Insight's EMEA business made an operating loss in the first quarter, affected by restructuring costs and severance expenses
In the first quarter of 2017, consolidated net sales at the US-headquartered IT services firm were $1.48bn, up 26% year over year. “This improvement reflects both strong organic growth and the acquisition of Datalink on 6 January this year,” said Insight. Consolidated earnings from operations in the first quarter of 2017 increased 68% year over year to $23m.
“In the first quarter, our team delivered double digit organic sales and gross profit growth across our largely fixed expense base, which drove adjusted earnings from operations up more than 100% year over year,” said Ken Lamneck, Insight CEO. “Through new client wins and new projects with existing clients in the first quarter, we gained market share in the data centre and software categories, while holding our own with devices.”
The acquisition of Datalink added about $130 million to the top line and was a “small positive contributor” to adjusted earnings from operations for the quarter, said the firm. “Integration efforts are underway and we remain excited about the long-term opportunities for the combined business,” said Lamneck.
But restructuring and job losses in EMEA are having a negative effect. While net sales in EMEA increased 9% to $330.4m and gross profits of $42.5 million (down 2%) were reported, EMEA posted an operating loss of $1.1m – compared to an operating profit of of $2.7 million in the first quarter of 2016. Over $3.5m was spent on restructuring and job losses in the quarter.
For the full year 2017, the group expects its whole business to deliver sales growth of “15% to 18% compared to 2016”. But this outlook “excludes severance and restructuring and acquisition-related expenses incurred during the first quarter of 2017” and “those that may be incurred during the balance of 2017”.