CDW Corporation
Non-GAAP Reconciliations
Fourth Quarter 2024
Non-GAAP Financial Measures - Definitions
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 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 underlying performance, such as refinancing activities or acquisition and integration expenses. Our non-GAAP financial measures include non-GAAP performance and non-GAAP financial condition measures. For a reconciliation of non-GAAP financial measures to the most comparable US GAAP financial measures, refer to the slides herein.
Non-GAAP Performance Measures:
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.
Non-GAAP operating income and Non-GAAP selling and administrative expenses 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 amortization of acquisition-related intangible assets, equity- based compensation and the associated payroll taxes, acquisition and integration expenses, transformation initiatives, workplace optimization and their associated tax effects.
Non-GAAP net income per diluted share on a constant currency basis is defined as Non-GAAP net income per diluted share excluding the impact of foreign currency translation on Non-GAAP net income.
Net sales on a constant currency basis is defined as Net sales excluding the impact of foreign currency translation on Net sales.
Non-GAAP Financial Condition Measures:
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.
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.
Return on working capital ("ROWC") is defined as the percentage of Non-GAAP operating income After-tax divided by working capital.
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Non-GAAP Operating Income and Non-GAAP Operating Income Margin Reconciliation
(Unaudited) ($ in millions)
Three Months Ended December 31,
2024 % of Net sales | 2023 % of Net sales |
Year Ended December 31,
2024 % of Net sales | 2023 % of Net sales |
Operating income, as reported | $ | 408.6 | 7.9 % $ | 435.0 | 8.7 % $ | 1,651.3 | 7.9 % $ | 1,680.9 | 7.9 % | |||
Amortization of intangibles(1) | 37.7 | 38.2 | 150.9 | 154.4 | ||||||||
Equity-based compensation | 13.9 | 22.1 | 64.7 | 93.7 | ||||||||
Transformation initiatives(2) | 11.7 | 11.1 | 34.8 | 27.1 | ||||||||
Acquisition and integration expenses | 10.1 | 5.3 | 12.2 | 30.0 | ||||||||
Workplace optimization(3) | 15.9 | 5.2 | 25.4 | 47.7 | ||||||||
Other adjustments | 1.3 | 1.8 | 7.7 | 5.3 | ||||||||
Non-GAAP operating income | $ | 499.2 | 9.6 % $ | 518.7 | 10.3 % $ | 1,947.0 | 9.3 % $ | 2,039.1 | 9.5 % | |||
- Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
- Includes costs related to strategic transformation initiatives focused on optimizing various operations and systems.
- Includes costs related to workforce reductions and charges related to the reduction of our real estate lease portfolio.
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Non-GAAP Net Income and
Non-GAAP Effective Tax Rate Reconciliation
(Unaudited) ($ in millions)
Three Months Ended December 31, 2024 | Three Months Ended December 31, 2023 |
Income | Income tax | ||
before | Effective tax | ||
income taxes | expense(1) | Net income | rate |
Income | Income tax | ||
before | Effective tax | ||
income taxes | expense(1) | Net income | rate |
US GAAP, as reported | $ | 351.5 | $ | (87.3) | $ | 264.2 | 24.8 % $ | 380.7 | $ | (84.6) | $ | 296.1 | 22.2 % | |||||
Amortization of intangibles(2) | 37.7 | (9.8) | 27.9 | 38.2 | (10.0) | 28.2 | ||||||||||||
Equity-based compensation | 13.9 | (3.3) | 10.6 | 22.1 | (14.9) | 7.2 | ||||||||||||
Transformation initiatives(3) | 11.7 | (3.1) | 8.6 | 11.1 | (2.9) | 8.2 | ||||||||||||
Acquisition and integration expenses | 10.1 | (1.6) | 8.5 | 5.3 | (1.4) | 3.9 | ||||||||||||
Workplace optimization(4) | 15.9 | (4.1) | 11.8 | 5.2 | (1.3) | 3.9 | ||||||||||||
Other adjustments | 1.4 | (0.3) | 1.1 | 1.8 | (0.2) | 1.6 | ||||||||||||
Non-GAAP | $ | 442.2 | $ | (109.5) | $ | 332.7 | 24.8 % $ | 464.4 | $ | (115.3) | $ | 349.1 | 24.8 % | |||||
- Income tax on non-GAAP adjustments includes excess tax benefits associated with equity-based compensation.
- Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
- Includes costs related to strategic transformation initiatives focused on optimizing various operations and systems.
- Includes costs related to workforce reductions and charges related to the reduction of our real estate lease portfolio.
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Non-GAAP Net Income and
Non-GAAP Effective Tax Rate Reconciliation
(Unaudited) | |||||||||||||||||||||
($ in millions) | |||||||||||||||||||||
Year Ended December 31, 2024 | Year Ended December 31, 2023 | ||||||||||||||||||||
Income | Income tax | Income | Income tax | ||||||||||||||||||
before | Effective tax | before | Effective tax | ||||||||||||||||||
income taxes | expense(1) | Net income | rate | income taxes | expense(1) | Net income | rate | ||||||||||||||
US GAAP, as reported | $ | 1,435.4 | $ | (357.6) | $ | 1,077.8 | 24.9 % $ | 1,450.2 | $ | (345.9) | $ | 1,104.3 | 23.9 % | ||||||||
Amortization of intangibles(2) | 150.9 | (39.2) | 111.7 | 154.4 | (40.2) | 114.2 | |||||||||||||||
Equity-based compensation | 64.7 | (26.7) | 38.0 | 93.7 | (47.6) | 46.1 | |||||||||||||||
Transformation initiatives(3) | 34.8 | (9.1) | 25.7 | 27.1 | (7.1) | 20.0 | |||||||||||||||
Acquisition and integration expenses | 12.2 | (2.1) | 10.1 | 30.0 | (7.8) | 22.2 | |||||||||||||||
Workplace optimization(4) | 25.4 | (6.6) | 18.8 | 47.7 | (12.4) | 35.3 | |||||||||||||||
Other adjustments | 6.9 | (1.8) | 5.1 | 5.3 | (1.2) | 4.1 | |||||||||||||||
Non-GAAP | $ | 1,730.3 | $ | (443.1) | $ | 1,287.2 | 25.6 % $ | 1,808.4 | $ | (462.2) | $ | 1,346.2 | 25.6 % | ||||||||
- Income tax on non-GAAP adjustments includes excess tax benefits associated with equity-based compensation.
- Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
- Includes costs related to strategic transformation initiatives focused on optimizing various operations and systems.
- Includes costs related to workforce reductions and charges related to the reduction of our real estate lease portfolio.
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Non-GAAP Net Income Per Diluted Share
(Unaudited) | ||||||||||||||
($ in millions, except per share amounts) | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||
2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||
US GAAP Net income | $ | 264.2 | $ | 296.1 | (10.8)% $ | 1,077.8 | $ | 1,104.3 | (2.4)% | |||||
Weighted-average common shares outstanding - Diluted | 134.4 | 135.9 | 135.2 | 136.3 | ||||||||||
Net income per diluted share | $ | 1.97 | $ | 2.18 | (9.8)% $ | 7.97 | $ | 8.10 | (1.6)% | |||||
Non-GAAP net income | $ | 332.7 | $ | 349.1 | (4.7)% $ | 1,287.2 | $ | 1,346.2 | (4.4)% | |||||
Weighted-average common shares outstanding - Diluted | 134.4 | 135.9 | 135.2 | 136.3 | ||||||||||
Non-GAAP net income per diluted share | $ | 2.48 | $ | 2.57 | (3.7)% $ | 9.52 | $ | 9.88 | (3.6)% | |||||
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Net Sales on a Constant Currency Basis
(Unaudited) | ||||||||||||||
($ in millions) | ||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||
% Change(1) | Average Daily | % Change(1) | ||||||||||||
2024 | 2023 | % Change(1) | 2024 | 2023 | ||||||||||
Net sales, as reported | $ | 5,186.0 | $ | 5,018.5 | 3.3 % | 5.0 % $ | 20,998.7 | $ | 21,376.0 | (1.8)% | ||||
Foreign currency translation(2) | - | 5.5 | - | 32.5 | ||||||||||
Net sales, on a constant currency basis* | $ | 5,186.0 | $ | 5,024.0 | 3.2 % | 4.9 % $ | 20,998.7 | $ | 21,408.5 | (1.9)% | ||||
- There were 62 and 63 selling days for the three months ended December 31, 2024 and 2023, respectively. There were 254 selling days for both the years ended December 31, 2024 and 2023. Average Daily Sales is defined as Net sales divided by the number of selling days.
- Represents the effect of translating the prior period results of CDW UK and CDW Canada at the average exchange rates applicable in the current period.
- Non-GAAPmeasure.
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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, | ||||||||||||||
2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||
US GAAP Net income | $ | 264.2 | $ | 296.1 | (10.8)% $ | 1,077.8 | $ | 1,104.3 | (2.4)% | ||||||
Amortization of intangibles | 37.7 | 38.2 | 150.9 | 154.4 | |||||||||||
Equity-based compensation | 13.9 | 22.1 | 64.7 | 93.7 | |||||||||||
Transformation initiatives | 11.7 | 11.1 | 34.8 | 27.1 | |||||||||||
Acquisition and integration expenses | 10.1 | 5.3 | 12.2 | 30.0 | |||||||||||
Workplace optimization | 15.9 | 5.2 | 25.4 | 47.7 | |||||||||||
Other adjustments | 1.4 | 1.8 | 6.9 | 5.3 | |||||||||||
Aggregate adjustment for income taxes | (22.2) | (30.7) | (85.5) | (116.3) | |||||||||||
Non-GAAP net income | 332.7 | 349.1 | (4.7) | 1,287.2 | 1,346.2 | (4.4) | |||||||||
Foreign currency translation(1) | - | 0.1 | - | 1.7 | |||||||||||
Non-GAAP net income, on a constant currency basis | $ | 332.7 | $ | 349.2 | (4.7)% $ | 1,287.2 | $ | 1,347.9 | (4.5)% | ||||||
Shares used in computing Non-GAAP net income per diluted share | |||||||||||||||
and Non-GAAP net income per diluted share, on a constant | |||||||||||||||
currency basis | 134.4 | 135.9 | 135.2 | 136.3 | |||||||||||
Non-GAAP net income per diluted share | $ | 2.48 | $ | 2.57 | (3.7)% $ | 9.52 | $ | 9.88 | (3.6)% | ||||||
Non-GAAP net income per diluted share, on a constant currency | |||||||||||||||
basis | $ | 2.48 | $ | 2.57 | (3.7)% $ | 9.52 | $ | 9.89 | (3.7)% |
(1) Represents the effect of translating the prior period results of CDW UK and CDW Canada at the average exchange rates applicable in the current year. | 8 |
Non-GAAP Selling and Administrative Expenses
(Unaudited) | ||||||||||||||||
($ in millions) | ||||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||
Selling and administrative expenses, as reported | $ | 746.7 | $ | 718.8 | 3.9 % $ | 2,951.1 | $ | 2,971.5 | (0.7)% | |||||||
Amortization of intangibles(1) | (37.7) | (38.2) | (150.9) | (154.4) | ||||||||||||
Equity-based compensation | (13.9) | (22.1) | (64.7) | (93.7) | ||||||||||||
Transformation initiatives(2) | (11.7) | (11.1) | (34.8) | (27.1) | ||||||||||||
Acquisition and integration expenses | (10.1) | (5.3) | (12.2) | (30.0) | ||||||||||||
Workplace optimization(3) | (15.9) | (5.2) | (25.4) | (47.7) | ||||||||||||
Other adjustments | (1.3) | (1.8) | (7.7) | (5.3) | ||||||||||||
Non-GAAP selling and administrative expenses | $ | 656.1 | $ | 635.1 | 3.3 % $ | 2,655.4 | $ | 2,613.3 | 1.6 % | |||||||
- Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
- Includes costs related to strategic transformation initiatives focused on optimizing various operations and systems.
- Includes costs related to workforce reductions and charges related to the reduction of our real estate lease portfolio.
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Free Cash Flow and Adjusted Free Cash Flow
(Unaudited) ($ in millions)
Year Ended December 31, | |||||
2024 | 2023 | ||||
Net cash provided by operating activities | $ | 1,277.3 | $ | 1,598.7 | |
Capital expenditures | (122.6) | (148.2) | |||
Free Cash Flow | 1,154.7 | 1,450.5 | |||
Net change in accounts payable - inventory financing | (75.7) | (23.7) | |||
Adjusted free cash flow(1) | $ | 1,079.0 | $ | 1,426.8 | |
(1) Defined as Net cash provided by operating activities less capital expenditures, adjusted to include cash flows from financing activities that relate to the purchase of inventory.
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Disclaimer
CDW Corporation published this content on February 05, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on February 05, 2025 at 13:18:08.507.
