insight enterprises, inc. · this presentation includes “forward -looking statements” within...

Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 1Insight Presentation

Insight Enterprises, Inc.Fourth Quarter and Full Year 2019Earnings Conference Call and Webcast

Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 2

Agenda• Opening Comments

• CEO Commentary• Fourth Quarter 2019 Consolidated Financials• Full Year 2019 Consolidated Financials• 2019 Highlights• 2020 Priorities

• CFO Commentary• Financial results by region• Taxes and cash flow

• Closing Comments & 2020 Guidance


Disclosures

• Safe harbor statementThis presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 related to Insight’s plans and expectations. Statements that are not historical facts, including the Company’s expected 2020 financial results and assumptions, as well as statements about future trends in the IT market and our opportunities for growth, are forward-looking statements. These forward-looking statements are subject to assumptions, risks and uncertainties which could cause actual results or future events to differ materially from such statements. The Company undertakes no obligation to update publicly or revise any of the forward-looking statements, except as otherwise required by law. More detailed information about risk factors is included in today’s press release and discussed in the Company’s most recently filed periodic reports and subsequent filings with the Securities and Exchange Commission.

• Non-GAAP measuresThis presentation will reference certain non-GAAP financial information as ‘Adjusted’. A reconciliation of non-GAAP financial measures presented in this document to our actual GAAP results is attached to the back of this presentation and included in the press release issued today, which you may find on the Investor Relations section of our website at investor.insight.com.

• Constant currencyIn 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.


Q4 2019 Year over Year ResultsNet Sales Gross Profit Gross Margin+31% YoY +33% YoY +20 bps YoY

SG&A % of Net Sales Adj EFO* Adj Diluted EPS*+50 bps YoY +29% YoY +11% YoY

$2.30B

2018 2019

$338M

2018 2019

$82M

2018 2019

11.6%

2018 2019

14.7%

2018 2019

$1.57

2018 2019GAAP Earnings from operations $67M GAAP Diluted EPS $1.20

* Adjusted Non-GAAP excludes severance and restructuring expense and other unique items



FY 2019 Year over Year ResultsNet Sales Gross Profit Gross Margin+9% YoY +15% YoY +70 bps YoY

SG&A % of Net Sales Adj EFO* Adj Diluted EPS*+80 bps YoY +11% YoY +9% YoY

$7.73B

2018 2019

$1.14B

2018 2019

$282M

2018 2019

11.0%

2018 2019

14.7%

2018 2019

$5.42

2018 2019GAAP Earnings from operations $241M GAAP Diluted EPS $4.43


FY 2019 Highlights• Strategic Investments

• Acquisition of PCM

• Teammate Development

• Fortune’s 100 Best Workplaces for Diversity, ranked #70

• Fortune’s 50 Best Workplaces in Technology, ranked #23

• Capacity for growth – New debt facilities

• Strong Financial Performance

• High single-digit top line growth

• Fourth year of double-digit adjusted earnings growth

• Services GP % of consolidated GP expands 90 basis points


Our go-to market strategy

Product-focused

Suppliers

Outcome-based

Clients

Supply

Chain Optimization

Connected Workforce Cloud + Data Center

Transformation

Digital Innovation

CapEx OpEx

Manage Today Transform Tomorrow


CFO Commentary• Financial results by region

• Taxes and cash flow



Q4 North America | Financial ResultsNet Sales Gross Profit Gross Margin+38% YoY +44% YoY +70 bps YoY

SG&A % of Net Sales Adj EFO* Sales Mix+80 bps YoY +40% YoY

67%

20%

13%

Hardware

Software

Services

$1.86B

2018 2019

$271M

2018 2019

14.6%

2018 2019

$69M

2018 2019

11.4%

2018 2019GAAP Earnings from operations $55M



FY 2019 North America | Financial ResultsNet Sales Gross Profit Gross Margin+12% YoY +19% YoY +80 bps YoY


66%

21%

13%

Hardware

Software

Services

$6.02B

2018 2019

$871M

2018 2019

14.5%

2018 2019

$230M

2018 2019

11.0%

2018 2019GAAP Earnings from operations $190M


* Adjusted Non-GAAP excludes severance and restructuring expense and other unique items** Reference “Constant currency” section on slide 3 of this presentation

Q4 EMEA | Financial ResultsNet Sales Gross Profit Gross Margin+11% YoY +4% YoY -90 bps YoY

SG&A % of Net Sales Adj EFO* Sales Mix-30 bps YoY -39% YoY

43%

48%

9%

Hardware

Software

Services

$402M

2018 2019

$58M

2018 2019

14.4%

2018 2019

$11M

2018 2019

11.9%

2018 2019

in constant $** in constant $**

GAAP Earnings from operations $10M

in constant $**



FY 2019 EMEA | Financial ResultsNet Sales Gross Profit Gross Margin+5% YoY +8% YoY +30 bps YoY


41%

49%

10%

Hardware

Software

Services

$1.53B

2018 2019

$227M

2018 2019

14.9%

2018 2019

$41M

2018 2019

12.2%

2018 2019



in constant $**



Q4 APAC | Financial ResultsNet Sales Gross Profit Gross Margin-2% YoY -7% YoY -140 bps YoY

SG&A % of Net Sales Adj EFO* Sales Mix+170 bps YoY -3% YoY

$34M

2018 2019

$9M

2018 2019

27.4%

2018 2019

$2M

2018 2019

21.7%

2018 2019

27%

37%

36%Hardware

Software

Services



in constant $**



FY 2019 APAC | Financial ResultsNet Sales Gross Profit Gross Margin+2% YoY +6% YoY +90 bps YoY


$180M

2018 2019

$40M

2018 2019

22.1%

2018 2019

$11M

2018 2019

16.3%

2018 2019

19%

52%

29% Hardware

Software

Services


in constant $**




Cash Flows and Cash CycleNet cash from operations Cash Conversion Cycle

+5 days YoY

Days sales outstanding Days inventory outstanding Days purchases outstanding-2 days YoY 0 days YoY -7 days YoY

$128M

2018 2019

38

2018 2019

100

2018 2019

10

2018 2019

72

2018 2019


Closing Comments• 2020 net sales expected to grow between 20% and 25%

• Adjusted diluted earnings per share* are expected to be between $6.55 and $6.65 per share for the full year 2020

• Assumptions:• interest expense between $35 and $40 million.• an effective tax rate of 25% to 26% for the full year 2020.

• capital expenditures of $55 to $60 million including approximately $35 million for the build out of new corporate headquarters; and

• an average share count for the full year of approximately 36 million shares.• Exclusions:

• acquisition related intangibles amortization expense of approximately $37 million (posted on website)

• amortization of convertible debt discount and issuance costs reported in interest expense of approximately $12 million (posted on website)

• acquisition-related or severance and restructuring expenses.



Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures

US Dollar in $000s, except per share data 2019 2018 2019 2018Adjusted Consolidated Earnings from Operations:GAAP consolidated EFO 67,016$ 58,659$ 240,594$ 233,483$ Severance and restructuring expenses 1,713 715 5,425 3,424 Acquisition-related expenses 2,282 - 11,342 282 Amortization of intangible assets 9,395 4,338 22,985 15,737 Impairment of construction in Process 1,501 - 1,501 - Adjusted non-GAAP consolidated EFO 81,908$ 63,712$ 281,847$ 252,926$

Adjusted Consolidated Net Earnings:GAAP consolidated net earnings 42,950$ 47,041$ 159,407$ 163,677$

Severance and restructuring expenses 1,713 715 5,425 3,424 Acquisition-related expenses 2,283 - 11,342 282 Amortization of intangible assets 9,395 4,338 22,985 15,737 Impairment of construction in Process 1,501 - 1,501 - Amortization of debt discount and issuance costs 2,825 - 4,223 - Income taxes on non-GAAP adjustments (4,485) (1,277) (10,073) (4,767) Adjusted non-GAAP consolidated net earnings 56,182$ 50,817$ 194,810$ 178,353$

Adjusted Diluted EPS:GAAP diluted EPS 1.20$ 1.31$ 4.43$ 4.55$ Severance and restructuring expenses 0.05 0.02 0.15 0.09 Acquisition-related expenses 0.06 - 0.32 0.01 Amortization of intangible assets 0.26 0.12 0.64 0.43 Impairment of construction in Process 0.04 - 0.04 - Amortization of debt discount and issuance costs 0.08 - 0.12 - Income taxes on non-GAAP adjustments (0.13) (0.04) (0.28) (0.13) Adjusted non-GAAP diluted EPS 1.56$ 1.41$ 5.42$ 4.95$

Twelve Months EndedDec 31,

Three Months EndedDec 31,


Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

US Dollar in $000s 2019 2018 2019 2018Adjusted North America Earnings from Operations:GAAP EFO from North America segment 54,902$ 44,444$ 190,452$ 185,705$ Severance and restructuring expenses 1,686 583 4,946 1,617 Acquisition-related expenses 2,283 - 11,342 282 Amortization of intangible assets 8,659 4,121 21,696 14,791 Impairment of property and equipment 1,501 - 1,501 - Adjusted non-GAAP EFO from North America segment 69,031$ 49,148$ 229,936$ 202,395$

Adjusted EMEA Earnings from Operations:GAAP EFO from EMEA segment 10,161$ 11,000$ 39,792$ 37,320$ Severance and restructuring expenses 6 132 334 1,677 Amortization of intangible assets 623 69 828 285 Adjusted non-GAAP EFO from EMEA segment 10,790$ 11,201$ 40,954$ 39,282$

Adjusted APAC Earnings from Operations:GAAP EFO from APAC segment 1,953$ 3,215$ 10,350$ 10,458$ Severance and restructuring expenses 21 - 145 130 Amortization of intangible assets 113 148 461 661 Adjusted non-GAAP EFO from APAC segment 2,087$ 3,363$ 10,956$ 11,249$

Dec 31, Dec 31,Twelve Months EndedThree Months Ended


Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

* 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 plans.

** Assumed tax rate of 27.5% for 2019 and 2018.*** Average of previous five quarters**** Computed as GAAP consolidated EFO, net of tax divided by invested capital***** Computed as Adjusted non-GAAP consolidated EFO, net of tax, divided by

invested capital

US Dollar in $000s 2019 2018

GAAP consolidated EFO $ 240,594 $ 233,483 Severance and restructuring expenses 5,425 3,424 Acquisition-related expenses 11,342 282 Construction in Process 1,501 -

Adjusted non-GAAP consolidated EFO* 258,862 237,189 Income tax expense** 71,187 65,227

Adjusted non-GAAP consolidated EFO, net of tax $ 187,675 $ 171,962

Average stockholders’ equity*** $ 1,071,346 $ 912,111 Average debt*** 410,976 240,504 Average cash*** (126,956) (141,580)

Invested Capital $ 1,355,366 $ 1,011,035

ROIC (from GAAP consolidated EFO)**** 12.87% 16.74%ROIC (from Adjusted non-GAAP consolidated EFO)***** 13.85% 17.01%

Dec 31,

Return on invested capital:

Twelve Months Ended

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