|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
26-0273989
|
||
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
||
|
|
|
|
|
75 Tri-State International
|
|
|
||
Lincolnshire
|
,
|
Illinois
|
|
60069
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
Common stock, par value $0.01 per share
|
CDW
|
Nasdaq Global Select Market
|
|
|
|
Page
|
PART I
|
FINANCIAL INFORMATION
|
|
Item 1.
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
PART II
|
OTHER INFORMATION
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
SIGNATURES
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions, except per share amounts)
|
|||||||
|
March 31, 2020
|
|
December 31, 2019
|
||||
Assets
|
(unaudited)
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
214.4
|
|
|
$
|
154.0
|
|
Accounts receivable, net of allowance for credit losses of $35.1 and $7.9, respectively
|
3,149.4
|
|
|
3,002.2
|
|
||
Merchandise inventory
|
672.1
|
|
|
611.2
|
|
||
Miscellaneous receivables
|
442.5
|
|
|
395.1
|
|
||
Prepaid expenses and other
|
187.4
|
|
|
171.6
|
|
||
Total current assets
|
4,665.8
|
|
|
4,334.1
|
|
||
Operating lease right-of-use assets
|
129.5
|
|
|
131.8
|
|
||
Property and equipment, net
|
331.9
|
|
|
363.1
|
|
||
Goodwill
|
2,529.5
|
|
|
2,553.0
|
|
||
Other intangible assets, net
|
540.2
|
|
|
594.1
|
|
||
Other assets
|
25.5
|
|
|
23.3
|
|
||
Total Assets
|
$
|
8,222.4
|
|
|
$
|
7,999.4
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable-trade
|
$
|
1,967.1
|
|
|
$
|
1,835.0
|
|
Accounts payable-inventory financing
|
345.5
|
|
|
429.9
|
|
||
Current maturities of long-term debt
|
33.7
|
|
|
34.1
|
|
||
Contract liabilities
|
257.6
|
|
|
252.2
|
|
||
Accrued expenses and other current liabilities:
|
|
|
|
||||
Compensation
|
201.3
|
|
|
212.3
|
|
||
Advertising
|
158.6
|
|
|
147.9
|
|
||
Sales and income taxes
|
135.4
|
|
|
88.6
|
|
||
Other
|
548.0
|
|
|
491.4
|
|
||
Total current liabilities
|
3,647.2
|
|
|
3,491.4
|
|
||
Long-term liabilities:
|
|
|
|
||||
Debt
|
3,438.5
|
|
|
3,283.2
|
|
||
Deferred income taxes
|
62.8
|
|
|
62.4
|
|
||
Operating lease liabilities
|
129.2
|
|
|
131.1
|
|
||
Other liabilities
|
55.0
|
|
|
71.0
|
|
||
Total long-term liabilities
|
3,685.5
|
|
|
3,547.7
|
|
||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, 100.0 shares authorized; no shares issued or outstanding for both periods
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 1,000.0 shares authorized; 142.3 and 143.0 shares outstanding, respectively
|
1.4
|
|
|
1.4
|
|
||
Paid-in capital
|
3,114.9
|
|
|
3,095.3
|
|
||
Accumulated deficit
|
(2,067.3
|
)
|
|
(2,018.6
|
)
|
||
Accumulated other comprehensive loss
|
(159.3
|
)
|
|
(117.8
|
)
|
||
Total stockholders' equity
|
889.7
|
|
|
960.3
|
|
||
Total Liabilities and Stockholders' Equity
|
$
|
8,222.4
|
|
|
$
|
7,999.4
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per-share amounts)
(unaudited)
|
||||||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Net sales
|
|
$
|
4,389.2
|
|
|
$
|
3,957.9
|
|
Cost of sales
|
|
3,632.7
|
|
|
3,285.8
|
|
||
Gross profit
|
|
756.5
|
|
|
672.1
|
|
||
Selling and administrative expenses
|
|
510.7
|
|
|
443.2
|
|
||
Operating income
|
|
245.8
|
|
|
228.9
|
|
||
Interest expense, net
|
|
(37.9
|
)
|
|
(38.3
|
)
|
||
Other income, net
|
|
3.9
|
|
|
1.0
|
|
||
Income before income taxes
|
|
211.8
|
|
|
191.6
|
|
||
Income tax expense
|
|
(43.9
|
)
|
|
(38.7
|
)
|
||
Net income
|
|
$
|
167.9
|
|
|
$
|
152.9
|
|
|
|
|
|
|
||||
Net income per common share:
|
|
|
|
|
||||
Basic
|
|
$
|
1.18
|
|
|
$
|
1.04
|
|
Diluted
|
|
$
|
1.16
|
|
|
$
|
1.02
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding:
|
|
|
|
|
||||
Basic
|
|
142.7
|
|
|
147.0
|
|
||
Diluted
|
|
144.9
|
|
|
149.2
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in millions)
(unaudited)
|
||||||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Net income
|
|
$
|
167.9
|
|
|
$
|
152.9
|
|
Other comprehensive (loss) income:
|
|
|
|
|
||||
Unrealized loss from hedge accounting, net of tax
|
|
(0.2
|
)
|
|
(8.3
|
)
|
||
Reclassification of hedge accounting gain to net income, net of tax
|
|
1.1
|
|
|
1.5
|
|
||
Foreign currency translation, net of tax
|
|
(42.4
|
)
|
|
9.9
|
|
||
Other comprehensive (loss) income
|
|
(41.5
|
)
|
|
3.1
|
|
||
Comprehensive income
|
|
$
|
126.4
|
|
|
$
|
156.0
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in millions)
(unaudited)
|
|||||||||||||||||||||||
|
|
Three Months Ended March 31, 2020
|
|||||||||||||||||||||
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
Paid-in
Capital |
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Loss |
|
Total
Stockholders' Equity |
|||||||||||
Balance as of December 31, 2019
|
|
143.0
|
|
|
$
|
1.4
|
|
|
$
|
3,095.3
|
|
|
$
|
(2,018.6
|
)
|
|
$
|
(117.8
|
)
|
|
$
|
960.3
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
167.9
|
|
|
—
|
|
|
167.9
|
|
|||||
Equity-based compensation expense
|
|
—
|
|
|
—
|
|
|
8.8
|
|
|
—
|
|
|
—
|
|
|
8.8
|
|
|||||
Stock option exercises
|
|
0.4
|
|
|
—
|
|
|
7.1
|
|
|
—
|
|
|
—
|
|
|
7.1
|
|
|||||
Coworker Stock Purchase Plan
|
|
—
|
|
|
—
|
|
|
3.5
|
|
|
—
|
|
|
—
|
|
|
3.5
|
|
|||||
Repurchases of common stock
|
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|
(140.8
|
)
|
|
—
|
|
|
(140.8
|
)
|
|||||
Dividends paid ($0.380 per share)
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
(54.4
|
)
|
|
—
|
|
|
(54.2
|
)
|
|||||
Incentive compensation plan stock withheld for taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21.9
|
)
|
|
—
|
|
|
(21.9
|
)
|
|||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42.4
|
)
|
|
(42.4
|
)
|
|||||
Unrealized loss from hedge accounting
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|||||
Realized gain from hedge accounting
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
|
1.1
|
|
|||||
Impact of adoption of Topic 326
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
|||||
Balance as of March 31, 2020
|
|
142.3
|
|
|
$
|
1.4
|
|
|
$
|
3,114.9
|
|
|
$
|
(2,067.3
|
)
|
|
$
|
(159.3
|
)
|
|
$
|
889.7
|
|
|
|
Three Months Ended March 31, 2019
|
|||||||||||||||||||||
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
Paid-in
Capital |
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Loss |
|
Total
Stockholders' Equity |
|||||||||||
Balance as of December 31, 2018
|
|
147.7
|
|
|
$
|
1.5
|
|
|
$
|
2,996.9
|
|
|
$
|
(1,892.6
|
)
|
|
$
|
(130.6
|
)
|
|
$
|
975.2
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
152.9
|
|
|
—
|
|
|
152.9
|
|
|||||
Equity-based compensation expense
|
|
—
|
|
|
—
|
|
|
12.2
|
|
|
—
|
|
|
—
|
|
|
12.2
|
|
|||||
Stock option exercises
|
|
0.5
|
|
|
—
|
|
|
13.0
|
|
|
—
|
|
|
—
|
|
|
13.0
|
|
|||||
Coworker Stock Purchase Plan
|
|
—
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
|
—
|
|
|
3.0
|
|
|||||
Repurchases of common stock
|
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|
(177.1
|
)
|
|
—
|
|
|
(177.1
|
)
|
|||||
Dividends paid ($0.295 per share)
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
(43.6
|
)
|
|
—
|
|
|
(43.4
|
)
|
|||||
Incentive compensation plan stock withheld for taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11.6
|
)
|
|
—
|
|
|
(11.6
|
)
|
|||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.9
|
|
|
9.9
|
|
|||||
Unrealized loss from hedge accounting
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.3
|
)
|
|
(8.3
|
)
|
|||||
Realized gain from hedge accounting
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.5
|
|
|
1.5
|
|
|||||
Balance as of March 31, 2019
|
|
146.3
|
|
|
$
|
1.5
|
|
|
$
|
3,025.3
|
|
|
$
|
(1,972.0
|
)
|
|
$
|
(127.5
|
)
|
|
$
|
927.3
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
(unaudited)
|
||||||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
167.9
|
|
|
$
|
152.9
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
91.4
|
|
|
64.3
|
|
||
Equity-based compensation expense
|
|
8.8
|
|
|
12.7
|
|
||
Deferred income taxes
|
|
2.6
|
|
|
(13.7
|
)
|
||
Provision for credit losses
|
|
29.2
|
|
|
0.5
|
|
||
Other
|
|
1.4
|
|
|
2.3
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(209.0
|
)
|
|
11.9
|
|
||
Merchandise inventory
|
|
(66.4
|
)
|
|
(134.2
|
)
|
||
Other assets
|
|
(63.7
|
)
|
|
(31.9
|
)
|
||
Accounts payable-trade
|
|
157.4
|
|
|
116.0
|
|
||
Other liabilities
|
|
103.4
|
|
|
71.6
|
|
||
Net cash provided by operating activities
|
|
223.0
|
|
|
252.4
|
|
||
Cash flows used in investing activities:
|
|
|
|
|
||||
Capital expenditures
|
|
(25.4
|
)
|
|
(19.4
|
)
|
||
Acquisition of business, net of cash acquired
|
|
—
|
|
|
(68.7
|
)
|
||
Net cash used in investing activities
|
|
(25.4
|
)
|
|
(88.1
|
)
|
||
Cash flows used in financing activities:
|
|
|
|
|
||||
Proceeds from borrowings under revolving credit facility
|
|
781.0
|
|
|
88.5
|
|
||
Repayments of borrowings under revolving credit facility
|
|
(619.5
|
)
|
|
(12.5
|
)
|
||
Net change in accounts payable-inventory financing
|
|
(81.4
|
)
|
|
70.2
|
|
||
Repurchases of common stock
|
|
(140.8
|
)
|
|
(177.1
|
)
|
||
Payment of incentive compensation plan withholding taxes
|
|
(21.9
|
)
|
|
(11.6
|
)
|
||
Dividend payments
|
|
(54.2
|
)
|
|
(43.4
|
)
|
||
Other
|
|
6.8
|
|
|
5.7
|
|
||
Net cash used in financing activities
|
|
(130.0
|
)
|
|
(80.2
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
(7.2
|
)
|
|
0.8
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
|
60.4
|
|
|
84.9
|
|
||
Cash, cash equivalents and restricted cash—beginning of period
|
|
154.0
|
|
|
205.8
|
|
||
Cash, cash equivalents and restricted cash—end of period
|
|
$
|
214.4
|
|
|
$
|
290.7
|
|
Supplementary disclosure of cash flow information:
|
|
|
|
|
||||
Interest paid
|
|
$
|
(28.6
|
)
|
|
$
|
(44.1
|
)
|
Taxes paid, net
|
|
$
|
(9.9
|
)
|
|
$
|
(11.4
|
)
|
1.
|
Description of Business and Summary of Significant Accounting Policies
|
|
|
March 31, 2020
|
|
December 31, 2019
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||
Cash and cash equivalents
|
|
$
|
214.4
|
|
|
$
|
154.0
|
|
|
$
|
285.0
|
|
|
$
|
205.8
|
|
Restricted cash:
|
|
|
|
|
|
|
|
|
||||||||
Prepaid expenses and other
|
|
—
|
|
|
—
|
|
|
5.7
|
|
|
—
|
|
||||
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows
|
|
$
|
214.4
|
|
|
$
|
154.0
|
|
|
$
|
290.7
|
|
|
$
|
205.8
|
|
2.
|
Recent Accounting Pronouncements
|
3.
|
Inventory Financing Agreements
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Revolving Loan inventory financing agreement(1)
|
|
$
|
303.8
|
|
|
$
|
379.1
|
|
Other inventory financing agreements
|
|
41.7
|
|
|
50.8
|
|
||
Accounts payable-inventory financing
|
|
$
|
345.5
|
|
|
$
|
429.9
|
|
(1)
|
The senior secured asset-based revolving credit facility includes an inventory floorplan sub-facility that enables the Company to maintain an inventory financing agreement with a financial intermediary to facilitate the purchase of inventory from certain vendors on more favorable terms than offered directly by the vendors.
|
4.
|
Contract Liabilities and Performance Obligations
|
|
|
Within 1 Year
|
|
Years 1-2
|
|
Years 2-3
|
|
Thereafter
|
||||||||
Remaining performance obligations
|
|
$
|
42.7
|
|
|
$
|
20.6
|
|
|
$
|
8.6
|
|
|
$
|
0.5
|
|
5.
|
Financial Instruments
|
6.
|
Long-Term Debt
|
|
|
|
|
As of March 31, 2020
|
|
As of December 31, 2019
|
||||||||||
|
|
Maturity
|
|
Interest Rate
|
|
Amount
|
|
Interest Rate
|
|
Amount
|
||||||
Credit Facilities
|
|
|
|
|
|
|
|
|
|
|
||||||
CDW UK revolving credit facility(1)
|
|
July 2021
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
Senior secured asset-based revolving credit facility
|
|
March 2022
|
|
2.62
|
%
|
|
212.5
|
|
|
5.00
|
%
|
|
51.0
|
|
||
Total credit facilities
|
|
|
|
|
|
212.5
|
|
|
|
|
51.0
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Term Loans
|
|
|
|
|
|
|
|
|
|
|
||||||
CDW UK term loan(1)
|
|
August 2021
|
|
2.07
|
%
|
|
57.1
|
|
|
2.19
|
%
|
|
61.0
|
|
||
Senior secured term loan facility
|
|
October 2026
|
|
2.74
|
%
|
|
1,434.5
|
|
|
3.55
|
%
|
|
1,438.3
|
|
||
Total term loans
|
|
|
|
|
|
1,491.6
|
|
|
|
|
1,499.3
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Unsecured Senior Notes
|
|
|
|
|
|
|
|
|
|
|
||||||
Senior notes due 2024 ("2024 Senior Notes")
|
|
December 2024
|
|
5.50
|
%
|
|
575.0
|
|
|
5.50
|
%
|
|
575.0
|
|
||
Senior notes due 2025 ("2025 Senior Notes")
|
|
September 2025
|
|
5.00
|
%
|
|
600.0
|
|
|
5.00
|
%
|
|
600.0
|
|
||
Senior notes due 2028 ("2028 Senior Notes")
|
|
April 2028
|
|
4.25
|
%
|
|
600.0
|
|
|
4.25
|
%
|
|
600.0
|
|
||
Total unsecured senior notes
|
|
|
|
|
|
1,775.0
|
|
|
|
|
1,775.0
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Other long-term obligations
|
|
|
|
|
|
12.8
|
|
|
|
|
12.6
|
|
||||
Unamortized deferred financing fees
|
|
|
|
|
|
(19.7
|
)
|
|
|
|
(20.6
|
)
|
||||
Current maturities of long-term debt
|
|
|
|
|
|
(33.7
|
)
|
|
|
|
(34.1
|
)
|
||||
Total long-term debt
|
|
|
|
|
|
$
|
3,438.5
|
|
|
|
|
$
|
3,283.2
|
|
(1)
|
British pound-denominated debt facilities.
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Fair value
|
|
$
|
3,429.4
|
|
|
$
|
3,447.5
|
|
Carrying value
|
|
3,491.9
|
|
|
3,337.9
|
|
7.
|
Income Taxes
|
8.
|
Earnings Per Share
|
|
Three Months Ended March 31,
|
||||
|
2020
|
|
2019
|
||
Basic weighted-average shares outstanding
|
142.7
|
|
|
147.0
|
|
Effect of dilutive securities(1)
|
2.2
|
|
|
2.2
|
|
Diluted weighted-average shares outstanding(2)
|
144.9
|
|
|
149.2
|
|
(1)
|
The dilutive effect of outstanding stock options, restricted stock units, restricted stock, performance share units and Coworker Stock Purchase Plan units is reflected in the diluted weighted-average shares outstanding using the treasury stock method.
|
(2)
|
There were fewer than 0.1 million potential common shares excluded from diluted weighted-average shares outstanding for both the three months ended March 31, 2020 and 2019 as their inclusion would have had an anti-dilutive effect.
|
9.
|
Commitments and Contingencies
|
10.
|
Segment Information
|
|
|
Corporate
|
|
Small Business
|
|
Public
|
|
Other
|
|
Headquarters
|
|
Total
|
||||||||||||
Three Months Ended March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
|
$
|
1,911.0
|
|
|
$
|
391.5
|
|
|
$
|
1,525.3
|
|
|
$
|
561.4
|
|
|
$
|
—
|
|
|
$
|
4,389.2
|
|
Operating income (loss)
|
|
127.4
|
|
|
27.3
|
|
|
112.4
|
|
|
14.7
|
|
|
(36.0
|
)
|
|
245.8
|
|
||||||
Depreciation and amortization expense
|
|
(22.3
|
)
|
|
(5.8
|
)
|
|
(37.7
|
)
|
|
(8.0
|
)
|
|
(17.6
|
)
|
|
(91.4
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Three Months Ended March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
|
$
|
1,736.2
|
|
|
$
|
355.6
|
|
|
$
|
1,330.7
|
|
|
$
|
535.4
|
|
|
$
|
—
|
|
|
$
|
3,957.9
|
|
Operating income (loss)
|
|
134.7
|
|
|
24.4
|
|
|
76.1
|
|
|
25.6
|
|
|
(31.9
|
)
|
|
228.9
|
|
||||||
Depreciation and amortization expense
|
|
(21.5
|
)
|
|
(5.6
|
)
|
|
(12.7
|
)
|
|
(7.4
|
)
|
|
(17.1
|
)
|
|
(64.3
|
)
|
|
Three Months Ended March 31, 2020
|
||||||||||||||||||
|
Corporate
|
|
Small Business
|
|
Public
|
|
Other
|
|
Total
|
||||||||||
Geography(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
United States
|
$
|
1,907.8
|
|
|
$
|
391.5
|
|
|
$
|
1,525.3
|
|
|
$
|
6.2
|
|
|
$
|
3,830.8
|
|
Rest of World
|
3.2
|
|
|
—
|
|
|
—
|
|
|
555.2
|
|
|
558.4
|
|
|||||
Total Net sales
|
1,911.0
|
|
|
391.5
|
|
|
1,525.3
|
|
|
561.4
|
|
|
4,389.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Major Product and Services
|
|
|
|
|
|
|
|
|
|
||||||||||
Hardware
|
1,513.9
|
|
|
324.4
|
|
|
1,210.8
|
|
|
407.4
|
|
|
3,456.5
|
|
|||||
Software
|
276.0
|
|
|
53.5
|
|
|
239.7
|
|
|
97.1
|
|
|
666.3
|
|
|||||
Services
|
100.1
|
|
|
8.2
|
|
|
67.8
|
|
|
54.5
|
|
|
230.6
|
|
|||||
Other(2)
|
21.0
|
|
|
5.4
|
|
|
7.0
|
|
|
2.4
|
|
|
35.8
|
|
|||||
Total Net sales
|
1,911.0
|
|
|
391.5
|
|
|
1,525.3
|
|
|
561.4
|
|
|
4,389.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales by Channel
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate
|
1,911.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,911.0
|
|
|||||
Small Business
|
—
|
|
|
391.5
|
|
|
—
|
|
|
—
|
|
|
391.5
|
|
|||||
Government
|
—
|
|
|
—
|
|
|
568.5
|
|
|
—
|
|
|
568.5
|
|
|||||
Education
|
—
|
|
|
—
|
|
|
476.2
|
|
|
—
|
|
|
476.2
|
|
|||||
Healthcare
|
—
|
|
|
—
|
|
|
480.6
|
|
|
—
|
|
|
480.6
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
561.4
|
|
|
561.4
|
|
|||||
Total Net sales
|
1,911.0
|
|
|
391.5
|
|
|
1,525.3
|
|
|
561.4
|
|
|
4,389.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Timing of Revenue Recognition
|
|
|
|
|
|
|
|
|
|
||||||||||
Transferred at a point in time where CDW is principal
|
1,741.0
|
|
|
366.7
|
|
|
1,404.6
|
|
|
499.0
|
|
|
4,011.3
|
|
|||||
Transferred at a point in time where CDW is agent
|
107.6
|
|
|
22.0
|
|
|
52.3
|
|
|
13.2
|
|
|
195.1
|
|
|||||
Transferred over time where CDW is principal
|
62.4
|
|
|
2.8
|
|
|
68.4
|
|
|
49.2
|
|
|
182.8
|
|
|||||
Total Net sales
|
$
|
1,911.0
|
|
|
$
|
391.5
|
|
|
$
|
1,525.3
|
|
|
$
|
561.4
|
|
|
$
|
4,389.2
|
|
(1)
|
Net sales by geography is generally based on the ship-to address with the exception of certain services that may be performed at, or on behalf of, multiple locations. Such service arrangements are categorized based on the bill-to address.
|
(2)
|
Includes items such as delivery charges to customers.
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||
|
Corporate
|
|
Small Business
|
|
Public
|
|
Other
|
|
Total
|
||||||||||
Geography(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
United States
|
$
|
1,732.9
|
|
|
$
|
355.6
|
|
|
$
|
1,330.7
|
|
|
$
|
8.4
|
|
|
$
|
3,427.6
|
|
Rest of World
|
3.3
|
|
|
—
|
|
|
—
|
|
|
527.0
|
|
|
530.3
|
|
|||||
Total Net sales
|
1,736.2
|
|
|
355.6
|
|
|
1,330.7
|
|
|
535.4
|
|
|
3,957.9
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Major Product and Services
|
|
|
|
|
|
|
|
|
|
||||||||||
Hardware
|
1,384.7
|
|
|
295.1
|
|
|
1,063.3
|
|
|
403.2
|
|
|
3,146.3
|
|
|||||
Software
|
246.5
|
|
|
48.1
|
|
|
221.1
|
|
|
77.3
|
|
|
593.0
|
|
|||||
Services
|
88.0
|
|
|
7.0
|
|
|
42.1
|
|
|
51.9
|
|
|
189.0
|
|
|||||
Other(2)
|
17.0
|
|
|
5.4
|
|
|
4.2
|
|
|
3.0
|
|
|
29.6
|
|
|||||
Total Net sales
|
1,736.2
|
|
|
355.6
|
|
|
1,330.7
|
|
|
535.4
|
|
|
3,957.9
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales by Channel
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate
|
1,736.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,736.2
|
|
|||||
Small Business
|
—
|
|
|
355.6
|
|
|
—
|
|
|
—
|
|
|
355.6
|
|
|||||
Government
|
—
|
|
|
—
|
|
|
488.4
|
|
|
—
|
|
|
488.4
|
|
|||||
Education
|
—
|
|
|
—
|
|
|
400.4
|
|
|
—
|
|
|
400.4
|
|
|||||
Healthcare
|
—
|
|
|
—
|
|
|
441.9
|
|
|
—
|
|
|
441.9
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
535.4
|
|
|
535.4
|
|
|||||
Total Net sales
|
1,736.2
|
|
|
355.6
|
|
|
1,330.7
|
|
|
535.4
|
|
|
3,957.9
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Timing of Revenue Recognition
|
|
|
|
|
|
|
|
|
|
||||||||||
Transferred at a point in time where CDW is principal
|
1,581.8
|
|
|
335.2
|
|
|
1,243.3
|
|
|
474.9
|
|
|
3,635.2
|
|
|||||
Transferred at a point in time where CDW is agent
|
104.0
|
|
|
19.8
|
|
|
46.2
|
|
|
13.0
|
|
|
183.0
|
|
|||||
Transferred over time where CDW is principal
|
50.4
|
|
|
0.6
|
|
|
41.2
|
|
|
47.5
|
|
|
139.7
|
|
|||||
Total Net sales
|
$
|
1,736.2
|
|
|
$
|
355.6
|
|
|
$
|
1,330.7
|
|
|
$
|
535.4
|
|
|
$
|
3,957.9
|
|
(1)
|
Net sales by geography is generally based on the ship-to address with the exception of certain services that may be performed at, or on behalf of, multiple locations. Such service arrangements are categorized based on the bill-to address.
|
(2)
|
Includes items such as delivery charges to customers.
|
|
Three Months Ended March 31,
|
||||||||||||
|
2020
|
|
2019
|
||||||||||
|
Net Sales
|
|
Percentage
of Total Net Sales |
|
Net Sales
|
|
Percentage
of Total Net Sales |
||||||
Notebooks/Mobile Devices
|
$
|
1,111.0
|
|
|
25.3
|
%
|
|
$
|
916.1
|
|
|
23.1
|
%
|
Netcomm Products
|
456.4
|
|
|
10.4
|
|
|
511.4
|
|
|
12.9
|
|
||
Desktops
|
384.3
|
|
|
8.8
|
|
|
297.0
|
|
|
7.5
|
|
||
Video
|
314.6
|
|
|
7.2
|
|
|
271.3
|
|
|
6.9
|
|
||
Enterprise and Data Storage (Including Drives)
|
240.5
|
|
|
5.5
|
|
|
293.3
|
|
|
7.4
|
|
||
Other Hardware
|
949.7
|
|
|
21.5
|
|
|
857.2
|
|
|
21.7
|
|
||
Total Hardware
|
3,456.5
|
|
|
78.7
|
|
|
3,146.3
|
|
|
79.5
|
|
||
|
|
|
|
|
|
|
|
||||||
Software(1)
|
666.3
|
|
|
15.2
|
|
|
593.0
|
|
|
15.0
|
|
||
Services(1)
|
230.6
|
|
|
5.3
|
|
|
189.0
|
|
|
4.8
|
|
||
Other(2)
|
35.8
|
|
|
0.8
|
|
|
29.6
|
|
|
0.7
|
|
||
Total Net sales
|
$
|
4,389.2
|
|
|
100.0
|
%
|
|
$
|
3,957.9
|
|
|
100.0
|
%
|
(1)
|
Certain software and services revenues are recorded on a net basis for accounting purposes. As a result, the category percentage of net revenues is not representative of the category percentage of gross profits.
|
(2)
|
Includes items such as delivery charges to customers.
|
11.
|
Subsequent Events
|
•
|
General economic conditions are a key factor affecting our results as they impact our customers' willingness to spend on information technology. This is particularly the case for our Corporate and Small Business customers, as their purchases tend to reflect confidence in their business prospects, which are driven by their discrete perceptions of business and general economic conditions. Additionally, changes in trade policy and product constraints from suppliers could have an adverse impact on our business.
|
•
|
The global spread of the novel coronavirus (“COVID-19”) pandemic has created significant macroeconomic uncertainty, volatility and disruption. The extent to which the COVID-19 pandemic ultimately impacts our business, results of operations, cash flows, financial condition and liquidity will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and further spread of the outbreak, its severity, actions taken to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. The Company is mobilizing its resources to help ensure the well-being and safety of our coworkers, business continuity, a strong capital position and adequate liquidity. The Company’s efforts are described below:
|
•
|
Currently, we are focused on the well-being and safety of our coworkers, leveraging standing crisis management protocols and following guidelines from public health authorities. We implemented precautions to help keep our coworkers healthy and safe, including activating a cross-functional response team led by senior leadership, moving to remote working for our office coworkers, and implementing safety protocols at our distribution centers, including social distancing measures, segmented shifts, additional personal protective equipment, enhanced facility cleanings, and temperature screening for anyone entering the facilities. At the end of March, to limit the virus spread after a few coworkers tested positive for COVID-19, we decided to close our Vernon Hills, Illinois distribution center for several days and to require a shift of configuration center coworkers to self-isolate. We have continued to pay our affected coworkers their wages. These actions have not had a material impact to date as we leveraged flexibility in our distribution and configuration capabilities where possible, and where not, shipping times modestly increased.
|
•
|
We had strong Net sales at the end for the first quarter 2020 due to robust customer demand for remote work enablement. We expect as the workforces of our customers are more fully enabled for remote work, this demand will moderate. We believe that some portion of Net sales achieved in March is likely attributable to a pull forward of future demand.
|
•
|
During the first quarter of 2020, we increased our provision for credit losses as a result of the expected economic impact of COVID-19. We continue to monitor cash collections and credit limits of our customers to manage the risk of uncollectible receivables.
|
•
|
We have taken certain strategic stocking positions to potentially mitigate the impacts of product constraints related to potential delays in our supply chain.
|
•
|
We have taken measures to enhance liquidity, including completing a $600 million debt issuance in April 2020, suspending share repurchases and implementing cost savings initiatives.
|
•
|
There continues to be substantial uncertainty regarding the impact of the UK's exit from the European Union ("EU") (referred to as "Brexit"), with the UK/EU future trade deal still being negotiated. Potential adverse consequences of Brexit such as global market uncertainty, volatility in currency exchange rates, greater restrictions on imports and exports between UK and EU countries and increased regulatory complexities could have a negative impact on our business, financial condition and results of operations. Prior to the impact of COVID-19, CDW UK had not experienced significant changes in the buying behavior of its customers. We have established a presence in the Netherlands to support CDW UK's broader growth opportunities in the EU and to help address future developments, as needed, for Brexit.
|
•
|
Changes in spending policies, budget priorities and funding levels are a key factor influencing the purchasing levels of government, healthcare and education customers. With the current COVID-19 pandemic, future budget priorities and funding levels for these customers may be adversely affected.
|
•
|
Technology trends drive customer purchasing behaviors in the market. Current technology trends are focused on delivering greater flexibility and efficiency, as well as designing IT securely. These trends are driving customer adoption of solutions such as those delivered via cloud, software defined architectures and hybrid on-premise and off-premise combinations, as well as the evolution of the IT consumption model to more "as a service" offerings, including Device as a Service and managed services. Technology trends could also change as customers consider the impact of the COVID-19 pandemic on their operations.
|
|
Three Months Ended March 31,
|
||||||
(dollars in millions)
|
2020
|
|
2019
|
||||
Net sales
|
$
|
4,389.2
|
|
|
$
|
3,957.9
|
|
Gross profit
|
756.5
|
|
|
672.1
|
|
||
Operating income
|
245.8
|
|
|
228.9
|
|
||
Net income
|
167.9
|
|
|
152.9
|
|
||
Non-GAAP operating income
|
303.9
|
|
|
287.3
|
|
||
Non-GAAP net income
|
200.0
|
|
|
185.4
|
|
||
Average daily sales(1)
|
68.6
|
|
|
62.8
|
|
||
Net debt(2)
|
3,257.8
|
|
|
2,998.4
|
|
||
Cash conversion cycle (in days)(3)
|
20
|
|
|
17
|
|
(1)
|
There were 64 and 63 selling days for the three months ended March 31, 2020 and 2019, respectively.
|
(2)
|
Defined as Total debt minus Cash and cash equivalents.
|
(3)
|
Cash conversion cycle is defined as days of sales outstanding in Accounts receivable and certain receivables due from vendors plus days of supply in Merchandise inventory minus days of purchases outstanding in Accounts payable and Accounts payable-inventory financing, based on a rolling three-month average.
|
|
|
Three Months Ended March 31,
|
||||||||||||
|
|
2020
|
|
2019
|
||||||||||
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
||||||
Net sales
|
|
$
|
4,389.2
|
|
|
100.0
|
%
|
|
$
|
3,957.9
|
|
|
100.0
|
%
|
Cost of sales
|
|
3,632.7
|
|
|
82.8
|
|
|
3,285.8
|
|
|
83.0
|
|
||
Gross profit
|
|
756.5
|
|
|
17.2
|
|
|
672.1
|
|
|
17.0
|
|
||
Selling and administrative expenses
|
|
510.7
|
|
|
11.6
|
|
|
443.2
|
|
|
11.2
|
|
||
Operating income
|
|
245.8
|
|
|
5.6
|
|
|
228.9
|
|
|
5.8
|
|
||
Interest expense, net
|
|
(37.9
|
)
|
|
(0.9
|
)
|
|
(38.3
|
)
|
|
(1.0
|
)
|
||
Other income, net
|
|
3.9
|
|
|
0.1
|
|
|
1.0
|
|
|
—
|
|
||
Income before income taxes
|
|
211.8
|
|
|
4.8
|
|
|
191.6
|
|
|
4.8
|
|
||
Income tax expense
|
|
(43.9
|
)
|
|
(1.0
|
)
|
|
(38.7
|
)
|
|
(1.0
|
)
|
||
Net income
|
|
$
|
167.9
|
|
|
3.8
|
%
|
|
$
|
152.9
|
|
|
3.9
|
%
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
||||||||||||||||
|
|
2020
|
|
2019
|
|
|
|
|
|
|
||||||||||||||
(dollars in millions)
|
|
Net Sales
|
|
Percentage
of Total Net Sales
|
|
Net Sales
|
|
Percentage
of Total Net Sales
|
|
Dollar
Change
|
|
Percent
Change
|
|
Average Daily Sales Percent Change(1)
|
||||||||||
Corporate
|
|
$
|
1,911.0
|
|
|
43.5
|
%
|
|
$
|
1,736.2
|
|
|
43.9
|
%
|
|
$
|
174.8
|
|
|
10.1
|
%
|
|
8.4
|
%
|
Small Business
|
|
391.5
|
|
|
8.9
|
|
|
355.6
|
|
|
9.0
|
|
|
35.9
|
|
|
10.1
|
|
|
8.4
|
|
|||
Public:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Government
|
|
568.5
|
|
|
13.0
|
|
|
488.4
|
|
|
12.3
|
|
|
80.1
|
|
|
16.4
|
|
|
14.6
|
|
|||
Education
|
|
476.2
|
|
|
10.8
|
|
|
400.4
|
|
|
10.1
|
|
|
75.8
|
|
|
19.0
|
|
|
17.1
|
|
|||
Healthcare
|
|
480.6
|
|
|
11.0
|
|
|
441.9
|
|
|
11.2
|
|
|
38.7
|
|
|
8.8
|
|
|
7.1
|
|
|||
Total Public
|
|
1,525.3
|
|
|
34.8
|
|
|
1,330.7
|
|
|
33.6
|
|
|
194.6
|
|
|
14.6
|
|
|
12.8
|
|
|||
Other
|
|
561.4
|
|
|
12.8
|
|
|
535.4
|
|
|
13.5
|
|
|
26.0
|
|
|
4.8
|
|
|
3.2
|
|
|||
Total Net sales
|
|
$
|
4,389.2
|
|
|
100.0
|
%
|
|
$
|
3,957.9
|
|
|
100.0
|
%
|
|
$
|
431.3
|
|
|
10.9
|
%
|
|
9.2
|
%
|
(1)
|
There were 64 and 63 selling days for the three months ended March 31, 2020 and 2019, respectively.
|
|
|
Three Months Ended March 31,
|
|
|
|||||||||||||
|
|
2020
|
|
2019
|
|
|
|||||||||||
|
|
Dollars in
Millions
|
|
Operating
Margin
|
|
Dollars in
Millions
|
|
Operating
Margin
|
|
Percent Change
in Operating
Income
|
|||||||
Segments:(1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Corporate
|
|
$
|
127.4
|
|
|
6.7
|
%
|
|
$
|
134.7
|
|
|
7.8
|
%
|
|
(5.4
|
)%
|
Small Business
|
|
27.3
|
|
|
7.0
|
|
|
24.4
|
|
|
6.9
|
|
|
11.9
|
|
||
Public
|
|
112.4
|
|
|
7.4
|
|
|
76.1
|
|
|
5.7
|
|
|
47.8
|
|
||
Other(2)
|
|
14.7
|
|
|
2.6
|
|
|
25.6
|
|
|
4.8
|
|
|
(42.5
|
)
|
||
Headquarters(3)
|
|
(36.0
|
)
|
|
nm*
|
|
|
(31.9
|
)
|
|
nm*
|
|
|
(12.9
|
)
|
||
Total Operating income
|
|
$
|
245.8
|
|
|
5.6
|
%
|
|
$
|
228.9
|
|
|
5.8
|
%
|
|
7.4
|
%
|
(1)
|
Segment operating income includes the segment's direct operating income, allocations for certain Headquarters costs, allocations for income and expenses from logistics services, certain inventory adjustments and volume rebates and cooperative advertising from vendors.
|
(2)
|
Includes the financial results for our other operating segments, CDW UK and CDW Canada, which do not meet the reportable segment quantitative thresholds.
|
(3)
|
Includes certain Headquarters' function costs that are not allocated to the segments.
|
|
|
Three Months Ended March 31,
|
||||||
(dollars in millions)
|
|
2020
|
|
2019
|
||||
Operating income
|
|
$
|
245.8
|
|
|
$
|
228.9
|
|
Amortization of intangibles(1)
|
|
44.6
|
|
|
44.4
|
|
||
Equity-based compensation
|
|
8.8
|
|
|
12.7
|
|
||
Other adjustments(2)
|
|
4.7
|
|
|
1.3
|
|
||
Non-GAAP operating income
|
|
$
|
303.9
|
|
|
$
|
287.3
|
|
Non-GAAP operating income margin
|
|
6.9
|
%
|
|
7.3
|
%
|
(1)
|
Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
|
(2)
|
Includes other expenses such as payroll taxes on equity-based compensation, expenses related to the relocation of the downtown Chicago office, and acquisition and integration expenses.
|
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||
|
|
2020
|
|
2019
|
||||||||||||||||||||
(dollars in millions)
|
|
Income before income taxes
|
|
Income tax expense(1)
|
|
Net income
|
|
Income before income taxes
|
|
Income tax expense(1)
|
|
Net income
|
||||||||||||
GAAP (as reported)
|
|
$
|
211.8
|
|
|
$
|
(43.9
|
)
|
|
$
|
167.9
|
|
|
$
|
191.6
|
|
|
$
|
(38.7
|
)
|
|
$
|
152.9
|
|
Amortization of intangibles(2)
|
|
44.6
|
|
|
(11.1
|
)
|
|
33.5
|
|
|
44.4
|
|
|
(11.3
|
)
|
|
33.1
|
|
||||||
Equity-based compensation
|
|
8.8
|
|
|
(13.7
|
)
|
|
(4.9
|
)
|
|
12.7
|
|
|
(11.3
|
)
|
|
1.4
|
|
||||||
Other adjustments(3)
|
|
4.7
|
|
|
(1.2
|
)
|
|
3.5
|
|
|
1.3
|
|
|
(3.3
|
)
|
|
(2.0
|
)
|
||||||
Non-GAAP
|
|
$
|
269.9
|
|
|
$
|
(69.9
|
)
|
|
$
|
200.0
|
|
|
$
|
250.0
|
|
|
$
|
(64.6
|
)
|
|
$
|
185.4
|
|
(1)
|
Income tax on non-GAAP adjustments includes excess tax benefits associated with equity-based compensation.
|
(2)
|
Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
|
(3)
|
Includes other expenses such as payroll taxes on equity-based compensation, expenses related to the relocation of the downtown Chicago office, and acquisition and integration expenses.
|
|
|
Three Months Ended March 31,
|
||||||||||||
(dollars in millions)
|
|
2020
|
|
2019
|
|
% Change
|
|
Average Daily % Change(1)
|
||||||
Net sales, as reported
|
|
$
|
4,389.2
|
|
|
$
|
3,957.9
|
|
|
10.9
|
%
|
|
9.2
|
%
|
Foreign currency translation(2)
|
|
—
|
|
|
(9.8
|
)
|
|
|
|
|
||||
Net sales, on a constant currency basis
|
|
$
|
4,389.2
|
|
|
$
|
3,948.1
|
|
|
11.2
|
%
|
|
9.4
|
%
|
(1)
|
There were 64 and 63 selling days for the three months ended March 31, 2020 and 2019, respectively.
|
(2)
|
Represents the effect of translating the prior year results of CDW UK and CDW Canada at the average exchange rates applicable in the current year.
|
Dividend Amount
|
|
Declaration Date
|
|
Record Date
|
|
Payment Date
|
$0.380
|
|
February 6, 2020
|
|
February 25, 2020
|
|
March 10, 2020
|
|
Three Months Ended March 31,
|
||||||
(dollars in millions)
|
2020
|
|
2019
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
223.0
|
|
|
$
|
252.4
|
|
Investing activities
|
(25.4
|
)
|
|
(88.1
|
)
|
||
Net change in accounts payable-inventory financing
|
(81.4
|
)
|
|
70.2
|
|
||
Other financing activities
|
(48.6
|
)
|
|
(150.4
|
)
|
||
Financing activities
|
(130.0
|
)
|
|
(80.2
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(7.2
|
)
|
|
0.8
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
$
|
60.4
|
|
|
$
|
84.9
|
|
|
Three Months Ended March 31,
|
||||||||||
(dollars in millions)
|
2020
|
|
2019
|
|
Change
|
||||||
Net income
|
$
|
167.9
|
|
|
$
|
152.9
|
|
|
$
|
15.0
|
|
Adjustments for the impact of non-cash items(1)
|
133.4
|
|
|
66.1
|
|
|
67.3
|
|
|||
Net income adjusted for the impact of non-cash items(2)
|
301.3
|
|
|
219.0
|
|
|
82.3
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable(3)
|
(209.0
|
)
|
|
11.9
|
|
|
(220.9
|
)
|
|||
Merchandise inventory(4)
|
(66.4
|
)
|
|
(134.2
|
)
|
|
67.8
|
|
|||
Accounts payable-trade(5)
|
157.4
|
|
|
116.0
|
|
|
41.4
|
|
|||
Other
|
39.7
|
|
|
39.7
|
|
|
—
|
|
|||
Net cash provided by operating activities
|
$
|
223.0
|
|
|
$
|
252.4
|
|
|
$
|
(29.4
|
)
|
(1)
|
Includes items such as deferred income taxes, depreciation and amortization, provision for credit losses and equity-based compensation expense.
|
(2)
|
The change is due to stronger operating results driven by Net sales and Gross profit growth.
|
(3)
|
The change is primarily due to increased sales volume and timing of payments during the first quarter of 2020 compared to 2019.
|
(4)
|
The change is primarily due to lower growth in inventory balances during the first quarter of 2020 compared to 2019.
|
(5)
|
The change is due to increased sales volume during the first quarter of 2020 compared to 2019 and timing of inventory purchases, partially offset by mixing out of vendors with longer payment terms.
|
(1)
|
Represents the rolling three-month average of the balance of Accounts receivable, net at the end of the period, divided by average daily Net sales for the same three-month period. Also incorporates components of other miscellaneous receivables.
|
(2)
|
Represents the rolling three-month average of the balance of Merchandise inventory at the end of the period divided by average daily Cost of sales for the same three-month period.
|
(3)
|
Represents the rolling three-month average of the combined balance of Accounts payable-trade, excluding cash overdrafts, and Accounts payable-inventory financing at the end of the period divided by average daily Cost of sales for the same three-month period.
|
•
|
structurally subordinated to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries and;
|
•
|
rank equal in right of payment with all of the Issuers' and the Guarantors’ existing and future unsecured senior debt.
|
(dollars in millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Current assets
|
$
|
3,909.6
|
|
|
$
|
3,601.6
|
|
Goodwill
|
2,205.6
|
|
|
2,206.1
|
|
||
Other assets
|
821.2
|
|
|
903.1
|
|
||
Total Non-current assets
|
3,026.8
|
|
|
3,109.2
|
|
||
Current liabilities
|
3,096.5
|
|
|
2,975.3
|
|
||
Long-term debt
|
3,388.1
|
|
|
3,229.5
|
|
||
Other liabilities
|
175.5
|
|
|
188.3
|
|
||
Total Long-term liabilities
|
3,563.6
|
|
|
3,417.8
|
|
(dollars in millions)
|
Three Months Ended March 31, 2020
|
|
Year Ended December 31, 2019
|
||||
Net sales
|
$
|
3,827.8
|
|
|
$
|
15,874.1
|
|
Gross profit
|
668.4
|
|
|
2,666.8
|
|
||
Operating income
|
231.1
|
|
|
1,032.1
|
|
||
Net income
|
154.8
|
|
|
656.7
|
|
Period
|
|
Total Number of Shares Purchased (in millions)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of a Publicly Announced Program (in millions)
|
|
Maximum Dollar Value of Shares that May Yet be Purchased Under the Program(1)
(in millions)
|
||||||
January 1 through January 31, 2020
|
|
0.3
|
|
|
$
|
139.28
|
|
|
0.3
|
|
|
$
|
631.1
|
|
February 1 through February 29, 2020
|
|
0.3
|
|
|
$
|
131.96
|
|
|
0.3
|
|
|
$
|
588.3
|
|
March 1 through March 31, 2020
|
|
0.5
|
|
|
$
|
105.78
|
|
|
0.5
|
|
|
$
|
538.0
|
|
Total
|
|
1.1
|
|
|
|
|
1.1
|
|
|
|
(1)
|
The amounts presented in this column are the remaining total authorized value to be spent after each month's repurchases. As of March 31, 2020, the Company has elected to suspend share repurchases as a precautionary measure in light of the COVID-19 pandemic.
|
Exhibit
|
|
Description
|
|
|
|
3.1┼
|
|
|
|
|
|
10.1**
|
|
|
|
|
|
10.2**
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
22.1*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
101.INS*
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
101.SCH*
|
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL*
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF*
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB*
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE*
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
104*
|
|
Cover Page Interactive Data File (embedded within the Inline XBRL document).
|
*
|
Filed herewith
|
**
|
These items are furnished and not filed.
|
|
|
|
|
|
|
|
|
|
CDW CORPORATION
|
||
|
|
|
|
|
|
Date:
|
May 6, 2020
|
|
By:
|
|
/s/ Collin B. Kebo
|
|
|
|
|
|
Collin B. Kebo
|
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
(Duly authorized officer and principal financial officer)
|
Subsidiary
|
|
Jurisdiction of Organization
|
|
Type of Obligor
|
CDW LLC
|
|
Illinois
|
|
Issuer
|
CDW Finance Corporation
|
|
Delaware
|
|
Issuer
|
CDW Technologies LLC
|
|
Wisconsin
|
|
Guarantor
|
CDW Direct, LLC
|
|
Illinois
|
|
Guarantor
|
CDW Government LLC
|
|
Illinois
|
|
Guarantor
|
CDW Logistics LLC
|
|
Illinois
|
|
Guarantor
|
1.
|
I have reviewed this quarterly report on Form 10-Q of the registrant;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Christine A. Leahy
|
Christine A. Leahy
|
President and Chief Executive Officer
|
CDW Corporation
|
May 6, 2020
|
1.
|
I have reviewed this quarterly report on Form 10-Q of the registrant;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Collin B. Kebo
|
Collin B. Kebo
|
Senior Vice President and Chief Financial Officer
|
CDW Corporation
|
May 6, 2020
|
/s/ Christine A. Leahy
|
Christine A. Leahy
|
President and Chief Executive Officer
|
CDW Corporation
|
May 6, 2020
|
/s/ Collin B. Kebo
|
Collin B. Kebo
|
Senior Vice President and Chief Financial Officer
|
CDW Corporation
|
May 6, 2020
|