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 second quarter 2020 results. CDW also
announced the approval by its Board of Directors of a quarterly
cash dividend to be paid in September 2020.
“This quarter, our financial results reflected
variances across our diversified customer end markets directly
related to the impact of the COVID-19 pandemic,” said Christine A.
Leahy, chief executive officer, CDW. “I am extremely proud of
our dedicated coworkers, who continued to meet the needs of our
customers amidst unprecedented circumstances. Customer
priorities included remote enablement, business continuity,
security, optimization, and digital transformation.”
“CDW continues to be in a position of financial
strength,” said Collin B. Kebo, chief financial officer, CDW. “We
are confident in our balance sheet and liquidity position. We
will continue to balance managing risk while supporting our
customers.”
“While the depth and duration of the impact from
COVID-19 remain unknowable, I am confident that technology will
continue to be essential throughout this health and economic crisis
and the recovery beyond. CDW will continue to invest in
capabilities, and our coworkers will continue to orchestrate
integrated solutions from our broad technology portfolio to deliver
strategic outcomes for our customers,” concluded Leahy.
A cash dividend of $0.38 per share will be paid
on September 10, 2020 to all stockholders of record as of the
close of business on August 25, 2020.
Second Quarter of 2020 Highlights:
Total Net sales in the second quarter of 2020
were $4,366 million, compared to $4,630 million in the second
quarter of 2019, a decrease of 5.7 percent. There were 64 selling
days for both the three months ended June 30, 2020 and 2019. Net
sales on a constant currency basis decreased 5.3 percent. Currency
impact to Net sales growth was driven by unfavorable translation of
the British pound and Canadian dollar to US dollar. Second quarter
Net sales performance included:
- Total Corporate segment Net sales
of $1,558 million, 17.3 percent lower than the second quarter of
2019.
- Total Small Business segment Net
sales of $302 million, 19.9 percent lower than the second quarter
of 2019.
- Total Public segment Net sales of
$2,022 million, 9.9 percent higher than the second quarter of 2019.
Public results were driven by an increase in Net sales to
Government and Education customers of 24.4 percent and 13.3
percent, respectively. Net sales to Healthcare customers
decreased 12.8 percent.
- Net sales for CDW's UK and Canadian
operations, combined as “Other” for financial reporting purposes,
of $484 million, 8.4 percent lower than the second quarter of
2019.
Gross profit in the second quarter of 2020 was
$747 million, compared to $774 million for the second quarter of
2019, representing a decrease of 3.4 percent. Gross profit margin
was 17.1 percent in the second quarter of 2020 versus 16.7 percent
in the second quarter of 2019. Gross profit margin was positively
impacted by product margin and by the mix of netted down revenues
that are booked net of cost of goods sold, primarily software as a
service.
Total selling and administrative expenses were
$464 million in the second quarter of 2020, compared to $474
million in the second quarter of 2019, representing a decrease of
2.1 percent. This decrease was primarily driven by lower sales
payroll consistent with lower gross profit, reduced
performance-based compensation, and cost saving measures, including
decreased travel and entertainment, and ongoing productivity and
efficiency efforts. These reductions were partially offset by
COVID-19 related costs.
Operating income was $283 million in the second
quarter of 2020, compared to $300 million in the second quarter of
2019, representing a decrease of 5.6 percent. Non-GAAP operating
income was $338 million in the second quarter of 2020, compared to
$358 million in the second quarter of 2019, representing a decrease
of 5.6 percent. The Non-GAAP operating income margin was 7.7
percent in both the second quarter of 2020 and the second quarter
of 2019.
Net interest expense was $40 million in the
second quarter of 2020 compared to $41 million in the second
quarter of 2019, representing a decrease of 1.8 percent.
The effective tax rate was 22.9 percent in the
second quarter of 2020, compared to 24.7 percent in the second
quarter of 2019, which resulted in tax expense of $56 million and
$65 million, respectively. The decrease was primarily related to
higher excess tax benefits on equity-based compensation in
2020.
Net income was $189 million in the second
quarter of 2020, compared to $197 million in the second quarter of
2019, representing a decrease of 3.8 percent. Non-GAAP net income
was $225 million in the second quarter of 2020, compared to $238
million in the second quarter of 2019, representing a decrease of
5.2 percent.
Weighted average diluted shares outstanding were
144 million for the second quarter of 2020, compared to 148 million
for the second quarter of 2019. Net income per diluted share for
the second quarter of 2020 was $1.31, compared to $1.33 for the
second quarter of 2019, representing a decrease of 1.1 percent.
Non-GAAP net income per diluted share for the second quarter of
2020 was $1.56, compared to $1.60 for the second quarter of 2019,
representing a decrease of 2.6 percent.
Year to Date 2020 Highlights:
Total Net sales in the first six months ("year
to date") of 2020 were $8,755 million, compared to $8,588 million
for year to date 2019, an increase of 1.9 percent. There were 128
and 127 selling days for the six months ended June 30, 2020 and
2019, respectively. On an average daily sales basis, Net sales
growth was 1.1 percent and Net sales growth on a constant currency
average daily sales basis was 1.5 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, on an average daily sales basis, included:
- Total Corporate segment Net sales
of $3,469 million, 4.9 percent lower than 2019.
- Total Small Business segment Net
sales of $694 million, 6.1 percent lower than 2019.
- Total Public segment Net sales of
$3,547 million, 11.0 percent higher than 2019. Public results were
led by Net sales to Government and Education customers, which
increased 19.8 percent and 14.3 percent, respectively. Net
sales to Healthcare customers decreased 3.3 percent.
- Net sales for CDW's UK and Canadian
operations, combined as “Other” for financial reporting purposes,
were $1,045 million, 2.5 percent lower than 2019.
Gross profit for year to date 2020 was $1,504
million, compared to $1,446 million for 2019, representing an
increase of 4.0 percent. Gross profit margin was 17.2 percent for
year to date 2020 versus 16.8 percent for 2019. Gross profit
margin was positively impacted by product margin.
Total selling and administrative expenses were
$975 million for year to date 2020, compared to $917 million for
2019, representing an increase of 6.3 percent. This increase was
primarily due to a higher provision for credit losses driven by
increased reserves reflecting the expected economic impact of the
COVID-19 pandemic, higher payroll expenses consistent with higher
coworker count and higher gross profit, and COVID-19 related
costs.
Operating income was $529 million for both year
to date 2020 and 2019. Non-GAAP operating income was $642 million
for year to date 2020, compared to $646 million for 2019,
representing a decrease of 0.5 percent. The Non-GAAP operating
income margin was 7.3 percent for 2020 versus 7.5 percent for
2019.
Net interest expense was $78 million for year to
date 2020, compared to $79 million for 2019, representing a
decrease of 1.5 percent.
The effective tax rate for year to date 2020 was
21.9 percent, which resulted in tax expense of $100 million,
compared to a 22.8 percent effective tax rate and tax expense of
$103 million for 2019. The decrease in the effective tax rate was
primarily driven by higher excess tax benefits on equity-based
compensation in 2020, partially offset by a discrete tax benefit
related to CDW Canada's acquisition of Scalar Decisions Inc. in
2019.
Net income was $357 million for year to date
2020, compared to $349 million for 2019, representing an increase
of 2.2 percent. Non-GAAP net income was $425 million for year to
date 2020, compared to $423 million for 2019, representing an
increase of 0.5 percent.
Weighted average diluted shares outstanding were
145 million for year to date 2020, compared to 149 million for
2019. Net income per diluted share for year to date 2020 was $2.47
compared to $2.35 for 2019, representing an increase of 5.1
percent. Non-GAAP net income per diluted share for year to date
2020 was $2.94, compared to $2.84 for 2019, representing an
increase of 3.4 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
forward-looking statements are subject to risks and uncertainties
that may cause actual results or events to differ materially from
those described in such statements. These risks and uncertainties
include, among others, the COVID-19 pandemic and actions taken in
response thereto and the associated impact on our business, results
of operations, cash flows, financial condition and liquidity;
global and regional economic and political conditions; decreases in
spending on technology products and services; CDW's relationships
with vendor partners and terms of their agreements; continued
innovations in hardware, software and services offerings by CDW's
vendor partners; substantial competition that could reduce CDW's
market share; potential interruptions of the flow of products from
suppliers; CDW's level of indebtedness and ability to generate
sufficient cash to service such indebtedness; restrictions imposed
by agreements relating to CDW's indebtedness on its operations and
liquidity; changes in, or the discontinuation of, CDW's share
repurchase program or dividend payments; 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 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; future
acquisitions or alliances; fluctuations in CDW's operating results;
fluctuations in foreign currency; 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 its plans, intentions and other
expectations reflected in or suggested by such forward-looking
statements are reasonable, it can give no assurance that it will
achieve those plans, intentions or expectations. 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 Quarterly Report on
Form 10-Q for the quarter ended March 31, 2020 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, except as
otherwise required by law.
Non-GAAP Financial
Information
Non-GAAP operating income excludes, among other
things, charges related to the amortization of acquisition-related
intangible assets, equity-based compensation and related payroll
taxes, and acquisition and integration expenses. Non-GAAP operating
income margin is defined as Non-GAAP operating income as a
percentage of Net sales. Non-GAAP income before income taxes and
Non-GAAP net income exclude, among other things, charges related to
acquisition-related intangible asset amortization, equity-based
compensation, 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.
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 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 member of the S&P
500 Index, CDW was founded in 1984 and employs over 10,000
coworkers. For the trailing twelve months ended June 30, 2020,
CDW generated Net sales over $18 billion. For more information
about CDW, please visit www.CDW.com.
Webcast
CDW Corporation will hold a conference call
today, August 5, 2020 at 7:30 a.m. CT/8:30 a.m. ET to discuss
its second 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 InquiriesBrittany A. SmithVice
President, Investor Relations andFinancial Planning and
Analysis(847) 968-0238investorrelations@cdw.com
Media InquiriesSara GranackVice President,
Corporate Communications(847) 419-7411mediarelations@cdw.com
CDWPR-FI
CDW CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(dollars and shares in millions, except
per-share amounts)(unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
% Change(i) |
|
2020 |
|
2019 |
|
% Change(i) |
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
4,365.7 |
|
|
$ |
4,629.9 |
|
|
(5.7 |
)% |
|
$ |
8,754.9 |
|
|
$ |
8,587.8 |
|
|
1.9 |
% |
Cost of sales |
3,618.5 |
|
|
3,856.1 |
|
|
(6.2 |
) |
|
7,251.2 |
|
|
7,141.9 |
|
|
1.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
747.2 |
|
|
773.8 |
|
|
(3.4 |
) |
|
1,503.7 |
|
|
1,445.9 |
|
|
4.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative
expenses |
463.8 |
|
|
473.5 |
|
|
(2.1 |
) |
|
974.5 |
|
|
916.7 |
|
|
6.3 |
|
Operating income |
283.4 |
|
|
300.3 |
|
|
(5.6 |
) |
|
529.2 |
|
|
529.2 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
(39.7 |
) |
|
(40.5 |
) |
|
(1.8 |
) |
|
(77.6 |
) |
|
(78.8 |
) |
|
(1.5 |
) |
Other income, net |
1.7 |
|
|
1.4 |
|
|
20.9 |
|
|
5.6 |
|
|
2.4 |
|
|
nm* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
245.4 |
|
|
261.2 |
|
|
(6.0 |
) |
|
457.2 |
|
|
452.8 |
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
(56.3 |
) |
|
(64.6 |
) |
|
(13.0 |
) |
|
(100.2 |
) |
|
(103.3 |
) |
|
(3.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
189.1 |
|
|
$ |
196.6 |
|
|
(3.8 |
)% |
|
$ |
357.0 |
|
|
$ |
349.5 |
|
|
2.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.32 |
|
|
$ |
1.35 |
|
|
(1.6 |
)% |
|
$ |
2.50 |
|
|
$ |
2.39 |
|
|
4.9 |
% |
Diluted |
$ |
1.31 |
|
|
$ |
1.33 |
|
|
(1.1 |
)% |
|
$ |
2.47 |
|
|
$ |
2.35 |
|
|
5.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
142.4 |
|
|
145.7 |
|
|
|
|
142.5 |
|
|
146.3 |
|
|
|
Diluted |
144.3 |
|
|
148.3 |
|
|
|
|
144.6 |
|
|
148.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Not meaningful
- There were 64 selling days for both the three months ended June
30, 2020 and 2019. There were 128 and 127 selling days for the six
months ended June 30, 2020 and 2019, respectively.
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 six months ended June 30, 2020 and 2019 below.
CDW CORPORATION AND
SUBSIDIARIESNON-GAAP OPERATING INCOME AND NON-GAAP
OPERATING INCOME MARGIN(dollars in
millions)(unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
%
ofNetsales |
|
2019 |
|
% of Net sales |
|
2020 |
|
% of Net sales |
|
2019 |
|
% of Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
$ |
283.4 |
|
|
6.5 |
% |
|
$ |
300.3 |
|
|
6.5 |
% |
|
$ |
529.2 |
|
|
6.0 |
% |
|
$ |
529.2 |
|
|
6.2 |
% |
Amortization of
intangibles(i) |
44.4 |
|
|
|
|
44.7 |
|
|
|
|
89.0 |
|
|
|
|
89.1 |
|
|
|
Equity-based compensation |
5.6 |
|
|
|
|
12.2 |
|
|
|
|
14.4 |
|
|
|
|
24.9 |
|
|
|
Other adjustments(ii) |
4.8 |
|
|
|
|
1.2 |
|
|
|
|
9.5 |
|
|
|
|
2.5 |
|
|
|
Non-GAAP operating income |
$ |
338.2 |
|
|
7.7 |
% |
|
$ |
358.4 |
|
|
7.7 |
% |
|
$ |
642.1 |
|
|
7.3 |
% |
|
$ |
645.7 |
|
|
7.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Includes amortization expense for acquisition-related
intangible assets, primarily customer relationships, customer
contracts and trade names.
- Includes other expenses such as payroll taxes on equity-based
compensation, expenses related to the relocation of the downtown
Chicago office, and acquisition and integration expenses.
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)
|
Three Months Ended June 30, |
|
|
|
2020 |
|
2019 |
|
|
|
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 |
$ |
245.4 |
|
|
$ |
(56.3 |
) |
|
$ |
189.1 |
|
|
22.9 |
% |
|
$ |
261.2 |
|
|
$ |
(64.6 |
) |
|
$ |
196.6 |
|
|
24.7 |
% |
|
(3.8 |
)% |
Amortization of
intangibles(ii) |
44.4 |
|
|
(11.1 |
) |
|
33.3 |
|
|
|
|
44.7 |
|
|
(11.2 |
) |
|
33.5 |
|
|
|
|
|
Equity-based compensation |
5.6 |
|
|
(6.3 |
) |
|
(0.7 |
) |
|
|
|
12.2 |
|
|
(5.5 |
) |
|
6.7 |
|
|
|
|
|
Other adjustments(iii) |
4.8 |
|
|
(1.2 |
) |
|
3.6 |
|
|
|
|
1.2 |
|
|
(0.3 |
) |
|
0.9 |
|
|
|
|
|
Non-GAAP |
$ |
300.2 |
|
|
$ |
(74.9 |
) |
|
$ |
225.3 |
|
|
24.9 |
% |
|
$ |
319.3 |
|
|
$ |
(81.6 |
) |
|
$ |
237.7 |
|
|
25.6 |
% |
|
(5.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income per diluted
share |
|
|
|
|
$ |
1.31 |
|
|
|
|
|
|
|
|
$ |
1.33 |
|
|
|
|
|
Non-GAAP net income per
diluted share |
|
|
|
|
$ |
1.56 |
|
|
|
|
|
|
|
|
$ |
1.60 |
|
|
|
|
|
Shares used in computing GAAP
and Non-GAAP net income per diluted share |
|
|
|
|
144.3 |
|
|
|
|
|
|
|
|
148.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Income tax on non-GAAP adjustments includes excess tax benefits
associated with equity-based compensation.
- Includes amortization expense for acquisition-related
intangible assets, primarily customer relationships, customer
contracts and trade names.
- Includes other expenses such as payroll taxes on equity-based
compensation, expenses related to the relocation of the downtown
Chicago office, and acquisition and integration expenses.
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)
|
Six Months Ended June 30, |
|
|
|
2020 |
|
2019 |
|
|
|
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 |
$ |
457.2 |
|
|
$ |
(100.2 |
) |
|
$ |
357.0 |
|
|
21.9 |
% |
|
$ |
452.8 |
|
|
$ |
(103.3 |
) |
|
$ |
349.5 |
|
|
22.8 |
% |
|
2.2 |
% |
Amortization of
intangibles(ii) |
89.0 |
|
|
(22.2 |
) |
|
66.8 |
|
|
|
|
89.1 |
|
|
(22.5 |
) |
|
66.6 |
|
|
|
|
|
Equity-based compensation |
14.4 |
|
|
(20.0 |
) |
|
(5.6 |
) |
|
|
|
24.9 |
|
|
(16.8 |
) |
|
8.1 |
|
|
|
|
|
Other adjustments(iii) |
9.5 |
|
|
(2.4 |
) |
|
7.1 |
|
|
|
|
2.5 |
|
|
(3.6 |
) |
|
(1.1 |
) |
|
|
|
|
Non-GAAP |
$ |
570.1 |
|
|
$ |
(144.8 |
) |
|
$ |
425.3 |
|
|
25.4 |
% |
|
$ |
569.3 |
|
|
$ |
(146.2 |
) |
|
$ |
423.1 |
|
|
25.7 |
% |
|
0.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income per diluted
share |
|
|
|
|
$ |
2.47 |
|
|
|
|
|
|
|
|
$ |
2.35 |
|
|
|
|
|
Non-GAAP net income per
diluted share |
|
|
|
|
$ |
2.94 |
|
|
|
|
|
|
|
|
$ |
2.84 |
|
|
|
|
|
Shares used in computing GAAP
and Non-GAAP net income per diluted share |
|
|
|
|
144.6 |
|
|
|
|
|
|
|
|
148.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Income tax on non-GAAP adjustments includes excess tax benefits
associated with equity-based compensation.
- Includes amortization expense for acquisition-related
intangible assets, primarily customer relationships, customer
contracts and trade names.
- Includes other expenses such as payroll taxes on equity-based
compensation, expenses related to the relocation of the downtown
Chicago office, and acquisition and integration expenses.
CDW CORPORATION AND
SUBSIDIARIESNET SALES GROWTH ON A CONSTANT
CURRENCY BASIS(dollars in millions)(unaudited)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2020 |
|
2019 |
|
% Change(i) |
|
2020 |
|
2019 |
|
% Change |
|
Average Daily % Change(ii) |
Net sales, as reported |
|
$ |
4,365.7 |
|
|
$ |
4,629.9 |
|
|
(5.7 |
)% |
|
$ |
8,754.9 |
|
|
$ |
8,587.8 |
|
|
1.9 |
% |
|
1.1 |
% |
Foreign currency translation(iii) |
|
— |
|
|
(17.8 |
) |
|
|
|
— |
|
|
(26.8 |
) |
|
|
|
|
Net sales, on a constant
currency basis |
|
$ |
4,365.7 |
|
|
$ |
4,612.1 |
|
|
(5.3 |
)% |
|
$ |
8,754.9 |
|
|
$ |
8,561.0 |
|
|
2.3 |
% |
|
1.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- There were 64 selling days for both the three months ended June
30, 2020 and 2019.
- There were 128 and 127 selling days for the six months ended
June 30, 2020 and 2019, respectively.
- 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)
|
|
June 30, 2020 |
|
December 31, 2019 |
|
June 30, 2019 |
Assets |
(unaudited) |
|
|
|
(unaudited) |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
958.4 |
|
|
$ |
154.0 |
|
|
$ |
194.5 |
|
Accounts receivable, net of allowance for credit losses of
$30.7, $7.9, and $8.9, respectively |
3,029.0 |
|
|
3,002.2 |
|
|
2,967.3 |
|
Merchandise inventory |
694.8 |
|
|
611.2 |
|
|
652.2 |
|
Miscellaneous receivables |
353.9 |
|
|
395.1 |
|
|
406.0 |
|
Prepaid expenses and other |
199.7 |
|
|
171.6 |
|
|
205.3 |
|
Total current assets |
5,235.8 |
|
|
4,334.1 |
|
|
4,425.3 |
|
|
|
|
|
|
|
Operating lease right-of-use
assets |
137.3 |
|
|
131.8 |
|
|
117.3 |
|
Property and equipment,
net |
326.5 |
|
|
363.1 |
|
|
163.4 |
|
Goodwill |
2,532.1 |
|
|
2,553.0 |
|
|
2,524.7 |
|
Other intangible assets,
net |
492.9 |
|
|
594.1 |
|
|
660.5 |
|
Other assets |
24.9 |
|
|
23.3 |
|
|
30.7 |
|
Total assets |
$ |
8,749.5 |
|
|
$ |
7,999.4 |
|
|
$ |
7,921.9 |
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable - trade |
$ |
1,809.0 |
|
|
$ |
1,835.0 |
|
|
$ |
2,055.8 |
|
Accounts payable - inventory financing |
479.1 |
|
|
429.9 |
|
|
465.7 |
|
Current maturities of long-term debt |
37.9 |
|
|
34.1 |
|
|
25.5 |
|
Contract liabilities |
275.4 |
|
|
252.2 |
|
|
200.8 |
|
Accrued expenses and other current liabilities |
960.1 |
|
|
940.2 |
|
|
712.5 |
|
Total current liabilities |
3,561.5 |
|
|
3,491.4 |
|
|
3,460.3 |
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
Debt |
3,861.6 |
|
|
3,283.2 |
|
|
3,253.3 |
|
Deferred income taxes |
67.6 |
|
|
62.4 |
|
|
123.1 |
|
Operating lease liabilities |
138.0 |
|
|
131.1 |
|
|
86.6 |
|
Other liabilities |
65.2 |
|
|
71.0 |
|
|
62.5 |
|
Total long-term liabilities |
4,132.4 |
|
|
3,547.7 |
|
|
3,525.5 |
|
|
|
|
|
|
|
Total stockholders’ equity |
1,055.6 |
|
|
960.3 |
|
|
936.1 |
|
Total liabilities and stockholders’ equity |
$ |
8,749.5 |
|
|
$ |
7,999.4 |
|
|
$ |
7,921.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CDW CORPORATION AND
SUBSIDIARIESNET SALES DETAIL(dollars in
millions)(unaudited)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2020 |
|
2019 |
|
% Change(i) |
|
2020 |
|
2019 |
|
% Change |
|
Average Daily % Change(i) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
$ |
1,557.5 |
|
|
$ |
1,883.9 |
|
|
(17.3 |
)% |
|
$ |
3,468.5 |
|
|
$ |
3,620.1 |
|
|
(4.2 |
)% |
|
(4.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Small Business |
|
302.1 |
|
|
377.4 |
|
|
(19.9 |
) |
|
693.6 |
|
|
733.0 |
|
|
(5.4 |
) |
|
(6.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government |
|
719.7 |
|
|
578.4 |
|
|
24.4 |
|
|
1,288.2 |
|
|
1,066.8 |
|
|
20.8 |
|
|
19.8 |
|
Education |
|
876.8 |
|
|
773.6 |
|
|
13.3 |
|
|
1,353.0 |
|
|
1,174.0 |
|
|
15.2 |
|
|
14.3 |
|
Healthcare |
|
425.6 |
|
|
488.1 |
|
|
(12.8 |
) |
|
906.2 |
|
|
930.0 |
|
|
(2.6 |
) |
|
(3.3 |
) |
Total Public |
|
2,022.1 |
|
|
1,840.1 |
|
|
9.9 |
|
|
3,547.4 |
|
|
3,170.8 |
|
|
11.9 |
|
|
11.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
484.0 |
|
|
528.5 |
|
|
(8.4 |
) |
|
1,045.4 |
|
|
1,063.9 |
|
|
(1.7 |
) |
|
(2.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Net sales |
|
$ |
4,365.7 |
|
|
$ |
4,629.9 |
|
|
(5.7 |
)% |
|
$ |
8,754.9 |
|
|
$ |
8,587.8 |
|
|
1.9 |
% |
|
1.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- There were 64 selling days for both the three months ended June
30, 2020 and 2019. There were 128 and 127 selling days for the six
months ended June 30, 2020 and 2019, respectively.
CDW CORPORATION AND
SUBSIDIARIESDEBT AND WORKING CAPITAL
INFORMATION(dollars in millions)
|
June 30, 2020 |
|
December 31, 2019 |
|
June 30, 2019 |
|
(unaudited) |
|
|
|
(unaudited) |
Debt and Revolver
Availability |
|
|
|
|
|
Cash and cash equivalents |
$ |
958.4 |
|
|
$ |
154.0 |
|
|
$ |
194.5 |
|
Total debt |
3,899.5 |
|
|
3,317.3 |
|
|
3,278.8 |
|
Revolver availability |
1,029.5 |
|
|
1,106.2 |
|
|
1,036.0 |
|
Cash plus revolver availability |
1,987.9 |
|
|
1,260.2 |
|
|
1,230.5 |
|
|
|
|
|
|
|
Working
Capital(i) |
|
|
|
|
|
Days of sales outstanding |
59 |
|
|
57 |
|
|
52 |
|
Days of supply in inventory |
18 |
|
|
14 |
|
|
14 |
|
Days of purchases outstanding |
(52 |
) |
|
(53 |
) |
|
(50 |
) |
Cash conversion cycle |
25 |
|
|
18 |
|
|
16 |
|
|
|
|
|
|
|
|
|
|
- Based on a rolling three-month average.
CDW CORPORATION AND
SUBSIDIARIESCASH FLOW INFORMATION(dollars
in millions)(unaudited)
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
|
|
|
Cash flows provided by operating activities |
$ |
515.8 |
|
|
$ |
414.5 |
|
|
|
|
|
Capital expenditures(i) |
(100.0 |
) |
|
(43.9 |
) |
Acquisition of business, net
of cash acquired |
— |
|
|
(75.0 |
) |
Cash flows used in investing
activities |
(100.0 |
) |
|
(118.9 |
) |
|
|
|
|
Net change in accounts payable
- inventory financing |
52.3 |
|
|
36.3 |
|
Other cash flows provided by
(used in) financing activities |
342.0 |
|
|
(341.5 |
) |
Cash flows provided by (used
in) financing activities |
394.3 |
|
|
(305.2 |
) |
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
(5.7 |
) |
|
(1.7 |
) |
Net increase (decrease) in
cash and cash equivalents |
804.4 |
|
|
(11.3 |
) |
Cash and cash equivalents -
beginning of period |
154.0 |
|
|
205.8 |
|
Cash and cash equivalents -
end of period |
$ |
958.4 |
|
|
$ |
194.5 |
|
|
|
|
|
Supplementary
disclosure of cash flow information: |
|
|
|
Interest paid |
$ |
(67.2 |
) |
|
$ |
(76.0 |
) |
Taxes paid, net |
$ |
(21.5 |
) |
|
$ |
(115.2 |
) |
- Includes expenditures for revenue generating assets.
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