Insight Enterprises(NSIT) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 2021, the company reported net sales of $2.2 billion, a 2% increase compared to Q1 2020, driven by increases in software and services net sales [25] - Gross margin was 16.1%, and SG&A expenses decreased by 2% in constant currency, while adjusted earnings from operations rose by 3% year-over-year to$ 68 million [25][10] - Adjusted diluted earnings per share was $1.30, compared to$ 1.18 on a GAAP basis [25] Business Line Data and Key Metrics Changes - North America net sales were $1.7 billion, down 1% year-over-year, primarily due to lower hardware sales from supply constraints [26] - EMEA net sales increased by 5% in constant currency, with adjusted earnings from operations rising by 50% in constant currency to$ 11 million [27] - APAC net sales were $59 million, with a 2% increase year-over-year, and adjusted earnings from operations rose by 21% in constant currency [28] Market Data and Key Metrics Changes - The company experienced low single-digit growth in corporate and enterprise clients, with strong growth in the public sector, particularly K-12 education [10] - Industry analysts expect mid single-digit growth across hardware, software, and services sales for 2021, with the macro recovery showing positive indicators [18] Company Strategy and Development Direction - The company aims to innovate to capture market share in high-growth areas, develop solutions for better business outcomes, and optimize client experience through operational excellence [17] - The focus is on integrated solutions, including digital innovation, data center and cloud services, and modern workforce solutions [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about market recovery strengthening throughout 2021, maintaining guidance for net sales growth between 4% and 8% [18][34] - The company anticipates that supply constraints due to chip shortages will continue but expects healthy hardware booking trends and elevated backlog to drive sales [19] Other Important Information - The Board of Directors approved a stock repurchase program of up to$ 125 million, which will commence in 2021 [33] - The company has been recognized as one of the best employers for diversity in 2021, ranking 140 out of 500 [20] Q&A Session Summary Question: Expectations for acceleration in the second half of the year - Management believes the second half will see acceleration due to easier comparisons and elevated backlog, despite semiconductor shortages [41][42] Question: Gross margin concerns - Gross margin was down slightly due to hardware sales carrying lower margins, but management expects margins to remain flat for 2021 [43][45] Question: Market share gains - The company is gaining market share in software, particularly in cloud services, while facing challenges in hardware due to supply constraints [71] Question: Inflation impact - Management is not currently seeing inflation impact but acknowledges potential price increases due to semiconductor shortages [60] Question: Competitive landscape and consolidation - Larger players are growing faster than smaller competitors, and the pandemic has highlighted the importance of IT, leading to potential consolidation in the industry [65]