| Insight Enterprises, Inc (NASDAQ: NSIT) (the “Company”) today reported financial results for the quarter ended September 30, 2024. Highlights include: |
- Gross profit increased 6% year over year to $432.1 million with gross margin expanding 270 basis points to 20.7%
|
-
- Insight Core Services gross profit grew 14% year over year
|
-
- Cloud gross profit grew 33% year over year
|
- Consolidated net earnings decreased 3% to $58.2 million, year to year
|
- Adjusted earnings before interest, tax, depreciation and amortization (“EBITDA”) was flat at $128.8 million, year over year
|
- Diluted earnings per share of $1.52 decreased 6% year to year
|
- Adjusted diluted earnings per share of $2.19 decreased 8% year to year
|
| In the third quarter of 2024, net sales decreased 8%, year to year, to $2.1 billion, while gross profit increased 6%, year over year, to $432.1 million. Gross margin expanded 270 basis points compared to the third quarter of 2023 to 20.7%. Earnings from operations of $92.9 million increased by 1% compared to $91.9 million in the third quarter of 2023. Adjusted earnings from operations of $120.1 million were relatively flat compared to $119.8 million in the third quarter of 2023. Consolidated net earnings were $58.2 million, or 2.8% of net sales, in the third quarter of 2024, and Adjusted consolidated net earnings were $77.0 million, or 3.7% of net sales. Diluted earnings per share for the quarter was $1.52, down 6%, year to year, and Adjusted diluted earnings per share was $2.19, down 8%, year to year. |
| “We are optimistic about the business’s long-term health; however, the third quarter did not meet our expectations, and we anticipate the information technology spending environment will remain cautious in the near term,” stated Joyce Mullen, President and Chief Executive Officer. “We continue to execute on our solutions integrator strategy, delivering strong cloud growth and solid Insight Core Services results fueled by our acquisitions,” Mullen stated. |
| KEY HIGHLIGHTS |
| Results for the Quarter: |
- Consolidated net sales for the third quarter of 2024 of $2.1 billion decreased 8%, year to year when compared to the third quarter of 2023. Product net sales decreased 11%, year to year, while services net sales increased 10%, year over year.
|
-
- Net sales in North America decreased 8%, year to year, to $1.7 billion;
|
-
-
- Product net sales decreased 11%, year to year, to $1.4 billion;
|
-
-
- Services net sales increased 9%, year over year, to $325.4 million;
|
-
- Net sales in EMEA decreased 12%, year to year, to $312.6 million; and
|
-
- Net sales in APAC increased 15%, year over year, to $58.7 million.
|
- Excluding the effects of fluctuating foreign currency exchange rates, consolidated net sales also decreased 8%, year to year, with decreases in net sales in North America and EMEA of 8% and 13% year to year, respectively, while net sales in APAC increased 13%, year over year.
|
- Consolidated gross profit increased 6% compared to the third quarter of 2023 to $432.1 million, with consolidated gross margin expanding 270 basis points to 20.7% of net sales. Product gross profit decreased 3%, year to year, and services gross profit increased 13%, year over year. Cloud gross profit grew 33%, year over year, and Insight Core services gross profit increased 14%, year over year. By segment, gross profit:
|
-
- increased 4% in North America, year over year, to $348.1 million (20.3% gross margin);
|
-
- increased 11% in EMEA, year over year, to $66.4 million (21.2% gross margin); and
|
-
- increased 15% in APAC, year over year, to $17.6 million (30.1% gross margin).
|
- Excluding the effects of fluctuating foreign currency exchange rates, consolidated gross profit was up 5%, year over year, with gross profit growth in North America, EMEA and APAC of 4%, 9% and 13%, respectively, year over year.
|
- Consolidated earnings from operations increased 1% compared to the third quarter of 2023 to $92.9 million, or 4.4% of net sales. By segment, earnings from operations:
|
-
- decreased 6% in North America, year to year, to $80.8 million, or 4.7% of net sales;
|
-
- increased by more than 100% in EMEA, year over year, to $6.7 million, or 2.1% of net sales; and
|
-
- increased 31% in APAC, year over year, to $5.4 million, or 9.1% of net sales.
|
- Excluding the effects of fluctuating foreign currency exchange rates, consolidated earnings from operations were also up 1%, year over year, with increased earnings from operations in EMEA and APAC of over 100% and 28%, year over year, respectively, partially offset by a decrease in earnings from operations in North America of 6%, year to year.
|
- Adjusted earnings from operations were relatively flat compared to the third quarter of 2023 at $120.1 million, or 5.8% of net sales. By segment, Adjusted earnings from operations:
|
-
- decreased 3% in North America, year to year, to $106.6 million, or 6.2% of net sales;
|
-
- increased 30% in EMEA, year over year, to $8.1 million, or 2.6% of net sales; and
|
-
- increased 30% in APAC, year over year, to $5.5 million, or 9.3% of net sales.
|
- Excluding the effects of fluctuating foreign currency exchange rates, Adjusted consolidated earnings from operations were flat compared to the third quarter of 2023, with increased Adjusted earnings from operations in EMEA and APAC of 25% and 28%, year over year, respectively, offset by a decrease in Adjusted earnings from operations in North America of 2%, year to year.
|
- Consolidated net earnings and diluted earnings per share for the third quarter of 2024 were $58.2 million and $1.52, respectively, at an effective tax rate of 22.5%.
|
- Adjusted consolidated net earnings and Adjusted diluted earnings per share for the third quarter of 2024 were $77.0 million and $2.19, respectively. Excluding the effects of fluctuating foreign currency exchange rates, Adjusted diluted earnings per share decreased 8% year to year.
|
| In discussing financial results for the three and nine months ended September 30, 2024, and 2023 in this press release, the Company refers to certain financial measures that are adjusted from the financial results prepared by 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 by GAAP to the non-GAAP financial measures is included at the end of this press release. |
| In some instances, the Company refers to changes in net sales, gross profit, earnings from operations and Adjusted earnings from operations on a consolidated basis and in North America, EMEA and APAC excluding the effects of fluctuating foreign currency exchange rates. In addition, the Company refers to changes in Adjusted diluted earnings per share on a consolidated basis excluding the effects of fluctuating foreign currency exchange rates. These are also considered to be non-GAAP measures. The Company believes providing this information excluding the effects of fluctuating foreign currency exchange rates provides valuable supplemental information to investors regarding its underlying business and results of operations, consistent with how the Company and its management evaluate the Company’s performance. In computing these changes and percentages, the Company compares the current year's amount as translated into U.S. dollars under the applicable accounting standards to the prior year's amount in local currency translated into U.S. dollars utilizing the weighted average translation rate for the current period. The performance measures excluding the effects of fluctuating foreign currency exchange rates should not be considered a substitute for, or superior to, the measures of financial performance prepared by GAAP. |
| The tax effect of Adjusted amounts referenced herein was computed using the statutory tax rate for the taxing jurisdictions in the operating segment in which the related expenses were recorded, adjusted for the effects of valuation allowances on net operating losses in certain jurisdictions. |
| GUIDANCE |
| For the full year 2024, we now expect Adjusted diluted earnings per share to be between $9.40 and $9.70. We also now expect to deliver mid-single-digit gross profit growth and continue to expect that our gross margin will be in the 19% to 20% range. |
| This outlook assumes: |
- interest expense of $58 to $60 million;
|
- an effective tax rate of approximately 25.5% for the full year;
|
- capital expenditures of $35 to $40 million; and
|
- an average share count for the full year of 35.1 million shares.
|
| This outlook excludes acquisition-related intangibles amortization expense of approximately $70 million, assumes no acquisition or integration-related expenses, transformation or severance and restructuring expenses, net and no significant change in our debt instruments or the macroeconomic environment. Due to the inherent difficulty of forecasting some of these types of expenses, which impact net earnings, diluted earnings per share and selling and administrative expenses, the Company is unable to reasonably estimate the impact of such expenses, if any, on net earnings, diluted earnings per share and selling and administrative expenses. Accordingly, the Company is unable to provide a reconciliation of GAAP to non-GAAP diluted earnings per share for the full year 2024 forecast. |
| For the full document click the link below: |
| Insight Enterprises, Inc |
| Stay ahead of the curve! Subscribe to InsidEntity for daily updates on all your favourite companies. |
