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CDW 8-K Report, Financial Results (Jul 31, 2024)

Reports
Earnings & Results·Other Events·Exhibits & Filings
Filing Date
Filed July 31, 2024
Period End
July 31, 2024
Security
CDW
In the record · 2016–202610-K1110-Q328-K113

CDW filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 113 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Mar ’17Mar ’17
  2. Material agreement8-K · Aug ’20Aug ’20
  3. Leadership change8-K · Feb ’23Feb ’23
  4. Leadership change8-K · Oct ’26Oct ’26

01—Abstract

Summary

Summary of the 8-K filed July 31, 2024. Cited figures are marked; the original filing is the authoritative source.

CDW Corporation reported second quarter 2024 results on July 31, 2024, showing continued pressure on top-line sales alongside a higher gross profit margin.

Net sales were $5.42 billiona, down 3.6 percent from $5.63 billion in the second quarter of 2023, and down 4.0 percent for the six months to $10.30 billion. Management attributed the decline to economic uncertainty and a complex technology landscape that led customers to be cautious about technology spending. Gross profit was essentially flat at $1.18 billion, while gross profit margin rose to 21.8 percent from 21.0 percent, primarily due to a higher contribution of netted down revenue, mainly software as a service.

GAAP operating income rose 5.1 percent to $433.1 millionb, but non-GAAP operating income declined 3.7 percent to $510.3 million. GAAP net income increased 7.0 percent to $281.1 million, while non-GAAP net income fell 2.9 percent to $338.8 million, and diluted EPS was $2.07 on a GAAP basis versus $2.50 on a non-GAAP basis. Beyond the earnings release, the filing discloses that the Board declared a quarterly cash dividend of $0.62 per common share, payable September 10, 2024 to holders of record as of August 26, 2024.

Management pointed to cash flow generation and working capital management as providing strategic flexibility across M&A, share repurchases and dividends. Balance sheet figures show total debt of $5.63 billionc and cash of $665.3 million as of June 30, 2024, with net debt of $4.96 billion, and net cash provided by operating activities of $589.9 million for the six months.

For investors, the key trade-off is between a stable gross margin and profit trends that are mixed on a GAAP versus non-GAAP basis, against a continued decline in sales across most segments. The Public segment and the UK and Canadian "Other" operations saw the steepest revenue declines in the quarter.

02—Key points

Key Highlights

  1. Net sales of $5,423.4 million, down 3.6 percent from $5,626.1 million in Q2 2023, with a decline of 4.0 percent for the six months to $10,296.1 million.
  2. Gross profit margin increased to 21.8 percent from 21.0 percent, driven mainly by a higher contribution of netted down revenue, primarily software as a service.
  3. GAAP operating income rose 5.1 percent to $433.1 million, while non-GAAP operating income fell 3.7 percent to $510.3 million.
  4. GAAP net income increased 7.0 percent to $281.1 million; non-GAAP net income decreased 2.9 percent to $338.8 million.
  5. GAAP diluted EPS was $2.07 (up 7.5 percent) versus non-GAAP diluted EPS of $2.50 (down 2.6 percent).
  6. Quarterly cash dividend of $0.62 per common share declared, payable September 10, 2024 to holders of record as of August 26, 2024.
  7. Public segment net sales fell 2.3 percent to $2,243.3 million, with Government down 6.2 percent; the Other segment (UK and Canada) fell 12.7 percent to $602.0 million.

03—Questions

Frequently Asked Questions

  1. Why did CDW's net sales decline in the second quarter of 2024?

    The company said continued economic uncertainty and a complex technology landscape led customers to be cautious and measured in their technology spending. Net sales decreased 3.6 percent on both a reported and constant currency basis, with 64 selling days in both periods.

  2. Why did gross profit margin improve even though sales declined?

    Gross profit margin rose to 21.8 percent from 21.0 percent, primarily due to a higher contribution of netted down revenue, mainly software as a service, partly offset by an increased mix into notebooks and mobile devices.

  3. How did GAAP and non-GAAP profitability compare?

    GAAP operating income and net income increased, at 5.1 percent and 7.0 percent respectively. Non-GAAP operating income and non-GAAP net income declined, at 3.7 percent and 2.9 percent. The non-GAAP measures exclude items such as amortization of acquisition-related intangibles, equity-based compensation, transformation initiatives and workplace optimization costs.

  4. What is the dividend announcement?

    The Board declared a quarterly cash dividend of $0.62 per common share, to be paid on September 10, 2024 to stockholders of record as of the close of business on August 26, 2024. The release states that future dividends will be subject to Board approval.

  5. What is CDW's capital allocation outlook?

    Management said cash flow generation and effective working capital management provide strategic flexibility across capital priorities including M&A, share repurchases and dividends. As of June 30, 2024, the company reported total debt of $5,628.3 million, cash and cash equivalents of $665.3 million and net debt of $4,963.0 million.

04—Continue

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