Insight enterprises, inc. reports fourth quarter and record results for the full year 2020
Tempe, ariz.--(business wire)--insight enterprises, inc. (nasdaq: nsit) (the “company”) today reported financial results for the quarter and full year ended december 31, 2020. highlights include: net sales increased 8% to $8.3 billion for the full year gross profit increased 14% to $1.3 billion with gross margin expanding 90 basis points to 15.6% for the full year earnings from operations increased 13% to $271.6 million and adjusted earnings from operations increased 14% to $322.4 million for the full year diluted earnings per share increased 10% to $4.87 and adjusted diluted earnings per share increased 14% to $6.19 for the full year cash flow provided by operations was $355.6 million for the full year 2020 compared to $127.9 million for the full year 2019 in the fourth quarter of 2020, net sales were flat, year to year, while gross profit increased 1% and gross margin expanded 30 basis points compared to the fourth quarter of 2019. the increase in gross profit and gross margin reflects our continued emphasis on growing our higher margin cloud and services businesses. diluted earnings per share for the quarter was $1.50, up 25%, year over year, and adjusted diluted earnings per share was $1.76, up 12%, year over year. “during the fourth quarter, we drove double digit growth in cloud and warranty solutions, which pushed gross margins to 15%,” stated ken lamneck, president and chief executive officer. “and, when combined with the positive effect of the acceleration of our pcm integration, including cost synergies, this helped us achieve adjusted earnings from operations growth of 12% year over year,” stated lamneck. for the full year 2020, consolidated net sales were $8.3 billion, up 8% year over year. the benefit from including pcm in the full year results was partially offset by a decline in overall client demand and certain supply challenges as a result of the covid-19 global pandemic. gross profit increased 14%, year over year, with gross margins increasing 90 basis points to 15.6% for the full year. earnings from operations grew 13%, year over year, to $271.6 million. cash flow from operations was strong at $355.6 million. “as we look back at our business for the full year in 2020, we are pleased with all we accomplished under trying circumstances, being responsive to the difficult demand landscape, and proactive in our approach. we are positioned well to help our clients solve complex it challenges,” stated ken lamneck, president and chief executive officer. “we believe that the strategic investments we made in our go-to-market solution areas over the last several years, as well as the investments in our sales and technical talent in 2020 have positioned us well to execute our business goals in the new year,” stated lamneck. key highlights the company continued to support clients with their changing needs in response to the covid-19 global pandemic. the demand environment continued to be challenged but the company focused on answering its clients’ most pressing it needs while helping many to plan for the investments required to support their businesses as the economy recovers. the company has exited the year with approximately $70 million in annualized run-rate cost savings in connection with the pcm acquisition, ahead of expectations. the company previously disclosed that the total two-year commitment in annualized run-rate cost savings related to the pcm acquisition was expected to be approximately $70 million. results for the quarter: consolidated net sales for the fourth quarter of 2020 of $2.29 billion were flat, year to year, when compared to the fourth quarter of 2019. net sales in north america decreased 1%, year to year, to $1.84 billion; net sales in emea were flat, year over year, to $403.0 million; and net sales in apac increased 31%, year over year, to $44.9 million. net sales in north america decreased 1%, year to year, to $1.84 billion; net sales in emea were flat, year over year, to $403.0 million; and net sales in apac increased 31%, year over year, to $44.9 million. excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales decreased 1%, year to year, with a decline in net sales in north america and emea of 1% and 5%, respectively, year to year, partially offset by growth in apac of 24%, year over year. consolidated gross profit increased to $342.7 million, an increase of 1% compared to the fourth quarter of 2019, with consolidated gross margin expanding 30 basis points to 15.0% of net sales. gross profit in north america increased 1%, year over year, to $272.4 million (14.8% gross margin); gross profit in emea increased 2%, year over year, to $58.8 million (14.6% gross margin); and gross profit in apac increased 22%, year over year, to $11.5 million (25.5% gross margin). gross profit in north america increased 1%, year over year, to $272.4 million (14.8% gross margin); gross profit in emea increased 2%, year over year, to $58.8 million (14.6% gross margin); and gross profit in apac increased 22%, year over year, to $11.5 million (25.5% gross margin). excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit was flat, increasing less than 1%, year over year, with gross profit growth in north america and apac of 1% and 16%, respectively, year over year, partially offset by a decline in emea of 3%, year to year. consolidated earnings from operations increased 24% compared to the fourth quarter of 2019 to $83.0 million, or 3.6% of net sales. earnings from operations in north america increased 28%, year over year, to $70.5 million, or 3.8% of net sales; earnings from operations in emea decreased 9%, year to year, to $9.3 million, or 2.3% of net sales; and earnings from operations in apac increased 64%, year over year, to $3.2 million, or 7.1% of net sales. earnings from operations in north america increased 28%, year over year, to $70.5 million, or 3.8% of net sales; earnings from operations in emea decreased 9%, year to year, to $9.3 million, or 2.3% of net sales; and earnings from operations in apac increased 64%, year over year, to $3.2 million, or 7.1% of net sales. excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations increased 23%, year over year, with increased earnings from operations in north america and apac of 28% and 59%, respectively, year over year, partially offset by a decline in emea of 13%, year to year. adjusted earnings from operations increased 12% compared to the fourth quarter of 2019 to $92.1 million, or 4.0% of net sales. adjusted earnings from operations in north america increased 13%, year over year, to $78.1 million, or 4.2% of net sales; adjusted earnings from operations in emea decreased 1%, year to year, to $10.6 million, or 2.6% of net sales; and adjusted earnings from operations in apac increased 63%, year over year, to $3.4 million, or 7.6% of net sales. adjusted earnings from operations in north america increased 13%, year over year, to $78.1 million, or 4.2% of net sales; adjusted earnings from operations in emea decreased 1%, year to year, to $10.6 million, or 2.6% of net sales; and adjusted earnings from operations in apac increased 63%, year over year, to $3.4 million, or 7.6% of net sales. consolidated net earnings and diluted earnings per share for the fourth quarter of 2020 were $53.4 million and $1.50, respectively, at an effective tax rate of 25.8%. adjusted consolidated net earnings and adjusted diluted earnings per share for the fourth quarter of 2020 were $62.4 million and $1.76, respectively. results for the year: consolidated net sales of $8.3 billion for 2020 increased 8%, year over year, when compared to 2019. net sales in north america increased 10%, year over year, to $6.6 billion; net sales in emea increased 2%, year over year, to $1.6 billion; and net sales in apac decreased 6%, year to year, to $170.3 million. net sales in north america increased 10%, year over year, to $6.6 billion; net sales in emea increased 2%, year over year, to $1.6 billion; and net sales in apac decreased 6%, year to year, to $170.3 million. excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales increased 8%, year over year, with growth in net sales in north america and emea of 10% and 1%, year over year, partially offset by a decline in apac of 4%, year to year. consolidated gross profit of $1.3 billion increased 14% compared to 2019, with consolidated gross margin expanding 90 basis points to 15.6% of net sales. gross profit in north america increased 17%, year over year, to $1.0 billion (15.4% gross margin); gross profit in emea increased 4%, year over year, to $236.0 million (15.2% gross margin); and gross profit in apac increased 7%, year over year, to $42.5 million (25.0% gross margin). gross profit in north america increased 17%, year over year, to $1.0 billion (15.4% gross margin); gross profit in emea increased 4%, year over year, to $236.0 million (15.2% gross margin); and gross profit in apac increased 7%, year over year, to $42.5 million (25.0% gross margin). excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit increased 14%, year over year, with gross profit growth in north america, emea and apac of 17%, 3% and 8%, respectively, year over year. consolidated earnings from operations increased 13%, compared to 2019, to $271.6 million, or 3.3% of net sales. earnings from operations in north america increased 15%, year over year, to $219.2 million, or 3.3% of net sales; earnings from operations in emea increased 1%, year over year, to $40.4 million, or 2.6% of net sales; and earnings from operations in apac increased 16%, year over year, to $12.0 million, or 7.1% of net sales. earnings from operations in north america increased 15%, year over year, to $219.2 million, or 3.3% of net sales; earnings from operations in emea increased 1%, year over year, to $40.4 million, or 2.6% of net sales; and earnings from operations in apac increased 16%, year over year, to $12.0 million, or 7.1% of net sales. excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations increased 13%, year over year, with increased earnings from operations in north america, emea and apac of 15%, 1% and 18%, respectively, year over year. adjusted earnings from operations increased 14%, compared to 2019, to $322.4 million, or 3.9% of net sales. adjusted earnings from operations in north america increased 15%, year over year, to $264.1 million, or 4.0% of net sales; adjusted earnings from operations in emea increased 11%, year over year, to $45.6 million, or 2.9% of net sales; and adjusted earnings from operations in apac increased 15%, year over year, to $12.6 million, or 7.4% of net sales. adjusted earnings from operations in north america increased 15%, year over year, to $264.1 million, or 4.0% of net sales; adjusted earnings from operations in emea increased 11%, year over year, to $45.6 million, or 2.9% of net sales; and adjusted earnings from operations in apac increased 15%, year over year, to $12.6 million, or 7.4% of net sales. consolidated net earnings and diluted earnings per share for 2020 were $172.6 million and $4.87, respectively, at an effective tax rate of 24.4%. adjusted consolidated net earnings and adjusted diluted earnings per share for 2020 were $219.4 million and $6.19, respectively. in discussing financial results for the three and twelve months ended december 31, 2020 and 2019 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 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 2021, the company expects to deliver net sales growth in the 4% to 8% range and adjusted diluted earnings per share is expected to be between $6.60 and $6.80. this outlook assumes interest expense between $25 million and $28 million; an effective tax rate of 25% to 26% for the full year 2021; capital expenditures of $75 to $85 million, including approximately $60 million for the build out of our new corporate headquarters; and an average share count for the full year of approximately 36 million shares. this outlook excludes acquisition-related intangibles amortization expense of approximately $32 million and the non-cash convertible debt discount and issuance costs, reported as part of interest expense, of approximately $12 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 and diluted earnings per share, the company is unable to reasonably estimate the 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 2021 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 2020 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 consolidated earnings from operations, adjusted consolidated net earnings and adjusted diluted earnings per share exclude (i) severance and restructuring expenses, (ii) certain acquisition and integration related expenses, (iii) impairment of property and equipment, (iv) amortization of intangible assets, and (v) the tax effects of each of these items, as applicable. adjusted consolidated 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 ebitda adds back (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, (vii) certain acquisition and integration related expenses and (viii) impairment of property and equipment. adjusted free cash flow is the company’s net cash provided by operating activities adjusted for (i) purchases of property and equipment and (ii) the net borrowings or repayments under the inventory financing facilities. adjusted return on invested capital (“roic”) excludes (i) severance and restructuring expenses, (ii) certain acquisition and integration related expenses, (iii) impairment of construction in progress, (iv) loss on sale of property, (v) litigation settlement proceeds, and (vi) 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, 2020 2019 change 2020 2019 change insight enterprises, inc. net sales: products $ 1,989,338 $ 2,002,234 (1%) $ 7,172,155 $ 6,732,121 7% services $ 301,977 $ 294,922 2% $ 1,168,424 $ 999,069 17% total net sales $ 2,291,315 $ 2,297,156 — $ 8,340,579 $ 7,731,190 8% gross profit $ 342,654 $ 337,982 1% $ 1,299,942 $ 1,138,098 14% gross margin 15.0 % 14.7 % 30 bps 15.6 % 14.7 % 90 bps selling and administrative expenses $ 257,167 $ 266,970 (4%) $ 1,013,765 $ 880,737 15% severance and restructuring expenses $ 2,432 $ 1,713 42% $ 12,394 $ 5,425 > 100% acquisition and integration related expenses $ 13 $ 2,283 (99%) $ 2,208 $ 11,342 (81%) earnings from operations $ 83,042 $ 67,016 24% $ 271,575 $ 240,594 13% net earnings $ 53,388 $ 42,950 24% $ 172,640 $ 159,407 8% diluted earnings per share $ 1.50 $ 1.20 25% $ 4.87 $ 4.43 10% north america net sales: products $ 1,600,261 $ 1,615,595 (1%) $ 5,679,052 $ 5,227,490 9% services $ 243,075 $ 245,600 (1%) $ 935,980 $ 796,815 17% total net sales $ 1,843,336 $ 1,861,195 (1%) $ 6,615,032 $ 6,024,305 10% gross profit $ 272,396 $ 270,804 1% $ 1,021,388 $ 871,114 17% gross margin 14.8 % 14.6 % 20 bps 15.4 % 14.5 % 90 bps selling and administrative expenses $ 200,364 $ 211,933 (5%) $ 790,913 $ 664,374 19% severance and restructuring expenses $ 1,474 $ 1,686 (13%) $ 9,273 $ 4,946 87% acquisition and integration related expenses $ 13 $ 2,283 (99%) $ 2,004 $ 11,342 (82%) earnings from operations $ 70,545 $ 54,902 28% $ 219,198 $ 190,452 15% sales mix ** ** hardware 67 % 67 % (1%) 67 % 66 % 12% software 20 % 20 % — 19 % 21 % (1%) services 13 % 13 % (1%) 14 % 13 % 17% 100 % 100 % (1%) 100 % 100 % 10% emea net sales: products $ 358,314 $ 364,713 (2%) $ 1,378,387 $ 1,376,678 — services $ 44,728 $ 36,874 21% $ 176,838 $ 149,966 18% total net sales $ 403,042 $ 401,587 — $ 1,555,225 $ 1,526,644 2% gross profit $ 58,792 $ 57,759 2% $ 236,046 $ 227,083 4% gross margin 14.6 % 14.4 % 20 bps 15.2 % 14.9 % 30 bps selling and administrative expenses $ 48,626 $ 47,592 2% $ 192,485 $ 186,957 3% severance and restructuring expenses $ 871 $ 6 > 100% $ 2,989 $ 334 > 100% acquisition and integration related expenses $ — $ — — $ 204 $ — * earnings from operations $ 9,295 $ 10,161 (9%) $ 40,368 $ 39,792 1% sales mix ** ** hardware 37 % 43 % (12%) 40 % 41 % (1%) software 52 % 48 % 7% 49 % 49 % 1% services 11 % 9 % 21% 11 % 10 % 18% 100 % 100 % — 100 % 100 % 2% * 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, 2020 2019 change 2020 2019 change apac net sales: products $ 30,763 $ 21,926 40% $ 114,716 $ 127,953 (10%) services $ 14,174 $ 12,448 14% $ 55,606 $ 52,288 6% total net sales $ 44,937 $ 34,374 31% $ 170,322 $ 180,241 (6%) gross profit $ 11,466 $ 9,419 22% $ 42,508 $ 39,901 7% gross margin 25.5 % 27.4 % (190 bps) 25.0 % 22.1 % 290 bps selling and administrative expenses $ 8,177 $ 7,445 10% $ 30,367 $ 29,406 3% severance and restructuring expenses $ 87 $ 21 > 100% $ 132 $ 145 (9%) earnings from operations $ 3,202 $ 1,953 64% $ 12,009 $ 10,350 16% sales mix ** ** hardware 24 % 27 % 19% 19 % 19 % (9%) software 44 % 37 % 56% 48 % 52 % (11%) services 32 % 36 % 14% 33 % 29 % 6% 100 % 100 % 31% 100 % 100 % (6%) * 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, the company’s anticipated effective tax rate, capital expenditures, expected average share count, the company’s expectations regarding cash flow, the company’s expectations about future benefits relating to the pcm integration, including expected synergies, future trends in the it market, including due to covid-19, and 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, 2020 to be filed with the sec: actions of the company’scompetitors, 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 in the requirements year over year; 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 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, including pcm related litigation, 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 substantial amount of indebtedness; the conditional conversion feature of the convertible notes, which if triggered, may adversely affect the company’s financial condition and operating results; the accounting method for convertible debt securities that may be settled in cash, such as the convertible notes, could have a material effect on the company’s reported financial results; the company is subject to counterparty risk with respect to the convertible note hedge transactions; risks associated with the discontinuation of libor as a benchmark rate; increased debt and interest expense and 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 customer demands; the company’s dependence on certain key personnel; 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. 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, 2020 2019 2020 2019 net sales: products $ 1,989,338 $ 2,002,234 $ 7,172,155 $ 6,732,121 services 301,977 294,922 1,168,424 999,069 total net sales 2,291,315 2,297,156 8,340,579 7,731,190 costs of goods sold: products 1,808,504 1,809,896 6,497,001 6,125,360 services 140,157 149,278 543,636 467,732 total costs of goods sold 1,948,661 1,959,174 7,040,637 6,593,092 gross profit 342,654 337,982 1,299,942 1,138,098 operating expenses: selling and administrative expenses 257,167 266,970 1,013,765 880,737 severance and restructuring expenses, net 2,432 1,713 12,394 5,425 acquisition and integration related expenses 13 2,283 2,208 11,342 earnings from operations 83,042 67,016 271,575 240,594 non-operating (income) expense: interest expense, net 10,434 11,897 41,594 28,478 other (income) expense, net 693 (458 ) 1,529 400 earnings before income taxes 71,915 55,577 228,452 211,716 income tax expense 18,527 12,627 55,812 52,309 net earnings $ 53,388 $ 42,950 $ 172,640 $ 159,407 net earnings per share: basic $ 1.52 $ 1.22 $ 4.92 $ 4.49 diluted $ 1.50 $ 1.20 $ 4.87 $ 4.43 shares used in per share calculations: basic 35,098 35,259 35,117 35,538 diluted 35,523 35,755 35,444 35,959 insight enterprises, inc. and subsidiaries consolidated balance sheets (in thousands) (unaudited) december 31, 2020 december 31, 2019 assets current assets: cash and cash equivalents $ 128,313 $ 114,668 accounts receivable, net 2,685,448 2,511,383 inventories 185,650 190,833 other current assets 177,039 231,148 total current assets 3,176,450 3,048,032 property and equipment, net 146,016 130,907 goodwill 429,368 415,149 intangible assets, net 246,915 278,584 other assets 311,984 305,507 $ 4,310,733 $ 4,178,179 liabilities and stockholders’ equity current liabilities: accounts payable – trade $ 1,461,312 $ 1,275,957 accounts payable – inventory financing facilities 356,930 253,676 accrued expenses and other current liabilities 408,117 352,204 current portion of long-term debt 1,105 1,691 total current liabilities 2,227,464 1,883,528 long-term debt 437,581 857,673 deferred income taxes 33,209 44,633 other liabilities 270,049 232,027 2,968,303 3,017,861 stockholders’ equity: preferred stock — — common stock 351 353 additional paid-in capital 364,288 357,032 retained earnings 993,245 841,097 accumulated other comprehensive loss – foreign currency translation adjustments (15,454 ) (38,164 ) total stockholders’ equity 1,342,430 1,160,318 $ 4,310,733 $ 4,178,179 insight enterprises, inc. and subsidiaries consolidated statements of cash flows (in thousands) (unaudited) twelve months ended december 31, 2020 2019 cash flows from operating activities: net earnings $ 172,640 $ 159,407 adjustments to reconcile net earnings to net cash provided by operating activities: depreciation and amortization 65,560 46,209 provision for losses on accounts receivable 10,163 5,079 non-cash stock-based compensation 17,727 16,011 deferred income taxes (13,246 ) 7,418 amortization of debt discount and issuance costs 16,217 4,223 other adjustments 6,272 7,323 changes in assets and liabilities: increase in accounts receivable (132,598 ) (118,971 ) decrease in inventories 1,029 11,944 decrease (increase) in other assets 7,367 (129,745 ) increase (decrease) in accounts payable 152,235 (612 ) increase in accrued expenses and other liabilities 52,216 119,590 net cash provided by operating activities 355,582 127,876 cash flows from investing activities: proceeds from sale of assets held for sale 40,295 — purchases of property and equipment (24,184 ) (69,086 ) acquisitions, net of cash and cash equivalents acquired (6,405 ) (664,287 ) net cash provided by (used in) investing activities 9,706 (733,373 ) cash flows from financing activities: borrowings on senior revolving credit facility — 242,936 repayments on senior revolving credit facility — (242,936 ) borrowings on abl revolving credit facility 3,030,679 1,680,515 repayments on abl revolving credit facility (3,462,063 ) (1,130,544 ) borrowings on accounts receivable securitization financing facility — 2,364,500 repayments on accounts receivable securitization financing facility — (2,558,500 ) net borrowings (repayments) under inventory financing facilities 103,254 (50,454 ) proceeds from issuance of convertible senior notes — 341,250 proceeds from issuance of warrants — 34,440 purchase of note hedge related to convertible senior notes — (66,325 ) repurchases of treasury stock (25,000 ) (27,899 ) other payments (8,661 ) (9,396 ) net cash (used in) provided by financing activities (361,791 ) 577,587 foreign currency exchange effect on cash, cash equivalents and restricted cash balances 10,788 (86 ) increase (decrease) in cash, cash equivalents and restricted cash 14,285 (27,996 ) cash, cash equivalents and restricted cash at beginning of period 116,297 144,293 cash, cash equivalents and restricted cash at end of period $ 130,582 $ 116,297 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, 2020 2019 2020 2019 adjusted consolidated earnings from operations: gaap consolidated efo $ 83,042 $ 67,016 $ 271,575 $ 240,594 amortization of intangible assets 7,980 9,395 37,535 22,985 other* 1,121 5,497 13,278 18,268 adjusted non-gaap consolidated efo $ 92,143 $ 81,908 $ 322,388 $ 281,847 adjusted consolidated net earnings: gaap consolidated net earnings $ 53,388 $ 42,950 $ 172,640 $ 159,407 amortization of intangible assets 7,980 9,395 37,535 22,985 amortization of debt discount and issuance costs 2,949 2,825 11,585 4,223 other* 1,121 5,497 13,278 18,268 income taxes on non-gaap adjustments (3,021 ) (4,485 ) (15,583 ) (10,073 ) adjusted non-gaap consolidated net earnings $ 62,417 $ 56,182 $ 219,455 $ 194,810 adjusted diluted earnings per share: gaap diluted eps $ 1.50 $ 1.20 $ 4.87 $ 4.43 amortization of intangible assets 0.23 0.27 1.06 0.64 amortization of debt discount and issuance costs 0.08 0.08 0.33 0.12 other* 0.03 0.15 0.37 0.51 income taxes on non-gaap adjustments (0.08 ) (0.13 ) (0.44 ) (0.28 ) adjusted non-gaap diluted eps $ 1.76 $ 1.57 $ 6.19 $ 5.42 adjusted north america earnings from operations: gaap efo from north america segment $ 70,545 $ 54,902 $ 219,198 $ 190,452 amortization of intangible assets 7,396 8,659 34,990 21,696 other* 163 5,470 9,953 17,789 adjusted non-gaap efo from north america segment $ 78,104 $ 69,031 $ 264,141 $ 229,937 adjusted emea earnings from operations: gaap efo from emea segment $ 9,295 $ 10,161 $ 40,368 $ 39,792 amortization of intangible assets 463 623 2,088 828 other* 871 6 3,193 334 adjusted non-gaap efo from emea segment $ 10,629 $ 10,790 $ 45,649 $ 40,954 * “other” includes (i) severance and restructuring expenses, net, (ii) acquisition and integration related expenses, and (iii) impairment of property and equipment, as applicable to the operating segment. insight enterprises, inc. and subsidiaries reconciliation of gaap to non-gaap financial measures (continued) (in thousands, except per share data) (unaudited) three months ended december 31, twelve months ended december 31, 2020 2019 2020 2019 adjusted apac earnings from operations: gaap efo from apac segment $ 3,202 $ 1,953 $ 12,009 $ 10,350 amortization of intangible assets 121 113 457 461 other* 87 21 132 145 adjusted non-gaap efo from apac segment $ 3,410 $ 2,087 $ 12,598 $ 10,956 twelve months ended december 31, 2020 2019 adjusted ebitda: gaap consolidated net earnings $ 172,640 $ 159,407 interest expense 41,913 29,614 income tax expense 55,812 52,309 depreciation and amortization of property and equipment 28,025 23,224 amortization of intangible assets 37,535 22,985 non-cash stock-based compensation 17,727 16,011 other* 13,278 18,268 adjusted non-gaap ebitda $ 366,930 $ 321,818 gaap consolidated net earnings as a percentage of net sales 2.1 % 2.1 % adjusted non-gaap ebitda as a percentage of net sales 4.4 % 4.2 % adjusted free cash flow: net cash provided by operating activities $ 355,582 $ 127,876 purchases of property and equipment (24,184 ) (69,086 ) net borrowings (repayments) under inventory financing facilities 103,254 (50,454 ) adjusted non-gaap free cash flow $ 434,652 $ 8,336 * “other” includes (i) severance and restructuring expenses, net, (ii) acquisition and integration related expenses, and (iii) impairment of property and equipment, as applicable to the operating segment. 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, 2020 2019 adjusted return on invested capital: gaap consolidated efo $ 271,575 $ 240,594 other 13,278 18,268 adjusted non-gaap consolidated efo * 284,853 258,862 income tax expense** 74,062 71,187 adjusted non-gaap consolidated efo, net of tax $ 210,791 $ 187,675 average stockholders’ equity*** $ 1,224,713 $ 1,071,346 average debt*** 556,581 410,976 average cash*** (106,949 ) (126,956 ) invested capital $ 1,674,345 $ 1,355,366 adjusted non-gaap roic (from gaap consolidated efo) **** 12.00 % 12.87 % adjusted non-gaap roic (from non-gaap consolidated efo) ***** 12.59 % 13.85 % * 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% and 27.5% for 2020 and 2019, respectively. *** average of previous five quarters. **** computed as gaap consolidated efo, net of tax of $70,610 and $66,163 for the twelve months ended december 31, 2020 and 2019, respectively, divided by invested capital. ***** computed as adjusted non-gaap consolidated efo, net of tax, divided by invested capital. nsit-f
