Strong Margins Reinforce Power of Business
Model and Strategy
CDW Corporation (Nasdaq:CDW):
(Dollars in millions, except per share
amounts)
Three Months Ended December
31,
Year Ended December 31,
2023
2022
%
Chg.
2023
2022
%
Chg.
Net Sales
$
5,018.5
$
5,438.3
(7.7
)%
$
21,376.0
$
23,748.7
(10.0
)%
Average Daily Sales1
79.7
86.3
(7.7
)
84.2
93.5
(10.0
)
Gross Profit
1,153.8
1,181.1
(2.3
)
4,652.4
4,686.6
(0.7
)
Operating Income
435.0
446.6
(2.6
)
1,680.9
1,735.2
(3.1
)
Net Income
296.1
287.2
3.1
1,104.3
1,114.5
(0.9
)
Net Income per Diluted Share
$
2.18
$
2.09
4.3
$
8.10
$
8.13
(0.4
)
Non-GAAP Operating Income2
518.7
523.1
(0.8
)
2,039.1
2,050.5
(0.6
)
Non-GAAP Net Income per Diluted Share2
$
2.57
$
2.50
2.8
%
$
9.88
$
9.79
0.9
%
1 Defined as Net sales divided by the
number of selling days. There were 63 selling days for both the
three months ended December 31, 2023 and 2022. There were 254
selling days for both the years ended December 31, 2023 and
2022.
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 measures 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 fourth quarter and year end 2023
results. CDW also announced the approval by its Board of Directors
of a $750 million increase to its share repurchase authorization
and a quarterly cash dividend of $0.62 per share, which is 5
percent higher than the prior year period, to be paid on March 12,
2024 to all stockholders of record as of the close of business on
February 26, 2024.
"Strong margins, both for the quarter and the year, highlight
the power of our execution excellence and financial rigor when
underpinned by the strategic investments we have made over the past
five years," said Christine A. Leahy, chair and chief executive
officer, CDW. "In this period of ongoing economic uncertainty,
customers are increasingly turning to CDW to address
mission-critical needs across the full IT solutions stack and
lifecycle, and our value proposition is stronger than ever."
"Healthy operating results, our resilient business model, and
our disciplined approach to capital allocation delivered growth in
earnings per diluted share for the quarter and record cash flows
from operations for the year," said Albert J. Miralles, chief
financial officer, CDW. "We continue to convert earnings to cash at
a productive rate, ahead of our targets, and optimize our use of
cash flow through dividends and share repurchases."
"Looking ahead to 2024, we remain well-positioned to continue
our track record of outpacing the US IT market growth by 200 to 300
basis points on a constant currency basis. To accomplish this, we
will maintain our laser focus on meeting the needs of our more than
250,000 customers and remaining the partner of choice for more than
1,000 leading and emerging technology brands as the technology
market continues to evolve," concluded Leahy.
Fourth Quarter of 2023
Highlights:
Net sales in the fourth quarter of 2023 were $5,019 million,
compared to $5,438 million in the fourth quarter of 2022, a
decrease of 7.7 percent. There were 63 selling days for both the
three months ended December 31, 2023 and 2022. Net sales on a
constant currency basis decreased 8.1 percent. The decline in Net
sales was driven by all operating segments. Continued economic
uncertainty has led customers to focus their business priorities,
resulting in a reduction or delays in their hardware spend. Fourth
quarter Net sales performance included:
- Corporate segment Net sales of $2,286 million, 8.0 percent
lower than 2022.
- Small Business segment Net sales of $370 million, 12.7 percent
lower than 2022.
- Public segment Net sales of $1,776 million, 4.1 percent lower
than 2022. Public results were driven by decreased Net sales to
Education and Healthcare customers by 11.7 percent and 4.7 percent,
respectively, while Government customers increased by 4.5
percent.
- Net sales for CDW's UK and Canadian operations, combined as
"Other" for financial reporting purposes, of $587 million, 13.6
percent lower than 2022.
Gross profit was $1,154 million in the fourth quarter of 2023,
compared to $1,181 million in the fourth quarter of 2022,
representing a decrease of 2.3 percent. Gross profit margin was
23.0 percent in the fourth quarter of 2023 versus 21.7 percent in
the fourth quarter of 2022. The increase in Gross profit margin was
primarily driven by a more favorable contribution of netted down
revenue, primarily software as a service.
Selling and administrative expenses were $719 million in the
fourth quarter of 2023, compared to $735 million in the fourth
quarter of 2022, representing a decrease of 2.1 percent. This
decrease was primarily due to reduced discretionary expenses,
partially offset by increased payroll expenses.
Operating income was $435 million in the fourth quarter of 2023,
compared to $447 million in the fourth quarter of 2022,
representing a decrease of 2.6 percent. Non-GAAP operating income
was $519 million in the fourth quarter of 2023, compared to $523
million in the fourth quarter of 2022, representing a decrease of
0.8 percent. The Operating income margin and Non-GAAP operating
income margin were 8.7 percent and 10.3 percent, respectively, in
the fourth quarter of 2023 versus 8.2 percent and 9.6 percent,
respectively, in the fourth quarter of 2022.
Interest expense, net includes interest expense and interest
income. Interest expense, net was $53 million in the fourth quarter
of 2023, compared to $59 million in the fourth quarter of 2022,
representing a decrease of 10.3 percent. Interest expense, net
decreased as a result of higher interest income earned on cash
balances and lower debt levels, partially offset by higher variable
interest rate on the senior unsecured term loan.
The effective tax rate was 22.2 percent in the fourth quarter of
2023, compared to 24.7 percent in the fourth quarter of 2022, which
resulted in tax expense of $85 million and $94 million,
respectively. The decrease in the effective tax rate is primarily
attributable to higher excess tax benefits on equity-based
compensation.
Net income was $296 million in the fourth quarter of 2023,
compared to $287 million in the fourth quarter of 2022,
representing an increase of 3.1 percent. Non-GAAP net income was
$349 million in the fourth quarter of 2023, compared to $343
million in the fourth quarter of 2022, representing an increase of
1.7 percent.
Weighted average diluted shares outstanding were 136 million for
the fourth quarter of 2023, compared to 137 million for the fourth
quarter of 2022. Net income per diluted share was $2.18 in the
fourth quarter of 2023, compared to $2.09 in the fourth quarter of
2022, representing an increase of 4.3 percent. Non-GAAP net income
per diluted share was $2.57 in the fourth quarter of 2023, compared
to $2.50 in the fourth quarter of 2022, representing an increase of
2.8 percent.
Full Year 2023 Highlights:
Net sales in 2023 were $21,376 million, compared to $23,749
million in 2022, a decrease of 10.0 percent. There were 254 selling
days for both the years ended December 31, 2023 and 2022. Net sales
on a constant currency basis decreased 9.9 percent. The decline in
Net sales was driven by all operating segments. Continued economic
uncertainty has led customers to focus their business priorities,
resulting in a reduction or delays in their hardware spend. Full
year Net sales performance included:
- Corporate segment Net sales of $8,961 million, 13.4 percent
lower than 2022.
- Small Business segment Net sales of $1,556 million, 19.7
percent lower than 2022.
- Public segment Net sales of $8,306 million, 2.9 percent lower
than 2022. Public results were driven by a decrease in Net sales to
Education and Healthcare customers of 8.9 percent and 0.7 percent,
respectively, while Government customers increased 3.7
percent.
- Net sales for CDW's UK and Canadian operations, combined as
"Other" for financial reporting purposes, of $2,554 million, 12.2
percent lower than 2022.
Gross profit was $4,652 million in 2023, compared to $4,687
million for 2022, representing a decrease of 0.7 percent. Gross
profit margin was 21.8 percent in 2023 versus 19.7 percent in 2022.
The increase in Gross profit margin was primarily driven by a more
favorable contribution of netted down revenue, primarily software
as a service, and higher product margin due to lower mix in
notebooks and increased margin rate across various categories.
Selling and administrative expenses were $2,972 million in 2023,
compared to $2,951 million in 2022, representing an increase of 0.7
percent. This increase was primarily driven by costs related to the
reduction of our workforce and real estate portfolio (collectively
"workplace optimization") and increased payroll expenses associated
with higher year-over-year average coworker count, partially offset
by reduced discretionary expenses.
Operating income was $1,681 million in 2023, compared to $1,735
million in 2022, representing a decrease of 3.1 percent. Non-GAAP
operating income was $2,039 million in 2023, compared to $2,051
million for 2022, representing a decrease of 0.6 percent. The
Operating income margin and Non-GAAP operating income margin were
7.9 percent and 9.5 percent, respectively, for 2023 versus 7.3
percent and 8.6 percent, respectively, for 2022.
Interest expense, net includes interest expense and interest
income. Interest expense, net was $227 million in 2023, compared to
$236 million in 2022, representing a decrease of 3.9 percent.
Interest expense, net decreased as a result of lower debt levels
and higher interest income earned on cash balances, partially
offset by higher variable interest rate on the senior unsecured
term loan.
The effective tax rate was 23.9 percent in 2023, compared to
25.1 percent in 2022, which resulted in tax expense of $346 million
and $373 million, respectively. The decrease in the effective tax
rate is primarily attributable to higher excess tax benefits on
equity-based compensation.
Net income was $1,104 million in 2023, compared to $1,115
million in 2022, representing a decrease of 0.9 percent. Non-GAAP
net income was $1,346 million in 2023, compared to $1,342 million
in 2022, representing an increase of 0.4 percent.
Weighted average diluted shares outstanding were 136 million in
2023, compared to 137 million in 2022. Net income per diluted share
was $8.10 in 2023, compared to $8.13 in 2022, representing a
decrease of 0.4 percent. Non-GAAP net income per diluted share was
$9.88 in 2023, compared to $9.79 in 2022, representing an increase
of 0.9 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, growth, 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 sections entitled "Risk Factors" and
"Trends and Key Factors Affecting our Financial Performance"
included in our Annual Report on Form 10-K for the year ended
December 31, 2022, 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, inflationary pressures; level
of interest rates; CDW's relationships with vendor partners and
terms of their agreements; continued innovations in technology by
CDW's vendor partners; the use or capabilities of artificial
intelligence; 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; future acquisitions or
alliances; fluctuations in CDW's operating results; fluctuations in
foreign currency; global and regional economic and political
conditions, including the impact of pandemics such as COVID-19 and
armed conflicts; potential interruptions of the flow of products
from suppliers; decreases in spending on technology products and
services, including impacts of adverse change in government
spending policies; 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; restrictions imposed by agreements relating to CDW's
indebtedness on its operations and liquidity; failure to maintain
the ratings assigned to CDW's debt securities by rating agencies;
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 made in this release 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 Measures
Non-GAAP operating income excludes, among other things, charges
related to the amortization of acquisition-related intangible
assets, equity-based compensation and the associated payroll taxes,
acquisition and integration expenses, transformation initiatives
and workplace optimization. Non-GAAP operating income margin is
defined as Non-GAAP operating income as a percentage of Net sales.
Non-GAAP net income excludes, among other things, charges related
to acquisition-related intangible asset amortization, equity-based
compensation, acquisition and integration expenses, transformation
initiatives, workplace optimization and the associated tax effects
of each. Net sales on a constant currency basis is defined as Net
sales excluding the impact of foreign currency translation on Net
sales compared to the prior period. Free cash flow is defined as
cash flows provided by operating activities less capital
expenditures. Adjusted free cash flow is defined as Free cash flow
adjusted to include certain cash flows from financing activities
incurred in the normal course of operations or as capital
expenditures.
Non-GAAP operating income, Non-GAAP operating income margin,
Non-GAAP net income, Non-GAAP net income per diluted share, Net
sales on a constant currency basis, Free cash flow and Adjusted
free cash flow 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. Non-GAAP measures used by management may
differ from similar measures used by other companies, even when
similar terms are used to identify such measures.
CDW believes Non-GAAP operating income, Non-GAAP operating
income margin, Non-GAAP net income, Non-GAAP net income per diluted
share and Net sales on a constant currency basis provide analysts,
investors and management with useful 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. We
also present Free cash flow and Adjusted free cash flow as we
believe these measures provide more information regarding our
liquidity and capital resources. Certain non-GAAP financial
measures are also used to determine certain components of
performance-based compensation.
CDW's outlook is 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.
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 15,100
coworkers. For the year ended December 31, 2023, CDW generated Net
sales of approximately $21 billion. For more information about CDW,
please visit www.CDW.com.
Webcast
CDW Corporation will hold a conference call today, February 7,
2024 at 7:30 a.m. CT/8:30 a.m. ET to discuss its fourth quarter and
full year 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)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
% Change(i)
2023
2022
% Change(i)
(unaudited)
(unaudited)
(unaudited)
Net sales
$
5,018.5
$
5,438.3
(7.7
)%
$
21,376.0
$
23,748.7
(10.0
)%
Cost of sales
3,864.7
4,257.2
(9.2
)
16,723.6
19,062.1
(12.3
)
Gross profit
1,153.8
1,181.1
(2.3
)
4,652.4
4,686.6
(0.7
)
Selling and administrative expenses
718.8
734.5
(2.1
)
2,971.5
2,951.4
0.7
Operating income
435.0
446.6
(2.6
)
1,680.9
1,735.2
(3.1
)
Interest expense, net
(53.3
)
(59.4
)
(10.3
)
(226.6
)
(235.7
)
(3.9
)
Other expense, net
(1.0
)
(6.0
)
nm*
(4.1
)
(11.7
)
nm*
Income before income taxes
380.7
381.2
(0.1
)
1,450.2
1,487.8
(2.5
)
Income tax expense
(84.6
)
(94.0
)
(10.0
)
(345.9
)
(373.3
)
(7.3
)
Net income
$
296.1
$
287.2
3.1
%
$
1,104.3
$
1,114.5
(0.9
) %
Net income per common share:
Basic
$
2.20
$
2.12
4.2
%
$
8.20
$
8.24
(0.4
)%
Diluted
$
2.18
$
2.09
4.3
%
$
8.10
$
8.13
(0.4
)%
Weighted-average common shares
outstanding:
Basic
134.1
135.5
134.6
135.2
Diluted
135.9
137.4
136.3
137.0
* Not meaningful
(i)
There were 63 selling days for both the three months ended
December 31, 2023 and 2022. There were 254 selling days for both
the years ended December 31, 2023 and 2022. Average Daily Sales is
defined as Net sales divided by the number of selling days.
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 net income, Non-GAAP net
income per diluted share and Net sales on a constant currency basis
for the three months and years ended December 31, 2023 and 2022
below. In addition, a reconciliation of Free cash flow and Adjusted
free cash flow is included for the years ended December 31, 2023
and 2022.
CDW CORPORATION AND
SUBSIDIARIES
NON-GAAP OPERATING INCOME AND
NON-GAAP OPERATING INCOME MARGIN
(dollars in millions)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
% of Net sales
2022
% of Net sales
2023
% of Net sales
2022
% of Net sales
Operating income, as reported
$
435.0
8.7
%
$
446.6
8.2
%
$
1,680.9
7.9
%
$
1,735.2
7.3
%
Amortization of intangibles(i)
38.2
41.5
154.4
167.9
Equity-based compensation
22.1
19.7
93.7
91.1
Acquisition and integration expenses
5.3
12.0
30.0
48.3
Transformation initiatives(ii)
11.1
2.9
27.1
6.3
Workplace optimization(iii)
5.2
—
47.7
—
Other adjustments
1.8
0.4
5.3
1.7
Non-GAAP operating income
$
518.7
10.3
%
$
523.1
9.6
%
$
2,039.1
9.5
%
$
2,050.5
8.6
%
(i)
Includes amortization expense for
acquisition-related intangible assets, primarily customer
relationships, customer contracts and trade names.
(ii)
Includes costs related to
strategic transformation initiatives focused on optimizing various
operations and systems.
(iii)
Includes costs related to the
workforce reduction program and charges related to the reduction of
our real estate lease portfolio.
CDW CORPORATION AND
SUBSIDIARIES
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 December
31,
2023
2022
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
$
380.7
$
(84.6
)
$
296.1
22.2
%
$
381.2
$
(94.0
)
$
287.2
24.7
%
3.1
%
Amortization of intangibles(ii)
38.2
(10.0
)
28.2
41.5
(10.8
)
30.7
Equity-based compensation
22.1
(14.9
)
7.2
19.7
(6.7
)
13.0
Acquisition and integration expenses
5.3
(1.4
)
3.9
12.0
(3.0
)
9.0
Transformation initiatives(iii)
11.1
(2.9
)
8.2
2.9
(0.8
)
2.1
Workplace optimization(iv)
5.2
(1.3
)
3.9
—
—
—
Net loss on extinguishment of long-term
debt
—
—
—
1.6
(0.4
)
1.2
Other adjustments
1.8
(0.2
)
1.6
0.4
(0.2
)
0.2
Non-GAAP
$
464.4
$
(115.3
)
$
349.1
24.8
%
$
459.3
$
(115.9
)
$
343.4
25.2
%
1.7
%
US GAAP net income per diluted share
$
2.18
$
2.09
Non-GAAP net income per diluted share
$
2.57
$
2.50
Shares used in computing US GAAP and
Non-GAAP net income per diluted share
135.9
137.4
(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.
(iii)
Includes costs related to strategic transformation initiatives
focused on optimizing various operations and systems.
(iv)
Includes costs related to the workforce reduction program and
charges related to the reduction of our real estate lease
portfolio.
CDW CORPORATION AND
SUBSIDIARIES
NON-GAAP NET INCOME
AND NON-GAAP NET INCOME PER
DILUTED SHARE
(dollars and shares in millions,
except per-share amounts)
(unaudited)
Year Ended December
31,
2023
2022
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
$
1,450.2
$
(345.9
)
$
1,104.3
23.9
%
$
1,487.8
$
(373.3
)
$
1,114.5
25.1
%
(0.9
)%
Amortization of intangibles(ii)
154.4
(40.2
)
114.2
167.9
(44.6
)
123.3
Equity-based compensation
93.7
(47.6
)
46.1
91.1
(30.4
)
60.7
Acquisition and integration expenses
30.0
(7.8
)
22.2
48.3
(12.4
)
35.9
Transformation initiatives(iii)
27.1
(7.1
)
20.0
6.3
(1.6
)
4.7
Workplace optimization(iv)
47.7
(12.4
)
35.3
—
—
—
Net loss on extinguishment of long-term
debt
—
—
—
1.6
(0.4
)
1.2
Other adjustments
5.3
(1.2
)
4.1
1.7
(0.5
)
1.2
Non-GAAP
$
1,808.4
$
(462.2
)
$
1,346.2
25.6
%
$
1,804.7
$
(463.2
)
$
1,341.5
25.7
%
0.4
%
US GAAP net income per diluted share
$
8.10
$
8.13
Non-GAAP net income per diluted share
$
9.88
$
9.79
Shares used in computing US GAAP and
Non-GAAP net income per diluted share
136.3
137.0
(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.
(iii)
Includes costs related to
strategic transformation initiatives focused on optimizing various
operations and systems.
(iv)
Includes costs related to the
workforce reduction program and charges related to the reduction of
our real estate lease portfolio.
CDW CORPORATION AND
SUBSIDIARIES
NET SALES CHANGE ON A CONSTANT
CURRENCY BASIS
(dollars in millions)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
% Change(i)
2023
2022
% Change(i)
Net sales, as reported
$
5,018.5
$
5,438.3
(7.7
)%
$
21,376.0
$
23,748.7
(10.0
)%
Foreign currency translation(ii)
—
23.8
—
(28.2
)
Net sales, on a constant currency
basis
$
5,018.5
$
5,462.1
(8.1
)%
$
21,376.0
$
23,720.5
(9.9
)%
(i)
There were 63 selling days for
both the three months ended December 31, 2023 and 2022. There were
254 selling days for both the years ended December 31, 2023 and
2022. Average Daily Sales is defined as Net sales divided by the
number of selling days.
(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)
December 31, 2023
December 31, 2022
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$
588.7
$
315.2
Accounts receivable, net of allowance for
credit losses of $28.8 and $25.7, respectively
4,567.5
4,461.3
Merchandise inventory
668.1
800.2
Miscellaneous receivables
470.5
489.1
Prepaid expenses and other
410.2
498.2
Total current assets
6,705.0
6,564.0
Operating lease right-of-use assets
128.8
149.2
Property and equipment, net
195.5
188.8
Goodwill
4,413.4
4,342.7
Other intangible assets, net
1,369.7
1,490.7
Other assets
472.2
396.1
Total assets
$
13,284.6
$
13,131.5
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable - trade
$
2,881.0
$
2,821.3
Accounts payable - inventory financing
430.9
519.0
Current maturities of long-term debt
613.1
56.3
Contract liabilities
487.4
485.5
Accrued expenses and other liabilities
1,029.6
1,065.0
Total current liabilities
5,442.0
4,947.1
Long-term liabilities:
Debt
5,031.8
5,866.4
Deferred income taxes
171.4
203.4
Operating lease liabilities
164.0
175.2
Other liabilities
432.9
336.1
Total long-term liabilities
5,800.1
6,581.1
Total stockholders’ equity
2,042.5
1,603.3
Total liabilities and stockholders’
equity
$
13,284.6
$
13,131.5
CDW CORPORATION AND
SUBSIDIARIES
NET SALES DETAIL
(dollars in millions)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
% Change(i)
2023
2022
% Change(i)
(unaudited)
(unaudited)
(unaudited)
Corporate
$
2,285.6
$
2,484.0
(8.0
)%
$
8,960.8
$
10,350.1
(13.4
)%
Small Business
370.0
423.7
(12.7
)
1,556.0
1,938.9
(19.7
)
Public:
Government
660.7
632.5
4.5
2,669.1
2,574.3
3.7
Education
579.1
656.2
(11.7
)
3,298.3
3,621.4
(8.9
)
Healthcare
535.9
562.3
(4.7
)
2,338.3
2,355.6
(0.7
)
Total Public
1,775.7
1,851.0
(4.1
)
8,305.7
8,551.3
(2.9
)
Other
587.2
679.6
(13.6
)
2,553.5
2,908.4
(12.2
)
Total Net sales
$
5,018.5
$
5,438.3
(7.7
)%
$
21,376.0
$
23,748.7
(10.0
)%
(i)
There were 63 selling days for both the
three months ended December 31, 2023 and 2022. There were 254
selling days for both the years ended December 31, 2023 and 2022.
Average Daily Sales is defined as Net sales divided by the number
of selling days.
CDW CORPORATION AND
SUBSIDIARIES
TIMING OF REVENUE
RECOGNITION
(dollars in millions)
(unaudited)
Three Months Ended December
31, 2023
Corporate
Small Business
Public
Other
Total
Timing of Revenue Recognition
Transferred at a point in time where CDW
is principal
$
1,901.1
$
320.8
$
1,552.5
$
493.9
$
4,268.3
Transferred at a point in time where CDW
is agent
214.7
38.5
118.5
37.0
408.7
Transferred over time where CDW is
principal
169.8
10.7
104.7
56.3
341.5
Total Net sales
$
2,285.6
$
370.0
$
1,775.7
$
587.2
$
5,018.5
Three Months Ended December
31, 2022
Corporate
Small Business
Public
Other
Total
Timing of Revenue Recognition
Transferred at a point in time where CDW
is principal
$
2,138.0
$
376.5
$
1,655.0
$
595.6
$
4,765.1
Transferred at a point in time where CDW
is agent
202.1
36.1
97.6
26.7
362.5
Transferred over time where CDW is
principal
143.9
11.1
98.4
57.3
310.7
Total Net sales
$
2,484.0
$
423.7
$
1,851.0
$
679.6
$
5,438.3
CDW CORPORATION AND
SUBSIDIARIES
TIMING OF REVENUE
RECOGNITION
(dollars in millions)
(unaudited)
Year Ended December 31,
2023
Corporate
Small Business
Public
Other
Total
Timing of Revenue Recognition
Transferred at a point in time where CDW
is principal
$
7,515.7
$
1,374.1
$
7,411.1
$
2,212.0
$
18,512.9
Transferred at a point in time where CDW
is agent
778.0
145.3
480.6
117.9
1,521.8
Transferred over time where CDW is
principal
667.1
36.6
414.0
223.6
1,341.3
Total Net sales
$
8,960.8
$
1,556.0
$
8,305.7
$
2,553.5
$
21,376.0
For the year ended December
31, 2022
Corporate
Small Business
Public
Other
Total
Timing of Revenue Recognition
Transferred at a point in time where CDW
is principal
$
8,971.4
$
1,751.1
$
7,717.1
$
2,576.5
$
21,016.1
Transferred at a point in time where CDW
is agent
749.3
140.1
426.9
97.7
1,414.0
Transferred over time where CDW is
principal
629.4
47.7
407.3
234.2
1,318.6
Total Net sales
$
10,350.1
$
1,938.9
$
8,551.3
$
2,908.4
$
23,748.7
CDW CORPORATION AND
SUBSIDIARIES
DEBT AND WORKING CAPITAL
INFORMATION
(dollars in millions)
(unaudited)
December 31, 2023
December 31, 2022
Debt and Revolver Availability
Cash and cash equivalents
$
588.7
$
315.2
Total debt
5,644.9
5,922.7
Revolver availability
1,208.1
1,083.6
Cash plus revolver availability
1,796.8
1,398.8
Working Capital(i)
Days of sales outstanding
77
71
Days of supply in inventory
13
17
Days of purchases outstanding
(73
)
(67
)
Cash conversion cycle
17
21
(i)
Based on a rolling three-month
average.
CDW CORPORATION AND
SUBSIDIARIES
CASH FLOW INFORMATION
(dollars in millions)
Year Ended December
31,
2023
2022
(unaudited)
Cash flows provided by operating
activities
$
1,598.7
$
1,335.9
Capital expenditures
(148.2
)
(127.8
)
Acquisition of businesses, net of cash
acquired
(76.4
)
(36.7
)
Other
(5.0
)
—
Cash flows used in investing
activities
(229.6
)
(164.5
)
Net change in accounts payable - inventory
financing
(23.7
)
84.6
Other cash flows used in financing
activities
(1,075.0
)
(1,186.7
)
Cash flows used in financing
activities
(1,098.7
)
(1,102.1
)
Effect of exchange rate changes on cash
and cash equivalents
3.1
(12.2
)
Net increase in cash and cash
equivalents
273.5
57.1
Cash and cash equivalents - beginning of
period
315.2
258.1
Cash and cash equivalents - end of
period
$
588.7
$
315.2
Supplementary disclosure of cash flow
information:
Interest paid
$
(233.2
)
$
(224.3
)
Income taxes paid, net
$
(401.4
)
$
(362.2
)
CDW CORPORATION AND
SUBSIDIARIES
FREE CASH FLOW AND ADJUSTED
FREE CASH FLOW RECONCILIATION
(dollars in millions)
(unaudited)
Year Ended December
31,
2023
2022
Net cash provided by operating
activities
$
1,598.7
$
1,335.9
Capital expenditures
(148.2
)
(127.8
)
Free cash flow
1,450.5
1,208.1
Net change in accounts payable - inventory
financing
(23.7
)
84.6
Adjusted free cash flow(i)
$
1,426.8
$
1,292.7
(i)
Defined as Cash flows provided by
operating activities less capital expenditures, adjusted to include
cash flows from financing activities that relate to the purchase of
inventory.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240207242542/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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