CDW INVESTOR PRESENTATION · 2021. 2. 11. · 370 bps (1) STRATEGY DRIVES SUSTAINED MARKET SHARE...
Transcript of CDW INVESTOR PRESENTATION · 2021. 2. 11. · 370 bps (1) STRATEGY DRIVES SUSTAINED MARKET SHARE...
CDW INVESTOR PRESENTATION
2021 | WINTER / SPRING
http://investor.cdw.com/
DISCLAIMERSForward-Looking StatementsStatements in this presentation that are not statements of historical fact are forward-looking statements within
the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including,
without limitation, statements regarding (i) the impact of COVID-19 on CDW's business, operations and liquidity,
and (ii) capital priorities and other strategic plans of CDW. These forward-looking statements are subject to risks
and uncertainties that may cause actual results or events to differ materially from those described in such
statements. Although CDW believes that its plans, intentions and other expectations reflected in or suggested
by such forward-looking statements are reasonable, it can give no assurance that it will achieve those plans,
intentions or expectations. Reference is made to a more complete discussion of forward-looking statements and
applicable risks contained under the captions "Forward-Looking Statements" and "Risk Factors" in CDW's
Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Report on Form 10-Q for the
quarter ended September 30, 2020, and subsequent filings with the SEC. CDW undertakes no obligation to
update or revise any of its forward-looking statements, whether as a result of new information, future events or
otherwise, except as otherwise required by law.
Non-GAAP Financial InformationThis presentation contains certain Non-GAAP financial measures, including Non-GAAP operating income, Non-
GAAP operating income margin, and Non-GAAP net income. Generally, a Non-GAAP financial measure is a
numerical measure of a company’s performance or financial position that either excludes or includes amounts
that are not normally included or excluded in the most directly comparable measure calculated and presented
in accordance with US GAAP. For a reconciliation of Non-GAAP financial measures to the applicable most
comparable US GAAP financial measures, see Exhibit 99.1 to CDW's Current Report on Form 8-K filed with the
Securities and Exchange Commission on February 10, 2021 and the reconciliations included in these slides. Non-
GAAP financial measures used by CDW may differ from similar measures used by other companies, even when
similar terms are used to identify such measures.
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TRACK RECORD OF PROFITABLE GROWTH
1. As of December 31, 2020.
2. 2015 and prior years have not been updated to reflect the adoption of Topic 606.
• Market-leading provider of integrated technologysolutions to business, government, education and healthcare customers for 35+ years
• Coworkers: ~7,800 US and ~2,200 international;over 2/3 are customer-facing(1)
• Full stack of technology solutions and services across the entire IT lifecycle
• Offers 100,000+ products and services from 1,000+ brands to more than 250,000 customers in the US, UK and Canada
• “Sweet spot” is customers with <5,000 employees
$9.6 $10.1$10.8
$12.1$13.0
$13.7$14.8
$16.2
$18.0 $18.5
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$471 $511 $509
$673$742
$820 $867$987
$1,134 $1,179
$656 $696 $747$851
$961$1,048
$1,107$1,217
$1,368 $1,405
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Operating Income Non-GAAP Operating Income
• Attractive business model with demonstrated track record of profitable growth
NET SALES ($B)(2)
OPERATING INCOME ($MM)(2)
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1. Estimated market share for top 4 publicly traded IT solutions companies: CDW, Insight North America, PC Connection, and e-Plus as of trailing twelve months last reported results.2. IDC and CDW internal estimates as of December 2020.3. For year ended December 31, 2020.4. IDC Worldwide Black Book, December 23, 2020, includes Consumer and B2B for US, UK and Canada markets.
Total US, UK and
Canada IT Market(2):
~$1,100B
CDW Current
Addressable Market(2):
~$360B
CDW:
$18.5B(3)
2016-2021E CAGR IT Spending: 5.2%(4)
CDW plus the next three largest publicly
traded IT solutions companies(1) represent
less than 10% of CDW’s US addressable
market.
The majority of the market is fragmented
across thousands of value-added resellers.
TOTAL ADDRESSABLE MARKET
LARGE AND GROWING MARKET OPPORTUNITY
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1. IDC Worldwide Black Book, December 23, 2020.
4.9%5.3%
7.4%
9.0%
2006-2020 2009-2020
US IT Spending CAGR CDW Net Sales CAGR
250 bps
370 bps
(1)
STRATEGY DRIVES SUSTAINED MARKET SHARE GROWTH
CONSISTENT, FASTER-THAN-MARKET-GROWTHTHREE-PART STRATEGY FOR GROWTH
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Capture share and acquire new customers
Enhance capabilities in high-growth solutions areas
Expand services capabilities
1
2
3
-22% -18%
11%3%
-4%
7% 8%12%
9%5%
29%
-9% -7%
18%
43%
-12%-3%
19%14%
3%7%
30% 29%
1. 2013 Net sales adjusted to reflect a comparable 2019 Net sales segmentation: (1) Other includes CDW Canada Net sales (CDW UK acquired in 2015); (2) Advanced Technology Services (ATS) business classified under each US segment.
Great Recession Recovery
’09–’11 CAGR(Other includes ATS & Canada)
+16%
Great Recession
’08–’09 Change(Other includes ATS & Canada)
(11)%
IPO - 2019
’13–’19 CAGR(1)
(Other includes
Canada & CDW UK)+9%
COVID-19
’19–’20 Change(Other includes
Canada & CDW UK) +2%
TOTAL
CHANGE
$6.8B
$1.4B$3.0B
$3.5B
$1.7B
$2.1B
Small Business
(<250 employees)Government
(Federal, State & Local)
Education
(K-12, Higher Ed)
Healthcare
Corporate
(>250 employees)
Other
(UK, Canada)
BALANCED PORTFOLIO OFFERS MULTIPLE GROWTH DRIVERSDIVERSE CUSTOMER CHANNELS AND GEOGRAPHY CREATE MULTIPLE DRIVERS OF GROWTH AND DIVERSIFICATION AGAINST MACRO AND EXOGENOUS HEA DWINDS
2020 NET SALES ($18.5B) NET SALES GROWTH %
0%
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VALUE TO CUSTOMERS:
• Broad selection of products and multi-branded IT solutions
• Value-added services with integration capabilities
• Highly-skilled specialists and engineers
• Solutions across IT lifecycle
VALUE TO VENDOR PARTNERS:
• Access to more than 250,000 customers
• Large and established customer channels
• Strong distribution and implementation capabilities
• Customer relationships driving insight into
technology roadmaps
INTIMATE KNOWLEDGE
OF IT ENVIRONMENTAND LANDSCAPE
VENDOR
PARTNER VALUE
CUSTOMER
VALUE
CDW Sits Between Customers and Vendor Partners, Creating Value for Both
UNIQUELY POSITIONED TO DELIVER CUSTOMER AND PARTNER VALUE
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HIGHLY
COMPLEX AND
INTERCONNECTED
CUSTOMER
EXPERIENCES
FULL SOLUTIONS STACK, FULL OUTCOME AND FULL IT LIFECYCLE
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As a trusted advisor, we help customers navigate and be successful in an ever-changing world by providing them the technology advice and solutions they need, when they need them.
MULTI-CLOUD
SOFTWARE
SERVICES
HARDWARE
BROAD PORTFOLIO OF SOLUTIONS AND SERVICES
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The breadth of our product and solutions portfolio ensures we are well-positioned to meet our customers’ needs and pivot quickly to trends in customer demand.
We will continue to invest, organically and inorganically, in high-growth solutions and services capabilities.
SOLUTION
DESIGNS
TRANSFORMATION
DESIGNS
PLATFORM
DESIGNS
SOLUTION
BUILDSUPGRADES
& MIGRATIONS
CLOUD SERVICES
BUILDS
OPERATIONS
& SUPPORT
MANAGED
MIGRATIONSCLOUD SERVICES
& RESOURCES
ON PREMISE ON JOURNEY
DESIGN
ORCHESTRATE
MANAGE
ON MULTI-CLOUD
1. As of December 31, 2020.2. Subcomponent of Customer-Facing Coworkers.
~7,000CUSTOMER-FACING
COWORKERS
>3,200TECHNICAL
COWORKERS(2)
HIGHLY SKILLED SERVICES AND SALES CAPABILITIES(1)
NON CUSTOMER–FACING
COWORKERS
100%
0%
50%
SERVICES DELIVERY
PRE-SALE SPECIALISTS
SELLERS
OTHER CUSTOMER-FACING
Our strong technical organization includesmore than 3,200 technical coworkers,including pre-sales specialists and advancedservices delivery engineers, allowing CDWto deliver increasingly complex IT solutions.
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Able to provide IT solutions to 150+ countries (1)
1. As of December 31, 2020.2. Includes countries in the trailing 24 months that CDW has exported to or is able to supplement export capabilities with via fulfillment partners.
Located in 10 countries
Able to export to (2)
No presence
INTERNATIONAL PRESENCE TO BETTER SERVE CUSTOMERS
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SUSTAINABLE COMPETITIVE ADVANTAGES
Scale and
Scope
SUPERIOR VALUE DIFFERENTIATED GROWTH STRONG ROWC
Highly Engaged
Performance -
Driven Culture
Highly-Skilled
Sales and
Service
Capabilities
Robust
Distribution and
Logistics
Capabilities
Multinational
Footprint With
International
Capabilities
Deep and
Experienced
Management
$86
$199 $247
$314 $410
$504 $570 $606
$794
$902 $954
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Non-GAAP operating income ($MM)
1. 2015 and prior years have not been updated to reflect the adoption of Topic 606.2. Non-GAAP operating income excludes, among other things, charges related to the amortization of acquisition-related intangible assets, equity-based compensation and associated payroll taxes, and acquisition and integration expenses. Non-GAAP operating income margin is
defined as Non-GAAP operating income as a percentage of Net sales.3. Defined as the ratio of total debt at period-end excluding any unamortized discount and/or premium and deferred financing costs, less cash and cash equivalents, to trailing twelve months (TTM) Non-GAAP operating income plus depreciation and amortization in SG&A (excluding
amortization expenses for acquisition-related intangible assets).4. As of December 31, 2020.
$9.6 $10.1$10.8
$12.1$13.0
$13.7$14.8
$16.2
$18.0 $18.5
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
NET SALES $B
$656 $696$747
$851$961
$1,048$1,107
$1,217
$1,368 $1,405
6.8% 6.9% 6.9% 7.1% 7.4% 7.7% 7.5% 7.5% 7.6% 7.6%
0.04
0.06
0.08
0.1
0.12
0.14
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
OPERATING INCOME AND MARGIN(2)
US GAAP operating income ($MM) Non-GAAP Margin (%)
NET INCOME
US GAAP net income ($MM)
Non-GAAP net income ($MM) 7.5x
5.7x5.0x
3.9x3.2x 3.2x
2.7x 2.6x 2.3x 2.2x1.7x
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
NET LEVERAGE RATIO(3)
STRONG FINANCIAL PERFORMANCE(1)
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(4)
1. See Return on Working Capital (ROWC) calculation on page 28.
32.5%
41.8%
47.2% 47.8%
51.5% 52.7%54.9% 55.1%
65.0% 65.5%
58.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
RO
WC
(%
)
Highly focused on balancing working capital investments to support customers while generating attractive returns on invested capital.
STRONG RETURN ON WORKING CAPITAL(1)
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1. Defined as the ratio of total debt at period-end excluding any unamortized discount and/or premium and deferred financing costs, less cash and cash equivalents, to trailing twelve-month Non-GAAP operating income plus depreciation and amortization in SG&A (excluding amortization expenses for acquisition-related intangible assets).
2. As of December 31, 2020.
Increase Dividends Annually
Maintain Net Leverage Ratio(1)
Supplement Organic Growth with M&A
Return Excess FCF after Dividends
and M&A Through Share Repurchases
OBJECTIVESPRIORITIES ACTIONS
Target ~25% Payout of Non-GAAP
Net Income; Grow In-line with Earnings
~2.5 to 3.0 Times Net Leverage Ratio
Expand CDW’s Strategic Capabilities
Offset to Incentive Plan Dilution and
to Supplement EPS Growth
5.3% increase in November 2020
to $1.60/share annually
Currently at 1.7x(2)
Completed 3 acquisitions in 2020
Repurchase program
2021 CAPITAL ALLOCATION PRIORITIES
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Net Sales Growth
Non-GAAP Operating Income Margin(3)
Non-GAAP Earnings per Diluted Share Growth
U.S. IT growth plus ~200 to 300 bps premium in constant currency
Mid-7%s
Mid-to-high single digit growth in constant currency
1. Annual targets are provided on a non-GAAP basis because certain reconciling items are dependent on future events that either cannot be controlled, such as currency impacts or interest rates, or reliably predicted because they are not part of CDW’s routine activities, such asrefinancing activities or acquisition and integration expenses.
2. As of February 10, 2021.3. Non-GAAP operating income as a percentage of Net sales.
2021 OUTLOOK
(1)(2)
2021
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1. From IPO through December 31, 2020.2. CDW elected to temporarily suspend share repurchases as a precautionary measure in light of the COVID-19 pandemic from March 2020 through October 2020.
$7
$34
$53
$79
$107
$139
$183
$220
2013 2014 2015 2016 2017 2018 2019 2020
$241
$367
$534 $522
$657
$341
2015 2016 2017 2018 2019 2020
DIVIDENDS PAID ($MM) SHARE REPURCHASES ($MM)
RETURNED MORE THAN $3.4B SINCE 2013(1),(2)
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• ~$360B addressable market opportunity with
attractive growth potential
• Clear leader with sustained market share gains in a
highly fragmented market
• Proven ability to evolve and capitalize on IT trends
• Flexible, nimble performance-driven culture
generating a strong financial track record
• Attractive business model with sustainable
competitive advantages
• Multiple levers for growth and creation of shareholder
value
INVESTMENT HIGHLIGHTS
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APPENDIX
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CDW COVID-19 RESPONSE
Safeguard the health and well-being of our coworkers
Serve the mission-driven needs of our customers
Support our communities
PRIORITIES ACTIONS• Deliberate actions to foster collaboration and coworker engagement and to maintain
connectivity and productivity to preserve and bolster our culture while working remote• Thoughtfully planning for when and how to return to the office and where and how our
coworkers will work in the future• Distribution and configuration centers have adopted precautionary measures advised by
public health authorities while maintaining a high level of customer service
• Customers focused on remote enablement, resource optimization, cost reduction, security, hybrid and cloud solutions, and digital transformation.
• CDW teams are trusted partners to help customers smartly deploy their IT resources and adopt modern software and infrastructure patterns and practices
• CDW teams help to design, orchestrate, and manage solutions leveraging our broad portfolio of solutions and services
• Pledged $1 million in donations to support COVID-19 response efforts• Contributed meaningfully to support the COVID-19 response efforts in the U.S., UK and
Canada, and around the world• Support local organizations through virtual volunteering
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OUR COMMITMENT TO ESG IN ACTION
11 of 12 Board Members, incl. Chairman, are Independent
50% of Board Members are Women/People of Color
71% of Executive Committee are Women/People of Color
ESG FRAMEWORK AT CDW – IT MATTERS
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SUSTAINING ENGAGING INSPIRINGA Successful Business and a Healthy Planet
▪Economic performance ▪Environment
Trust and Confidence in All Our Stakeholders
▪Governance and ethics ▪Customer privacy and data
security
ISO 14001 CertifiedAt all CDW distribution centers
+90% Waste Diversion RateAt US distribution centers in 2020
8 Global Coworker Business Resource Groups
+$8MM in Charitable GivingTo local communities over 5 years(1)
+$1B Diverse Supplier Spend(2)
Member of Billion Dollar Roundtable
ENVIRONMENTAL RESPONSIBILITY SOCIAL RESPONSIBLITY LEADERSHIP & GOVERNANCE
Our Coworkers, Communities and Partners
▪Coworkers▪Local communities ▪Supply chain
1. From 2016 through 2020.
2. In 2020, CDW spent over $1 billion with diverse suppliers and was inducted into the Billion Dollar Roundtable, which celebrates companies that have achieved and are committed to spending at least $1 billion with minority and women-owned suppliers annually.
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2019-2020 RECOGNITION SNAPSHOT
2020 Best Places to Work
by Glassdoor
America’s Most JUST Companies
2020by JUST Capital
America’s Best Employers for Diversity 2020
by Forbes
Best Companies for Women
by Fairygodboss
Best for Vets Employer
by Military Times
Best Place to Work in IT
by Computerworld
Best of the Best Supplier
Diversity Program by U.S. Veterans
Magazine
Best Technology Companies
by Fairygodboss
Corporate Equality Index Perfect Score
by Human Rights Campaign
Military Friendly Silver Employerby Military Friendly
Most Powerful Women in Business
(President & CEO Christine Leahy) by
Fortune
The Future 50by Fortune
The CDW Way sets forth the shared values that guide our behavior.
We run our business with passion and integrity.
We empower others to do their jobs.
We keep our commitments.
We treat others with respect.
We resolve conflict directly.
We listen.
We include stakeholders in the decision process.
We live our “philosophiesof success” every day.
We make things happen.
NON-GAAP OPERATING INCOME RECONCILIATION: 2010-2015
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NON-GAAP OPERATING INCOME RECONCILIATION: 2016-2020
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NON-GAAP NET INCOME RECONCILIATION: 2010-2015
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NON-GAAP NET INCOME RECONCILIATION: 2016-2020
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RETURN ON WORKING CAPITAL CALCULATION
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NON-GAAP OPERATING INCOME MARGIN RECONCILIATION
29 | INVESTOR PRESENTATION
$56
$575 $600
$1,423
$600
$459
$991
$700
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DEBT MATURITY PROFILE
As of December 31, 2020($MM)
Senior Notes 5.5% Due 2024
$1.45B ABL - Floorplan
Senior Notes 4.125% Due 2025
$1.45B ABL - Undrawn
CDW UK Term Loan L+140
Senior Notes 4.25% Due 2028 Term Loan L+175 w/No Floor
Weighted Average Rate: 3.4%
Weighted Average Maturity: 5.9 years
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Senior Notes 3.25% Due 2029
For a copy of this presentation, please access CDW’s investor relations website at:
http://investor.cdw.com/