Cdw Corporation · NASDAQ:CDW
Cdw — Q1 2017 Earnings Presentation
21 slides from Cdw's earnings presentation, May 3, 2017
Slide 1: CDW Corporation Webcast Conference Call
CDW Corporation Webcast Conference Call May 3, 2017 CDW.com | 800.800.4239
Slide 2: Today's Agenda
Today's Agenda ▪ First Quarter 2017 Results ▪ Key Performance Drivers and Strategic Progress ▪ Financial Results ▪ Outlook ▪ Q&A 2
Slide 3: Disclaimers
Disclaimers This presentation contains forward-looking statements, which are any predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ b
Slide 4: Strong Financial Performance
Strong Financial Performance First Quarter: ▪ Net Sales up 6.7% to $3.3 billion - Up 7.6% in constant currency ▪ Adjusted EBITDA up 7.1% to $249 million ▪ Non-GAAP net income per diluted share up 11.7% to $0.75 - Up 12.7% in constant currency 4
Slide 5: Highlights Combined Power
Highlights Combined Power ▪ Balanced portfolio of customer end-markets ▪ Broad product and solutions suite ▪ Impact of mix on our profitability 5
Slide 6: Balanced Portfolio Drove Topline
Balanced Portfolio Drove Topline (Unaudited) ($ in millions) Three Months Ended March 31, Average Daily % 2017 2016 % Change Change(1) Corporate(2) $ 1,476.3 $ 1,414.9 4.3% 4.3% Small Business(2) 298.7 277.4 7.7% 7.7% Public Government $ 386.9 $ 339.9 13.8% 13.8% Education 397.1 341.0 16.4 16.4 Heal
Slide 7: First Quarter Financial Results
First Quarter Financial Results (Unaudited) ($ in millions, except per share amounts) Three Months Ended March 31, 2017 2016 % Change Net sales $ 3,324.7 $ 3,116.7 6.7% Avg Daily Net Sales $ 51.9 $ 48.7 6.7% Gross profit $ 552.6 $ 524.5 5.4% % of Net Sales 16.6% 16.8% SG&A, including advertising $ 3
Slide 8: First Quarter Adjusted SG&A and Adjusted EBITDA
First Quarter Adjusted SG&A and Adjusted EBITDA (Unaudited) ($ in millions) Three Months Ended March 31, 2017 2016 % Change Reported SG&A, including advertising $ 382.8 $ 363.5 5.3% Adjustments: Equity-based compensation (12.1) (8.4) Acquisition and integration expenses (0.5) (1.6) Other expenses (1
Slide 9: Interest, Taxes and Non-GAAP Net Income
Interest, Taxes and Non-GAAP Net Income (Unaudited) ($ in millions, except per share amounts) Three Months Ended March 31, 2017 2016 % Change Interest expense, net $ (39.7) $ (38.1) 4.1% Other income, net $ 0.9 $ 1.0 (8.8)% Income tax expense $ (16.0) $ (46.1) (65.3)% Net income $ 57.6 $ 77.8 (26.0)
Slide 10: First Quarter Non-GAAP Net Income
First Quarter Non-GAAP Net Income (Unaudited) ($ in millions) Three Months Ended March 31, 2017 2016 Net income $ 57.6 $ 77.8 Amortization of intangibles (1) 46.1 47.5 Equity-based compensation 12.1 8.4 Net Loss on extinguishments of long-term debt 57.4 — Acquisition and integration expenses(2) 0.5
Slide 11: Debt and Revolver Availability
Debt and Revolver Availability (Unaudited) ($ in millions) March 31, 2017 December 31, 2016 March 31, 2016 Cash and cash equivalents $ 251.7 $ 263.7 $ 248.2 Total debt $ 3,280.5 $ 3,234.4 $ 3,251.9 Senior secured debt $ 1,549.4 $ 1,552.1 $ 1,577.6 Net debt (total debt net of cash and cash equivalent
Slide 12: Cash Conversion Cycle
Cash Conversion Cycle (Unaudited) March 31, 2017 December 31, 2016 March 31, 2016 Days of sales outstanding (DSO) * 50 51 49 Days of supply in inventory (DIO) * 13 12 14 Days purchases outstanding (DPO) * (45) (44) (43) Cash Conversion Cycle * 18 19 20 * Based on a rolling three-month average 12
Slide 13: Four Capital Allocation Priorities
Four Capital Allocation Priorities Priorities Objectives Actions Target 30% payout of Increase Dividends Annually 49% increase to $0.64/share FCF in 5 years(1) Maintain Net ~2.5 to 3.0 times Currently at 2.7x (3) Leverage Ratio (2) Net Leverage Ratio Supplement Organic Tuck-in, accretive deals CDW U
Slide 14: Capital Allocation Priorities Support Medium Term Targets
Capital Allocation Priorities Support Medium Term Targets 2016-2018 U.S. IT growth Net Sales Growth +200-300bps in constant currency Adjusted EBITDA Mid-7% Margin Maintain net debt/adj. Leverage EBITDA ratio at ~2.5-3.0x Non-GAAP EPS Low double-digits in Growth constant currency 14
Slide 15: Thoughts on Modeling 2017
Thoughts on Modeling 2017 Current expectations for PL: ▪ Full-year constant currency growth within our annual medium term target of 200 to 300 bps above US IT ▪ Seasonality ~ 48 / 52% between 1H/2H ▪ Currency headwinds ~70 bps for 2017; 1H impact ~105 bps ▪ Full-year Adjusted EBITDA margin roughly i
Slide 16: Thoughts on Modeling 2017 cont'd
Thoughts on Modeling 2017 cont'd Current expectations for working capital and cash flow: ▪ Annual Free Cash Flow above "rule of thumb" of 2 1/2 to 3% of net sales, coming in between 3-3 1/2% of net sales ▪ Capital expenditures ~0.5% of net sales on an annual basis ▪ Achieve Cash Conversion Cycle in
Slide 17: Questions and Answers
al Questions and Answers DU PEOPLE WHO GET IT 4 |
Slide 18: Adjusted EBITDA to Net Income Reconciliation
Adjusted EBITDA to Net Income Reconciliation (Unaudited) ($ in millions) Three Months Ended March 31, % of Net % of Net 2017 Sales 2016 Sales Net income $ 57.6 $ 77.8 Depreciation and amortization(1) 64.2 64.0 Income tax expense 16.0 46.1 Interest expense, net 39.7 38.1 EBITDA 177.5 5.3% 226.0 7.3%
Slide 19: First Quarter Free Cash Flow
First Quarter Free Cash Flow (Unaudited) ($ in millions) Three Months Ended March 31, 2017 2016 % Change Net cash provided by operating activities $ 369.9 $ 427.8 Capital expenditures (19.6) (11.0) Net change in accounts payable - inventory financing (135.7) (66.5) Free Cash Flow $ 214.6 $ 350.3 (38
Slide 20: Consolidated Net Sales Growth on a Constant Currency Basis
Consolidated Net Sales Growth on a Constant Currency Basis (Unaudited) ($ in millions) Three Months Ended March 31, Average % Daily % 2017 2016 Change Change (1) Consolidated Net sales, as reported $ 3,324.7 $ 3,116.7 6.7% 6.7% Foreign currency translation(2) — (27.1) Consolidated Net sales, on a co
Slide 21: Non-GAAP Net Income Per Diluted Share, 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, Average % Daily % 2017 2016 Change Change (1) Net income $ 57.6 $ 77.8 Amortization of intangibles 46.1 47.5 Equity-based compensation 12.