Slide 1: CDW Corporation Webcast Conference Call
CDW Corporation Webcast Conference Call August 2, 2023 CDW.com | 800.800.4239
Slide 2: Today's Agenda
Today's Agenda ▪ Second 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: Q2 2023 Financial Performance
Q2 2023 Financial Performance ▪ Net sales decreased $520 million from Q2 2022 to $5.6 billion – Down 8.5% on a reported and average daily sales ("ADS") basis – Down 8.2% on a constant currency basis ▪ Operating income down 5.3% to $412 million ▪ Net income down 6.0% to $263 million ▪ Non-GAAP operat
Slide 5: Net Sales By Channel
Net Sales By Channel (Unaudited) ($ in millions) Three Months Ended June 30, 2023 2022 % Change(1) Corporate $ 2,245.0 $ 2,660.7 (15.6)% Small Business 396.2 500.0 (20.8) Public Government 681.2 609.5 11.8 Education 1,026.8 1,041.3 (1.4) Healthcare 587.1 592.2 (0.9) Total Public 2,295.1 2,243.0 2.3
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: Q2 2023 Financial Results
Q2 2023 Financial Results (Unaudited) ($ in millions, except per share amounts) Three Months Ended June 30, 2023 2022 % Change Net sales $ 5,626.1 $ 6,145.8 (8.5)% Average daily net sales $ 87.9 $ 96.0 (8.5)% Gross profit $ 1,181.5 $ 1,168.2 1.1 % % of Net sales 21.0 % 19.0 % SG&A $ 769.3 $ 732.9 5.
Slide 8: Q2 2023 Non-GAAP SG&A and Non-GAAP Operating Income
Q2 2023 Non-GAAP SG&A and Non-GAAP Operating Income (Unaudited) ($ in millions) Three Months Ended June 30, 2023 2022 % Change SG&A, as reported $ 769.3 $ 732.9 5.0 % Amortization of acquisition-related intangible assets(1) (37.3) (40.7) Equity-based compensation (24.8) (23.5) Acquisition and integr
Slide 9: Q2 2023 Non-Operating Expenses
Q2 2023 Non-Operating Expenses (Unaudited) ($ in millions) Three Months Ended June 30, 2023 2022 % Change Interest expense, net $ 58.2 $ 57.7 0.9 % Other expense, net $ (0.6) $ (0.4) *nm Income tax expense $ 90.8 $ 97.9 (7.3)% * Not meaningful 9
Slide 10: Q2 2023 US GAAP Effective Tax Rate
Q2 2023 US GAAP Effective Tax Rate (Unaudited) Three Months Ended June 30, 2023 2022 Federal statutory rate 21.0 % 21.0 % State taxes(1) 4.2 4.2 Excess benefits from equity-based compensation(2) (0.6) (0.3) All other items impacting tax rate 1.1 1.1 US GAAP effective tax rate 25.7 % 26.0 % (1) Net o
Slide 11: Q2 2023 Non-GAAP Net Income
Q2 2023 Non-GAAP Net Income (Unaudited) ($ in millions) Three Months Ended June 30, 2023 Three Months Ended June 30, 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 reported
Slide 12: Q2 2023 Earnings Per Diluted Share
Q2 2023 Earnings Per Diluted Share (Unaudited) ($ in millions, except per share amounts) Three Months Ended June 30, 2023 2022 % Change US GAAP Net income $ 262.6 $ 279.3 (6.0)% Weighted-average common shares outstanding - Diluted 136.1 136.8 Net income per diluted share $ 1.92 $ 2.04 (5.5)% Non-GAA
Slide 13: Debt and Revolver Availability
Debt and Revolver Availability ($ in millions) June 30, 2023 December 31, 2022 June 30, 2022 (unaudited) (unaudited) Cash and cash equivalents $ 203.9 $ 315.2 $ 541.6 Total debt $ 5,763.2 $ 5,922.7 $ 6,586.9 Net debt (total debt net of cash and cash equivalents) $ 5,559.3 $ 5,607.5 $ 6,045.3 Revolve
Slide 14: Cash Conversion Cycle
Cash Conversion Cycle (Unaudited) (Based on a rolling three-month average) June 30, 2023 December 31, 2022 June 30, 2022 Days of sales outstanding 67 71 64 Days of supply in inventory 14 17 18 Days purchases outstanding (67) (67) (63) Cash conversion cycle 14 21 19 14
Slide 15: Free Cash Flow
Free Cash Flow (Unaudited) ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net cash provided by operating activities $ 228.1 $ 380.3 $ 593.6 $ 761.1 Capital expenditures (39.5) (22.3) (71.3) (63.6) Net change in accounts payable - inventory financing 84.0 (1
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 $2.36/share annually grow in-line with earnings Target ~2.0 to 3.0 times Net Maintain Net Leverage Leverage Ratio, committed Curren
Slide 17: 2023 Outlook
2023 Outlook 2023 Outlook(1),(2) U.S. IT Market to decline at a high single- Net Sales Growth digit rate plus ~200 to 300 bps CDW premium in constant currency Non-GAAP Operating In the range of 9% Income Margin(3) Non-GAAP Earnings Per In the range of flat year-over-year Diluted Share Growth (1) As
Slide 18: Modeling Thoughts for 2023
Modeling Thoughts for 2023 ▪ Net sales • 2H sales split in range of 52%; historical norm of 51% to 52% of full-year Net sales • Third quarter reported sequential sales growth of mid-single digits on an average daily sales basis • Currency expected to be neutral for full year, with headwinds in 1H an
Slide 19: Questions and Answers
[Mak Questions and Answers DW, PEOPLE WHO GETIT el iL JBL
Slide 20: Non-GAAP Operating Income Reconciliation
Non-GAAP Operating Income Reconciliation (Unaudited) ($ in millions) Three Months Ended June 30, % of Net % of Net 2023 sales 2022 sales Operating income, as reported $ 412.2 7.3 % $ 435.3 7.1 % Amortization of intangibles(1) 37.3 40.7 Equity-based compensation 24.8 23.5 Acquisition and integration
Slide 21: Net Sales Growth on a Constant Currency Basis
Net Sales Growth on a Constant Currency Basis (Unaudited) ($ in millions) Three Months Ended June 30, % 2023 2022 Change(1) Net sales, as reported $ 5,626.1 $ 6,145.8 (8.5)% (2) Foreign currency translation — (14.9) Net sales, on a constant currency basis* $ 5,626.1 $ 6,130.9 (8.2)% (1) There were 6
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 June 30, 2023 2022 % Change Net income, as reported $ 262.6 $ 279.3 (6.0)% Amortization of intangibles 37.3 40.7 Equity-based compensation 24.8 23.5