Cdw Corporation · NASDAQ:CDW
Cdw — FY2015 Earnings Presentation
25 slides from Cdw's earnings presentation, Feb 9, 2016
Slide 1: CDW Corporation Webcast Conference Call
CDW Corporation Webcast Conference Call February 9, 2016 CDW.com | 800.800.4239
Slide 2: Today's Agenda
Today's Agenda ▪ Full year 2015 and 4th Quarter Results ▪ Key Performance Drivers and Strategic Progress ▪ Financial Results ▪ Outlook ▪ Questions & Answers 2
Slide 3: Disclaimers
Disclaimers This presentation contains forward-looking statements, which are any predications, 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
Slide 4: Demonstrates Strength of Business Model
Demonstrates Strength of Business Model Highlights combined power of: ▪ Balanced portfolio of channels ▪ Broad product and solution suite ▪ Variable cost structure 4
Slide 5: Record Full Year and 4th Quarter Performance
Record Full Year and 4th Quarter Performance Full Year: ▪ Net sales up 7.6% to $13.0 billion; Organic net sales on a constant currency basis up 5.3% ▪ Adjusted EBITDA up 12.3% to $1.0 billion ▪ Non-GAAP net income per diluted share up 23.6% to $2.93 4th Quarter: ▪ Net sales up 12.1% to $3.4 billion;
Slide 6: Balanced Portfolio Drove Topline
Balanced Portfolio Drove Topline (Unaudited) ($ in millions) Three Months Ended December 31, Year Ended December 31, % Corporate: 2015 2014 Change(1) 2015 2014 % Change(2) Medium / Large $ 1,493.4 $ 1,440.3 3.7% $ 5,758.2 $ 5,485.4 5.0% Small Business 263.2 250.7 5.0 1,058.2 990.1 6.9 Total Corporat
Slide 7: Our Three-Part Growth Strategy
Our Three-Part Growth Strategy Gain "share of wallet" from existing customers and acquire new customers Enhance ability to deliver high-growth, integrated solutions Expand services capabilities 7
Slide 8: Fourth Quarter Financial Results
Fourth Quarter Financial Results (Unaudited) ($ in millions, except per share amounts) Three Months Ended December 31, 2015 2014 % Change Net sales $ 3,418.4 $ 3,050.1 12.1% Avg Daily Net Sales $ 54.3 $ 48.4 12.1% Gross profit $ 557.6 $ 491.9 13.4% % of Net Sales 16.3% 16.1% SG&A/advertising $ 377.7
Slide 9: Fourth Quarter Adjusted SG&A and Adjusted EBITDA
Fourth Quarter Adjusted SG&A and Adjusted EBITDA (Unaudited) ($ in millions) Three Months Ended December 31, 2015 2014 % Change Reported SG&A, including advertising $ 377.7 $ 327.6 15.3% Adjustments: Non-cash equity-based compensation (11.2) (4.9) Acquisition and integration expenses (1.5) — Other e
Slide 10: Interest, Taxes and Non-GAAP Net Income
Interest, Taxes and Non-GAAP Net Income (Unaudited) ($ in millions, except per share amounts) Three Months Ended December 31, 2015 2014 % Change Interest expense, net $ (38.4) $ (48.6) (21.0)% Other income, net $ 0.2 $ 1.3 (84.4)% Income tax expense $ (52.4) $ (28.3) 84.8% Net income $ 89.3 $ 51.8 7
Slide 11: Fourth Quarter Non-GAAP Net Income
Fourth Quarter Non-GAAP Net Income (Unaudited) ($ in millions) Three Months Ended December 31, 2015 2014 Net income $ 89.3 $ 51.8 Amortization of intangibles (1) 47.8 40.4 Non-cash equity-based compensation 11.2 4.9 Net loss on extinguishments of long-term debt — 36.9 Acquisition and integration exp
Slide 12: Full Year Financial Results
Full Year Financial Results (Unaudited) ($ in millions, except per share amounts) Year Ended December 31, 2015 2014 % Change Net sales $ 12,988.7 $ 12,074.5 7.6% Avg Daily Net Sales $ 51.1 $ 47.5 7.6% Gross profit $ 2,115.8 $ 1,921.3 10.1% % of Net Sales 16.3% 15.9% SG&A/advertising $ 1,373.8 $ 1,24
Slide 13: Debt and Revolver Availability
Debt and Revolver Availability (Unaudited) ($ in millions) December 31, September 30, December 31, 2015 2015 2014 Cash and cash equivalents $ 37.6 $ 97.5 $ 344.5 Total debt(1) $ 3,259.7 $ 3,267.8 $ 3,166.0 Senior secured debt $ 1,586.6 $ 1,595.8 $ 1,513.5 Net debt (total debt net of cash and cash eq
Slide 14: Cash Conversion Cycle
Cash Conversion Cycle (Unaudited) December 31, September 30, December 31, 2015 2015 2014 Days of sales outstanding (DSO) * 48 45 42 Days of supply in inventory (DIO) * 13 13 13 Days purchases outstanding (DPO) * (40) (40) (34) Cash Conversion Cycle * 21 18 21 * Based on a rolling three-month average
Slide 15: Four Capital Allocation Priorities
Four Capital Allocation Priorities Priorities Objectives Actions Target 30% payout of FCF Increase Dividends Annually 59% increase to $0.43/share in 5 years ~2.5 to 3.0 times Net Maintain Net Leverage Ratio (1) Currently at 3.0x (2) Leverage Ratio Supplement Organic Tuck-in, accretive deals Kelway a
Slide 16: Capital Allocation Priorities Support Annual Medium Term Targets
Capital Allocation Priorities Support Annual Medium Term Targets 2016-2018 Net Sales U.S. IT growth Growth +200-300bps* Adjusted Mid-7% Margin EBITDA Leverage Maintain net debt/adj. EBITDA ratio at ~2.5-3.0x Non-GAAP Low double-digits EPS Growth *Exceed in 2016 due to 7 months incremental Kelway and
Slide 17: Thoughts on Modeling 2016
Thoughts on Modeling 2016 For P&L currently look for: Revenue: • FY16 organic, constant currency growth within annual medium term target of 200 to 300 basis points above US IT market growth − Given current market volatility and macro uncertainty, closer to 2% earlier in the year • Dell to add up to
Slide 18: Thoughts on Modeling 2016
Thoughts on Modeling 2016 For P&L currently look for: NGNI and EPS: • FY16 book interest to be in the range of $155MM − Q1 slightly lower than 2015 due to quarter-end refinancing in 2015 • Effective tax rate to be between 37-38% • Share repurchases to offset dilution and contribute to achievement of
Slide 19: Questions and Answers
al Questions and Answers DU PEOPLE WHO GET IT 4 |
Slide 20: Adjusted EBITDA to Net Income Reconciliation
Adjusted EBITDA to Net Income Reconciliation (Unaudited) ($ in millions) Three Months Ended December 31, Year Ended December 31, % of Net % of Net % of Net % of Net 2015 sales 2014 sales 2015 sales 2014 sales Net income $ 89.3 $ 51.8 $ 403.1 $ 244.9 Depreciation and amortization(1) 62.4 52.0 227.4 2
Slide 21: Full Year Adjusted SG&A
Full Year Adjusted SG&A (Unaudited) ($ in millions) Year Ended December 31, 2015 2014 % Change Reported SG&A, including advertising: $ 1,373.8 $ 1,248.3 10.1% Adjustments: Non-cash equity-based compensation (31.2) (16.4) Acquisition and integration expenses (10.2) — Other expenses (1) (6.4) (9.7) De
Slide 22: Full Year Non-GAAP Net Income
Full Year Non-GAAP Net Income (Unaudited) ($ in millions) Year Ended December 31, 2015 2014 Net income $ 403.1 $ 244.9 Amortization of intangibles (1) 173.9 161.2 Non-cash equity-based compensation 31.2 16.4 Non-cash equity-based compensation from equity investment(2) 20.0 — Net loss on extinguishme
Slide 23: Fourth Quarter Free Cash Flow
Fourth Quarter Free Cash Flow (Unaudited) ($ in millions) Three Months Ended December 31, 2015 2014 % Change Net cash provided by operating activities $ (17.4) $ 84.5 Capital expenditures (46.3) (20.6) Net change in accounts payable - inventory financing 73.3 32.4 Free Cash Flow $ 9.6 $ 96.3 (90.0)%
Slide 24: Full Year Free Cash Flow
Full Year Free Cash Flow (Unaudited) ($ in millions) Year Ended December 31, 2015 2014 % Change Net cash provided by operating activities $ 277.5 $ 435.0 Capital expenditures (90.1) (55.0) Net change in accounts payable - inventory financing 95.9 75.5 Free Cash Flow $ 283.3 $ 455.5 (37.8)% 24
Slide 25: Organic Net Sales Growth on a Constant Currency Basis
Organic Net Sales Growth and Organic Net Sales Growth on a Constant Currency Basis (Unaudited) ($ in millions) Three Months Ended December 31, Year Ended December 31, % % 2015 2014 Change 2015 2014 Change Net sales, as reported $ 3,418.4 $ 3,050.1 12.1% $ 12,988.7 $ 12,074.5 7.6% Impact of acquisiti