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Insight Enterprises, Inc. Reports Second Quarter 2009 Results
Posted by: gurufocus (IP Logged)
Date: August 5, 2009 09:38PM
Press Release: Insight Enterprises, Inc. Reports Second Quarter 2009 Results
TEMPE, Ariz.--(BUSINESS WIRE)--Insight Enterprises, Inc. (Nasdaq: NSIT) (“Insight” or the “Company”) today reported results of operations for the quarter ended June 30, 2009.
Second Quarter Highlights
* A tabular reconciliation of financial measures prepared in accordance with United States generally accepted accounting principles (“GAAP”) to non-GAAP financial measures is included at the end of this press release.
“Overall, we are pleased with our first-half operational performance in this challenging new demand environment,” stated Rich Fennessy, President and Chief Executive Officer. “We believe we are well positioned going into the second half of the year to compete aggressively,” added Fennessy.
In North America, net sales were $713.5 million for the second quarter of 2009, down 25% from the second quarter of 2008, but up 8% sequentially. Gross margin on these sales held steady at 14%. Selling and administrative expenses for North America in the second quarter include $2.6 million of professional fees and costs associated with the trade credits investigation. Excluding the effect of this item, selling and administrative expenses were down $22.5 million compared to last year, or 21%, primarily due to the cost reduction initiatives the Company has implemented over the last several quarters and, to a lesser extent, the effect of lower variable costs on lower sales. As a result, the North America segment reported earnings from operations of $13.8 million for the second quarter of 2009. Earnings from operations in North America in the second quarter were $16.3 million excluding the one-time items.
The Company’s EMEA operating segment reported net sales of $281.2 million for the second quarter of 2009, down 26% in U.S. dollars, but up 4% sequentially. Excluding the effects of foreign currency fluctuations, net sales were down 12% versus last year and down 2% sequentially. Gross profit in EMEA was down 26% in U.S. dollars, and down 12% excluding the effects of foreign currency fluctuations, while gross margin stayed steady at 14.9% compared to the same quarter last year. Selling and administrative expenses in EMEA in the second quarter of 2009 were down $7.6 million year over year in U.S. dollars, and excluding the effects of foreign currency fluctuations, selling and administrative expenses in EMEA decreased by approximately $600,000. The EMEA segment reported earnings from operations of $6.1 million for the second quarter of 2009. Excluding a severance charge of $1.9 million during the quarter, EMEA reported earnings from operations of $8.0 million.
In the Company’s APAC operating segment, net sales of $42.4 million for the second quarter of 2009 were down 28% from the prior year, and down 15% excluding the effects of foreign currency fluctuations. Gross profit was $6.3 million and gross margin was 14.9%, down from $9.5 million and 16.2% in the prior year quarter. The APAC segment reported earnings from operations of $2.0 million for the second quarter of 2009. Excluding a severance charge of $230,000 during the quarter, APAC reported earnings from operations of $2.2 million.
The Company continues to believe that, with demand levels where they are today and with the resource and other actions it has taken over the last several quarters, diluted earnings per share from continuing operations will be between $0.80 and $0.87 for the full year of 2009. However, given the typical seasonality of the Company’s software business and anticipation of continued softness in the EMEA market, it now believes that diluted EPS from continuing operations in the second half of the year may be lower than the first half of the year. This outlook does not include the impact of any severance and restructuring expenses, expenses associated with the restatement investigation and administration or related litigation, or other one-time charges.
CONFERENCE CALL AND WEBCAST
The Company will host a conference call and live web cast today at 5:00 p.m. ET to discuss second quarter results of operations. A live web cast of the conference call (in listen-only mode) will be available on the Company’s web site at www.insight.com and a replay of the web cast will be available on the Company’s web site for a limited time following the call. To listen to the live web cast by telephone, call 1-800-573-4752 if located in the U.S., 617-224-4324 for International callers, and enter the access code 21930220.
* A tabular reconciliation of financial measures prepared in accordance with GAAP to non-GAAP financial measures is included at the end of this press release.
USE OF NON-GAAP FINANCIAL MEASURES
The non-GAAP financial measures in 2009 and 2008 exclude one-time items and the tax effect of these items. We exclude these charges when internally evaluating earnings from operations, tax expense, net earnings from continuing operation and diluted earnings per share from continuing operations for the Company and earnings from operations for the individual operating segments. These non-GAAP measures are used to evaluate financial performance against budgeted amounts, to calculate incentive compensation, to assist in forecasting future performance and to compare our results to competitors’ financial results. We believe that these non-GAAP financial measures are useful to investors because they allow for greater transparency, facilitate comparisons to prior periods and competitors’ results and assist in forecasting performance for future periods because they exclude items we believe to be outside of normal operating results. These non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
Certain statements in this release and the related conference call and Web cast are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including our estimated diluted earnings per share for 2009, our perceptions of trends in the demand environment, estimated savings from headcount reductions (including assumptions about currency fluctuations underlying such statements), and fluctuations in our borrowing levels in the second half of 2009, are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Some of the important factors that could cause our actual results to differ materially from those projected in any forward-looking statements, include, but are not limited to, the following, which are discussed in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008:
Additionally, there may be other risks that are otherwise described from time to time in the reports that we file with the Securities and Exchange Commission. Any forward-looking statements in this release should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others. We assume no obligation to update, and do not intend to update, any forward-looking statements. We do not endorse any projections regarding future performance made by third parties.