Slide 1: CDW Corporation Webcast Conference Call
CDW Corporation Webcast Conference Call May 4, 2022 CDW.com | 800.800.4239
Slide 2: Today's Agenda
Today's Agenda ▪ First Quarter 2022 Results ▪ Performance Drivers ▪ 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 2022 Financial Performance
Q1 2022 Financial Performance ▪ Net sales increased $1,112 million from Q1 2021 to $5.9 billion – Up 23.0% on a reported basis and average daily sales ("ADS") basis – Up 23.3% on an ADS constant currency basis ▪ Operating income up 19.6% to $387 million ▪ Net income up 7.6% to $250 million ▪ Non-GAA
Slide 5: Balanced Portfolio Drove Record Top-Line Results
Balanced Portfolio Drove Record Top-Line Results (Unaudited) ($ in millions) Three Months Ended March 31, 2022 2021 % Change Corporate $ 2,627.6 $ 1,805.6 45.5 % Small Business 524.0 432.7 21.1 Public Government 543.9 516.1 5.4 Education 902.8 943.3 (4.3) Healthcare 586.3 462.3 26.8 Total Public 2,0
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: Q1 2022 Financial Results
Q1 2022 Financial Results (Unaudited) ($ in millions, except per share amounts) Three Months Ended March 31, 2022 2021 % Change Net sales $ 5,949.1 $ 4,837.5 23.0 % Average daily net sales $ 94.4 $ 76.8 23.0 % Gross profit $ 1,104.1 $ 795.2 38.8 % % of Net sales 18.6 % 16.4 % SG&A $ 717.2 $ 471.8 52
Slide 9: Q1 2022 Non-GAAP SG&A and Non-GAAP Operating Income
Q1 2022 Non-GAAP SG&A and Non-GAAP Operating Income (Unaudited) ($ in millions) Three Months Ended March 31, 2022 2021 % Change SG&A, as reported $ 717.2 $ 471.8 52.0 % Amortization of acquisition-related intangible assets (40.9) (21.6) Equity-based compensation (21.1) (15.8) Acquisition and integra
Slide 10: Q1 2022 Non-Operating Expenses
Q1 2022 Non-Operating Expenses (Unaudited) ($ in millions) Three Months Ended March 31, 2022 2021 % Change Interest expense, net $ 56.0 $ 35.6 57.5 % Other (expense) income, net $ (0.5) $ 1.1 *nm Income tax expense $ 80.2 $ 56.3 42.6 % * Not meaningful 10
Slide 11: Q1 2022 US GAAP Effective Tax Rate
Q1 2022 US GAAP Effective Tax Rate (Unaudited) Three Months Ended March 31, 2022 2021 Federal statutory rate 21.0 % 21.0 % State taxes(1) 4.2 4.2 Excess benefits from equity-based compensation(2) (1.6) (6.1) All other items impacting tax rate 0.7 0.4 US GAAP effective tax rate 24.3 % 19.5 % (1) Net
Slide 12: Q1 2022 Non-GAAP Net Income
Q1 2022 Non-GAAP Net Income (Unaudited) ($ in millions) Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 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 13: Q1 2022 Earnings Per Share
Q1 2022 Earnings Per Share (Unaudited) ($ in millions, except per share amounts) Three Months Ended March 31, 2022 2021 % Change Diluted EPS $ 1.83 $ 1.63 12.6 % Non-GAAP net income* $ 301.5 $ 249.4 20.9 % Non-GAAP diluted EPS* $ 2.20 $ 1.74 26.6 % * Non-GAAP net income and Non-GAAP diluted EPS are
Slide 14: Debt and Revolver Availability
Debt and Revolver Availability ($ in millions) March 31, 2022 December 31, 2021 March 31, 2021 (unaudited) (unaudited) Cash and cash equivalents $ 386.9 $ 258.1 $ 878.6 Total debt $ 6,598.7 $ 6,858.5 $ 3,930.7 Net debt (total debt net of cash and cash equivalents) $ 6,211.8 $ 6,600.4 $ 3,052.1 Revol
Slide 15: Cash Conversion Cycle
Cash Conversion Cycle (Unaudited) (Based on a rolling three-month average) March 31, 2022 December 31, 2021 March 31, 2021 Days of sales outstanding 67 65 57 Days of supply in inventory 17 17 16 Days purchases outstanding (64) (58) (51) Cash conversion cycle 20 24 22 15
Slide 16: Free Cash Flow
Free Cash Flow (Unaudited) ($ in millions) Three Months Ended March 31, 2022 2021 % Change Net cash provided by operating activities $ 380.8 $ 344.6 10.5 % Capital expenditures (41.3) (20.7) Net change in accounts payable - inventory financing 126.7 (180.3) Financing payments for revenue generating
Slide 17: 2022 Capital Allocation Priorities
2022 Capital Allocation Priorities Priorities Objectives 2022 Actions Target ~25% payout of 25% increase in November 2021 Increase Dividends Annually Non-GAAP net income; to $2.00/share annually grow in-line with earnings Use FCF after dividends Currently at 3.1x(2),(3). Down 0.3x Maintain Net Lever
Slide 18: 2022 Outlook
2022 Outlook 2022 Outlook On a Combined Basis(1),(2),(3) U.S. IT growth of ~4% plus ~325 to 425 bps Net Sales Growth premium in constant currency Non-GAAP Operating Low-8%s Income Margin(4) Non-GAAP Earnings Per • Low-teen growth in constant currency on a combined basis Diluted Share Growth • Low-tw
Slide 19: Modeling Thoughts for 2022
Modeling Thoughts for 2022 ▪ Net sales • 1H/2H sales split of ~49.25%/50.75%. Equates to a second quarter sequential growth of low single-digit on an average daily sales basis from the first quarter • Currency expected to be neutral for the full year ▪ Annual depreciation and amortization expenses e
Slide 20: Questions and Answers
[Mak Questions and Answers DW, PEOPLE WHO GETIT el iL JBL
Slide 21: Non-GAAP Operating Income Reconciliation
Non-GAAP Operating Income Reconciliation (Unaudited) ($ in millions) Three Months Ended March 31, 2022 % of Net sales 2021 % of Net sales Operating income, as reported $ 386.9 6.5 % $ 323.4 6.7 % (1) Amortization of intangibles 40.9 21.6 Equity-based compensation 21.1 15.8 Acquisition and integratio
Slide 22: Net Sales Growth on a Constant Currency Basis
Net Sales Growth on a Constant Currency Basis (Unaudited) ($ in millions) Three Months Ended March 31, 2022 2021 % Change Net sales, as reported $ 5,949.1 $ 4,837.5 23.0 % (2) Foreign currency translation — (12.6) Net sales, on a constant currency basis* $ 5,949.1 $ 4,824.9 23.3 % (1) There were 63
Slide 23: 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, 2022 2021 % Change Net income, as reported $ 250.2 $ 232.6 7.6 % Amortization of intangibles 40.9 21.6 Equity-based compensation 21.1 15.8