CDW Corporation (Nasdaq:CDW), a leading multi-brand technology
solutions provider to business, government, education and
healthcare customers in the United States, the United Kingdom and
Canada, today announced third quarter results. CDW also announced
the approval by its Board of Directors of a 28.8 percent increase
to its quarterly cash dividend. The cash dividend of $0.38 per
share will be paid on December 10, 2019 to all stockholders of
record as of the close of business on November 25, 2019.
"We delivered excellent topline growth and
profitability in the quarter while continuing to invest in the
future and deliver shareholder value," said Christine Leahy, chief
executive officer, CDW. "These results reinforce the strength of
our strategy and power of our business model - underpinned by
balanced performance across our customer end markets, the breadth
of our product and solutions portfolio and the ongoing execution of
our strategy for growth."
"Excellent operating results were amplified by
share repurchases, delivering a 20 percent increase in Non-GAAP net
income per diluted share," said Collin Kebo, chief financial
officer, CDW. "Given this quarter's results and our expectations
for the balance of the year, we are now targeting 2019 constant
currency Non-GAAP net income per diluted share growth in the
mid-teens."
"We expect to exceed our 2019 target to outpace
US IT market growth by 200 to 300 basis points on a constant
currency organic basis. To accomplish this, we will continue our
laser focus on meeting the needs of our more than 250,000 customers
in the United States, the United Kingdom and Canada 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.
Third Quarter of 2019 Highlights:
Total Net sales in the third quarter of 2019
were $4,908 million, compared to $4,373 million in the third
quarter of 2018, an increase of 12.2 percent. There were 64 and 63
selling days for the three months ended September 30, 2019 and
2018, respectively. Net sales growth on an average daily sales
basis was 10.5 percent and Net sales growth on a constant currency
average daily sales basis was 10.9 percent. Currency impact to Net
sales growth was driven by unfavorable translation of the British
pound and Canadian dollar to US dollar. Third quarter Net sales
performance, on an average daily sales basis, included:
- Total Corporate segment Net sales of $1,914 million, 10.4
percent higher than the third quarter of 2018.
- Total Small Business segment Net sales of $386 million, 11.8
percent higher than the third quarter of 2018.
- Total Public segment Net sales of $2,101 million, 10.3 percent
higher than the third quarter of 2018. Public results were driven
by sales to Government and Healthcare customers which increased
22.2 percent and 11.3 percent, respectively. Sales to
Education customers were flat.
- Net sales for CDW's UK and Canadian operations, combined as
“Other” for financial reporting purposes, of $507 million, 10.6
percent higher than the third quarter of 2018. Results for 2019
include the Net sales of Scalar Decisions Inc. ("Scalar"), which
was acquired on February 1, 2019.
Gross profit for the third quarter of 2019 was
$816 million, compared to $714 million for the same period in 2018,
representing an increase of 14.4 percent. Gross profit margin was
16.6 percent for the third quarter of 2019 versus 16.3 percent in
the third quarter of 2018. Gross profit margin was positively
impacted by an increase in the mix of netted down revenues, such as
Software as a Service and warranties.
Total selling and administrative expenses,
including advertising expense, were $496 million in the third
quarter of 2019, compared to $439 million in the third quarter of
2018, representing an increase of 13.0 percent. This was primarily
driven by increased sales payroll expenses, the inclusion of Scalar
expenses, and performance-based compensation consistent with higher
attainment against goals.
Operating income was $321 million in the third
quarter of 2019, compared to $275 million in the third quarter of
2018, an increase of 16.7 percent. Non-GAAP operating income was
$380 million in the third quarter of 2019, compared to $334 million
in the third quarter of 2018, representing an increase of 13.9
percent. The Non-GAAP operating income margin was 7.8 percent for
the third quarter of 2019 versus 7.6 percent in the third quarter
of 2018.
Net interest expense was $42 million in the
third quarter of 2019 compared to $37 million in the third quarter
of 2018, representing an increase of 15.6 percent. This increase
was primarily due to paying an effective interest rate on the term
loan in 2019 that exceeded the capped rate in 2018.
The effective tax rate for the third quarter of
2019 was 22.7 percent, compared to 22.9 percent for the third
quarter of 2018, which resulted in tax expense of $59 million and
$55 million, respectively.
Net income was $202 million in the third quarter
of 2019, compared to $184 million in the third quarter of 2018,
representing an increase of 9.8 percent. Non-GAAP net income was
$250 million in the third quarter of 2019, compared to $218 million
in the third quarter of 2018, representing an increase of 14.8
percent.
Weighted average diluted shares outstanding were
147 million for the third quarter of 2019, compared to 154 million
for the third quarter of 2018. Net income per diluted share for the
third quarter of 2019 was $1.37, compared to $1.20 for the third
quarter of 2018, representing an increase of 14.6 percent. Non-GAAP
net income per diluted share for the third quarter of 2019 was
$1.70, compared to $1.42 for the third quarter of 2018,
representing an increase of 19.8 percent.
Year to Date 2019 Highlights:
Total Net sales in the first nine months ("year
to date") of 2019 were $13,495 million, compared to $12,166 million
for year to date 2018, an increase of 10.9 percent. There were 191
selling days for both 2019 and 2018 periods. Net sales growth on a
constant currency basis was 11.6 percent. Currency impact to Net
sales growth was driven by unfavorable translation of the British
pound and Canadian dollar to US dollar. The year to date Net sales
performance included:
- Total Corporate segment Net sales of $5,534 million, 10.5
percent higher than 2018.
- Total Small Business segment Net sales of $1,119 million, 12.2
percent higher than 2018.
- Total Public segment Net sales of $5,272 million, 11.2 percent
higher than 2018. Public results were led by sales to Government,
Healthcare and Education customers, which increased 19.9 percent,
11.2 percent and 4.1 percent, respectively.
- Net sales for CDW's UK and Canadian operations, combined as
“Other” for financial reporting purposes, were $1,571 million, 10.5
percent higher than 2018. Results for 2019 include eight months of
the Net sales of Scalar, which was acquired on February 1,
2019.
Gross profit for year to date 2019 was $2,262
million, compared to $2,013 million for 2018, representing an
increase of 12.4 percent. Gross profit margin was 16.8 percent for
year to date 2019 versus 16.5 percent for 2018. Gross profit
margin was positively impacted by an increase in the mix of netted
down revenues, such as Software as a Service and warranties.
Total selling and administrative expenses,
including advertising expense, were $1,413 million for year to date
2019, compared to $1,269 million for 2018, representing an increase
of 11.3 percent. This increase was primarily driven by increased
sales payroll expenses, the inclusion of Scalar expenses, and
performance-based compensation consistent with higher attainment
against goals.
Operating income was $850 million for year to
date 2019, compared to $744 million in 2018, an increase of 14.2
percent. Non-GAAP operating income was $1,026 million for year to
date 2019, compared to $917 million for 2018, representing an
increase of 11.9 percent. The Non-GAAP operating income margin was
7.6 percent for 2019 versus 7.5 percent for 2018.
Net interest expense was $121 million for year
to date 2019 compared to $112 million for 2018, representing an
increase of 8.6 percent. This increase was primarily due to paying
an effective interest rate on the term loan in 2019 that exceeded
the capped rate in 2018.
The effective tax rate for year to date 2019 was
22.8 percent, which resulted in tax expense of $162 million,
compared to a 23.7 percent effective tax rate and tax expense of
$150 million for 2018. The decrease in the effective tax rate
primarily reflects higher excess tax benefits on equity-based
compensation and a discrete tax benefit related to CDW Canada's
acquisition of Scalar.
Net income was $551 million for year to date
2019, compared to $484 million for 2018, representing an increase
of 14.0 percent. Non-GAAP net income was $673 million for year to
date 2019, compared to $594 million for 2018, representing an
increase of 13.4 percent.
Weighted average diluted shares outstanding were
148 million for year to date 2019, compared to 154 million for
2018. Net income per diluted share for year to date 2019 was $3.72
compared to $3.14 for 2018, representing an increase of 18.5
percent. Non-GAAP net income per diluted share for year to date
2019 was $4.54, compared to $3.85 for 2018, representing an
increase of 17.9 percent.
Forward-Looking Statements
Statements in this release that are not
statements of historical fact are forward-looking statements within
the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, including without limitation
statements regarding the future financial performance of CDW. These
statements involve risks and uncertainties that could cause actual
results to differ materially from those described in such
statements. These risks and uncertainties include, among others,
global and regional economic and political conditions; decreases in
spending on technology products and services; CDW's relationships
with vendor partners and availability of their products; continued
innovations in hardware, software and services offerings by CDW's
vendor partners; substantial competition that could reduce CDW's
market share; CDW's substantial 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; 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 comply with Public segment contracts
or applicable laws and regulations; potential failures to provide
high-quality services to CDW's customers; potential losses of any
key personnel; potential interruptions of the flow of products from
suppliers; potential adverse occurrences at one of CDW's primary
facilities or customer data centers; increases in the cost of
commercial delivery services or disruptions of those services;
CDW's exposure to accounts receivable and inventory risks;
fluctuations in foreign currency; future acquisitions or alliances;
fluctuations in CDW's operating results; current and future legal
proceedings and audits; changes in laws, including regulations or
interpretations thereof; and other risk factors or uncertainties
identified from time to time in CDW's filings with the SEC.
Although CDW believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance
that such expectations will prove to have been correct. Reference
is made to a more complete discussion of forward-looking statements
and applicable risks contained under the captions "Forward-Looking
Statements" and "Risk Factors" in CDW's Annual Report on Form 10-K
for the year ended December 31, 2018 and subsequent filings
with the SEC. CDW undertakes no obligation to update or revise
any of its forward-looking statements, whether as a result of new
information, future events or otherwise, unless 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, net loss on extinguishment of long-term debt,
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 position 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 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.
Our 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 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 (Nasdaq:CDW) is a leading multi-brand
technology solutions provider 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 more than 9,800
coworkers. For the trailing twelve months ended September 30,
2019, CDW generated Net sales over $17 billion. For more
information about CDW, please visit www.CDW.com.
Webcast
CDW will hold a conference call today,
October 31, 2019 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.
Investor
Inquiries
Brittany A. Smith
Vice President, Investor Relations
and
Financial Planning and Analysis
(847)
968-0238
Media InquiriesSara GranackVice President,
Corporate Communications(847) 419-7411
CDWPR-FI
CDW CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(dollars and shares in millions, except
per-share amounts)(unaudited)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2019 |
|
2018 |
|
% Change(i) |
|
2019 |
|
2018 |
|
% Change(i) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
4,907.7 |
|
|
$ |
4,373.2 |
|
|
12.2 |
% |
|
$ |
13,495.5 |
|
|
$ |
12,165.7 |
|
|
10.9 |
% |
Cost of sales |
|
4,091.2 |
|
|
3,659.6 |
|
|
11.8 |
|
|
11,233.1 |
|
|
10,152.6 |
|
|
10.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
816.5 |
|
|
713.6 |
|
|
14.4 |
|
|
2,262.4 |
|
|
2,013.1 |
|
|
12.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative
expenses |
|
444.9 |
|
|
390.7 |
|
|
13.9 |
|
|
1,269.3 |
|
|
1,134.8 |
|
|
11.9 |
|
Advertising expense |
|
51.0 |
|
|
48.1 |
|
|
6.0 |
|
|
143.3 |
|
|
133.9 |
|
|
7.0 |
|
Operating income |
|
320.6 |
|
|
274.8 |
|
|
16.7 |
|
|
849.8 |
|
|
744.4 |
|
|
14.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
(42.3 |
) |
|
(36.6 |
) |
|
15.6 |
|
|
(121.1 |
) |
|
(111.5 |
) |
|
8.6 |
|
Other (expense) income,
net |
|
(17.4 |
) |
|
0.2 |
|
|
nm* |
|
|
(15.0 |
) |
|
1.0 |
|
|
nm* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
260.9 |
|
|
238.4 |
|
|
9.5 |
|
|
713.7 |
|
|
633.9 |
|
|
12.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
(59.2 |
) |
|
(54.7 |
) |
|
8.2 |
|
|
(162.5 |
) |
|
(150.2 |
) |
|
8.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
201.7 |
|
|
$ |
183.7 |
|
|
9.8 |
% |
|
$ |
551.2 |
|
|
$ |
483.7 |
|
|
14.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.39 |
|
|
$ |
1.22 |
|
|
14.6 |
% |
|
$ |
3.78 |
|
|
$ |
3.19 |
|
|
18.5 |
% |
Diluted |
|
$ |
1.37 |
|
|
$ |
1.20 |
|
|
14.6 |
% |
|
$ |
3.72 |
|
|
$ |
3.14 |
|
|
18.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
144.5 |
|
|
150.9 |
|
|
|
|
145.7 |
|
|
151.6 |
|
|
|
Diluted |
|
147.2 |
|
|
153.7 |
|
|
|
|
148.2 |
|
|
154.1 |
|
|
|
*Not meaningful
(i) There were 64 and 63 selling days for the
three months ended September 30, 2019 and 2018, respectively. There
were 191 selling days for both the nine months ended September 30,
2019 and 2018.
CDW CORPORATION AND
SUBSIDIARIESNON-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 and nine months ended September 30, 2019 and 2018
below.
CDW CORPORATION AND
SUBSIDIARIESNON-GAAP OPERATING INCOME AND NON-GAAP
OPERATING INCOME MARGIN(dollars in
millions)(unaudited)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
% of Net sales |
|
2018 |
|
% of Net sales |
|
2019 |
|
% of Net sales |
|
2018 |
|
% of Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
$ |
320.6 |
|
|
6.5 |
% |
|
$ |
274.8 |
|
|
6.3 |
% |
|
$ |
849.8 |
|
|
6.3 |
% |
|
$ |
744.4 |
|
|
6.1 |
% |
Amortization of
intangibles(i) |
44.6 |
|
|
|
|
45.3 |
|
|
|
|
133.7 |
|
|
|
|
138.6 |
|
|
|
Equity-based compensation |
12.8 |
|
|
|
|
10.8 |
|
|
|
|
37.7 |
|
|
|
|
29.9 |
|
|
|
Scalar acquisition and
integration expenses |
0.9 |
|
|
|
|
— |
|
|
|
|
2.0 |
|
|
|
|
— |
|
|
|
Other adjustments(ii) |
1.5 |
|
|
|
|
3.0 |
|
|
|
|
2.9 |
|
|
|
|
4.2 |
|
|
|
Non-GAAP operating income |
$ |
380.4 |
|
|
7.8 |
% |
|
$ |
333.9 |
|
|
7.6 |
% |
|
$ |
1,026.1 |
|
|
7.6 |
% |
|
$ |
917.1 |
|
|
7.5 |
% |
(i) Includes amortization expense for acquisition-related
intangible assets, primarily customer relationships, customer
contracts and trade names.
(ii) Includes other expenses such as payroll taxes on
equity-based compensation.
NON-GAAP INCOME BEFORE INCOME TAXES,
NON-GAAP NET INCOMEAND NON-GAAP NET INCOME PER
DILUTED SHARE(dollars and shares in millions, except
per-share amounts)(unaudited)
|
Three Months Ended September 30, |
|
|
|
2019 |
|
2018 |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP, as reported |
$ |
260.9 |
|
|
$ |
(59.2 |
) |
|
$ |
201.7 |
|
|
22.7 |
% |
|
$ |
238.4 |
|
|
$ |
(54.7 |
) |
|
$ |
183.7 |
|
|
22.9 |
% |
|
9.8 |
% |
Amortization of
intangibles(ii) |
44.6 |
|
|
(11.3 |
) |
|
33.3 |
|
|
|
|
45.3 |
|
|
(12.0 |
) |
|
33.3 |
|
|
|
|
|
Equity-based compensation |
12.8 |
|
|
(11.8 |
) |
|
1.0 |
|
|
|
|
10.8 |
|
|
(10.5 |
) |
|
0.3 |
|
|
|
|
|
Net loss on extinguishment of
long-term debt |
16.1 |
|
|
(4.0 |
) |
|
12.1 |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
Scalar acquisition and
integration expenses |
0.9 |
|
|
(0.2 |
) |
|
0.7 |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
Other adjustments(iii) |
1.5 |
|
|
(0.4 |
) |
|
1.1 |
|
|
|
|
3.0 |
|
|
(2.7 |
) |
|
0.3 |
|
|
|
|
|
Non-GAAP |
$ |
336.8 |
|
|
$ |
(86.9 |
) |
|
$ |
249.9 |
|
|
25.8 |
% |
|
$ |
297.5 |
|
|
$ |
(79.9 |
) |
|
$ |
217.6 |
|
|
26.9 |
% |
|
14.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income per diluted
share |
|
|
|
|
$ |
1.37 |
|
|
|
|
|
|
|
|
$ |
1.20 |
|
|
|
|
|
Non-GAAP net income per
diluted share |
|
|
|
|
$ |
1.70 |
|
|
|
|
|
|
|
|
$ |
1.42 |
|
|
|
|
|
Shares used in computing GAAP
and Non-GAAP net income per diluted share |
|
|
|
|
147.2 |
|
|
|
|
|
|
|
|
153.7 |
|
|
|
|
|
(i) Income tax on non-GAAP adjustments includes excess tax
benefits associated with equity-based compensation and the impact
of global intangible low tax income (“GILTI”) due to equity-based
compensation and amortization of intangibles.
(ii) Includes amortization expense for acquisition-related
intangible assets, primarily customer relationships, customer
contracts and trade names.
(iii) Includes other expenses such as payroll taxes on
equity-based compensation.
CDW CORPORATION AND
SUBSIDIARIESNON-GAAP INCOME BEFORE INCOME TAXES,
NON-GAAP NET INCOMEAND NON-GAAP NET INCOME PER
DILUTED SHARE(dollars and shares in millions, except
per-share amounts)(unaudited)
|
Nine Months Ended September 30, |
|
|
|
2019 |
|
2018 |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP, as reported |
$ |
713.7 |
|
|
$ |
(162.5 |
) |
|
$ |
551.2 |
|
|
22.8 |
% |
|
$ |
633.9 |
|
|
$ |
(150.2 |
) |
|
$ |
483.7 |
|
|
23.7 |
% |
|
14.0 |
% |
Amortization of
intangibles(ii) |
133.7 |
|
|
(33.8 |
) |
|
99.9 |
|
|
|
|
138.6 |
|
|
(36.0 |
) |
|
102.6 |
|
|
|
|
|
Equity-based compensation |
37.7 |
|
|
(28.7 |
) |
|
9.0 |
|
|
|
|
29.9 |
|
|
(23.8 |
) |
|
6.1 |
|
|
|
|
|
Net loss on extinguishment of
long-term debt |
16.1 |
|
|
(4.0 |
) |
|
12.1 |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
Scalar acquisition and
integration expenses(iii) |
2.0 |
|
|
(3.4 |
) |
|
(1.4 |
) |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
Other adjustments(iv) |
2.9 |
|
|
(0.7 |
) |
|
2.2 |
|
|
|
|
4.2 |
|
|
(3.0 |
) |
|
1.2 |
|
|
|
|
|
Non-GAAP |
$ |
906.1 |
|
|
$ |
(233.1 |
) |
|
$ |
673.0 |
|
|
25.7 |
% |
|
$ |
806.6 |
|
|
$ |
(213.0 |
) |
|
$ |
593.6 |
|
|
26.4 |
% |
|
13.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income per diluted
share |
|
|
|
|
$ |
3.72 |
|
|
|
|
|
|
|
|
$ |
3.14 |
|
|
|
|
|
Non-GAAP net income per
diluted share |
|
|
|
|
$ |
4.54 |
|
|
|
|
|
|
|
|
$ |
3.85 |
|
|
|
|
|
Shares used in computing GAAP
and Non-GAAP net income per diluted share |
|
|
|
|
148.2 |
|
|
|
|
|
|
|
|
154.1 |
|
|
|
|
|
(i) Income tax on non-GAAP adjustments includes excess tax
benefits associated with equity-based compensation and the impact
of GILTI due to equity-based compensation and amortization of
intangibles.
(ii) Includes amortization expense for acquisition-related
intangible assets, primarily customer relationships, customer
contracts and trade names.
(iii) Includes a $3 million discrete tax benefit related to CDW
Canada's acquisition of Scalar.
(iv) Includes other expenses such as payroll taxes on
equity-based compensation.
CDW CORPORATION AND
SUBSIDIARIESNET SALES GROWTH ON A CONSTANT
CURRENCY BASIS(dollars in millions)(unaudited)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2019 |
|
2018 |
|
% Change |
|
Average Daily % Change(i) |
|
2019 |
|
2018 |
|
% Change(ii) |
Net sales, as reported |
|
$ |
4,907.7 |
|
|
$ |
4,373.2 |
|
|
12.2 |
% |
|
10.5 |
% |
|
$ |
13,495.5 |
|
|
$ |
12,165.7 |
|
|
10.9 |
% |
Foreign currency translation(iii) |
|
— |
|
|
(18.1 |
) |
|
|
|
|
|
— |
|
|
(68.9 |
) |
|
|
Net sales, on a constant
currency basis |
|
$ |
4,907.7 |
|
|
$ |
4,355.1 |
|
|
12.7 |
% |
|
10.9 |
% |
|
$ |
13,495.5 |
|
|
$ |
12,096.8 |
|
|
11.6 |
% |
(i) There were 64 and 63 selling days for the three months ended
September 30, 2019 and 2018, respectively.
(ii) There were 191 selling days for both the nine months ended
September 30, 2019 and 2018.
(iii) 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
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(dollars in millions)
|
|
September 30, 2019 |
|
December 31, 2018 |
|
September 30, 2018 |
Assets |
(unaudited) |
|
|
|
(unaudited) |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
166.9 |
|
|
$ |
205.8 |
|
|
$ |
255.1 |
|
Accounts receivable, net of allowance for doubtfulaccounts of $9.1,
$7.0, and $8.0, respectively |
2,899.5 |
|
|
2,671.2 |
|
|
2,650.5 |
|
Merchandise inventory |
603.6 |
|
|
454.3 |
|
|
481.1 |
|
Miscellaneous receivables |
432.2 |
|
|
316.4 |
|
|
370.4 |
|
Prepaid expenses and other |
193.1 |
|
|
149.1 |
|
|
192.4 |
|
Total current assets |
4,295.3 |
|
|
3,796.8 |
|
|
3,949.5 |
|
|
|
|
|
|
|
Operating lease right-of-use
assets |
84.2 |
|
|
— |
|
|
— |
|
Property and equipment,
net |
171.1 |
|
|
156.1 |
|
|
147.8 |
|
Goodwill |
2,515.9 |
|
|
2,462.8 |
|
|
2,469.5 |
|
Other intangible assets,
net |
616.1 |
|
|
712.2 |
|
|
758.2 |
|
Other assets |
20.5 |
|
|
39.8 |
|
|
50.4 |
|
Total Assets |
$ |
7,703.1 |
|
|
$ |
7,167.7 |
|
|
$ |
7,375.4 |
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable - trade |
$ |
1,900.0 |
|
|
$ |
1,577.1 |
|
|
$ |
1,609.9 |
|
Accounts payable - inventory financing |
411.7 |
|
|
429.3 |
|
|
407.6 |
|
Current maturities of long-term debt |
25.4 |
|
|
25.3 |
|
|
32.0 |
|
Contract liabilities |
212.1 |
|
|
178.3 |
|
|
188.5 |
|
Accrued expenses and other current liabilities |
691.8 |
|
|
593.1 |
|
|
565.9 |
|
Total current liabilities |
3,241.0 |
|
|
2,803.1 |
|
|
2,803.9 |
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
Debt |
3,259.0 |
|
|
3,183.3 |
|
|
3,187.4 |
|
Deferred income taxes |
111.3 |
|
|
141.9 |
|
|
158.4 |
|
Operating lease liabilities |
81.7 |
|
|
— |
|
|
— |
|
Other liabilities |
75.0 |
|
|
64.2 |
|
|
65.0 |
|
Total long-term liabilities |
3,527.0 |
|
|
3,389.4 |
|
|
3,410.8 |
|
|
|
|
|
|
|
Total stockholders’ equity |
935.1 |
|
|
975.2 |
|
|
1,160.7 |
|
Total Liabilities and Stockholders’ Equity |
$ |
7,703.1 |
|
|
$ |
7,167.7 |
|
|
$ |
7,375.4 |
|
CDW CORPORATION AND
SUBSIDIARIESNET SALES DETAIL(dollars in
millions)(unaudited)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2019 |
|
2018 |
|
% Change |
|
Average Daily %
Change(i) |
|
2019 |
|
2018 |
|
% Change(i) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
$ |
1,913.5 |
|
|
$ |
1,706.5 |
|
|
12.1 |
% |
|
10.4 |
% |
|
$ |
5,533.6 |
|
|
$ |
5,006.1 |
|
|
10.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Small Business |
|
386.2 |
|
|
340.0 |
|
|
13.6 |
|
|
11.8 |
|
|
1,119.2 |
|
|
997.1 |
|
|
12.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government |
|
793.4 |
|
|
639.3 |
|
|
24.1 |
|
|
22.2 |
|
|
1,860.2 |
|
|
1,551.3 |
|
|
19.9 |
|
Education |
|
807.0 |
|
|
793.1 |
|
|
1.8 |
|
|
0.2 |
|
|
1,981.0 |
|
|
1,902.4 |
|
|
4.1 |
|
Healthcare |
|
500.5 |
|
|
442.7 |
|
|
13.1 |
|
|
11.3 |
|
|
1,430.5 |
|
|
1,286.8 |
|
|
11.2 |
|
Total Public |
|
2,100.9 |
|
|
1,875.1 |
|
|
12.0 |
|
|
10.3 |
|
|
5,271.7 |
|
|
4,740.5 |
|
|
11.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
507.1 |
|
|
451.6 |
|
|
12.3 |
|
|
10.6 |
|
|
1,571.0 |
|
|
1,422.0 |
|
|
10.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Net sales |
|
$ |
4,907.7 |
|
|
$ |
4,373.2 |
|
|
12.2 |
% |
|
10.5 |
% |
|
$ |
13,495.5 |
|
|
$ |
12,165.7 |
|
|
10.9 |
% |
(i) There were 64 and 63 selling days for the three months
ended September 30, 2019 and 2018, respectively. There were 191
selling days for both the nine months ended September 30, 2019 and
2018.
CDW CORPORATION AND
SUBSIDIARIESDEBT AND WORKING CAPITAL
INFORMATION(dollars in millions)
|
September 30, 2019 |
|
December 31, 2018 |
|
September 30, 2018 |
|
(unaudited) |
|
|
|
(unaudited) |
Debt and Revolver
Availability |
|
|
|
|
|
Cash and cash equivalents |
$ |
166.9 |
|
|
$ |
205.8 |
|
|
$ |
255.1 |
|
Total debt |
3,284.4 |
|
|
3,208.6 |
|
|
3,219.4 |
|
Revolver
availability |
1,129.5 |
|
|
1,120.1 |
|
|
1,129.7 |
|
Cash plus revolver
availability |
1,296.4 |
|
|
1,325.9 |
|
|
1,384.8 |
|
|
|
|
|
|
|
Working
Capital(i) |
|
|
|
|
|
Days of sales
outstanding |
56 |
|
|
56 |
|
|
55 |
|
Days of supply in
inventory |
13 |
|
|
13 |
|
|
12 |
|
Days of purchases
outstanding |
(52 |
) |
|
(50 |
) |
|
(49 |
) |
Cash conversion
cycle |
17 |
|
|
19 |
|
|
18 |
|
(i) Based on a rolling three-month average.
CDW CORPORATION AND
SUBSIDIARIESCASH FLOW INFORMATION(dollars
in millions)(unaudited)
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
|
|
|
Cash flows provided by
operating activities |
$ |
682.3 |
|
|
$ |
602.3 |
|
|
|
|
|
Capital expenditures |
(75.0 |
) |
|
(53.4 |
) |
Acquisition of business, net
of cash acquired |
(75.0 |
) |
|
— |
|
Cash flows used in investing
activities |
(150.0 |
) |
|
(53.4 |
) |
|
|
|
|
Net change in accounts payable
- inventory financing |
(17.4 |
) |
|
(90.1 |
) |
Other cash flows used in
financing activities |
(551.1 |
) |
|
(345.2 |
) |
Cash flows used in financing
activities |
(568.5 |
) |
|
(435.3 |
) |
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
(2.7 |
) |
|
(2.7 |
) |
Net (decrease) increase in
cash and cash equivalents |
(38.9 |
) |
|
110.9 |
|
Cash and cash equivalents -
beginning of period |
205.8 |
|
|
144.2 |
|
Cash and cash equivalents -
end of period |
$ |
166.9 |
|
|
$ |
255.1 |
|
|
|
|
|
Supplementary
disclosure of cash flow information: |
|
|
|
Interest paid |
$ |
(124.8 |
) |
|
$ |
(117.4 |
) |
Taxes paid, net |
$ |
(203.0 |
) |
|
$ |
(200.5 |
) |
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