Slide 1: CDW Corporation Webcast Conference Call
CDW Corporation Webcast Conference Call May 6, 2020 CDW.com | 800.800.4239
Slide 2: 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 3: Today's Agenda
Today's Agenda ▪ First Quarter 2020 Results ▪ COVID-19 Response ▪ Performance Drivers ▪ Q&A 3
Slide 4: Strong Q1 2020 Financial Performance
Strong Q1 2020 Financial Performance ▪ Net sales increased $431 million from Q1 2019 to $4,389 million – Up 10.9% on a reported basis – Up 9.2% on an average daily basis ("ADS") – Up 9.4% on an ADS constant currency basis ▪ Operating income up 7.4% to $246 million ▪ Net income up 9.8% to $168 millio
Slide 5: Balanced Portfolio Drove Topline Growth
Balanced Portfolio Drove Topline Growth (Unaudited) ($ in millions) Three Months Ended March 31, Average Daily % 2020 2019 % Change Change(1) Corporate $ 1,911.0 $ 1,736.2 10.1% 8.4% Small Business 391.5 355.6 10.1 8.4 Public Government 568.5 488.4 16.4 14.6 Education 476.2 400.4 19.0 17.1 Healthcar
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: COVID-19 Response
COVID-19 Response ▪ Safeguard the health and well-being of our coworkers ▪ Serve the mission-driven needs of our customers ▪ Support our communities, including efforts to contain and slow the virus 8
Slide 9: Q1 2020 Financial Results
Q1 2020 Financial Results (Unaudited) ($ in millions, except per share amounts) Three Months Ended March 31, 2020 2019 % Change Net sales $ 4,389.2 $ 3,957.9 10.9 % Average daily net sales $ 68.6 $ 62.8 9.2 % Gross profit $ 756.5 $ 672.1 12.6 % % of Net sales 17.2% 17.0% SG&A $ 510.7 $ 443.2 15.2 %
Slide 10: Q1 2020 Non-GAAP SG&A and Non-GAAP Operating Income
Q1 2020 Non-GAAP SG&A and Non-GAAP Operating Income (Unaudited) ($ in millions) Three Months Ended March 31, 2020 2019 % Change Reported SG&A $ 510.7 $ 443.2 15.2% Amortization of acquisition-related intangible assets (44.6) (44.4) Equity-based compensation (8.8) (12.7) Other adjustments (4.7) (1.3)
Slide 11: Q1 2020 Non-Operating Expenses
Q1 2020 Non-Operating Expenses (Unaudited) ($ in millions) Three Months Ended March 31, 2020 2019 % Change Interest expense, net $ 37.9 $ 38.3 (1.2)% Other income, net $ 3.9 $ 1.0 nm* Income tax expense $ 43.9 $ 38.7 13.6 % * Not meaningful 11
Slide 12: Q1 2020 GAAP Effective Tax Rate
Q1 2020 GAAP Effective Tax Rate (Unaudited) Three Months Ended March 31, 2020 2019 Federal statutory rate 21.0% 21.0% State taxes(1) 4.2 4.2 Excess benefits from equity-based compensation(2) (5.7) (4.3) All other items impacting tax rate 1.2 (0.7) GAAP effective tax rate 20.7% 20.2% (1) Net of Feder
Slide 13: Q1 2020 Non-GAAP Net Income
Q1 2020 Non-GAAP Net Income (Unaudited) ($ in millions) Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 Income Income Income Income before Net Effective before Net Effective tax tax income (1) income tax rate income (1) income tax rate expense expense taxes taxes GAAP, as reporte
Slide 14: Q1 2020 Earnings Per Share
Q1 2020 Earnings Per Share (Unaudited) ($ in millions, except per share amounts) Three Months Ended March 31, 2020 2019 % Change Diluted EPS $ 1.16 $ 1.02 13.1% Non-GAAP net income* $ 200.0 $ 185.4 7.8% Non-GAAP diluted EPS* $ 1.38 $ 1.24 11.0% * Non-GAAP net income and Non-GAAP diluted EPS are non-
Slide 15: Debt and Revolver Availability
Debt and Revolver Availability ($ in millions) March 31, 2020 December 31, 2019 March 31, 2019 (unaudited) (unaudited) Cash and cash equivalents $ 214.4 $ 154.0 $ 285.0 Total debt $ 3,472.2 $ 3,317.3 $ 3,283.4 Net debt (total debt net of cash and cash equivalents) $ 3,257.8 $ 3,163.3 $ 2,998.4 Revol
Slide 16: Free Cash Flow
Free Cash Flow (Unaudited) ($ in millions) Three Months Ended March 31, 2020 2019 % Change Net cash provided by operating activities $ 223.0 $ 252.4 (11.6)% Capital expenditures(1) (25.4) (19.4) Net change in accounts payable-inventory financing (81.4) 70.2 Free cash flow $ 116.2 $ 303.2 (61.7)% (1)
Slide 17: Cash Conversion Cycle
Cash Conversion Cycle (Unaudited) (Based on a rolling three-month average) March 31, 2020 December 31, 2019 March 31, 2019 Days of sales outstanding 58 57 57 Days of supply in inventory 14 14 14 Days purchases outstanding (52) (53) (54) Cash conversion cycle 20 18 17 17
Slide 18: Capital Allocation Priorities
Capital Allocation Priorities Priorities Objectives 2020 Actions Target ~25% payout of Declared Q1'20 dividend on May Increase Dividends Annually Non-GAAP net income; 6th grow in-line with earnings Maintain Net Leverage ~2.5 to 3.0 times Net 2.2x(2) pro forma for recent debt Ratio(1) leverage ratio
Slide 19: Questions and Answers
[Mak Questions and Answers DW, PEOPLE WHO GETIT el iL JBL
Slide 20: Non-GAAP Operating Income Reconciliation
Non-GAAP Operating Income Reconciliation (Unaudited) ($ in millions) Three Months Ended March 31, % of Net % of Net 2020 sales 2019 sales Operating income $ 245.8 5.6% $ 228.9 5.8% (1) Amortization of intangibles 44.6 44.4 Equity-based compensation 8.8 12.7 Other adjustments(2) 4.7 1.3 Non-GAAP oper
Slide 21: Net Sales Growth on a Constant Currency Basis
Net Sales Growth on a Constant Currency Basis (Unaudited) ($ in millions) Three Months Ended March 31, Average Daily 2020 2019 % Change % Change(1) Net sales, as reported $ 4,389.2 $ 3,957.9 10.9% 9.2% (2) Foreign currency translation — (9.8) Net sales, on a constant currency basis* $ 4,389.2 $ 3,94
Slide 22: 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 March 31, 2020 2019 % Change Net income $ 167.9 $ 152.9 9.8% Amortization of intangibles 44.6 44.4 Equity-based compensation 8.8 12.7 Other adjustme