Slide 1: CDW Corporation Webcast Conference Call
CDW Corporation Webcast Conference Call November 3, 2021 CDW.com | 800.800.4239
Slide 2: Today's Agenda
Today's Agenda ▪ Third Quarter and YTD 2021 Results ▪ Performance Drivers ▪ Outlook ▪ Q&A 2
Slide 3: Disclaimers
Disclaimers Forward-Looking Statements Statements in this presentation 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 regardi
Slide 4: Q3 2021 and YTD Financial Performance
Q3 2021 and YTD Financial Performance Third Quarter: ▪ Net sales increased $544 million from Q3 2020 to $5.3 billion – Up 11.4% on a reported and average daily sales ("ADS") basis – Up 10.7% on an ADS constant currency basis ▪ Operating income up 21.6% to $386 million ▪ Net income up 38.0% to $267 m
Slide 5: Balanced Portfolio Drove Record Top-Line Results
Balanced Portfolio Drove Record Top-Line Results (Unaudited) ($ in millions) Three Months Ended September 30, Nine Months Ended September 30, Average Daily 2021 2020 % Change(1) 2021 2020 % Change % Change(1) Corporate $ 2,067.3 $ 1,660.0 24.5 % $ 5,856.2 $ 5,128.5 14.2 % 14.8 % Small Business 467.1
Slide 6: Highlights Combined Power of Business Model and Strategy
Highlights Combined Power of Business Model and Strategy ▪ Balanced portfolio of customer end-markets ▪ Diverse product and solutions portfolio ▪ Three-part strategy for growth 6
Slide 7: Our Three-Part Growth Strategy
Our Three-Part Growth Strategy Capture share and acquire new customers Enhance capabilities in high-growth solutions areas Expand services capabilities 7
Slide 8: Q3 2021 Financial Results
Q3 2021 Financial Results (Unaudited) ($ in millions, except per share amounts) Three Months Ended September 30, 2021 2020 % Change Net sales $ 5,300.0 $ 4,756.4 11.4 % Average daily net sales $ 82.8 $ 74.3 11.4 % Gross profit $ 914.9 $ 825.5 10.8 % % of Net sales 17.3 % 17.4 % SG&A $ 528.5 $ 507.7
Slide 9: Q3 2021 Non-GAAP SG&A and Non-GAAP Operating Income
Q3 2021 Non-GAAP SG&A and Non-GAAP Operating Income (Unaudited) ($ in millions) Three Months Ended September 30, 2021 2020 % Change SG&A, as reported $ 528.5 $ 507.7 4.1 % Amortization of acquisition-related intangible assets (24.6) (44.9) Equity-based compensation (16.9) (11.5) Other adjustments (7
Slide 10: Q3 2021 Non-Operating Expenses
Q3 2021 Non-Operating Expenses (Unaudited) ($ in millions) Three Months Ended September 30, 2021 2020 % Change Interest expense, net $ 36.4 $ 40.2 (9.4)% Other income (expense), net $ 0.4 $ (27.5) *nm Income tax expense $ 83.8 $ 56.9 47.4 % * Not meaningful 10
Slide 11: Q3 2021 US GAAP Effective Tax Rate
Q3 2021 US GAAP Effective Tax Rate (Unaudited) Three Months Ended September 30, 2021 2020 Federal statutory rate 21.0 % 21.0 % State taxes(1) 4.2 2.2 Excess benefits from equity-based compensation(2) (1.9) (1.1) Change in tax law(3) — 1.0 All other items impacting tax rate 0.6 (0.4) US GAAP effectiv
Slide 12: Q3 2021 Non-GAAP Net Income
Q3 2021 Non-GAAP Net Income (Unaudited) ($ in millions) Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Income Income before Income before Income income tax Net Effective income tax Net Effective taxes expense(1) income tax rate taxes expense(1) income tax rate US GAAP, a
Slide 13: Q3 2021 Earnings Per Share
Q3 2021 Earnings Per Share (Unaudited) ($ in millions, except per share amounts) Three Months Ended September 30, 2021 2020 % Change Diluted EPS $ 1.91 $ 1.33 43.2 % Non-GAAP net income* $ 298.0 $ 265.4 12.3 % Non-GAAP diluted EPS* $ 2.13 $ 1.83 16.4 % * Non-GAAP net income and Non-GAAP diluted EPS
Slide 14: YTD Financial Results
YTD Financial Results (Unaudited) ($ in millions, except per share amounts) Nine Months Ended September 30, 2021 2020 % Change Net sales $ 15,283.9 $ 13,511.3 13.1 % Average daily net sales $ 80.0 $ 70.4 13.7 % Gross profit $ 2,592.9 $ 2,329.2 11.3 % % of Net sales 17.0 % 17.2 % SG&A $ 1,513.2 $ 1,4
Slide 15: YTD Non-GAAP SG&A and Non-GAAP Operating Income
YTD Non-GAAP SG&A and Non-GAAP Operating Income (Unaudited) ($ in millions) Nine Months Ended September 30, 2021 2020 % Change SG&A, as reported $ 1,513.2 $ 1,482.2 2.1 % Amortization of acquisition-related intangible assets (70.6) (133.9) Equity-based compensation (53.3) (25.9) Other adjustments (1
Slide 16: YTD Non-Operating Expenses
YTD Non-Operating Expenses (Unaudited) ($ in millions) Nine Months Ended September 30, 2021 2020 % Change Interest expense, net $ 107.5 $ 117.8 (8.7)% Other income (expense), net $ 38.3 $ (21.9) *nm Income tax expense $ 237.2 $ 157.1 51.1 % * Not meaningful 16
Slide 17: YTD US GAAP Effective Tax Rate
YTD US GAAP Effective Tax Rate (Unaudited) Nine Months Ended September 30, 2021 2020 Federal statutory rate 21.0 % 21.0 % State taxes(1) 4.2 3.4 Excess benefits from equity-based compensation(2) (2.6) (2.8) Change in tax law(3) 0.4 0.4 All other items impacting tax rate 0.5 0.2 US GAAP effective tax
Slide 18: YTD Non-GAAP Net Income
YTD Non-GAAP Net Income (Unaudited) ($ in millions) Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Income Income before Income before Income income tax Net Effective income tax Net Effective taxes expense(1) income tax rate taxes expense(1) income tax rate US GAAP, as repo
Slide 19: YTD Earnings Per Share
YTD Earnings Per Share (Unaudited) ($ in millions, except per share amounts) Nine Months Ended September 30, 2021 2020 % Change Diluted EPS $ 5.47 $ 3.80 43.8 % Non-GAAP net income* $ 833.5 $ 690.7 20.7 % Non-GAAP diluted EPS* $ 5.89 $ 4.77 23.5 % * Non-GAAP net income and Non-GAAP diluted EPS are n
Slide 20: Debt and Revolver Availability
Debt and Revolver Availability ($ in millions) September 30, September 30, 2021 December 31, 2020 2020 (unaudited) (unaudited) Cash and cash equivalents $ 245.1 $ 1,410.2 $ 1,249.5 Total debt $ 4,066.2 $ 3,927.2 $ 3,930.9 Net debt (total debt net of cash and cash equivalents) $ 3,821.1 $ 2,517.0 $ 2
Slide 21: Free Cash Flow
Free Cash Flow (Unaudited) ($ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 % Change 2021 2020 % Change Net cash provided by operating activities $ 291.8 $ 222.6 31.1 % $ 636.7 $ 738.4 (13.8)% Capital expenditures(1) (27.7) (33.6) (66.2) (133.6) Net change i
Slide 22: Cash Conversion Cycle
Cash Conversion Cycle (Unaudited) (Based on a rolling three-month average) September 30, 2021 December 31, 2020 September 30, 2020 Days of sales outstanding 61 57 61 Days of supply in inventory 17 14 13 Days purchases outstanding (53) (54) (58) Cash conversion cycle 25 17 16 22
Slide 23: 2021 Capital Allocation Priorities
2021 Capital Allocation Priorities Priorities Objectives 2021 Actions Target ~25% payout of 25% increase in November 2021 Increase Dividends Annually Non-GAAP net income; to $2.00/share annually grow in-line with earnings Maintain Net Leverage ~2.5 to 3.0 times Net Currently at 2.3x(2) Ratio(1) leve
Slide 24: 2021 Outlook
2021 Outlook 2021(1)(2) U.S. IT growth Net Sales Growth plus ~425 to 500 bps premium in constant currency Non-GAAP Operating Income Margin(3) High-7%s Non-GAAP Earnings Per High-teens growth Diluted Share Growth in constant currency (1) Annual outlooks are provided on a non-GAAP basis because certai
Slide 25: Modeling Thoughts for 2021
Modeling Thoughts for 2021 ▪ Full-year constant currency Net sales growth 425 to 500 bps faster than U.S. IT market growth • Currency expected to be ~80 basis point tailwind for the full year • One extra selling day vs. 2020 in Q4 '21 ▪ Annual depreciation and amortization expenses expected to be be
Slide 26: Questions and Answers
[Mak Questions and Answers DW, PEOPLE WHO GETIT el iL JBL
Slide 27: Non-GAAP Operating Income Reconciliation
Non-GAAP Operating Income Reconciliation (Unaudited) ($ in millions) Three Months Ended September 30, Nine Months Ended September 30, % of Net % of Net % of Net % of Net 2021 sales 2020 sales 2021 sales 2020 sales Operating income, as reported $ 386.4 7.3 % $ 317.8 6.7 % $ 1,079.7 7.1 % $ 847.0 6.3
Slide 28: Net Sales Growth on a Constant Currency Basis
Net Sales Growth on a Constant Currency Basis (Unaudited) ($ in millions) Three Months Ended September 30, Nine Months Ended September 30, Average % % Daily % 2021 2020 Change(1) 2021 2020 Change Change(1) Net sales, as reported $ 5,300.0 $ 4,756.4 11.4 % $ 15,283.9 $ 13,511.3 13.1 % 13.7 % (2) Fore
Slide 29: Non-GAAP Net Income Per Diluted Share, on a Constant Currency Basis
Non-GAAP Net Income Per Diluted Share, on a Constant Currency Basis (Unaudited) ($ and shares in millions, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 % Change 2021 2020 % Change Net income, as reported $ 266.6 $ 193.2 38.0 % $ 773.3 $ 550.2 4