CDW Corporation (Nasdaq:CDW) today announced updates related to the
novel coronavirus, COVID-19.
“Our mission at CDW is to help our customers
navigate change and be successful in an ever-evolving world.
This mission is even more relevant during the current COVID-19
crisis,” said Christine A. Leahy, chief executive officer, CDW.
“First quarter demand was strong as customers looked to CDW to meet
urgent needs for greater technology capabilities. CDW teams
have worked tirelessly to safeguard the health and well-being of
each other and to continue delivering for our customers at this
time of great need.”
“Given the depth and duration of the pandemic is
unknown, it is too early to predict the full impact of COVID-19 on
our business. We are committed to deliver on our mission by
providing the essential technology required across all sectors of
the economy – from vital healthcare, education and government
entities to businesses of all sizes – as organizations strive to
achieve their goals during this pandemic,” concluded
Leahy.
Business UpdateFor the first
quarter, preliminary Net sales are expected to be $4.39 billion,
Operating income is expected to be $246 million and Non-GAAP
operating income is expected to be $304 million. Net income
per diluted share is expected to be $1.16 and Non-GAAP net income
per diluted share is expected to be $1.38. Non-GAAP operating
income and Non-GAAP net income per diluted share are measures that
are not based on accounting principles generally accepted in the
United States (“GAAP”). Reconciliations to the most directly
comparable GAAP measures are included in the attached
schedules. These preliminary results have not been reviewed,
audited or subjected to any agreed-upon procedures by our
independent registered public accounting firm. Final results
for the first quarter may ultimately differ from these preliminary
results.
CDW is focused on the well-being and safety of
its coworkers, leveraging standing crisis management protocols and
following guidelines from public health authorities. CDW
implemented precautions to help keep its coworkers healthy and
safe, including activating a cross-functional response team led by
Executive Committee members, moving to remote working for its
office coworkers, and implementing safety protocols at its
distribution centers, including social distancing measures,
segmented shifts, additional personal protective equipment,
enhanced facility cleanings, and temperature screening for anyone
entering the facilities. In recent weeks, to limit the virus
spread after a few coworkers tested positive for COVID-19, CDW
decided to close its Vernon Hills, Illinois distribution center for
several days and to require a shift of configuration center
coworkers to self-isolate. CDW has continued to pay its
affected coworkers their wages. These actions have not had a
material impact to date as the company leveraged flexibility in its
distribution and configuration capabilities where possible, and
where not, shipping times modestly increased.
2020 Targets and Related 2020 Financial
Information As a result of COVID-19 and the adoption of
current and potential future measures to prevent its spread, CDW is
withdrawing its 2020 targets and related 2020 financial information
that were previously issued on February 6, 2020. While CDW
has a balanced portfolio of customer end-markets and a full suite
of solutions and services that address customer priorities across
the IT landscape, the impact of COVID-19 on CDW’s businesses could
be material with some customer end-markets impacted more
significantly than others or due to operational measures taken to
safeguard its coworkers or issues with its supply chain. CDW
is unable at this time to predict the impact of COVID-19 on its
operations, liquidity, and financial results, and, depending on the
magnitude and duration of the COVID-19 pandemic, such impact may be
material.
LiquidityThe company remains
confident in its liquidity position. CDW’s primary liquidity
sources are operating cash flow, cash and cash equivalents, and
borrowings under its revolving credit facilities. As of March
31, 2020, CDW had cash and cash equivalents of $214 million and
$3.47 billion of total debt outstanding, plus the capacity to
borrow an additional $1.0 billion under its revolving credit
facilities. The company has no debt maturities due in 2020
and $57 million (£46 million) of debt maturing in August
2021. The company has taken measures to enhance liquidity,
including implementing cost savings initiatives and suspending
share repurchases.
The company will provide an update in its first
quarter earnings release and on its first quarter earnings
call.
About CDWCDW Corporation
(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 a member of the S&P 500 Index, CDW was founded in 1984 and
employs almost 10,000 coworkers. For the year ended December 31,
2019, the company generated Net sales over $18 billion. For more
information about CDW, please visit www.CDW.com.
Forward-Looking
StatementsStatements 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 (i) the impact of COVID-19 on its business,
operations and liquidity, (ii) its preliminary and future financial
results, and (iii) other strategic plans of CDW. These
statements involve risks and uncertainties that could cause actual
results to differ materially from those described in such
statements. 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, 2019 and
subsequent filings with the SEC. Our actual results may
differ from those described in forward-looking statements due to
the risks and uncertainties described in these filings as well as
risks related to COVID-19, including disruptions in the supply or
distribution of products, and postponements or reductions in
spending on technology products or services related to the
pandemic’s economic impacts. 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 net income per
diluted share and Non-GAAP net income exclude, among other things,
charges related to acquisition-related intangible asset
amortization, equity-based compensation, acquisition and
integration expenses, and the associated tax effects of each.
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. The financial statement tables include
a reconciliation of non-GAAP financial measures to the applicable
most comparable GAAP financial measures.
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.
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.
Investor InquiriesBrittany A. SmithVice
President, Investor Relations and Financial Planning and
Analysis847-968-0238investorrelations@cdw.com
Media InquiriesSara GranackVice President,
Corporate Communications847-419-7411mediarelations@cdw.com
CDW CORPORATION AND
SUBSIDIARIES
PRELIMINARY NON-GAAP OPERATING
INCOME (dollars in millions)(unaudited)
|
|
Three MonthsEndedMarch 31, 2020 |
|
|
Operating income |
$ |
246 |
|
Amortization of
intangibles |
45 |
|
Equity-based compensation |
9 |
|
Other adjustments |
4 |
|
Non-GAAP operating income |
$ |
304 |
|
|
|
|
|
PRELIMINARY NON-GAAP NET
INCOMEAND NON-GAAP NET INCOME PER DILUTED
SHARE(dollars and shares in millions, except per-share
amounts)(unaudited)
|
|
Three MonthsEndedMarch 31, 2020 |
|
|
Net income |
$ |
168 |
|
Amortization of
intangibles |
45 |
|
Equity-based compensation |
9 |
|
Other adjustments |
4 |
|
Aggregate adjustment for
income taxes |
(26 |
) |
Non-GAAP net income |
$ |
200 |
|
|
|
|
GAAP net income per diluted
share |
$ |
1.16 |
|
Non-GAAP net income per
diluted share |
$ |
1.38 |
|
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