Insight enterprises, inc. reports fourth quarter and record full year results
Chandler, ariz.--(business wire)--insight enterprises, inc. (nasdaq: nsit) (the “company”) today reported financial results for the quarter and full year ended december 31, 2022. highlights include: gross profit increased 9% to $420.6 million with gross margin expanding 180 basis points to a record 16.8% for the fourth quarter and up 13% for the full year earnings from operations increased 22% to $114.0 million for the fourth quarter and up 25% for the full year adjusted earnings from operations increased 25% to $128.3 million for the fourth quarter and up 29% for the full year diluted earnings per share of $2.13 increased 26% for the fourth quarter and up 29% for the full year adjusted diluted earnings per share of $2.53 increased 25% for the fourth quarter and up 28% for the full year in the fourth quarter of 2022, net sales decreased 2%, year to year. gross profit increased 9% while gross margin expanded 180 basis points to a record 16.8% compared to the fourth quarter of 2021. earnings from operations of $114.0 million increased 22% compared to $93.4 million in the fourth quarter of 2021. adjusted earnings from operations of $128.3 million increased 25% compared to $102.9 million in the fourth quarter of 2021. diluted earnings per share for the quarter was $2.13, up 26%, year over year. adjusted diluted earnings per share was $2.53, up 25%, year over year. “it is my pleasure to report that we ended 2022 with an outstanding fourth quarter that topped off record setting financial results for 2022,” stated joyce mullen, president and chief executive officer. “these results demonstrate we are making progress towards our ambition to become the leading solutions integrator and show the resilience of our business model,” stated mullen. for the full year 2022, we had record results including net sales, gross profit, gross margin, earnings from operations, adjusted earnings from operations, diluted earnings per share and adjusted diluted earnings per share. net sales increased 11%, year over year to $10.4 billion. gross profit increased 13% while gross margin of 15.7% expanded 40 basis points compared to the prior year. earnings from operations of $413.7 million increased 25% compared to $332.1 million in 2021. adjusted earnings from operations of $466.6 million increased 29% compared to $362.5 million in 2021. diluted earnings per share for the full year 2022 was $7.66, up 29%, year over year. adjusted diluted earnings per share was $9.11, up 28%, year over year. “in 2022 we delivered record net sales, gross profit, gross margin, adjusted earnings from operations and adjusted diluted earnings per share. and we ended the year with positive cash flow from operations of $98 million,” stated joyce mullen, president and chief executive officer. “we are especially encouraged by our results because we achieved that stellar performance in a decelerating macro-environment in the second half of 2022,” stated mullen. key highlights results for the quarter: consolidated net sales for the fourth quarter of 2022 of $2.5 billion decreased 2%, year to year, when compared to the fourth quarter of 2021. product net sales decreased 4%, year to year and services net sales increased 9%, year over year. net sales in north america decreased 1%, year to year, to $2.1 billion; product net sales decreased 2%, year to year, to $1.8 billion; services net sales increased 10%, year over year, to $311.8 million; net sales in emea decreased 12%, year to year, to $375.2 million; and net sales in apac increased 2%, year over year, to $54.8 million. net sales in north america decreased 1%, year to year, to $2.1 billion; product net sales decreased 2%, year to year, to $1.8 billion; services net sales increased 10%, year over year, to $311.8 million; product net sales decreased 2%, year to year, to $1.8 billion; services net sales increased 10%, year over year, to $311.8 million; net sales in emea decreased 12%, year to year, to $375.2 million; and net sales in apac increased 2%, year over year, to $54.8 million. excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales were flat, year to year, with growth in net sales in apac of 12%, year over year, and net sales in both north america and emea also being flat. consolidated gross profit increased to $420.6 million, an increase of 9% compared to the fourth quarter of 2021, with consolidated gross margin expanding 180 basis points to a record 16.8% of net sales. product gross profit increased 4%, year over year, and services gross profit increased 15%, year over year. cloud gross profit increased 44% and insight core services gross profit increased 11%, year over year. gross profit in north america increased 12%, year over year, to $345.3 million (16.7% gross margin); gross profit in emea decreased 4%, year to year, to $61.2 million (16.3% gross margin); and gross profit in apac increased 1%, year over year, to $14.1 million (25.7% gross margin). gross profit in north america increased 12%, year over year, to $345.3 million (16.7% gross margin); gross profit in emea decreased 4%, year to year, to $61.2 million (16.3% gross margin); and gross profit in apac increased 1%, year over year, to $14.1 million (25.7% 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%, 9% and 11%, respectively, year over year. consolidated earnings from operations increased 22% compared to the fourth quarter of 2021 to $114.0 million, or 4.6% of net sales. earnings from operations in north america increased 30%, year over year, to $99.3 million, or 4.8% of net sales; earnings from operations in emea decreased 14%, year to year, to $10.7 million, or 2.9% of net sales; and earnings from operations in apac decreased 10%, year to year, to $4.0 million, or 7.2% of net sales. earnings from operations in north america increased 30%, year over year, to $99.3 million, or 4.8% of net sales; earnings from operations in emea decreased 14%, year to year, to $10.7 million, or 2.9% of net sales; and earnings from operations in apac decreased 10%, year to year, to $4.0 million, or 7.2% of net sales. excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations were up 25%, year over year, with increased earnings from operations in north america of 31%, year over year, partially offset by decreased earnings from operations in emea and apac of 8% and 2%, respectively, year to year. adjusted earnings from operations increased 25% compared to the fourth quarter of 2021 to $128.3 million, or 5.1% of net sales. adjusted earnings from operations in north america increased 32%, year over year, to $112.3 million, or 5.4% of net sales; adjusted earnings from operations in emea decreased 10%, year to year, to $11.8 million, or 3.2% of net sales; and adjusted earnings from operations in apac decreased 11%, year to year, to $4.2 million, or 7.6% of net sales. adjusted earnings from operations in north america increased 32%, year over year, to $112.3 million, or 5.4% of net sales; adjusted earnings from operations in emea decreased 10%, year to year, to $11.8 million, or 3.2% of net sales; and adjusted earnings from operations in apac decreased 11%, year to year, to $4.2 million, or 7.6% of net sales. excluding the effects of fluctuating foreign currency exchange rates, adjusted consolidated earnings from operations were up 27%, year over year, with increased adjusted earnings from operations in north america of 33%, year over year, partially offset by decreases in adjusted earnings from operations in emea and apac of 3% and 4%, respectively, year to year. consolidated net earnings and diluted earnings per share for the fourth quarter of 2022 were $77.5 million and $2.13, respectively, at an effective tax rate of 24.9%. adjusted consolidated net earnings and adjusted diluted earnings per share for the fourth quarter of 2022 were $88.2 million and $2.53, respectively. excluding the effects of fluctuating foreign currency exchange rates, adjusted diluted earnings per share was up 28%, year over year. results for the year: consolidated net sales of $10.4 billion for 2022 increased 11%, year over year, when compared to 2021. net sales in north america increased 13%, year over year, to $8.5 billion; net sales in emea was flat, year over year, at $1.7 billion; and net sales in apac increased 11%, year over year, to $234.3 million. net sales in north america increased 13%, year over year, to $8.5 billion; net sales in emea was flat, year over year, at $1.7 billion; and net sales in apac increased 11%, year over year, to $234.3 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%, 12% and 18%, respectively, year over year. consolidated gross profit increased to $1.6 billion, an increase of 13% compared to 2021, with consolidated gross margin expanding 40 basis points to 15.7% of net sales. product gross profit and services gross profit both increased 13%, year over year. cloud gross profit increased 29% and insight core services gross profit increased 14%, year over year. gross profit in north america increased 17%, year over year, to $1.3 billion (15.7% gross margin); gross profit in emea decreased 4%, year to year, to $247.3 million (14.4% gross margin); and gross profit in apac increased 14%, year over year, to $61.0 million (26.0% gross margin). gross profit in north america increased 17%, year over year, to $1.3 billion (15.7% gross margin); gross profit in emea decreased 4%, year to year, to $247.3 million (14.4% gross margin); and gross profit in apac increased 14%, year over year, to $61.0 million (26.0% gross margin). excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit was up 16%, year over year, with gross profit growth in north america, emea and apac of 17%, 6% and 22%, respectively, year over year. consolidated earnings from operations increased 25% compared to 2021 to $413.7 million, or 4.0% of net sales. earnings from operations in north america increased 30%, year over year, to $350.4 million, or 4.1% of net sales; earnings from operations in emea decreased 6%, year to year, to $44.3 million, or 2.6% of net sales; and earnings from operations in apac increased 16%, year over year, to $19.0 million, or 8.1% of net sales. earnings from operations in north america increased 30%, year over year, to $350.4 million, or 4.1% of net sales; earnings from operations in emea decreased 6%, year to year, to $44.3 million, or 2.6% of net sales; and earnings from operations in apac increased 16%, year over year, to $19.0 million, or 8.1% of net sales. excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations were up 27%, year over year, with increased earnings from operations in north america, emea and apac of 31%, 4% and 24%, respectively. adjusted earnings from operations increased 29% compared to 2021 to $466.6 million, or 4.5% of net sales. adjusted earnings from operations in north america increased 35%, year over year, to $399.1 million, or 4.7% of net sales; adjusted earnings from operations in emea decreased 4%, year to year, to $48.0 million, or 2.8% of net sales; and adjusted earnings from operations in apac increased 15%, year over year, to $19.6 million, or 8.3% of net sales. adjusted earnings from operations in north america increased 35%, year over year, to $399.1 million, or 4.7% of net sales; adjusted earnings from operations in emea decreased 4%, year to year, to $48.0 million, or 2.8% of net sales; and adjusted earnings from operations in apac increased 15%, year over year, to $19.6 million, or 8.3% of net sales. excluding the effects of fluctuating foreign currency exchange rates, adjusted consolidated earnings from operations were up 31%, year over year, with increased adjusted earnings from operations in north america, emea and apac of 36%, 5% and 22%, respectively. consolidated net earnings and diluted earnings per share for 2022 were $280.6 million and $7.66, respectively, at an effective tax rate of 25.1%. adjusted consolidated net earnings and adjusted diluted earnings per share for 2022 were $320.2 million and $9.11, respectively. excluding the effects of fluctuating foreign currency exchange rates, adjusted diluted earnings per share was up 31%, year over year. in discussing financial results for the three and twelve months ended december 31, 2022 and 2021 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, earnings from operations and adjusted diluted earnings per share 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 2023, the company expects to deliver gross profit growth in the high single digit range and adjusted diluted earnings per share is expected to be between $9.90 and $10.10. this outlook assumes interest expense between $48 and $52 million; an effective tax rate of 25% to 26% for the full year; capital expenditures of $55 to $60 million; and an average share count for the full year of 34.3 million shares after an estimated completion of our planned share repurchases under our current authorization net of estimated dilution. this outlook excludes acquisition-related intangibles amortization expense of approximately $32 million, assumes no acquisition or integration related expenses, transformation or severance and restructuring expenses, and no significant change in our debt instruments. due to the inherent difficulty of forecasting some of these types of expenses, which impact net earnings, diluted earnings per share and 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 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 2023 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 2022 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 executive recruitment and hiring related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration related expenses, and (vi) the tax effects of each of these items, as applicable. transformation costs represent costs we are incurring to transform our business, to help us achieve our strategic objectives, including becoming a leading solutions integrator. adjusted net earnings and adjusted diluted earnings per share for the twelve months ended december 31, 2021 also exclude amortization of debt discount and issuance costs associated with the issuance of the company’s convertible senior notes due 2025. effective january 1, 2022, the company adopted asu 2020-06 and no longer records amortization of debt discount associated with the convertible senior notes. 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 2022 was in excess of $68.32, which is the initial conversion price of the convertible senior notes. adjusted ebitda excludes (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization of property and equipment, (iv) amortization of intangible assets, (v) severance and restructuring expenses (vi) certain executive recruitment and hiring related expenses, (vii) transformation costs and (viii) certain acquisition and integration related expenses. adjusted return on invested capital (“roic”) excludes (i) severance and restructuring expenses, (ii) certain executive recruitment and hiring related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration related expenses 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, 2022 2021 change 2022 2021 change insight enterprises, inc. net sales: products $ 2,119,061 $ 2,213,690 (4 %) $ 8,947,787 $ 8,120,127 10 % services $ 383,549 $ 352,333 9 % $ 1,483,404 $ 1,315,986 13 % total net sales $ 2,502,610 $ 2,566,023 (2 %) $ 10,431,191 $ 9,436,113 11 % gross profit $ 420,559 $ 384,855 9 % $ 1,636,567 $ 1,447,557 13 % gross margin 16.8 % 15.0 % 180 bps 15.7 % 15.3 % 40 bps selling and administrative expenses $ 304,766 $ 289,855 5 % $ 1,216,660 $ 1,117,130 9 % severance and restructuring expenses $ 1,451 $ 1,583 (8 %) $ 4,235 $ (1,634 ) > 100% acquisition and integration related expenses $ 326 $ — * $ 1,972 — * earnings from operations $ 114,016 $ 93,417 22 % $ 413,700 $ 332,061 25 % net earnings $ 77,477 $ 62,133 25 % $ 280,608 $ 219,345 28 % diluted earnings per share $ 2.13 $ 1.69 26 % $ 7.66 $ 5.95 29 % north america net sales: products $ 1,760,826 $ 1,803,056 (2 %) $ 7,291,301 $ 6,478,637 13 % services $ 311,780 $ 282,981 10 % $ 1,193,091 $ 1,041,686 15 % total net sales $ 2,072,606 $ 2,086,037 (1 %) $ 8,484,392 $ 7,520,323 13 % gross profit $ 345,287 $ 307,082 12 % $ 1,328,333 $ 1,135,450 17 % gross margin 16.7 % 14.7 % 200 bps 15.7 % 15.1 % 60 bps selling and administrative expenses $ 244,965 $ 229,346 7 % $ 973,798 $ 869,766 12 % severance and restructuring expenses $ 912 $ 1,232 (26 %) $ 2,384 $ (3,129 ) > 100% acquisition and integration related expenses $ 69 $ — * $ 1,715 $ — * earnings from operations $ 99,341 $ 76,504 30 % $ 350,436 $ 268,813 30 % sales mix ** hardware 64 % 70 % (10 %) 68 % 69 % 11 % software 21 % 16 % 30 % 18 % 17 % 18 % services 15 % 14 % 10 % 14 % 14 % 15 % 100 % 100 % (1 %) 100 % 100 % 13 % emea net sales: products $ 324,625 $ 376,877 (14 %) $ 1,511,897 $ 1,502,176 1 % services $ 50,558 $ 49,516 2 % $ 200,624 $ 201,875 (1 %) total net sales $ 375,183 $ 426,393 (12 %) $ 1,712,521 $ 1,704,051 — % gross profit $ 61,180 $ 63,851 (4 %) $ 247,269 $ 258,862 (4 %) gross margin 16.3 % 15.0 % 130 bps 14.4 % 15.2 % (80 bps) selling and administrative expenses $ 49,763 $ 51,150 (3 %) $ 200,988 $ 210,616 (5 %) severance and restructuring expenses $ 450 $ 193 133 % $ 1,760 $ 1,328 33 % acquisition and integration related expenses $ 257 $ — * $ 257 $ — * earnings from operations $ 10,710 $ 12,508 (14 %) $ 44,264 $ 46,918 (6 %) sales mix ** hardware 37 % 35 % (9 %) 38 % 40 % (3 %) software 50 % 53 % (17 %) 50 % 48 % 4 % services 13 % 12 % 2 % 12 % 12 % (1 %) 100 % 100 % (12 %) 100 % 100 % — % apac net sales: products $ 33,610 $ 33,757 — % $ 144,589 $ 139,314 4 % services $ 21,211 $ 19,836 7 % $ 89,689 $ 72,425 24 % total net sales $ 54,821 $ 53,593 2 % $ 234,278 $ 211,739 11 % gross profit $ 14,092 $ 13,922 1 % $ 60,965 $ 53,245 14 % gross margin 25.7 % 26.0 % (30 bps) 26.0 % 25.1 % 90 bps selling and administrative expenses $ 10,038 $ 9,359 7 % $ 41,874 $ 36,748 14 % severance and restructuring expenses $ 89 $ 158 (44 %) $ 91 $ 167 (46 %) earnings from operations $ 3,965 $ 4,405 (10 %) $ 19,000 $ 16,330 16 % sales mix ** hardware 24 % 27 % (8 %) 25 % 23 % 17 % software 37 % 36 % 5 % 37 % 43 % (4 %) services 39 % 37 % 7 % 38 % 34 % 24 % 100 % 100 % 2 % 100 % 100 % 11 % * 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 the company’s future responses to and the potential impact of coronavirus strain covid-19 (“covid-19”) on the company, the company’s future financial performance and results of operations, including net sales growth, adjusted diluted earnings per share, and adjusted selling and administrative expenses, the company’s anticipated effective tax rate, capital expenditures, and expected average share count including our expectation that we will complete our planned share repurchases in the first quarter of 2023, the company’s expectations that note holders will not convert the company’s convertible senior notes in the near term, the company’s expectations regarding cash flow, the company’s expectations regarding current supply constraints and shipment of backlog, future trends in the it market, the company’s business strategy and strategic initiatives, which 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 the “risk factors” sections of the company’s most recently filed periodic reports on form 10-k and form 10-q and subsequent filings with the sec: actions of our competitors, including manufacturers and publishers of products we sell; our reliance on our 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; our ability to keep pace with rapidly evolving technological advances and the evolving competitive marketplace general economic conditions, economic uncertainties and changes in geopolitical conditions, including the possibility of a recession or as a result of the ongoing war between russia and ukraine; changes in the it industry and/or rapid changes in technology; our ability to provide high quality services to our clients; accounts receivable risks, including increased credit loss experience or extended payment terms with our clients; our reliance on independent shipping companies; the risks associated with our international operations; supply constraints for products; the duration and severity of the covid-19 pandemic and its effects on our business, results of operations and financial condition, as well as the widespread outbreak of any other illnesses or communicable diseases; natural disasters or other adverse occurrences; disruptions in our it systems and voice and data networks; cyberattacks or breaches of data privacy and security regulations; intellectual property infringement claims and challenges to our 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 our commercial and public sector contracts; exposure to changes in, interpretations of, or enforcement trends related to tax rules and regulations; our potential to draw down a substantial amount of indebtedness; the conditional conversion feature of our convertible senior notes (the “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 notes (the "call spread transactions"); increased debt and interest expense and the possibility of decreased availability of funds under our financing facilities; risks associated with the discontinuation of libor as a benchmark rate; possible significant fluctuations in our future operating results as well as seasonality and variability in client demands; our dependence on certain key personnel and our ability to attract, train and retain skilled teammates; risks associated with the integration and operation of acquired businesses, including 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, 2022 2021 2022 2021 net sales: products $ 2,119,061 $ 2,213,690 $ 8,947,787 $ 8,120,127 services 383,549 352,333 1,483,404 1,315,986 total net sales 2,502,610 2,566,023 10,431,191 9,436,113 costs of goods sold: products 1,911,469 2,013,825 8,111,252 7,380,908 services 170,582 167,343 683,372 607,648 total costs of goods sold 2,082,051 2,181,168 8,794,624 7,988,556 gross profit 420,559 384,855 1,636,567 1,447,557 operating expenses: selling and administrative expenses 304,766 289,855 1,216,660 1,117,130 severance and restructuring expenses, net 1,451 1,583 4,235 (1,634 ) acquisition and integration related expenses 326 — 1,972 — earnings from operations 114,016 93,417 413,700 332,061 non-operating (income) expense: interest expense, net 10,333 10,632 39,497 40,516 other expense (income), net 511 (157 ) (230 ) (1,012 ) earnings before income taxes 103,172 82,942 374,433 292,557 income tax expense 25,695 20,809 93,825 73,212 net earnings $ 77,477 $ 62,133 $ 280,608 $ 219,345 net earnings per share: basic $ 2.24 $ 1.78 $ 8.04 $ 6.27 diluted $ 2.13 $ 1.69 $ 7.66 $ 5.95 shares used in per share calculations: basic 34,604 34,892 34,903 35,011 diluted 36,336 36,871 36,620 36,863 insight enterprises, inc. and subsidiaries consolidated balance sheets (in thousands) (unaudited) december 31, 2022 december 31, 2021 assets current assets: cash and cash equivalents $ 163,637 $ 103,840 accounts receivable, net 3,272,371 2,936,732 inventories 265,154 328,101 other current assets 199,506 199,638 total current assets 3,900,668 3,568,311 property and equipment, net 204,260 176,263 goodwill 493,033 428,346 intangible assets, net 204,998 214,788 other assets 309,622 301,372 $ 5,112,581 $ 4,689,080 liabilities and stockholders’ equity current liabilities: accounts payable – trade $ 1,785,076 $ 1,779,854 accounts payable – inventory financing facilities 301,314 311,878 accrued expenses and other current liabilities 433,789 423,489 current portion of long-term debt 346,228 36 total current liabilities 2,866,407 2,515,257 long-term debt 291,672 361,570 deferred income taxes 32,844 47,073 other liabilities 283,590 255,953 3,474,513 3,179,853 stockholders’ equity: preferred stock — — common stock 340 349 additional paid-in capital 327,872 368,282 retained earnings 1,368,658 1,167,690 accumulated other comprehensive loss – foreign currency translation adjustments (58,802 ) (27,094 ) total stockholders’ equity 1,638,068 1,509,227 $ 5,112,581 $ 4,689,080 insight enterprises, inc. and subsidiaries consolidated statements of cash flows (in thousands) (unaudited) twelve months ended december 31, 2022 2021 cash flows from operating activities: net earnings $ 280,608 $ 219,345 adjustments to reconcile net earnings to net cash provided by operating activities: depreciation and amortization 56,614 55,421 provision for losses on accounts receivable 6,066 7,862 non-cash stock-based compensation 22,710 18,201 deferred income taxes (9,251 ) 11,858 amortization of debt discount and issuance costs 6,105 16,875 other adjustments 2,035 (3,259 ) changes in assets and liabilities: increase in accounts receivable (406,370 ) (289,009 ) decrease (increase) in inventories 53,711 (148,941 ) decrease (increase) in other assets 27,858 (18,100 ) increase in accounts payable 53,607 303,395 increase (decrease) in accrued expenses and other liabilities 4,413 (9,937 ) net cash provided by operating activities: 98,106 163,711 cash flows from investing activities: proceeds from sale of assets 1,346 31,005 purchases of property and equipment (70,939 ) (52,079 ) acquisitions, net of cash and cash equivalents acquired (68,248 ) — net cash used in investing activities: (137,841 ) (21,074 ) cash flows from financing activities: borrowings on abl revolving credit facility 4,678,212 3,953,496 repayments on abl revolving credit facility (4,433,510 ) (4,040,496 ) net repayments under inventory financing facilities (8,307 ) (14,355 ) repurchases of common stock (107,922 ) (50,000 ) other payments (14,466 ) (10,030 ) net cash provided by (used in) financing activities: 114,007 (161,385 ) foreign currency exchange effect on cash, cash equivalents and restricted cash balances (14,531 ) (5,857 ) increase (decrease) in cash, cash equivalents and restricted cash 59,741 (24,605 ) cash, cash equivalents and restricted cash at beginning of period 105,977 130,582 cash, cash equivalents and restricted cash at end of period $ 165,718 $ 105,977 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, 2022 2021 2022 2021 adjusted consolidated earnings from operations: gaap consolidated efo $ 114,016 $ 93,417 $ 413,700 $ 332,061 amortization of intangible assets 8,077 7,948 32,892 32,045 other 6,172 1,583 20,018 (1,634 ) adjusted non-gaap consolidated efo $ 128,265 $ 102,948 $ 466,610 $ 362,472 gaap efo as a percentage of net sales 4.6 % 3.6 % 4.0 % 3.5 % adjusted non-gaap efo as a percentage of net sales 5.1 % 4.0 % 4.5 % 3.8 % adjusted consolidated net earnings: gaap consolidated net earnings $ 77,477 $ 62,133 $ 280,608 $ 219,345 amortization of intangible assets 8,077 7,948 32,892 32,045 amortization of debt discount and issuance costs — 3,079 — 12,124 other 6,172 1,583 20,018 (1,634 ) income taxes on non-gaap adjustments (3,533 ) (3,209 ) (13,306 ) (10,325 ) adjusted non-gaap consolidated net earnings $ 88,193 $ 71,534 $ 320,212 $ 251,555 adjusted diluted earnings per share: gaap diluted eps $ 2.13 $ 1.69 $ 7.66 $ 5.95 amortization of intangible assets 0.22 0.22 0.90 0.87 amortization of debt discount and issuance costs — 0.08 — 0.33 other 0.17 0.04 0.55 (0.04 ) income taxes on non-gaap adjustments (0.10 ) (0.09 ) (0.36 ) (0.28 ) impact of benefit from note hedge 0.11 0.09 0.36 0.27 adjusted non-gaap diluted eps $ 2.53 $ 2.03 $ 9.11 $ 7.10 shares used in diluted eps calculation 36,336 36,871 36,620 36,863 impact of benefit from note hedge (1,459 ) (1,604 ) (1,466 ) (1,453 ) shares used in adjusted non-gaap diluted eps calculation 34,877 35,267 35,154 35,410 adjusted north america earnings from operations: gaap efo from north america segment $ 99,341 $ 76,504 $ 350,436 $ 268,813 amortization of intangible assets 7,563 7,347 30,735 29,576 other 5,376 1,232 17,910 (3,129 ) adjusted non-gaap efo from north america segment $ 112,280 $ 85,083 $ 399,081 $ 295,260 gaap efo as a percentage of net sales 4.8 % 3.7 % 4.1 % 3.6 % adjusted non-gaap efo as a percentage of net sales 5.4 % 4.1 % 4.7 % 3.9 % adjusted emea earnings from operations: gaap efo from emea segment $ 10,710 $ 12,508 $ 44,264 $ 46,918 amortization of intangible assets 405 480 1,696 1,971 other 707 193 2,017 1,328 adjusted non-gaap efo from emea segment $ 11,822 $ 13,181 $ 47,977 $ 50,217 gaap efo as a percentage of net sales 2.9 % 2.9 % 2.6 % 2.8 % adjusted non-gaap efo as a percentage of net sales 3.2 % 3.1 % 2.8 % 2.9 % adjusted apac earnings from operations: gaap efo from apac segment $ 3,965 $ 4,405 $ 19,000 $ 16,330 amortization of intangible assets 109 121 461 498 other 89 158 91 167 adjusted non-gaap efo from apac segment $ 4,163 $ 4,684 $ 19,552 $ 16,995 gaap efo as a percentage of net sales 7.2 % 8.2 % 8.1 % 7.7 % adjusted non-gaap efo as a percentage of net sales 7.6 % 8.7 % 8.3 % 8.0 % adjusted ebitda: gaap consolidated net earnings $ 77,477 $ 62,133 $ 280,608 $ 219,345 interest expense 11,271 10,907 41,577 41,198 income tax expense 25,695 20,809 93,825 73,212 depreciation and amortization of property and equipment 6,333 5,322 23,722 23,376 amortization of intangible assets 8,077 7,948 32,892 32,045 other 6,172 1,583 20,018 (1,634 ) adjusted non-gaap ebitda $ 135,025 $ 108,702 $ 492,642 $ 387,542 gaap consolidated net earnings as a percentage of net sales 3.1 % 2.4 % 2.7 % 2.3 % adjusted non-gaap ebitda as a percentage of net sales 5.4 % 4.2 % 4.7 % 4.1 % 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, 2022 2021 adjusted return on invested capital: gaap consolidated efo $ 413,700 $ 332,061 amortization of intangible assets 32,892 32,045 other 20,018 (1,634 ) adjusted non-gaap consolidated efo* 466,610 362,472 income tax expense** 121,319 94,243 adjusted non-gaap consolidated efo, net of tax $ 345,291 $ 268,229 average stockholders’ equity*** $ 1,584,075 $ 1,417,114 average debt*** 713,279 445,792 average cash*** (131,283 ) (117,214 ) invested capital $ 2,166,071 $ 1,745,692 adjusted non-gaap roic (from gaap consolidated efo) **** 14.13 % 14.08 % adjusted non-gaap roic (from non-gaap consolidated efo) ***** 15.94 % 15.37 % * the adjusted non-gaap consolidated efo amount used for the adjusted non-gaap roic calculation excludes 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 $107,562 and $86,336 for the twelve months ended december 31, 2022 and 2021, respectively, divided by invested capital. ***** computed as adjusted non-gaap consolidated efo, net of tax, divided by invested capital.
