CDW (US:CDW)2023-02-08 19:27Financial Data and Key Metrics Changes - In Q4, net sales were $5.4 billion, down $100 million from 2021, and roughly flat on a constant currency basis [22] - Non-GAAP operating income was $523 million, up 23% year-over-year, and non-GAAP net income per share was $2.50, up 21% year-over-year [22] - For the full year 2022, net sales were $23.7 billion, an increase of 14% on a reported basis, with non-GAAP operating income up 24.6% to $2.1 billion [64][65] Business Line Data and Key Metrics Changes - Services engagement grew over 20% across the business, driven by strong performance in cloud, security, and network upgrades [10][46] - The corporate segment saw a 7% sales increase, while small business declined by 13% [28][13] - Government sales grew 13.5%, with services increasing more than 50% [14] Market Data and Key Metrics Changes - The K-12 market experienced a significant decline, with client device units down more than 68% [32] - UK and Canadian operations delivered sales of $2.9 billion, with the UK increasing low-double-digits and Canada increasing high-single-digits in local currency [36] - U.S. software sales increased 8%, driven by strong demand in operating systems and data management [39] Company Strategy and Development Direction - The company focuses on a three-part growth strategy: capturing market share, enhancing capabilities in high-growth areas, and expanding services [8][9] - Strategic acquisitions, such as Sirius, have expanded service capabilities and provided cross-sell opportunities [8] - The company aims to outperform the market by 200 to 300 basis points annually [56] Management's Comments on Operating Environment and Future Outlook - The company anticipates flattish growth in the U.S. IT market for 2023, with stronger growth expected in the second half of the year [48] - Management noted increased scrutiny and deeper evaluation of projects by customers, but no significant cancellations [53] - The outlook for 2023 includes expectations for continued strong gross profit margins and non-GAAP earnings per diluted share growth at the upper end of a mid-single-digit range [57] Other Important Information - The company ended Q4 with a net leverage ratio of 2.6x, down from 3.4x at the end of 2021, demonstrating strong cash flow generation [70] - The company plans to return 50% to 75% of free cash flow to investors through dividends and share repurchases [71] Q&A Session Summary Question: Can you provide insights on the full-year results? - The company reported net sales of $23.7 billion, a 14% increase, with operating income at $1.7 billion and non-GAAP operating income at $2.1 billion, up 24.6% [64][65] Question: Are you seeing pricing pressure or ASP declines? - The company is not experiencing significant ASP declines, with prices remaining firm [78] Question: What is the outlook for the first half of 2023? - The company expects slightly below typical seasonality in the first half, with a stronger second half anticipated [81] Question: How is the demand for Device-as-a-Service and Infrastructure-as-a-Service? - Demand for Infrastructure-as-a-Service is picking up, particularly in the enterprise sector, while Device-as-a-Service is more complicated and has not gained significant traction yet [132][134] Question: What are the hiring trends and expectations for the market? - The company has been cautious in hiring, focusing on high-demand areas, and is managing costs carefully in light of economic uncertainty [140]