Slide 1: CDW Corporation Webcast Conference Call
CDW Corporation Webcast Conference Call August 5, 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 ▪ Second Quarter and YTD 2020 Results ▪ COVID-19 Response ▪ Performance Drivers ▪ Q&A 3
Slide 4: Q2 2020 and YTD Financial Performance
Q2 2020 and YTD Financial Performance Second Quarter: ▪ Net sales decreased $264 million from Q2 2019 to $4,366 million – Down 5.7% on a reported and average daily sales ("ADS") basis – Down 5.3% on an ADS constant currency basis ▪ Operating income down 5.6% to $283 million ▪ Net income down 3.8% to
Slide 5: Balanced Portfolio Drove Topline Results
Balanced Portfolio Drove Topline Results (Unaudited) ($ in millions) Three Months Ended June 30, Six Months Ended June 30, Average Daily 2020 2019 % Change(1) 2020 2019 % Change % Change(2) Corporate $ 1,557.5 $ 1,883.9 (17.3)% $ 3,468.5 $ 3,620.1 (4.2)% (4.9)% Small Business 302.1 377.4 (19.9) 693.
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: Q2 2020 Financial Results
Q2 2020 Financial Results (Unaudited) ($ in millions, except per share amounts) Three Months Ended June 30, 2020 2019 % Change Net sales $ 4,365.7 $ 4,629.9 (5.7)% Average daily net sales $ 68.2 $ 72.3 (5.7)% Gross profit $ 747.2 $ 773.8 (3.4)% % of Net sales 17.1% 16.7% SG&A $ 463.8 $ 473.5 (2.1)%
Slide 10: Q2 2020 Non-GAAP SG&A and Non-GAAP Operating Income
Q2 2020 Non-GAAP SG&A and Non-GAAP Operating Income (Unaudited) ($ in millions) Three Months Ended June 30, 2020 2019 % Change Reported SG&A $ 463.8 $ 473.5 (2.1)% Amortization of acquisition-related intangible assets (44.4) (44.7) Equity-based compensation (5.6) (12.2) Other adjustments (4.8) (1.2)
Slide 11: Q2 2020 Non-Operating Expenses
Q2 2020 Non-Operating Expenses (Unaudited) ($ in millions) Three Months Ended June 30, 2020 2019 % Change Interest expense, net $ (39.7) $ (40.5) (1.8)% Other income, net $ 1.7 $ 1.4 20.9 % Income tax expense $ (56.3) $ (64.6) (13.0)% 11
Slide 12: Q2 2020 GAAP Effective Tax Rate
Q2 2020 GAAP Effective Tax Rate (Unaudited) Three Months Ended June 30, 2020 2019 Federal statutory rate 21.0% 21.0% State taxes(1) 3.9 4.0 Excess benefits from equity-based compensation(2) (2.1) (1.2) All other items impacting tax rate 0.1 0.9 GAAP effective tax rate 22.9% 24.7% (1) Net of Federal
Slide 13: Q2 2020 Non-GAAP Net Income
Q2 2020 Non-GAAP Net Income (Unaudited) ($ in millions) Three Months Ended June 30, 2020 Three Months Ended June 30, 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 reported
Slide 14: Q2 2020 Earnings Per Share
Q2 2020 Earnings Per Share (Unaudited) ($ in millions, except per share amounts) Three Months Ended June 30, 2020 2019 % Change Diluted EPS $ 1.31 $ 1.33 (1.1)% Non-GAAP net income* $ 225.3 $ 237.7 (5.2)% Non-GAAP diluted EPS* $ 1.56 $ 1.60 (2.6)% * Non-GAAP net income and Non-GAAP diluted EPS are n
Slide 15: YTD Financial Results
YTD Financial Results (Unaudited) ($ in millions, except per share amounts) Six Months Ended June 30, 2020 2019 % Change Net sales $ 8,754.9 $ 8,587.8 1.9 % Average daily net sales $ 68.4 $ 67.6 1.1 % Gross profit $ 1,503.7 $ 1,445.9 4.0 % % of Net sales 17.2% 16.8% SG&A $ 974.5 $ 916.7 6.3 % Operat
Slide 16: YTD Non-GAAP SG&A and Non-GAAP Operating Income
YTD Non-GAAP SG&A and Non-GAAP Operating Income (Unaudited) ($ in millions) Six Months Ended June 30, 2020 2019 % Change Reported SG&A $ 974.5 $ 916.7 6.3 % Amortization of acquisition-related intangible assets (89.0) (89.1) Equity-based compensation (14.4) (24.9) Other adjustments (9.5) (2.5) Non-G
Slide 17: YTD Non-Operating Expenses
YTD Non-Operating Expenses (Unaudited) ($ in millions) Six Months Ended June 30, 2020 2019 % Change Interest expense, net $ 77.6 $ 78.8 (1.5)% Other income, net $ 5.6 $ 2.4 nm* Income tax expense $ 100.2 $ 103.3 (3.0)% * Not meaningful 17
Slide 18: YTD GAAP Effective Tax Rate
YTD GAAP Effective Tax Rate (Unaudited) Six Months Ended June 30, 2020 2019 Federal statutory rate 21.0% 21.0% State taxes(1) 4.0 4.1 Excess benefits from equity-based compensation(2) (3.8) (2.5) All other items impacting tax rate 0.7 0.2 GAAP effective tax rate 21.9% 22.8% (1) Net of Federal benefi
Slide 19: YTD Non-GAAP Net Income
YTD Non-GAAP Net Income (Unaudited) ($ in millions) Six Months Ended June 30, 2020 Six Months Ended June 30, 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 reported $ 457.2
Slide 20: YTD Earnings Per Share
YTD Earnings Per Share (Unaudited) ($ in millions, except per share amounts) Six Months Ended June 30, 2020 2019 % Change Diluted EPS $ 2.47 $ 2.35 5.1% Non-GAAP net income* $ 425.3 $ 423.1 0.5% Non-GAAP diluted EPS* $ 2.94 $ 2.84 3.4% * Non-GAAP net income and Non-GAAP diluted EPS are non-GAAP fina
Slide 21: Debt and Revolver Availability
Debt and Revolver Availability ($ in millions) June 30, 2020 December 31, 2019 June 30, 2019 (unaudited) (unaudited) Cash and cash equivalents $ 958.4 $ 154.0 $ 194.5 Total debt $ 3,899.5 $ 3,317.3 $ 3,278.8 Net debt (total debt net of cash and cash equivalents) $ 2,941.1 $ 3,163.3 $ 3,084.4 Revolve
Slide 22: Free Cash Flow
Free Cash Flow (Unaudited) ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 % Change 2020 2019 % Change Net cash provided by operating activities $ 292.8 $ 162.1 80.6% $ 515.8 $ 414.5 24.4% Capital expenditures(1) (74.6) (24.5) (100.0) (43.9) Net change in accounts pay
Slide 23: Cash Conversion Cycle
Cash Conversion Cycle (Unaudited) (Based on a rolling three-month average) June 30, 2020 December 31, 2019 June 30, 2019 Days of sales outstanding 59 57 52 Days of supply in inventory 18 14 14 Days purchases outstanding (52) (53) (50) Cash conversion cycle 25 18 16 23
Slide 24: Capital Allocation Priorities
Capital Allocation Priorities Priorities Objectives 2020 Actions Target ~25% payout of Declared Q2'20 dividend on Increase Dividends Annually Non-GAAP net income; August 5th grow in-line with earnings Maintain Net Leverage ~2.5 to 3.0 times Net Currently at 2.0x(2) Ratio(1) leverage ratio Prioritizi
Slide 25: Questions and Answers
[Mak Questions and Answers DW, PEOPLE WHO GETIT el iL JBL
Slide 26: Non-GAAP Operating Income Reconciliation
Non-GAAP Operating Income Reconciliation (Unaudited) ($ in millions) Three Months Ended June 30, Six Months Ended June 30, % of Net % of Net % of Net % of Net 2020 sales 2019 sales 2020 sales 2019 sales Operating income $ 283.4 6.5% $ 300.3 6.5% $ 529.2 6.0% $ 529.2 6.2% Amortization of intangibles(
Slide 27: Net Sales Growth on a Constant Currency Basis
Net Sales Growth on a Constant Currency Basis (Unaudited) ($ in millions) Three Months Ended June 30, Six Months Ended June 30, Average % % Daily % 2020 2019 Change(1) 2020 2019 Change Change(2) Net sales, as reported $ 4,365.7 $ 4,629.9 (5.7)% $ 8,754.9 $ 8,587.8 1.9% 1.1% (3) Foreign currency tran
Slide 28: 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, Six Months Ended June 30, 2020 2019 % Change 2020 2019 % Change Net income $ 189.1 $ 196.6 (3.8)% $ 357.0 $ 349.5 2.2% Amortization of inta