Insight Enterprises (NSIT) 8 May 222022 Q1 Earnings call transcript

Good day and thank you for standing by. Welcome to the Insight Enterprises First Quarter 2022 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Glynis Bryan, our CFO. Please go ahead.

Thank you. you the thank conference Enterprises and call. everyone for Insight joining earnings Welcome, be operating the quarter we discussing Today, will company's XX, ended XXXX. results March the for is of I'm Officer. and Financial Bryan, President Officer Glynis joining Chief Chief me Joyce Executive Mullen, and Insight;

after we conference website Insight Form refer to discuss do it a Securities limited contain copy any accurate and for Insight section. call being express insight.com in the time. An and presentation Today's written at Enterprises. In consent the will will property to quarter website XXXX conference our of and slide page earnings will be of the non-GAAP as Any call or period, only first the them adjusted. discussing information approximately we the of on call, completion of is including the on form not measures, strictly time-sensitive XXXX. When prohibited. the hours of will have today's copy you filed is non-GAAP today, financial measures without was Relations we with May a retransmission this posted rebroadcast the as a call remain Investor of archive webcast accessed call, refer This X-K, This or Exchange X, webcast that redistribution, of Enterprises associated that question-and-answer is accompanying the as results. is financial call the the Investor find insight.com. can Relations this If live available conference you and call at our on of will our release, website Commission be under morning and via X

that release U.S. are and reconciliation currency, of note the dollar our adjusted today. or highlighted either rates You accompanying press the actual discussed as in GAAP growth will Also, all to presentation please slide amounts results unless earlier constant included in issued find measures terms. a these

and could As call forward-looking our discussed subsequent with that greater These forward-looking statements reports the no date results X. recently Joyce? uncertainties made of press Joyce in periodic update the actual made that this I undertake any this release and or along that, and call are this to statements by all materially. reminder, and begin are in in to statements most if cause as filed new filings events future our slide risks conference turn today's are With whether we in differ obligation a of made we forward-looking SEC. risks except over required the as the a law, on otherwise. and call are All subject of detail as you're call, result will following Slide on information, now will to presentation, with to

XX% QX. you and services sales, backlog. for The healthy adjusted much, in for so thank increase grew healthy. profit bookings delivered performance Glynis. remained devices, bookings grew adjusted Bookings easing for With supply and our net business Thanks my demand XX%. report constraints QX everyone today. a us XX%, share. growth grew Year-over-year hardware over in for grew hardware the grew We was gross year-over-year also sequential diluted earnings QX sales from for expect than faster double-digit grew continue our ending expected. and higher sales XX% joining It record to is per in net to which we XX% than adjusted backlog earnings in and Product diluted demand strong and operations resulting our another revenue, somewhat is Hello, pleasure quarter. EPS

and more perform billings These looking points labor as Insight year-over-year. demonstrate clients to more to continues provide inflation with growing to business are than XX% gross Cloud Our well than ever services our have on digital even work and proud of to their these teammates shortages of meet projects. transformation who needs focus the tirelessly We're Insight and and prouder clients' automation results expectations. increased

leadership solutions have team a accelerate transformation To becoming team. that will to the end, As CEO, executives required assemble that X privilege is of responsibility it my our our to integrator. am pleased vision drive a a team, and I extremely stellar world-class leading that leadership added we to

XX AI May Burger First, from led Dee where President on proven business. he vast cybersecurity. experience including Cloud Capgemini, a strong Dee With effective accelerate of experience, North North digital our is and ensuring joins has Dee a to critical we joined sales business. appropriate capabilities track of will and organization incredibly customer-centric building us has solutions reputation nearly customers, also X and as our our and us and an have American to be years as of to services Dee new the His leader America. the applications, record delivering leader. transforming

X Another enterprise our with experience extensive our knowledge focus effective transformation as team guide large-scale key operations, cybersecurity. on modern demonstrated Suma Her CIO. to Suma SaaS addition the Nallapati efficient us and and continued success is delivering new will global April agility of intelligence joined and who infrastructure and automation, on solutions. brings digital IT leadership business

leverage This data leveraging and delivery experience. seamless Additionally, to innovative cybersecurity build scalable focus increased consolidating through footprints and we services, several business solutions designing intelligent data sustainability productivity deliver over deliver expertise: and to drive but we costs own or of reducing improved experience, to also operating in and organizations implementing have last are client needs and and customer our or user infrastructure, and The clients enhancing applications, capabilities to business the modern reducing consolidated their IP key efficiency our our clients. edge. general, modern value more include driven presales to everything, center our months, by our drive do And cybersecurity consolidation while we their improving proud automation, to solutions workplace, modern manage workloads solutions extraordinarily building areas differentiated increase and data outcomes that supports we our and of on and AI, new risk, models. and our are a don't

operating Slide back-end long-standing a also shopping in XX with fashion streamline global retailer wanted to X, on secure modernizing experience. countries, while operations infrastructure example, their For Cloud an e-commerce their updated and over

score digital understanding for experts and requires an demonstrating enduring to growth. of needs XX many And the of Cloud protecting Our intimate The ongoing transformation, client digital overall cultivate security regulatory our is help nurture type client's is against digital user tripled a with identity transformation while platform and met goal Navigating of delivered the we that a engagement secure which continuity relationships controls the relationship in metric, has their nature all team Cloud their of and continue client travel our leader Azure this future secure and while passed with efficiency improving On hybrid and And we business, our this. compliance because of X an simple. experience. Slide to long-term them of example like all results. cost-effective business global impressive could is never engagements. global industry. create accommodate excellent scalable, clients' transformation an This

operations spend years, projects to their model across and world. they scale usage-based experience Over we've pandemic and various dramatic helped their more very with in client with This that the demand familiar are due the needed around XX,XXX to IT this a to changes client shift employees demand XXX returns. flexible X countries, can supporting the past as

are support fully experts while dramatically this an efficiency at solutions ongoing solutions has Our Insight. models contact compute have and of solution than we solution are been security. the costs single services for infrastructure through as support hyper-converged of providing deployed through engagements their The our reduced delivered post These recommended types experts. all-in-one initial consumption same X,XXX deployment, storage managed results their improving the time, and by remarkable point network, more And infrastructure. and global

we and technical a expertise invest. is Our continue to key differentiator

new fact, in the added experts over XXX first quarter. In we've solutions

We to engineering by invest people our program. our also programs implementing distinguished continue like in

of engineers and mentoring and committed demonstrate leadership next influence thought they architects. the generation industry developing distinguished of technical and Our highest engineers levels skilled highly are expertise, to and the

and sustainability people, our a strive an where has reach potential of their to full place we champions of As opportunity while communities. to the to culture, leadership be everyone contributing

a Index. achieved Forbes leveraging Human work is based Foundation's differentiator in Ukraine Harmony businesses in on are the have do did all values, of achieved recognitions we An perfect and we background meaningful for on their talent. ranked truckloads work of and and example to also to Diversity send of XXX attracting over key retaining Hunger in diversity the across that is of money months. key Harmony Citizens like our our Corporate our and our that of teammates to and labor Hunger, Heart population. with Rights Heart have I'm thought, a values XXXX is dominate Work which have XX improve combined market. teammate Best is Employers this Place critical the our experience about score drivers and culture These of together Our we Campaign XXXX the the to of working Equality the these. Great about couple on in proud delivering is results all past the number we clients help goods

I'm Sustainable as very this and XXX very I'm increasingly one Companies digital robust. clients for our and solutions Finally, for first was transformation that industry the sustainability And is important with pleased XXXX. Barron's recognized our year, In results outlook demand teammates. for Client proud business. our Most summary, of to our the remains QX of

to and and have continued depth for talent We as business and services our our positioned well team growth. added leadership solutions

back review call financial to the to turn first I'll results. Now, quarter over Glynis our

Joyce. you, Thank

the year. elevated As to net we're sales the leading record hardware well results Joyce continue for saw pleased the and in our financial to quarter with quarter. and first us positioning have stronger-than-expected for rest certainly of We the record mentioned, backlog, results

currency more found services. gross increased X grew net by quarter XX% $X.X over and sales gross sales Gross which margin consolidated I be XX% devices. up and in as in the sales and specifically, Insight gross Gross dollars by delivered profit decreased XX.X%. services XX% hardware compared increased Net and margin grew sales year on profit XX%. growth the Product net quarter growth sales year-over-year, can Our mentioned profit by U.S. the growth grew year-over-year, driven were Services Product constant million basis and driven by year-over-year, XX% primarily XX% was increased net of first XX% $XXX results hardware expanded of in primarily driven to XXXX. quarter billion, in in prior over prior year, year-over-year. X. XX of devices, primarily first XX% points up driven Slides

was profit months dollars. prior consolidated gross constant flat gross was in gross currency XX% Our XXXX, a SG&A XX% Cloud in XX, XX-month And profit total and March to basis. gross profit were of of up compared for trailing on year-over-year at up the ended XX% our U.S. profit. trailing XX expenses year services XX%

percentage GAAP on a a million. a earnings Adjusted SG&A sales, adjusted per up adjusted in $X.XX, also up SG&A share $XX versus basis per and XX% basis GAAP earnings $XX GAAP net were XX%. up of quarter. XX% basis, was was XX% from an year-over-year operations year XX% on both versus prior to million, our As share $X.XX And diluted of increase XX%

to America our operating on start on of the Slide results results with XX. Moving operating segments. each for We'll North

devices, primarily $X.X year-over-year, sales year-over-year, in driven by and primarily net hardware sales sales by XX% and margin a quarter points, sales. software more XX% basis services first hardware record XX.X%, specifically North the of XX% the in growth profit higher category IT. driven XX% Services mix in billion, of Product net quarter assurance. was and down increase year-over-year, net driven increased devices. in a and lowest were sales Insight-delivered total of up related In Gross by to was QX, margin net products grew hardware grew net XX sales gross by year-over-year XX% driven services. the than XX% America more First the

in variable mentioned XX% solutions and to associated we expenses mentioned, million. exited this XX% networking by anticipate Adjusted XX% in and I the $XX XX%, business. operations with profit and I increased second progress similar driven teammates. we investments and higher services year-over-year versus of as to elevated infrastructure Product gross from million. QX year-over-year, year-over-year would $XX gross through driven products grew administrative personnel Selling with as profit year-over-year. growth operations GAAP XX% XXXX, by of from that And the as in the we sales growth related devices. the costs earnings higher quarter more services We devices, backlog to gross increased grew profit half earnings compensation and in be and our but will expect increased

margin in freight on net and decline in quarter sales. were net in which earnings XX% Slide to product to Adjusted agency grew Gross sales of includes on currency million. partner up first million, net XX constant decrease constant $XX in sales in due XX% points funding the grew basis EMEA profit than services XX% earnings X% currency. year-over-year Net currency. grew XX. the slower reported Moving in and constant in from operations $XX fees from to operations GAAP a

on up XX. Now in decreased software currency, to year-over-year operations X% profit of million operations grew GAAP quarter, Gross This from Net constant of on in Cloud primarily in to million $X driven the higher constant sales Cloud XX% from $XX million. constant to due quarter a solutions. earnings in XX% to increased by million to $X volume currency, and APAC shift higher the of Slide of adjusted led XX% currency. year-over-year sales in year-over-year first in earnings from $XX solutions. profit services

Moving tax on to rate. our

Our XXXX. effective XX.X%, the of relatively was XXXX for quarter tax XX.X% flat to first compared in rate

first of Slide quarter flow details the to performance our cash on Turning XXXX XX.

period compared used cash in generated $XX $XXX same of cash operations of to XXXX. million million the Our in

shorter us As we meaning cash volumes when $XX distributors the cash highlighted increased and payment the first and to cash of with changes This from in decline expenditures, cash from decrease sales from volume quarter that to previously, pay capital was inverted, days, receive XX cycle hardware we quarter flow I first allows drive facility of increased In cycle in on cash related investments. mainly conversion the distributors just XXXX million than terms. XXXX, our we flow primarily days driven of of terms partners used activities the have DSO. is by XXXX, of result including early we hardware our In payments operating slight our the more X in while In in was mix, up in net more operations. invested XXXX, hardware as with by a growth quarter conversion periods sales growth, in with is our a discussed offset reduction technology and partner our first in clients.

prior real received assets year. As we the estate in sale a reminder, in million $XX of proceeds from the

authorization. have We our continue million under $XX to outstanding repurchase share

majority at billion and we contracts. subsidiaries. to accounting a of Effective compared ABL a of convertible We new senior instruments the cash of growth. had the including facility and March our XX, was As our which prior $XXX end debt capacity, of debt, million the first debt convertible have million standard ample ASU million notes of quarter we $XXX XXXX-XX, balance available the our of $X.X outstanding of total capacity XXXX, $XXX XXXX, X, for had we balance of January million. foreign under we fund in the and our of $XXX had to resident future million, cash end At quarter, $XX the adopted

quarter, exceeded trigger of of $XX.XX. the the June price notes If of be to our cash. we this the option, the the XX option in notes convertible at the amount notes exercise And became During holders the XXXX. convertible will holders the market required first of settle principal through

exceed the the as If be the as and convertible current market holders to convertible continue principal will current. of future notes $XX.XX, such, is notes classified trigger option the at amount to XXXX. remain March periods, the As the of in XX, balance classified continue the at price will

value near notes anticipate of in the convert convertible would term. note not the note, Given market that the their do we holders

liquidity Slide Moving XX. on to on

position well with X.Xx or interest. coverage which quarter expenditures, cash leverage charge to fixed flow which a than Under are our We and is the taxes is compliance comfort at range. primary coverage XX-month covenant cash EBITDA trailing debt includes within our less over ratio our EBITDA agreement, a exiting ABL capital

of X.Xx liquidity requirements the minimum support X.Xx, at and we we we're confident XX, needs. capital are our March of requirement As can and

year Slide growth. XX, For sales we low to on deliver net XXXX our full expect guidance double-digit

and $XX turn $X.XX full year million now be expenditures instruments headquarters of corporate XXXX; effective of share million an segment $X.XX. acquisition-related back completion million, acquisition-related to call the $XX This $XX or to $XX year of final share to XX.X and expect restructuring of This amortization outlook change rate average including to expense and new year earnings between million between and macroeconomic expenses in count the our XXXX of the of assumes XX% Joyce. no debt outlook to for outlook. approximately interest million XX% for the capital I assumes per We diluted million, full for full expense and $XX will tax the no or significant shares. excludes intangible assumes our

a to to our In good about questions. Insight clients Thanks, and line their innovative and with to they would closing, teammates our for our is for demand we're and start our to clients our and solutions. thank expand This their our their collaboration economic trusting our continued more partners support will delivering Insight to we and other, Glynis. partners like for journeys in concludes XXXX. ability I the optimistic strong transformational open clients, modernize commitment each uncertainties, off in help your is comments Despite to and now them deliver as solutions and even our value transform. business the for

[Operator comes Matt the first Instructions] from question of line from Stifel. Your Sheerin

Yes.

for particularly your open said it like up. you sounds even is And while a that client the strength where in enterprise the to regarding backlog supply you Joyce, it sounded shortages that the starting is level just saw Is for question we've quarter, up. that also devices. First in seen like now? devices

expect of seasonal So better quarter June that? a than you because would

device has expect Yes, frankly, through Matt. because for hardware and do supply you, strong demand chain up to QX. fact, devices. in pretty opened Thank a we expect bit see demand And we continue the Yes.

devices in year, see hardware tough of QX. we compares good on on half In We also devices. invoicing will the have really, the back really

the to chain would infrastructure back in quite X in in expect year. healthy. be muted as So back supply the And more the of we year devices to networking and of gear bit shipping would that half not we the growth start expect is the half a more but

So we constraints through the expect of infrastructure XXXX. half and supply persist networking to first

is the that in seeing, gives of terms step-up side that or that turnaround seeing you on infrastructure that the you're in And which half? Okay. in backlog the confidence also second

Yes.

Our -- levels. of infrastructure backlog is at levels record record multiples

absolutely. yes, So

And quarter Okay. margin, then And Is it mix why you about Glynis and the And regarding it be for Would this should last margins flat sounds down the to was mix. was gross year? understand similar down case? gross the mean, like I what year? the talking that about maybe I profile due year-over-year. margin gross issue gross to expect the we think or from margin

gross in because we're of flat would seeing. the of as be margin that gross the well QX device be to the compressed to We we but a for year strength mix expect margins bit do expect

lastly, Could regarding labor seeing and all inflationary your the talk side? pressures great. any businesses, a you're And just about that you're also OpEx, on you Okay, talent. just there. on pressures nice good of seeing keeping There's lot cost your particularly very leverage pool

Yes.

strength teammates. also lot that a of bookings X we the in interesting to that pretty had first things, were work talk business that our helping teammates about our all, do strong. clients. the we've our of culture retaining We strong services and success of pretty our So good attribute get And the the time all is and to

mean of say wage some all. for nothing -- elevated we a at been some and -- about been reasonable. have jobs, overall, have some played at I'd but in we've course, part for sure. also able has increases so years of our industry, very times we seen it's previous not recruiting, seen happy like So the types results huge actively But that. all We're retention slightly has I we're from inflation

-- services that to able aggregate side. the it's on our the pass very in to So for not product but either side on the significant either or been clients we're

of Sidoti Your next Lebiedzinski the of comes Company. Anthony question from line &

Yes.

clarify. So I to wanted just

So -- it right? sounds to like growth say? Is the was fair the unit sales overall, that versus pricing, more volume-driven

some significant weren't than was not volume There I we yes. think was the were it it but there that driven increases volume I'm quarter. going Yes, And driven. ASP more increases that they well. was primarily in to as saw rate say

it. Got

to smaller Okay, that's X in the to hear. as just far then we to get to outperform wanted far your a I as great sense embedded better as regional performance, your should continue here what's And America as as to regions North -- expect guidance? other

to they in APAC had region to had North APAC Yes, did albeit continue a will first quarter, great America small would a outperform first great anticipate have contribute quarter. guidance. great is quarter. but the a we but that each going

So somewhat EFO the there, margin Europe, was was good. expansion while depressed

Got it.

any from the Okay. And then business? impact lockdowns seen have your as the notable you far in on impact as China

constraints, say, mentioned, devices supply Well, bit supply would unpredictable, bit. for as we loosened a I Anthony. still a have -- is chain chain, been though, The have

and -- devices. for So even

not networking really a we're and we're point to specifically for we what. of worse improve ever supply device view. from products. has infrastructure exactly get have gotten sure chain The So But going that seen when

help. lockdowns The that help. of doesn't China has, China don't in certainly, Some

the James. comes of question next from Your from line Adam Raymond Tindle

to wanted on ask the portion. just I backlog

shrink? fully device ultimately supply if the to would of enough the getting center the center continue data devices. about because But us about to and stuff? that obviously is better backlog of question to for talked the in of think backlog the is is data And we think heart there easing, there devices the through a supply significantly versus carry in really size us in backlog offset is kind or I way You the get through

in weighted our at the industry. guess like is just general, backlog So I the the, if you industry look

it's towards weighted So more devices. heavily

you up as not. backlog the backlog. significantly than But want that, infrastructure basis, versus a it's on It's would what year-over-year backlog But be to I on that larger don't and up a device there. basis. However, mentioned, significantly is say Joyce would our expect networking year-over-year around

through, seeing that device to low grew devices So as digits I going mid-single an the We're think not flow -- QX in XXXX necessarily to QX XX% that XXXX to example. decline. grow of to in as We is continue expecting we're of XXXX. in backlog

anticipate to are our just been going QX. not mix. to it the It's has growth devices be that So in going XX-plus be in percent still we that

And the Okay. I'm comment for get company than also for model trying [indiscernible]. of You for the year that was QX shape the because year? to lower for total the it's forecast just full obviously and raised the

more that By backlog, which the on talking to where comment the America was bulk is I specifically the is. North backlog of

Sorry.

the Well, year and QX tackle for linearity tougher progresses. level the the go the shape beat shape closer growth think from half? high because in in the in of given, year. high-teens year to could about of kind sense than models a Just trying the mid more comparisons Or back you're to in just what that? as single year Do stay rates of of any you the mentioned, more getting our it than to sort the in then QX the is raise through just as I'm Okay. maybe we standpoint digits is smooth and we full facing

Yes.

the it's high be And That's to -- year. the and that's year QX. weighted mid-single-digit our of year, second the teens, not that the, more to in as is I because the in going QX. -- we comps the regard going be think high, as it half the is relative in The range. high have half high -- with QX of the assumption then to that of half teens that growth model in QX of first towards potentially first was to in growth

Okay, makes And for Joyce. maybe sense. just one

changes there And obviously, of and on that team. tenure? the you've adding KPIs? are what the marching you key services anticipating orders of now and consolidating further internally, any to made that you're kind Some about under changes Are the talked these presales

Monday. started Well, Dee just on

services kind don't reasons so see result his Adam, out and a solutions expertise know our chance But solutions here. to we point, So that why solutions, of of business yet. he's changes accelerate to our in whole in lot that's what momentum that's right? of had one certainly, know to and We've would I the we leadership he's plan. solutions got he's going if experience going a services to and make when as the And expect his figure the -- is the exactly, and and but sure. I for sell that's to more his guidance a whole happen, don't

I I have expectations. guess high

I. do let So you know. We'll

On lagging. like jot trying astronomical but here sales growth. data some quickly That's now are you're of that mean, going points Obviously, understandable the because but was services, I so they to I hardware lagging down. somewhat it's right hardware sales are

I dollars said Cloud gross think you TTM profit were flat.

I as think that was a percent of mix.

that see? fees like seeing do bit challenges the opportunities can you're that challenges a just and or more potentially on specifics and couple are -- You a of services in the net things you of Dee agency business, in decline talked the sales little about some what that

I Yes. services quite think mean rate. our bookings happy really I with we're

some compare, QX momentum last seeing. of we're this we with for a in tough has So did gross tough that a quarter have We bit year line deal happy are really on the and made services large what really but we good comparison the see there. growth profit the line

continues unabated. the and demand so And --

XX% it So kind areas, and the across delivered than -- than consulting, bookings more seeing. up all that Insight the professional cycle we're momentum services. services strong of Managed mix we're we Services major like including more for seeing. was Demand and was We life like and

need client last has than the the in of is higher guess, given momentum us -- demand confidence. And the then a quarter given labor issues. Managed we So the for I Services and ever lot the

for good. up XX% growth months. billings we're gross trailing XX% Cloud So up pretty feeling -- the year-on-year and And were XX

confidence. us also some that's given So

Maybe One if or additional quick one price it. of could you is Glynis, clarification. and warrants the kind and think those. contemplates any with close near for a to Got EPS for we're I just strike last the that me. converting us of guidance outstanding? dilution. Does consider convert remind anything guidance

any does the additional convert. no, with guidance So dilution that include associated not

evaluating from -- is would as here. XX do consecutive -- convert that are -- QX at days occur at stay to We price $XXX.XX to average XX with what we're level over is the The we of going stay quarter. move and our level likely it in for on that over would have price

the So what our are guidance -- looking at at are? contemplated actively this that of that none looking is we that alternatives in and But at point.

from line Research. Colicchio of next from Vincent Your comes Barrington the question

Yes. Joyce, thoughts of curious your you in outlook? economic any I'm are verticals? any the your signs of geographies or on economic on weakness maybe And seeing

thanks, So Vince.

So pretty growth And all proud verticals organic segments. we the all across seeing and not. sort are far, of we're of we're that

to -- we're that So But concern so our starting consumer us. we're But some hints that some not not that's slight, and around impacting demand. participate we there's OEMs from hear carefully. we're watching don't there

not have any we of but seen sort all -- at So pullback so far.

I half out year," think one the spend we're customer thousands so "hey, of customer second kind a at but in I of that's heard taking our of the look say, one far.

it wood looks so strong. on So but far, knock

the strong expect for you the And should quarter how the as to year? growth side, balance forward would be of ramp on which the services moving

quarters, than growth where side, see we'll the because on or And equal year. half the of bookings to I have been be the translate start last to services you'll the year. of back strong going higher see X product would difficult expect in to that just our the So hardware to for the think start compares growth through see we

your concludes participation. And today's gentlemen, Thank you call. ladies and conference for this

You may now disconnect.