CDW Corporation (Nasdaq: CDW), a leading multi-brand provider of information technology solutions to business, government, education and healthcare customers in the United States, the United Kingdom and Canada, today announced first quarter 2023 results. CDW also announced the approval by its Board of Directors of a quarterly cash dividend of $0.59 per share to be paid on June 13, 2023 to all stockholders of record as of the close of business on May 25, 2023.
“The IT market experienced a marked shift in commercial buying behavior as economic uncertainty built during the quarter, driving a deeper than expected demand contraction. While this translated into lower business volume, the value of the solutions we provide customers continued to grow and we delivered record first quarter margins,” said Christine A. Leahy, chair and chief executive officer, CDW. “The strategic actions we have taken over the past four years have both strengthened our value proposition and fortified our profitability.”
“We continue to convert earnings to cash at a consistent rate and optimize our use of cash flow through dividends, strategic M&A, and share repurchases, while maintaining an appropriate capital structure,” said Albert J. Miralles, chief financial officer, CDW. “Given our resilient business model and our financial discipline, we remain confident in our ability to deliver the profitability, margins and cash flow our stakeholders have come to expect.”
“Within this period of economic uncertainty, our engagement with customers and partners is stronger than ever before. We remain well-positioned to attain our target of exceeding US IT market growth by 200 to 300 basis points on a constant currency basis. To achieve this, we will continue our laser focus on meeting the needs of our more than 250,000 customers around the globe and remaining the partner of choice for more than 1,000 leading and emerging technology brands as the IT market continues to evolve,” concluded Leahy.
First Quarter of 2023 Highlights:
Total Net sales in the first quarter of 2023 were $5,103 million, compared to $5,949 million in the first quarter of 2022, a decrease of 14.2 percent. There were 64 and 63 selling days for the three months ended March 31, 2023 and 2022, respectively. On an average daily sales basis, Net sales decreased 15.6 percent and Net sales on a constant currency basis decreased 14.7 percent. Currency impact to Net sales decline was driven by unfavorable translation of the British pound and Canadian dollar to US dollar. The first quarter Net sales performance, on an average daily sales basis, included:
- Corporate segment Net sales of $2,204 million, 17.4 percent lower than 2022.
- Small Business segment Net sales of $411 million, 22.7 percent lower than 2022.
- Public segment Net sales of $1,813 million, 12.2 percent lower than 2022. Public results were driven by a decrease in Net sales to Education customers of 27.4 percent while Net sales to Healthcare and Government customers remained consistent with the prior year.
- Net sales for CDW’s UK and Canadian operations, combined as “Other” for financial reporting purposes, were $675 million, 13.1 percent lower than 2022.
Gross profit in the first quarter of 2023 was $1,089 million, compared to $1,104 million for 2022, representing a decrease of 1.3 percent. Gross profit margin was 21.3 percent in the first quarter of 2023 versus 18.6 percent for 2022. The increase in Gross profit margin was primarily driven by higher product margin, including notebook mix and rate, and a higher mix of netted down revenue, primarily software.
Total selling and administrative expenses were $734 million in the first quarter of 2023, compared to $717 million in the first quarter of 2022, representing an increase of 2.4 percent. The increase was primarily driven by increased payroll expenses as a result of higher coworker count, increased travel and entertainment expenses, increased software license costs and additional investments associated with transformation initiatives. These increases were partially offset by lower performance-based compensation consistent with lower Gross profit attainment.
Operating income was $355 million in the first quarter of 2023, compared to $387 million in the first quarter of 2022, representing a decrease of 8.2 percent. Non-GAAP operating income was $434 million in the first quarter of 2023, compared to $462 million in the first quarter of 2022, representing a decrease of 6.0 percent. The Non-GAAP operating income margin was 8.5 percent for the first quarter of 2023 versus 7.8 percent for the first quarter of 2022.
Net interest expense was $58 million in the first quarter of 2023, compared to $56 million for the first quarter of 2022. The increase was driven by a higher variable interest rate on the senior unsecured term loan, partially offset by lower debt levels.
The effective tax rate was 22.3 percent in the first quarter of 2023, compared to 24.3 percent in the first quarter of 2022, which resulted in tax expense of $66 million and $80 million, respectively. The decrease in effective tax rate was primarily attributable to higher excess tax benefits on equity-based compensation.
Net income was $230 million in the first quarter of 2023, compared to $250 million in the first quarter of 2022, representing a decrease of 8.0 percent. Non-GAAP net income was $279 million for the first quarter of 2023, compared to $302 million in the first quarter of 2022, representing a decrease of 7.6 percent.
Weighted average diluted shares outstanding were approximately 137 million for the first quarter of 2023 and 2022. Net income per diluted share for the first quarter of 2023 was $1.68, compared to $1.83 for 2022, representing a decrease of 8.4 percent. Non-GAAP net income per diluted share for the first quarter of 2023 was $2.03, compared to $2.20 for 2022, representing a decrease of 7.9 percent.
Source: https://www.businesswire.com/
