Record Margins Reinforce Power of Business
Model and Strategy
CDW Corporation (Nasdaq: CDW)
(Dollars in millions, except per share
amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
%
Chg.
2023
2022
%
Chg.
Net Sales
$
5,628.3
$
6,215.5
(9.4
)
$
16,357.5
$
18,310.4
(10.7
)
Average Daily Sales1
89.3
97.1
(8.0
)
85.6
95.9
(10.7
)
Gross Profit
1,227.7
1,233.2
(0.4
)
3,498.6
3,505.5
(0.2
)
Operating Income
478.4
466.4
2.6
1,245.9
1,288.6
(3.3
)
Net Income
315.5
297.8
5.9
808.2
827.3
(2.3
)
Non-GAAP Operating Income2
556.3
549.0
1.3
1,520.4
1,527.4
(0.5
)
Net Income per Diluted Share
$
2.32
$
2.17
6.9
$
5.92
$
6.04
(2.0
)
Non-GAAP Net Income per Diluted Share2
$
2.72
$
2.60
4.4
$
7.31
$
7.29
0.2
1 Defined as Net sales divided by the
number of selling days. There were 63 and 64 selling days for the
three months ended September 30, 2023 and 2022, respectively. There
were 191 selling days for both the nine months ended September 30,
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 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 third quarter 2023 results. CDW also
announced the approval by its Board of Directors of a quarterly
cash dividend of $0.62 per share to be paid on December 12, 2023 to
all stockholders of record as of the close of business on November
24, 2023. It is the tenth consecutive year that CDW has increased
its dividend since its 2013 IPO.
"This quarter's exceptional profitability underscores the power
of our strategy when underpinned by our resilient business model,
relentless execution and financial rigor," said Christine A. Leahy,
chair and chief executive officer, CDW. "Technology remains the
vital foundation of our customers' abilities to achieve their
mission critical outcomes and record profitability in a market
facing ongoing uncertainty reinforces the value we deliver to our
customers."
"Strong operating results, our agile business model, and our
disciplined approach to capital allocation delivered record
earnings per share results," said Albert J. Miralles, chief
financial officer, CDW. "We continued 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, while
maintaining an appropriate capital structure."
"Through this ongoing period of economic uncertainty, customers
continue to turn to CDW to address their mission-critical IT and
operational needs across the full IT solutions stack and lifecycle.
We remain well-positioned to attain our target of exceeding US IT
market growth by 200 to 300 basis points on a constant currency
basis. To achieve this, we will continue our laser focus on meeting
the needs of our more than 250,000 customers around the globe and
remaining the partner of choice for more than 1,000 leading and
emerging technology brands as the IT market continues to evolve,"
concluded Leahy.
Third Quarter of 2023
Highlights:
Net sales in the third quarter of 2023 were $5,628 million,
compared to $6,216 million in the third quarter of 2022, a decrease
of 9.4 percent. There were 63 and 64 selling days for the three
months ended September 30, 2023 and 2022, respectively. On an
average daily sales basis, Net sales decreased 8.0 percent and Net
sales on a constant currency basis decreased 8.4 percent. The
decline in Net sales was driven by the Corporate and Small Business
segments and our UK and Canadian operations. Continued economic
uncertainty has led customers to focus their business priorities,
resulting in a reduction or delays in their technology spend. Third
quarter Net sales performance, on an average daily sales basis,
included:
- Corporate segment Net sales of $2,227 million, 12.3 percent
lower than 2022.
- Small Business segment Net sales of $378 million, 21.7 percent
lower than 2022.
- Public segment Net sales of $2,422 million, 1.5 percent higher
than 2022. Public results were primarily driven by an increase in
Net sales to Healthcare and Education customers of 2.4 percent and
2.1 percent respectively, while Government customers remained
flat.
- Net sales for CDW's UK and Canadian operations, combined as
"Other" for financial reporting purposes, were $601 million, 15.4
percent lower than 2022.
Gross profit in the third quarter of 2023 was $1,228 million,
compared to $1,233 million for the third quarter of 2022,
representing a decrease of 0.4 percent. Gross profit margin was
21.8 percent in the third quarter of 2023 versus 19.8 percent in
the third quarter of 2022. The increase in Gross profit margin was
primarily driven by higher product margin due to increased margin
rate across various categories and lower mix in notebooks, and a
more favorable contribution of netted down revenue, primarily
software as a service.
Selling and administrative expenses were $749 million in the
third quarter of 2023, compared to $767 million in the third
quarter of 2022, representing a decrease of 2.3 percent. The
decrease was primarily due to reduced discretionary expenses.
Operating income was $478 million in the third quarter of 2023,
compared to $466 million in the third quarter of 2022, representing
an increase of 2.6 percent. Non-GAAP operating income was $556
million in the third quarter of 2023, compared to $549 million in
the third quarter of 2022, representing an increase of 1.3 percent.
The Operating income margin and Non-GAAP operating income margin
were 8.5 percent and 9.9 percent, respectively, for the third
quarter of 2023 versus 7.5 percent and 8.8 percent, respectively,
for the third quarter of 2022.
Interest expense, net includes interest expense and interest
income. Interest expense, net was $57 million for third quarter of
2023 compared to $63 million for the third quarter of 2022,
representing a decrease of 8.3 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 24.8 percent in the third quarter of
2023, compared to 25.4 percent in the third quarter of 2022, which
resulted in tax expense of $104 million and $101 million,
respectively. The decrease in the effective tax rate was primarily
attributable to higher excess tax benefits on equity-based
compensation.
Net income was $316 million in the third quarter of 2023,
compared to $298 million in the third quarter of 2022, representing
an increase of 5.9 percent. Non-GAAP net income was $369 million in
the third quarter of 2023, compared to $357 million in the third
quarter of 2022, representing an increase of 3.5 percent.
Weighted average diluted shares outstanding were 136 million for
the third quarter of 2023, compared to 137 million for the third
quarter of 2022. Net income per diluted share for the third quarter
of 2023 was $2.32, compared to $2.17 for the third quarter of 2022,
representing an increase of 6.9 percent. Non-GAAP net income per
diluted share for the third quarter of 2023 was $2.72, compared to
$2.60 for the third quarter of 2022, representing an increase of
4.4 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 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; 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; 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, including impacts of
adverse changes 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 Information
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. 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, and Net sales on a constant
currency basis 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. 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 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.
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 15,000
coworkers. For the trailing twelve months ended September 30, 2023,
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, November 1,
2023 at 7:30 a.m. CT/8:30 a.m. ET to discuss its third 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 September
30,
Nine Months Ended September
30,
2023
2022
% Change(i)
2023
2022
% Change(i)
Net sales
$
5,628.3
$
6,215.5
(9.4
)%
$
16,357.5
$
18,310.4
(10.7
)%
Cost of sales
4,400.6
4,982.3
(11.7
)
12,858.9
14,804.9
(13.1
)
Gross profit
1,227.7
1,233.2
(0.4
)
3,498.6
3,505.5
(0.2
)
Selling and administrative expenses
749.3
766.8
(2.3
)
2,252.7
2,216.9
1.6
Operating income
478.4
466.4
2.6
1,245.9
1,288.6
(3.3
)
Interest expense, net
(57.4
)
(62.6
)
(8.3
)
(173.3
)
(176.3
)
(1.7
)
Other expense, net
(1.2
)
(4.8
)
nm*
(3.1
)
(5.7
)
n.m.*
Income before income taxes
419.8
399.0
5.2
1,069.5
1,106.6
(3.4
)
Income tax expense
(104.3
)
(101.2
)
3.1
(261.3
)
(279.3
)
(6.4
)
Net income
$
315.5
$
297.8
5.9
%
$
808.2
$
827.3
(2.3
)%
Net income per common share:
Basic
$
2.35
$
2.20
6.9
%
$
6.00
$
6.12
(2.0
)%
Diluted
$
2.32
$
2.17
6.9
%
$
5.92
$
6.04
(2.0
)%
Weighted-average common shares
outstanding:
Basic
134.1
135.3
134.8
135.1
Diluted
135.9
137.1
136.4
136.9
* not meaningful
(i)
There were 63 and 64 selling days for the
three months ended September 30, 2023 and 2022, respectively. There
were 191 selling days for both the nine months ended September 30,
2023 and 2022.
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 and nine months ended September 30, 2023 and 2022
below. In addition, a reconciliation of Free cash flow and Adjusted
free cash flow is included for the nine months ended September 30,
2023 and 2022.
CDW CORPORATION AND
SUBSIDIARIES
NON-GAAP OPERATING INCOME AND
NON-GAAP OPERATING INCOME MARGIN
(dollars in millions)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
% of Net sales
2022
% of Net sales
2023
% of Net sales
2022
% of Net sales
Operating income, as reported
$
478.4
8.5
%
$
466.4
7.5
%
$
1,245.9
7.6
%
$
1,288.6
7.0
%
Amortization of intangibles(i)
37.3
44.8
116.2
126.4
Equity-based compensation
26.0
26.8
71.6
71.4
Acquisition and integration expenses
7.1
9.7
24.7
36.3
Transformation initiatives(ii)
6.4
1.0
16.0
3.4
Workplace optimization(iii)
(0.4
)
—
42.5
—
Other adjustments
1.5
0.3
3.5
1.3
Non-GAAP operating income
$
556.3
9.9
%
$
549.0
8.8
%
$
1,520.4
9.3
%
$
1,527.4
8.3
%
(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 September
30,
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
$
419.8
$
(104.3
)
$
315.5
24.8
%
$
399.0
$
(101.2
)
$
297.8
25.4
%
5.9
%
Amortization of intangibles(ii)
37.3
(9.7
)
27.6
44.8
(12.6
)
32.2
Equity-based compensation
26.0
(10.3
)
15.7
26.8
(8.1
)
18.7
Acquisition and integration expenses
7.1
(1.8
)
5.3
9.7
(2.6
)
7.1
Transformation initiatives(iii)
6.4
(1.7
)
4.7
1.0
(0.1
)
0.9
Workplace optimization(iv)
(0.4
)
—
(0.4
)
—
—
—
Other adjustments
1.5
(0.5
)
1.0
0.3
—
0.3
Non-GAAP
$
497.7
$
(128.3
)
$
369.4
25.8
%
$
481.6
$
(124.6
)
$
357.0
25.9
%
3.5
%
US GAAP net income per diluted share
$
2.32
$
2.17
Non-GAAP net income per diluted share
$
2.72
$
2.60
Shares used in computing US GAAP and
Non-GAAP net income per diluted share
135.9
137.1
(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.
(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)
Nine Months Ended September
30,
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
$
1,069.5
$
(261.3
)
$
808.2
24.4
%
$
1,106.6
$
(279.3
)
$
827.3
25.2
%
(2.3
)%
Amortization of intangibles(ii)
116.2
(30.2
)
86.0
126.4
(33.8
)
92.6
Equity-based compensation
71.6
(32.7
)
38.9
71.4
(23.7
)
47.7
Acquisition and integration expenses
24.7
(6.4
)
18.3
36.3
(9.4
)
26.9
Transformation initiatives(iii)
16.0
(4.2
)
11.8
3.4
(0.9
)
2.5
Workplace optimization(iv)
42.5
(11.1
)
31.4
—
—
—
Other adjustments
3.5
(1.0
)
2.5
1.3
(0.3
)
1.0
Non-GAAP
$
1,344.0
$
(346.9
)
$
997.1
25.8
%
$
1,345.4
$
(347.4
)
$
998.0
25.8
%
(0.1
)%
US GAAP net income per diluted share
$
5.92
$
6.04
Non-GAAP net income per diluted share
$
7.31
$
7.29
Shares used in computing US GAAP and
Non-GAAP net income per diluted share
136.4
136.9
(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 September
30,
Nine Months Ended September
30,
2023
2022
% Change(i)
Average Daily %
Change(i)
2023
2022
% Change(i)
Net sales, as reported
$
5,628.3
$
6,215.5
(9.4
)%
(8.0
)%
$
16,357.5
$
18,310.4
(10.7
)%
Foreign currency translation(ii)
—
27.8
—
(52.1
)
Net sales, on a constant currency
basis
$
5,628.3
$
6,243.3
(9.9
)%
(8.4
)%
$
16,357.5
$
18,258.3
(10.4
)%
(i)
There were 63 and 64 selling days for the
three months ended September 30, 2023 and 2022, respectively. There
were 191 selling days for both the nine months ended September 30,
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)
September 30, 2023
December 31, 2022
September 30, 2022
Assets
(unaudited)
(unaudited)
Current assets:
Cash and cash equivalents
$
440.7
$
315.2
$
384.6
Accounts receivable, net of allowance for
credit losses
of $27.0, $25.7, and $24.0,
respectively
4,418.5
4,461.3
4,549.4
Merchandise inventory
706.4
800.2
914.5
Miscellaneous receivables
489.7
489.1
486.4
Prepaid expenses and other
403.1
498.2
560.3
Total current assets
6,458.4
6,564.0
6,895.2
Operating lease right-of-use assets
133.1
149.2
153.8
Property and equipment, net
194.9
188.8
188.0
Goodwill
4,417.4
4,342.7
4,327.5
Other intangible assets, net
1,384.9
1,490.7
1,525.5
Other assets
286.6
396.1
385.6
Total assets
$
12,875.3
$
13,131.5
$
13,475.6
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable - trade
$
2,616.7
$
2,821.3
$
3,251.1
Accounts payable - inventory financing
620.0
519.0
478.7
Current maturities of long-term debt
40.0
56.3
57.8
Contract liabilities
438.9
485.5
437.7
Accrued expenses and other current
liabilities
1,066.5
1,065.0
1,133.5
Total current liabilities
4,782.1
4,947.1
5,358.8
Long-term liabilities:
Debt
5,661.5
5,866.4
6,100.0
Deferred income taxes
171.8
203.4
208.3
Operating lease liabilities
168.8
175.2
180.0
Other liabilities
281.1
336.1
302.5
Total long-term liabilities
6,283.2
6,581.1
6,790.8
Total stockholders’ equity
1,810.0
1,603.3
1,326.0
Total liabilities and stockholders’
equity
$
12,875.3
$
13,131.5
$
13,475.6
CDW CORPORATION AND
SUBSIDIARIES
NET SALES DETAIL
(dollars in millions)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
% Change(i)
Average Daily %
Change(i)
2023
2022
% Change(i)
Corporate
$
2,226.5
$
2,577.8
(13.6
)%
(12.3
)%
$
6,675.2
$
7,866.1
(15.1
)%
Small Business
378.4
491.2
(23.0
)
(21.7
)
1,186.0
1,515.2
(21.7
)
Public
Government
775.7
788.4
(1.6
)
—
2,008.4
1,941.8
3.4
Education
1,026.7
1,021.1
0.5
2.1
2,719.2
2,965.2
(8.3
)
Healthcare
619.7
614.8
0.8
2.4
1,802.4
1,793.3
0.5
Total Public
2,422.1
2,424.3
(0.1
)
1.5
6,530.0
6,700.3
(2.5
)
Other
601.3
722.2
(16.7
)
(15.4
)
1,966.3
2,228.8
(11.8
)
Total Net sales
$
5,628.3
$
6,215.5
(9.4
)%
(8.0
)%
$
16,357.5
$
18,310.4
(10.7
)%
(i)
There were 63 and 64 selling days for the
three months ended September 30, 2023 and 2022, respectively. There
were 191 selling days for both the nine months ended September 30,
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 September
30, 2023
Corporate
Small Business
Public
Other
Total
Timing of Revenue Recognition
Transferred at a point in time where CDW
is principal
$
1,861.9
$
333.1
$
2,169.3
$
520.3
$
4,884.6
Transferred at a point in time where CDW
is agent
192.9
37.1
143.9
25.8
399.7
Transferred over time where CDW is
principal
171.7
8.2
108.9
55.2
344.0
Total Net sales
$
2,226.5
$
378.4
$
2,422.1
$
601.3
$
5,628.3
Three Months Ended September
30, 2022
Corporate
Small Business
Public
Other
Total
Timing of Revenue Recognition
Transferred at a point in time where CDW
is principal
$
2,216.3
$
438.4
$
2,189.4
$
641.2
$
5,485.3
Transferred at a point in time where CDW
is agent
194.3
36.3
129.5
22.2
382.3
Transferred over time where CDW is
principal
167.2
16.5
105.4
58.8
347.9
Total Net sales
$
2,577.8
$
491.2
$
2,424.3
$
722.2
$
6,215.5
CDW CORPORATION AND
SUBSIDIARIES
TIMING OF REVENUE
RECOGNITION
(dollars in millions)
(unaudited)
Nine Months Ended September
30, 2023
Corporate
Small Business
Public
Other
Total
Timing of Revenue Recognition
Transferred at a point in time where CDW
is principal
$
5,614.6
$
1,053.3
$
5,858.6
$
1,718.1
$
14,244.6
Transferred at a point in time where CDW
is agent
563.3
106.8
362.1
80.9
1,113.1
Transferred over time where CDW is
principal
497.3
25.9
309.3
167.3
999.8
Total Net sales
$
6,675.2
$
1,186.0
$
6,530.0
$
1,966.3
$
16,357.5
Nine Months Ended September
30, 2022
Corporate
Small Business
Public
Other
Total
Timing of Revenue Recognition
Transferred at a point in time where CDW
is principal
$
6,833.4
$
1,374.6
$
6,062.1
$
1,980.9
$
16,251.0
Transferred at a point in time where CDW
is agent
547.2
104.0
329.3
71.0
1,051.5
Transferred over time where CDW is
principal
485.5
36.6
308.9
176.9
1,007.9
Total Net sales
$
7,866.1
$
1,515.2
$
6,700.3
$
2,228.8
$
18,310.4
CDW CORPORATION AND
SUBSIDIARIES
DEBT AND WORKING CAPITAL
INFORMATION
(dollars in millions)
(unaudited)
September 30, 2023
December 31, 2022
September 30, 2022
Debt and Revolver Availability
Cash and cash equivalents
$
440.7
$
315.2
$
384.6
Total debt
5,701.5
5,922.7
6,157.8
Revolver availability
942.4
1,083.6
1,069.8
Cash plus revolver availability
1,383.1
1,398.8
1,454.4
Working Capital(i)
Days of sales outstanding
73
71
68
Days of supply in inventory
14
17
18
Days of purchases outstanding
(72
)
(67
)
(68
)
Cash conversion cycle
15
21
18
(i)
Based on a rolling three-month
average.
CDW CORPORATION AND
SUBSIDIARIES
CASH FLOW INFORMATION
(dollars in millions)
(unaudited)
Nine Months Ended September
30,
2023
2022
Cash flows provided by operating
activities
$
1,062.2
$
1,094.0
Capital expenditures
(114.7
)
(97.2
)
Acquisition of businesses, net of cash
acquired
(76.2
)
(28.0
)
Other
(5.0
)
—
Cash flows used in investing
activities
(195.9
)
(125.2
)
Net change in accounts payable - inventory
financing
165.4
46.6
Other cash flows used in financing
activities
(905.1
)
(877.0
)
Cash flows used in financing
activities
(739.7
)
(830.4
)
Effect of exchange rate changes on cash
and cash equivalents
(1.1
)
(11.9
)
Net increase in cash and cash
equivalents
125.5
126.5
Cash and cash equivalents - beginning of
period
315.2
258.1
Cash and cash equivalents - end of
period
$
440.7
$
384.6
Supplementary disclosure of cash flow
information:
Interest paid
$
(141.2
)
$
(131.6
)
Income taxes paid, net
$
(285.1
)
$
(274.5
)
CDW CORPORATION AND
SUBSIDIARIES
FREE CASH FLOW AND ADJUSTED
FREE CASH FLOW RECONCILIATION
(dollars in millions)
(unaudited)
Nine Months Ended September
30,
2023
2022
Net cash provided by operating
activities
$
1,062.2
$
1,094.0
Capital expenditures
(114.7
)
(97.2
)
Free cash flow
947.5
996.8
Net change in accounts payable - inventory
financing
165.4
46.6
Adjusted free cash flow(i)(ii)
$
1,112.9
$
1,043.4
(i)
Beginning with this report, we will refer to our historical key
business metric, Free cash flow, as Adjusted free cash flow with no
definitional change from prior reports.
(ii)
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/20231101332046/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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