NSIT
$50.96
Insight Enterpr
($1.14)
(2.19%)
Earnings Details
2nd Quarter June 2018
Wednesday, August 01, 2018 8:00:00 AM
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Summary

Insight Enterprises Raises Guidance

Insight Enterpr (NSIT) reported 2nd Quarter June 2018 earnings of $1.45 per share on revenue of $1.8 billion. The consensus earnings estimate was $1.26 per share on revenue of $1.8 billion. Revenue grew 9.1% on a year-over-year basis.

The company said it expects 2018 earnings of $4.50 to $4.60 per share. The company's previous guidance was earnings of $4.35 to $4.45 per share and the current consensus earnings estimate is $4.41 per share for the year ending December 31, 2018.

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
$1.45
Earnings Whisper
-
Consensus Estimate
$1.26
Reported Revenue
$1.84 Bil
Revenue Estimate
$1.82 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

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 30Six 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