CDW (CDW) - 2023 Q3 - Quarterly Report

Financial Performance - Net sales for Q3 2023 were $5,628.3 million, a decrease of 9.4$6,215.5 million in Q3 2022[17] - Gross profit for Q3 2023 was $1,227.7 million, slightly down from$1,233.2 million in Q3 2022, resulting in a gross margin of approximately 21.8%[17] - Operating income increased to $478.4 million in Q3 2023, up from$466.4 million in Q3 2022, reflecting a growth of 2.9%[17] - Net income for Q3 2023 was $315.5 million, compared to$297.8 million in Q3 2022, representing an increase of 5.8%[19] - For the nine months ended September 30, 2023, net sales totaled $16,357.5 million, a decrease of 10.6$18,310.4 million for the same period in 2022[79] - The company reported a total operating income of $1,245.9 million for the nine months ended September 30, 2023, down from$1,288.6 million in the same period of 2022[79] - Net income for the nine months ended September 30, 2023, was $808.2 million, compared to$297.8 million for the same period in 2022, representing a 171% increase[27] - Non-GAAP net income for the three months ended September 30, 2023, was $369.4 million, compared to$357.0 million for the same period in 2022[150] - Non-GAAP net income for the nine months ended September 30, 2023, was $997.1 million, compared to$998.0 million in 2022, reflecting a marginal decrease[170] Assets and Liabilities - Total current assets decreased to $6,458.4 million as of September 30, 2023, down from$6,564.0 million at the end of 2022[15] - Total liabilities decreased to $10,065.3 million as of September 30, 2023, compared to$10,528.2 million at the end of 2022[15] - The company’s total stockholders' equity increased to $1,810.0 million as of September 30, 2023, from$1,603.3 million at the end of 2022[15] - The company has total long-term debt of $5,661.5 million as of September 30, 2023, down from$5,866.4 million as of December 31, 2022[51] - Net debt as of September 30, 2023, was $5,260.8 million, down from$5,773.2 million in 2022, showing a reduction in leverage[170] Cash Flow and Investments - Cash and cash equivalents increased to $440.7 million at the end of Q3 2023, up from$384.6 million at the end of Q3 2022[21] - The company reported a net cash provided by operating activities of $1,062.2 million for the nine months ended September 30, 2023, compared to$1,094.0 million for the same period in 2022[21] - The company paid dividends of $1.77 per share, totaling$238.4 million for the nine months ended September 30, 2023[27] - The Company prepaid $100 million on the Term Loan Facility during the nine months ended September 30, 2023, with no additional mandatory payments required until maturity on December 1, 2026[69] - Adjusted free cash flow for the nine months ended September 30, 2023, was$1,112.9 million, an increase from $1,043.4 million in 2022[170] Segment Performance - The company has three reportable segments: Corporate, Small Business, and Public, with Corporate segment net sales of$2,226.5 million for the three months ended September 30, 2023[79] - Corporate segment net sales decreased by $1,190.9 million, or 15.1$6,675.2 million, representing 40.8% of total net sales[199] - Small Business segment net sales decreased by $113 million, or 23.0$22 million, or 4.0%, to $575 million, primarily due to lower payroll costs[204] Revenue Composition - Hardware sales accounted for$12,149.9 million, which is 74.3% of total net sales, down from 77.6% in the previous year[102] - Software sales increased to $2,805.8 million, representing 17.2$1,316.6 million, accounting for 8.0% of total net sales, compared to 7.6% in the prior year[102] - Revenue recognized at a point in time where CDW is principal was $14,244.6 million, making up the majority of total net sales[102] Operational Efficiency - Selling and administrative expenses decreased by$18 million, or 2.3%, to $749 million for the three months ended September 30, 2023, compared to$767 million for the same period in 2022[133] - Interest expense, net decreased by $5 million, or 8.3$57 million for the three months ended September 30, 2023, compared to $63 million for the same period in 2022[135] - The effective tax rate for the three months ended September 30, 2023, was 24.8%, compared to 25.4% for the same period in 2022[85] Future Outlook - The company plans to continue investing in new product development and market expansion strategies to drive future growth[17] - Future outlook includes continued focus on expanding software and services offerings to enhance revenue diversification[102] - The company is exploring new market strategies and potential acquisitions to drive growth in the upcoming quarters[102] - Economic conditions and customer spending priorities are critical factors influencing the company's sales performance and IT investment decisions[116]