CDW (US:CDW)2022-05-03 16:00Financial Performance - Net sales for the three months ended March 31, 2022, increased by $1,112 million, or 23.0%, to $5,949 million compared to the prior year, driven by higher demand in hardware, services, and software, including contributions from the acquisition of Sirius[103] - Gross profit rose by $309 million, or 38.8%, to $1,104 million for the three months ended March 31, 2022, with a gross profit margin increase of 220 basis points to 18.6%[104] - Operating income was $386.9 million for the three months ended March 31, 2022, an increase of $64 million compared to $323.4 million for the same period in 2021[106] - Net income for the three months ended March 31, 2022, was $250.2 million, representing a 7.3% increase from $232.6 million in the prior year[102] - Non-GAAP operating income increased to $462.1 million for the three months ended March 31, 2022, compared to $367.7 million for the same period in 2021[102] - Total operating income for the three months ended March 31, 2022, was $386.9 million, an increase of $63.5 million, or 19.6%, from $323.4 million in the same period of 2021[112] - Non-GAAP operating income was $462.1 million for the three months ended March 31, 2022, reflecting a 25.6% increase from $367.7 million in the prior year[130] - Non-GAAP net income increased by $52 million, or 20.9%, to $302 million for the three months ended March 31, 2022, compared to $249 million in the same period of 2021[131] Segment Performance - Corporate segment net sales rose by $822 million, or 45.5%, to $2,627.6 million, driven by digital transformation and the acquisition of Sirius[115] - Small Business segment net sales increased by $91 million, or 21.1%, to $524 million, supported by remote enablement strategies[118] - Public segment net sales grew by $111 million, or 5.8%, to $2,033 million, influenced by digital transformation in Healthcare and improved performance with State and Local Government customers[120] - The Other segment, which includes UK and Canadian operations, saw net sales increase by $87 million, or 12.8%, to $764.5 million[122] Expenses and Income - Selling and administrative expenses increased by $245 million, or 52.0%, to $717 million for the three months ended March 31, 2022, primarily due to higher payroll and integration expenses from the acquisition of Sirius[106] - Interest expense for the three months ended March 31, 2022, was $56 million, an increase of $20 million compared to $36 million for the same period in 2021, driven by additional interest from unsecured senior notes issued to fund the acquisition of Sirius[107] - The effective tax rate for the three months ended March 31, 2022, was 24.3%, up from 19.5% in the prior year, primarily due to lower excess tax benefits on equity-based compensation[108] Cash Flow and Debt - The company reported net cash provided by operating activities of $380.8 million for the three months ended March 31, 2022, an increase of 10.5% from $344.6 million in the same period of 2021[145] - Net debt increased to $6,211.8 million as of March 31, 2022, compared to $3,052.1 million in the prior year[100] - The company’s long-term debt decreased to $6,393.9 million as of March 31, 2022, from $6,534.6 million as of December 31, 2021[160] - The company experienced a net increase in cash and cash equivalents of $128.8 million for the three months ended March 31, 2022, compared to a decrease of $531.6 million in the same period of 2021[145] Assets and Dividends - Total current assets increased to $5,658.2 million as of March 31, 2022, compared to $4,584.1 million as of December 31, 2021[160] - The company announced a quarterly cash dividend of $0.50 per share, payable on June 10, 2022[143] Risks and Concerns - The company faces significant risks including the impact of the COVID-19 pandemic, inflationary pressures, and competition that could reduce market share[168] - There are concerns regarding the potential failure to achieve anticipated benefits from the acquisition of Sirius within the expected timeframe[168] - The company is exposed to risks related to accounts receivable and inventory, which could affect financial performance[168] - Fluctuations in foreign currency and global economic conditions, including the military conflict between Russia and Ukraine, pose additional risks[168] - The company has not experienced material changes in market risk disclosures as of March 31, 2022[171] Cash Conversion Cycle - The cash conversion cycle improved to 20 days for the three months ended March 31, 2022, compared to 22 days in the prior year[100] - The company had a cash conversion cycle of 20 days as of March 31, 2022, down from 22 days in the previous year[153] Investment Activities - Net cash used in investing activities decreased by $192 million for the three months ended March 31, 2022, compared to the same period in 2021[155] - The company made no share repurchases during the three months ended March 31, 2022[142]