8-K
INSIGHT ENTERPRISES INC (NSIT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 10, 2022
INSIGHT ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
_____________________________
| Delaware | 0-25092 | 86-0766246 | |
|---|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission<br><br>File Number) | (I.R.S. Employer<br><br>Identification No.) | |
| 6820 South Harl Avenue, | |||
| Tempe, | Arizona | 85283 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code:
(480) 333-3000
Not Applicable
(Former name or former address, if changed since last report)
_____________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common stock, par value $0.01 | NSIT | The NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
| Emerging growth company | ☐ |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On February 10, 2022, Insight Enterprises, Inc. announced by press release its results of operations for the fourth quarter and full year ended December 31, 2021. A copy of the press release and accompanying investor presentation are attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated by reference herein. The information disclosed under this Item 2.02, including Exhibits 99.1 and 99.2 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit<br><br>Number | Description |
|---|---|
| 99.1 | Press release datedFebruary 10, 2022. |
| 99.2 | Investor presentation of Insight Enterprises, Inc. datedFebruary 10, 2022. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Insight Enterprises, Inc. | |||
|---|---|---|---|
| Date: | February 10, 2022 | By: | /s/ Glynis A. Bryan |
| Glynis A. Bryan | |||
| Chief Financial Officer |
Document
EXHIBIT 99.1
| FOR IMMEDIATE RELEASE | NASDAQ: NSIT |
|---|
INSIGHT ENTERPRISES, INC. REPORTS RECORD
FOURTH QUARTER AND FULL YEAR 2021 RESULTS
TEMPE, AZ – February 10, 2022 – Insight Enterprises, Inc. (NASDAQ: NSIT) (the “Company”) today reported financial results for the quarter and full year ended December 31, 2021. Highlights include:
•Net sales increased 13% to a record $9.44 billion for the full year
•Gross profit increased 11% to $1.45 billion with gross margin contracting 30 basis points to 15.3% for the full year
•Earnings from operations increased 22% to $332.1 million for the full year and was 3.5% of net sales
•Adjusted earnings from operations increased 12% to $362.5 million for the full year and was 3.8% of net sales
•Diluted earnings per share of $5.95 increased 22% for the full year
•Adjusted diluted earnings per share of $7.10 increased 15% for the full year
In the fourth quarter of 2021, net sales increased 12%, year over year. Gross profit also increased 12% while gross margin remained consistent at 15.0% compared to the fourth quarter of 2020. Earnings from operations of $93.4 million increased 12% compared to $83.0 million in the fourth quarter of 2020. Adjusted earnings from operations of $102.9 million increased 12% compared to $92.1 million in the fourth quarter of 2020. Diluted earnings per share for the quarter was $1.69, up 13%, year over year, and Adjusted diluted earnings per share was $2.03, up 15% year over year.
“During the fourth quarter, our net sales were $2.6 billion, representing record net sales in a quarter for Insight,” stated Joyce Mullen, President and Chief Executive Officer. “We had hardware net sales growth of 13% and drove services gross profit growth of 14%, year over year, allowing us to maintain gross margin of 15.0%, which was consistent with the prior year quarter,” stated Mullen.
For the full year 2021, consolidated net sales were $9.44 billion, up 13% year over year. Gross profit increased 11%, year over year, with gross margins contracting 30 basis points to 15.3% for the full year. Earnings from operations grew 22%, year over year, to $332.1 million. Cash flow from operations was strong at $163.7 million.
“Once again, our teammates faced a challenging year, navigating the uncertainty of the macro environment. I could not be more pleased with their performance as they maintained focus on solving our clients’ biggest technology and solutions challenges. We set company records for full year net sales, gross profit, Adjusted earnings from operations and Adjusted diluted earnings per share,” stated Joyce Mullen. “While we are proud of our accomplishments in 2021, we are focused on the opportunities ahead of us in 2022, as we strive to expand our reputation and capabilities as an industry recognized global solutions integrator. What really makes our go-to-market strategy impactful, is the ability to expand to adjacencies within our areas of expertise. We have the ability to not only deliver immediate results for clients today, but to guide them through their longer term digital transformation,” stated Mullen.
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| Insight Enterprises, Inc. | 6820 South Harl Avenue | Tempe, Arizona 85283 | 800.467.4448 | FAX 480.760.8958 |
KEY HIGHLIGHTS
Results for the Quarter:
•Consolidated net sales for the fourth quarter of 2021 of $2.57 billion increased 12%, year over year, when compared to the fourth quarter of 2020.
•Net sales in North America increased 13%, year over year, to $2.09 billion;
•Net sales in EMEA increased 6%, year over year, to $426.4 million; and
•Net sales in APAC increased 19%, year over year, to $53.6 million.
•Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales were up 12%, year over year, with growth in net sales in North America, EMEA and APAC of 13%, 7% and 19%, respectively, year over year.
•Consolidated gross profit increased to $384.9 million, an increase of 12% compared to the fourth quarter of 2020, with consolidated gross margin remaining consistent at 15.0% of net sales.
•Gross profit in North America increased 13%, year over year, to $307.1 million (14.7% gross margin);
•Gross profit in EMEA increased 9%, year over year, to $63.9 million (15.0% gross margin); and
•Gross profit in APAC increased 21%, year over year, to $13.9 million (26.0% gross margin).
•Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit was up 12%, year over year, with gross profit growth in North America, EMEA and APAC of 13%, 10% and 22%, respectively, year over year.
•Consolidated earnings from operations increased 12% compared to the fourth quarter of 2020 to $93.4 million, or 3.6% of net sales.
•Earnings from operations in North America increased 8%, year over year, to $76.5 million, or 3.7% of net sales;
•Earnings from operations in EMEA increased 35%, year over year, to $12.5 million, or 2.9% of net sales; and
•Earnings from operations in APAC increased 38%, year over year, to $4.4 million, or 8.2% of net sales.
•Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations were up 13%, year over year, with increased earnings from operations in North America, EMEA and APAC of 8%, 38% and 37%, respectively, year over year.
•Adjusted earnings from operations increased 12% compared to the fourth quarter of 2020 to $102.9 million, or 4.0% of net sales.
•Adjusted earnings from operations in North America increased 9%, year over year, to $85.1 million, or 4.1% of net sales;
•Adjusted earnings from operations in EMEA increased 24%, year over year, to $13.2 million, or 3.1% of net sales; and
•Adjusted earnings from operations in APAC increased 37%, year over year, to $4.7 million, or 8.7% of net sales.
•Consolidated net earnings and diluted earnings per share for the fourth quarter of 2021 were $62.1 million and $1.69, respectively, at an effective tax rate of 25.1%.
•Adjusted consolidated net earnings and Adjusted diluted earnings per share for the fourth quarter of 2021 were $71.5 million and $2.03, respectively.
Results for the Year:
•Consolidated net sales of $9.44 billion for 2021 increased 13%, year over year, when compared to 2020.
•Net sales in North America increased 14%, year over year, to $7.52 billion;
•Net sales in EMEA increased 10%, year over year, to $1.70 billion; and
•Net sales in APAC increased 24%, year over year, to $211.7 million.
•Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales were up 13%, year over year, with growth in net sales in North America, EMEA and APAC of 13%, 4% and 15%, respectively, year over year.
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| Insight Enterprises, Inc. | 6820 South Harl Avenue | Tempe, Arizona 85283 | 800.467.4448 | FAX 480.760.8958 |
•Consolidated gross profit increased to $1.45 billion, an increase of 11% compared to 2020, with consolidated gross margin contracting 30 basis points to 15.3% of net sales.
•Gross profit in North America increased 11%, year over year, to $1.14 billion (15.1% gross margin);
•Gross profit in EMEA increased 10%, year over year, to $258.9 million (15.2% gross margin); and
•Gross profit in APAC increased 25%, year over year, to $53.2 million (25.1% gross margin).
•Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit was up 10%, year over year, with gross profit growth in North America, EMEA and APAC of 11%, 4% and 17%, respectively, year over year.
•Consolidated earnings from operations increased 22% compared to 2020 to $332.1 million, or 3.5% of net sales.
•Earnings from operations in North America increased 23%, year over year, to $268.8 million, or 3.6% of net sales;
•Earnings from operations in EMEA increased 16%, year over year, to $46.9 million, or 2.8% of net sales; and
•Earnings from operations in APAC increased 36%, year over year, to $16.3 million, or 7.7% of net sales.
•Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations were up 20%, year over year, with increased earnings from operations in North America, EMEA and APAC of 22%, 10% and 27%, respectively.
•Adjusted earnings from operations increased 12% compared to 2020 to $362.5 million, or 3.8% of net sales.
•Adjusted earnings from operations in North America increased 12%, year over year, to $295.3 million, or 3.9% of net sales;
•Adjusted earnings from operations in EMEA increased 10%, year over year, to $50.2 million, or 2.9% of net sales; and
•Adjusted earnings from operations in APAC increased 35%, year over year, to $17.0 million, or 8.0% of net sales.
•Consolidated net earnings and diluted earnings per share for 2021 were $219.3 million and $5.95, respectively, at an effective tax rate of 25.0%.
•Adjusted consolidated net earnings and Adjusted diluted earnings per share for 2021 were $251.6 million and $7.10, respectively.
In discussing financial results for the three and twelve months ended December 31, 2021 and 2020 in this press release, the Company refers to certain financial measures that are adjusted from the financial results prepared in accordance with United States generally accepted accounting principles (“GAAP”). When referring to non-GAAP measures, the Company refers to them as “Adjusted.” See “Use of Non-GAAP Financial Measures” for additional information. A tabular reconciliation of financial measures prepared in accordance with GAAP to the non-GAAP financial measures is included at the end of this press release.
In some instances, the Company refers to changes in net sales, gross profit and earnings from operations on a consolidated basis and in North America, EMEA and APAC excluding the effects of fluctuating foreign currency exchange rates. In computing these changes and percentages, the Company compares the current year amount as translated into U.S. dollars under the applicable accounting standards to the prior year amount in local currency translated into U.S. dollars utilizing the weighted average translation rate for the current period.
The tax effect of Adjusted amounts referenced herein were computed using the statutory tax rate for the taxing jurisdictions in the operating segment in which the related expenses were recorded, adjusted for the effects of valuation allowances on net operating losses in certain jurisdictions.
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| Insight Enterprises, Inc. | 6820 South Harl Avenue | Tempe, Arizona 85283 | 800.467.4448 | FAX 480.760.8958 |
GUIDANCE
For the full year 2022, the Company expects to deliver mid single-digit net sales growth and Adjusted diluted earnings per share is expected to be between $7.65 and $7.85.
This outlook assumes
•interest expense between $30 million and $35 million;
•an effective tax rate of 25% to 26% for the full year 2022;
•capital expenditures of $75 to $80 million, including final completion of our new corporate headquarters; and
•an average share count for the full year of 35.6 million shares.
This outlook excludes acquisition-related intangibles amortization expense of approximately $31 million and assumes no acquisition-related or severance and restructuring expenses. Due to the inherent difficulty of forecasting some of these types of expenses, which impact net earnings, diluted earnings per share and Adjusted selling and administrative expenses, the Company is unable to reasonably estimate the impact of such expenses, if any, to net earnings, diluted earnings per share and Adjusted selling and administrative expenses. Accordingly, the Company is unable to provide a reconciliation of GAAP to non-GAAP diluted earnings per share for the full year 2022 forecast.
CONFERENCE CALL AND WEBCAST
The Company will host a conference call and live web cast today at 9:00 a.m. ET to discuss fourth quarter and full year 2021 results of operations. A live web cast of the conference call (in listen-only mode) will be available on the Company’s web site at http://investor.insight.com/, and a replay of the web cast will be available on the Company’s web site for a limited time following the call. To access the live conference call, please register in advance using this event link. Upon registering, participants will receive dial-in information via email, as well as a unique registrant ID, event passcode, and detailed instructions regarding how to join the call.
USE OF NON-GAAP FINANCIAL MEASURES
The non-GAAP financial measures are referred to as “Adjusted”. Adjusted earnings from operations, Adjusted net earnings and Adjusted diluted earnings per share exclude (i) severance and restructuring expenses, (ii) certain acquisition and integration related expenses, (iii) amortization of intangible assets, and (iv) the tax effects of each of these items, as applicable. Adjusted net earnings and Adjusted diluted earnings per share also exclude amortization of debt discount and issuance costs associated with the issuance of the Company’s convertible senior notes due 2025. The Company excludes these items when internally evaluating earnings from operations, tax expense, net earnings and diluted earnings per share for the Company and earnings from operations for each of the Company’s operating segments. Adjusted diluted earnings per share also includes the impact of the benefit from the note hedge where the Company’s average stock price for the fourth quarter of 2021 was in excess of $68.32, which is the initial conversion price of the convertible senior notes. Adjusted EBITDA includes (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization of property and equipment, (iv) amortization of intangibles, (v) non-cash stock based compensation, (vi) severance and restructuring expenses and (vii) certain acquisition and integration related expenses. Adjusted return on invested capital (“ROIC”) excludes (i) severance and restructuring expenses, (ii) certain acquisition and integration related expenses, (iii) loss on sale of property, and (iv) the tax effects of each of these items, as applicable.
These non-GAAP measures are used by the Company and its management to evaluate financial performance against budgeted amounts, to calculate incentive compensation, to assist in forecasting future performance and to compare the Company’s results to those of the Company’s competitors. The Company believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency, facilitate comparisons to prior periods and the Company’s competitors’ results and assist in forecasting performance for future periods. These non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
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| Insight Enterprises, Inc. | 6820 South Harl Avenue | Tempe, Arizona 85283 | 800.467.4448 | FAX 480.760.8958 |
FINANCIAL SUMMARY TABLE
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | change | 2021 | 2020 | change | |||||||||||||||
| Insight Enterprises, Inc. | ||||||||||||||||||||
| Net sales: | ||||||||||||||||||||
| Products | $ | 2,213,690 | $ | 1,989,338 | 11% | $ | 8,120,127 | $ | 7,172,155 | 13% | ||||||||||
| Services | $ | 352,333 | $ | 301,977 | 17% | $ | 1,315,986 | $ | 1,168,424 | 13% | ||||||||||
| Total net sales | $ | 2,566,023 | $ | 2,291,315 | 12% | $ | 9,436,113 | $ | 8,340,579 | 13% | ||||||||||
| Gross profit | $ | 384,855 | $ | 342,654 | 12% | $ | 1,447,557 | $ | 1,299,942 | 11% | ||||||||||
| Gross margin | 15.0 | % | 15.0 | % | — | 15.3 | % | 15.6 | % | (30 bps) | ||||||||||
| Selling and administrative expenses | $ | 289,855 | 257,167 | 13% | $ | 1,117,130 | $ | 1,013,765 | 10% | |||||||||||
| Severance and restructuring expenses | $ | 1,583 | $ | 2432 | (35%) | $ | (1,634) | $ | 12,394 | > 100% | ||||||||||
| Acquisition and integration related expenses | $ | — | $ | 13 | * | $ | — | $ | 2,208 | * | ||||||||||
| Earnings from operations | $ | 93,417 | $ | 83,042 | 12% | $ | 332,061 | $ | 271,575 | 22% | ||||||||||
| Net earnings | $ | 62,133 | $ | 53,388 | 16% | $ | 219,345 | $ | 172,640 | 27% | ||||||||||
| Diluted earnings per share | $ | 1.69 | $ | 1.50 | 13% | $ | 5.95 | $ | 4.87 | 22% | ||||||||||
| North America | ||||||||||||||||||||
| Net sales: | ||||||||||||||||||||
| Products | $ | 1,803,056 | $ | 1,600,261 | 13% | $ | 6,478,637 | $ | 5,679,052 | 14% | ||||||||||
| Services | $ | 282,981 | $ | 243,075 | 16% | $ | 1,041,686 | $ | 935,980 | 11% | ||||||||||
| Total net sales | $ | 2,086,037 | $ | 1,843,336 | 13% | $ | 7,520,323 | $ | 6,615,032 | 14% | ||||||||||
| Gross profit | $ | 307,082 | $ | 272,396 | 13% | $ | 1,135,450 | $ | 1,021,388 | 11% | ||||||||||
| Gross margin | 14.7 | % | 14.8 | % | (10 bps) | 15.1 | % | 15.4 | % | (30 bps) | ||||||||||
| Selling and administrative expenses | $ | 229,346 | $ | 200,364 | 14% | $ | 869,766 | $ | 790,913 | 10% | ||||||||||
| Severance and restructuring expenses | $ | 1,232 | $ | 1,474 | (16%) | $ | (3,129) | $ | 9,273 | > 100% | ||||||||||
| Acquisition and integration related expenses | $ | — | $ | 13 | * | $ | — | $ | 2,004 | * | ||||||||||
| Earnings from operations | $ | 76,504 | $ | 70,545 | 8% | $ | 268,813 | $ | 219,198 | 23% | ||||||||||
| Sales Mix | ** | ** | ||||||||||||||||||
| Hardware | 70 | % | 67 | % | 19% | 69 | % | 67 | % | 17% | ||||||||||
| Software | 16 | % | 20 | % | (7%) | 17 | % | 19 | % | 4% | ||||||||||
| Services | 14 | % | 13 | % | 16% | 14 | % | 14 | % | 11% | ||||||||||
| 100 | % | 100 | % | 13% | 100 | % | 100 | % | 14% | |||||||||||
| EMEA | ||||||||||||||||||||
| Net sales: | ||||||||||||||||||||
| Products | $ | 376,877 | $ | 358,314 | 5% | $ | 1,502,176 | $ | 1,378,387 | 9% | ||||||||||
| Services | $ | 49,516 | $ | 44,728 | 11% | $ | 201,875 | $ | 176,838 | 14% | ||||||||||
| Total net sales | $ | 426,393 | $ | 403,042 | 6% | $ | 1,704,051 | $ | 1,555,225 | 10% | ||||||||||
| Gross profit | $ | 63,851 | $ | 58,792 | 9% | $ | 258,862 | $ | 236,046 | 10% | ||||||||||
| Gross margin | 15.0 | % | 14.6 | % | 40 bps | 15.2 | % | 15.2 | % | — | ||||||||||
| Selling and administrative expenses | $ | 51,150 | $ | 48,626 | 5% | $ | 210,616 | $ | 192,485 | 9% | ||||||||||
| Severance and restructuring expenses | $ | 193 | $ | 871 | (78%) | $ | 1,328 | $ | 2,989 | (56%) | ||||||||||
| Acquisition and integration related expenses | $ | — | $ | — | * | $ | — | $ | 204 | * | ||||||||||
| Earnings from operations | $ | 12,508 | $ | 9,295 | 35% | $ | 46,918 | $ | 40,368 | 16% | ||||||||||
| Sales Mix | ** | ** | ||||||||||||||||||
| Hardware | 35 | % | 37 | % | (1%) | 40 | % | 40 | % | 10% | ||||||||||
| Software | 53 | % | 52 | % | 10% | 48 | % | 49 | % | 9% | ||||||||||
| Services | 12 | % | 11 | % | 11% | 12 | % | 11 | % | 14% | ||||||||||
| 100 | % | 100 | % | 6% | 100 | % | 100 | % | 10% | - MORE - | ||||||||||
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| Insight Enterprises, Inc. | 6820 South Harl Avenue | Tempe, Arizona 85283 | 800.467.4448 | FAX 480.760.8958 |
FINANCIAL SUMMARY TABLE (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | change | 2021 | 2020 | change | |||||||||
| APAC | ||||||||||||||
| Net sales: | ||||||||||||||
| Products | $ | 33,757 | $ | 30,763 | 10% | $ | 139,314 | $ | 114,716 | 21% | ||||
| Services | $ | 19,836 | $ | 14,174 | 40% | $ | 72,425 | $ | 55,606 | 30% | ||||
| Total net sales | $ | 53,593 | $ | 44,937 | 19% | $ | 211,739 | $ | 170,322 | 24% | ||||
| Gross profit | $ | 13,922 | $ | 11,466 | 21% | $ | 53,245 | $ | 42,508 | 25% | ||||
| Gross margin | 26.0 | % | 25.5 | % | 50 bps | 25.1 | % | 25.0 | % | 10 bps | ||||
| Selling and administrative expenses | $ | 9,359 | $ | 8,177 | 14% | $ | 36,748 | $ | 30,367 | 21% | ||||
| Severance and restructuring expenses | $ | 158 | $ | 87 | 82% | $ | 167 | $ | 132 | 27% | ||||
| Earnings from operations | $ | 4,405 | $ | 3,202 | 38% | $ | 16,330 | $ | 12,009 | 36% | ||||
| Sales Mix | ** | ** | ||||||||||||
| Hardware | 27 | % | 24 | % | 34% | 23 | % | 19 | % | 55% | ||||
| Software | 36 | % | 44 | % | (3)% | 43 | % | 48 | % | 9% | ||||
| Services | 37 | % | 32 | % | 40% | 34 | % | 33 | % | 30% | ||||
| 100 | % | 100 | % | 19% | 100 | % | 100 | % | 24% |
*Percentage change not considered meaningful.
** Change in sales mix represents growth/decline in category net sales on a U.S. dollar basis and does not exclude the effects of fluctuating foreign currency exchange rates.
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| Insight Enterprises, Inc. | 6820 South Harl Avenue | Tempe, Arizona 85283 | 800.467.4448 | FAX 480.760.8958 |
FORWARD-LOOKING INFORMATION
Certain statements in this release and the related conference call, web cast and presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including those related to our future responses to and the potential impact of coronavirus strain COVID-19 (“COVID-19”) on our Company, the Company’s future financial performance and results of operations, including net sales growth, Adjusted diluted earnings per share, Adjusted selling and administrative expenses, the Company’s anticipated effective tax rate, capital expenditures, expected average share count, the Company’s expectations regarding cash flow, the Company’s expectations regarding current supply constraints pipeline, and shipment of backlog, future trends in the IT market, our business strategy and our strategic initiatives, are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. There can be no assurances that the results discussed by the forward-looking statements will be achieved, and actual results may differ materially from those set forth in the forward-looking statements. Some of the important factors that could cause the Company’s actual results to differ materially from those projected in any forward-looking statements include, but are not limited to, the following, which are discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including in “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 to be filed with the SEC:
•actions of the Company’s competitors, including manufacturers and publishers of products the Company sells;
•the Company’s reliance on its partners for product availability, competitive products to sell and marketing funds and purchasing incentives, which can change significantly in the amounts made available and in the requirements year over year;
•the Company’s ability to keep pace with rapidly evolving technological advances and the evolving competitive marketplace;
•the duration and severity of the COVID-19 pandemic and its effects on the Company’s business, results of operations and financial condition, as well as the widespread outbreak of any other illnesses or communicable diseases;
•general economic conditions, economic uncertainties and changes in geopolitical conditions;
•changes in the IT industry and/or rapid changes in technology;
•supply constraints for hardware, including devices;
•accounts receivable risks, including increased credit loss experience or extended payment terms with the Company’s clients;
•the Company’s reliance on independent shipping companies;
•the risks associated with the Company’s international operations;
•natural disasters or other adverse occurrences;
•disruptions in the Company’s IT systems and voice and data networks;
•cyberattacks or breaches of data privacy and security regulations;
•intellectual property infringement claims and challenges to the Company’s registered trademarks and trade names;
•legal proceedings, client audits and failure to comply with laws and regulations;
•failure to comply with the terms and conditions of the Company’s commercial and public sector contracts;
•exposure to changes in, interpretations of, or enforcement trends related to tax rules and regulations;
•the Company’s potential to draw down a substantial amount of indebtedness;
•the conditional conversion feature of the Company’s convertible senior notes, which has been triggered, may adversely affect the Company’s financial condition and operating results;
•the Company is subject to counterparty risk with respect to certain hedge and warrant transactions entered into in connection with the issuance of the convertible senior notes;
•risks associated with the discontinuation of LIBOR as a benchmark rate;
•increased debt and interest expense and decreased availability of funds under the Company’s financing facilities;
•possible significant fluctuations in the Company’s future operating results as well as seasonality and variability in client demands;
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|---|---|---|---|---|
| Insight Enterprises, Inc. | 6820 South Harl Avenue | Tempe, Arizona 85283 | 800.467.4448 | FAX 480.760.8958 |
•the Company’s dependence on certain key personnel and the Company’s ability to attract, train and retain skilled teammates;
•risks associated with the integration and operation of acquired businesses, including the achievement of expected synergies and benefits; and
•future sales of the Company’s common stock or equity-linked securities in the public market could lower the market price for our common stock.
Additionally, there may be other risks that are otherwise described from time to time in the reports that the Company files with the SEC. Any forward-looking statements in this release, the related conference call, webcast and presentation speak only as of the date on which they are made and should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others. The Company assumes no obligation to update, and, except as may be required by law, does not intend to update, any forward-looking statements. The Company does not endorse any projections regarding future performance that may be made by third parties.
| CONTACT: | GLYNIS BRYAN | ||||||
|---|---|---|---|---|---|---|---|
| CHIEF FINANCIAL OFFICER | |||||||
| TEL. 480.333.3390 | |||||||
| EMAIL glynis.bryan@insight.com | - MORE - | ||||||
| --- | --- | --- | --- | --- | |||
| Insight Enterprises, Inc. | 6820 South Harl Avenue | Tempe, Arizona 85283 | 800.467.4448 | FAX 480.760.8958 |
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended<br>December 31, | Twelve Months Ended<br>December 31, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| Net sales: | ||||||||||||||
| Products | $ | 2,213,690 | $ | 1,989,338 | $ | 8,120,127 | $ | 7,172,155 | ||||||
| Services | 352,333 | 301,977 | 1,315,986 | 1,168,424 | ||||||||||
| Total net sales | 2,566,023 | 2,291,315 | 9,436,113 | 8,340,579 | ||||||||||
| Costs of goods sold: | ||||||||||||||
| Products | 2,013,825 | 1,808,504 | 7,380,908 | 6,497,001 | ||||||||||
| Services | 167,343 | 140,157 | 607,648 | 543,636 | ||||||||||
| Total costs of goods sold | 2,181,168 | 1,948,661 | 7,988,556 | 7,040,637 | ||||||||||
| Gross profit | 384,855 | 342,654 | 1,447,557 | 1,299,942 | ||||||||||
| Operating expenses: | ||||||||||||||
| Selling and administrative expenses | 289,855 | 257,167 | 1,117,130 | 1,013,765 | ||||||||||
| Severance and restructuring expenses, net | 1,583 | 2,432 | (1,634) | 12,394 | ||||||||||
| Acquisition and integration related expenses | — | 13 | — | 2,208 | ||||||||||
| Earnings from operations | 93,417 | 83,042 | 332,061 | 271,575 | ||||||||||
| Non-operating (income) expense: | ||||||||||||||
| Interest expense, net | 10,632 | 10,434 | 40,516 | 41,594 | ||||||||||
| Other (income) expense, net | (157) | 693 | (1,012) | 1,529 | ||||||||||
| Earnings before income taxes | 82,942 | 71,915 | 292,557 | 228,452 | ||||||||||
| Income tax expense | 20,809 | 18,527 | 73,212 | 55,812 | ||||||||||
| Net earnings | $ | 62,133 | $ | 53,388 | $ | 219,345 | $ | 172,640 | ||||||
| Net earnings per share: | ||||||||||||||
| Basic | $ | 1.78 | $ | 1.52 | $ | 6.27 | $ | 4.92 | ||||||
| Diluted | $ | 1.69 | $ | 1.50 | $ | 5.95 | $ | 4.87 | ||||||
| Shares used in per share calculations: | ||||||||||||||
| Basic | 34,892 | 35,098 | 35,011 | 35,117 | ||||||||||
| Diluted | 36,871 | 35,523 | 36,863 | 35,444 | - MORE - | |||||||||
| --- | --- | --- | --- | --- | ||||||||||
| Insight Enterprises, Inc. | 6820 South Harl Avenue | Tempe, Arizona 85283 | 800.467.4448 | FAX 480.760.8958 |
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In THOUSANDS)
(UNAUDITED)
| December 31, 2021 | December 31, 2020 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 103,840 | $ | 128,313 | ||||||
| Accounts receivable, net | 2,936,732 | 2,685,448 | ||||||||
| Inventories | 328,101 | 185,650 | ||||||||
| Other current assets | 199,638 | 177,039 | ||||||||
| Total current assets | $ | 3,568,311 | $ | 3,176,450 | ||||||
| Property and equipment, net | 176,263 | 146,016 | ||||||||
| Goodwill | 428,346 | 429,368 | ||||||||
| Intangible assets, net | 214,788 | 246,915 | ||||||||
| Other assets | 301,372 | 311,983 | ||||||||
| $ | 4,689,080 | $ | 4,310,732 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable – trade | $ | 1,779,854 | $ | 1,461,312 | ||||||
| Accounts payable – inventory financing facilities | 311,878 | 356,930 | ||||||||
| Accrued expenses and other current liabilities | 423,489 | 408,117 | ||||||||
| Current portion of long-term debt | 36 | 1,105 | ||||||||
| Total current liabilities | 2,515,257 | 2,227,464 | ||||||||
| Long-term debt | 361,570 | 437,581 | ||||||||
| Deferred income taxes | 47,073 | 33,209 | ||||||||
| Other liabilities | 255,953 | 270,049 | ||||||||
| 3,179,853 | 2,968,303 | |||||||||
| Stockholders’ equity: | ||||||||||
| Preferred stock | — | — | ||||||||
| Common stock | 349 | 351 | ||||||||
| Additional paid-in capital | 368,282 | 364,288 | ||||||||
| Retained earnings | 1,167,690 | 993,245 | ||||||||
| Accumulated other comprehensive loss – foreign currency translation adjustments | (27,094) | (15,455) | ||||||||
| Total stockholders’ equity | 1,509,227 | 1,342,429 | ||||||||
| $ | 4,689,080 | $ | 4,310,732 | - MORE - | ||||||
| --- | --- | --- | --- | --- | ||||||
| Insight Enterprises, Inc. | 6820 South Harl Avenue | Tempe, Arizona 85283 | 800.467.4448 | FAX 480.760.8958 |
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
| Twelve Months Ended<br><br>December 31, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||||||
| Cash flows from operating activities: | ||||||||||
| Net earnings | $ | 219,345 | $ | 172,640 | ||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 55,421 | 65,560 | ||||||||
| Provision for losses on accounts receivable | 7,862 | 10,163 | ||||||||
| Non-cash stock-based compensation | 18,201 | 17,727 | ||||||||
| Deferred income taxes | 11,858 | (13,246) | ||||||||
| Amortization of debt discount and issuance costs | 16,875 | 16,217 | ||||||||
| Other adjustments | (3,259) | 6,272 | ||||||||
| Changes in assets and liabilities: | ||||||||||
| Increase in accounts receivable | (289,009) | (132,599) | ||||||||
| (Increase) decrease in inventories | (148,941) | 1,029 | ||||||||
| (Increase) decrease in other assets | (18,100) | 7,367 | ||||||||
| Increase in accounts payable | 303,395 | 152,235 | ||||||||
| (Decrease) increase in accrued expenses and other liabilities | (9,937) | 52,217 | ||||||||
| Net cash provided by operating activities | 163,711 | 355,582 | ||||||||
| Cash flows from investing activities: | ||||||||||
| Proceeds from sale of assets | 31,005 | 40,295 | ||||||||
| Purchases of property and equipment | (52,079) | (24,184) | ||||||||
| Acquisitions, net of cash and cash equivalents acquired | — | (6,405) | ||||||||
| Net cash (used in) provided by investing activities | (21,074) | 9,706 | ||||||||
| Cash flows from financing activities: | ||||||||||
| Borrowings on ABL revolving credit facility | 3,953,496 | 3,030,679 | ||||||||
| Repayments on ABL revolving credit facility | (4,040,496) | (3,462,063) | ||||||||
| Net (repayments) borrowings under inventory financing facilities | (14,355) | 103,254 | ||||||||
| Repurchases of treasury stock | (50,000) | (25,000) | ||||||||
| Other payments | (10,030) | (8,661) | ||||||||
| Net cash used in financing activities | (161,385) | (361,791) | ||||||||
| Foreign currency exchange effect on cash, cash equivalents and restricted cash balances | (5,857) | 10,788 | ||||||||
| (Decrease) increase in cash, cash equivalents and restricted cash | (24,605) | 14,285 | ||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 130,582 | 116,297 | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 105,977 | $ | 130,582 | - MORE - | |||||
| --- | --- | --- | --- | --- | ||||||
| Insight Enterprises, Inc. | 6820 South Harl Avenue | Tempe, Arizona 85283 | 800.467.4448 | FAX 480.760.8958 |
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended<br><br>December 31, | Twelve Months Ended<br><br>December 31, | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||
| Adjusted Consolidated Earnings from Operations: | ||||||||||||||||||
| GAAP consolidated EFO | $ | 93,417 | $ | 83,042 | $ | 332,061 | $ | 271,575 | ||||||||||
| Amortization of intangible assets | 7,948 | 7,980 | 32,045 | 37,535 | ||||||||||||||
| Other | 1,583 | 1,121 | (1,634) | 13,278 | ||||||||||||||
| Adjusted non-GAAP consolidated EFO | $ | 102,948 | 92,143 | $ | 362,472 | $ | 322,388 | |||||||||||
| GAAP EFO as a percentage of net sales | 3.6 | % | 3.6 | % | 3.5 | % | 3.3 | % | ||||||||||
| Adjusted non-GAAP EFO as a percentage of net sales | 4.0 | % | 4.0 | % | 3.8 | % | 3.9 | % | ||||||||||
| Adjusted Consolidated Net Earnings: | ||||||||||||||||||
| GAAP consolidated net earnings | $ | 62,133 | $ | 53,388 | $ | 219,345 | $ | 172,640 | ||||||||||
| Amortization of intangible assets | 7,948 | 7,980 | 32,045 | 37,535 | ||||||||||||||
| Amortization of debt discount and issuance costs | 3,079 | 2,949 | 12,124 | 11,585 | ||||||||||||||
| Other | 1,583 | 1,121 | (1,634) | 13,278 | ||||||||||||||
| Income taxes on non-GAAP adjustments | (3,209) | (3,021) | (10,325) | (15,583) | ||||||||||||||
| Adjusted non-GAAP consolidated net earnings | $ | 71,534 | $ | 62,417 | $ | 251,555 | $ | 219,455 | ||||||||||
| Adjusted Diluted Earnings Per Share: | ||||||||||||||||||
| GAAP diluted EPS | $ | 1.69 | $ | 1.50 | $ | 5.95 | $ | 4.87 | ||||||||||
| Amortization of intangible assets | 0.22 | 0.23 | 0.87 | 1.06 | ||||||||||||||
| Amortization of debt discount and issuance costs | 0.08 | 0.08 | 0.33 | 0.33 | ||||||||||||||
| Other | 0.04 | 0.03 | (0.04) | 0.37 | ||||||||||||||
| Income taxes on non-GAAP adjustments | (0.09) | (0.08) | (0.28) | (0.44) | ||||||||||||||
| Impact of benefit from note hedge | 0.09 | — | 0.27 | — | ||||||||||||||
| Adjusted non-GAAP diluted EPS | $ | 2.03 | $ | 1.76 | $ | 7.10 | $ | 6.19 | ||||||||||
| Shares used in diluted EPS calculation | 36,871 | 35,523 | 36,863 | 35,444 | ||||||||||||||
| Impact of benefit from note hedge | (1,604) | — | (1,453) | — | ||||||||||||||
| Shares used in Adjusted non-GAAP diluted EPS calculation | 35,267 | 35,523 | 35,410 | 35,444 | - MORE - | |||||||||||||
| --- | --- | --- | --- | --- | ||||||||||||||
| Insight Enterprises, Inc. | 6820 South Harl Avenue | Tempe, Arizona 85283 | 800.467.4448 | FAX 480.760.8958 |
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended<br><br>December 31, | Twelve Months Ended<br><br>December 31, | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||
| Adjusted North America Earnings from Operations: | ||||||||||||||||||
| GAAP EFO from North America segment | $ | 76,504 | $ | 70,545 | $ | 268,813 | $ | 219,198 | ||||||||||
| Amortization of intangible assets | 7,347 | 7,396 | 29,576 | 34,990 | ||||||||||||||
| Other | 1,232 | 163 | (3,129) | 9,953 | ||||||||||||||
| Adjusted non-GAAP EFO from North America segment | $ | 85,083 | $ | 78,104 | $ | 295,260 | $ | 264,141 | ||||||||||
| GAAP EFO as a percentage of net sales | 3.7 | % | 3.8 | % | 3.6 | % | 3.3 | % | ||||||||||
| Adjusted non-GAAP EFO as a percentage of net sales | 4.1 | % | 4.2 | % | 3.9 | % | 4.0 | % | ||||||||||
| Adjusted EMEA Earnings from Operations: | ||||||||||||||||||
| GAAP EFO from EMEA segment | $ | 12,508 | $ | 9,295 | $ | 46,918 | $ | 40,368 | ||||||||||
| Amortization of intangible assets | 480 | 463 | 1,971 | 2,088 | ||||||||||||||
| Other | 193 | 871 | 1,328 | 3,193 | ||||||||||||||
| Adjusted non-GAAP EFO from EMEA segment | $ | 13,181 | $ | 10,629 | $ | 50,217 | $ | 45,649 | ||||||||||
| GAAP EFO as a percentage of net sales | 2.9 | % | 2.3 | % | 2.8 | % | 2.6 | % | ||||||||||
| Adjusted non-GAAP EFO as a percentage of net sales | 3.1 | % | 2.6 | % | 2.9 | % | 2.9 | % | ||||||||||
| Adjusted APAC Earnings from Operations: | ||||||||||||||||||
| GAAP EFO from APAC segment | $ | 4,405 | $ | 3,202 | $ | 16,330 | $ | 12,009 | ||||||||||
| Amortization of intangible assets | 121 | 121 | 498 | 457 | ||||||||||||||
| Other | 158 | 87 | 167 | 132 | ||||||||||||||
| Adjusted non-GAAP EFO from APAC segment | $ | 4,684 | $ | 3,410 | $ | 16,995 | $ | 12,598 | ||||||||||
| GAAP EFO as a percentage of net sales | 8.2 | % | 7.1 | % | 7.7 | % | 7.1 | % | ||||||||||
| Adjusted non-GAAP EFO as a percentage of net sales | 8.7 | % | 7.6 | % | 8.0 | % | 7.4 | % | ||||||||||
| Adjusted EBITDA: | ||||||||||||||||||
| GAAP consolidated net earnings | $ | 62,133 | $ | 53,388 | $ | 219,345 | $ | 172,640 | ||||||||||
| Interest expense | 10,907 | 10,547 | 41,198 | 41,913 | ||||||||||||||
| Income tax expense | 20,809 | 18,527 | 73,212 | 55,812 | ||||||||||||||
| Depreciation and amortization of property and equipment | 5,322 | 6,205 | 23,376 | 28,025 | ||||||||||||||
| Amortization of intangible assets | 7,948 | 7,980 | 32,045 | 37,535 | ||||||||||||||
| Non-cash stock-based compensation | 4,251 | 5,973 | 18,201 | 17,727 | ||||||||||||||
| Other | 1,583 | 1,121 | (1,634) | 13,278 | ||||||||||||||
| Adjusted non-GAAP EBITDA | $ | 112,953 | $ | 103,741 | $ | 405,743 | $ | 366,930 | ||||||||||
| GAAP consolidated net earnings as a percentage of net sales | 2.4% | 2.3% | 2.3% | 2.1% | ||||||||||||||
| Adjusted non-GAAP EBITDA as a percentage of net sales | 4.4% | 4.5% | 4.3% | 4.4% | - MORE - | |||||||||||||
| --- | --- | --- | --- | --- | ||||||||||||||
| Insight Enterprises, Inc. | 6820 South Harl Avenue | Tempe, Arizona 85283 | 800.467.4448 | FAX 480.760.8958 |
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| Twelve Months Ended<br><br>December 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Adjusted return on invested capital: | ||||||
| GAAP consolidated EFO | $ | 332,061 | $ | 271,575 | ||
| Other | (1,634) | 13,278 | ||||
| Adjusted non-GAAP consolidated EFO* | 330,427 | 284,853 | ||||
| Income tax expense** | 85,911 | 74,062 | ||||
| Adjusted non-GAAP consolidated EFO, net of tax | $ | 244,516 | $ | 210,791 | ||
| Average stockholders’ equity*** | $ | 1,417,114 | $ | 1,224,713 | ||
| Average debt*** | 445,792 | 556,581 | ||||
| Average cash*** | (117,214) | (106,949) | ||||
| Invested Capital | $ | 1,745,692 | $ | 1,674,345 | ||
| Adjusted non-GAAP ROIC (from GAAP consolidated EFO) **** | 14.08 | % | 12.00 | % | ||
| Adjusted non-GAAP ROIC (from non-GAAP consolidated EFO) ***** | 14.01 | % | 12.59 | % |
*The adjusted non-GAAP consolidated EFO amount used for the Adjusted non-GAAP ROIC calculation does not exclude amortization of intangible assets. This calculation remains consistent with the metric utilized in management’s compensation plan.
** Assumed tax rate of 26.0%.
*** Average of previous five quarters.
**** Computed as GAAP consolidated EFO, net of tax of $86,336 and $70,610 for the twelve months ended December 31, 2021 and 2020, respectively, divided by invested capital.
***** Computed as Adjusted non-GAAP consolidated EFO, net of tax, divided by invested capital.
q42021-earningspresentat
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 2021 Earnings Conference Call and Webcast Exhibit 99.2
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 2 Agenda • Disclosures • CEO Commentary • Our Expertise and Services • 2021 Industry Accolades and Partner Recognitions • Primary Business Goals • CFO Commentary • Fourth Quarter and Full Year 2021 Financial Highlights • Cashflow and Debt Covenants • 2022 Outlook • Closing Comments
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 3 Disclosures • Safe harbor statement This 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 those related to coronavirus strain COVID-19 (“COVID-19”), our future responses to and the impact of COVID-19 on our Company, our expectations about future financial results, our expectations regarding current supply constraints, our expectations regarding backlog shipments, future expected 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 measures This 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. 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. • Constant currency 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.
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 4 Well Positioned to Help Organizations
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 5 Unified Communications with Insight Services Expanded cloud footprint with unified communications Unified, cost-effective connectivity for 3,500 locations Expedited project timeline Created ongoing cost savings Pioneered the first instance of cloud communications as a service Improved business agility and time to market Deep vendor and client partnership Decommissioned data center to reduce on-site footprint
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 6 Global Retailer Improves Operations with Modern Application Framework Increased back-end automation Greater visibility across devices Improved operational efficiencies Enhanced employee engagement Dedicated asset management • Roadmap for deployment • Significant pilot test phase • Ongoing guidance • Asset management • Consulting Services • Professional Services • Support Services • Device Lifecycle Services Insight Services: Insight Provided:
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 7 No. 360 500 Insight 2021 industry accolades Jeff Shumway ArizonaCIO Global CIO of the Year Glynis Bryan Phoenix Business Journal 2021 Most Admired Leaders John Dathan GDS Group CIO Summit Tech Leader of the Year Samuel C. Cowley AZ Business Magazine General Counsel of the Year Most Gender Diverse Executive Teams in Technology for 2021 2021 Industry Accolades INSIGHT LEADERSHIP RECOGNITIONS
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 8 Migration to Azure Partner of the Year Microsoft US Partner Award in Modernizing Applications Solution Assessments Partner of the Year Surface & M365 Solution Selling Partner of the Year Microsoft Security 20/20 Partner of the Year 1. Microsoft Azure Security Deployment 2. Microsoft Security GTM (finalist) 3. Microsoft 365 Security Deployment (finalist) Microsoft Canada Impact Awards 1. Co-sell Impact Award 2. National Large Solution Provider 3. Tech Intensity Impact Award 2021 Partner Recognitions Public Sector – Federal Rising Star Excellence in Growth Partner of the Year Global Finance Partner of the Year U.S. Innovation Partner of the Year Americas Investment Partner of the Year North America Commercial Partner of the Year Keystone and SLED Partner of the Year Top National Business Partner of the Year North America Partner Value Award Software Partner of the Year Positioned in Gartner Magic Quadrant for Managed Workplace Services, NA (5th year) and Gartner Magic Quadrant for SAM Managed Services, NA
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 9 Primary Business Goals Earn Client Loyalty Be client obsessed and deliver exceptional client outcomes. Lead with Services & Solutions Deliver differentiated client outcomes leveraging our six areas of technical expertise, solutions skills and partner relationships. Drive Profitable Growth Deliver high value solutions supported by operational excellence and integrated global systems. Champion People, Leadership and Culture Create growth opportunities, invest in teammates, and live our values of Hunger, Heart and Harmony to be an employer of choice.
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 10 CFO Commentary • Fourth Quarter and Full Year 2021 Financial Highlights • Cashflow and Debt Covenants • 2022 Outlook
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 11 Fourth Quarter 2021 Highlights • Net Sales of $2.6 billion • Gross profit of $385 million • Gross margin 15.0% • SG&A up 13% in US dollars, up 12% year over year in constant currency • 11.3% - GAAP SG&A as a percent of net sales • 11.0% - Adjusted SG&A as a percent of net sales* • GAAP EFO of $93 million • Adjusted EFO* of $103 million • GAAP Diluted Earnings Per share $1.69 • Adjusted Diluted Earnings Per Share* of $2.03 * See Appendix for reconciliation of non-GAAP measures
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 12 Full Year 2021 Highlights • Net Sales of $9.4 billion • Gross profit of $1.4 billion • Services gross profit 49% of consolidated gross profit • Cloud gross profit up 21% from last year • SaaS and Infrastructure-as-a-service, combined gross profit growth of 35% • Gross margin 15.3% • SG&A up 10% in US dollars, up 7% year over year in constant currency • 11.8% - GAAP SG&A as a percent of net sales • 11.5% - Adjusted SG&A as a percent of net sales* • GAAP EFO of $332 million • Adjusted EFO* of $362 million • GAAP Diluted Earnings Per share $5.95 • Adjusted Diluted Earnings Per Share* of $7.10 * See Appendix for reconciliation of non-GAAP measures
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 13 Net Sales Net Sales Gross Profit Gross Margin +12% YoY +12% YoY +12% YoY Flat YoY SG&A % of Net Sales Adj SG&A % of Net Sales* Adj EFO* Adj Diluted EPS* +10 bps YoY +10 bps YoY +12% YoY +15% YoY $2.57B 2020 2021 $0.38B 2020 2021 $103M 2020 2021 11.3% 2020 2021 15.0% 2020 2021 $2.03 2020 2021 $2.57B 2020 2021 11.0% 2020 2021 Q4 2021 Year over Year Results GAAP Earnings from operations $93M GAAP Diluted EPS $1.69 * See Appendix for reconciliation of non-GAAP measures ** Reference “Constant currency” section on slide 3 of this presentation (in constant $**)
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 14 Net Sales Net Sales Gross Profit Gross Margin +13% YoY +13% YoY +11% YoY -30 bps YoY SG&A % of Net Sales Adj SG&A % of Net Sales* Adj EFO* Adj Diluted EPS* -30 bps YoY -20 bps YoY +12% YoY +15% YoY $9.44B 2020 2021 $1.45B 2020 2021 $362M 2020 2021 11.8% 2020 2021 15.3% 2020 2021 $7.10 2020 2021 $9.44B 2020 2021 11.5% 2020 2021 FY 2021 Year over Year Results GAAP Earnings from operations $332M GAAP Diluted EPS $5.95 * See Appendix for reconciliation of non-GAAP measures ** Reference “Constant currency” section on slide 3 of this presentation (in constant $**)
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 15 Net Sales Gross Profit Gross Margin +13% YoY +13% YoY -10 bps YoY SG&A % of Net Sales Adj SG&A % of Net Sales* Adj EFO* Sales Mix +10 bps YoY +10 bps YoY +9% YoY 70% 16% 14% Hardware Software Services $2.09B 2020 2021 $307M 2020 2021 14.7% 2020 2021 11.0% 2020 2021 $85M 2020 2021 10.6% 2020 2021 * See Appendix for reconciliation of non-GAAP measures Q4 2021 North America | Financial Results GAAP Earnings from operations $77M
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 16 Net Sales Gross Profit Gross Margin +7% YoY +10% YoY +40 bps YoY SG&A % of Net Sales Adj EFO* Sales Mix -10 bps YoY +27% YoY 35% 53% 12% Hardware Software Services $0.43B 2020 2021 $64M 2020 2021 15.0% 2020 2021 $13M 2020 2021 12.0% 2020 2021 * See Appendix for reconciliation of non-GAAP measures ** Reference “Constant currency” section on slide 3 of this presentation Q4 2021 EMEA | Financial Results GAAP Earnings from Operations $13M (in constant $**) (in constant $**) (in constant $**)
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 17 Net Sales Gross Profit Gross Margin +19% YoY +22% YoY +50 bps YoY SG&A % of Net Sales Adj EFO* Sales Mix -70 bps YoY +37% YoY $54M 2020 2021 $14M 2020 2021 26.0% 2020 2021 $5M 2020 2021 17.5% 2020 2021 27% 36% 37% Hardware Software Services * See Appendix for reconciliation of non-GAAP measures ** Reference “Constant currency” section on slide 3 of this presentation Q4 2021 APAC | Financial Results (in constant $**) (in constant $**) GAAP Earnings from Operations $4M (in constant $**)
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 18 Q4 2021 | Cash Flows and Cash Cycle Net cash from operations Cash Conversion Cycle 0 days YoY Days sales outstanding Days inventory outstanding Days purchases outstanding -3 days YoY +5 days YoY +2 days YoY $164M 2020 2021 30 2020 2021 105 2020 2021 13 2020 2021 88 2020 2021
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 19 Liquidity and Debt Covenants ** Tax Expense plus Interest Expense less non-cash imputed interest under the Company’s inventory financing facilities and the Company’s convertible notes. * “Other” includes (i) severance and restructuring expenses, net, (ii) acquisition and integration related expenses, and (iii) impairment of property and equipment, as applicable. US Dollar in $000s 2021 2020 Adjusted Consolidated EBITDA: Net Income 219,345$ 172,640$ Interest Expense 41,198 41,913 Taxes 73,212 55,812 Depreciation and amortization of property and equipment 23,376 28,025 Amortization of intangible assets 32,045 37,535 Non-cash stock-based compensation 18,201 17,727 Other* (1,634) 13,278 Adjusted Consolidated EBITDA 405,743$ 366,930$ Less Capital Expenditures (52,079) (24,184)$ Adjusted Consolidated EBITDA for FCCR Ratio 353,664$ 342,746$ Taxes and interest ** 86,994$ 73,065$ Fixed Charge Coverage Ratio 4.1 4.7 Twelve Months Ended Dec 31, Fixed Charge Coverage 353,664 86,994 ‐ 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 EBITDAR‐Dividends‐CAPEX Fixed Charges 4.07x Total Leverage Ratio 361,606 405,743 360,000 365,000 370,000 375,000 380,000 385,000 390,000 395,000 400,000 405,000 410,000 Consolidated Funded Indebtedness Adjusted Consolidated EBITDA 0.89x
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 20 Full Year 2022 Outlook • Adjusted diluted earnings per share* is expected to be between $7.65 and $7.85 per share for the full year 2022 • 2022 net sales expected to grow mid-single digits over prior year • Assumptions: • Interest expense between $30 and $35 million • Effective tax rate of 25% to 26% for the full year 2022 • Capital expenditures of $75 to $80 million, including final completion of our new corporate headquarters • Average share count for the full year of 35.6 million shares • Exclusions: • Acquisition related intangibles amortization expense of approximately $31 million (posted on website) • Acquisition-related or severance and restructuring expenses * Adjusted diluted earnings per share excludes severance and restructuring expense and other unique items as well as amortization expense related to acquired intangibles. 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 2022 forecast.
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 21Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 21Insight Presentation Appendix
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 22 Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures* * 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) amortization of intangible assets, and (iv) 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. US Dollar in $000s, except per share data 2021 2020 2021 2020 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO 93,417$ 83,042$ 332,061$ 271,575$ Amortization of intangible assets 7,948 7,980 32,045 37,535 Other 1,583 1,121 (1,634) 13,278 Adjusted non-GAAP consolidated EFO 102,948$ 92,143$ 362,472$ 322,388$ Adjusted Consolidated Net Earnings: GAAP consolidated net earnings 62,133$ 53,388$ 219,345$ 172,640$ Amortization of intangible assets 7,948 7,980 32,045 37,535 Amortization of debt discount and issuance costs 3,079 2,949 12,124 11,585 Other 1,583 1,121 (1,634) 13,278 Income taxes on non-GAAP adjustments (3,209) (3,021) (10,325) (15,583) Adjusted non-GAAP consolidated net earnings 71,534$ 62,417$ 251,555$ 219,455$ Adjusted Diluted EPS: GAAP diluted EPS $1.69 1.50$ 5.95$ 4.87$ Amortization of intangible assets 0.22 0.23 0.87 1.06 Amortization of debt discount and issuance costs 0.08 0.08 0.33 0.33 Other 0.04 0.03 (0.04) 0.37 Income taxes on non-GAAP adjustments (0.09) (0.08) (0.28) (0.44) Impact of benefit from note hedge 0.09 — 0.27 — Adjusted non-GAAP diluted EPS 2.03$ 1.76$ 7.10$ 6.19$ Shares used in diluted EPS calculation 36,871 35,523 36,863 35,444 Impact of benefit from note hedge (1,604) — (1,453) — Shares used in Adjusted non-GAAP diluted EPS calculation 35,267 35,523 35,410 35,444 Three Months Ended Twelve Months Ended Dec 31, Dec 31,
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 23 Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) * 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) amortization of intangible assets, and (iv) the tax effects of each of these items, as applicable. US Dollar in $000s 2021 2020 2021 2020 Adjusted North America Earnings from Operations: GAAP EFO from North America segment 76,504$ 70,545$ 268,813$ 219,198$ Amortization of intangible assets 7,347 7,396 29,576 34,990 Other 1,232 163 (3,129) 9,953 Adjusted non-GAAP EFO from North America segment 85,083$ 78,104$ 295,260$ 264,141$ Adjusted EMEA Earnings from Operations: GAAP EFO from EMEA segment 12,508$ 9,295$ 46,918$ 40,368$ Amortization of intangible assets 480 463 1,971 2,088 Other 193 871 1,328 3,193 Adjusted non-GAAP EFO from EMEA segment 13,181$ 10,629$ 50,217$ 45,649$ Adjusted APAC Earnings from Operations: GAAP EFO from APAC segment 4,405$ 3,202$ 16,330$ 12,009$ Amortization of intangible assets 121 121 498 457 Other 158 87 167 132 Adjusted non-GAAP EFO from APAC segment 4,684$ 3,410$ 16,995$ 12,598$ Three Months Ended Twelve Months Ended Dec 31, Dec 31,
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 24 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 plan. ** Assumed tax rate of 26.0%. *** Average of previous five quarters. **** Computed as GAAP consolidated EFO, net of tax of $86,336 and $70,610 for the twelve months ended December 31, 2021, and 2020, respectively, divided by invested capital. ***** Computed as Adjusted non‐GAAP consolidated EFO, net of tax, divided by invested capital. US Dollar in $000s 2021 2020 GAAP consolidated EFO $ 332,061 $ 271,575 Other (1,634) 13,278 Adjusted non-GAAP consolidated EFO* 330,427 284,853 Income tax expense** 85,911 74,062 Adjusted non-GAAP consolidated EFO, net of tax $ 244,516 $ 210,791 Average stockholders’ equity*** $ 1,417,114 $ 1,224,713 Average debt*** 445,792 556,581 Average cash*** (117,214) (106,949) Invested Capital $ 1,745,692 $ 1,674,345 ROIC (from GAAP consolidated EFO)**** 14.08% 12.00% ROIC (from Adjusted non-GAAP consolidated EFO)***** 14.01% 12.59% Twelve Months Ended Dec 31, Return on invested capital:
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 25 Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued) US Dollar in $000s 2021 2020 GAAP selling and administrative expenses $ 289,855 $ 257,167 Less: Amorization of intangible assets (7,948) (7,980) Adjusted non-GAAP selling and administrative expenses 281,907 249,187 GAAP selling and administrative expenses 11.3% 11.2% Adjusted non-GAAP selling and administrative expenses 11.0% 10.9% US Dollar in $000s 2021 2020 GAAP selling and administrative expenses $ 1,117,130 $ 1,013,765 Less: Amorization of intangible assets (32,045) (37,535) Adjusted non-GAAP selling and administrative expenses 1,085,085 976,230 GAAP selling and administrative expenses 11.8% 12.1% Adjusted non-GAAP selling and administrative expenses 11.5% 11.7% Dec 31, Adjusted Consolidated Selling and Administrative Expenses: Twelve Months Ended Dec 31, Adjusted Consolidated Selling and Administrative Expenses: Three Months Ended
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 26 Appendix – Reconciliation of GAAP to Non-GAAP Financial Measures (continued) US Dollar in $000s 2021 2020 Adjusted North America Selling and Administrative Expenses: GAAP selling and administrative expenses $ 229,346 $ 200,364 Less: Amorization of intangible assets (7,347) (7,396) Adjusted non-GAAP selling and administrative expenses 221,999 192,968 GAAP selling and administrative expenses 11.0% 10.9% Adjusted non-GAAP selling and administrative expenses 10.6% 10.5% US Dollar in $000s 2021 2020 Adjusted North America Selling and Administrative Expenses: GAAP selling and administrative expenses $ 869,766 $ 790,913 Less: Amorization of intangible assets (29,576) (34,990) Adjusted non-GAAP selling and administrative expenses 840,190 755,923 GAAP selling and administrative expenses 11.6% 12.0% Adjusted non-GAAP selling and administrative expenses 11.2% 11.4% Three Months Ended Dec 31, Twelve Months Ended Dec 31,
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 27 Appendix - Convertible Senior Notes * NSIT assumed stock price for 20 out of last 30 trading days in the period ** The Balance Sheet impacts only apply post adoption of ASU 2020-06 on January 1, 2022. Diluted Earnings Per Share (DEPS) incremental number of shares* for various NSIT stock price examples: Insight’s policy elected for settlement of the convertible notes is principal/par value in cash with the excess being settled in shares resulting in dilution in GAAP reported Diluted Earnings Per Share (“DEPS”). The DEPS incremental shares for GAAP reporting purposes are not issued at the time of reporting and are a non- GAAP exclusion for the Company (up to the strike price of the warrants of $103.12). The bond hedge effectively raises the potential dilution point of the convertible note and call spread from $68.32 up to $103.12, as illustrated below: Balance sheet classification impacts of Sales price conversion trigger being met**: NSIT Stock price * Non current debt Equity (APIC) Current debt Temporary equity 51.56$ 308,500 46,431 ‐ ‐ 68.32$ 308,500 46,431 ‐ ‐ 80.00$ 308,500 46,431 ‐ ‐ 88.82$ ‐ ‐ 308,500 46,431 110.00$ ‐ ‐ 308,500 46,431 115.00$ ‐ ‐ 308,500 46,431 NSIT Stock price Net shares owed on Convertible Notes Net shares received from bond hedge Net shares owed on Warrants GAAP additional dilution Non‐GAAP additional dilution 51.56$ ‐ ‐ ‐ ‐ ‐ 68.32$ ‐ ‐ ‐ ‐ ‐ 80.00$ 747,951 (747,951) ‐ 747,951 ‐ 85.70$ 1,038,835 (1,038,835) ‐ 1,038,835 ‐ 103.12$ 1,728,847 (1,728,847) ‐ 1,728,847 ‐ 110.00$ 1,941,133 (1,941,133) 212,286 2,153,418 212,286 115.00$ 2,079,473 (2,079,473) 350,626 2,430,098 350,626
Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2019 Insight Direct USA, Inc. All Rights Reserved. 28 Appendix - Convertible Senior Notes * No automatic redemption trigger, expect convertible notes will remain outstanding for foreseeable future. GAAP diluted earnings per share (DEPS) are for reporting purposes only, no incremental shares were actually issued. ** Principal amount would be settled in cash and only premium above $103.12 would result in actual shares being issues Insight Convertible Senior Notes - $350 Million Relevant NSIT stock prices: • Price at issuance - $51.56 • Conversion ratio price equivalent - $68.32 • Sales price conversion trigger - $88.82 • Bond hedge strike price - $68.32 • Warrants strike price - $103.12 Potential dilution to existing shareholders** • Assumed accreted value - $308.5 Million Triggered potential additional shares in GAAP DEPS*