CDW : First Quarter 2024 Earnings Presentation

CDW Corporation

Webcast Conference Call May 1, 2024

CDW.com | 800.800.4239

Today's Agenda

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First Quarter 2024 Results

Performance Drivers

Outlook

Q&A

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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 regarding the future financial performance, 2024 outlook capital allocation priorities and growth prospects of CDW. These forward-looking statements are subject to risks and uncertainties that may cause actual results or events to differ materially from those described in such statements. Although CDW believes that its plans, intentions and other expectations reflected in or suggested by such forward-looking statements are reasonable, it can give no assurance that it will achieve those plans, intentions or expectations. Reference is made to a more complete discussion of forward-looking statements and applicable risks contained under the captions "Forward-Looking Statements" and "Risk Factors" in CDW's Annual Report on Form 10-K for the year ended December 31, 2023, and subsequent filings with the SEC. CDW undertakes no obligation to update or revise any of its forward- looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.

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Non-GAAP Financial Measures

Generally, a non-GAAP financial measure is a numerical measure of a company's performance or financial condition that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with US GAAP. Non-GAAP measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

Our non-GAAP performance measures include Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP net income, Non-GAAP net income per diluted share and Net sales on a constant currency basis, and our non-GAAP financial condition measures include Free cash flow and Adjusted free cash flow. These non-GAAP performance measures and non-GAAP financial condition measures are collectively referred to as "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 the associated payroll taxes, acquisition and integration expenses, transformation initiatives and workplace optimization. Non-GAAP operating income margin is defined as Non-GAAP operating income as a percentage of Net sales. Non-GAAP net income and Non-GAAP net income per diluted share excludes, among other things, charges related to acquisition-related intangible asset amortization, equity-based compensation, acquisition and integration expenses, transformation initiatives, workplace optimization and the associated tax effects of each. Net sales on a constant currency basis is defined as Net sales excluding the impact of foreign currency translation on Net sales. Free cash flow is defined as Net cash provided by operating activities less capital expenditures. Adjusted free cash flow is defined as Free cash flow adjusted to include certain cash flows from financing activities incurred in the normal course of operations or as capital expenditures.

We believe our non-GAAP performance measures provide analysts, investors and management with useful information regarding the underlying operating performance of our business, as they remove the impact of items that management believes are not reflective of underlying operating performance. Management uses these measures to evaluate period-over-period performance as management believes they provide a more comparable measure of the underlying business. We also present non-GAAP financial condition measures as we believe they provide analysts, investors and management with more information regarding our liquidity and capital resources. Certain non- GAAP financial measures are also used to determine certain components of performance-based compensation.

Our outlook includes non-GAAP financial measures because certain reconciling items are dependent on future events that either cannot be controlled, such as currency impacts or interest rates, or reliably predicted because they are not part of our routine activities, such as refinancing activities or acquisition and integration expenses.

Non-GAAP financial measures in this presentation are denoted with an asterisk (*) when shown. For a reconciliation of non-GAAP financial measures to the applicable most comparable US GAAP financial measures, see the CDW Investor Relations website: https://investor.cdw.com/financials/quarterly-results/default.aspx.

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Financial Performance

• Net sales of $4.9 billion
• • Down 4.5% on a reported basis and average daily sales ("ADS") basis
  • Down 4.9% on a constant currency basis*
• Operating income of $328 million, down 7.7%
• Net income of $216 million, down 6.1%
• Non-GAAPoperating income* of $404 million, down 7.1%
• Net income per diluted share of $1.59, down 5.2%
• Non-GAAPnet income per diluted share* of $1.92, down 5.5%

*Non-GAAP measure.

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Net Sales By Channel

(Unaudited) ($ in millions)

		Three Months Ended March 31,
		2024			2023		% Change(1)
Corporate	$	2,135.9		$	2,203.7		(3.1)%
Small Business		380.9			411.4	(7.4)
Public
Government		543.3			551.5	(1.5)
Education		596.8			665.7	(10.4)
Healthcare		584.6			595.6		(1.8)
Total Public		1,724.7			1,812.8		(4.9)
Other		631.2			675.2		(6.5)
Total Net sales	$	4,872.7	$	5,103.1	(4.5)%

1. There were 64 selling days for both the three months ended March 31, 2024 and 2023. Average daily sales is defined as Net sales divided by the number of selling days.

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Our Three-Part Growth Strategy

Capture share and acquire new customers

Enhance capabilities in high-growth solutions areas

Expand services capabilities

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Financial Results

(Unaudited)
($ in millions)
		Three Months Ended March 31,
		2024			2023		% Change
Net sales	$	4,872.7	$	5,103.1	(4.5)%
Average daily net sales(1)	$	76.1	$	79.7	(4.5)%
Gross profit	$	1,063.3	$	1,089.4	(2.4)%
Gross profit margin		21.8 %			21.3 %
Selling and administrative expenses	$	735.3	$	734.1	0.2 %
Operating income	$	328.0	$	355.3	(7.7)%
Operating income margin		6.7 %			7.0 %
Non-GAAP SG&A*	$	659.8	$	655.1	0.7 %
Non-GAAP operating income*	$	403.5	$	434.3	(7.1)%
Non-GAAP operating income margin*		8.3 %			8.5 %
Interest expense, net	$	51.3	$	57.7	(11.1)%
Other expense, net	$	0.1	$	1.3	(92.3)%
Net income	$	216.1	$	230.1	(6.1)%
Non-GAAP net income*	$	260.8	$	278.7	(6.4)%
Effective Tax Rate		21.9 %			22.3 %
Non-GAAP Effective Tax Rate*		25.9 %			25.7 %

• Non-GAAPmeasure.

1. There were 64 selling days for both the three months ended March 31, 2024 and 2023. Average daily sales is defined as Net sales divided by the number of selling days.

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Earnings Per Diluted Share

(Unaudited)
($ and shares in millions, except per share amounts)		Three Months Ended March 31,
		2024			2023		% Change
US GAAP Net income	$	216.1	$	230.1	(6.1)%
Weighted-average common shares outstanding - Diluted		136.0			137.3
Net income per diluted share	$	1.59		$	1.68	(5.2)%
Non-GAAP net income*	$	260.8	$	278.7	(6.4)%
Weighted-average common shares outstanding - Diluted		136.0			137.3
Non-GAAP net income per diluted share*	$	1.92		$	2.03	(5.5)%

• Non-GAAPmeasure.

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Debt and Revolver Availability

(Unaduited) ($ in millions)

		March 31, 2024 December 31, 2023		March 31, 2023
Cash and cash equivalents	$	803.8	$	588.7	$	279.4
Total debt		5,632.3		5,644.9		5,795.6
Net debt (total debt net of cash and cash equivalents)		4,828.5		5,056.2		5,516.2
Revolver availability		1,251.7		1,208.1		1,051.0
Cash plus revolver availability		2,055.5		1,796.8		1,330.4

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