NSIT
$56.86
Insight Enterpr
Earnings Details
4th Quarter December 2018
Thursday, February 14, 2019 8:01:00 AM
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Summary

Insight Enterprises Sees Earnings Above Estimates

Insight Enterpr (NSIT) reported 4th Quarter December 2018 earnings of $1.32 per share on revenue of $1.7 billion. The consensus earnings estimate was $1.12 per share on revenue of $1.8 billion. Revenue fell 2.0% compared to the same quarter a year ago.

The company said it expects 2019 earnings of $4.75 to $4.85 per share. The current consensus earnings estimate is $4.55 per share for the year ending December 31, 2019.

Insight Enterprises Inc is a provider of information technology (‘IT’) solutions to businesses and public sector institutions. The Company offers integrated solutions to the clients through its hardware, software, and services.

Results
Reported Earnings
$1.32
Earnings Whisper
-
Consensus Estimate
$1.12
Reported Revenue
$1.75 Bil
Revenue Estimate
$1.76 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Insight Enterprises, Inc. Reports Strong Fourth Quarter and Record Full Year 2018 Results

TEMPE, Ariz.--(BUSINESS WIRE)-- Insight Enterprises, Inc. (NASDAQ: NSIT) (the “Company”) today reported financial results for the quarter and full year ended December 31, 2018. Highlights include:

  • Gross profit up 9% year over year to $254.2 million for the fourth quarter and up 8% for the full year
  • Earnings from operations up 29% to $58.7 million for the fourth quarter and up 30% for the full year
  • Diluted earnings per share of $1.31 increased more than 100% for the fourth quarter year over year and record diluted earnings per share of $4.55 increased 82% for the full year
  • Cash flows provided by operations of $292.6 million in 2018 compared to cash used in operations of $307.1 million in 2017

In the fourth quarter of 2018, consolidated net sales were $1.75 billion, which was down 2%, year to year, reflecting a decline in software net sales offset by strong growth in services net sales. The decline in software net sales was due primarily to the adoption of ASC 606, which resulted in more software sales being recorded net and a higher mix of cloud and maintenance service offerings which are recorded net in services. Gross profit increased 9%, year over year, with gross margins increasing 140 basis points to 14.5% for the quarter. Earnings from operations grew 29%, year over year.

“Our fourth quarter results reflect a strong close to another great year for our company. We focused on sales in higher margin categories, including cloud subscription, maintenance and professional services offerings, which drove up gross margins 140 basis points and earnings from operations up double digits for the quarter,” stated Ken Lamneck, president and CEO.

For the full year 2018, consolidated net sales were $7.1 billion, up 6% year over year, reflecting strong growth in services including an increase in sales of cloud offerings and software maintenance. Gross profit increased 8%, year over year, with gross margins increasing 30 basis points to 14.0% for the full year. Earnings from operations grew 30%, year over year, with each of our geographic segments generating double digit growth in earnings from operations.

“We are happy to report another year of record results for Insight. Our global team delivered a third consecutive year of double-digit earnings growth while accelerating cash flow generation, expanding our services offerings and integrating strategic acquisitions,” stated Lamneck. ”Our solution area go-to-market strategy, deep technical talent and consistent focus on operational excellence have accelerated our financial performance and uniquely position us to compete in the marketplace in 2019 and beyond,” stated Lamneck.

KEY HIGHLIGHTS

Results for the Quarter:

  • Consolidated net sales of $1.75 billion for the fourth quarter of 2018 decreased 2% year to year when compared to the fourth quarter of 2017.
    • Net sales in North America decreased 2% year to year to $1.34 billion;
    • Net sales in EMEA increased less than 1% year over year to $368.4 million; and
    • Net sales in APAC decreased 7% year to year to $36.3 million.
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales for the fourth quarter decreased 1% year to year, with declines in net sales in North America and APAC of 2% each year to year, offset by growth in net sales in EMEA of 4%, year over year.
  • Consolidated gross profit of $254.2 million increased 9% compared to the fourth quarter of 2017, with consolidated gross margin expanding 140 basis points to 14.5% of net sales.
    • Gross profit in North America increased 7% year over year to $187.5 million (13.9% gross margin);
    • Gross profit in EMEA increased 12% year over year to $56.2 million (15.3% gross margin); and
    • Gross profit in APAC increased 32% year over year to $10.5 million (28.8% gross margin).
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit for the fourth quarter increased 10% year over year, with gross profit growth in North America, EMEA and APAC of 8%, 16% and 40%, respectively, year over year.
  • Consolidated earnings from operations of $58.7 million, or 3.4% of net sales, increased 29% compared to the fourth quarter of 2017.
    • Earnings from operations in North America increased 19% year over year to $44.4 million, or 3.3% of net sales;
    • Earnings from operations in EMEA increased 54% year over year to $11.0 million, or 3.0% of net sales; and
    • Earnings from operations in APAC increased more than 100% year over year to $3.2 million, or 8.9% of net sales.
  • Excluding the effects of fluctuating foreign currency exchange rates, for the fourth quarter, consolidated earnings from operations increased 30% year over year, with earnings from operations growth in North America, EMEA and APAC of 20%, 61% and more than 100%, respectively, year over year.
  • Adjusted consolidated earnings from operations increased 23% year over year to $59.4 million, or 3.4% of net sales for the fourth quarter of 2018. Adjusted earnings from operations grew in North America, EMEA and APAC by 15%, 40% and more than 100%, respectively, year over year.
  • Consolidated net earnings and diluted earnings per share for the fourth quarter of 2018 were $47.0 million and $1.31, respectively, at an effective tax rate of 14.0%.
  • Adjusted consolidated net earnings and Adjusted diluted earnings per share for the fourth quarter of 2018 were $47.6 million and $1.32, respectively.

Results for the Year:

  • Consolidated net sales of $7.1 billion for 2018 increased 6% compared to 2017.
    • Net sales in North America increased 3% year over year to $5.4 billion;
    • Net sales in EMEA increased 13% year over year to $1.5 billion; and
    • Net sales in APAC increased 12% year over year to $186.9 million.
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales increased 5% year over year, with growth in net sales in North America, EMEA and APAC of 4%, 9% and 13%, respectively, year over year.
  • Consolidated gross profit of $993.7 million increased 8% compared to 2017, with consolidated gross margin expanding 30 basis points to 14.0% of net sales.
    • Gross profit in North America increased 6% year over year to $732.7 million (13.7% gross margin);
    • Gross profit in EMEA increased 16% year over year to $221.5 million (14.5% gross margin); and
    • Gross profit in APAC increased 8% year over year to $39.6 million (21.2% gross margin).
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit increased 7% year over year, with gross profit growth in North America, EMEA and APAC of 6%, 12% and 9%, respectively, year over year.
  • Consolidated earnings from operations increased 30% compared to 2017 to $233.5 million, or 3.3% of net sales.
    • Earnings from operations in North America increased 21% year over year to $185.7 million, or 3.5% of net sales;
    • Earnings from operations in EMEA increased more than 100% year over year to $37.3 million, or 2.4% of net sales; and
    • Earnings from operations in APAC increased 27% year over year to $10.5 million, or 5.6% of net sales.
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations also increased 30% year over year, with earnings from operations growth in North America, EMEA and APAC of 21%, more than 100% and 27%, respectively, year over year.
  • Adjusted consolidated earnings from operations increased 21% year over year to $237.2 million, or 3.4% of net sales for 2018. Adjusted earnings from operations grew in North America, EMEA and APAC by 17%, 50% and 27%, respectively, year over year.
  • Consolidated net earnings and diluted earnings per share for 2018 were $163.7 million and $4.55, respectively, at an effective tax rate of 22.8%.
  • Adjusted consolidated net earnings and Adjusted diluted earnings per share for 2018 were $166.6 million and $4.63, respectively.

In discussing financial results for the three and twelve months ended December 31, 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 2019, the Company expects to deliver sales growth in the mid-single digit range in U.S. dollar terms and diluted earnings per share is expected to be between $4.75 and $4.85.

This outlook assumes:

  • an effective tax rate of 25% to 26% for the full year 2019;
  • capital expenditures of $20 to $25 million for the full year; and
  • an average share count for the full year of approximately 36.2 million shares.

This outlook does not reflect the repurchase of any shares under the Company’s currently authorized share repurchase program and assumes no severance and restructuring or acquisition-related expenses. 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.

CONFERENCE CALL AND WEBCAST

The Company will host a conference call and live web cast today at 9:00 a.m. ET to discuss fourth quarter and full year 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 1-877-524-8416 if located in the U.S., or 412-902-1028 for international callers, and enter the access code 13687122.

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) loss on sale of the Company’s Russia business in the 2017 period, (iii) certain acquisition-related expenses, and (iv) 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 under the inventory financing facility. Adjusted return on invested capital (“ROIC”) excludes (i) severance and restructuring expenses, (ii) loss on sale of the Company’s Russia business in the 2017 period, and (iii) certain acquisition-related expenses.

These non-GAAP measures are used by 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 December 31,     Twelve Months Ended December 31,
2018   2017   change 2018   2017   change
Insight Enterprises, Inc.  
Net sales:
Products $ 1,525,050 $ 1,612,338 (5 %) $ 6,249,938 $ 6,038,744 3 %
Services $ 223,996 $ 171,737 30 % $ 830,198 $ 664,879 25 %
Total net sales $ 1,749,046 $ 1,784,075 (2 %) $ 7,080,136 $ 6,703,623 6 %
Gross profit $ 254,164 $ 232,883 9 % $ 993,718 $ 918,570 8 %
Gross margin 14.5 % 13.1 % 140 bps 14.0 % 13.7 % 30 bps
Selling and administrative expenses $ 194,790 $ 184,554 6 % $ 756,529 $ 723,328 5 %
Severance and restructuring expenses $ 715 $ 2,791 (74 %) $ 3,424 $ 9,002 (62 %)
Loss on sale of foreign entity $ $ $ $ 3,646 *
Acquisition-related expenses $ $ $ 282 $ 3,329 (92 %)
Earnings from operations $ 58,659 $ 45,538 29 % $ 233,483 $ 179,265 30 %
Net earnings $ 47,041 $ 14,168 > 100% $ 163,677 $ 90,683 80 %
Diluted earnings per share $ 1.31 $ 0.39 > 100% $ 4.55 $ 2.50 82 %
 
North America
Net sales:
Products $ 1,169,924 $ 1,249,420 (6 %) $ 4,723,071 $ 4,662,473 1 %
Services $ 174,452 $ 128,971 35 % $ 639,910 $ 519,261 23 %
Total net sales $ 1,344,376 $ 1,378,391 (2 %) $ 5,362,981 $ 5,181,734 3 %
Gross profit $ 187,480 $ 174,569 7 % $ 732,695 $ 691,677 6 %
Gross margin 13.9 % 12.7 % 120 bps 13.7 % 13.3 % 40 bps
Selling and administrative expenses $ 142,453 $ 135,369 5 % $ 545,091 $ 530,792 3 %
Severance and restructuring expenses $ 583 $ 1,965 (70 %) $ 1,617 $ 4,010 (60 %)
Acquisition-related expenses $ $ $ 282 $ 3,223 (91 %)
Earnings from operations $ 44,444 $ 37,235 19 % $ 185,705 $ 153,652 21 %
 
Sales Mix ** **
Hardware 66 % 64 % 1 % 67 % 65 % 8 %
Software 21 % 27 % (24 %) 21 % 25 % (15 %)
Services   13 %   9 % 35 %   12 %   10 % 23 %
  100 %   100 % (2 %)   100 %   100 % 3 %
 
EMEA
Net sales:
Products $ 332,244 $ 333,540 $ 1,390,008 $ 1,246,952 11 %
Services $ 36,147 $ 33,267 9 % $ 140,233 $ 108,464 29 %
Total net sales $ 368,391 $ 366,807 $ 1,530,241 $ 1,355,416 13 %
Gross profit $ 56,219 $ 50,413 12 % $ 221,467 $ 190,310 16 %
Gross margin 15.3 % 13.7 % 160 bps 14.5 % 14.0 % 50 bps
Selling and administrative expenses $ 45,087 $ 42,442 6 % $ 182,470 $ 164,305 11 %
Severance and restructuring expenses $ 132 $ 826 (84 %) $ 1,677 $ 4,888 (66 %)
Loss on sale of foreign entity $ $ $ $ 3,646 *
Acquisition-related expenses $ $ $ $ 106 *
Earnings from operations $ 11,000 $ 7,145 54 % $ 37,320 $ 17,365 > 100%
 
Sales Mix ** **
Hardware 40 % 37 % 8 % 43 % 40 % 22 %
Software 50 % 54 % (6 %) 48 % 52 % 4 %
Services   10 %   9 % 9 %   9 %   8 % 29 %
  100 %   100 %   100 %   100 % 13 %
 
 
* 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.
 
 

FINANCIAL SUMMARY TABLE (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 
    Three Months Ended December 31,     Twelve Months Ended December 31,
2018   2017   change 2018   2017   change
APAC  
Net sales:
Products $ 22,882 $ 29,378 (22 %) $ 136,859 $ 129,319 6 %
Services $ 13,397 $ 9,499 41 % $ 50,055 $ 37,154 35 %
Total net sales $ 36,279 $ 38,877 (7 %) $ 186,914 $ 166,473 12 %
Gross profit $ 10,465 $ 7,901 32 % $ 39,556 $ 36,583 8 %
Gross margin 28.8 % 20.3 % 850 bps 21.2 % 22.0 % (80 bps)
Selling and administrative expenses $ 7,250 $ 6,743 8 % $ 28,968 $ 28,231 3 %
Severance and restructuring expenses $ $ $ 130 $ 104 25 %
Earnings from operations $ 3,215 $ 1,158 > 100% $ 10,458 $ 8,248 27 %
 
Sales Mix ** **
Hardware 19 % 25 % (26 %) 16 % 17 % 6 %
Software 44 % 51 % (20 %) 57 % 61 % 6 %
Services   37 %   24 % 41 %   27 %   22 % 35 %
  100 %   100 % (7 %)   100 %   100 % 12 %
 
 
* 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 2019 financial results, sales growth and diluted earnings per share for the full year 2019, and the assumptions relating thereto, as well as the Company’s anticipated effective tax rate and capital expenditures, expected average share count, and the Company’s expectations regarding cash flow, 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.

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 
    Three Months Ended

December 31,

  Twelve Months Ended

December 31,

2018   2017 2018   2017
Net sales:
Products $ 1,525,050 $ 1,612,338 $ 6,249,938 $ 6,038,744
Services   223,996   171,737   830,198   664,879
Total net sales   1,749,046   1,784,075   7,080,136   6,703,623
Costs of goods sold:
Products 1,392,219 1,475,916 5,711,400 5,512,402
Services   102,663   75,276   375,018   272,651
Total costs of goods sold   1,494,882   1,551,192   6,086,418   5,785,053
Gross profit 254,164 232,883 993,718 918,570
Operating expenses:
Selling and administrative expenses 194,790 184,554 756,529 723,328
Severance and restructuring expenses 715 2,791 3,424 9,002
Loss on sale of foreign entity 3,646
Acquisition-related expenses       282   3,329
Earnings from operations 58,659 45,538 233,483 179,265
Non-operating (income) expense:
Interest income (422 ) (346 ) (1,075 ) (1,209 )
Interest expense 5,563 5,360 22,812 19,174
Net foreign currency exchange (gain) loss (1,517 ) (117 ) (1,498 ) 855
Other expense, net   323   367   1,342   1,347
Earnings before income taxes 54,712 40,274 211,902 159,098
Income tax expense   7,671   26,106   48,225   68,415
Net earnings $ 47,041 $ 14,168 $ 163,677 $ 90,683
 
Net earnings per share:
Basic $ 1.33 $ 0.40 $ 4.60 $ 2.54
Diluted $ 1.31 $ 0.39 $ 4.55 $ 2.50
 
Shares used in per share calculations:
Basic   35,480   35,809   35,586   35,741
Diluted   35,999   36,272   36,009   36,207
 
 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

(UNAUDITED)

 
    December 31,

2018

  December 31,

2017

ASSETS
Current assets:
Cash and cash equivalents $ 142,655 $ 105,831
Accounts receivable, net 1,931,736 1,814,560
Inventories 148,503 194,529
Inventories not available for sale 36,956
Other current assets   115,683   152,467
Total current assets 2,338,577 2,304,343
 
Property and equipment, net 72,954 75,252
Goodwill 166,841 131,431
Intangible assets, net 112,179 100,778
Deferred income taxes 7,967 17,064
Other assets   77,429   56,783
$ 2,775,947 $ 2,685,651
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable – trade $ 978,104 $ 899,075
Accounts payable – inventory financing facility 304,130 319,468
Accrued expenses and other current liabilities 190,733 175,860
Current portion of long-term debt 1,395 16,592
Deferred revenue   62,300   88,979
Total current liabilities 1,536,662 1,499,974
 
Long-term debt 195,525 296,576
Deferred income taxes 683 717
Other liabilities   56,088   44,915
  1,788,958   1,842,182
Stockholders’ equity:
Preferred stock
Common stock 355 358
Additional paid-in capital 323,622 317,155
Retained earnings 704,665 550,220
Accumulated other comprehensive loss – foreign currency

translation adjustments

  (41,653 )   (24,264 )
Total stockholders’ equity   986,989   843,469
$ 2,775,947 $ 2,685,651
 
 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

 
    Twelve Months Ended

December 31,

2018   2017
Cash flows from operating activities:
Net earnings $ 163,677 $ 90,683
Adjustments to reconcile net earnings to net cash provided by

(used in) operating activities:

Depreciation and amortization of property and equipment 21,721 25,787
Amortization of intangible assets 15,737 16,812
Provision for losses on accounts receivable 4,776 5,245
Write-downs of inventories 2,912 2,776
Write-off of property and equipment 393 418
Non-cash stock-based compensation 15,355 12,826
Deferred income taxes 9,126 19,139
Loss on sale of foreign entity 3,646
Loss on extinguishment of debt 624
Changes in assets and liabilities:
Increase in accounts receivable (46,883 ) (208,065 )
Decrease (increase) in inventories 46,534 (14,046 )
Decrease in other assets 12,424 3,342
Increase (decrease) in accounts payable 29,844 (237,457 )
Increase (decrease) in deferred revenue 9,178 (27,184 )
Increase (decrease) in accrued expenses and other liabilities   7,229   (988 )
Net cash provided by (used in) operating activities   292,647   (307,066 )
Cash flows from investing activities:
Acquisitions, net of cash and cash equivalents acquired (74,938 ) (186,932 )
Purchases of property and equipment (17,251 ) (19,230 )
Proceeds from sale of foreign entity   479   1,517
Net cash used in investing activities   (91,710 )   (204,645 )
Cash flows from financing activities:
Borrowings on senior revolving credit facility 569,232 1,151,216
Repayments on senior revolving credit facility (686,732 ) (1,033,716 )
Borrowings on accounts receivable securitization financing facility 3,357,000 3,961,389
Repayments on accounts receivable securitization financing facility (3,188,000 ) (3,975,889 )
Borrowings under Term Loan A 175,000
Repayments under Term Loan A (166,250 ) (8,750 )
Repayments under other financing agreements (2,372 ) (5,636 )
Payments on capital lease obligations (999 ) (1,089 )
Net (repayments) borrowings under inventory financing facility (15,338 ) 141,037
Payment of debt issuance costs (270 ) (1,123 )
Payment of payroll taxes on stock-based compensation through

shares withheld

(3,230 ) (5,318 )
Repurchases of common stock   (22,069 )  
Net cash (used in) provided by financing activities   (159,028 )   397,121
Foreign currency exchange effect on cash, cash equivalents and

restricted cash balances

  (5,061 )   16,089
Increase (decrease) in cash, cash equivalents and restricted cash 36,848 (98,501 )
Cash, cash equivalents and restricted cash at beginning of period   107,445   205,946
Cash, cash equivalents and restricted cash at end of period $ 144,293 $ 107,445
 
 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 
    Three Months Ended

December 31,

  Twelve Months Ended

December 31,

2018   2017 2018   2017
Adjusted Consolidated Earnings from Operations:
GAAP consolidated earnings from operations ("EFO") $ 58,659 $ 45,538 $ 233,483 $ 179,265
Severance and restructuring expenses 715 2,791 3,424 9,002
Loss on sale of foreign entity 3,646
Acquisition-related expenses       282   3,329
Adjusted non-GAAP consolidated EFO $ 59,374 $ 48,329 $ 237,189 $ 195,242
 
Adjusted Consolidated Net Earnings:
GAAP consolidated net earnings $ 47,041 $ 14,168 $ 163,677 $ 90,683
Severance and restructuring expenses 715 2,791 3,424 9,002
Loss on sale of foreign entity 3,646
Acquisition-related expenses 282 3,329
Income taxes on non-GAAP adjustments (169 ) (806 ) (756 ) (2,552 )

Tax expense related to U.S. federal tax reform

    13,363     13,363
Adjusted non-GAAP consolidated net earnings $ 47,587 $ 29,516 $ 166,627 $ 117,471
 
Adjusted Diluted Earnings Per Share:
GAAP diluted EPS $ 1.31 $ 0.39 $ 4.55 $ 2.50
Severance and restructuring expenses 0.02 0.08 0.09 0.25
Loss on sale of foreign entity 0.10
Acquisition-related expenses 0.01 0.09
Income taxes on non-GAAP adjustments (0.01 ) (0.03 ) (0.02 ) (0.07 )

Tax expense related to U.S. federal tax reform

    0.37     0.37
Adjusted non-GAAP diluted EPS $ 1.32 $ 0.81 $ 4.63 $ 3.24
 
Adjusted North America Earnings from Operations:
GAAP EFO from North America segment $ 44,444 $ 37,235 $ 185,705 $ 153,652
Severance and restructuring expenses 583 1,965 1,617 4,010
Acquisition-related expenses       282   3,223
Adjusted non-GAAP EFO from North America

segment

$ 45,027 $ 39,200 $ 187,604 $ 160,885
 
Adjusted EMEA Earnings from Operations:
GAAP EFO from EMEA segment $ 11,000 $ 7,145 $ 37,320 $ 17,365
Severance and restructuring expenses 132 826 1,677 4,888
Loss on sale of foreign entity 3,646
Acquisition-related expenses         106
Adjusted non-GAAP EFO from EMEA segment $ 11,132 $ 7,971 $ 38,997 $ 26,005
 
Adjusted APAC Earnings from Operations:
GAAP EFO from APAC segment $ 3,215 $ 1,158 $ 10,458 $ 8,248
Severance and restructuring expenses       130   104
Adjusted non-GAAP EFO from APAC segment $ 3,215 $ 1,158 $ 10,588 $ 8,352
 
 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

   
Twelve Months Ended

December 31,

2018   2017
Adjusted free cash flow:
Net cash provided by (used in) operating activities $ 292,647 $ (307,066 )
Purchases of property and equipment (17,251 ) (19,230 )
Net (repayments) borrowings under inventory financing facility   (15,338 )   141,037
Adjusted non-GAAP free cash flow $ 260,058 $ (185,259 )
 
Twelve Months Ended

December 31,

2018 2017
Adjusted return on invested capital:
GAAP consolidated EFO $ 233,483 $ 179,265
Severance and restructuring expenses 3,424 9,002
Loss on sale of foreign entity 3,646
Acquisition-related expenses   282   3,329
Adjusted non-GAAP consolidated EFO 237,189 195,242
Income tax expense*   66,413   72,240
Adjusted non-GAAP consolidated EFO, net of tax $ 170,776 $ 123,002
Average stockholders’ equity** $ 912,111 $ 780,624
Average debt** 240,504 316,050
Average cash**   (141,580 )   (184,723 )
Invested Capital $ 1,011,035 $ 911,951
 
Adjusted non-GAAP ROIC (from GAAP consolidated EFO) *** 16.63 % 12.38 %
Adjusted non-GAAP ROIC (from non-GAAP consolidated EFO) **** 16.89 % 13.49 %
 
 
* Assumed tax rate of 28% for 2018 and 37% for 2017.
** Average of previous five quarters.
*** Computed as GAAP consolidated EFO, net of tax of $65,375 and $66,328 for the twelve months ended December 31, 2018 and 2017, respectively, divided by invested capital.
**** Computed as Adjusted non-GAAP consolidated EFO, net of tax divided by invested capital.

GLYNIS BRYAN
CHIEF FINANCIAL OFFICER
480.333.3390
glynis.bryan@insight.com

HELEN JOHNSON
SENIOR VP, FINANCE
480.333.3234
helen.johnson@insight.com

Source: Insight Enterprises, Inc.