CDW (US:CDW)2025-08-06 20:07PART I FINANCIAL INFORMATION Item 1. Financial Statements The section presents unaudited consolidated financial statements for the periods ended June 30, 2025 Consolidated Balance Sheets Total assets grew to $15.27 billion, driven by higher accounts receivable and inventory Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $7,836.5 | $7,373.1 | | Total Assets | $15,265.7 | $14,678.4 | | Total Current Liabilities | $5,805.7 | $5,474.4 | | Total Long-term Debt | $5,623.2 | $5,607.0 | | Total Liabilities | $12,798.5 | $12,325.7 | | Total Stockholders' Equity | $2,467.2 | $2,352.7 | Consolidated Statements of Operations Net sales grew 10.2% in Q2 2025, though operating income and diluted EPS saw slight declines Key Performance Indicators - Three Months Ended June 30 (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $5,976.6 | $5,423.4 | 10.2% | | Gross profit | $1,241.2 | $1,183.1 | 4.9% | | Operating income | $420.2 | $433.1 | -3.0% | | Net income | $271.2 | $281.1 | -3.5% | | Diluted EPS | $2.05 | $2.07 | -1.0% | Key Performance Indicators - Six Months Ended June 30 (in millions, except EPS) | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $11,175.7 | $10,296.1 | 8.5% | | Gross profit | $2,363.5 | $2,246.4 | 5.2% | | Operating income | $781.6 | $761.1 | 2.7% | | Net income | $496.1 | $497.2 | -0.2% | | Diluted EPS | $3.73 | $3.66 | 1.9% | Consolidated Statements of Cash Flows Operating cash flow decreased to $443.1 million due to working capital changes Cash Flow Summary - Six Months Ended June 30 (in millions) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $443.1 | $589.9 | | Net cash provided by (used in) investing activities | $154.6 | $(60.6) | | Net cash (used in) financing activities | $(649.2) | $(449.6) | | Net (decrease) increase in cash | $(26.5) | $76.6 | - Key financing activities in the first six months of 2025 included $350.1 million in common stock repurchases and $165.1 million in dividend payments16 Notes to Consolidated Financial Statements The notes detail accounting policies, segment performance, debt, and legal matters - The company is a leading multi-brand provider of IT solutions to business, government, education, and healthcare customers in the US, UK, and Canada24 - Total long-term debt stood at $5.62 billion as of June 30, 2025, and the company repaid $211 million of its 4.125% Senior Notes in May 20254447 - The company received a Civil Investigative Demand from the Department of Justice related to a False Claims Act investigation concerning the E-Rate Program, with the outcome currently indeterminable66 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial results, highlighting sales growth offset by margin pressure - Key factors affecting performance include general economic conditions, a measured approach to IT spending by customers, and technology trends driving adoption of cloud, AI, and hybrid solutions9496 Key Business Metrics Summary | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales ($M) | $5,976.6 | $5,423.4 | $11,175.7 | $10,296.1 | | Gross profit margin | 20.8% | 21.8% | 21.1% | 21.8% | | Operating income margin | 7.0% | 8.0% | 7.0% | 7.4% | | Non-GAAP operating income margin | 8.7% | 9.4% | 8.6% | 8.9% | | Non-GAAP net income per diluted share | $2.60 | $2.50 | $4.74 | $4.41 | Results of Operations Q2 2025 net sales grew 10.2%, but a decline in gross margin led to lower operating income - Q2 2025 vs Q2 2024: Net sales increased by $553 million (10.2%), but Gross Profit only grew by $58 million (4.9%) due to a 100 basis point decline in gross profit margin, leading to a $13 million (3.0%) decrease in Operating Income103104105 - H1 2025 vs H1 2024: Net sales increased by $880 million (8.5%), and Gross Profit grew by $117 million (5.2%), resulting in an Operating Income increase of $21 million (2.7%)108109110 Segment Results of Operations The Corporate segment led sales growth, while the Public segment's operating income declined Net Sales Growth by Segment - Q2 2025 vs Q2 2024 | Segment | Q2 2025 Net Sales ($M) | % Change YoY | | :--- | :--- | :--- | | Corporate | $2,581.5 | 17.6% | | Small Business | $431.3 | 12.6% | | Public | $2,291.7 | 2.2% | | Other | $672.1 | 11.6% | Operating Income by Segment - Q2 2025 vs Q2 2024 | Segment | Q2 2025 Op. Income ($M) | % Change YoY | | :--- | :--- | :--- | | Corporate | $243.1 | 23.4% | | Small Business | $47.8 | 4.8% | | Public | $187.5 | -10.4% | | Other | $42.6 | 76.0% | | Headquarters (cost) | $(100.8) | -135.0% | - The Public segment's performance was mixed: Healthcare sales grew 24.1%, Government sales grew 2.7%, but Education sales declined 10.9% year-over-year in Q2 2025113124 Liquidity and Capital Resources Liquidity is supported by operations and a revolving facility despite lower operating cash flow - As of June 30, 2025, the company had $1.2 billion of availability under its Revolving Loan Facility and total unsecured debt of $5.6 billion150151 - During H1 2025, the company repurchased 2.0 million shares for $350 million154 - The cash conversion cycle decreased by one day to 16 days, driven by an increase in Days of Purchases Outstanding (DPO)159161 Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk disclosures remain materially unchanged from the previous annual report - There have been no material changes in market risk information since the last annual report176 Item 4. Controls and Procedures Disclosure controls and procedures were deemed effective with no material changes to internal controls - Management concluded that disclosure controls and procedures were effective as of the end of the period covered by the report177 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls178 PART II OTHER INFORMATION Item 1. Legal Proceedings The company is involved in ordinary course legal proceedings and a DOJ investigation - The company is subject to various legal proceedings and is cooperating with a Department of Justice investigation related to the Schools and Libraries Program (E-Rate Program)6366180 Item 1A. Risk Factors Risk factors remain materially unchanged from the 2024 Annual Report on Form 10-K - There are no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K181 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 0.9 million shares for $150 million in Q2 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased (millions) | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 0.2 | $152.83 | | May 2025 | 0.3 | $182.93 | | June 2025 | 0.4 | $175.94 | | Total | 0.9 | - | - As of June 30, 2025, $987.5 million remained available for future repurchases under the authorized program183 Item 6. Exhibits This section lists all exhibits filed with the report, including certifications and XBRL data - Exhibits filed include CEO and CFO certifications pursuant to Rule 15d-14(a) and 18 U.S.C. 1350, as well as Inline XBRL documents188