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Aug 01, 2018

Insight Enterprises, Inc. Reports Second Quarter 2018 Results and Increases Full Year 2018 Guidance

TEMPE, Ariz., Aug. 01, 2018 (GLOBE NEWSWIRE) -- Insight Enterprises, Inc. (Nasdaq:NSIT) (the “Company”) today reported strong financial results for the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017. 

  • Diluted earnings per share of $1.44 increased 30% year over year
    • Adjusted diluted earnings per share of $1.45 increased 27% year over year
  • Cash flows provided by operations in the first half of 2018 were $351.0 million compared to cash used in operations of $99.3 million in the first half of 2017                   

In the second quarter of 2018, consolidated net sales increased 9% and consolidated gross profit increased 5% year over year.  These results are primarily driven by continued strong growth in the hardware category as a result of the ongoing device refresh cycle as well as a 22% increase in services sales year over year, which includes professional services as well as cloud and maintenance offerings.  Earnings from operations (“EFO”)increased 7% year over year and EFO margin was 4.0%.

The Company also announced that it has acquired Cardinal Solution Group, Inc. (“Cardinal”) effective August 1, 2018.  Cardinal is a digital solutions provider based in Cincinnati, Ohio with expertise in mobile applications development, IOT and cloud enabled business intelligence.  Cardinal will complement the capabilities the Company has been building within the digital innovation solution area, following the acquisitions of BlueMetal and Ignia in 2015 and 2016, respectively.  The Company expects the acquisition to be neutral to earnings from operations for the balance of 2018, including projected intangible amortization.

“We are pleased with our top and bottom line financial results in the second quarter and with our team’s execution in optimizing working capital in the business, which led to Adjusted free cash flow of more than $300 million in the first half of the year,” stated Ken Lamneck, President and Chief Executive Officer.  “Our strategy to grow organically while consistently driving operational efficiency across the business allows us to invest for the long term, including strategic acquisitions like Cardinal that will bring scale and reach to our already strong Digital Innovations solution area,” stated Lamneck.

KEY HIGHLIGHTS

  • Consolidated net sales for the second quarter of 2018 increased 9% compared to the second quarter of 2017 to $1.84 billion.
    • Net sales in North America increased 7% year over year to $1.4 billion;
    • Net sales in EMEA increased 17% year over year to $406.3 million; and
    • Net sales in APAC increased 8% year over year to $61.2 million.
       
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales increased 7% year over year, with net sales growth in North America, EMEA and APAC of 7%, 10% and 7%, respectively, year over year.
     
  • Consolidated gross profit increased 5% compared to the second quarter of 2017 to $264.4 million, with consolidated gross margin contracting 50 basis points to 14.4% of net sales.
    • Gross profit in North America increased 4% year over year to $190.5 million (13.9% gross margin);
    • Gross profit in EMEA increased 11% year over year to $62.0 million (15.3% gross margin); and
    • Gross profit in APAC decreased 7% year to year to $11.9 million (19.4% gross margin).
       
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit increased 3% year over year, with gross profit growth in North America and EMEA of 4% each, year over year, and gross profit decreasing in APAC 8%, year to year.
     
  • Consolidated earnings from operations increased 7% compared to the second quarter of 2017 to $74.4 million, or 4.0% of net sales. 
    • Earnings from operations in North America increased 9% year over year to $54.9 million, or 4.0% of net sales;
    • Earnings from operations in EMEA increased 11% year over year to $15.0 million, or 3.7% of net sales; and
    • Earnings from operations in APAC decreased 17% year to year to $4.5 million, or 7.4% of net sales.
       
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations increased 6% year over year, with earnings from operations growth in North America and EMEA of 8% and 6%, respectively, year over year and earnings from operations decreasing in APAC 17% year to year.
     
  • Adjusted consolidated earnings from operations increased 6% year over year to $74.9 million, or 4.1% of net sales for the second quarter of 2018.
     
  • Consolidated net earnings and diluted earnings per share for the second quarter of 2018 were $51.5 million and $1.44, respectively, at an effective tax rate of 25.9%.
     
  • Adjusted consolidated net earnings and Adjusted diluted earnings per share for the second quarter of 2018 were $51.8 million and $1.45, respectively.
     
  • Adjusted free cash flow generation was $324.5 million in the first six months of 2018, up from a use of cash of $84.1 million in the same period last year.
     
  • Adjusted return on invested capital was 16.0%, up 40 basis points year over year.            

As services have become a larger portion of the Company’s consolidated net sales, beginning with our results of operations for the year ended December 31, 2017, the Company began reporting net sales from the provision of services and the related costs of goods sold separately from net sales of products and the related costs of goods sold.  The Company continued this presentation in the three and six months ended June 30, 2018, and expects to continue this presentation in future periods.  For comparability purposes, net sales and costs of goods sold for the 2017 periods have been expanded to conform to the current year presentation.  These changes in presentation had no effect on previously reported total net sales, total costs of goods sold or gross profit amounts. 

In conjunction with these changes in presentation, because fees earned from activities reported net are now considered services revenues, the Company reclassified certain revenue streams for which the Company acts as the agent in the transaction to net sales from services.  Previously, the Company included these net revenue streams within its software and, to a lesser extent, hardware sales mix categories based on the type of product being sold (e.g., fees earned for the sale of software maintenance and certain software licenses were included in software sales and fees earned for the sale of certain third-party provided training and warranty services were included in hardware sales when the Company historically disclosed and analyzed its sales mix).  For comparability purposes, the Company’s sales mix among its hardware, software and services categories for the three and six months ended June 30, 2017, as presented in the Financial Summary Table in this press release, has been reclassified to conform to the current year presentation.  These reclassifications had no effect on previously reported total net sales amounts. 

In discussing financial results for the three months ended June 30, 2018 and 2017 in this press release, the Company refers to certain financial measures that are not prepared in accordance with United States generally accepted accounting principles (“GAAP”).  When referring to non-GAAP measures, the Company refers to such measures 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 2018, the Company expects to deliver sales growth in the high single to low double digit range compared to 2017.  The Company is also increasing its Adjusted diluted earnings per share outlook for the full year of 2018 to be between $4.50 and $4.60.

This outlook assumes:

  • an effective tax rate of between 26% and 27% for the balance of 2018;
  • capital expenditures of $15 to $20 million for the full year; and
  • an average share count for the full year of approximately 36.0 million shares.

This outlook does not reflect the repurchase of any additional shares under the Company’s currently authorized share repurchase program, assumes no current year acquisition-related expenses and excludes severance and restructuring expenses incurred during the first half of 2018 and those that may be incurred during the balance of 2018.  Due to the inherent difficulty of forecasting these types of expenses, which impact net earnings and diluted earnings per share, the Company is unable to reasonably estimate the related impact of such expenses, if any, to net earnings and diluted earnings per share.  Accordingly, the Company is unable to provide a reconciliation of GAAP to non-GAAP diluted earnings per share for the full year 2018 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 second quarter 2018 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 listen to the live web cast by telephone, call 1-877-402-8904 if located in the U.S., 678-809-1029 for international callers, and enter the access code 4892118. NSIT-F

USE OF NON-GAAP FINANCIAL MEASURES

The non-GAAP financial measures are referred to as “Adjusted.”  Adjusted consolidated earnings from operations, Adjusted consolidated net earnings and Adjusted diluted earnings per share exclude (i) severance and restructuring expenses, (ii) certain acquisition-related expenses, and (iii) the tax effects of each of these items, as applicable.  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 free cash flow is the Company’s net cash provided or used by operating activities adjusted for (i) purchases of property and equipment and (ii) the net borrowings or repayments on the inventory financing facility.  Adjusted return on invested capital (“ROIC”) excludes (i) severance and restructuring expenses, (ii) certain acquisition-related expenses, and (iii) a loss on sale of the Company’s Russia business in the 2017 period. 

These non-GAAP measures are used 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 June 30,  Six Months Ended June 30, 
   2018     2017      change    2018       2017      change 
Insight Enterprises, Inc.
                                 
Net sales:            
Products $ 1,619,774   $ 1,505,464   8%   $ 3,201,929   $ 2,827,433   13%  
Services $ 217,146   $ 178,568   22%   $ 397,894   $ 334,142   19%  
Total net sales $ 1,836,920   $ 1,684,032   9%   $ 3,599,823   $ 3,161,575   14%  
Gross profit $ 264,377   $ 251,379   5%   $ 504,382   $ 459,606   10%  
Gross margin   14.4%     14.9%   (50 bps)     14.0%     14.5%   (50 bps)  
Selling and administrative expenses $ 189,464   $ 180,752   5%   $ 377,644   $ 358,384   5%  
Severance and restructuring expenses $ 382   $ 1,022   (63%)   $ 2,026   $ 5,717   (65%)  
Acquisition-related expenses $ 94   $ 276   (66%)   $ 94   $ 3,223   (97%)  
Earnings from operations $ 74,437   $ 69,329   7%   $ 124,618   $ 92,282   35%)  
Net earnings $ 51,479   $ 40,255   28%   $ 84,224   $ 54,103   56%  
Diluted earnings per share $ 1.44   $ 1.11   30%   $ 2.34   $ 1.50   56%  
             
North America
Net sales:            
Products $ 1,206,413   $ 1,145,032   5%   $ 2,370,230   $ 2,129,878   11%  
Services $ 163,037   $ 136,280   20%   $ 306,618   $ 262,386   17%  
Total net sales $ 1,369,450   $ 1,281,312   7%   $ 2,676,848   $ 2,392,264   12%  
Gross profit $ 190,517   $ 182,786   4%   $ 365,888   $ 341,087   7%  
Gross margin   13.9%     14.3%   (40 bps)     13.6%     14.3%   (70 bps)  
Selling and administrative expenses $ 135,206   $ 131,560   3%   $ 267,846   $ 262,570   2%  
Severance and restructuring expenses $ 338   $ 543   (38%)   $ 781   $ 1,647   (53%)  
Acquisition-related expenses $ 94   $ 276   (66%)   $ 94   $ 3,223   (97%)  
Earnings from operations $ 54,879   $ 50,407   9%   $ 97,167   $ 73,647   32%  
             
Sales Mix     **       **  
Hardware   66%     63%   12%     66%     63%   17%  
Software   22%     26%   (10%)     22%     26%   (3%)  
Services   12%     11%   20%     12%     11%   17%  
    100%     100%   7%     100%     100%   12%  
                                 
             
EMEA
Net sales:            
Products $ 364,453   $ 314,108   16%   $ 736,381   $ 622,303   18%  
Services $ 41,827   $ 31,952   31%   $ 70,314   $ 54,112   30%  
Total net sales $ 406,280   $ 346,060   17%   $ 806,695   $ 676,415   19%  
Gross profit $ 61,964   $ 55,733   11%   $ 117,756   $ 98,279   20%  
Gross margin   15.3%     16.1%   (80 bps)     14.6%     14.5%   10 bps  
Selling and administrative expenses $ 46,894   $ 41,772   12%   $ 95,177   $ 81,915   16%  
Severance and restructuring expenses $ 41   $ 479   (91%)   $ 1,115   $ 4,009   (72%)  
Earnings from operations $ 15,029   $ 13,482   11%   $ 21,464   $ 12,355   74%  
             
Sales Mix     **       **  
Hardware   42%     36%   38%     44%     39%   36%  
Software   48%     55%   2%     47%     53%   5%  
Services   10%     9%   31%     9%     8%   30%  
    100%     100%   17%     100%     100%   19%  
                                 
                                 

**  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. 

 
FINANCIAL SUMMARY TABLE (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
 
    Three Months Ended June 30,    Six Months Ended June 30, 
    2018       2017      change    2018       2017      change 
APAC                                      
Net sales:            
Products  $   48,908   $   46,325       6%   $   95,318   $   75,252       27%  
Services  $   12,282   $   10,335       19%   $   20,962   $   17,644       19%  
Total net sales  $   61,190   $   56,660       8%   $   116,280   $   92,896       25%  
Gross profit  $   11,896   $   12,860     (7%)   $   20,738   $   20,240     2%  
Gross margin      19.4%       22.7%     (330 bps)       17.8%       21.8%     (400 bps)  
Selling and administrative expenses  $   7,364   $   7,420     (1%)   $   14,621   $   13,899     5%  
Severance and restructuring expenses  $   3   $   -     *   $   130   $   61     113%  
Earnings from operations  $   4,529   $   5,440     (17%)   $   5,987   $   6,280     (5%)  
               
Sales Mix       **         **  
Hardware      15%       12%     35%       14%       12%     50%  
Software      65%       70%     -       68%       69%     23%  
Services        20%         18%     19%         18%         19%     19%  
      100%       100%     8%       100%       100%     25%  
                                 

*    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 and web cast are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements, including the Company’s expected 2018 financial results, sales growth and Adjusted diluted earnings per share for the full year 2018, and the assumptions relating thereto, as well as the Company’s anticipated effective tax rate, capital expenditures and plans concerning repurchases under the Company’s currently authorized share repurchase program, the Company’s expectations for earnings from operations and amortization of intangibles from the Cardinal acquisition, the Company’s expectations regarding cash flow, and the Company’s expectations for the future presentation of services net sales, 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 “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 and in other of the Company’s subsequent filings with the Securities and Exchange Commission:      

  • actions of the Company’s competitors, 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 the requirements year over year;
  • changes in the information technology (“IT”) industry and/or rapid changes in technology;
  • risks associated with the integration and operation of acquired businesses;
  • possible significant fluctuations in the Company’s future operating results;
  • the risks associated with the Company’s international operations;
  • general economic conditions;
  • increased debt and interest expense and decreased availability of funds under the Company’s financing facilities;
  • the security of the Company’s electronic and other confidential information;
  • disruptions in the Company’s IT systems and voice and data networks;
  • failure to comply with the terms and conditions of the Company’s commercial and public sector contracts;
  • legal proceedings and the results of client and public sector audits and failure to comply with laws and regulations;
  • 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 Company’s dependence on certain key personnel;
  • natural disasters or other adverse occurrences;
  • exposure to changes in, interpretations of, or enforcement trends related to tax rules and regulations; and
  • intellectual property infringement claims and challenges to the Company’s registered trademarks and trade names.

Additionally, there may be other risks that are otherwise described from time to time in the reports that the Company files with the Securities and Exchange Commission.  Any forward-looking statements in this release 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.

CONTACTS:  GLYNIS BRYAN   HELEN JOHNSON
  CHIEF FINANCIAL OFFICER    SENIOR VP, FINANCE
  TEL.  480.333.3390   TEL.  480.333.3234
  EMAIL glynis.bryan@insight.com   EMAIL helen.johnson@insight.com

          

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
 
  Three Months Ended
June 30, 

  Six Months Ended
June 30,
 
   2018     2017     2018     2017   
Net sales:                        
Products  $   1,619,774   $   1,505,464   $   3,201,929   $   2,827,433  
Services      217,146       178,568       397,894       334,142  
Total net sales        1,836,920         1,684,032         3,599,823         3,161,575  
Costs of goods sold:                        
Products      1,488,921       1,372,015       2,927,655       2,573,072  
Services      83,622       60,638       167,786       128,897  
Total costs of goods sold      1,572,543       1,432,653       3,095,441       2,701,969  
Gross profit      264,377       251,379       504,382       459,606  
Operating expenses:                        
  Selling and administrative expenses     189,464       180,752       377,644       358,384  
  Severance and restructuring expenses     382       1,022       2,026       5,717  
  Acquisition-related expenses     94       276       94       3,223  
Earnings from operations     74,437       69,329       124,618       92,282  
Non-operating (income) expense:        
  Interest income     (170 )     (205 )     (323 )     (636 )
  Interest expense     5,102       4,326       11,117       8,259  
  Net foreign currency exchange (gain) loss     (275 )     251       (520 )     631  
  Other expense, net     324       326       626       641  
Earnings before income taxes     69,456       64,631       113,718       83,387  
Income tax expense     17,977       24,376       29,494       29,284  
Net earnings $   51,479   $   40,255   $   84,224   $   54,103  
                         
                         
Net earnings per share:                        
Basic $   1.45   $   1.13   $   2.36   $   1.52  
Diluted $   1.44   $   1.11   $   2.34   $   1.50  
                         
                         
Shares used in per share calculations:                        
Basic     35,483       35,765       35,698       35,684  
Diluted     35,815       36,169       36,039       36,177  
                         


INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
 
  June 30,  
  December 31,
 
  2018     2017   
ASSETS            
Current assets:             
Cash and cash equivalents $   248,122   $   105,831  
Accounts receivable, net     2,161,077       1,814,560  
Inventories     174,099       194,529  
Inventories not available for sale     4,528       36,956  
Other current assets     122,397       152,467  
Total current assets     2,710,223         2,304,343  
     
Property and equipment, net     74,694       75,252  
Goodwill     130,841       131,431  
Intangible assets, net     93,300       100,778  
Deferred income taxes     14,936       17,064  
Other assets     68,736       56,783  
    $   3,092,730   $   2,685,651  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities:            
Accounts payable – trade $   1,395,934   $   899,075  
Accounts payable – inventory financing facility     303,702       319,468  
Accrued expenses and other current liabilities     199,069       175,860  
Current portion of long-term debt     16,924       16,592  
Deferred revenue     66,179       88,979  
Total current liabilities     1,981,808       1,499,974  
     
Long-term debt     144,888       296,576  
Deferred income taxes     588       717  
Other liabilities     58,955       44,915  
      2,186,239       1,842,182  
Stockholders’ equity:            
Preferred stock     -       -  
Common stock     355       358  
Additional paid-in capital     315,619       317,155  
Retained earnings     625,212       550,220  
Accumulated other comprehensive loss – foreign currency translation adjustments   (34,695

)
  (24,264 )
Total stockholders’ equity     906,491       843,469  
  $   3,092,730   $   2,685,651  
             

 

 
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
 
     Six Months Ended June 30,
 
   2018    2017  
Cash flows from operating activities:             
Net earnings $   84,224   $   54,103  
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:    
  Depreciation and amortization of property and equipment     10,712       12,729  
  Amortization of intangible assets     7,214       8,433  
  Provision for losses on accounts receivable     1,336       2,225  
  Write-downs of inventories     1,396       1,077  
  Write-off of property and equipment     309       -  
  Non-cash stock-based compensation     7,047       6,749  
  Deferred income taxes     2,020       (25 )
Changes in assets and liabilities:    
  Increase in accounts receivable     (283,930 )     (230,762 )
  Decrease (increase) in inventories     18,281       (54,276 )
  Decrease (increase) in other assets     13,714       (64,875 )
  Increase in accounts payable     450,471       163,451  
Increase in deferred revenue     13,733       4,944  
Increase (decrease) in accrued expenses and other liabilities     24,428       (3,039 )
Net cash provided by (used in) operating activities     350,955       (99,266 )
Cash flows from investing activities:             
Purchases of property and equipment     (10,644 )     (10,274 )
Acquisitions, net of cash and cash equivalents acquired     -       (180,894 )
Net cash used in investing activities     (10,644 )     (191,168 )
Cash flows from financing activities:             
  Borrowings on senior revolving credit facility     280,184       386,609  
Repayments on senior revolving credit facility     (397,684 )     (386,609 )
Borrowings on accounts receivable securitization financing facility     1,696,500       1,802,889  
Repayments on accounts receivable securitization financing facility     (1,721,500 )     (1,718,389 )
Borrowings under Term Loan A     -       175,000  
Repayments under Term Loan A     (6,563 )     (4,375 )
Repayments under other financing agreements     (1,835 )     (3,957 )
Payments on capital lease obligations     (580 )     (255 )
Net (repayments) borrowings under inventory financing facility     (15,766 )     25,470  
Payment of debt issuance costs     (270 )     (1,123 )
Payment of payroll taxes on stock-based compensation through shares withheld    

  (2,925


)
   

  (4,548


)
Repurchases of common stock     (22,069 )     -  
Net cash (used in) provided by financing activities     (192,508 )     270,712  
Foreign currency exchange effect on cash, cash equivalents and restricted cash balances    

  (5,541


)
   

  11,739
 
Increase (decrease) in cash, cash equivalents and restricted cash     142,262       (7,983 )
Cash, cash equivalents and restricted cash at beginning of period     107,445       205,946  
Cash, cash equivalents and restricted cash at end of period $   249,707   $   197,963  
             


 
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
 
    Three Months Ended
  June 30, 
  Six Months Ended
  June 30, 
   2018     2017     2018     2017   
Adjusted Consolidated Earnings from Operations:
GAAP consolidated EFO $   74,437   $   69,329   $   124,618   $   92,282  
Severance and restructuring expenses     382       1,022       2,026       5,717  
Acquisition-related expenses       94         276         94       3,223  
Adjusted non-GAAP consolidated EFO $   74,913   $   70,627   $   126,738   $   101,222  
                         
         
Adjusted Consolidated Net Earnings:
GAAP consolidated net earnings $   51,479   $   40,255   $   84,224   $   54,103  
Severance and restructuring expenses     382       1,022       2,026       5,717  
Acquisition-related expenses     94       276       94       3,223  
Income taxes on non-GAAP adjustments     (117 )     (310 )     (408 )     (1,597 )
Adjusted non-GAAP consolidated net earnings $   51,838   $   41,243   $   85,936   $   61,446  
                         
         
Adjusted Diluted EPS:
GAAP diluted EPS $   1.44   $   1.11   $   2.34   $   1.50  
Severance and restructuring expenses     0.01       0.03       0.05       0.16  
Acquisition-related expenses     -       0.01       -       0.09  
Income taxes on non-GAAP adjustments     -       (0.01 )     (0.01 )     (0.05 )
Adjusted non-GAAP diluted EPS $   1.45   $   1.14   $   2.38   $   1.70  
                         
         
Adjusted North America Earnings from Operations:
GAAP EFO from North America segment $   54,879   $   50,407   $   97,167   $   73,647  
Severance and restructuring expenses     338       543       781       1,647  
Acquisition-related expenses     94       276         94           3,223  
Adjusted non-GAAP EFO from North America segment $   55,311   $   51,226   $   98,042   $   78,517  
                         
         
Adjusted EMEA Earnings from Operations:
GAAP EFO from EMEA segment $   15,029   $   13,482   $   21,464   $   12,355  
Severance and restructuring expenses     41       479       1,115       4,009  
Adjusted non-GAAP EFO from EMEA segment $   15,070   $   13,961   $   22,579   $   16,364  
                         
Adjusted APAC Earnings from Operations:                        
GAAP consolidated EFO $  4,529   $ 5,440   $ 5,987   $ 6,280  
Severance and restructuring expenses    3     _     130     61  
Adjusted non-GAAP consolidated EFO $  4,532   $ 5,440   $ 6,117   $ 6,341  
                         

 

 
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
 
    Six Months Ended
  June 30, 
   2018     2017   
Adjusted free cash flow:
Net cash provided by (used in) operating activities $   350,955   $   (99,266 )
Purchases of property and equipment     (10,644 )     (10,274 )
Net (repayments) borrowings under inventory financing facility     (15,766 )     25,470  
Adjusted non-GAAP free cash flow $   324,545   $   (84,070 )
             


    Twelve Months Ended
  June 30, 
   2018     2017   
Adjusted return on invested capital:
GAAP consolidated EFO $   211,469   $   169,359  
Severance and restructuring expenses     5,311       8,032  
Acquisition-related expenses     200       7,670  
Loss on sale of foreign entity     3,120       -  
Adjusted non-GAAP consolidated EFO     220,100       185,061  
Income tax expense*     61,628       68,473  
Adjusted non-GAAP consolidated EFO, net of tax $   158,472   $   116,588  
             
Average stockholders’ equity** $   848,730   $   723,534  
Average debt**     317,536       209,718  
Average cash**     ( 177,077 )     (186,443 )
Invested Capital $   989,189   $   746,809  
             
Adjusted non-GAAP ROIC***     16.02%       15.61%  

*            Assumed tax rate of 28% for 2018 and 37% for 2017.
**          Average of previous five quarters.
***        Computed as Adjusted non-GAAP consolidated EFO, net of tax divided by invested capital.

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Source: Insight Enterprises