Non-GAAP Measures Definition - Non-GAAP financial measures exclude or include amounts not normally included or excluded in US GAAP measures[3] - These measures provide analysts, investors, and management with useful information regarding underlying operating performance[4, 8] Operating Income - Non-GAAP operating income for the three months ended September 30, 2025, was $530.6 million, representing 9.2% of net sales[10] - Non-GAAP operating income for the nine months ended September 30, 2025, reached $1,494.3 million, or 8.8% of net sales[10] - Reported operating income for the three months ended September 30, 2025, was $443.3 million, 7.7% of net sales, compared to $481.6 million, 8.7% of net sales in 2024[10] - Reported operating income for the nine months ended September 30, 2025, was $1,224.9 million, 7.2% of net sales, compared to $1,242.7 million, 7.9% of net sales in 2024[10] Net Income - Non-GAAP net income for the three months ended September 30, 2025, was $357.2 million with an effective tax rate of 25.1%[12] - Non-GAAP net income for the nine months ended September 30, 2025, was $987.4 million with an effective tax rate of 25.6%[14] - US GAAP net income for the three months ended September 30, 2025, was $291.0 million with an effective tax rate of 25.3%[12] - US GAAP net income for the nine months ended September 30, 2025, was $787.1 million with an effective tax rate of 25.6%[14] Sales and Expenses - Net sales for the three months ended September 30, 2025, were $5,737.4 million, a 4.0% increase compared to 2024[17] - Net sales for the nine months ended September 30, 2025, were $16,913.1 million, a 7.0% increase compared to 2024[17] - Non-GAAP selling and administrative expenses for the three months ended September 30, 2025, were $724.9 million, an 8.7% increase[20] - Non-GAAP selling and administrative expenses for the nine months ended September 30, 2025, were $2,124.7 million, a 6.3% increase[20] Cash Flow - Free cash flow for the nine months ended September 30, 2025, was $692.2 million[22] - Adjusted free cash flow for the nine months ended September 30, 2025, was $668.0 million[22]

Core Viewpoint - CDW Corporation has declared a quarterly cash dividend of $0.630 per common share, reflecting its commitment to returning value to shareholders [1] Company Summary - The dividend will be paid on December 10, 2025, to all stockholders of record as of the close of business on November 25, 2025 [1] - The declared dividend amount represents approximately [1]

Financial Performance - Net sales for Q3 2025 were $5,737 million, a 4.0% increase from $5,517 million in Q3 2024[4] - Gross profit for Q3 2025 was $1,256 million, up 4.6% from $1,201 million in Q3 2024, with a gross profit margin of 21.9%[5] - Operating income decreased by 8.0% to $443 million in Q3 2025, with a non-GAAP operating income of $531 million, down 0.6%[7] - Net income for Q3 2025 was $291 million, an 8.0% decrease from $316 million in Q3 2024, while non-GAAP net income increased by 0.6% to $357 million[10] - For the nine months ended September 30, 2025, net sales increased by 7.0% to $16,913.1 million, compared to $15,812.7 million in the same period of 2024[29] - The company reported a net cash provided by operating activities of $771.4 million for the nine months ended September 30, 2025[60] Tax and Expenses - The effective income tax rate decreased to 25.3% in Q3 2025 from 26.0% in Q3 2024, resulting in a tax expense of $98 million[9] - Selling and administrative expenses rose by 12.9% to $812 million in Q3 2025, primarily due to higher performance-based compensation and acquisition-related costs[6] - The net income before income tax for the nine months ended September 30, 2025, was $1,058.3 million, with an effective tax rate of 25.6%[53] Segment Performance - Corporate segment net sales were $2,255 million, up 4.4% compared to 2024, while the Small Business segment saw a 14.2% increase to $434 million[13] - Healthcare sales increased by 6.9% to $693.9 million in Q3 2025, while Education sales decreased by 8.5% to $911.2 million[31] - The Corporate segment saw a 4.4% increase in sales to $2,255.4 million for Q3 2025, while the Small Business segment grew by 14.2% to $433.8 million[31] Cash Flow and Working Capital - Net cash provided by operating activities for the nine months ended September 30, 2025, was $771.4 million, down from $932.0 million in the same period of 2024, reflecting a decline of 17.3%[41] - Free cash flow for the nine months ended September 30, 2025, was $692.2 million, down from $838.0 million in 2024[60] - Cash conversion cycle improved to 11 days in September 2025, down from 18 days in December 2024, suggesting better efficiency in managing working capital[38] Assets and Liabilities - Total assets increased to $15,197.6 million as of September 30, 2025, up from $14,678.4 million at December 31, 2024, representing a growth of 3.5%[36] - Total debt decreased to $5,628.8 million from $5,842.8 million, a reduction of 3.7% compared to the previous period[38] - Total current liabilities rose to $5,593.8 million from $5,474.4 million, an increase of 2.2%[36] Shareholder Returns - A quarterly cash dividend of $0.630 per common share was approved, to be paid on December 10, 2025[2] Other Financial Metrics - Days of sales outstanding increased to 92 days in September 2025 from 84 days in December 2024, indicating a longer collection period[38] - Non-GAAP operating income for the three months ended September 30, 2025, was $530.6 million, accounting for 9.2% of net sales, compared to $534.0 million or 9.7% in 2024[45] - Non-GAAP net income for the three months ended September 30, 2025, was $476.7 million, with a net income per diluted share of $2.21, compared to $479.1 million and $2.34 in 2024[49] - The amortization of intangibles for the nine months ended September 30, 2025, was $127.6 million[53] - The company incurred $44.1 million in costs related to transformation initiatives during the nine months ended September 30, 2025[53]

Core Insights - Wedgewood Partners' third-quarter 2025 investor letter indicates that AI stocks remain a focal point for Wall Street, with the Wedgewood Composite's net return at 5.9%, underperforming the S&P's 8.1% and the Russell 1000 Growth Index's 10.5% [1] Company Performance - CDW Corporation (NASDAQ:CDW) is highlighted as an IT solutions provider, with a one-month return of -2.56% and a 52-week loss of 28.16%, closing at $156.36 per share on October 22, 2025, with a market cap of $20.493 billion [2][3] - CDW's revenues grew by 10% while adjusted operating income only increased by 2%, indicating potential challenges in profitability despite revenue growth [3] Market Position and Outlook - CDW Corporation is not among the top 30 most popular stocks among hedge funds, with 44 hedge fund portfolios holding its shares at the end of Q2 2025, unchanged from the previous quarter [4] - The company reported consolidated net sales of $6 billion in Q2 2025, reflecting a 10% increase compared to Q2 2024, suggesting a stable revenue trajectory [4] - Wedgewood Partners believes that while CDW has investment potential, other AI stocks may offer greater upside with less downside risk, indicating a competitive landscape for investment opportunities [4]

Core Insights - CDW Corporation, based in Vernon Hills, Illinois, is a leading provider of IT solutions with a market capitalization of $19 billion, offering a range of products including hardware, software, cloud computing, and security solutions [1] Financial Performance - Analysts anticipate CDW will report a diluted earnings per share (EPS) of $2.53 for the fiscal third quarter of 2025, reflecting a 3.1% decrease from $2.61 in the same quarter last year [2] - For the full fiscal year, EPS is projected to be $9.44, which is a 2.2% increase from $9.24 in fiscal 2024, and is expected to rise to $9.99 in fiscal 2026, marking a year-over-year increase of 5.8% [3] Stock Performance - CDW's stock has significantly underperformed, with a decline of 34.6% over the past 52 weeks, contrasting with the S&P 500 Index's gain of 13.4% and the Technology Select Sector SPDR Fund's increase of 20.8% during the same period [4] Recent Earnings Report - On August 6, CDW reported its Q2 results, with an adjusted EPS of $2.60, surpassing Wall Street's expectations of $2.49, and revenue of $5.98 billion, exceeding forecasts of $5.51 billion [5] Analyst Ratings - The consensus opinion among analysts is moderately bullish, with a "Moderate Buy" rating overall. Out of 12 analysts, five recommend a "Strong Buy," two suggest a "Moderate Buy," and five advise a "Hold." The average price target for CDW is $206.80, indicating a potential upside of 42.6% from current levels [6]

Company Overview - CDW Corporation, based in Vernon Hills, Illinois, provides IT solutions across the United States, the United Kingdom, and Canada, with a market cap of $21.5 billion [1][2] Stock Performance - CDW stock has experienced a significant decline of 28.8% from its 52-week high of $230.86 reached on September 20, 2024, and has dropped nearly 6% over the past three months, underperforming the Nasdaq Composite's 12.6% increase during the same period [3] - Over the longer term, CDW stock has decreased by 5.6% in 2025 and 24.9% over the past 52 weeks, while the Nasdaq Composite has gained 14.7% year-to-date and 26% over the past year [4] Financial Performance - In Q2, CDW reported net sales of approximately $6 billion, reflecting a year-over-year increase of 10.2%, which exceeded analysts' expectations by 8.6%. However, there was a slight contraction in gross margins, resulting in a modest 3.9% growth in non-GAAP EPS to $2.60, also surpassing consensus estimates [5] Competitive Position - CDW has outperformed its peer, Gartner, Inc., which has seen a 49% decline year-to-date and a 51.1% drop over the past 52 weeks [6] - Among 12 analysts covering CDW stock, the consensus rating is a "Moderate Buy," with a mean price target of $206.80, indicating a potential upside of 25.9% from current price levels [6]

Market Performance - All three major U.S. equity benchmarks, including the S&P 500, Nasdaq 100, and Dow Jones, reached record highs as investors favored risk assets amid expectations of falling interest rates [1][2] - The S&P 500 rose 0.8% to 6,585.53, the Nasdaq 100 increased 0.7% to 24,012.41, and the Dow Jones jumped 1.3% to 46,087.94 [2][7] - The Vanguard S&P 500 ETF increased by 0.8% to $604.49, while the SPDR Dow Jones Industrial Average rose 1.2% to $461.58 [7] Sector Performance - All 11 S&P sectors experienced gains, with consumer discretionary, materials, and financials leading the way [3] - The Consumer Discretionary Select Sector SPDR Fund outperformed, increasing by 1.3%, while the Energy Select Sector SPDR Fund lagged with a 0.1% rise [7] Company Performance - Top gainers in the S&P 500 included Synopsys, Inc. (+11.11%), Centene Corporation (+10.66%), and Micron Technology, Inc. (+9.57%) [8] - Notable losers included Delta Air Lines, Inc. (-4.30%), Oracle Corporation (-3.38%), and Netflix, Inc. (-2.83%) [9]

Group 1 - CDW is participating in Citi Research's Global TMT Conference, marking its 33rd Annual Conference [1] - Asiya Merchant, VP & Analyst at Citi Research, oversees tech hardware and tech supply chain stocks [1] - Chris Leahy and Al Miralles from CDW are present at the conference [1] Group 2 - The format of the session is a fireside chat, allowing for both prepared remarks and audience questions [2] - The investment community is encouraged to engage by raising hands for Q&A [2]

Summary of CDW (CDW) 2025 Conference Call Company Overview - **Company**: CDW - **Event**: 2025 Conference - **Date**: September 03, 2025 - **Speakers**: Christine Leahy, Al Miralles, Sia Merchant Key Points Industry and Market Performance - CDW reported a **10% year-on-year growth** in Q2 2025, indicating strong performance despite market complexities [6][7] - The company characterized its business as **highly resilient**, with strong execution across all end markets, particularly in the enterprise sector, which performed better than expected [7][9] - Caution was expressed regarding the second half of the year, particularly in federal and education markets, due to **administration policy changes** and funding challenges [9][10] Growth and Outlook - CDW's outlook for the second half of 2025 is **prudent**, with expectations of muted performance in federal and education sectors, despite potential catalysts for growth [9][10] - The company is looking for **consistent growth** in enterprise and small business sectors, along with clarity in budgetary and policy areas for education and federal government [13] Competitive Positioning - CDW has evolved from a reseller to a **technology integrator**, enhancing its relevance in a complex technology landscape [17][18] - The company benefits from its scale, which provides advantages in verticalization and cost leverage, making it a preferred partner for technology solutions [18][19] - CDW's partner ecosystem is robust, with strong relationships that position it as a leading channel player [19] Cloud and AI Integration - The transition to cloud services is complex, and CDW emphasizes the need for **advisory services** to help customers optimize their technology investments [23][24] - AI adoption among customers is increasing, with CDW positioned as a key partner in helping organizations become **AI-ready** [35][36] - The company is committed to being an **AI-native workforce**, integrating AI tools to enhance productivity internally [46][47] Financial Performance and Margins - CDW expects margins to remain consistent with 2024, driven by growth in solutions and services, particularly in higher-margin areas [26][32] - The company is focused on **durable gross profit growth** through strategic investments across the business cycle [29][30] - Free cash flow generation is strong, with a disciplined approach to capital allocation, including potential M&A opportunities [60] Strategic Acquisitions - CDW recently acquired **Mission Cloud Services**, enhancing its cloud solution capabilities and integration with AWS [61][62] - The integration of Mission Cloud is performing well, contributing positively to CDW's sales and AWS relationships [63] Investor Insights - Investors may underestimate the **complexity of the technology landscape**, which creates opportunities for CDW as businesses seek guidance in navigating new technologies [65][66] - The company is optimistic about future growth driven by AI and other secular catalysts, despite a cautious near-term outlook [64] Additional Important Points - CDW's diverse portfolio allows it to adapt to various market conditions, providing a buffer against macroeconomic events [20] - The company is actively investing in higher-margin areas such as managed services and security, which are expected to drive future profitability [32]

Investment Rating - The report maintains a constructive outlook on shares of Amphenol Corp (APH), Dell Technologies (DELL), Corning Inc (GLW), Hewlett Packard Enterprise (HPE), and the memory/disk drive sector including Seagate Technology (STX), Western Digital Corp (WDC), and SanDisk Corp (SNDK) [4]. Core Insights - The upcoming Citi's 33rd annual Global Technology Conference will feature over 240 technology companies, focusing on updates regarding customer and enterprise demand dynamics, as well as supply chain conditions [1]. - Key investor questions include the impact of Generative AI on infrastructure spending, enterprise spending intentions, consumer spending trends, margin impacts from rising component costs, and capital allocation strategies [2][3]. Company Summaries - **Amphenol Corp (APH)**: Current price at $109.36 with a market cap of $133.52 billion. The target price is set at $125.00 with an expected share price return of 14.3% [7]. - **CDW Corp (CDW)**: Current price at $167.00 with a market cap of $21.89 billion. The target price is $200.00 with an expected share price return of 19.8% [7]. - **Corning Inc (GLW)**: Current price at $65.77 with a market cap of $56.34 billion. The target price is $72.00 with an expected share price return of 9.5% [7]. - **Dell Technologies (DELL)**: Current price at $130.84 with a market cap of $88.50 billion. The target price is $160.00 with an expected share price return of 22.3% [7]. - **Hewlett Packard Enterprise (HPE)**: Current price at $22.45 with a market cap of $29.46 billion. The target price is $25.00 with an expected share price return of 11.4% [7]. - **SanDisk Corp (SNDK)**: Current price at $46.37 with a market cap of $6.76 billion. The target price is $57.00 with an expected share price return of 22.9% [7]. - **Seagate Technology (STX)**: Current price at $159.19 with a market cap of $33.86 billion. The target price is $167.00 with an expected share price return of 4.9% [7]. - **Western Digital Corp (WDC)**: Current price at $76.97 with a market cap of $26.70 billion. The target price is $88.00 with an expected share price return of 14.3% [7].