Slide 1: CDW Corporation Webcast Conference Call
CDW Corporation Webcast Conference Call May 5, 2021 CDW.com | 800.800.4239
Slide 2: Today's Agenda
Today's Agenda ▪ First Quarter 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: Q1 2021 Financial Performance
Q1 2021 Financial Performance ▪ Net sales increased $448 million from Q1 2020 to $4.8 billion – Up 10.2% on a reported basis – Up 12.0% on an average daily basis ("ADS") – Up 10.9% on an ADS constant currency basis ▪ Operating income up 31.6% to $323 million ▪ Net income up 38.6% to $233 million ▪ N
Slide 5: Balanced Portfolio Drove Top-Line Results
Balanced Portfolio Drove Top-Line Results (Unaudited) ($ in millions) Three Months Ended March 31, Average Daily 2021 2020 % Change % Change(1) Corporate $ 1,805.6 $ 1,911.0 (5.5)% (4.0)% Small Business 432.7 391.5 10.5 12.3 Public Government 516.1 568.5 (9.2) (7.8) Education 943.3 476.2 98.1 101.2
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: Q1 2021 Financial Results
Q1 2021 Financial Results (Unaudited) ($ in millions, except per share amounts) Three Months Ended March 31, 2021 2020 % Change Net sales $ 4,837.5 $ 4,389.2 10.2 % Average daily net sales $ 76.8 $ 68.6 12.0 % Gross profit $ 795.2 $ 756.5 5.1 % % of Net sales 16.4 % 17.2 % SG&A $ 471.8 $ 510.7 (7.6)
Slide 9: Q1 2021 Non-GAAP SG&A and Non-GAAP Operating Income
Q1 2021 Non-GAAP SG&A and Non-GAAP Operating Income (Unaudited) ($ in millions) Three Months Ended March 31, 2021 2020 % Change SG&A, as reported $ 471.8 $ 510.7 (7.6)% Amortization of acquisition-related intangible assets (21.6) (44.6) Equity-based compensation (15.8) (8.8) Other adjustments (6.9)
Slide 10: Q1 2021 Non-Operating Expenses
Q1 2021 Non-Operating Expenses (Unaudited) ($ in millions) Three Months Ended March 31, 2021 2020 % Change Interest expense, net $ 35.6 $ 37.9 (6.1)% Other income, net $ 1.1 $ 3.9 (74.0)% Income tax expense $ 56.3 $ 43.9 28.0 % 10
Slide 11: Q1 2021 US GAAP Effective Tax Rate
Q1 2021 US GAAP Effective Tax Rate (Unaudited) Three Months Ended March 31, 2021 2020 Federal statutory rate 21.0 % 21.0 % State taxes(1) 4.2 4.2 Excess benefits from equity-based compensation(2) (6.1) (5.7) All other items impacting tax rate 0.4 1.2 US GAAP effective tax rate 19.5 % 20.7 % (1) Net
Slide 12: Q1 2021 Non-GAAP Net Income
Q1 2021 Non-GAAP Net Income (Unaudited) ($ in millions) Three Months Ended March 31, 2021 Three Months Ended March 31, 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 report
Slide 13: Q1 2021 Earnings Per Share
Q1 2021 Earnings Per Share (Unaudited) ($ in millions, except per share amounts) Three Months Ended March 31, 2021 2020 % Change Diluted EPS $ 1.63 $ 1.16 40.3 % Non-GAAP net income* $ 249.4 $ 200.0 24.7 % Non-GAAP diluted EPS* $ 1.74 $ 1.38 26.2 % * Non-GAAP net income and Non-GAAP diluted EPS are
Slide 14: Debt and Revolver Availability
Debt and Revolver Availability ($ in millions) March 31, 2021 December 31, 2020 March 31, 2020 (unaudited) (unaudited) Cash and cash equivalents $ 878.6 $ 1,410.2 $ 214.4 Total debt $ 3,930.7 $ 3,927.2 $ 3,472.2 Net debt (total debt net of cash and cash equivalents) $ 3,052.1 $ 2,517.0 $ 3,257.8 Rev
Slide 15: Free Cash Flow
Free Cash Flow (Unaudited) ($ in millions) Three Months Ended March 31, 2021 2020 % Change Net cash provided by operating activities $ 344.6 $ 223.0 54.5 % Capital expenditures(1) (20.7) (25.4) Net change in accounts payable - inventory financing (180.3) (81.4) Financing payments for revenue generat
Slide 16: Cash Conversion Cycle
Cash Conversion Cycle (Unaudited) (Based on a rolling three-month average) March 31, 2021 December 31, 2020 March 31, 2020 Days of sales outstanding 57 57 58 Days of supply in inventory 16 14 14 Days purchases outstanding (51) (54) (52) Cash conversion cycle 22 17 20 16
Slide 17: 2021 Capital Allocation Priorities
2021 Capital Allocation Priorities Priorities Objectives 2021 Actions Target ~25% payout of 5.3% increase in November 2020 Increase Dividends Annually Non-GAAP net income; to $1.60/share annually grow in-line with earnings Maintain Net Leverage ~2.5 to 3.0 times Net Currently at 2.0x(2) Ratio(1) lev
Slide 18: 2021 Outlook
2021 Outlook 2021(1)(2) U.S. IT growth Net Sales Growth plus ~300 to 400 bps premium in constant currency Non-GAAP Operating Income Margin(3) Mid-7%s Non-GAAP Earnings Per Low double-digit growth Diluted Share Growth in constant currency (1) Annual targets are provided on a non-GAAP basis because ce
Slide 19: Modeling Thoughts for 2021
Modeling Thoughts for 2021 ▪ Full-year constant currency Net sales growth 300 to 400 bps faster than U.S. IT market growth • 1H/2H sales split of 48.5%-49.0%/51.5%-51.0% • Currency expected to be ~60 basis point tailwind for the full year • Slight second quarter sequential growth on an average daily
Slide 20: Modeling Thoughts for 2021 Cash Flows
Modeling Thoughts for 2021 Cash Flows ▪ Annual Free Cash Flow at or slightly below the low end of the 'rule of thumb' of 3 ¾% to 4 ¼% of Net sales ▪ Capital expenditures ~75 to 80 basis points as a percent of Net sales on an annual basis ▪ Achieve Cash Conversion Cycle within target range of high te
Slide 21: Questions and Answers
[Mak Questions and Answers DW, PEOPLE WHO GETIT el iL JBL
Slide 22: Non-GAAP Operating Income Reconciliation
Non-GAAP Operating Income Reconciliation (Unaudited) ($ in millions) Three Months Ended March 31, % of Net % of Net 2021 sales 2020 sales Operating income, as reported $ 323.4 6.7 % $ 245.8 5.6 % Amortization of intangibles(1) 21.6 44.6 Equity-based compensation 15.8 8.8 (2) Other adjustments 6.9 4.
Slide 23: 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 2021 2020 % Change % Change(1) Net sales, as reported $ 4,837.5 $ 4,389.2 10.2 % 12.0 % (2) Foreign currency translation — 42.2 Net sales, on a constant currency basis* $ 4,837.5 $ 4,
Slide 24: 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, 2021 2020 % Change Net income, as reported $ 232.6 $ 167.9 38.6 % Amortization of intangibles 21.6 44.6 Equity-based compensation 15.8 8.8