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Insight Enterprises, Inc. Reports Record Fourth Quarter and Full Year 2021 Results

Insight Enterprises, Inc. (NASDAQ: NSIT) (the “Company”) today reported financial results for the quarter and full year ended December 31, 2021. Highlights include:

  • Net sales increased 13% to a record $9.44 billion for the full year
  • Gross profit increased 11% to $1.45 billion with gross margin contracting 30 basis points to 15.3% for the full year
  • Earnings from operations increased 22% to $332.1 million for the full year and was 3.5% of net sales
  • Adjusted earnings from operations increased 12% to $362.5 million for the full year and was 3.8% of net sales
  • Diluted earnings per share of $5.95 increased 22% for the full year
  • Adjusted diluted earnings per share of $7.10 increased 15% for the full year

In the fourth quarter of 2021, net sales increased 12%, year over year. Gross profit also increased 12% while gross margin remained consistent at 15.0% compared to the fourth quarter of 2020. Earnings from operations of $93.4 million increased 12% compared to $83.0 million in the fourth quarter of 2020. Adjusted earnings from operations of $102.9 million increased 12% compared to $92.1 million in the fourth quarter of 2020. Diluted earnings per share for the quarter was $1.69, up 13%, year over year, and Adjusted diluted earnings per share was $2.03, up 15% year over year.

“During the fourth quarter, our net sales were $2.6 billion, representing record net sales in a quarter for Insight,” stated Joyce Mullen, President and Chief Executive Officer. “We had hardware net sales growth of 13% and drove services gross profit growth of 14%, year over year, allowing us to maintain gross margin of 15.0%, which was consistent with the prior year quarter,” stated Mullen.

For the full year 2021, consolidated net sales were $9.44 billion, up 13% year over year. Gross profit increased 11%, year over year, with gross margins contracting 30 basis points to 15.3% for the full year. Earnings from operations grew 22%, year over year, to $332.1 million. Cash flow from operations was strong at $163.7 million.

“Once again, our teammates faced a challenging year, navigating the uncertainty of the macro environment. I could not be more pleased with their performance as they maintained focus on solving our clients’ biggest technology and solutions challenges. We set company records for full year net sales, gross profit, Adjusted earnings from operations and Adjusted diluted earnings per share,” stated Joyce Mullen. “While we are proud of our accomplishments in 2021, we are focused on the opportunities ahead of us in 2022, as we strive to expand our reputation and capabilities as an industry recognized global solutions integrator. What really makes our go-to-market strategy impactful, is the ability to expand to adjacencies within our areas of expertise. We have the ability to not only deliver immediate results for clients today, but to guide them through their longer term digital transformation,” stated Mullen.

KEY HIGHLIGHTS

Results for the Quarter:

  • Consolidated net sales for the fourth quarter of 2021 of $2.57 billion increased 12%, year over year, when compared to the fourth quarter of 2020.
    • Net sales in North America increased 13%, year over year, to $2.09 billion;
    • Net sales in EMEA increased 6%, year over year, to $426.4 million; and
    • Net sales in APAC increased 19%, year over year, to $53.6 million.
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales were up 12%, year over year, with growth in net sales in North America, EMEA and APAC of 13%, 7% and 19%, respectively, year over year.
  • Consolidated gross profit increased to $384.9 million, an increase of 12% compared to the fourth quarter of 2020, with consolidated gross margin remaining consistent at 15.0% of net sales.
    • Gross profit in North America increased 13%, year over year, to $307.1 million (14.7% gross margin);
    • Gross profit in EMEA increased 9%, year over year, to $63.9 million (15.0% gross margin); and
    • Gross profit in APAC increased 21%, year over year, to $13.9 million (26.0% gross margin).
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit was up 12%, year over year, with gross profit growth in North America, EMEA and APAC of 13%, 10% and 22%, respectively, year over year.
  • Consolidated earnings from operations increased 12% compared to the fourth quarter of 2020 to $93.4 million, or 3.6% of net sales.
    • Earnings from operations in North America increased 8%, year over year, to $76.5 million, or 3.7% of net sales;
    • Earnings from operations in EMEA increased 35%, year over year, to $12.5 million, or 2.9% of net sales; and
    • Earnings from operations in APAC increased 38%, year over year, to $4.4 million, or 8.2% of net sales.
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations were up 13%, year over year, with increased earnings from operations in North America, EMEA and APAC of 8%, 38% and 37%, respectively, year over year.
  • Adjusted earnings from operations increased 12% compared to the fourth quarter of 2020 to $102.9 million, or 4.0% of net sales.
    • Adjusted earnings from operations in North America increased 9%, year over year, to $85.1 million, or 4.1% of net sales;
    • Adjusted earnings from operations in EMEA increased 24%, year over year, to $13.2 million, or 3.1% of net sales; and
    • Adjusted earnings from operations in APAC increased 37%, year over year, to $4.7 million, or 8.7% of net sales.
  • Consolidated net earnings and diluted earnings per share for the fourth quarter of 2021 were $62.1 million and $1.69, respectively, at an effective tax rate of 25.1%.
  • Adjusted consolidated net earnings and Adjusted diluted earnings per share for the fourth quarter of 2021 were $71.5 million and $2.03, respectively.

Results for the Year:

  • Consolidated net sales of $9.44 billion for 2021 increased 13%, year over year, when compared to 2020.
    • Net sales in North America increased 14%, year over year, to $7.52 billion;
    • Net sales in EMEA increased 10%, year over year, to $1.70 billion; and
    • Net sales in APAC increased 24%, year over year, to $211.7 million.
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales were up 13%, year over year, with growth in net sales in North America, EMEA and APAC of 13%, 4% and 15%, respectively, year over year.
  • Consolidated gross profit increased to $1.45 billion, an increase of 11% compared to 2020, with consolidated gross margin contracting 30 basis points to 15.3% of net sales.
    • Gross profit in North America increased 11%, year over year, to $1.14 billion (15.1% gross margin);
    • Gross profit in EMEA increased 10%, year over year, to $258.9 million (15.2% gross margin); and
    • Gross profit in APAC increased 25%, year over year, to $53.2 million (25.1% gross margin).
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit was up 10%, year over year, with gross profit growth in North America, EMEA and APAC of 11%, 4% and 17%, respectively, year over year.
  • Consolidated earnings from operations increased 22% compared to 2020 to $332.1 million, or 3.5% of net sales.
    • Earnings from operations in North America increased 23%, year over year, to $268.8 million, or 3.6% of net sales;
    • Earnings from operations in EMEA increased 16%, year over year, to $46.9 million, or 2.8% of net sales; and
    • Earnings from operations in APAC increased 36%, year over year, to $16.3 million, or 7.7% of net sales.
  • Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations were up 20%, year over year, with increased earnings from operations in North America, EMEA and APAC of 22%, 10% and 27%, respectively.
  • Adjusted earnings from operations increased 12% compared to 2020 to $362.5 million, or 3.8% of net sales.
    • Adjusted earnings from operations in North America increased 12%, year over year, to $295.3 million, or 3.9% of net sales;
    • Adjusted earnings from operations in EMEA increased 10%, year over year, to $50.2 million, or 2.9% of net sales; and
    • Adjusted earnings from operations in APAC increased 35%, year over year, to $17.0 million, or 8.0% of net sales.
  • Consolidated net earnings and diluted earnings per share for 2021 were $219.3 million and $5.95, respectively, at an effective tax rate of 25.0%.
  • Adjusted consolidated net earnings and Adjusted diluted earnings per share for 2021 were $251.6 million and $7.10, respectively.

In discussing financial results for the three and twelve months ended December 31, 2021 and 2020 in this press release, the Company refers to certain financial measures that are adjusted from the financial results prepared in accordance with United States generally accepted accounting principles (“GAAP”). When referring to non-GAAP measures, the Company refers to them as “Adjusted.” See “Use of Non-GAAP Financial Measures” for additional information. A tabular reconciliation of financial measures prepared in accordance with GAAP to the non-GAAP financial measures is included at the end of this press release.

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

The tax effect of Adjusted amounts referenced herein were computed using the statutory tax rate for the taxing jurisdictions in the operating segment in which the related expenses were recorded, adjusted for the effects of valuation allowances on net operating losses in certain jurisdictions.

GUIDANCE

For the full year 2022, the Company expects to deliver mid single-digit net sales growth and Adjusted diluted earnings per share is expected to be between $7.65 and $7.85.

This outlook assumes

  • interest expense between $30 million and $35 million;
  • an effective tax rate of 25% to 26% for the full year 2022;
  • capital expenditures of $75 to $80 million, including final completion of our new corporate headquarters; and
  • an average share count for the full year of 35.6 million shares.

This outlook excludes acquisition-related intangibles amortization expense of approximately $31 million and assumes no acquisition-related or severance and restructuring expenses. Due to the inherent difficulty of forecasting some of these types of expenses, which impact net earnings, diluted earnings per share and Adjusted selling and administrative expenses, the Company is unable to reasonably estimate the impact of such expenses, if any, to net earnings, diluted earnings per share and Adjusted selling and administrative expenses. Accordingly, the Company is unable to provide a reconciliation of GAAP to non-GAAP diluted earnings per share for the full year 2022 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 fourth quarter and full year 2021 results of operations. A live web cast of the conference call (in listen-only mode) will be available on the Company’s web site at http://investor.insight.com/, and a replay of the web cast will be available on the Company’s web site for a limited time following the call. To access the live conference call, please register in advance using this event link. Upon registering, participants will receive dial-in information via email, as well as a unique registrant ID, event passcode, and detailed instructions regarding how to join the call.

USE OF NON-GAAP FINANCIAL MEASURES

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

These non-GAAP measures are used by the Company and its management to evaluate financial performance against budgeted amounts, to calculate incentive compensation, to assist in forecasting future performance and to compare the Company’s results to those of the Company’s competitors. The Company believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency, facilitate comparisons to prior periods and the Company’s competitors’ results and assist in forecasting performance for future periods. These non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

FINANCIAL SUMMARY TABLE

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

Three Months Ended December 31,

Twelve Months Ended December 31,

 

2021

2020

change

2021

2020

change

Insight Enterprises, Inc.

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

Products

$

2,213,690

 

$

1,989,338

 

11

%

$

8,120,127

 

$

7,172,155

 

13

%

Services

$

352,333

 

$

301,977

 

17

%

$

1,315,986

 

$

1,168,424

 

13

%

Total net sales

$

2,566,023

 

$

2,291,315

 

12

%

$

9,436,113

 

$

8,340,579

 

13

%

Gross profit

$

384,855

 

$

342,654

 

12

%

$

1,447,557

 

$

1,299,942

 

11

%

Gross margin

 

15.0

%

 

15.0

%

 

 

15.3

%

 

15.6

%

(30 bps)

Selling and administrative expenses

$

289,855

 

 

257,167

 

13

%

$

1,117,130

 

$

1,013,765

 

10

%

Severance and restructuring expenses

$

1,583

 

$

2432

 

(35

%)

$

(1,634

)

$

12,394

 

> 100%

Acquisition and integration related expenses

$

 

$

13

 

*

$

 

$

2,208

 

*

Earnings from operations

$

93,417

 

$

83,042

 

12

%

$

332,061

 

$

271,575

 

22

%

Net earnings

$

62,133

 

$

53,388

 

16

%

$

219,345

 

$

172,640

 

27

%

Diluted earnings per share

$

1.69

 

$

1.50

 

13

%

$

5.95

 

$

4.87

 

22

%

 

 

 

 

 

 

 

North America

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

Products

$

1,803,056

 

$

1,600,261

 

13

%

$

6,478,637

 

$

5,679,052

 

14

%

Services

$

282,981

 

$

243,075

 

16

%

$

1,041,686

 

$

935,980

 

11

%

Total net sales

$

2,086,037

 

$

1,843,336

 

13

%

$

7,520,323

 

$

6,615,032

 

14

%

Gross profit

$

307,082

 

$

272,396

 

13

%

$

1,135,450

 

$

1,021,388

 

11

%

Gross margin

 

14.7

%

 

14.8

%

(10 bps)

 

15.1

%

 

15.4

%

(30 bps)

Selling and administrative expenses

$

229,346

 

$

200,364

 

14

%

$

869,766

 

$

790,913

 

10

%

Severance and restructuring expenses

$

1,232

 

$

1,474

 

(16

%)

$

(3,129

)

$

9,273

 

> 100%

Acquisition and integration related expenses

$

 

$

13

 

*

$

 

$

2,004

 

*

Earnings from operations

$

76,504

 

$

70,545

 

8

%

$

268,813

 

$

219,198

 

23

%

 

 

 

 

 

 

 

Sales Mix

 

 

**

 

 

**

Hardware

 

70

%

 

67

%

19

%

 

69

%

 

67

%

17

%

Software

 

16

%

 

20

%

(7

%)

 

17

%

 

19

%

4

%

Services

 

14

%

 

13

%

16

%

 

14

%

 

14

%

11

%

 

 

100

%

 

100

%

13

%

 

100

%

 

100

%

14

%

 

 

 

 

 

 

 

EMEA

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

Products

$

376,877

 

$

358,314

 

5

%

$

1,502,176

 

$

1,378,387

 

9

%

Services

$

49,516

 

$

44,728

 

11

%

$

201,875

 

$

176,838

 

14

%

Total net sales

$

426,393

 

$

403,042

 

6

%

$

1,704,051

 

$

1,555,225

 

10

%

Gross profit

$

63,851

 

$

58,792

 

9

%

$

258,862

 

$

236,046

 

10

%

Gross margin

 

15.0

%

 

14.6

%

40 bps

 

15.2

%

 

15.2

%

 

Selling and administrative expenses

$

51,150

 

$

48,626

 

5

%

$

210,616

 

$

192,485

 

9

%

Severance and restructuring expenses

$

193

 

$

871

 

(78

%)

$

1,328

 

$

2,989

 

(56

%)

Acquisition and integration related expenses

$

 

$

 

*

$

 

$

204

 

*

Earnings from operations

$

12,508

 

$

9,295

 

35

%

$

46,918

 

$

40,368

 

16

%

 

 

 

 

 

 

 

Sales Mix

 

 

**

 

 

**

Hardware

 

35

%

 

37

%

(1

%)

 

40

%

 

40

%

10

%

Software

 

53

%

 

52

%

10

%

 

48

%

 

49

%

9

%

Services

 

12

%

 

11

%

11

%

 

12

%

 

11

%

14

%

 

 

100

%

 

100

%

6

%

 

100

%

 

100

%

10

%

 

 

 

 

 

 

 

APAC

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

Products

$

33,757

 

$

30,763

 

10

%

$

139,314

 

$

114,716

 

21

%

Services

$

19,836

 

$

14,174

 

40

%

$

72,425

 

$

55,606

 

30

%

Total net sales

$

53,593

 

$

44,937

 

19

%

$

211,739

 

$

170,322

 

24

%

Gross profit

$

13,922

 

$

11,466

 

21

%

$

53,245

 

$

42,508

 

25

%

Gross margin

 

26.0

%

 

25.5

%

50 bps

 

25.1

%

 

25.0

%

10 bps

Selling and administrative expenses

$

9,359

 

$

8,177

 

14

%

$

36,748

 

$

30,367

 

21

%

Severance and restructuring expenses

$

158

 

$

87

 

82

%

$

167

 

$

132

 

27

%

Earnings from operations

$

4,405

 

$

3,202

 

38

%

$

16,330

 

$

12,009

 

36

%

 

 

 

 

 

 

 

Sales Mix

 

 

**

 

 

**

Hardware

 

27

%

 

24

%

34

%

 

23

%

 

19

%

55

%

Software

 

36

%

 

44

%

(3

)%

 

43

%

 

48

%

9

%

Services

 

37

%

 

32

%

40

%

 

34

%

 

33

%

30

%

 

 

100

%

 

100

%

19

%

 

100

%

 

100

%

24

%

* Percentage change not considered meaningful.

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

FORWARD-LOOKING INFORMATION

Certain statements in this release and the related conference call, web cast and presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including those related to our future responses to and the potential impact of coronavirus strain COVID-19 (“COVID-19”) on our Company, the Company’s future financial performance and results of operations, including net sales growth, Adjusted diluted earnings per share, Adjusted selling and administrative expenses, the Company’s anticipated effective tax rate, capital expenditures, expected average share count, the Company’s expectations regarding cash flow, the Company’s expectations regarding current supply constraints pipeline, and shipment of backlog, future trends in the IT market, our business strategy and our strategic initiatives, are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. There can be no assurances that the results discussed by the forward-looking statements will be achieved, and actual results may differ materially from those set forth in the forward-looking statements. Some of the important factors that could cause the Company’s actual results to differ materially from those projected in any forward-looking statements include, but are not limited to, the following, which are discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including in “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 to be filed with the SEC:

  • actions of the Company’s competitors, including manufacturers and publishers of products the Company sells;
  • the Company’s reliance on its partners for product availability, competitive products to sell and marketing funds and purchasing incentives, which can change significantly in the amounts made available and in the requirements year over year;
  • the Company’s ability to keep pace with rapidly evolving technological advances and the evolving competitive marketplace;
  • the duration and severity of the COVID-19 pandemic and its effects on the Company’s business, results of operations and financial condition, as well as the widespread outbreak of any other illnesses or communicable diseases;
  • general economic conditions, economic uncertainties and changes in geopolitical conditions;
  • changes in the IT industry and/or rapid changes in technology;
  • supply constraints for hardware, including devices;
  • accounts receivable risks, including increased credit loss experience or extended payment terms with the Company’s clients;
  • the Company’s reliance on independent shipping companies;
  • the risks associated with the Company’s international operations;
  • natural disasters or other adverse occurrences;
  • disruptions in the Company’s IT systems and voice and data networks;
  • cyberattacks or breaches of data privacy and security regulations;
  • intellectual property infringement claims and challenges to the Company’s registered trademarks and trade names;
  • legal proceedings, client audits and failure to comply with laws and regulations;
  • failure to comply with the terms and conditions of the Company’s commercial and public sector contracts;
  • exposure to changes in, interpretations of, or enforcement trends related to tax rules and regulations;
  • the Company’s potential to draw down a substantial amount of indebtedness;
  • the conditional conversion feature of the Company’s convertible senior notes, which has been triggered, may adversely affect the Company’s financial condition and operating results;
  • the Company is subject to counterparty risk with respect to certain hedge and warrant transactions entered into in connection with the issuance of the convertible senior notes;
  • risks associated with the discontinuation of LIBOR as a benchmark rate;
  • increased debt and interest expense and decreased availability of funds under the Company’s financing facilities;
  • possible significant fluctuations in the Company’s future operating results as well as seasonality and variability in client demands;
  • the Company’s dependence on certain key personnel and the Company’s ability to attract, train and retain skilled teammates;
  • risks associated with the integration and operation of acquired businesses, including the achievement of expected synergies and benefits; and
  • future sales of the Company’s common stock or equity-linked securities in the public market could lower the market price for our common stock.

Additionally, there may be other risks that are otherwise described from time to time in the reports that the Company files with the SEC. Any forward-looking statements in this release, the related conference call, webcast and presentation speak only as of the date on which they are made and should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others. The Company assumes no obligation to update, and, except as may be required by law, does not intend to update, any forward-looking statements. The Company does not endorse any projections regarding future performance that may be made by third parties. NSIT-F

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

Three Months Ended

Twelve Months Ended

December 31,

December 31,

 

2021

2020

2021

2020

Net sales:

 

 

 

 

Products

$

2,213,690

 

$

1,989,338

$

8,120,127

 

$

7,172,155

Services

 

352,333

 

 

301,977

 

1,315,986

 

 

1,168,424

Total net sales

 

2,566,023

 

 

2,291,315

 

9,436,113

 

 

8,340,579

Costs of goods sold:

 

 

 

 

Products

 

2,013,825

 

 

1,808,504

 

7,380,908

 

 

6,497,001

Services

 

167,343

 

 

140,157

 

607,648

 

 

543,636

Total costs of goods sold

 

2,181,168

 

 

1,948,661

 

7,988,556

 

 

7,040,637

Gross profit

 

384,855

 

 

342,654

 

1,447,557

 

 

1,299,942

Operating expenses:

 

 

 

 

Selling and administrative expenses

 

289,855

 

 

257,167

 

1,117,130

 

 

1,013,765

Severance and restructuring expenses, net

 

1,583

 

 

2,432

 

(1,634

)

 

12,394

Acquisition and integration related expenses

 

 

 

13

 

 

 

2,208

Earnings from operations

 

93,417

 

 

83,042

 

332,061

 

 

271,575

Non-operating (income) expense:

 

 

 

 

Interest expense, net

 

10,632

 

 

10,434

 

40,516

 

 

41,594

Other (income) expense, net

 

(157

)

 

693

 

(1,012

)

 

1,529

Earnings before income taxes

 

82,942

 

 

71,915

 

292,557

 

 

228,452

Income tax expense

 

20,809

 

 

18,527

 

73,212

 

 

55,812

Net earnings

$

62,133

 

$

53,388

$

219,345

 

$

172,640

 

 

 

 

 

Net earnings per share:

 

 

 

 

Basic

$

1.78

 

$

1.52

$

6.27

 

$

4.92

Diluted

$

1.69

 

$

1.50

$

5.95

 

$

4.87

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

Basic

 

34,892

 

 

35,098

 

35,011

 

 

35,117

Diluted

 

36,871

 

 

35,523

 

36,863

 

 

35,444

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In THOUSANDS)

(UNAUDITED)

 

December 31, 2021

December 31, 2020

ASSETS

 

 

Current assets:

 

 

Cash and cash equivalents

$

103,840

 

$

128,313

 

Accounts receivable, net

 

2,936,732

 

 

2,685,448

 

Inventories

 

328,101

 

 

185,650

 

Other current assets

 

199,638

 

 

177,039

 

Total current assets

$

3,568,311

 

$

3,176,450

 

 

 

 

Property and equipment, net

 

176,263

 

 

146,016

 

Goodwill

 

428,346

 

 

429,368

 

Intangible assets, net

 

214,788

 

 

246,915

 

Other assets

 

301,372

 

 

311,983

 

 

$

4,689,080

 

$

4,310,732

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

Accounts payable – trade

$

1,779,854

 

$

1,461,312

 

Accounts payable – inventory financing facilities

 

311,878

 

 

356,930

 

Accrued expenses and other current liabilities

 

423,489

 

 

408,117

 

Current portion of long-term debt

 

36

 

 

1,105

 

Total current liabilities

 

2,515,257

 

 

2,227,464

 

 

 

 

Long-term debt

 

361,570

 

 

437,581

 

Deferred income taxes

 

47,073

 

 

33,209

 

Other liabilities

 

255,953

 

 

270,049

 

 

 

3,179,853

 

 

2,968,303

 

Stockholders’ equity:

 

 

Preferred stock

 

 

 

 

Common stock

 

349

 

 

351

 

Additional paid-in capital

 

368,282

 

 

364,288

 

Retained earnings

 

1,167,690

 

 

993,245

 

Accumulated other comprehensive loss – foreign currency translation adjustments

 

(27,094

)

 

(15,455

)

Total stockholders’ equity

 

1,509,227

 

 

1,342,429

 

 

$

4,689,080

 

$

4,310,732

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

 

Twelve Months Ended

December 31,

 

2021

2020

Cash flows from operating activities:

 

 

Net earnings

$

219,345

 

$

172,640

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

Depreciation and amortization

 

55,421

 

 

65,560

 

Provision for losses on accounts receivable

 

7,862

 

 

10,163

 

Non-cash stock-based compensation

 

18,201

 

 

17,727

 

Deferred income taxes

 

11,858

 

 

(13,246

)

Amortization of debt discount and issuance costs

 

16,875

 

 

16,217

 

Other adjustments

 

(3,259

)

 

6,272

 

Changes in assets and liabilities:

 

 

Increase in accounts receivable

 

(289,009

)

 

(132,599

)

(Increase) decrease in inventories

 

(148,941

)

 

1,029

 

(Increase) decrease in other assets

 

(18,100

)

 

7,367

 

Increase in accounts payable

 

303,395

 

 

152,235

 

(Decrease) increase in accrued expenses and other liabilities

 

(9,937

)

 

52,217

 

Net cash provided by operating activities

 

163,711

 

 

355,582

 

Cash flows from investing activities:

 

 

Proceeds from sale of assets

 

31,005

 

 

40,295

 

Purchases of property and equipment

 

(52,079

)

 

(24,184

)

Acquisitions, net of cash and cash equivalents acquired

 

 

 

(6,405

)

Net cash (used in) provided by investing activities

 

(21,074

)

 

9,706

 

Cash flows from financing activities:

 

 

Borrowings on ABL revolving credit facility

 

3,953,496

 

 

3,030,679

 

Repayments on ABL revolving credit facility

 

(4,040,496

)

 

(3,462,063

)

Net (repayments) borrowings under inventory financing facilities

 

(14,355

)

 

103,254

 

Repurchases of treasury stock

 

(50,000

)

 

(25,000

)

Other payments

 

(10,030

)

 

(8,661

)

Net cash used in financing activities

 

(161,385

)

 

(361,791

)

Foreign currency exchange effect on cash, cash equivalents and restricted cash balances

 

(5,857

)

 

10,788

 

(Decrease) increase in cash, cash equivalents and restricted cash

 

(24,605

)

 

14,285

 

Cash, cash equivalents and restricted cash at beginning of period

 

130,582

 

 

116,297

 

Cash, cash equivalents and restricted cash at end of period

$

105,977

 

$

130,582

 

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

Three Months Ended

Twelve Months Ended

December 31,

December 31,

 

2021

2020

2021

2020

Adjusted Consolidated Earnings from Operations:

 

 

 

 

GAAP consolidated EFO

$

93,417

 

$

83,042

 

$

332,061

 

$

271,575

 

Amortization of intangible assets

 

7,948

 

 

7,980

 

 

32,045

 

 

37,535

 

Other

 

1,583

 

 

1,121

 

 

(1,634

)

 

13,278

 

Adjusted non-GAAP consolidated EFO

$

102,948

 

 

92,143

 

$

362,472

 

$

322,388

 

 

 

 

 

 

GAAP EFO as a percentage of net sales

 

3.6

%

 

3.6

%

 

3.5

%

 

3.3

%

Adjusted non-GAAP EFO as a percentage of net sales

 

4.0

%

 

4.0

%

 

3.8

%

 

3.9

%

 

 

 

 

 

Adjusted Consolidated Net Earnings:

 

 

 

 

GAAP consolidated net earnings

$

62,133

 

$

53,388

 

$

219,345

 

$

172,640

 

Amortization of intangible assets

 

7,948

 

 

7,980

 

 

32,045

 

 

37,535

 

Amortization of debt discount and issuance costs

 

3,079

 

 

2,949

 

 

12,124

 

 

11,585

 

Other

 

1,583

 

 

1,121

 

 

(1,634

)

 

13,278

 

Income taxes on non-GAAP adjustments

 

(3,209

)

 

(3,021

)

 

(10,325

)

 

(15,583

)

Adjusted non-GAAP consolidated net earnings

$

71,534

 

$

62,417

 

$

251,555

 

$

219,455

 

 

 

 

 

 

Adjusted Diluted Earnings Per Share:

 

 

 

 

GAAP diluted EPS

$

1.69

 

$

1.50

 

$

5.95

 

$

4.87

 

Amortization of intangible assets

 

0.22

 

 

0.23

 

 

0.87

 

 

1.06

 

Amortization of debt discount and issuance costs

 

0.08

 

 

0.08

 

 

0.33

 

 

0.33

 

Other

 

0.04

 

 

0.03

 

 

(0.04

)

 

0.37

 

Income taxes on non-GAAP adjustments

 

(0.09

)

 

(0.08

)

 

(0.28

)

 

(0.44

)

Impact of benefit from note hedge

 

0.09

 

 

 

 

0.27

 

 

 

Adjusted non-GAAP diluted EPS

$

2.03

 

$

1.76

 

$

7.10

 

$

6.19

 

 

 

 

 

 

Shares used in diluted EPS calculation

 

36,871

 

 

35,523

 

 

36,863

 

 

35,444

 

Impact of benefit from note hedge

 

(1,604

)

 

 

 

(1,453

)

 

 

Shares used in Adjusted non-GAAP diluted EPS calculation

 

35,267

 

 

35,523

 

 

35,410

 

 

35,444

 

 

 

 

 

 

Adjusted North America Earnings from Operations:

 

 

 

 

GAAP EFO from North America segment

$

76,504

 

$

70,545

 

$

268,813

 

$

219,198

 

Amortization of intangible assets

 

7,347

 

 

7,396

 

 

29,576

 

 

34,990

 

Other

 

1,232

 

 

163

 

 

(3,129

)

 

9,953

 

Adjusted non-GAAP EFO from North America segment

$

85,083

 

$

78,104

 

$

295,260

 

$

264,141

 

 

 

 

 

 

GAAP EFO as a percentage of net sales

 

3.7

%

 

3.8

%

 

3.6

%

 

3.3

%

Adjusted non-GAAP EFO as a percentage of net sales

 

4.1

%

 

4.2

%

 

3.9

%

 

4.0

%

 

 

 

 

 

Adjusted EMEA Earnings from Operations:

 

 

 

 

GAAP EFO from EMEA segment

$

12,508

 

$

9,295

 

$

46,918

 

$

40,368

 

Amortization of intangible assets

 

480

 

 

463

 

 

1,971

 

 

2,088

 

Other

 

193

 

 

871

 

 

1,328

 

 

3,193

 

Adjusted non-GAAP EFO from EMEA segment

$

13,181

 

$

10,629

 

$

50,217

 

$

45,649

 

 

 

 

 

 

GAAP EFO as a percentage of net sales

 

2.9

%

 

2.3

%

 

2.8

%

 

2.6

%

Adjusted non-GAAP EFO as a percentage of net sales

 

3.1

%

 

2.6

%

 

2.9

%

 

2.9

%

 

 

 

 

 

Adjusted APAC Earnings from Operations:

 

 

 

 

GAAP EFO from APAC segment

$

4,405

 

$

3,202

 

$

16,330

 

$

12,009

 

Amortization of intangible assets

 

121

 

 

121

 

 

498

 

 

457

 

Other

 

158

 

 

87

 

 

167

 

 

132

 

Adjusted non-GAAP EFO from APAC segment

$

4,684

 

$

3,410

 

$

16,995

 

$

12,598

 

 

 

 

 

 

GAAP EFO as a percentage of net sales

 

8.2

%

 

7.1

%

 

7.7

%

 

7.1

%

Adjusted non-GAAP EFO as a percentage of net sales

 

8.7

%

 

7.6

%

 

8.0

%

 

7.4

%

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

GAAP consolidated net earnings

$

62,133

 

$

53,388

 

$

219,345

 

$

172,640

 

Interest expense

 

10,907

 

 

10,547

 

 

41,198

 

 

41,913

 

Income tax expense

 

20,809

 

 

18,527

 

 

73,212

 

 

55,812

 

Depreciation and amortization of property and equipment

 

5,322

 

 

6,205

 

 

23,376

 

 

28,025

 

Amortization of intangible assets

 

7,948

 

 

7,980

 

 

32,045

 

 

37,535

 

Non-cash stock-based compensation

 

4,251

 

 

5,973

 

 

18,201

 

 

17,727

 

Other

 

1,583

 

 

1,121

 

 

(1,634

)

 

13,278

 

Adjusted non-GAAP EBITDA

$

112,953

 

$

103,741

 

$

405,743

 

$

366,930

 

 

 

 

 

 

GAAP consolidated net earnings as a percentage of net sales

 

2.4

%

 

2.3

%

 

2.3

%

 

2.1

%

Adjusted non-GAAP EBITDA as a percentage of net sales

 

4.4

%

 

4.5

%

 

4.3

%

 

4.4

%

INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES

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

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

Twelve Months Ended

December 31,

 

2021

2020

Adjusted return on invested capital:

 

 

GAAP consolidated EFO

$

332,061

 

$

271,575

 

Other

 

(1,634

)

 

13,278

 

Adjusted non-GAAP consolidated EFO*

 

330,427

 

 

284,853

 

Income tax expense**

 

85,911

 

 

74,062

 

Adjusted non-GAAP consolidated EFO, net of tax

$

244,516

 

$

210,791

 

Average stockholders’ equity***

$

1,417,114

 

$

1,224,713

 

Average debt***

 

445,792

 

 

556,581

 

Average cash***

 

(117,214

)

 

(106,949

)

Invested Capital

$

1,745,692

 

$

1,674,345

 

 

 

 

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

 

14.08

%

 

12.00

%

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

 

14.01

%

 

12.59

%

* The adjusted non-GAAP consolidated EFO amount used for the Adjusted non-GAAP ROIC calculation does not exclude amortization of intangible assets. This calculation remains consistent with the metric utilized in management’s compensation plan.

** Assumed tax rate of 26.0%.

*** Average of previous five quarters.

**** Computed as GAAP consolidated EFO, net of tax of $86,336 and $70,610 for the twelve months ended December 31, 2021 and 2020, respectively, divided by invested capital.

***** Computed as Adjusted non-GAAP consolidated EFO, net of tax, divided by invested capital.

 

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