Cdw Corporation · NASDAQ:CDW
Cdw — Q4 2021 Earnings Presentation
29 slides from Cdw's earnings presentation, Feb 9, 2022
Slide 1: CDW Corporation Webcast Conference Call
CDW Corporation Webcast Conference Call February 9, 2022 CDW.com | 800.800.4239
Slide 2: Today's Agenda
Today's Agenda ▪ Fourth Quarter and Full Year 2021 Results ▪ Performance Drivers ▪ 2022 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: Q4 2021 and Full Year Financial Performance
Q4 2021 and Full Year Financial Performance Fourth Quarter: ▪ Net sales increased $581 million from Q4 2020 to $5.5 billion – Up 11.7% on a reported basis – Up 9.9% on an average daily basis ("ADS") – Up 9.6% on an ADS constant currency basis ▪ Operating income up 2.1% to $339 million ▪ Net income d
Slide 5: Balanced Portfolio Drove Top-Line Growth
Balanced Portfolio Drove Top-Line Growth (Unaudited) ($ in millions) Three Months Ended December 31, Year Ended December 31, Average Daily % 2021 2020 % Change Change(1) 2021 2020 % Change(1) Corporate $ 2,323.5 $ 1,717.5 35.3 % 33.1 % $ 8,179.7 $ 6,846.0 19.5 % Small Business 487.4 366.5 33.0 30.9
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: Q4 2021 Financial Results
Q4 2021 Financial Results (Unaudited) ($ in millions, except per share amounts) Three Months Ended December 31, 2021 2020 % Change Net sales $ 5,536.9 $ 4,956.2 11.7 % Average daily net sales $ 87.9 $ 79.9 9.9 % Gross profit $ 975.6 $ 880.9 10.8 % % of Net sales 17.6 % 17.8 % SG&A $ 636.3 $ 548.7 16
Slide 9: Q4 2021 Non-GAAP SG&A and Non-GAAP Operating Income
Q4 2021 Non-GAAP SG&A and Non-GAAP Operating Income (Unaudited) ($ in millions) Three Months Ended December 31, 2021 2020 % Change SG&A, as reported $ 636.3 $ 548.7 16.0 % Amortization of acquisition-related intangible assets (24.3) (24.2) Equity-based compensation (19.3) (16.6) Acquisition and inte
Slide 10: Q4 2021 Non-Operating Expenses
Q4 2021 Non-Operating Expenses (Unaudited) ($ in millions) Three Months Ended December 31, 2021 2020 % Change Interest expense, net $ (43.4) $ (37.1) 16.9 % Other expense, net $ (8.6) $ (0.1) nm* Income tax expense $ (72.0) $ (56.7) 26.9 % * Not meaningful 10
Slide 11: Q4 2021 US GAAP Effective Tax Rate
Q4 2021 US GAAP Effective Tax Rate (Unaudited) Three Months Ended December 31, 2021 2020 Federal statutory rate 21.0 % 21.0 % State taxes(1) 2.8 4.0 Excess benefits from equity-based compensation(2) (1.2) (3.0) All other items impacting tax rate 2.5 (2.8) US GAAP effective tax rate 25.1 % 19.2 % (1)
Slide 12: Q4 2021 Non-GAAP Net Income
Q4 2021 Non-GAAP Net Income (Unaudited) ($ in millions) Three Months Ended December 31, 2021 Three Months Ended December 31, 2020 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
Slide 13: Q4 2021 Earnings Per Share
Q4 2021 Earnings Per Share (Unaudited) ($ in millions, except per share amounts) Three Months Ended December 31, 2021 2020 % Change Diluted EPS $ 1.57 $ 1.65 (4.5)% Non-GAAP net income* $ 285.4 $ 263.7 8.2 % Non-GAAP diluted EPS* $ 2.08 $ 1.82 14.0 % * Non-GAAP net income and Non-GAAP diluted EPS ar
Slide 14: Full Year Financial Results
Full Year Financial Results (Unaudited) ($ in millions, except per share amounts) Year Ended December 31, 2021 2020 % Change Net sales $ 20,820.8 $ 18,467.5 12.7 % Average daily net sales $ 82.0 $ 72.7 12.7 % Gross profit $ 3,568.5 $ 3,210.1 11.2 % % of Net sales 17.1 % 17.4 % SG&A $ 2,149.5 $ 2,030
Slide 15: Full Year Non-GAAP SG&A and Non-GAAP Operating Income
Full Year Non-GAAP SG&A and Non-GAAP Operating Income (Unaudited) ($ in millions) Year Ended December 31, 2021 2020 % Change SG&A, as reported $ 2,149.5 $ 2,030.9 5.8 % Amortization of acquisition-related intangible assets (94.9) (158.1) Equity-based compensation (72.6) (42.5) Acquisition and integr
Slide 16: Full Year Non-Operating Expenses
Full Year Non-Operating Expenses (Unaudited) ($ in millions) Year Ended December 31, 2021 2020 % Change Interest expense, net $ (150.9) $ (154.9) (2.6)% Other income (expense), net $ 29.7 $ (22.0) nm* Income tax expense $ (309.2) $ (213.8) 44.7 % * Not meaningful 16
Slide 17: Full Year US GAAP Effective Tax Rate
Full Year US GAAP Effective Tax Rate (Unaudited) Year Ended December 31, 2021 2020 Federal statutory rate 21.0 % 21.0 % State taxes(1) 3.9 3.6 Excess benefits from equity-based compensation(2) (2.3) (2.9) Change in tax law(3) 0.4 0.3 All other items impacting tax rate 0.8 (0.7) US GAAP effective tax
Slide 18: Full Year Non-GAAP Net Income
Full Year Non-GAAP Net Income (Unaudited) ($ in millions) Year Ended December 31, 2021 Year Ended December 31, 2020 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 $1,29
Slide 19: Full Year Earnings Per Share
Full Year Earnings Per Share (Unaudited) ($ in millions, except per share amounts) Year Ended December 31, 2021 2020 % Change Diluted EPS $ 7.04 $ 5.45 29.2 % Non-GAAP net income* $ 1,118.9 $ 954.4 17.2 % Non-GAAP diluted EPS* $ 7.97 $ 6.59 20.9 % * Non-GAAP net income and Non-GAAP diluted EPS are n
Slide 20: Debt and Revolver Availability
Debt and Revolver Availability (Unaudited) ($ in millions) December 31, 2021 December 31, 2020 Cash and cash equivalents $ 258.1 $ 1,410.2 Total debt $ 6,858.5 $ 3,927.2 Net debt (total debt net of cash and cash equivalents) $ 6,600.4 $ 2,517.0 Revolver availability $ 987.3 $ 1,059.3 Cash plus revol
Slide 21: Cash Conversion Cycle
Cash Conversion Cycle (Unaudited) (Based on a rolling three-month average) December 31, 2021 December 31, 2020 Days of sales outstanding 65 57 Days of supply in inventory 17 14 Days purchases outstanding (58) (54) Cash conversion cycle 24 17 21
Slide 22: Free Cash Flow
Free Cash Flow (Unaudited) ($ in millions) Three Months Ended December 31, Year Ended December 31, 2021 2020 % Change 2021 2020 % Change Net cash provided by operating activities $ 147.9 $ 576.0 (74.3)% $ 784.6 $ 1,314.3 (40.3)% Capital expenditures(1) (33.8) (24.3) (100.0) (158.0) Net change in acc
Slide 23: 2022 Capital Allocation Priorities
2022 Capital Allocation Priorities Priorities Objectives Actions Target ~25% payout of 25% increase in November 2021 Increase Dividends Annually Non-GAAP net income; to $2.00/share annually grow in-line with earnings Use FCF after dividends Currently at 3.4x(2), (3). Expect to Maintain Net Leverage
Slide 24: 2022 Outlook
2022 Outlook 2022 Outlook (1),(2),(3) On a Combined Basis U.S. IT growth plus ~200 to 300 bps premium Net Sales Growth in constant currency Non-GAAP Operating Income Margin(4) Low-8%s Non-GAAP Earnings Per • High single-digit growth in constant currency Diluted Share Growth • Mid-teens in constant c
Slide 25: Modeling Thoughts for 2022
Modeling Thoughts for 2022 ▪ Net sales • 1H sales split in-line with historical norm of 48% to 49% of full-year Net sales • First quarter reported sequential sales growth of low single-digit on an average daily sales basis • Currency expected to be neutral for the full year ▪ Annual depreciation and
Slide 26: Questions and Answers
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Slide 27: Non-GAAP Operating Income Reconciliation
Non-GAAP Operating Income Reconciliation (Unaudited) ($ in millions) Three Months Ended December 31, Year Ended December 31, % of Net % of Net % of Net % of Net 2021 sales 2020 sales 2021 sales 2020 sales Operating income, as reported 339.3 6.1 % $ 332.2 6.7 % 1,419.0 6.8 % $1,179.2 6.4 % Amortizati
Slide 28: Net Sales Growth on a Constant Currency Basis
Net Sales Growth on a Constant Currency Basis (Unaudited) ($ in millions) Three Months Ended December 31, Year Ended December 31, Average % Daily % % 2021 2020 Change Change(1) 2021 2020 Change(1) Net sales, as reported $ 5,536.9 $ 4,956.2 11.7 % 9.9 % $20,820.8 $18,467.5 12.7 % (2) Foreign currency
Slide 29: Non-GAAP Net Income Per Diluted Share, on a Constant Currency Basis
Non-GAAP Net Income Per Diluted Share, on a Constant Currency Basis (Unaudited) ($ in millions, except per share amounts) Three Months Ended December 31, Year Ended December 31, 2021 2020 % Change 2021 2020 % Change Net income, as reported $ 215.3 $ 238.3 (9.7)% $ 988.6 $ 788.5 25.4 % Amortization o