NSIT - Earnings call transcript Q3 2017 | Insight Enterprises, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Insight Enterprises' Third Quarter 2017 Operating Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call will be recorded. I would now like to introduce your host for today's conference, Ms. CFO. Bryan, Glynis

begin. You may

Glynis Bryan

you. Thank

we officially highlight provider just to this call, the start we some the afternoon. release that earnings our of I technical posting wanted our Before issues on with

it seen haven't you if across wire. the So,

and You been has the field our with also X-K it can an on find SEC. it website, with

for I Today, begin for results Officer. the that, me Insight Enterprises' quarter we and the Company's President joining be the earnings Welcome the everyone Chief with and Ken is XX, Glynis So, call. September call. will actually conference will discussing Executive Lamneck, Officer joining you XXXX. and Chief Bryan, ended thank of operating I'm Insight, Financial

Insight year-to-date afternoon on have and archived the limited copy is release do Relations An call the of page will and XXXX. copy is being will that severance refer webcast insight.com, discussed Enterprises' the restructuring X-K, any the Form consent of refer the financial associated we as results. referring via November not will measures on call, prohibited. in is non-GAAP call strictly Adjusted contain discuss as and financial with quarter call form to When without In include non-GAAP today, the and for will certain as this conference be and you adjusted. today conference call, insight.com. we Insight XX, third conference measures the Relations If third be written Investor retransmission Any our This of available recorded after the such approximately call, today's we period, at the our measures, website at a remain website will to section. tax expenses our to the the XXXX of time-sensitive as in measures XXXX, the on Exchange information our asset all quarter completion website measures a in of time. Enterprises. call of adjusted on This in and two a hours of rebroadcast expressed Today's of accessed or will on and webcast second of and in business Investor the property Securities and accurate only the redistribution, including as gain of expenses the can quarter year effect is on exclude periods, estate find also posted real recorded will under sale it Commission the recorded items. of of earnings this acquisition well Russia, filed related you this last that live these was sale the question-and-answer

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

to performance the reference core any in organic Datalink's or business acquisition. the year-to-year our subsequent to will Additionally, excludes results change our

will XX, to the SEC. Report in let call call. during forward-looking risks conference to and with call actual XX-K over that, results in file now also Ken. and be materially. forward-looking Annual to All the release detail me you the we risks on statements will XXXX, subject reports remind that statements are on ended year our discussed turn Ken? that other our Form made today's greater for press and December With today's I and are made Finally, cause this uncertainties These could about differ on

Kenneth Lamneck

everyone. Thank joining Thank us Glyn. third our discuss today Hello results. you for to quarter operating you, XXXX

up in in dollars XX% sales margins year-over-year, Datalink, in were third Consolidated contribution addition enterprise general basis, the points Datalink of services year-over-year, business business business up and in per XX%. growth million million the down operations to with XX acquired led Net a in up in in combined from expenses our which per growth diluted currency XX% to XX.X%, January last was XX% in quarter, On sales compared billion, in quarter of organic $X.XX Gross to XXXX, third reflecting was XX% an the earnings were by of earnings For to reflecting profit quarter on product of basis U.S. we lower were $XX from GAAP year. core from of earnings share and positive $X.XX; profit in administrative by good a of the adjusted X. increased the sales business selling, approximately and margin sales earnings on increase and year-over-year third core consolidated our $XXX of diluted net million up partly XX% currency. GAAP in growth both in sales our the operations quarter, lower $X.XX. clients share Strong North were positive Gross addition third a while basis, large constant contribution growth lower $XXX core business of Datalink. America, X% and driven Datalink. our including the XX% and year-over-year gross gross and core adjusted margin was constant offset

We double-digit and core saw category, year-over-year The while from business year-over-year to business. client SME the faster In approximately significantly profit points strong growth refresh decline well growth wins, devices quarter our see single-digit results margins to we of from million The America earnings consecutive continue grew North in large third clients, new services and to double-digit ongoing adjusted large as we decreased Datalink $XX to our topline solutions. while cycles, projects. in XX results, in as high year-over-year, America. lower see the for the North sixth our by gross certain Datalink sales reflecting datacenter in XX% business, reported business core XX.X%. was the XX% benefit with year-over-year basis datacenter the these $XXX multi-quarter and quarter. clients profit fueled client of enterprise for growth, to continued was growth added as including demand Within organic the quarter addition in the business. the North XX% a Gross year-over-year, with gross in Adjusted million by to the growth earnings growth strong increased America gross however large clients driven margin hardware operations

gross combined growth good XXX% Moving higher cost from results more of third XXX decreased helped constant up in EMEA currency, services quarter control, year-over-year sales on mix when year-to-year, approximately than and led third to but in Net basis the to the gross in with sales in margin drive EMEA. quarter. operations up X% which a earnings X% profit of adjusted points

completed the transactions third also in strategic We two EMEA in quarter.

in business after we did concluding our our as discussed market long-term the plans. this on First, not call, sale of we exceed completed last Russia our

in EMEA, Second, Caase in we in late of around in the services Caase consulting, XXX pursuit Office Microsoft our over Azure. stack million. were provides services Netherlands, $X the capabilities months Sales last and to including the acquisition September. managed of deployment strategy our cloud completed expand and approximately Located and XX

in our to delivering year. in Asia-Pacific, third and continue China, constant of in growth growth been we the quarter, combination. We the expertise cloud in team Australia the slower Insight. currency. portfolio the Demand well stable Insight And in our Caase In also good part first region workforce team areas and double-digit and throughout be very in of APAC with welcome to added talent completed in in its strong are as topline and bit far third about executed and quarter, New we in has a Australia, our so region excited the saw this growth bottom this productivity growth to accelerating EMEA And Zealand. as Ignia hybrid and line year pleased capabilities

are gained As additional our we we to footprint. global development across leveraging offerings our other from of Ignia the and businesses opportunities business looking application head BlueMetal scale into parts skills XXXX, our and analytics, around at

We with XXXX. execution globally are the first in pleased months nine our of

and capabilities, now for financials. extension environment, assets and XXXX. manage related our and we stable on supply focusing their a Amid year their this demand well solutions efficiently who of clients software data over areas Glynis highlights to will to execution, record as we center with will additional Our Glynis? cloud, business call in believe us tomorrow. helping IT chain, year-to-date today our transform the combined serve discuss disciplined I hand will close strategy out

Glynis Bryan

you, Thank Ken.

control For has from year-over-year, the driven growth in profit of cost nine earnings topline double-digit combined the XXXX, months first our business business. organic core adjusted gross and XX% single-digit great core with when year-over-year up operations which delivered high growth

Datalink the the year and its earnings line addition, this so our well far for with in performing meet track full-year. to on expectations target is In business

services. approximately sales currency hardware sales and and Asia-Pacific, in sales North software are net in sales net year-to-date more to significant $XXX Let same EMEA, sales compared in results down sales. in due in are of due maintenance financial In of to up in currency, months was from billion and first XX% the new including of bit America, our were higher were expansion year-to-date Consolidated sales million nine also in clients wins the strong and year-over-year in And reflecting net XXXX enterprise growth last period detail. $X.X a large year. within organic constant a constant existing to XX% In XX% client net growth net mix X% Datalink. cloud particularly X% up up me the sales breakdown

was XX% of addition Because of to a by SG&A XX.X% As mix by to for of and the are months including sales general purchase helping assessing the net, engaged the a year-to-year this earned in sales clients. currency. of expenses selling, earned low addition consolidated positive effect margin, dollars clients XX% expanded business enterprise and represented cloud the year-to-date, This XXX% margin profit. the offset and our first comparisons amortization XX% year. This metric Datalink in constant our expenses gross by in driven gross profit migrate most our Also, of first XX% single-digit was lower net sales, of our software higher Consolidated are from in are sales up we gross on and year-to-date. to agreements, increase $XXX nine in XX nine primarily $XXX before, discussed of to the basis consolidated core mix in are believe our on our points Datalink gross also business, profit enterprise the our up of reported have months fees million, product price million, front, administrative partially and performance. the of which business And large we actively mix to driven we is cloud Gross U.S. profit in business. a XXXX best were cloud. increase higher

of expenses restructuring and $X.X $X.X Ignia million related XXXX, the in this to year, the $XXX,XXX third of compared of expenses severance first acquisition Datalink the the in first And XXXX. recorded months Datalink in million also nine the $X.X of went million for the same Caase to We of the we months XXXX. and nine compared quarter on in and period to incurred acquisition

Ken our million, this about $X.X our a balance quarter in addition, equity previously sold foreign the adjustment that incurred In the to sale in mentioned, section business loss million accumulated in of of third related and $X.X as on was currency we sheet. translation had Russia of

currency from led constant of terms. up XXXX, quarters operations the nine increased adjusted XX% XXXX. earnings earnings for first operations year-over-over from of months million this the first to of GAAP and XX% of three up $XXX in in XX% All

tax settlement awards year-to-date benefit January XXXX. tax the of which XX.X% rate of XX, last through to new due down XX.X% was year was effective $X.X adopted accounting based from X, in approximately effected September our from to primarily accordance the addition, with this share million In year, standard,

of compared diluted per first of earnings year share an this $X.XX the in last to XXXX. year. basis were of on All earned led share per $X.XX diluted GAAP earnings two $X.XX, adjusted up quarters to this $X.XX from

$XXX of cash million to for used XXXX, in months million months the first compared our nine use of to XXXX. the cash of of operations a Moving $XXX performance, nine flow on

of in to large primarily our had the year-over-year January results supplier As scenario approximately the the working for We the which impacted flow and QX of $XXX cash paid in receivable before driven a higher QX cash for in million capital XXXX. exact balance sales. of used payment in of by in amount effects on million the call, XXXX adversely timing XXXX difference single the approximately by $XX higher The the quarter the last of in same collection gains operations fourth due in XXXX. significantly was a was increase our discussed this were of

to first year-over-year XXXX, to upgrade, use will QX the expect $XXX return strong partially due that capital cash generation in expect $XX of the full-year IT between year-to-date generation in digital And be to full-year, $XX And million million. our million. cash to two in and investments million through flow a normalized for in quarter quarters XXXX. we $XX we cash of fourth reported infrastructure the offset Also $XX the We to our of million of invested expenditure, million for $XX $XX up we we will anticipate of flow CapEx use significantly the in marketing million platform. expect website and report planned between to to cash

first We did comparison of the nine period the buy In we purposes, last addition, million $XX to shares but for million any $XXX to over in Datalink used acquire same acquire months year. we this XXXX, year. stock not back Caase expect and

due to All efficiency to day million the end of relative term days of third led a of to supplier year-to-year. in one-day in payments DPOs in at XX the debt flow resulted of less in a revolving inventory million [indiscernible] also of the increase quarter, $XXX QX for of million and XXXX. from there days cycle his closing and and X inventory net had increase XXXX, $XXX back the perspective, the conversion effect and client quarters at and end is Ken I to decrease compares a to $XXX timing $XXX receipts this This facility. at investments client outstanding a balance million than million engagement. $XXX and respective in outstanding of now will of increase a quarter debt From cash on DSOs and of third cash the up the due the comments. our specific turn one-day call we which the cash outstanding was This cash

Kenneth Lamneck

outlook that we'll just incurred as business you, Glynis. of nine maybe loss of months that respect our related share to balance Russia to XXXX, adjusted the to compared This approximately the joining assumes XXXX the you for expenses of we our deliver our growth clients XXXX. of and for per to With full-year open We're outlook the earlier. of as $X.XX effective first excludes and of mates, during for maintaining incurred those questions. sales to to comments, diluted during again for That and full-year XXXX, XXXX the XX% our XXXX. $X.XX. our for expect Glynis fourth Thank This outlook severance the an and Thank well earnings to team concludes outlook, XXXX discussed today. dedication lineup sale on Insight. for of XX% rate quarter the acquisition their partners I want tax business now XX% my the us thank restructuring, now you and

Operator

Raymond [Operator first from question Instructions] our with you. Adam Tindle comes James. And Thank

is open. line Your

Adam Tindle

evening. wanted first guidance. to maybe just on good I and Thanks, touch Okay.

down if and I'm I revenue, business implying QX, is QX. Datalink, seasonal is you're more my sequentially correctly. typically reading understanding, think But this the on in for in up, core

So, I just guidance maybe on to understand the for touching wanted revenue QX?

Glynis Bryan

that is Adam, correct. So,

was that down quarter expecting actually be QX, that QX us. not large we bit for significantly. will where are a are little We in from unusually seasonally, very QX a

seeing the QX in course we're in rollout in fourth dollars growth core going that well actual a terms And million $XXX that of I significant from think growth Datalink. our as the into growth in quarter. contribution same million and $XXX as was was of not

not the saw QX. core, the but we concluded So, that there in of this some the magnitude XX% quarter growth was at in projects

Adam Tindle

at when Understood, maybe look half second of we'll a stack look kind we at it.

Glynis Bryan

based I look half how at was the ultimately. we because Yes, think should it, Right. guidance second the on

Adam Tindle

Datalink the Yes, which to addition gross that despite in about makes sense. of previous pretty they're did Obviously, ask years want accretive. below be I should quarter. margins the

back at would look maybe it Datalink I have XX%. gross if levels, Datalink previous I North think core, historical If if the in an around margin try well ex below low. I all-time America is to it years, which I hold below

little you a I'm could So, bit hoping give detail. additional of

for some including Was it attributable vendor to? reasons on helpful. is hardware be pressures? this, competitive touched that margin. of You lower would the Any What changes additional

Glynis Bryan

business is to. It the analysis of APAC. the mix your business that were combination say was selling North in is actually business that correct. So, client sub-XX% the ultimately were core that America excluding is a comments I that selling Datalink of and the and And not this EMEA

margin to have competitive very trends good are we're with be had and One increased we great business going we pressure, where that where some [indiscernible] continuing was should that that to don't' say as of these the in move But not safely to business XX% going XXXX. you seeing. margin clients large or be ultimately. have is in there I and March we I the the plans liked that particular thing enterprise for I large QX always as that we is something success larger into we think a as the wouldn't forward. with terms thought sold, was deterioration establishing not we clients, very enterprise would in anticipate front-end should a relationships as in move we we anticipate think on us strong that take growth the it we in we So, quarter, enterprise very degradation the

growth business, expect well. we of all of our The normalize services and I the is expectations actually to as expect quarter. should is couple perforating and normalize our with Datalink in meeting it by XXXX in market. very as Ultimately into well thick move we a to is gross above point As just basis we think XXX to I that North definition margins

Adam Tindle

Okay.

Kenneth Lamneck

The programs on other you we didn't it piece supplier that attribute to at all. course Adam, as touched of

Adam Tindle

that a confused and Insight, for bit Okay. sorry for for more. Datalink Yes, the less I good by am thing clearly the market argue for is little is think should pressure, very it general maybe in just which I that growth not seems margin

understand So, is out I'm less just growth robust? this trying how plays when to

Glynis Bryan

of So, what the of is this - it in I quarter. happened business mix ultimately waiting it's that driving think the that has

a we if normalized in So, thing would large we a clients a more expect around of standard when the margin growth significantly of margins ultimately growth very, normalized business products lower have very would year, having more such product exists and rather. ultimately. a had the In high we lower have saw mix quarter that not kind and year, this rate, this preponderance the we spectrum

that as client of in the strong segment. well the is that think the I and type the as ultimately clients in growth products

Adam Tindle

Got it. you. Thank

Operator

you. Matt Sheerin Thank next Stifel. comes question from our with And

line open. Your is

Matt Sheerin

Yes, thanks. Hello, everyone.

Ken some that enterprise And selling strong opportunities Just just on of type they the in to sounds of it of continue focused dollars may for now might Adam's client demand see you to we where margins also continue the right And or opposed value you solution there. following budget as more a obviously it cycle to shift that you up are we're back like against better. that's getting where comps mix devices tough for going toward see dollars are sense shift where customers get XXXX, PCs. into normalize solution on like And you? be on to FY notebooks, PCs your a looks in more as regarding expecting refresh to client where questions up business, we and you add see servers budgets are as

Kenneth Lamneck

Yes.

think products was that increases the so higher of that. were growth mix we one no actually for through of units healthy are ASPs first in higher due us device the that market. We that in that across there, for and pretty component at we And just of desktops attribute see I across fully of we the there X% helped new the to selling because of XXXX, the revenue and were XX%, in uplift that the to what market device devices the sort notebooks, there there. XX% this pressures notebooks devices as the channel everybody. ASP than will data be so the points these the half than into units reasons on a and in I growth price as of expect was price performing desktops so just the now but question MPD for is unit component growth that actually couple the certainly seeing. that that, course, fortunate But revenue significant well, total a have look quarter as also, the X% market's and to of So, that couple us probably of Matt, significantly increase about stronger is growth and the occurred A the growth side is then was unit sort continue our mentioned

So that's on the device side.

On data, specifically That areas, growth the look competitive it business what the few growth. that's of made direct and that a a large We referenced. as climes such Glynis robust margin. this some not might at but MPD take certainly data center normally had you

client help that As got you recognize in continue strategic it we for business. but relations this with support us to that force them sense to made - we've

because are cyclical, those become pretty pretty big projects. those So

to of as sort was areas. normalize, and attributing that would the that expect don't normal has normalized projects and gross course, of big kind margins we will to out those So, certainly return aren't continue of back business, that going of our Glynis more

Matt Sheerin

In Windows refresh, seeing terms the driver that? to of are PC a the of upgrade as corporate you XX

Kenneth Lamneck

would as it Matt, you not as normally think I of of upticks. much a this see in Some bit, little kind but

in of with a the years government us fed sector bit well be Windows over to be the to regards have positioned that's that, talking slower some we to So, for government tends mandates, pretty There's I because is we nice think lot couple move that next going a will the a sort there's little there slower tailwind a platform. but that. certainly but certainly big bit the certainly we're contracts think of about and the of growth, and

not pretty And So, moving be could we we I a shape feel big that change, sales. going like tailwind commercial think see in not of new clients, nice increase we're in to it don't in you're so unit we sea that way, obviously, many cases, the drive think Because there. that the people need, touch of but that good because a but an certainly have. will course and forth moving on again devices might definitely are and

probably a starts we that years is the nice So, really think will be situation business. over the that root next take in couple to

Matt Sheerin

then And of but the profit just a Okay. noticed were gross EMEA. the up revenue there or revenue function down software down overall there? EMEA, in Is software a is of was I that year-over-year, of that the trend dollars netted in

Glynis Bryan

would guess there quarter deal last significantly that trend. a not I lower a say was I was margin. It's large

there, profit we large not think but the bit talked QX of really netting - it's about may the It's of prior the have impact. I the There's it in a gross the of in why that's improvement quarter deal year-over-year. netting little call XXXX. in in impact year in the

Matt Sheerin

up decline terms comps Okay, revenue tough last in of but year? from was the that just against

Glynis Bryan

tough deal impacted large That up was a comps. year-over-year - gross negatively, basis but The large on positively. profit against very just revenue some

Matt Sheerin

Okay.

in see expected. potentially foundation tracking yet is the sides that's still sounds both business, But track Okay, of great. is then as Datalink building upside in on where cross-selling next this starting year's are or it opportunities of like to that of sort you revenue margins? and terms on And the

Kenneth Lamneck

Matt. question good Yes,

both So, Datalink and well on six to up the and to as certainly was started starting and started to develop see open pipeline the about amongst really really you that first we're the to integrating months in there. versa. vice then nice that's start mentioned business Insight all focusing QX, we some cross-selling And entities, really starting

we'll to some QX, we So, that synergistic see XXXX, in expect we certainly but see of there. selling in definitely certainly that expect

the So far looks outlook positive.

Matt Sheerin

right. That's it lot. all a Thanks for Okay, me.

Operator

Kara Riley question Anderson FBR. from you. And Thank B. next our comes Instructions] with [Operator

open. is line Your

Marc Wiesenberger

Hurricanes, Good delayed were is lost wasn't impact you there speak that Wiesenberger, afternoon. the Irma? Can sales for to of in if any expect This Harvey simply all calling Marc you just impact And if Kara. from the it and or to recoup? the

Kenneth Lamneck

very any has had that worked a Marc, couple shipments Yes we that. part there and make did impacts we There there any we locations and that priorities to see our times, really impact sure certainly one closely in were our business. significant in with see them is from Houston, didn't really that heard of about - ours we negative

that. slight impact So, say really of that can't did we that once any anything revenue in saw that there is see significant kind course we on come we where QX. And of will

So that's not see didn't lost anything but we again for to pushed, hurricanes. us revenue. It's just revenue due that substantial the

that vendor very, think the well our I managed through from really very partners perspective.

Marc Wiesenberger

and maybe taking and share during Are quarter consolidation? you some thank Great, in from traction supplier smaller VARs just one other the question. you seeing additional any

Kenneth Lamneck

look Tech the track some distributors, only look pretty mean the who course VARs. only from numbers. when we we there's public then I again the the quite we And lot the so products and data real Synnex. aren't people And other we at Data comparison, have Ingram growth growth numbers of our market. are as at public the of are buy numbers as we Their what XX% comparisons like well and of carefully, And is, high. products growth about then a brought from is MPD certainly of have data occurring competitive in Yes, very the growth can can the we good the understand we

So, that our have small is VARs. to say business you their would and makeup

of growing so So, have if the only This coming major expense sort the of players of like sort ourselves is you'd somewhere at to the could faster, forth say that's CDW Mall smaller and we surmise VARs. at that. that are thing and Connection and why it's the

to favor. that's playing think think that our we I is scale So, certainly consolidation the

Marc Wiesenberger

Thank Great. you much. very

Operator

have time I we for questions. for all program. today's you. would to thank today's Thank everyone That's in like the participating This concludes conference.

You day. may a have disconnect. Everyone all great

Insight Enterprises (NSIT) 7 Nov 172017 Q3 Earnings call transcript