Reinforces Power of Business Model and
Strategy
CDW Corporation (Nasdaq: CDW):
(Dollars in millions, except per share
amounts)
Three Months Ended March 31,
2022
2021
%
Chg.
Net Sales
$
5,949.1
$
4,837.5
23.0
Average Daily Sales1
94.4
76.8
23.0
Gross Profit
1,104.1
795.2
38.8
Operating Income
386.9
323.4
19.6
Net Income
250.2
232.6
7.6
Non-GAAP Operating Income2
462.1
367.7
25.7
Net Income per Diluted Share
$
1.83
$
1.63
12.6
Non-GAAP Net Income per Diluted Share2
$
2.20
$
1.74
26.6
1 There were 63 selling days for both the
three months ended March 31, 2022 and 2021.
2 Non-GAAP measures used in this release
that are not based on accounting principles generally accepted in
the United States of America ("US GAAP") are each defined and
reconciled to the most directly comparable US GAAP measure in the
attached schedules.
CDW Corporation (Nasdaq: CDW), a leading multi-brand provider of
information technology solutions to business, government, education
and healthcare customers in the United States, the United Kingdom
and Canada, today announced first quarter 2022 results. CDW also
announced the approval by its Board of Directors of a quarterly
cash dividend of $0.50 per share to be paid on June 10, 2022 to all
stockholders of record as of the close of business on May 25,
2022.
“We delivered record Net sales and excellent profitability,
reinforcing confidence in our strategy for growth. Our first
quarter results once again highlight the strength of our business
model and the combined power of our diverse customer end markets
and broad product and solutions portfolio," said Christine A.
Leahy, president and chief executive officer, CDW. “Customers
continue to turn to CDW as a trusted advisor with the breadth,
depth, expertise and scale to deliver business-enhancing outcomes
across the full technology stack and lifecycle. I am extremely
proud of the commitment, agility and resolve of our coworkers, who
successfully delivered for customers in a supply constrained
environment.”
“Strong operating results, inclusive of our 2021 acquisition of
Sirius delivered outstanding earnings growth with a 13 and 27
percent increase in GAAP and Non-GAAP earnings per diluted share,”
said Albert J. Miralles, chief financial officer, CDW. "We continue
to intend to use cash flow after dividends to reduce outstanding
debt and achieve our net leverage target range of 2.5 to 3.0 times
by the end of 2022."
“We expect to exceed our initial 2022 outlook to outpace US IT
market growth by 200 to 300 basis points on a constant currency
basis. We will continue to execute our strategy, invest in the
business, and be laser-focused on meeting the needs of our more
than 250,000 customers around the globe and remain the partner of
choice for more than 1,000 leading and emerging technology brands
as the market continues to evolve," concluded Leahy.
First Quarter of 2022
Highlights:
Total Net sales in the first quarter of 2022 were $5,949
million, compared to $4,838 million for the first quarter of 2021,
an increase of 23.0 percent. This increase includes the
contribution from the acquisition of Sirius Computer Solutions
("Sirius") which closed on December 1, 2021. There were 63 selling
days for both the three months ended March 31, 2022 and 2021. Net
sales growth on a constant currency basis increased 23.3 percent.
The first quarter Net sales performance included:
- Total Corporate segment Net sales of $2,628 million, 45.5
percent higher than 2021.
- Total Small Business segment Net sales of $524 million, 21.1
percent higher than 2021.
- Total Public segment Net sales of $2,033 million, 5.8 percent
higher than 2021. Public results were driven by an increase in Net
sales to Healthcare and Government customers of 26.8 percent and
5.4 percent, respectively. Net sales to Education customers
decreased 4.3 percent.
- Net sales for CDW's UK and Canadian operations, combined as
“Other” for financial reporting purposes, were $765 million, 12.8
percent higher than 2021.
Gross profit in the first quarter of 2022 was $1,104 million,
compared to $795 million for 2021, representing an increase of 38.8
percent. Gross profit margin was 18.6 percent in the first quarter
of 2022 versus 16.4 percent for 2021. The increase in Gross profit
margin was primarily driven by more favorable product mix and rate,
higher mix of net service contract revenue, primarily within
Software as a Service, and increased Net sales and margins on
professional services as a result of the recent business
acquisitions.
Total selling and administrative expenses were $717 million in
the first quarter of 2022, compared to $472 million in the first
quarter of 2021, representing an increase of 52.0 percent. The
increase was primarily driven by higher payroll consistent with
higher Gross profit and higher coworker count, including the impact
of the acquisition of Sirius, as well as higher intangible asset
amortization and integration expenses from the acquisition of
Sirius.
Operating income was $387 million in the first quarter of 2022,
compared to $323 million in the first quarter of 2021, representing
an increase of 19.6 percent. Non-GAAP operating income was $462
million in the first quarter of 2022, compared to $368 million in
the first quarter of 2021, representing an increase of 25.7
percent. The Non-GAAP operating income margin was 7.8 percent for
the first quarter of 2022 versus 7.6 percent for the first quarter
of 2021.
Net interest expense was $56 million in the first quarter of
2022, compared to $36 million for the first quarter of 2021. The
increase was primarily driven by additional interest expense from
the $2.5 billion aggregate principal amount of senior notes issued
on December 1, 2021 which were used to fund the acquisition of
Sirius.
The effective tax rate was 24.3 percent in the first quarter of
2022, compared to 19.5 percent in the first quarter of 2021, which
resulted in tax expense of $80 million and $56 million,
respectively. The increase in effective tax rate was primarily
attributable to lower excess tax benefits on equity-based
compensation.
Net income was $250 million in the first quarter of 2022,
compared to $233 million in the first quarter of 2021, representing
an increase of 7.6 percent. Non-GAAP net income was $302 million
for the first quarter of 2022, compared to $249 million in the
first quarter of 2021, representing an increase of 20.9
percent.
Weighted average diluted shares outstanding were 137 million for
the first quarter of 2022, compared to 143 million for 2021. Net
income per diluted share for the first quarter of 2022 was $1.83,
compared to $1.63 for 2021, representing an increase of 12.6
percent. Non-GAAP net income per diluted share for the first
quarter of 2022 was $2.20, compared to $1.74 for 2021, representing
an increase of 26.6 percent.
Forward-Looking Statements
This release contains "forward-looking statements" within the
meaning of the federal securities laws. All statements other than
statements of historical fact are forward-looking statements. These
statements relate to analyses and other information, which are
based on forecasts of future results or events and estimates of
amounts not yet determinable. These statements also relate to our
future prospects, developments and business strategies. We claim
the protection of The Private Securities Litigation Reform Act of
1995 for all forward-looking statements in this release.
These forward-looking statements are identified by the use of
terms and phrases such as "anticipate," "assume," "believe,"
"estimate," "expect," "goal," "intend," "plan," "potential,"
"predict," "project," "target" and similar terms and phrases or
future or conditional verbs such as "could," "may," "should,"
"will," and "would." However, these words are not the exclusive
means of identifying such statements. Although we believe that our
plans, intentions and other expectations reflected in or suggested
by such forward-looking statements are reasonable, we cannot assure
you that we will achieve those plans, intentions or expectations.
All forward-looking statements are subject to risks and
uncertainties that may cause actual results or events to differ
materially from those that we expected.
Important factors that could cause actual results or events to
differ materially from our expectations, or cautionary statements,
are disclosed under the section entitled "Risk Factors" included in
our Annual Report on Form 10-K for the year ended December 31, 2021
and from time to time in our subsequent Quarterly Reports on Form
10-Q and our other US Securities and Exchange Commission ("SEC")
filings and public communications. These factors include, among
others, the COVID-19 pandemic, including resurgences and the
emergence of new variants, and actions taken in response thereto
and the associated impact on our business, results of operations,
cash flows, financial condition and liquidity; inflationary
pressures; level of interest rates; CDW's relationships with vendor
partners and terms of their agreements; continued innovations in
hardware, software and services by CDW's vendor partners;
substantial competition that could reduce CDW's market share; the
continuing development, maintenance and operation of CDW's
information technology systems; potential breaches of data security
and failure to protect our information technology systems from
cybersecurity threats; potential failures to provide high-quality
services to CDW's customers; potential losses of any key personnel,
significant increases in labor costs or ineffective workforce
management; potential adverse occurrences at one of CDW's primary
facilities or third-party data centers, including as a result of
climate change; increases in the cost of commercial delivery
services or disruptions of those services; CDW's exposure to
accounts receivable and inventory risks; the potential failure to
achieve the anticipated benefits of the acquisition of Sirius in
the expected timeframe or at all; future acquisitions or alliances;
fluctuations in CDW's operating results; fluctuations in foreign
currency; global and regional economic and political conditions,
including impacts of the ongoing military conflict between Russia
and Ukraine and related sanctions against Russia; potential
interruptions of the flow of products from suppliers; decreases in
spending on technology products and services; potential failures to
comply with Public segment contracts or applicable laws and
regulations; current and future legal proceedings, investigations
and audits, including intellectual property infringement claims;
changes in laws, including regulations or interpretations thereof,
or the potential failure to meet stakeholder expectations on
environmental sustainability and corporate responsibility matters;
CDW's level of indebtedness and ability to generate sufficient cash
to service such indebtedness; restrictions imposed by agreements
relating to CDW's indebtedness on its operations and liquidity;
changes in, or the discontinuation of, CDW's share repurchase
program or dividend payments; and other risk factors or
uncertainties identified from time to time in CDW's filings with
the SEC. All written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are expressly
qualified in their entirety by those cautionary statements as well
as other cautionary statements that are made from time to time in
our other SEC filings and public communications. You should
evaluate all forward-looking statements in the context of these
risks and uncertainties.
We caution you that the important factors referenced above may
not reflect all of the factors that could cause actual results or
events to differ from our expectations. In addition, we cannot
assure you that we will realize the results or developments we
expect or anticipate or, even if substantially realized, that they
will result in the consequences or affect us or our operations in
the way we expect. The forward-looking statements included in this
release are made only as of the date hereof. We undertake no
obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or
otherwise, except as otherwise required by law.
Non-GAAP Financial Information
Non-GAAP operating income excludes, among other things, charges
related to the amortization of acquisition-related intangible
assets, equity-based compensation and related payroll taxes, and
acquisition and integration expenses. Non-GAAP operating income
margin is defined as Non-GAAP operating income as a percentage of
Net sales. Non-GAAP income before income taxes and Non-GAAP net
income exclude, among other things, charges related to
acquisition-related intangible asset amortization, equity-based
compensation, acquisition and integration expenses, and the
associated tax effects of each. Net sales growth on a constant
currency basis is defined as Net sales growth excluding the impact
of foreign currency translation on Net sales compared to the prior
period.
Non-GAAP operating income, Non-GAAP operating income margin,
Non-GAAP income before income taxes, Non-GAAP net income, Non-GAAP
net income per diluted share and Net sales growth on a constant
currency basis are considered non-GAAP financial measures.
Generally, a non-GAAP financial measure is a numerical measure of a
company’s performance or financial condition that either excludes
or includes amounts that are not normally included or excluded in
the most directly comparable measure calculated and presented in
accordance with US GAAP.
CDW believes these measures provide analysts, investors and
management with helpful information regarding the underlying
operating performance of CDW's business, as they remove the impact
of items that management believes are not reflective of underlying
operating performance. CDW uses these measures to evaluate
period-over-period performance as management believes they provide
a more comparable measure of the underlying business. Certain
non-GAAP financial measures are also used to determine certain
components of performance-based compensation.
CDW's annual targets are provided on a non-GAAP basis because
certain reconciling items are dependent on future events that
either cannot be controlled, such as currency impacts or interest
rates, or reliably predicted because they are not part of CDW's
routine activities, such as refinancing activities or acquisition
and integration expenses.
The financial statement tables that accompany this press release
include a reconciliation of non-GAAP financial measures to the
applicable most comparable US GAAP financial measures. Non-GAAP
measures used by CDW may differ from similar measures used by other
companies, even when similar terms are used to identify such
measures.
About CDW
CDW Corporation (Nasdaq: CDW) is a leading multi-brand provider
of information technology solutions to business, government,
education and healthcare customers in the United States, the United
Kingdom and Canada. A Fortune 500 company and member of the S&P
500 Index, CDW was founded in 1984 and employs approximately 14,000
coworkers. For the trailing twelve months ended March 31, 2022, CDW
generated Net sales of approximately $22 billion. For more
information about CDW, please visit www.CDW.com.
Webcast
CDW Corporation will hold a conference call today, May 4, 2022
at 7:30 a.m. CT/8:30 a.m. ET to discuss its first quarter financial
results. The conference call, which will be broadcast live via the
Internet, and a copy of this press release along with supplemental
slides used during the call, can be accessed on CDW’s website at
investor.cdw.com. For those unable to participate in the live call,
a replay of the webcast will be available at investor.cdw.com
approximately 90 minutes after the completion of the call and will
be accessible on the site for approximately one year.
CDWPR-FI
CDW CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(dollars and shares in millions,
except per-share amounts)
(unaudited)
Three Months Ended March
31,
2022
2021
% Change(i)
Net sales
$
5,949.1
$
4,837.5
23.0
%
Cost of sales
4,845.0
4,042.3
19.9
Gross profit
1,104.1
795.2
38.8
Selling and administrative expenses
717.2
471.8
52.0
Operating income
386.9
323.4
19.6
Interest expense, net
(56.0
)
(35.6
)
57.5
Other (expense) income, net
(0.5
)
1.1
n.m.*
Income before income taxes
330.4
288.9
14.4
Income tax expense
(80.2
)
(56.3
)
42.6
Net income
$
250.2
$
232.6
7.6
%
Net income per common share:
Basic
$
1.85
$
1.65
12.5
%
Diluted
$
1.83
$
1.63
12.6
%
Weighted-average common shares
outstanding:
Basic
134.9
141.1
Diluted
136.7
143.1
*
not meaningful
(i)
There were 63 selling days for both the
three months ended March 31, 2022 and 2021.
CDW CORPORATION AND SUBSIDIARIES NON-GAAP
FINANCIAL MEASURE RECONCILIATIONS
CDW has included reconciliations of Non-GAAP operating income,
Non-GAAP operating income margin, Non-GAAP income before income
taxes, Non-GAAP net income, Non-GAAP net income per diluted share
and Net sales growth on a constant currency basis for the three
months ended March 31, 2022 and 2021 below.
CDW CORPORATION AND
SUBSIDIARIES
NON-GAAP OPERATING INCOME AND
NON-GAAP OPERATING INCOME MARGIN
(dollars in millions)
(unaudited)
Three Months Ended March
31,
2022
% of Net sales
2021
% of Net sales
Operating income, as reported
$
386.9
6.5
%
$
323.4
6.7
%
Amortization of intangibles(i)
40.9
21.6
Equity-based compensation
21.1
15.8
Acquisition and integration expenses
11.7
3.6
Other adjustments
1.5
3.3
Non-GAAP operating income
$
462.1
7.8
%
$
367.7
7.6
%
(i)
Includes amortization expense for
acquisition-related intangible assets, primarily customer
relationships, customer contracts and trade names.
CDW CORPORATION AND
SUBSIDIARIES
NON-GAAP INCOME BEFORE INCOME
TAXES, NON-GAAP NET INCOME
AND NON-GAAP NET INCOME PER
DILUTED SHARE
(dollars and shares in millions,
except per-share amounts)
(unaudited)
Three Months Ended March
31,
2022
2021
Income before Income
Taxes
Income Tax Expense(i)
Net Income
Effective Tax Rate
Income before Income
Taxes
Income Tax Expense(i)
Net Income
Effective Tax Rate
Net Income % Change
US GAAP, as reported
$
330.4
$
(80.2
)
$
250.2
24.3
%
$
288.9
$
(56.3
)
$
232.6
19.5
%
7.6
%
Amortization of intangibles(ii)
40.9
(10.6
)
30.3
21.6
(5.4
)
16.2
Equity-based compensation
21.1
(9.8
)
11.3
15.8
(20.8
)
(5.0
)
Acquisition and integration expenses
11.7
(3.0
)
8.7
3.6
(0.9
)
2.7
Other adjustments
1.4
(0.4
)
1.0
3.7
(0.8
)
2.9
Non-GAAP
$
405.5
$
(104.0
)
$
301.5
25.7
%
$
333.6
$
(84.2
)
$
249.4
25.2
%
20.9
%
US GAAP net income per diluted share
$
1.83
$
1.63
Non-GAAP net income per diluted share
$
2.20
$
1.74
Shares used in computing US GAAP and
Non-GAAP net income per diluted share
136.7
143.1
(i)
Income tax on non-GAAP adjustments
includes excess tax benefits associated with equity-based
compensation.
(ii)
Includes amortization expense for
acquisition-related intangible assets, primarily customer
relationships, customer contracts and trade names.
CDW CORPORATION AND
SUBSIDIARIES
NET SALES GROWTH ON A CONSTANT
CURRENCY BASIS
(dollars in millions)
(unaudited)
Three Months Ended March
31,
2022
2021
%
Change
Net sales, as reported
$
5,949.1
$
4,837.5
23.0
%
Foreign currency translation(ii)
—
(12.6
)
Net sales, on a constant currency
basis
$
5,949.1
$
4,824.9
23.3
%
(i)
There were 63 selling days for both the
three months ended March 31, 2022 and 2021.
(ii)
Represents the effect of translating the
prior year results of CDW UK and CDW Canada at the average exchange
rates applicable in the current year.
CDW CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(dollars in millions)
March 31, 2022
December 31, 2021
March 31, 2021
Assets
(unaudited)
(unaudited)
Current assets:
Cash and cash equivalents
$
386.9
$
258.1
$
878.6
Accounts receivable, net of allowance for
credit losses
of $22.0, $20.4, and $27.0,
respectively
4,613.5
4,499.4
3,234.1
Merchandise inventory
1,054.6
927.6
745.1
Miscellaneous receivables
449.8
435.5
396.6
Prepaid expenses and other
366.0
357.5
215.4
Total current assets
6,870.8
6,478.1
5,469.8
Operating lease right-of-use assets
164.0
155.6
128.3
Property and equipment, net
195.6
195.8
175.5
Goodwill
4,376.5
4,382.9
2,812.4
Other intangible assets, net
1,584.6
1,628.1
419.2
Other assets
322.3
358.9
48.3
Total assets
$
13,513.8
$
13,199.4
$
9,053.5
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable - trade
$
3,198.3
$
3,114.2
$
2,050.8
Accounts payable - inventory financing
564.9
448.3
344.8
Current maturities of long-term debt
83.9
102.7
19.6
Contract liabilities
443.8
402.9
326.5
Accrued expenses and other current
liabilities
1,173.7
1,027.9
967.6
Total current liabilities
5,464.6
5,096.0
3,709.3
Long-term liabilities:
Debt
6,514.8
6,755.8
3,911.1
Deferred income taxes
219.3
222.3
29.2
Operating lease liabilities
190.6
184.2
165.1
Other liabilities
231.4
235.4
68.5
Total long-term liabilities
7,156.1
7,397.7
4,173.9
Total stockholders’ equity
893.1
705.7
1,170.3
Total liabilities and stockholders’
equity
$
13,513.8
$
13,199.4
$
9,053.5
CDW CORPORATION AND
SUBSIDIARIES
NET SALES DETAIL
(dollars in millions)
(unaudited)
Three Months Ended March
31,
2022
2021
% Change
Corporate
$
2,627.6
$
1,805.6
45.5
%
Small Business
524.0
432.7
21.1
Public
Government
543.9
516.1
5.4
Education
902.8
943.3
(4.3
)
Healthcare
586.3
462.3
26.8
Total Public
2,033.0
1,921.7
5.8
Other
764.5
677.5
12.8
Total Net sales
$
5,949.1
$
4,837.5
23.0
%
(i)
There were 63 selling days for both the
three months ended March 31, 2022 and 2021.
CDW CORPORATION AND
SUBSIDIARIES
DEBT AND WORKING CAPITAL
INFORMATION
(dollars in millions)
March 31, 2022
December 31, 2021
March 31, 2021
(unaudited)
(unaudited)
Debt and Revolver Availability
Cash and cash equivalents
$
386.9
$
258.1
$
878.6
Total debt
6,598.7
6,858.5
3,930.7
Revolver availability
1,042.9
987.3
1,260.0
Cash plus revolver availability
1,429.8
1,245.4
2,138.6
Working Capital(i)
Days of sales outstanding
67
65
57
Days of supply in inventory
17
17
16
Days of purchases outstanding
(64
)
(58
)
(51
)
Cash conversion cycle
20
24
22
(i)
Based on a rolling three-month
average.
CDW CORPORATION AND
SUBSIDIARIES
CASH FLOW INFORMATION
(dollars in millions)
(unaudited)
Three Months Ended March
31,
2022
2021
Cash flows provided by operating
activities
$
380.8
$
344.6
Capital expenditures(i)
(41.3
)
(20.7
)
Acquisition of business, net of cash
acquired
—
(212.9
)
Cash flows used in investing
activities
(41.3
)
(233.6
)
Net change in accounts payable - inventory
financing
126.7
(180.3
)
Financing payments for revenue generating
assets
—
(42.9
)
Other cash flows used in financing
activities
(334.8
)
(420.3
)
Cash flows used in financing
activities
(208.1
)
(643.5
)
Effect of exchange rate changes on cash
and cash equivalents
(2.6
)
0.9
Net increase (decrease) in cash and cash
equivalents
128.8
(531.6
)
Cash and cash equivalents - beginning of
period
258.1
1,410.2
Cash and cash equivalents - end of
period
$
386.9
$
878.6
Supplementary disclosure of cash flow
information:
Interest paid
$
(17.5
)
$
(19.2
)
Income taxes paid, net
$
(11.5
)
$
(10.1
)
(i)
Includes expenditures for revenue
generating assets.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220504005140/en/
Investor Inquiries Steven O'Brien
Vice President, Investor Relations (847) 968-0238
investorrelations@cdw.com
Media Inquiries Sara Granack Vice
President, Corporate Communications (847) 419-7411
mediarelations@cdw.com
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