Slide 1: CDW Corporation Webcast Conference Call
CDW Corporation Webcast Conference Call November 1, 2023 CDW.com | 800.800.4239
Slide 2: Today's Agenda
Today's Agenda ▪ Third Quarter 2023 Results ▪ Business Strategy ▪ Outlook ▪ Q&A 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements 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, sta
Slide 4: Financial Performance
Financial Performance ▪ Net sales of $5.6 billion – Down 9.4% on a reported basis – Down 8.0% on an average daily sales ("ADS") basis – Down 8.4% on a constant currency basis* ▪ Operating income of $478 million, up 2.6% ▪ Net income of $316 million, up 5.9% ▪ Non-GAAP operating income* of $556 milli
Slide 5: Net Sales By Channel
Net Sales By Channel (Unaudited) ($ in millions) Three Months Ended September 30, Average Daily % 2023 2022 % Change(1) Change(1) Corporate $ 2,226.5 $ 2,577.8 (13.6)% (12.3)% Small Business 378.4 491.2 (23.0) (21.7) Public Government 775.7 788.4 (1.6) — Education 1,026.7 1,021.1 0.5 2.1 Healthcare
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: Financial Results
Financial Results (Unaudited) ($ in millions) Three Months Ended September 30, 2023 2022 % Change Net sales $ 5,628.3 $ 6,215.5 (9.4)% Average daily net sales(1) $ 89.3 $ 97.1 (8.0)% Gross profit $ 1,227.7 $ 1,233.2 (0.4)% % of Net sales 21.8 % 19.8 % SG&A $ 749.3 $ 766.8 (2.3)% Operating income $ 4
Slide 8: Earnings Per Diluted Share
Earnings Per Diluted Share (Unaudited) ($ in millions, except per share amounts) Three Months Ended September 30, 2023 2022 % Change US GAAP Net income $ 315.5 $ 297.8 5.9 % Weighted-average common shares outstanding - Diluted 135.9 137.1 Net income per diluted share $ 2.32 $ 2.17 6.9 % Non-GAAP net
Slide 9: Debt and Revolver Availability
Debt and Revolver Availability (Unaduited) ($ in millions) September 30, December 31, September 30, 2023 2022 2022 Cash and cash equivalents $ 440.7 $ 315.2 $ 384.6 Total debt 5,701.5 5,922.7 6,157.8 Net debt (total debt net of cash and cash equivalents) 5,260.8 5,607.5 5,773.2 Revolver availability
Slide 10: Cash Conversion Cycle
Cash Conversion Cycle (Unaudited) (Based on a rolling three-month average) September 30, 2023 December 31, 2022 September 30, 2022 Days of sales outstanding 73 71 68 Days of supply in inventory 14 17 18 Days purchases outstanding (72) (67) (68) Cash conversion cycle 15 21 18 10
Slide 11: Free Cash Flow and Adjusted Free Cash Flow
Free Cash Flow and Adjusted Free Cash Flow (Unaudited) ($ in millions) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net cash provided by operating activities $ 468.7 $ 332.9 $ 1,062.2 $ 1,094.0 Capital expenditures (43.5) (33.6) (114.7) (97.2) Free Cash Flow 4
Slide 12: 2023 Capital Allocation Priorities
2023 Capital Allocation Priorities Priorities Objectives Actions Target ~25% payout of 5% increase in November 2023 to Increase Dividends Annually Non-GAAP net income; $2.48/share annually grow in-line with earnings Target ~2.0 to 3.0 times Net Maintain Net Leverage Leverage Ratio, committed Current
Slide 13: 2023 Outlook
2023 Outlook 2023 Outlook(1),(2) U.S. IT Market to decline at a high single-digit Net Sales Growth rate plus ~200 to 300 bps CDW premium when adjusted for netted down sales mix Non-GAAP Operating In the range of low-to-mid 9%s Income Margin(3) Non-GAAP Earnings Per Flat to up slightly year-over-year
Slide 14: Modeling Thoughts for 2023
Modeling Thoughts for 2023 ▪ Net sales • 2H sales split modestly below historical norm of 51% to 52% of full-year Net sales • Fourth quarter reported sequential sales decline of mid-single digits on an average daily sales basis • Currency expected to be approximately neutral for full year, with head
Slide 15: Questions and Answers
[Mak Questions and Answers DW, PEOPLE WHO GETIT el iL JBL
Slide 16: Appendix: Non-GAAP Reconciliations
Appendix: Non-GAAP Reconciliations
Slide 17: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAP operating income excludes, among other things, charges related to the amortization of acquisition-related intangible assets, equity-based compensation and related payroll taxes, acquisition and integration expenses, transformation initiatives and workplace optimi
Slide 18: Net Sales Growth on a Constant Currency Basis
Net Sales Growth on a Constant Currency Basis (Unaudited) ($ in millions) Three Months Ended September 30, Average % Daily % 2023 2022 Change(1) Change(i) Net sales, as reported $ 5,628.3 $ 6,215.5 (9.4)% (8.0)% (2) Foreign currency translation — 27.8 Net sales, on a constant currency basis* $ 5,628
Slide 19: Non-GAAP SG&A and Non-GAAP Operating Income
Non-GAAP SG&A and Non-GAAP Operating Income (Unaudited) ($ in millions) Three Months Ended September 30, 2023 2022 % Change SG&A, as reported $ 749.3 $ 766.8 (2.3)% Amortization of acquisition-related intangible assets(1) (37.3) (44.8) Equity-based compensation (26.0) (26.8) Acquisition and integrat
Slide 20: Non-GAAP Operating Income and Margin Reconciliation
Non-GAAP Operating Income and Non-GAAP Operating Income Margin Reconciliation (Unaudited) ($ in millions) Three Months Ended September 30, % of Net % of Net 2023 sales 2022 sales Operating income, as reported $ 478.4 8.5 % $ 466.4 7.5 % Amortization of intangibles(1) 37.3 44.8 Equity-based compensat
Slide 21: Non-GAAP Net Income and Effective Tax Rate Reconciliation
Non-GAAP Net Income and Non-GAAP Effective Tax Rate Reconciliation (Unaudited) ($ in millions) Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Income Income before Income before Income income tax Net Effective income tax Net Effective taxes expense(1) income tax rate taxe
Slide 22: Non-GAAP Net Income Per Diluted Share, 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 September 30, 2023 2022 % Change Net income, as reported $ 315.5 $ 297.8 5.9 % Amortization of intangibles 37.3 44.8 Equity-based compensation 26.0