Insight enterprises, inc. reports second quarter 2011 results
Tempe, ariz.--(business wire)--insight enterprises, inc. (nasdaq: nsit) (the “company”) today reported results of operations for the quarter ended june 30, 2011. second quarter highlights for the second quarter of 2011 compared to the second quarter of 2010: net sales increased 16% to $1.47 billion. gross profit increased 17% to $204.2 million. earnings from operations increased 22% to $54.4 million, or 3.7% of net sales. net earnings increased 31% to $35.3 million. diluted earnings per share increased 29% to $0.75. repurchased approximately 873,000 shares of our common stock for $14.1 million (an average price of $16.20 per share). “strong execution supported by continued favorable market conditions enabled us to deliver a fifth consecutive quarter of double digit growth,” stated ken lamneck, president and chief executive officer. “we remain focused on growing sales faster than the market in 2011 while continuing to drive operational efficiencies throughout our business.” segment overview in north america, net sales were $989.3 million for the second quarter of 2011, up 14% from the second quarter of 2010. net sales of hardware, software and services increased 17%, 9% and 23%, respectively, year over year. gross profit of $132.1 million was up 10% year over year with gross margin decreasing 40 basis points to 13.4% from 13.8% in the second quarter of 2010. selling and administrative expenses in north america in the second quarter of 2011 were up $8.6 million, or 10%, compared to the second quarter of 2010. selling and administrative expenses in the three months ended june 30, 2010 were reduced by $2.9 million upon the collection of a single account receivable which the company had previously specifically reserved as doubtful. the north america segment had $1.1 million, $689,000 net of tax, of severance and restructuring expenses during the second quarter of 2011 compared to $943,000, $581,000 net of tax, of severance and restructuring expenses during the second quarter of 2010. as a result, earnings from operations in north america were $36.0 million, or 3.6% of net sales, in the second quarter of 2011, compared to $32.3 million, or 3.7% of net sales, in the second quarter of 2010. the company’s emea operating segment reported net sales of $402.9 million for the second quarter of 2011, up 12% in u.s. dollars compared to the second quarter of 2010. excluding the effects of foreign currency movements, net sales were flat year to year. net sales of hardware, software and services increased 7%, 14% and 43%, respectively, year over year, all in u.s. dollars. excluding the effects of foreign currency movements, hardware sales decreased 2%, while software and services sales increased 1% and 27%, respectively, compared to the second quarter of 2010. gross profit of $59.9 million was up 29% in u.s. dollars, 15% excluding the effects of foreign currency movements, while gross margin increased 200 basis points to 14.9% for the second quarter of 2011 from 12.9% in the second quarter of 2010. selling and administrative expenses in emea in the second quarter of 2011 were up 22%, or $8.1 million, compared to the second quarter of 2010 in u.s. dollars and, excluding the effects of foreign currency movements, were up 10% year over year. emea recorded $2.3 million, $1.6 million net of tax, of severance and restructuring expenses during the second quarter of 2011, compared to $375,000, $263,000 net of tax, of severance and restructuring expenses for the second quarter of 2010. as a result, earnings from operations in emea were $13.0 million, or 3.2% of net sales, in the second quarter of 2011 compared to $9.6 million, or 2.7% of net sales, in the second quarter of 2010. the company’s apac operating segment reported net sales of $76.8 million for the second quarter of 2011, up 82% from the second quarter of 2010 in u.s. dollars, 55% excluding the effects of foreign currency movements. gross profit was $12.2 million, an increase of 58% year over year in u.s. dollars, 34% excluding the effects of foreign currency movements, while gross margin decreased to 15.9% for the second quarter of 2011 from 18.2% in the second quarter of 2010. selling and administrative expenses in apac increased 36% year over year in u.s. dollars, 16% excluding the effects of foreign currency movements. as a result, earnings from operations in apac were $5.4 million, or 7.0% of net sales, in the second quarter of 2011, compared to $2.7 million, or 6.5% of net sales, in the second quarter of 2010. throughout this “segment overview” section, the company refers to changes in net sales, gross profit and selling and administrative expenses in emea and apac excluding the effects of foreign currency movements. 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 average translation rate for the current quarter. net of tax amounts referenced above were computed using the statutory tax rate for the taxing jurisdictions in the operating segment in which the related expenses were recorded. updated guidance due to strong execution and favorable market conditions, the company’s results in the second quarter exceeded internal expectations, and for the first half of 2011, the company is ahead of plan. as a result, for the full year of 2011, the company now expects diluted earnings per share to be between $1.90 and $1.98, excluding severance and restructuring expenses incurred during the year. this outlook includes the following assumptions: the completion of the company’s $50 million share repurchase authorization in the second half of the year; the effect of partner program changes expected to occur in the fourth quarter of 2011; and an effective tax rate between 36% and 39% for the second half of the year. conference call and webcast the company will host a conference call and live webcast today at 5:00 p.m. et to discuss second quarter 2011 results of operations. a live webcast of the conference call (in listen-only mode) will be available on the company’s web site at www.insight.com, and a replay of the webcast will be available on the company’s web site for a limited time following the call. to listen to the live webcast by telephone, call 1-866-804-6924 if located in the u.s., 857-350-1670 for international callers, and enter the access code 50465706. financial summary table (in thousands, except per share data and percentages) three months ended june 30, insight enterprises, inc. % change north america emea apac three months endedjune 30, three months endedjune 30, three months endedjune 30, sales mix 2011 2010 %change* 2011 2010 %change* 2011 2010 %change* * represents growth/decline in category net sales on a dollar basis. forward-looking information certain statements in this release and the related conference call and webcast are “forward-looking statements” within the meaning of the private securities litigation reform act of 1995. forward-looking statements, including the company’s expectations about the amount of its 2011 diluted earnings per share, the company’s plans related to share repurchases, the effect and timing of partner program changes and the company’s effective tax rate for the second half of the year, 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. 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, 2010: the company’s reliance on partners for product availability and competitive products to sell as well as the company’s competition with its partners; the company’s reliance on partners for marketing funds and purchasing incentives; disruptions in the company’s information technology (“it”) systems and voice and data networks, including risks and costs associated with the integration and upgrade of the company’s information technology systems; general economic conditions, including concerns regarding the company’s ability to collect its accounts receivable and client credit constraints; actions of the company’s competitors, including manufacturers and publishers of products the company sells; changes in the it industry and/or rapid changes in product standards; failure to comply with the terms and conditions of the company’s commercial and public sector contracts; stockholder litigation and regulatory proceedings related to the restatement of the company’s consolidated financial statements; the availability of future financing and the company’s ability to access and/or refinance its credit facilities; the security of the company’s electronic and other confidential information; the variability of the company’s net sales and gross profit; the risks associated with the company’s international operations; exposure to changes in, interpretations of, or enforcement trends related to tax rules and regulations; the company’s dependence on key personnel; 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 does not intend to update, any forward-looking statements. the company does not endorse any projections regarding future performance made by third parties. insight enterprises, inc. and subsidiaries consolidated statements of operations (in thousands, except per share data) (unaudited) three months endedjune 30, six months endedjune 30, insight enterprises, inc. and subsidiaries consolidated balance sheets (in thousands) (unaudited) june 30,2011 december 31,2010 27,866 17,882 insight enterprises, inc. and subsidiaries consolidated statements of cash flows (in thousands) (unaudited) borrowings on senior revolving credit facility payment of payroll taxes on stock-based compensation through shares withheld (2,522 ) (1,246 ) repurchases of common stock (14,149 -
