NSIT - Earnings call transcript Q1 2018 | Insight Enterprises, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Insight Enterprises' First Quarter 2018 Operating 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 conference call is being recorded. I would now like to turn the conference over to Ms. Officer. Financial Chief Bryan, Glynis Ma’am, you begin. may

Glynis Bryan

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

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

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

represented basis. X, today. XXXX earlier means Lastly, we that This adopted presentation or retrospective we in modified on earnings have results XXX effective shown issued January a materials ACS our not the release XXXX

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

Ken Lamneck

year. with line from to and market tightly operational bottom business. operations drove against EFO report and quarter discipline the us opportunity profit operating year over the XXXX strong everyone. compared first adjusted period and top basis financial that margin Hello quarter, results, our as current adjusted team delivered executed to year gross our we started for first growth XX% I’m while XX which the up last Thank maintained controlling joining earnings we've points you across discuss very double up the to year, In results. sales and global digit today expenses, the growth, well same pleased

XXXX, consolidated hardware, digit quarter software constant up categories. were Net in double and first services $X.XX billion, our year, the in net sales Specifically up sales of were over across XX% currency. XX% growth year reflecting

earned quarter, QX consolidated by up full incentives selling due constant Datalink in that As constant a profit year investments of up growth enterprise the engagements, over year the be year X, due partly administrative reminder, first XXXX agreements X% were $XXX million to in up basis points down were XX% service Gross fewer we margins fees lower the mix the headcount in normally across earned year so would from XX% partner offset Gross positive over expenses and over effect in acquired first acceleration year X% was January currency business. and of quarter, that up and were the And in modest to organic. is certain this all of fully professional million XX the $XXX XX.X%, and in year. year over currency.

earnings first very diluted All operations for results GAAP year operations year’s this year. Last of XXXX of a quarter basis, XX% to share adjusted with diluted per of prior operating basis, growth were earnings million, XXX% to $XX were than contributing adjusted million, up $X.XX. was year, and well, us. earnings record each an segments as of to adjusted share per the increase our XXX% was to compared from $XX EFO quarter our more another positively On results. strong from first led QX $X.XX, more with GAAP On earnings than compared over a

strong reflects exceptional quarter market. So on which deliver our we’re top compare, and a to a particularly growing pleased continued stable execution in another financially,

lower North executed Gross digit slide we the the benefited our topline of group, reporting in and SMB first of the quarter, margins also gross basis in cycle We in of to In margins this on By North XX%. double refresh categories technical and decreased to XX large, hardware on public XX.X% due sales quarter. quarter. sector lower profit lower first Despite double client well quarter, sales year’s XX% the America from in and services with from $XX servers America, growth and year a earnings data to growth results grew margins, up clients under adjusted operating Gross continuation only large year expense to very center the networking combined with operations device drove just storage. X%, in gross in topline clients. million. over projects digit points include profit, Moving five. grew the growth XX% growth the first of

results devices quarter share the We according last but in of servers to noted this we but third quarter, in also America In rates partner inconsistent to six back critical consecutive is for execution as growth the strong North to at second demand of device that gain data, has these North digit party in share market the in will this device the storage seen first through half the solutions. quarters, our the view, expect been community Demand Our America. the quarter. represent outstanding year. in continuing and they’ve earnings digit least adjusted particularly refresh seventh and revert growth for trends has double device category single cycle continued low

Moving on slide to six.

We've has in quarter to over excited XXX over from year. the services year over category. gross million first results recent certain migrate software XX% and XX% in mentioned quarter, workloads $X.X first basis XX% topline constant operate, to seven moment cloud. that scale year increased of you'll operations that seasonally across solid contract sales of million. year margin from profit some were year constant quarter. quarter our year business of first renewals each the business results integrated we’re in of in on EMEA, from ago. in the across acceleration Gross the Gross year XXXX. grew XXXX, year sector to that the over earnings clients XX% partner see and the in clients. and about Moving in X% up our expanded year public I remain to of with from sales our currency, last these the the and reported earnings into see where constant currency to but Pacific operations public points $X.X due million, net slide services we operations first a Netherlands markets currency, incentives Adjusted driven to balance increased growth quarter clients The to education has to $X.X by Caase grew increased historically space sector continuing shifted stronger fourth Across profit been opportunity Asia in the net On key hardware, the

public chain strong XX% history help gross and clients our As our infrastructure, this integration Today, we positioned and of capabilities, well expected software solutions increased transition cloud. DNA, drive expertise, profit. demand us the development as consolidated with cloud data long our to our With to a grow provider serve in for a we're supply sales services strong capabilities, application will global make approximately our and our well clients center around devices category. help this service believe software share of and

on improving IT sales again costs We automation of executing with first opportunity forward will focus quarter growth. end, scalability clients operational Glynis? cost process in business we're optimize demand remains business, our enhance who Glynis global in initiatives for gains To our and the our solutions We demonstrated Finally, our financial these the of share controlling that quarter the results. and the discuss on Insight. aspects initiatives yet now healthy, to decrease other to our call and future the additional calls. for are on that front well you hand for future. I’ll back and invested look manual about the updating and to structure with experience over first

Glynis Bryan

very slide Ken. highlights you, key first our the covered quarter Ken on results. excellent Thank eight. Beginning of

on So update to my I’ll time matters. other you use

in in million rate based quarter was the in new tax first accordance the the first $X Our reported reported XX%, year, with the share last we effective quarter settlement rate In on to year. awards of standard. quarter employee tax of last the of benefit accounting first of similar

For taxes expense. the on reform certain US operating for quarter, the of the quarter tax in and on income limitations impact XXXX, reflects and and related rate our deductibility late current enacted interest expenses federal - State

QX a in and balance the acceleration We to of first program, XXXX, the of performance earned expect will EMEA’s due included fully significant that our of be effect we certain be benefit was between them our to incentives over XX% This rate tax acceleration For QX quarter earned year. into Also, driver in normally the QX partner in QX. $X million. estimate full would to results the expected approximately changes that accelerated of the the was XX%.

basis. the XXX in presented results we our that we noted retrospective As we effective earlier, from results on rules today. In our XXXX the the XX-Q have materials adopted this later January methodology. a week XXXX to accounting restated new be released we XXX under used X, means This this reconciliation previously - ACS modified not provide earlier the will week, to a

Moving on to nine. Slide

ACS expected, material line As in bottom not our adoption on a or have effect top of the XXX the quarter. results did reported

days, in our impact XXX, year DSO calculation metric DSO each accounts year quarter effect XX was up result ACS With year. items all sales metrics days the XXXX, for QX, more $XX approximately and and net, over takes is balance DIO. only of our and receivable sales expected four overall, a increased days was due higher while the particular, first of reported on as puts conversion of DPO for the have cycle on to in which net of with to cash a is cash increased one respect However, the day after certain this million, million, notable. balance six flow increased and our associated to similar sheet the In $XX affecting

was in we’re the efforts cash continue which XXXX, rest over with the pleased is to of QX reflect reduce those XXX reflected of the in in DSO our just flow in the year. cash as the we Rounding and compared of results our Operationally, balances of impact flow first last - prior ACS million first discussed, out million quarter cash this to - will $XXX XXXX. quarter to the our our year, we of of use drove flow receivable decrease to operations $XXX generated approximately performance, as primarily for our cash our year. generation, aged a Just accounts of QX increase cash which the due balances, in compared very

XXXX. from of - flow a flow As $XX by balance effect year, facility, timing negative cash between receivable for timing first million supplier which was discussed cash inventory the of in approximately of million less from XXXX negative results change QX the define we on our difference was were the which $XXX January calls, collection large XXXX, million, recent in the flow, difference XXXX cash and the in up the $XXX operations, of including million $XXX a in Adjusted free discussed. payment impacted due the to capital our paid single just as last quarter of expenditures, financing plus the a of QX I

positive focused collection see as flow cash on We’re the year pleased heavily over cash shift free in to year, been cycle. we have our generation improving adjusted

For we full year, adjusted million million $XXX cash full million. operations. flow we flow the $XXX of between the to cash for expected At range XXXX from last gave the $XXX million free $XX of to you end be a year, year

operations, facility. year, $XX to invested million In stock million expenditures, used and inventory flows down facility financing vendors, $X cash on believe to this expect we XXX,XXX cash company's range, best we quarter. last We from of to when we QX, common million this provide in that flow first of flow guidance in the and of achieve $X growth viewed free we're capital are shares also more certain CapEx using inventory wanted repurchase as our our due to and cash the but approximately combining from

As in a make million in XXXX, to impact comparison, we first in to have timing there the acquire of second make in $XXX quarter further Datalink on in in We repurchase expect year. repurchases QX, any quarter the $XX used on first the repurchases of million do any of EPS. and was acquisitions of the shares, last no to used XXX,XXX today, XXXX Based quarter. not not did diluted we of but total

In we in repurchase year. not the of did addition, shares any first quarter last

debt revolving and led million cash $XXX $XX outstanding our QX this $XXX This to end subsidiaries, of at a of debt back of the will under outstanding outlook. facility. end million XXXX $XXX our the the term foreign turn to of in All million debt which the at review to compares and cash Ken of and I call resident million our balance was now to $XXX million quarter, XXXX. of of of our

Ken Lamneck

Glynis. you, Thank

XXXX, sales on of compared to for the the full to XX. year slide we outlook, our deliver high expect digit in range to respect XXXX Moving mid growth now single With to to XXXX.

the This work for year of of per to during the partners and incurred XXXX, tax million XX expenses the of clients Insight and We’re the share may related excited no authorized full the share does record year, outlook for the our XX% up we’ll the for XX% and current to questions. of adjusted full count that their the for This outlook resulted a shares. shares effective be very forward about first for for year business strong also year. concludes of program, between our us excludes our dedication reflect incurred acquisition that made balance for additional of be earnings again assumes for our of balance increasing quarter to thank $X.XX the diluted joining severance to momentum today. expenses, rate teammates, share XXXX may of those hard want line open and Thank full any approximately your quarter. that capital million XXXX. That and and I their restructuring under look of XXXX $X.XX. and $XX your during assumes an $XX currently to our and repurchase comments first now you and an outlook in expenditures We average year not million to repurchase

Operator

comes line now our is from Raymond line Thank James. from Adam first your the of [Operator open. And Sir, Tindle you. question Instructions].

Adam Tindle

and thanks evening. good Okay,

start of clarification for Glynis. lower wanted the COGs. quick I'm a OpEx assuming a maybe incentives to on with Just to these partner recorded acceleration that were not and

million quantified really right didn't if percent then If right as points that about it the kind know back, level OpEx over help year of to maybe here. year. a I add benefit Is moving margin. the revenue So And of think that you about? us you XXX down $X cadence basis forward. gross the impact I think was OpEx could of

Glynis Bryan

the margin. is didn’t impact first So $X out actually our it in that Ultimately Adam, OpEx. turns COGs reflected gross not it’s million it in so

Adam Tindle

the guess then. … question I negates I that Okay. can second Maybe

Glynis Bryan

through But QX into an and QX but from some perspective. getting about coming we just, we ultimately would delta take an the did our in as action it talked expense think and it, was, XXXX if of you I QX XXXX not is benefit as the great throughout end that don't and primarily XXXX. of impact that be operating at expenses think think of what QX because ultimately. we anticipate I in in QX The QX ramped going about

Adam Tindle

suggests mid-X% I think past. to full the year years I it. going begin for company's in has EFO a to goal this right. Got have actually if know Ken, guidance for the And I the math been the that approach margin

parts If the sustainability talk you that are getting level. you maybe of just moving and could about the there that

Ken Lamneck

Yes. Yes, we're that moving stated in that see Thanks has which Adam. for been of direction, objective you question, definitely ours. can the certainly a

regions. you I having nicely there the can OpEx Certainly well occurring us us. see as is certainly pretty a a impact certain as our accelerated controlling big growth for think across what's for all - the So

the area So as up the portfolio, service has diligently very believe those well solutions us in provide on really focused We're being as course, we that's leverage gross we - that's lot to an of drivers. for we're a are still there. margin. And which that of expanded main the working on it in help

we having We work of hit need backs the to believe on topline improving So margin. it's not to just also the at growth.

good progress completely but aren’t making right things actually that so in objective. towards sync those we’re now, So

there's are funding year in and the of issue, little were to one If but you wondered know this talking we about growing revenue a the if today? in talk rate on and seen and could program in one haven't puts margin, the did gross earlier strong one there, there's the could your the last Maybe from on they gross there one. you a competitors pick like really bit share at about this Okay. controls vendor I of in just I about, that that any quarter, area today, certainly apart cost North heard also half basis. particularly you of vendor America can that perspective, vein partner talk that year they much but from margin, your are terms just to takes over metrics we

Ken Lamneck

Yes. of what they The we're - certainly on well commented aware there.

that. haven't seen We really

there puts dependent become where upon occurs last are, we’ve we've over takes few Of issue an managing as course and that and partner the said, in and channel. where been itself the quarters the that's that balancing

So real for any not to that us. has contributed decline

for still us, of it. very that We’re coming we large fact we've at but mainly changes. certainly enterprise which hardware a the are stated, those gross it's services had margin and why basis, on we margin is well pretty that's not accretive from the hitting deals lower margin partner gross as wouldn’t do to incentive But some say gross as cognizant this of do still the ROIC size, the stage, the more that decline deals, in objectives significant degrading what's a bit.

Glynis Bryan

we million about. $X that the excluding Even talked

Ken Lamneck

acceleration. That's correct. $X the even excluding million Yes,

Adam Tindle

Right.

and on Okay. Well, congratulations fantastic a quarter. you thank

Ken Lamneck

Thank you.

Glynis Bryan

Thank you.

a first the We’re long time. you. Thank that congratulations. in saying time you’re so pleased It’s

Operator

Riley. our from next from question B. line of And Kara comes the Anderson

Your line is now open.

Kara Anderson

afternoon. Good Hi.

talk to is coming bit out and share be that Can specifically share continue So clearly your do guys so for working gaining is in ahead? think little about you well you have you come to you where to market strategy think from what you a here.

Ken Lamneck

Yes, Kara.

quarter that hardware you the helps a have lot of front. So third know, the solidify we data of sort on information

across Software up whole picked really the more basically picked difficult. data were we in on the by a the much basis. But servers of were up those areas. also growth as get And growth we in categories that by certainly substantial in Notebooks channel. pretty front, and of well, is considerable was storage and way, the share. the both weekly the further share strong we hardware we channel up picked There in

networking areas. storage really are basically primary of those are is devices the of those big to are and business course, Those all server main So products three. the regards then It’s are number the in two drivers. being hardware. And segments one,

the are those categories. So

we on globally state On them status that with information in the of largest quarterly number get Microsoft. good of maintain software play, we basis can course the provider Microsoft front, showing our software continuing being the to one we're that a pretty channel from

Kara Anderson

the Got than internal can move? to more you're it. And And true expectations, also you the guidance to relative in particular relative there share outperformance. Street at like that’s then if it least, seems is XQ raising behind anything that your

Glynis Bryan

calculation, gave I think, originally. we the of gave $X we think the any original our repurchases three by - when in you share we $X.XX to have So I guidance range didn't Kara, - that the you

regarding $X.XX So QX in some us. the that ultimately. this get a to the think stronger regard $X.XX couple about reductions That’s cost $X.XX to small the in reflecting little part And by to the not in year the for there's we flowing And be in adds the QX that believe from repurchase. I coming bit million Ultimately these of reduction, reduction half year forward, fourth we that's which there second that's - with through ultimately quarter. was is benefit a contributed bit a of the through. $X little to of the there. - about tax the of offset of benefit acceleration of - second we’ll There's going that rate a is sentiment overall cents share QX in the through

guess a for in the our remainder of this year. execution I level confidence there’s So of

Kara Anderson

you. That’s helpful. it. Got Thank

Operator

and participating that no I'm And gentlemen, day. thank Everyone, Q&A seeing you concludes our a today’s conference. Ladies great today’s session. and instructions]. program you have further may and concludes questions, [Operator in This disconnect.

Insight Enterprises (NSIT) 2 May 182018 Q1 Earnings call transcript