Slide 1: CDW Corporation Webcast Conference Call
CDW Corporation Webcast Conference Call May 3, 2023 CDW.com | 800.800.4239
Slide 2: Today's Agenda
Today's Agenda ▪ First Quarter 2023 Results ▪ Business Strategy ▪ 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 2023 Financial Performance
Q1 2023 Financial Performance ▪ Net sales decreased $846 million from Q1 2022 to $5.1 billion – Down 14.2% on a reported basis – Down 15.6% on an average daily sales ("ADS") basis – Down 14.7% on an ADS constant currency basis ▪ Operating income down 8.2% to $355 million ▪ Net income down 8.0% to $2
Slide 5: Net Sales By Channel
Net Sales By Channel (Unaudited) ($ in millions) Three Months Ended March 31, Average Daily 2023 2022 % Change % Change(1) Corporate $ 2,203.7 $ 2,627.6 (16.1)% (17.4)% Small Business 411.4 524.0 (21.5) (22.7) Public Government 551.5 543.9 1.4 (0.2) Education 665.7 902.8 (26.3) (27.4) Healthcare 595
Slide 6: 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 6
Slide 7: Q1 2023 Financial Results
Q1 2023 Financial Results (Unaudited) ($ in millions, except per share amounts) Three Months Ended March 31, 2023 2022 % Change Net sales $ 5,103.1 $ 5,949.1 (14.2)% Average daily net sales** $ 79.7 $ 94.4 (15.6)% Gross profit $ $ 1,089.4 1,089.4 $ 1,104.1 (1.3)% % of Net sales 21.3 % 18.6 % SG&A $
Slide 8: Q1 2023 Non-GAAP SG&A and Non-GAAP Operating Income
Q1 2023 Non-GAAP SG&A and Non-GAAP Operating Income (Unaudited) ($ in millions) Three Months Ended March 31, 2023 2022 % Change SG&A, as reported $ 734.1 $ 717.2 2.4 % Amortization of acquisition-related intangible assets (41.6) (40.9) Equity-based compensation (20.8) (21.1) Acquisition and integrat
Slide 9: Q1 2023 Non-Operating Expenses
Q1 2023 Non-Operating Expenses (Unaudited) ($ in millions) Three Months Ended March 31, 2023 2022 % Change Interest expense, net $ 57.7 $ 56.0 3.0 % Other (expense) income, net $ (1.3) $ (0.5) *nm Income tax expense $ 66.2 $ 80.2 (17.5)% * Not meaningful 9
Slide 10: Q1 2023 US GAAP Effective Tax Rate
Q1 2023 US GAAP Effective Tax Rate (Unaudited) Three Months Ended March 31, 2023 2022 Federal statutory rate 21.0 % 21.0 % State taxes(1) 4.3 4.2 Excess benefits from equity-based compensation(2) (3.9) (1.6) All other items impacting tax rate 0.9 0.7 US GAAP effective tax rate 22.3 % 24.3 % (1) Net
Slide 11: Q1 2023 Non-GAAP Net Income
Q1 2023 Non-GAAP Net Income (Unaudited) ($ in millions) Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 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 12: Q1 2023 Earnings Per Share
Q1 2023 Earnings Per Share (Unaudited) ($ in millions, except per share amounts) Three Months Ended March 31, 2023 2022 % Change Diluted EPS $ 1.68 $ 1.83 (8.4)% Non-GAAP net income* $ 278.7 $ 301.5 (7.6)% Non-GAAP diluted EPS* $ 2.03 $ 2.20 (7.9)% * Non-GAAP net income and Non-GAAP diluted EPS are
Slide 13: Debt and Revolver Availability
Debt and Revolver Availability ($ in millions) March 31, 2023 December 31, 2022 March 31, 2022 (unaudited) (unaudited) Cash and cash equivalents $ 279.4 $ 315.2 $ 386.9 Total debt $ 5,795.6 $ 5,922.7 $ 6,598.7 Net debt (total debt net of cash and cash equivalents) $ 5,516.2 $ 5,607.5 $ 6,211.8 Revol
Slide 14: Cash Conversion Cycle
Cash Conversion Cycle (Unaudited) (Based on a rolling three-month average) March 31, 2023 December 31, 2022 March 31, 2022 Days of sales outstanding 72 71 67 Days of supply in inventory 15 17 17 Days purchases outstanding (69) (67) (64) Cash conversion cycle 18 21 20 14
Slide 15: Free Cash Flow
Free Cash Flow (Unaudited) ($ in millions) Three Months Ended March 31, 2023 2022 Net cash provided by operating activities $ 365.4 $ 380.8 Capital expenditures (31.7) (41.3) Net change in accounts payable - inventory financing 77.6 126.7 Free cash flow $ 411.3 $ 466.2 15
Slide 16: 2023 Capital Allocation Priorities
2023 Capital Allocation Priorities Priorities Objectives Actions Target ~25% payout of 18% increase in November 2022 Increase Dividends Annually Non-GAAP net income; to $2.36/share annually grow in-line with earnings Target ~2.0 to 3.0 times Net Maintain Net Leverage Leverage Ratio, committed Curren
Slide 17: 2023 Outlook
2023 Outlook 2023 Outlook(1),(2) U.S. IT Market to decline at a high single- Net Sales Growth digit rate plus ~200 to 300 bps CDW premium in constant currency Non-GAAP Operating In the range of 9% Income Margin(3) Non-GAAP Earnings Per Low-single digit decline year-over-year Diluted Share Growth (1)
Slide 18: Modeling Thoughts for 2023
Modeling Thoughts for 2023 ▪ Net sales • 1H sales split slightly below historical norm of 48% to 49% of full-year Net sales • Second quarter reported sequential sales growth of mid single-digits on an average daily sales basis • Currency expected to be neutral for full year, with headwinds in 1H and
Slide 19: Questions and Answers
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Slide 20: Non-GAAP Operating Income Reconciliation
Non-GAAP Operating Income Reconciliation (Unaudited) ($ in millions) Three Months Ended March 31, 2023 % of Net sales 2022 % of Net sales Operating income, as reported $ 355.3 7.0 % $ 386.9 6.5 % (1) Amortization of intangibles 41.6 40.9 Equity-based compensation 20.8 21.1 Acquisition and integratio
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 % 2023 2022 % Change Change(1) Net sales, as reported $ 5,103.1 $ 5,949.1 (14.2)% (15.6)% (2) Foreign currency translation — (63.1) Net sales, on a constant currency basis* $ 5,103.1
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, 2023 2022 % Change Net income, as reported $ 230.1 $ 250.2 (8.0)% Amortization of intangibles 41.6 40.9 Equity-based compensation 20.8 21.