Business Wire | Nov 4, 2021 08:00AM EDT

Insight Enterprises, Inc. Reports Third Quarter 2021 Results

Nov. 04, 2021

TEMPE, Ariz.--(BUSINESS WIRE)--Nov. 04, 2021--Insight Enterprises, Inc. (Nasdaq: NSIT) (the "Company") today reported financial results for the quarter ended September 30, 2021. Highlights include:

* Net sales increased 26% year over year to $2.45 billion * Gross profit increased 19% year over year to $364.5 million * Earnings from operations increased 35% to $83.2 million and was 3.4% of net sales * Adjusted earnings from operations increased 30% to $93.5 million and was 3.8% of net sales * Diluted earnings per share of $1.51 increased 37% year over year * Adjusted diluted earnings per share of $1.87 increased 36% year over year

In the third quarter of 2021, net sales increased 26%, year over year. Gross profit increased 19% while gross margin contracted 100 basis points compared to the third quarter of 2020. Earnings from operations of $83.2 million increased 35% compared to $61.5 million in the third quarter of 2020. Adjusted earnings from operations of $93.5 million increased 30% compared to $71.8 million in the third quarter of 2020. Diluted earnings per share for the quarter were $1.51, up 37%, year over year, and adjusted diluted earnings per share were $1.87, up 36% year over year.

"During the third quarter we delivered a double digit increase in adjusted earnings from operations, up 30% compared to last year's third quarter. Significant top line growth was driven by hardware net sales, which were up 36% compared to prior year," stated Ken Lamneck, President and Chief Executive Officer. "We exited the third quarter with elevated hardware backlog above levels at the start of the quarter. We expect about 50% of this backlog will ship in Q4 this year. We are pleased to see the pipeline for future sales continue to build to healthy levels into 2022," stated Lamneck.

KEY HIGHLIGHTS

* Consolidated net sales for the third quarter of 2021 of $2.45 billion increased 26%, year over year, when compared to the third quarter of 2020. Net sales in North America increased 30%, year over year, to $2.02 billion; Net sales in EMEA increased 12%, year over year, to $381.4 million; and Net sales in APAC increased 25%, year over year, to $46.2 million. * Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales were up 25%, year over year, with growth in net sales in North America, EMEA and APAC of 29%, 7% and 21%, respectively, year over year. * Consolidated gross profit increased to $364.5 million, an increase of 19% compared to the third quarter of 2020, with consolidated gross margin contracting 100 basis points to 14.9% of net sales. Gross profit in North America increased 20%, year over year, to $296.0 million (14.7% gross margin); Gross profit in EMEA increased 10%, year over year, to $55.4 million (14.5% gross margin); and Gross profit in APAC increased 30%, year over year, to $13.1 million (28.4% gross margin). * Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit was up 17%, year over year, with gross profit growth in North America, EMEA and APAC of 19%, 6% and 26%, respectively, year over year. * Consolidated earnings from operations increased 35% compared to the third quarter of 2020 to $83.2 million, or 3.4% of net sales. Earnings from operations in North America increased 37%, year over year, to $74.3 million, or 3.7% of net sales; Earnings from operations in EMEA increased 3%, year over year, to $5.0 million, or 1.3% of net sales; and Earnings from operations in APAC increased 63%, year over year, to $3.9 million, or 8.4% of net sales. * Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations were up 33%, year over year, with increased earnings from operations in North America and APAC of 45% and 56%, respectively, year over year, and a decline in EMEA of 2%, year to year. * Adjusted earnings from operations increased 30% compared to the third quarter of 2020 to $93.5 million, or 3.8% of net sales. Adjusted earnings from operations in North America increased 31%, year over year, to $83.6 million, or 4.1% of net sales; Adjusted earnings from operations in EMEA increased 8%, year over year, to $5.9 million, or 1.5% of net sales; and Adjusted earnings from operations in APAC increased 59%, year over year, to $4.0 million, or 8.7% of net sales. * Consolidated net earnings and diluted earnings per share for the third quarter of 2021 were $55.5 million and $1.51, respectively, at an effective tax rate of 25.4%. * Adjusted consolidated net earnings and Adjusted diluted earnings per share for the third quarter of 2021 were $65.7 million and $1.87, respectively.

In discussing financial results for the three and nine months ended September 30, 2021 and 2020 in this press release, the Company refers to certain financial measures that are adjusted from the financial results prepared in accordance with United States generally accepted accounting principles ("GAAP"). When referring to non-GAAP measures, the Company refers to them as "Adjusted." See "Use of Non-GAAP Financial Measures" for additional information. A tabular reconciliation of financial measures prepared in accordance with GAAP to the non-GAAP financial measures is included at the end of this press release.

In some instances, the Company refers to changes in net sales, gross profit and earnings from operations on a consolidated basis and in North America, EMEA and APAC excluding the effects of fluctuating foreign currency exchange rates. In computing these changes and percentages, the Company compares the current year amount as translated into U.S. dollars under the applicable accounting standards to the prior year amount in local currency translated into U.S. dollars utilizing the weighted average translation rate for the current period.

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 2021, the Company now expects to deliver low double digit net sales growth over the prior year, and Adjusted diluted earnings per share is now expected to be between $7.00 and $7.10.

This outlook assumes

* interest expense between $25 million and $28 million; * an effective tax rate of 25% to 26% for the full year 2021; * capital expenditures of $65 to $75 million, including the build out of our new corporate headquarters; and * an average share count for the full year of 35.5 million shares.

This outlook excludes acquisition-related intangibles amortization expense of approximately $32 million and the non-cash convertible debt discount and issuance costs, reported as part of interest expense, of approximately $12 million and assumes no acquisition-related or severance and restructuring expenses. Due to the inherent difficulty of forecasting some of these types of expenses, which impact net earnings, diluted earnings per share and Adjusted selling and administrative expenses, the Company is unable to reasonably estimate the impact of such expenses, if any, to net earnings, diluted earnings per share and Adjusted selling and administrative expenses. Accordingly, the Company is unable to provide a reconciliation of GAAP to non-GAAP diluted earnings per share for the full year 2021 forecast.

CONFERENCE CALL AND WEBCAST

The Company will host a conference call and live web cast today at 9:00 a.m. ET to discuss third quarter 2021 results of operations. A live web cast of the conference call (in listen-only mode) will be available on the Company's web site at http://investor.insight.com/, and a replay of the web cast will be available on the Company's web site for a limited time following the call. To access the live conference call, please register in advance using this event link. Upon registering, participants will receive dial-in information via email, as well as a unique registrant ID, event passcode, and detailed instructions regarding how to join the call.

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 acquisition and integration related expenses, (iii) amortization of intangible assets, and (iv) the tax effects of each of these items, as applicable. Adjusted net earnings and Adjusted diluted earnings per share also exclude amortization of debt discount and issuance costs associated with the issuance of the Company's convertible senior notes due 2025. The Company excludes these items when internally evaluating earnings from operations, tax expense, net earnings and diluted earnings per share for the Company and earnings from operations for each of the Company's operating segments. Adjusted diluted earnings per share also includes the impact of the benefit from the note hedge where the Company's average stock price for the third quarter of 2021 was in excess of $68.32, which is the initial conversion price of the convertible senior notes. Adjusted EBITDA adds back (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization of property and equipment, (iv) amortization of intangibles, (v) non-cash stock based compensation (vi) severance and restructuring expenses and (vii) certain acquisition and integration related expenses. Adjusted return on invested capital ("ROIC") excludes (i) severance and restructuring expenses, (ii) certain acquisition and integration related expenses, (iii) impairment of construction in progress, (iv) loss on sale of property, (v) litigation settlement proceeds, and (vi) the tax effects of each of these items, as applicable.

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 September 30, Nine Months Ended September 30,

2021 2020 change 2021 2020 change

InsightEnterprises, Inc.

Net sales:

Products $ 2,124,239 $ 1,661,568 28% $ 5,906,437 $ 5,182,817 14%

Services $ 323,282 $ 274,910 18% $ 963,653 $ 866,447 11%

Total net $ 2,447,521 $ 1,936,478 26% $ 6,870,090 $ 6,049,264 14% sales

Gross profit $ 364,545 $ 307,563 19% $ 1,062,702 $ 957,288 11%

Gross margin 14.9 % 15.9 % (100 15.5 % 15.8 % (30 bps) bps)

Selling andadministrative $ 278,998 $ 245,155 14% $ 827,275 $ 756,598 9% expenses

Severance and (>restructuring $ 2,396 $ 808 > 100% $ (3,217 ) $ 9,962 100%) expenses

Acquisitionandintegration $ - $ 118 * $ - $ 2,195 * relatedexpenses

Earnings from $ 83,151 $ 61,482 35% $ 238,644 $ 188,533 27% operations

Net earnings $ 55,483 $ 38,906 43% $ 157,212 $ 119,252 32%

Dilutedearnings per $ 1.51 $ 1.10 37% $ 4.27 $ 3.37 27% share



North America

Net sales:

Products $ 1,756,775 $ 1,334,970 32% $ 4,675,581 $ 4,078,791 15%

Services $ 263,101 $ 223,198 18% $ 758,705 $ 692,905 9%

Total net $ 2,019,876 $ 1,558,168 30% $ 5,434,286 $ 4,771,696 14% sales

Gross profit $ 295,982 $ 247,168 20% $ 828,368 $ 748,992 11%

Gross margin 14.7 % 15.9 % (120 15.2 % 15.7 % (50 bps) bps)

Selling andadministrative $ 219,714 $ 192,033 14% $ 640,420 $ 590,549 8% expenses

Severance and (>restructuring $ 1,999 $ 773 > 100% $ (4,361 ) $ 7,799 100%) expenses

Acquisitionandintegration $ - $ 118 * $ - $ 1,991 * relatedexpenses

Earnings from $ 74,269 $ 54,244 37% $ 192,309 $ 148,653 29% operations



Sales Mix ** **

Hardware 70 % 66 % 38% 68 % 67 % 16%

Software 17 % 20 % 10% 18 % 19 % 9%

Services 13 % 14 % 18% 14 % 14 % 9%

100 % 100 % 30% 100 % 100 % 14%



EMEA

Net sales:

Products $ 339,513 $ 303,986 12% $ 1,125,299 $ 1,020,073 10%

Services $ 41,935 $ 37,294 12% $ 152,359 $ 132,110 15%

Total net $ 381,448 $ 341,280 12% $ 1,277,658 $ 1,152,183 11% sales

Gross profit $ 55,447 $ 50,300 10% $ 195,011 $ 177,254 10%

Gross margin 14.5 % 14.7 % (20 15.3 % 15.4 % (10 bps) bps)

Selling andadministrative $ 50,062 $ 45,438 10% $ 159,466 $ 143,859 11% expenses

Severance andrestructuring $ 397 $ 19 > 100% $ 1,135 $ 2,118 (46%) expenses

Acquisitionandintegration $ - $ - * $ - $ 204 * relatedexpenses

Earnings from $ 4,988 $ 4,843 3% $ 34,410 $ 31,073 11% operations



Sales Mix ** **

Hardware 42 % 41 % 16% 41 % 41 % 13%

Software 47 % 48 % 8% 47 % 48 % 8%

Services 11 % 11 % 12% 12 % 11 % 15%

100 % 100 % 12% 100 % 100 % 11%

* Percentage change not considered meaningful.

** Change in sales mix represents growth/decline in category net sales on aU.S. dollar basis and does not exclude the effects of fluctuating foreigncurrency exchange rates.

Financial Summary Table (continued)

(dollars in thousands, except per share data)

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

change

2021

2020

change

APAC

Net sales:

Products

$

27,951

$

22,612

24%

$

105,557

$

83,953

26%

Services

$

18,246

$

14,418

27%

$

52,589

$

41,432

27%

Total net sales

$

46,197

$

37,030

25%

$

158,146

$

125,385

26%

Gross profit

$

13,116

$

10,095

30%

$

39,323

$

31,042

27%

Gross margin

28.4

%

27.3

%

110 bps

24.9

%

24.8

%

10 bps

Selling and administrative expenses

$

9,222

$

7,684

20%

$

27,389

$

22,190

23%

Severance and restructuring expenses

$

-

$

16

*

$

9

$

45

(80%)

Earnings from operations

$

3,894

$

2,395

63%

$

11,925

$

8,807

35%

Sales Mix

**

**

Hardware

29

%

17

%

> 100%

22

%

17

%

66%

Software

31

%

44

%

(11%)

45

%

50

%

12%

Services

40

%

39

%

27%

33

%

33

%

27%

100

%

100

%

25%

100

%

100

%

26%

* Percentage change not considered meaningful.

** Change in sales mix represents growth/decline in category net sales on a U.S. dollar basis and does not exclude the effects of fluctuating foreign currency exchange rates.

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 our future responses to and the potential impact of coronavirus strain COVID-19 ("COVID-19") on our Company, the Company's future financial performance and results of operations, including net sales growth, Adjusted diluted earnings per share, Adjusted selling and administrative expenses, the Company's anticipated effective tax rate, capital expenditures, expected average share count, the Company's expectations regarding cash flow, the Company's expectations regarding current supply constraints pipeline, and shipment of backlog, future trends in the IT market, including due to COVID-19, our business strategy and our strategic initiatives, 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 Securities and Exchange Commission (the "SEC"), including in "Risk Factors" in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2020:

* actions of the Company'scompetitors, including manufacturers and publishers of products the Company sells; * the Company's reliance on 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 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; * changes in the IT industry and/or rapid changes in technology; * supply constraints for hardware including devices; * 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, including PCM related litigation, 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 convertible notes, which has been triggered, may adversely affect the Company's financial condition and operating results; * the accounting method for convertible debt securities that may be settled in cash, such as the convertible notes, could have a material effect on the Company's reported financial results; * the Company is subject to counterparty risk with respect to the convertible note hedge transactions; * risks associated with the discontinuation of LIBOR as a benchmark rate; * increased debt and interest expense and 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 customer demands; * the Company's dependence on certain key personnel; * 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 SEC. Any forward-looking statements in this release, the related conference call, webcast and presentation speak only as of the date on which they are made and should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others. The Company assumes no obligation to update, and, except as may be required by law, does not intend to update, any forward-looking statements. The Company does not endorse any projections regarding future performance that may be made by third parties. NSIT-F

Financial Summary Table (continued)

(dollars in thousands, except per share data)

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 change 2021 2020 change

APAC

Net sales:

Products $ 27,951 $ 22,612 24% $ 105,557 $ 83,953 26%

Services $ 18,246 $ 14,418 27% $ 52,589 $ 41,432 27%

Total net $ 46,197 $ 37,030 25% $ 158,146 $ 125,385 26% sales

Gross profit $ 13,116 $ 10,095 30% $ 39,323 $ 31,042 27%

Gross margin 28.4 % 27.3 % 110 bps 24.9 % 24.8 % 10 bps

Selling andadministrative $ 9,222 $ 7,684 20% $ 27,389 $ 22,190 23% expenses

Severance andrestructuring $ - $ 16 * $ 9 $ 45 (80%) expenses

Earnings from $ 3,894 $ 2,395 63% $ 11,925 $ 8,807 35% operations



Sales Mix ** **

Hardware 29 % 17 % > 100% 22 % 17 % 66%

Software 31 % 44 % (11%) 45 % 50 % 12%

Services 40 % 39 % 27% 33 % 33 % 27%

100 % 100 % 25% 100 % 100 % 26%

* Percentage change not considered meaningful.

** Change in sales mix represents growth/decline in category net sales on aU.S. dollar basis and does not exclude the effects of fluctuating foreigncurrency exchange rates.

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 our future responses to and the potential impact of coronavirus strain COVID-19 ("COVID-19") on our Company, the Company's future financial performance and results of operations, including net sales growth, Adjusted diluted earnings per share, Adjusted selling and administrative expenses, the Company's anticipated effective tax rate, capital expenditures, expected average share count, the Company's expectations regarding cash flow, the Company's expectations regarding current supply constraints pipeline, and shipment of backlog, future trends in the IT market, including due to COVID-19, our business strategy and our strategic initiatives, 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 Securities and Exchange Commission (the "SEC"), including in "Risk Factors" in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2020:

* actions of the Company'scompetitors, including manufacturers and publishers of products the Company sells; * the Company's reliance on 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 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; * changes in the IT industry and/or rapid changes in technology; * supply constraints for hardware including devices; * 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, including PCM related litigation, 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 convertible notes, which has been triggered, may adversely affect the Company's financial condition and operating results; * the accounting method for convertible debt securities that may be settled in cash, such as the convertible notes, could have a material effect on the Company's reported financial results; * the Company is subject to counterparty risk with respect to the convertible note hedge transactions; * risks associated with the discontinuation of LIBOR as a benchmark rate; * increased debt and interest expense and 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 customer demands; * the Company's dependence on certain key personnel; * 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 SEC. Any forward-looking statements in this release, the related conference call, webcast and presentation speak only as of the date on which they are made and should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others. The Company assumes no obligation to update, and, except as may be required by law, does not intend to update, any forward-looking statements. The Company does not endorse any projections regarding future performance that may be made by third parties. NSIT-F

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Net sales:

Products 2,124,239 $ 1,661,568 $ 5,906,437 $ 5,182,817

Services 323,282 274,910 963,653 866,447

Total net sales 2,447,521 1,936,478 6,870,090 6,049,264

Costs of goods sold:

Products 1,930,096 1,500,312 5,367,083 4,688,497

Services 152,880 128,603 440,305 403,479

Total costs of 2,082,976 1,628,915 5,807,388 5,091,976 goods sold

Gross profit 364,545 307,563 1,062,702 957,288

Operating expenses:

Selling andadministrative 278,998 245,155 827,275 756,598 expenses

Severance andrestructuring 2,396 808 (3,217 ) 9,962 expenses, net

Acquisition andintegration - 118 - 2,195 relatedexpenses

Earnings from 83,151 61,482 238,644 188,533 operations

Non-operating(income) expense:

Interest 10,332 9,115 29,884 31,160 expense, net

Other (income) (1,589 ) 1,301 (855 ) 836 expense, net

Earnings before 74,408 51,066 209,615 156,537 income taxes

Income tax 18,925 12,160 52,403 37,285 expense

Net earnings $ 55,483 $ 38,906 $ 157,212 $ 119,252



Net earnings per share:

Basic $ 1.59 $ 1.11 $ 4.49 $ 3.40

Diluted $ 1.51 $ 1.10 $ 4.27 $ 3.37



Shares used inper share calculations:

Basic 34,855 35,077 35,050 35,123

Diluted 36,745 35,348 36,860 35,418

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands)

(Unaudited)

September 30,

December 31,

2021

2020

ASSETS

Current assets:

Cash and cash equivalents

$

107,350

$

128,313

Accounts receivable, net

2,754,153

2,685,448

Inventories

269,471

185,650

Other current assets

192,018

177,039

Total current assets

3,322,992

3,176,450

Property and equipment, net

152,070

146,016

Goodwill

428,637

429,368

Intangible assets, net

223,496

246,915

Other assets

308,183

311,983

$

4,435,378

$

4,310,732

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable - trade

$

1,363,325

$

1,461,312

Accounts payable - inventory financing facilities

403,094

356,930

Accrued expenses and other current liabilities

379,302

408,117

Current portion of long-term debt

38

1,105

Total current liabilities

2,145,759

2,227,464

Long-term debt

527,499

437,581

Deferred income taxes

37,140

33,209

Other liabilities

276,058

270,049

2,986,456

2,968,303

Stockholders' equity:

Preferred stock

-

-

Common stock

349

351

Additional paid-in capital

364,699

364,288

Retained earnings

1,105,557

993,245

Accumulated other comprehensive loss - foreign currency

translation adjustments

(21,683

)

(15,455

)

Total stockholders' equity

1,448,922

1,342,429

$

4,435,378

$

4,310,732

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands)

(Unaudited)

September December 30, 31,

2021 2020

ASSETS

Current assets:

Cash and cash equivalents $ 107,350 $ 128,313

Accounts receivable, net 2,754,153 2,685,448

Inventories 269,471 185,650

Other current assets 192,018 177,039

Total current assets 3,322,992 3,176,450



Property and equipment, net 152,070 146,016

Goodwill 428,637 429,368

Intangible assets, net 223,496 246,915

Other assets 308,183 311,983

$ 4,435,378 $ 4,310,732



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable - trade $ 1,363,325 $ 1,461,312

Accounts payable - inventory financing 403,094 356,930 facilities

Accrued expenses and other current liabilities 379,302 408,117

Current portion of long-term debt 38 1,105

Total current liabilities 2,145,759 2,227,464



Long-term debt 527,499 437,581

Deferred income taxes 37,140 33,209

Other liabilities 276,058 270,049

2,986,456 2,968,303

Stockholders' equity:

Preferred stock - -

Common stock 349 351

Additional paid-in capital 364,699 364,288

Retained earnings 1,105,557 993,245

Accumulated other comprehensive loss - foreigncurrency (21,683 ) (15,455 )

translation adjustments

Total stockholders' equity 1,448,922 1,342,429

$ 4,435,378 $ 4,310,732

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended

September 30,

2021

2020

Cash flows from operating activities:

Net earnings

$

157,212

$

119,252

Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:

Depreciation and amortization

42,151

51,375

Provision for losses on accounts receivable

5,781

8,093

Non-cash stock-based compensation

13,950

11,754

Deferred income taxes

3,374

(2,883

)

Amortization of debt discount and issuance costs

12,615

12,091

Other adjustments

(4,753

)

4,087

Changes in assets and liabilities:

(Increase) decrease in accounts receivable

(85,853

)

247,659

(Increase) decrease in inventories

(88,119

)

28,002

(Increase) decrease in other assets

(20,844

)

19,643

Decrease in accounts payable

(119,525

)

(4,842

)

Decrease in accrued expenses and other liabilities

(33,777

)

(32,137

)

Net cash (used in) provided by operating activities

(117,788

)

462,094

Cash flows from investing activities:

Proceeds from sale of assets

29,221

14,218

Purchases of property and equipment

(28,011

)

(20,688

)

Acquisitions, net of cash and cash equivalents acquired

-

(6,405

)

Net cash provided by (used in) investing activities

1,210

(12,875

)

Cash flows from financing activities:

Borrowings on ABL revolving credit facility

3,167,044

2,111,674

Repayments on ABL revolving credit facility

(3,085,044

)

(2,682,562

)

Net borrowings under inventory financing facilities

76,422

114,321

Repurchases of treasury stock

(50,000

)

(25,000

)

Other payments

(9,330

)

(7,520

)

Net cash provided by (used in) financing activities

99,092

(489,087

)

Foreign currency exchange effect on cash, cash equivalents and

restricted cash balances

(3,601

)

718

Decrease in cash, cash equivalents and restricted cash

(21,087

)

(39,150

)

Cash, cash equivalents and restricted cash at beginning of period

130,582

116,297

Cash, cash equivalents and restricted cash at end of period

$

109,495

$

77,147

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended September 30,

2021 2020

Cash flows from operating activities:

Net earnings $ 157,212 $ 119,252

Adjustments to reconcile net earnings to netcash (used in) provided by operating activities:

Depreciation and amortization 42,151 51,375

Provision for losses on accounts receivable 5,781 8,093

Non-cash stock-based compensation 13,950 11,754

Deferred income taxes 3,374 (2,883 )

Amortization of debt discount and issuance 12,615 12,091 costs

Other adjustments (4,753 ) 4,087

Changes in assets and liabilities:

(Increase) decrease in accounts receivable (85,853 ) 247,659

(Increase) decrease in inventories (88,119 ) 28,002

(Increase) decrease in other assets (20,844 ) 19,643

Decrease in accounts payable (119,525 ) (4,842 )

Decrease in accrued expenses and other (33,777 ) (32,137 )liabilities

Net cash (used in) provided by operating (117,788 ) 462,094 activities

Cash flows from investing activities:

Proceeds from sale of assets 29,221 14,218

Purchases of property and equipment (28,011 ) (20,688 )

Acquisitions, net of cash and cash - (6,405 )equivalents acquired

Net cash provided by (used in) investing 1,210 (12,875 )activities

Cash flows from financing activities:

Borrowings on ABL revolving credit facility 3,167,044 2,111,674

Repayments on ABL revolving credit facility (3,085,044 ) (2,682,562 )

Net borrowings under inventory financing 76,422 114,321 facilities

Repurchases of treasury stock (50,000 ) (25,000 )

Other payments (9,330 ) (7,520 )

Net cash provided by (used in) financing 99,092 (489,087 )activities

Foreign currency exchange effect on cash,cash equivalents and (3,601 ) 718

restricted cash balances

Decrease in cash, cash equivalents and (21,087 ) (39,150 )restricted cash

Cash, cash equivalents and restricted cash at 130,582 116,297 beginning of period

Cash, cash equivalents and restricted cash at $ 109,495 $ 77,147 end of period

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Reconciliation of GAAP to non-GAAP Financial Measures

(In thousands, except per share data)

(unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2021

2020

2021

2020

Adjusted Consolidated Earnings from Operations:

GAAP consolidated EFO

$

83,151

$

61,482

$

238,644

$

188,533

Amortization of intangible assets

7,988

9,433

24,097

29,555

Other

2,396

926

(3,217

)

12,157

Adjusted non-GAAP consolidated EFO

$

93,535

$

71,841

$

259,524

$

230,245

GAAP EFO as a percentage of net sales

3.4

%

3.1

%

3.5

%

3.1

%

Adjusted non-GAAP EFO as a percentage of net sales

3.8

%

3.7

%

3.8

%

3.8

%

Adjusted Consolidated Net Earnings:

GAAP consolidated net earnings

$

55,483

$

38,906

$

157,212

$

119,252

Amortization of intangible assets

7,988

9,433

24,097

29,555

Amortization of debt discount and issuance costs

3,049

2,919

9,045

8,636

Other

2,396

926

(3,217

)

12,157

Income taxes on non-GAAP adjustments

(3,172

)

(3,335

)

(7,133

)

(12,562

)

Adjusted non-GAAP consolidated net earnings

$

65,744

$

48,849

$

180,004

$

157,038

Adjusted Diluted Earnings Per Share:

GAAP diluted EPS

$

1.51

$

1.10

$

4.27

$

3.37

Amortization of intangible assets

0.22

0.27

0.65

0.83

Amortization of debt discount and issuance costs

0.08

0.08

0.25

0.24

Other

0.07

0.02

(0.09

)

0.34

Income taxes on non-GAAP adjustments

(0.09

)

(0.09

)

(0.19

)

(0.35

)

Impact of benefit from note hedge

0.08

-

0.19

-

Adjusted non-GAAP diluted EPS

$

1.87

$

1.38

$

5.08

$

4.43

Shares used in diluted EPS calculation

36,745

35,348

36,860

35,418

Impact of benefit from note hedge

(1,509

)

-

(1,403

)

-

Shares used in Adjusted non-GAAP diluted EPS calculation

35,236

35,348

35,457

35,418

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Reconciliation of GAAP to non-GAAP Financial Measures

(In thousands, except per share data)

(unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Adjusted Consolidated Earnings from Operations:

GAAP consolidated EFO $ 83,151 $ 61,482 $ 238,644 $ 188,533

Amortization of 7,988 9,433 24,097 29,555 intangible assets

Other 2,396 926 (3,217 ) 12,157

Adjusted non-GAAP $ 93,535 $ 71,841 $ 259,524 $ 230,245 consolidated EFO



GAAP EFO as a percentage 3.4 % 3.1 % 3.5 % 3.1 %of net sales

Adjusted non-GAAP EFO as 3.8 % 3.7 % 3.8 % 3.8 %a percentage of net sales



Adjusted Consolidated Net Earnings:

GAAP consolidated net $ 55,483 $ 38,906 $ 157,212 $ 119,252 earnings

Amortization of 7,988 9,433 24,097 29,555 intangible assets

Amortization of debtdiscount and issuance 3,049 2,919 9,045 8,636 costs

Other 2,396 926 (3,217 ) 12,157

Income taxes on non-GAAP (3,172 ) (3,335 ) (7,133 ) (12,562 )adjustments

Adjusted non-GAAP $ 65,744 $ 48,849 $ 180,004 $ 157,038 consolidated net earnings



Adjusted Diluted Earnings Per Share:

GAAP diluted EPS $ 1.51 $ 1.10 $ 4.27 $ 3.37

Amortization of 0.22 0.27 0.65 0.83 intangible assets

Amortization of debtdiscount and issuance 0.08 0.08 0.25 0.24 costs

Other 0.07 0.02 (0.09 ) 0.34

Income taxes on non-GAAP (0.09 ) (0.09 ) (0.19 ) (0.35 )adjustments

Impact of benefit from 0.08 - 0.19 - note hedge

Adjusted non-GAAP diluted $ 1.87 $ 1.38 $ 5.08 $ 4.43 EPS



Shares used in diluted 36,745 35,348 36,860 35,418 EPS calculation

Impact of benefit from (1,509 ) - (1,403 ) - note hedge

Shares used in Adjustednon-GAAP diluted EPS 35,236 35,348 35,457 35,418 calculation

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Reconciliation of GAAP to NON-GAAP Financial Measures (Continued)

(In thousands, except per share data)

(unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2021

2020

2021

2020

Adjusted North America Earnings from Operations:

GAAP EFO from North America segment

$

74,269

$

54,244

$

192,309

$

148,653

Amortization of intangible assets

7,372

8,730

22,229

27,594

Other

1,999

891

(4,361

)

9,790

Adjusted non-GAAP EFO from North America segment

$

83,640

$

63,865

$

210,177

$

186,037

GAAP EFO as a percentage of net sales

3.7

%

3.5

%

3.5

%

3.1

%

Adjusted non-GAAP EFO as a percentage of net sales

4.1

%

4.1

%

3.9

%

3.9

%

Adjusted EMEA Earnings from Operations:

GAAP EFO from EMEA segment

$

4,988

$

4,843

$

34,410

$

31,073

Amortization of intangible assets

494

585

1,491

1,625

Other

397

19

1,135

2,322

Adjusted non-GAAP EFO from EMEA segment

$

5,879

$

5,447

$

37,036

$

35,020

GAAP EFO as a percentage of net sales

1.3

%

1.4

%

2.7

%

2.7

%

Adjusted non-GAAP EFO as a percentage of net sales

1.5

%

1.6

%

2.9

%

3.0

%

Adjusted APAC Earnings from Operations:

GAAP EFO from APAC segment

$

3,894

$

2,395

$

11,925

$

8,807

Amortization of intangible assets

122

118

377

336

Other

-

16

9

45

Adjusted non-GAAP EFO from APAC segment

$

4,016

$

2,529

$

12,311

$

9,188

GAAP EFO as a percentage of net sales

8.4

%

6.5

%

7.5

%

7.0

%

Adjusted non-GAAP EFO as a percentage of net sales

8.7

%

6.8

%

7.8

%

7.3

%

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Reconciliation of GAAP to NON-GAAP Financial Measures (Continued)

(In thousands, except per share data)

(unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Adjusted North America Earnings from Operations:

GAAP EFO from North $ 74,269 $ 54,244 $ 192,309 $ 148,653 America segment

Amortization of 7,372 8,730 22,229 27,594 intangible assets

Other 1,999 891 (4,361 ) 9,790

Adjusted non-GAAP EFOfrom North America $ 83,640 $ 63,865 $ 210,177 $ 186,037 segment



GAAP EFO as a percentage 3.7 % 3.5 % 3.5 % 3.1 %of net sales

Adjusted non-GAAP EFO as 4.1 % 4.1 % 3.9 % 3.9 %a percentage of net sales



Adjusted EMEA Earnings from Operations:

GAAP EFO from EMEA $ 4,988 $ 4,843 $ 34,410 $ 31,073 segment

Amortization of 494 585 1,491 1,625 intangible assets

Other 397 19 1,135 2,322

Adjusted non-GAAP EFO $ 5,879 $ 5,447 $ 37,036 $ 35,020 from EMEA segment



GAAP EFO as a percentage 1.3 % 1.4 % 2.7 % 2.7 %of net sales

Adjusted non-GAAP EFO as 1.5 % 1.6 % 2.9 % 3.0 %a percentage of net sales



Adjusted APAC Earnings from Operations:

GAAP EFO from APAC $ 3,894 $ 2,395 $ 11,925 $ 8,807 segment

Amortization of 122 118 377 336 intangible assets

Other - 16 9 45

Adjusted non-GAAP EFO $ 4,016 $ 2,529 $ 12,311 $ 9,188 from APAC segment



GAAP EFO as a percentage 8.4 % 6.5 % 7.5 % 7.0 %of net sales

Adjusted non-GAAP EFO as 8.7 % 6.8 % 7.8 % 7.3 %a percentage of net sales

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Reconciliation of GAAP to NON-GAAP Financial Measures (Continued)

(In thousands, except per share data)

(unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2021

2020

2021

2020

Adjusted EBITDA:

GAAP consolidated net earnings

$

55,483

$

38,906

$

157,212

$

119,252

Interest expense

10,529

9,186

30,291

31,366

Income tax expense

18,925

12,160

52,403

37,285

Depreciation and amortization of property and equipment

5,665

7,319

18,054

21,820

Amortization of intangible assets

7,988

9,433

24,097

29,555

Non-cash stock-based compensation

4,575

4,513

13,950

11,754

Other

2,396

926

(3,217

)

12,157

Adjusted non-GAAP EBITDA

$

105,561

$

82,443

$

292,790

$

263,189

GAAP consolidated net earnings as a percentage of net sales

2.3

%

2.0

%

2.3

%

2.0

%

Adjusted non-GAAP EBITDA as a percentage of net sales

4.3

%

4.3

%

4.3

%

4.4

%

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

Reconciliation of GAAP to NON-GAAP Financial Measures (Continued)

(In thousands, except per share data)

(unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Adjusted EBITDA:

GAAP consolidated net $ 55,483 $ 38,906 $ 157,212 $ 119,252 earnings

Interest expense 10,529 9,186 30,291 31,366

Income tax expense 18,925 12,160 52,403 37,285

Depreciation andamortization of property 5,665 7,319 18,054 21,820 and equipment

Amortization of 7,988 9,433 24,097 29,555 intangible assets

Non-cash stock-based 4,575 4,513 13,950 11,754 compensation

Other 2,396 926 (3,217 ) 12,157

Adjusted non-GAAP EBITDA $ 105,561 $ 82,443 $ 292,790 $ 263,189



GAAP consolidated netearnings as a percentage 2.3 % 2.0 % 2.3 % 2.0 %of net sales

Adjusted non-GAAP EBITDAas a percentage of net 4.3 % 4.3 % 4.3 % 4.4 %sales

Twelve Months Ended

September 30,

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 expense**

85,175

71,033

Adjusted non-GAAP consolidated EFO, net of tax

$

242,421

$

202,170

Average stockholders' equity***

$

1,367,940

$

1,176,754

Average debt***

432,693

636,215

Average cash***

(111,493

)

(109,396

)

Invested Capital

$

1,689,140

$

1,703,573

Adjusted non-GAAP ROIC (from GAAP consolidated EFO) ****

14.09

%

11.10

%

Adjusted non-GAAP ROIC (from non-GAAP consolidated EFO) *****

14.35

%

11.87

%

* The adjusted non-GAAP consolidated EFO amount used for the Adjusted non-GAAP ROIC calculation does not exclude amortization of intangible assets. This calculation remains consistent with the metric utilized in management's compensation plan. ** Assumed tax rate of 26.0%. *** Average of previous five quarters. **** Computed as GAAP consolidated EFO, net of tax of $83,637 and $66,443 for the twelve months ended September 30, 2021 and 2020, respectively, divided by invested capital. ***** 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/20211104005423/en/

CONTACT: Glynis Bryan Chief Financial Officer Tel. 480.333.3390 Email glynis.bryan@insight.com