CDW (US:CDW)2026-02-20 21:05Financial Performance - In 2025, CDW generated net sales of $22.4 billion, a 6.8% increase from $21.0 billion in 2024[47] - Net sales for the year ended December 31, 2025, totaled $22,424.1 million, representing a 6.8% increase from $20,998.7 million in 2024[202] - Gross profit for 2025 rose by $271 million, or 5.9%, with a gross profit margin of 21.7%, a decrease of 20 basis points from the previous year[176] - Total gross profit for the year ended December 31, 2025, was $4,873.4 million, a 5.9% increase from $4,602.4 million in 2024[180] - Operating income for 2025 was $1,655.6 million, reflecting a slight increase of 0.3% compared to 2024, with an operating income margin of 7.4%[174] - Operating income for the year ended December 31, 2025, increased by $4 million, or 0.3%, to $1,656 million compared to $1,651 million for 2024[177] - Non-GAAP net income for 2025 was $1,323.0 million, compared to $1,287.2 million in 2024, with non-GAAP net income per diluted share increasing to $10.02 from $9.52[170] - Non-GAAP operating income for 2025 was $1,996.7 million, or 8.9% of net sales, compared to $1,947.0 million, or 9.3% of net sales in 2024[199] - Free cash flow for 2025 was $1,088.1 million, down from $1,154.7 million in 2024, indicating a decrease of 5.7%[203] Sales Breakdown - The US business accounted for approximately 90% of net sales, with five dedicated customer channels each generating over $1.7 billion in net sales[29] - CDW's net sales from hardware amounted to $16.1 billion, representing 71.6% of total net sales in 2025[47] - Net sales from software reached $4.2 billion, accounting for 18.7% of total net sales in 2025[47] - Corporate segment net sales increased by $605 million, or 6.8%, driven by higher customer demand in software and hardware products[186] - Small Business segment net sales rose by $203 million, or 13.3%, primarily due to increased demand for notebooks/mobile devices and software[188] - Public segment net sales increased by $378 million, or 4.6%, attributed to higher demand in software and services across various customer channels[190] - Other segment net sales increased by $240 million, or 9.7%, driven by growth in notebooks/mobile devices and services within UK and Canada operations[192] Operational Insights - The company operates two distribution centers in North America and one in the UK, handling approximately 22 million units annually[35] - Drop-shipment arrangements represented about 51% of total North America net sales in 2025[36] - The company has approximately 14,800 coworkers globally, with 11,200 in the US and 3,600 internationally[51] - Over 50% of US net sales are generated by account managers with more than seven years of tenure[51] - The company maintains a diverse solutions portfolio with over 100,000 products and services from more than 1,000 brands, delivered through approximately 10,500 customer-facing employees[165] Strategic Initiatives - The company plans to realign its customer-facing organization into three reportable segments: Commercial, Government, and Education, effective January 1, 2026[30] - The company focuses on advanced digital transformation solutions, leveraging cloud-native deployment, DevOps, AI, and automation[49] - The company plans to further invest in AI capabilities to drive scale and efficiency across operations[73] Risk Factors - The company operates in a highly competitive industry, facing substantial competition from resellers, manufacturers, and service providers, which could harm financial performance[76] - Cybersecurity threats and data breaches could significantly impact business operations and reputation, with potential legal and regulatory consequences[89] - The reliance on cloud-based solutions may disrupt traditional business models and increase direct sales to customers, impacting hardware sales[78] - The ability to attract and retain key personnel is crucial for business success, with competitive labor markets increasing the risk of higher costs and turnover[92] - The company is exposed to accounts receivable risks, particularly during economic downturns, which could impact cash flows[100] - Inventory risks are heightened due to rapid technological changes and potential obsolescence, affecting business operations[101] - Legal and regulatory compliance risks could result in fines or contract terminations, adversely affecting business operations[118] Financial Position - As of December 31, 2025, the company had a total debt outstanding of $5.6 billion and $353 million in obligations under inventory financing agreements[128] - The company has $1.9 billion available to borrow under its senior unsecured revolving loan facility[128] - The company reported $635 million in variable rate debt outstanding, exposing it to interest rate risk[130] - Total unsecured indebtedness as of December 31, 2025, was $5.6 billion, with compliance to covenants under credit agreements[209] - The company entered into a new credit agreement in December 2025, increasing its borrowing capacity by $650 million[208] Shareholder Returns - The company declared a quarterly cash dividend of $0.630 per share, payable on March 10, 2026[149] - During the three months ended December 31, 2025, the company repurchased a total of 1.1 million shares of its common stock[151] - The average price paid per share for repurchases in October, November, and December 2025 was $155.34, $143.05, and $143.46 respectively[151] - The company has approximately $685 million remaining under its share repurchase program as of December 31, 2025[152]