some instances, the Company refers to changes in net sales, gross profit, earnings from operations and Adjusted diluted earnings per share on a consolidated basis and in
The tax effect of Adjusted amounts referenced herein were computed using the statutory tax rate for the taxing jurisdictions in the operating segment in which the related expenses were recorded, adjusted for the effects of valuation allowances on net operating losses in certain jurisdictions.
GUIDANCE
For the full year 2022, the Company expects to deliver low double digit net sales growth and Adjusted diluted earnings per share is expected to be between
This outlook assumes
-
interest expense between
and$35 ;$40 million -
an effective tax rate of
25% to26% for the full year 2022; -
capital expenditures of
to$65 ; and$70 million - an average share count for the full year of 35.1 to 35.2 million shares after an estimated partial completion of our planned repurchase under our current authorization.
This outlook excludes acquisition-related intangibles amortization expense of approximately
CONFERENCE CALL AND WEBCAST
The Company will host a conference call and live web cast today at
USE OF NON-GAAP FINANCIAL MEASURES
The non-GAAP financial measures are referred to as “Adjusted”. Adjusted earnings from operations, Adjusted net earnings and Adjusted diluted earnings per share exclude (i) severance and restructuring expenses, (ii) certain executive recruitment and hiring related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration related expenses, and (vi) the tax effects of each of these items, as applicable. Adjusted net earnings and Adjusted diluted earnings per share for the three and nine months ended
These non-GAAP measures are used by the Company and its management to evaluate financial performance against budgeted amounts, to calculate incentive compensation, to assist in forecasting future performance and to compare the Company’s results to those of the Company’s competitors. The Company believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency, facilitate comparisons to prior periods and the Company’s competitors’ results and assist in forecasting performance for future periods. These non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
FINANCIAL SUMMARY TABLE (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) |
||||||||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
change |
|
|
2022 |
|
|
|
2021 |
|
|
change |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Products |
|
$ |
2,169,197 |
|
|
$ |
2,124,239 |
|
|
2 |
% |
|
$ |
6,828,726 |
|
|
$ |
5,906,437 |
|
|
16 |
% |
Services |
|
$ |
365,157 |
|
|
$ |
323,282 |
|
|
13 |
% |
|
$ |
1,099,855 |
|
|
$ |
963,653 |
|
|
14 |
% |
Total net sales |
|
$ |
2,534,354 |
|
|
$ |
2,447,521 |
|
|
4 |
% |
|
$ |
7,928,581 |
|
|
$ |
6,870,090 |
|
|
15 |
% |
Gross profit |
|
$ |
399,258 |
|
|
$ |
364,545 |
|
|
10 |
% |
|
$ |
1,216,008 |
|
|
$ |
1,062,702 |
|
|
14 |
% |
Gross margin |
|
|
15.8 |
% |
|
|
14.9 |
% |
|
90 bps |
|
|
15.3 |
% |
|
|
15.5 |
% |
|
(20 bps) |
||
Selling and administrative expenses |
|
$ |
308,253 |
|
|
$ |
278,998 |
|
|
10 |
% |
|
$ |
911,894 |
|
|
$ |
827,275 |
|
|
10 |
% |
Severance and restructuring expenses |
|
$ |
720 |
|
|
$ |
2,396 |
|
|
(70 |
%) |
|
$ |
2,784 |
|
|
$ |
(3,217 |
) |
|
> |
|
Acquisition and integration related expenses |
|
$ |
6 |
|
|
$ |
— |
|
|
* |
|
$ |
1,646 |
|
|
|
— |
|
|
* |
||
Earnings from operations |
|
$ |
90,279 |
|
|
$ |
83,151 |
|
|
9 |
% |
|
$ |
299,684 |
|
|
$ |
238,644 |
|
|
26 |
% |
Net earnings |
|
$ |
57,316 |
|
|
$ |
55,483 |
|
|
3 |
% |
|
$ |
203,131 |
|
|
$ |
157,212 |
|
|
29 |
% |
Diluted earnings per share |
|
$ |
1.58 |
|
|
$ |
1.51 |
|
|
5 |
% |
|
$ |
5.53 |
|
|
$ |
4.27 |
|
|
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Products |
|
$ |
1,801,128 |
|
|
$ |
1,756,775 |
|
|
3 |
% |
|
$ |
5,530,475 |
|
|
$ |
4,675,581 |
|
|
18 |
% |
Services |
|
$ |
298,709 |
|
|
$ |
263,101 |
|
|
14 |
% |
|
$ |
881,311 |
|
|
$ |
758,705 |
|
|
16 |
% |
Total net sales |
|
$ |
2,099,837 |
|
|
$ |
2,019,876 |
|
|
4 |
% |
|
$ |
6,411,786 |
|
|
$ |
5,434,286 |
|
|
18 |
% |
Gross profit |
|
$ |
332,696 |
|
|
$ |
295,982 |
|
|
12 |
% |
|
$ |
983,046 |
|
|
$ |
828,368 |
|
|
19 |
% |
Gross margin |
|
|
15.8 |
% |
|
|
14.7 |
% |
|
110 bps |
|
|
15.3 |
% |
|
|
15.2 |
% |
|
10 bps |
||
Selling and administrative expenses |
|
$ |
249,745 |
|
|
$ |
219,714 |
|
|
14 |
% |
|
$ |
728,833 |
|
|
$ |
640,420 |
|
|
14 |
% |
Severance and restructuring expenses |
|
$ |
683 |
|
|
$ |
1,999 |
|
|
(66 |
%) |
|
$ |
1,472 |
|
|
$ |
(4,361 |
) |
|
> |
|
Acquisition and integration related expenses |
|
$ |
6 |
|
|
$ |
— |
|
|
* |
|
$ |
1,646 |
|
|
$ |
— |
|
|
* |
||
Earnings from operations |
|
$ |
82,262 |
|
|
$ |
74,269 |
|
|
11 |
% |
|
$ |
251,095 |
|
|
$ |
192,309 |
|
|
31 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales Mix |
|
|
|
|
|
** |
|
|
|
|
|
|
||||||||||
Hardware |
|
|
67 |
% |
|
|
70 |
% |
|
(1 |
%) |
|
|
69 |
% |
|
|
68 |
% |
|
19 |
% |
Software |
|
|
19 |
% |
|
|
17 |
% |
|
17 |
% |
|
|
17 |
% |
|
|
18 |
% |
|
14 |
% |
Services |
|
|
14 |
% |
|
|
13 |
% |
|
14 |
% |
|
|
14 |
% |
|
|
14 |
% |
|
16 |
% |
|
|
|
100 |
% |
|
|
100 |
% |
|
4 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EMEA |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Products |
|
$ |
335,866 |
|
|
$ |
339,513 |
|
|
(1 |
%) |
|
$ |
1,187,272 |
|
|
$ |
1,125,299 |
|
|
6 |
% |
Services |
|
$ |
43,708 |
|
|
$ |
41,935 |
|
|
4 |
% |
|
$ |
150,066 |
|
|
$ |
152,359 |
|
|
(2 |
%) |
Total net sales |
|
$ |
379,574 |
|
|
$ |
381,448 |
|
|
— |
% |
|
$ |
1,337,338 |
|
|
$ |
1,277,658 |
|
|
5 |
% |
Gross profit |
|
$ |
51,772 |
|
|
$ |
55,447 |
|
|
(7 |
%) |
|
$ |
186,089 |
|
|
$ |
195,011 |
|
|
(5 |
%) |
Gross margin |
|
|
13.6 |
% |
|
|
14.5 |
% |
|
(90 bps) |
|
|
13.9 |
% |
|
|
15.3 |
% |
|
(140 bps) |
||
Selling and administrative expenses |
|
$ |
47,527 |
|
|
$ |
50,062 |
|
|
(5 |
%) |
|
$ |
151,225 |
|
|
$ |
159,466 |
|
|
(5 |
%) |
Severance and restructuring expenses |
|
$ |
35 |
|
|
$ |
397 |
|
|
(91 |
%) |
|
$ |
1,310 |
|
|
$ |
1,135 |
|
|
15 |
% |
Earnings from operations |
|
$ |
4,210 |
|
|
$ |
4,988 |
|
|
(16 |
%) |
|
$ |
33,554 |
|
|
$ |
34,410 |
|
|
(2 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales Mix |
|
|
|
|
|
** |
|
|
|
|
|
|
||||||||||
Hardware |
|
|
40 |
% |
|
|
42 |
% |
|
(6 |
%) |
|
|
39 |
% |
|
|
41 |
% |
|
(2 |
%) |
Software |
|
|
49 |
% |
|
|
47 |
% |
|
3 |
% |
|
|
50 |
% |
|
|
47 |
% |
|
12 |
% |
Services |
|
|
11 |
% |
|
|
11 |
% |
|
4 |
% |
|
|
11 |
% |
|
|
12 |
% |
|
(2 |
%) |
|
|
|
100 |
% |
|
|
100 |
% |
|
— |
% |
|
|
100 |
% |
|
|
100 |
% |
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
APAC |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Products |
|
$ |
32,203 |
|
|
$ |
27,951 |
|
|
15 |
% |
|
$ |
110,979 |
|
|
$ |
105,557 |
|
|
5 |
% |
Services |
|
$ |
22,740 |
|
|
$ |
18,246 |
|
|
25 |
% |
|
$ |
68,478 |
|
|
$ |
52,589 |
|
|
30 |
% |
Total net sales |
|
$ |
54,943 |
|
|
$ |
46,197 |
|
|
19 |
% |
|
$ |
179,457 |
|
|
$ |
158,146 |
|
|
13 |
% |
Gross profit |
|
$ |
14,790 |
|
|
$ |
13,116 |
|
|
13 |
% |
|
$ |
46,873 |
|
|
$ |
39,323 |
|
|
19 |
% |
Gross margin |
|
|
26.9 |
% |
|
|
28.4 |
% |
|
(150 bps) |
|
|
26.1 |
% |
|
|
24.9 |
% |
|
120 bps |
||
Selling and administrative expenses |
|
$ |
10,981 |
|
|
$ |
9,222 |
|
|
19 |
% |
|
$ |
31,836 |
|
|
$ |
27,389 |
|
|
16 |
% |
Severance and restructuring expenses |
|
$ |
2 |
|
|
$ |
— |
|
|
* |
|
$ |
2 |
|
|
$ |
9 |
|
|
(78 |
%) |
|
Earnings from operations |
|
$ |
3,807 |
|
|
$ |
3,894 |
|
|
(2 |
%) |
|
$ |
15,035 |
|
|
$ |
11,925 |
|
|
26 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales Mix |
|
|
|
|
|
** |
|
|
|
|
|
|
||||||||||
Hardware |
|
|
30 |
% |
|
|
29 |
% |
|
23 |
% |
|
|
25 |
% |
|
|
22 |
% |
|
28 |
% |
Software |
|
|
29 |
% |
|
|
31 |
% |
|
8 |
% |
|
|
37 |
% |
|
|
45 |
% |
|
(6 |
%) |
Services |
|
|
41 |
% |
|
|
40 |
% |
|
25 |
% |
|
|
38 |
% |
|
|
33 |
% |
|
30 |
% |
|
|
|
100 |
% |
|
|
100 |
% |
|
19 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
13 |
% |
* Percentage change not considered meaningful. |
** Change in sales mix represents growth/decline in category net sales on a |
FORWARD-LOOKING INFORMATION
Certain statements in this release and the related conference call, web cast and presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including those related to the Company’s future responses to and the potential impact of coronavirus strain COVID-19 (“COVID-19”) on the Company, the Company’s future financial performance and results of operations, including net sales growth, Adjusted diluted earnings per share, and Adjusted selling and administrative expenses, the Company’s anticipated effective tax rate, capital expenditures, and expected average share count, the Company’s expectations that note holders will not convert the Company’s convertible senior notes in the near term, the Company’s expectations regarding cash flow, the Company’s expectations regarding current supply constraints and shipment of backlog, future trends in the IT market, the Company’s business strategy and strategic initiatives, which are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. There can be no assurances that the results discussed by the forward-looking statements will be achieved, and actual results may differ materially from those set forth in the forward-looking statements. Some of the important factors that could cause the Company’s actual results to differ materially from those projected in any forward-looking statements include, but are not limited to, the following, which are discussed in the Company’s filings with the
- actions of the Company’s competitors, including manufacturers and publishers of products the Company sells;
- the Company’s reliance on its partners for product availability, competitive products to sell and marketing funds and purchasing incentives, which can change significantly in the amounts made available and in the requirements year over year;
- the Company’s ability to keep pace with rapidly evolving technological advances and the evolving competitive marketplace;
- the duration and severity of the COVID-19 pandemic and its effects on the Company’s business, results of operations and financial condition, as well as the widespread outbreak of any other illnesses or communicable diseases;
-
general economic conditions, economic uncertainties and changes in geopolitical conditions including the possibility of a recession or as a result of Russia’s invasion of
Ukraine ; - changes in the IT industry and/or rapid changes in technology;
- supply constraints for hardware, including devices, and the potential impact on our inventory management and warehouse operations relating to the easing of these constraints;
- accounts receivable risks, including increased credit loss experience or extended payment terms with the Company’s clients;
- the Company’s reliance on independent shipping companies;
- the risks associated with the Company’s international operations;
- natural disasters or other adverse occurrences;
- disruptions in the Company’s IT systems and voice and data networks;
- cyberattacks or breaches of data privacy and security regulations;
- intellectual property infringement claims and challenges to the Company’s registered trademarks and trade names;
- legal proceedings, client audits and failure to comply with laws and regulations;
- failure to comply with the terms and conditions of the Company’s commercial and public sector contracts;
- exposure to changes in, interpretations of, or enforcement trends related to tax rules and regulations;
- the Company’s potential to draw down a substantial amount of indebtedness;
- the conditional conversion feature of the Company’s convertible senior notes, which has historically been triggered, may adversely affect the Company’s financial condition and operating results;
- the Company is subject to counterparty risk with respect to certain hedge and warrant transactions entered into in connection with the issuance of the convertible senior notes;
- risks associated with the discontinuation of LIBOR as a benchmark rate;
- increased debt and interest expense and the possibility of decreased availability of funds under the Company’s financing facilities;
- possible significant fluctuations in the Company’s future operating results as well as seasonality and variability in client demands;
- the Company’s dependence on certain key personnel and the Company’s ability to attract, train and retain skilled teammates;
- risks associated with the integration and operation of acquired businesses, including the achievement of expected synergies and benefits; and
- future sales of the Company’s common stock or equity-linked securities in the public market could lower the market price for our common stock.
Additionally, there may be other risks that are otherwise described from time to time in the reports that the Company files with the
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net sales: |
|
|
|
|
|
|
|
|||||||
Products |
$ |
2,169,197 |
|
$ |
2,124,239 |
|
|
$ |
6,828,726 |
|
|
$ |
5,906,437 |
|
Services |
|
365,157 |
|
|
323,282 |
|
|
|
1,099,855 |
|
|
|
963,653 |
|
Total net sales |
|
2,534,354 |
|
|
2,447,521 |
|
|
|
7,928,581 |
|
|
|
6,870,090 |
|
Costs of goods sold: |
|
|
|
|
|
|
|
|||||||
Products |
|
1,956,679 |
|
|
1,930,096 |
|
|
|
6,199,783 |
|
|
|
5,367,083 |
|
Services |
|
178,417 |
|
|
152,880 |
|
|
|
512,790 |
|
|
|
440,305 |
|
Total costs of goods sold |
|
2,135,096 |
|
|
2,082,976 |
|
|
|
6,712,573 |
|
|
|
5,807,388 |
|
Gross profit |
|
399,258 |
|
|
364,545 |
|
|
|
1,216,008 |
|
|
|
1,062,702 |
|
Operating expenses: |
|
|
|
|
|
|
|
|||||||
Selling and administrative expenses |
|
308,253 |
|
|
278,998 |
|
|
|
911,894 |
|
|
|
827,275 |
|
Severance and restructuring expenses, net |
|
720 |
|
|
2,396 |
|
|
|
2,784 |
|
|
|
(3,217 |
) |
Acquisition and integration related expenses |
|
6 |
|
|
— |
|
|
|
1,646 |
|
|
|
— |
|
Earnings from operations |
|
90,279 |
|
|
83,151 |
|
|
|
299,684 |
|
|
|
238,644 |
|
Non-operating (income) expense: |
|
|
|
|
|
|
|
|||||||
Interest expense, net |
|
11,713 |
|
|
10,332 |
|
|
|
29,164 |
|
|
|
29,884 |
|
Other expense (income), net |
|
1,790 |
|
|
(1,589 |
) |
|
|
(741 |
) |
|
|
(855 |
) |
Earnings before income taxes |
|
76,776 |
|
|
74,408 |
|
|
|
271,261 |
|
|
|
209,615 |
|
Income tax expense |
|
19,460 |
|
|
18,925 |
|
|
|
68,130 |
|
|
|
52,403 |
|
Net earnings |
$ |
57,316 |
|
$ |
55,483 |
|
|
$ |
203,131 |
|
|
$ |
157,212 |
|
|
|
|
|
|
|
|
|
|||||||
Net earnings per share: |
|
|
|
|
|
|
|
|||||||
Basic |
$ |
1.64 |
|
$ |
1.59 |
|
|
$ |
5.80 |
|
|
$ |
4.49 |
|
Diluted |
$ |
1.58 |
|
$ |
1.51 |
|
|
$ |
5.53 |
|
|
$ |
4.27 |
|
|
|
|
|
|
|
|
|
|||||||
Shares used in per share calculations: |
|
|
|
|
|
|
|
|||||||
Basic |
|
34,952 |
|
|
34,855 |
|
|
|
35,003 |
|
|
|
35,050 |
|
Diluted |
|
36,340 |
|
|
36,745 |
|
|
|
36,714 |
|
|
|
36,860 |
|
CONSOLIDATED BALANCE SHEETS (In THOUSANDS) (UNAUDITED) |
|||||||
|
|
|
|
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
136,653 |
|
|
$ |
103,840 |
|
Accounts receivable, net |
|
3,047,739 |
|
|
|
2,936,732 |
|
Inventories |
|
367,913 |
|
|
|
328,101 |
|
Other current assets |
|
232,355 |
|
|
|
199,638 |
|
Total current assets |
|
3,784,660 |
|
|
|
3,568,311 |
|
|
|
|
|
||||
Property and equipment, net |
|
201,269 |
|
|
|
176,263 |
|
|
|
493,618 |
|
|
|
428,346 |
|
Intangible assets, net |
|
211,806 |
|
|
|
214,788 |
|
Other assets |
|
306,361 |
|
|
|
301,372 |
|
|
$ |
4,997,714 |
|
|
$ |
4,689,080 |
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable – trade |
$ |
1,525,638 |
|
|
$ |
1,779,854 |
|
Accounts payable – inventory financing facilities |
|
331,982 |
|
|
|
311,878 |
|
Accrued expenses and other current liabilities |
|
414,822 |
|
|
|
423,489 |
|
Current portion of long-term debt |
|
594 |
|
|
|
36 |
|
Total current liabilities |
|
2,273,036 |
|
|
|
2,515,257 |
|
|
|
|
|
||||
Long-term debt |
|
783,723 |
|
|
|
361,570 |
|
Deferred income taxes |
|
36,723 |
|
|
|
47,073 |
|
Other liabilities |
|
283,441 |
|
|
|
255,953 |
|
|
|
3,376,923 |
|
|
|
3,179,853 |
|
Stockholders’ equity: |
|
|
|
||||
Preferred stock |
|
— |
|
|
|
— |
|
Common stock |
|
348 |
|
|
|
349 |
|
Additional paid-in capital |
|
330,726 |
|
|
|
368,282 |
|
Retained earnings |
|
1,366,124 |
|
|
|
1,167,690 |
|
Accumulated other comprehensive loss – foreign currency translation adjustments |
|
(76,407 |
) |
|
|
(27,094 |
) |
Total stockholders’ equity |
|
1,620,791 |
|
|
|
1,509,227 |
|
|
$ |
4,997,714 |
|
|
$ |
4,689,080 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED) |
|||||||
|
|
||||||
|
Nine Months Ended
|
||||||
|
|
2022 |
|
|
|
2021 |
|
Cash flows from operating activities: |
|
|
|
||||
Net earnings |
$ |
203,131 |
|
|
$ |
157,212 |
|
Adjustments to reconcile net earnings to net cash (used in) operating activities: |
|
|
|
||||
Depreciation and amortization |
|
42,204 |
|
|
|
42,151 |
|
Provision for losses on accounts receivable |
|
4,295 |
|
|
|
5,781 |
|
Non-cash stock-based compensation |
|
16,524 |
|
|
|
13,950 |
|
Deferred income taxes |
|
(5,554 |
) |
|
|
3,374 |
|
Amortization of debt discount and issuance costs |
|
4,894 |
|
|
|
12,615 |
|
Other adjustments |
|
933 |
|
|
|
(4,753 |
) |
Changes in assets and liabilities: |
|
|
|
||||
Increase in accounts receivable |
|
(230,049 |
) |
|
|
(85,853 |
) |
Increase in inventories |
|
(51,526 |
) |
|
|
(88,119 |
) |
Increase in other assets |
|
(14,926 |
) |
|
|
(20,844 |
) |
Decrease in accounts payable |
|
(171,257 |
) |
|
|
(119,525 |
) |
Decrease in accrued expenses and other liabilities |
|
(4,554 |
) |
|
|
(33,777 |
) |
Net cash (used in) operating activities: |
|
(205,885 |
) |
|
|
(117,788 |
) |
Cash flows from investing activities: |
|
|
|
||||
Proceeds from sale of assets |
|
1,318 |
|
|
|
29,221 |
|
Purchases of property and equipment |
|
(59,270 |
) |
|
|
(28,011 |
) |
Acquisitions, net of cash and cash equivalents acquired |
|
(68,248 |
) |
|
|
— |
|
Net cash (used in) provided by investing activities: |
|
(126,200 |
) |
|
|
1,210 |
|
Cash flows from financing activities: |
|
|
|
||||
Borrowings on ABL revolving credit facility |
|
3,825,923 |
|
|
|
3,167,044 |
|
Repayments on ABL revolving credit facility |
|
(3,433,629 |
) |
|
|
(3,085,044 |
) |
Net borrowings under inventory financing facilities |
|
23,017 |
|
|
|
76,422 |
|
Repurchases of common stock |
|
(25,008 |
) |
|
|
(50,000 |
) |
Other payments |
|
(12,798 |
) |
|
|
(9,330 |
) |
Net cash provided by financing activities: |
|
377,505 |
|
|
|
99,092 |
|
Foreign currency exchange effect on cash, cash equivalents and restricted cash balances |
|
(12,710 |
) |
|
|
(3,601 |
) |
Increase (decrease) in cash, cash equivalents and restricted cash |
|
32,710 |
|
|
|
(21,087 |
) |
Cash, cash equivalents and restricted cash at beginning of period |
|
105,977 |
|
|
|
130,582 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
138,687 |
|
|
$ |
109,495 |
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) |
||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Adjusted Consolidated Earnings from Operations: |
|
|
|
|
|
|
|
|
||||||||
GAAP consolidated EFO |
|
$ |
90,279 |
|
|
$ |
83,151 |
|
|
$ |
299,684 |
|
|
$ |
238,644 |
|
Amortization of intangible assets |
|
|
8,986 |
|
|
|
7,988 |
|
|
|
24,815 |
|
|
|
24,097 |
|
Other |
|
|
7,829 |
|
|
|
2,396 |
|
|
|
13,846 |
|
|
|
(3,217 |
) |
Adjusted non-GAAP consolidated EFO |
|
$ |
107,094 |
|
|
$ |
93,535 |
|
|
$ |
338,345 |
|
|
$ |
259,524 |
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP EFO as a percentage of net sales |
|
|
3.6 |
% |
|
|
3.4 |
% |
|
|
3.8 |
% |
|
|
3.5 |
% |
Adjusted non-GAAP EFO as a percentage of net sales |
|
|
4.2 |
% |
|
|
3.8 |
% |
|
|
4.3 |
% |
|
|
3.8 |
% |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Consolidated Net Earnings: |
|
|
|
|
|
|
|
|
||||||||
GAAP consolidated net earnings |
|
$ |
57,316 |
|
|
$ |
55,483 |
|
|
$ |
203,131 |
|
|
$ |
157,212 |
|
Amortization of intangible assets |
|
|
8,986 |
|
|
|
7,988 |
|
|
|
24,815 |
|
|
|
24,097 |
|
Amortization of debt discount and issuance costs |
|
|
— |
|
|
|
3,049 |
|
|
|
— |
|
|
|
9,045 |
|
Other |
|
|
7,829 |
|
|
|
2,396 |
|
|
|
13,846 |
|
|
|
(3,217 |
) |
Income taxes on non-GAAP adjustments |
|
|
(4,295 |
) |
|
|
(3,172 |
) |
|
|
(9,773 |
) |
|
|
(7,133 |
) |
Adjusted non-GAAP consolidated net earnings |
|
$ |
69,836 |
|
|
$ |
65,744 |
|
|
$ |
232,019 |
|
|
$ |
180,004 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Diluted Earnings Per Share: |
|
|
|
|
|
|
|
|
||||||||
GAAP diluted EPS |
|
$ |
1.58 |
|
|
$ |
1.51 |
|
|
$ |
5.53 |
|
|
$ |
4.27 |
|
Amortization of intangible assets |
|
|
0.25 |
|
|
|
0.22 |
|
|
|
0.68 |
|
|
|
0.65 |
|
Amortization of debt discount and issuance costs |
|
|
— |
|
|
|
0.08 |
|
|
|
— |
|
|
|
0.25 |
|
Other |
|
|
0.22 |
|
|
|
0.07 |
|
|
|
0.38 |
|
|
|
(0.09 |
) |
Income taxes on non-GAAP adjustments |
|
|
(0.12 |
) |
|
|
(0.09 |
) |
|
|
(0.27 |
) |
|
|
(0.19 |
) |
Impact of benefit from note hedge |
|
|
0.06 |
|
|
|
0.08 |
|
|
|
0.26 |
|
|
|
0.19 |
|
Adjusted non-GAAP diluted EPS |
|
$ |
1.99 |
|
|
$ |
1.87 |
|
|
$ |
6.58 |
|
|
$ |
5.08 |
|
|
|
|
|
|
|
|
|
|
||||||||
Shares used in diluted EPS calculation |
|
|
36,340 |
|
|
|
36,745 |
|
|
|
36,714 |
|
|
|
36,860 |
|
Impact of benefit from note hedge |
|
|
(1,187 |
) |
|
|
(1,509 |
) |
|
|
(1,468 |
) |
|
|
(1,403 |
) |
Shares used in Adjusted non-GAAP diluted EPS calculation |
|
|
35,153 |
|
|
|
35,236 |
|
|
|
35,246 |
|
|
|
35,457 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted North America Earnings from Operations: |
|
|
|
|
|
|
|
|
||||||||
GAAP EFO from |
|
$ |
82,262 |
|
|
$ |
74,269 |
|
|
$ |
251,095 |
|
|
$ |
192,309 |
|
Amortization of intangible assets |
|
|
8,468 |
|
|
|
7,372 |
|
|
|
23,172 |
|
|
|
22,229 |
|
Other |
|
|
7,792 |
|
|
|
1,999 |
|
|
|
12,534 |
|
|
|
(4,361 |
) |
Adjusted non-GAAP EFO from |
|
$ |
98,522 |
|
|
$ |
83,640 |
|
|
$ |
286,801 |
|
|
$ |
210,177 |
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP EFO as a percentage of net sales |
|
|
3.9 |
% |
|
|
3.7 |
% |
|
|
3.9 |
% |
|
|
3.5 |
% |
Adjusted non-GAAP EFO as a percentage of net sales |
|
|
4.7 |
% |
|
|
4.1 |
% |
|
|
4.5 |
% |
|
|
3.9 |
% |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EMEA Earnings from Operations: |
|
|
|
|
|
|
|
|
||||||||
GAAP EFO from EMEA segment |
|
$ |
4,210 |
|
|
$ |
4,988 |
|
|
$ |
33,554 |
|
|
$ |
34,410 |
|
Amortization of intangible assets |
|
|
404 |
|
|
|
494 |
|
|
|
1,291 |
|
|
|
1,491 |
|
Other |
|
|
35 |
|
|
|
397 |
|
|
|
1,310 |
|
|
|
1,135 |
|
Adjusted non-GAAP EFO from EMEA segment |
|
$ |
4,649 |
|
|
$ |
5,879 |
|
|
$ |
36,155 |
|
|
$ |
37,036 |
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP EFO as a percentage of net sales |
|
|
1.1 |
% |
|
|
1.3 |
% |
|
|
2.5 |
% |
|
|
2.7 |
% |
Adjusted non-GAAP EFO as a percentage of net sales |
|
|
1.2 |
% |
|
|
1.5 |
% |
|
|
2.7 |
% |
|
|
2.9 |
% |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted APAC Earnings from Operations: |
|
|
|
|
|
|
|
|
||||||||
GAAP EFO from APAC segment |
|
$ |
3,807 |
|
|
$ |
3,894 |
|
|
$ |
15,035 |
|
|
$ |
11,925 |
|
Amortization of intangible assets |
|
|
114 |
|
|
|
122 |
|
|
|
352 |
|
|
|
377 |
|
Other |
|
|
2 |
|
|
|
— |
|
|
|
2 |
|
|
|
9 |
|
Adjusted non-GAAP EFO from APAC segment |
|
$ |
3,923 |
|
|
$ |
4,016 |
|
|
$ |
15,389 |
|
|
$ |
12,311 |
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP EFO as a percentage of net sales |
|
|
6.9 |
% |
|
|
8.4 |
% |
|
|
8.4 |
% |
|
|
7.5 |
% |
Adjusted non-GAAP EFO as a percentage of net sales |
|
|
7.1 |
% |
|
|
8.7 |
% |
|
|
8.6 |
% |
|
|
7.8 |
% |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
||||||||
GAAP consolidated net earnings |
|
$ |
57,316 |
|
|
$ |
55,483 |
|
|
$ |
203,131 |
|
|
$ |
157,212 |
|
Interest expense |
|
|
12,376 |
|
|
|
10,529 |
|
|
|
30,306 |
|
|
|
30,291 |
|
Income tax expense |
|
|
19,460 |
|
|
|
18,925 |
|
|
|
68,130 |
|
|
|
52,403 |
|
Depreciation and amortization of property and equipment |
|
|
6,449 |
|
|
|
5,665 |
|
|
|
17,389 |
|
|
|
18,054 |
|
Amortization of intangible assets |
|
|
8,986 |
|
|
|
7,988 |
|
|
|
24,815 |
|
|
|
24,097 |
|
Other |
|
|
7,829 |
|
|
|
2,396 |
|
|
|
13,846 |
|
|
|
(3,217 |
) |
Adjusted non-GAAP EBITDA |
|
$ |
112,416 |
|
|
$ |
100,986 |
|
|
$ |
357,617 |
|
|
$ |
278,840 |
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP consolidated net earnings as a percentage of net sales |
|
|
2.3 |
% |
|
|
2.3 |
% |
|
|
2.6 |
% |
|
|
2.3 |
% |
Adjusted non-GAAP EBITDA as a percentage of net sales |
|
|
4.4 |
% |
|
|
4.1 |
% |
|
|
4.5 |
% |
|
|
4.1 |
% |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (CONTINUED) (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) |
||||||||
|
|
Twelve Months Ended
|
||||||
|
|
|
2022 |
|
|
|
2021 |
|
Adjusted return on invested capital: |
|
|
|
|
||||
GAAP consolidated EFO |
|
$ |
393,101 |
|
|
$ |
321,686 |
|
Amortization of intangible assets |
|
|
32,763 |
|
|
|
32,077 |
|
Other |
|
|
15,429 |
|
|
|
(2,096 |
) |
Adjusted non-GAAP consolidated EFO* |
|
|
441,293 |
|
|
|
351,667 |
|
Income tax expense** |
|
|
114,736 |
|
|
|
91,433 |
|
Adjusted non-GAAP consolidated EFO, net of tax |
|
$ |
326,557 |
|
|
$ |
260,234 |
|
Average stockholders’ equity*** |
|
$ |
1,546,245 |
|
|
$ |
1,367,940 |
|
Average debt*** |
|
|
757,603 |
|
|
|
432,693 |
|
Average cash*** |
|
|
(120,026 |
) |
|
|
(111,493 |
) |
|
|
$ |
2,183,822 |
|
|
$ |
1,689,140 |
|
|
|
|
|
|
||||
Adjusted non-GAAP ROIC (from GAAP consolidated EFO) **** |
|
|
13.32 |
% |
|
|
14.09 |
% |
Adjusted non-GAAP ROIC (from non-GAAP consolidated EFO) ***** |
|
|
14.95 |
% |
|
|
15.41 |
% |
* The adjusted non-GAAP consolidated EFO amount used for the Adjusted non-GAAP ROIC calculation excludes amortization of intangible assets. This calculation remains consistent with the metric utilized in management’s compensation plan. |
** Assumed tax rate of |
*** Average of previous five quarters. |
**** Computed as GAAP consolidated EFO, net of tax of |
***** Computed as Adjusted non-GAAP consolidated EFO, net of tax, divided by invested capital. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20221103005585/en/
CHIEF FINANCIAL OFFICER
TEL. 480.333.3390
EMAIL glynis.bryan@insight.com
Source:
FAQ
What were the Q3 2022 financial results for Insight Enterprises (NSIT)?
How much did the adjusted diluted earnings per share increase for NSIT in Q3 2022?
What is the forecast for Insight Enterprises (NSIT) for the full year 2022?
Which segment drove growth in Insight Enterprises' Q3 2022 results?