CDW : First Quarter 2025 Non-GAAP Reconciliations

Published: 2025-05-07 08:18:08 ET CDW

Published on 05/07/2025 at 08:18

Non-GAAP Reconciliations

First Quarter 2025

Generally, a non-GAAP financial measure is a numerical measure of a company's performance or financial condition 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. Non-GAAP measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Our outlook includes non-GAAP financial measures 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 our underlying performance, such as refinancing activities or acquisition and integration expenses. Our non-GAAP financial measures include non-GAAP performance and non-GAAP financial condition measures. For a reconciliation of non-GAAP financial measures to the most comparable US GAAP financial measures, refer to the slides herein.

Non-GAAP Performance Measures:

We believe our non-GAAP performance measures provide analysts, investors and management with useful information regarding the underlying operating performance of our business, as they remove the impact of items that management believes are not reflective of underlying operating performance. Management uses these measures to evaluate period-over-period performance as management believes they provide a more comparable measure of the underlying business.

Non-GAAP operating income and Non-GAAP selling and administrative expenses excludes, among other things, charges related to the amortization of acquisition-related intangible assets, equity-based compensation and the associated payroll taxes, acquisition and integration expenses, transformation initiatives and workplace optimization. Non-GAAP operating income margin is defined as Non-GAAP operating income as a percentage of Net sales.

Non-GAAP net income and Non-GAAP net income per diluted share excludes, among other things, charges related to acquisition-related intangible asset amortization, equity-based compensation and the associated payroll taxes, acquisition and integration expenses, transformation initiatives, workplace optimization and their associated income tax effects.

Non-GAAP net income per diluted share on a constant currency basis is defined as Non-GAAP net income per diluted share excluding the impact of foreign currency translation on Non-GAAP net income.

Net sales on a constant currency basis is defined as Net sales excluding the impact of foreign currency translation on Net sales.

Non-GAAP Financial Condition Measures:

We also present non-GAAP financial condition measures as we believe they provide analysts, investors and management with more information regarding our liquidity and capital resources. Certain non-GAAP financial measures are also used to determine certain components of performance-based compensation.

Free cash flow is defined as Net cash provided by operating activities less capital expenditures. Adjusted free cash flow is defined as Free cash flow adjusted to include certain cash flows from financing activities incurred in the normal course of operations or as capital expenditures.

Return on working capital ("ROWC") is defined as the percentage of Non-GAAP operating income After-tax divided by working capital.

(Unaudited) ($ in millions)

2025

% of Net sales

2024

% of Net sales

Operating income, as reported

$ 361.4

7.0 %

$ 328.0

6.7 %

Amortization of intangibles(1)

42.8

37.7

Equity-based compensation

20.5

19.4

Transformation initiatives(2)

13.7

6.1

Acquisition and integration expenses

2.9

0.7

Workplace optimization(3)

0.1

7.3

Other adjustments

2.6

4.3

Non-GAAP operating income

$ 444.0

8.5 %

$ 403.5

8.3 %

Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.

Includes costs related to strategic transformation initiatives focused on optimizing various operations and systems.

Includes costs related to the workforce reductions and charges related to the reduction of our real estate lease portfolio.

(Unaudited) ($ in millions)

Income before income taxes

Income tax expense(1)

Net income

Effective tax rate

Income before income taxes

Income tax expense(1)

Net income

Effective tax rate

US GAAP, as reported

$ 304.0

$ (79.1)

$ 224.9

26.0 %

$ 276.6

$ (60.5)

$ 216.1

21.9 %

Amortization of intangibles(2)

42.8

(11.1)

31.7

37.7

(9.8)

27.9

Equity-based compensation

20.5

(4.9)

15.6

19.4

(16.1)

3.3

Transformation initiatives(3)

13.7

(3.6)

10.1

6.1

(1.6)

4.5

Acquisition and integration expenses

2.9

(0.8)

2.1

0.7

(0.2)

0.5

Workplace optimization(4)

0.1

7.3

(1.9)

5.4

Other adjustments

2.6

(0.6)

2.0

4.3

(1.2)

3.1

Non-GAAP

$ 386.6

$ (100.1)

$ 286.5

25.9 %

$ 352.1

$ (91.3)

$ 260.8

25.9 %

Income tax on non-GAAP adjustments includes excess tax benefits associated with equity-based compensation.

Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.

Includes costs related to strategic transformation initiatives focused on optimizing various operations and systems.

Includes costs related to the workforce reductions and charges related to the reduction of our real estate lease portfolio.

(Unaudited)

($ in millions, except per share amounts)

US GAAP Net income $ 224.9 $ 216.1

Non-GAAP net income $ 286.5 $ 260.8

(Unaudited) ($ in millions)

2025

2024

% Change(1)

Change(1)

Net sales, as reported

$ 5,199.1 $

4,872.7

6.7 %

8.4 %

Foreign currency translation(2)

- (14.8)

Net sales, on a constant currency basis

$ 5,199.1 $ 4,857.9

7.0 %

8.7 %

(1)

There were 63 and 64 selling days for the three months ended March 31, 2025 and 2024, respectively. Average daily sales is defined as Net sales divided by the number of selling days.

(2) Represents the effect of translating the prior period results of CDW UK and CDW Canada at the average exchange rates applicable in the current year.

(Unaudited)

($ in millions, except per share amounts)

2025

2024

% Change

US GAAP Net income

$ 224.9

$ 216.1

4.1 %

Amortization of intangibles

42.8

37.7

Equity-based compensation

20.5

19.4

Transformation initiatives

13.7

6.1

Acquisition and integration expenses

2.9

0.7

Workplace optimization

0.1

7.3

Other adjustments

2.6

4.3

Aggregate adjustment for income taxes

(21.0) (30.8)

Non-GAAP net income

286.5 260.8

9.9

diluted share, on a constant currency basis

133.5

136.0

Non-GAAP net income per diluted share

$ 2.15

$ 1.92

11.9 %

Non-GAAP net income per diluted share, on a constant currency basis

$ 2.15

$ 1.91

12.2 %

(Unaudited) ($ in millions)

2025

2024

% Change

Selling and administrative expenses, as reported

$ 760.9

$ 735.3

3.5 %

Amortization of intangibles(1)

(42.8)

(37.7)

Equity-based compensation

(20.5)

(19.4)

Transformation initiatives(2)

(13.7)

(6.1)

Acquisition and integration expenses

(2.9)

(0.7)

Workplace optimization(3)

(0.1)

(7.3)

Other adjustments

(2.6) (4.3)

Non-GAAP selling and administrative expenses

$ 678.3 $ 659.8

2.8 %

Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.

Includes costs related to strategic transformation initiatives focused on optimizing various operations and systems.

Includes costs related to the workforce reductions and charges related to the reduction of our real estate lease portfolio.

(Unaudited) ($ in millions)

2025

2024

Net cash provided by operating activities

$ 287.2 $

440.0

Capital expenditures

(26.9) (29.5)

Free Cash Flow

260.3 410.5

Net change in accounts payable - inventory financing

(11.5) (46.1)

Adjusted free cash flow(1)

$ 248.8 $ 364.4

Defined as Net cash provided by operating activities less Capital expenditures, adjusted to include cash flows from financing activities that relate to the purchase of inventory.

(Unaudited) ($ in millions)

2015(1)(2)

2016

2017

2018

2019

2020

Net sales

$12,988.7

$13,672.7

$14,832.9

$16,240.5

$18,032.4

$18,467.5

Operating income, as reported

742.0

820.0

866.5

987.3

1,133.6

1,179.2

Amortization of intangibles(3)

173.9

187.2

185.1

182.7

178.5

158.1

Equity-based compensation

31.2

39.2

43.7

40.7

48.5

42.5

IPO and secondary offering expenses

0.8

Acquisition and integration expenses

10.2

7.3

2.5

1.2

3.6

4.9

Other adjustments

2.8

(5.4)

9.0

4.7

4.2

19.9

Non-GAAP operating income

$ 960.9

$ 1,048.3

$ 1,106.8

$ 1,216.6

$ 1,368.4

$ 1,404.6

Operating income margin

5.7 %

6.0 %

5.8 %

6.1 %

6.3 %

6.4 %

Non-GAAP operating income margin

7.4 %

7.7 %

7.5 %

7.6 %

Depreciation and amortization in selling and administrative expenses(4)

48.1

60.3

68.8

77.0

80.1

90.0

2015 have not been updated to reflect the adoption of Topic 606.

In August 2015, CDW UK was acquired and included in our consolidated financial statements.

Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.

Excludes amortization expense for acquisition-related intangible assets.

(Unaudited)

($ in millions)

2021

2022

2023

2024

TTM Q1 2024

TTM Q1 2025

Net sales

$20,820.8

$23,748.7

$21,376.0

$20,998.7

$21,145.6

$21,325.1

Operating income, as reported

1,419.0

1,735.2

1,680.9

1,651.3

1,653.6

1,684.7

Amortization of intangibles(1)

94.9

167.9

154.4

150.9

150.5

156.0

Equity-based compensation

72.6

91.1

93.7

64.7

92.3

65.8

Transformation initiatives(2)

6.3

27.1

34.8

21.8

42.4

Acquisition and integration expenses

54.3

48.3

30.0

12.2

28.2

14.4

Workplace optimization(3)

47.7

25.4

54.1

18.2

Other adjustments 4.6 1.7 5.3 7.7 7.8 6.0

Non-GAAP operating income $ 1,645.4 $ 2,050.5 $ 2,039.1 $ 1,947.0 $ 2,008.3 $ 1,987.5

Operating income margin

6.8 %

7.3 %

7.9 %

7.8 %

7.9 %

Non-GAAP operating income margin

7.9 %

8.6 %

9.5 %

9.3 %

9.5 %

9.3 %

Depreciation and amortization in selling and administrative expenses(4)

88.6

114.8

$ 106.9

114.0

107.2

116.0

Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.

Includes costs related to strategic transformation initiatives focused on optimizing various operations and systems.

Includes costs related to the workforce reductions and charges related to the reduction of our real estate lease portfolio.

Excludes amortization expense for acquisition-related intangible assets.

* TTM - Trailing twelve months

2015(1)(2)2016

2017

2018

2019

2020

US GAAP net income

$ 403.1

$ 425.1

$ 523.1

$ 643.0

$ 736.8

$ 788.5

Amortization of intangibles(3)

173.9

187.2

185.1

182.7

178.5

158.1

Equity-based compensation

31.2

39.2

43.7

40.7

48.5

42.5

Equity-based compensation related to equity investment(4)

20.0

Net loss on extinguishments of long-term debt

24.3

2.1

57.4

22.1

27.3

IPO and secondary offering expenses

0.8

Gain on remeasurement of equity investment(5)

(98.1)

Acquisition and integration expenses

10.2

7.3

2.5

1.2

3.6

4.9

Other adjustments

2.9

(5.4)

9.0

4.7

4.2

19.9

Aggregate adjustment for income taxes(6)

(64.8)

(85.8)

(214.9)

(78.0)

(91.6)

(86.8)

Non-GAAP net income

$ 503.5

$ 569.7

$ 605.9

$ 794.3

$ 902.1

$ 954.4

(Unaudited) ($ in millions)

2015 have not been updated to reflect the adoption of Topic 606.

In August 2015, CDW UK was acquired and included in our consolidated financial results.

Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.

Represents CDW's 35% share of an expense related to certain equity awards against granted by one of the sellers to CDW UK coworkers in July 2015 prior to the acquisition.

Represents the gain resulting from the remeasurement of the CDW's previously held 35% equity investment to fair value upon the completion of the acquisition of CDW UK.

Aggregate adjustment for income taxes consists of the following:

2015(1)(2)2016

2017

2018

2019

2020

Total Non-GAAP adjustments

$ 165.2

$ 230.4

$ 297.7

$ 229.3

$ 256.9

$ 252.7

Weighted-average statutory rate

38.0 %

36.0 %

25.0 %

Income taxes

(62.8)

(82.9)

(107.2)

(57.3)

(64.2)

(63.2)

Deferred tax adjustment due to law changes

(4.0)

(1.5)

1.3

0.5

0.3

2.7

Excess tax benefits from equity-based compensation

(1.8)

(36.2)

(19.1)

(24.5)

(26.3)

Impact from Tax Cuts and Jobs Act

(75.5)

(1.9)

Discrete tax benefit related to CDW Canada's acquisition of Scalar

(3.0)

Non-deductible adjustments and other

2.0

0.4

2.7

(0.2)

Total aggregate adjustment for income taxes

$ (64.8)

$ (85.8)

$ (214.9)

$ (78.0)

$ (91.6)

$ (86.8)

2021

2022

2023

2024

TTM Q1 2024

TTM Q1 2025

US GAAP net income

$ 988.6

$ 1,114.5

$ 1,104.3

$ 1,077.8

$ 1,090.3

$ 1,086.6

Amortization of intangibles(1)

94.9

167.9

154.4

150.9

150.5

156.0

Equity-based compensation

72.6

91.1

93.7

64.7

92.3

65.8

Gain on sale of equity method investment

(36.0)

Net loss (gain) on extinguishments of long-term debt

6.0

1.6

(0.8)

Transformation initiatives(2)

6.3

27.1

34.8

21.8

42.4

Acquisition and integration expenses

54.3

48.3

30.0

12.2

28.2

14.4

Workplace optimization(3)

47.7

25.4

54.1

18.2

Other adjustments

4.6

1.7

5.3

6.9

7.8

6.0

Aggregate adjustment for income taxes(4)

(66.1)

(89.9)

(116.3)

(85.5)

(116.7)

(75.7)

Non-GAAP net income

$ 1,118.9

$ 1,341.5

$ 1,346.2

$ 1,287.2

$ 1,328.3

$ 1,312.9

(Unaudited) ($ in millions)

Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.

Includes costs related to strategic transformation initiatives focused on optimizing various operations and systems.

Includes costs related to the workforce reduction program and charges related to the reduction of our real estate lease portfolio.

Aggregate adjustment for income taxes consists of the following:

2021

2022

2023

2024

TTM Q1 2024

TTM Q1 2025

Total Non-GAAP adjustments

$ 196.4

$ 316.9

$ 358.2

$ 294.9

$ 354.7

$ 302.0

Weighted-average statutory rate

25.0 %

26.0 %

Income taxes

(49.1)

(82.4)

(93.1)

(76.7)

(92.3)

(78.5)

Deferred tax adjustment due to law changes

4.8

(1.0)

Excess tax benefits from equity-based compensation

(24.5)

(6.7)

(23.2)

(9.9)

(24.4)

1.7

Discrete tax benefit related to CDW's acquisition of Sirius

3.2

Discrete tax benefit related to CDW's acquisition of Mission

1.1

Non-deductible adjustments and other

(0.5)

0.2

Total aggregate adjustment for income taxes

$ (66.1)

$ (89.9)

$ (116.3)

$ (85.5)

$ (116.7)

$ (75.7)

(Unaudited) ($ in millions)

2015(1)

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Numerator

Non-GAAP Operating Income

$ 960.9

$1,048.3

$1,106.8

$1,216.6

$1,368.4

$1,404.6

$1,645.4

$2,050.5

$2,039.1

$1,947.0

$1,987.5

Taxes(2)

(374.8)

(387.9)

(409.5)

(316.3)

(355.8)

(365.2)

(427.8)

(533.1)

(530.2)

(506.2)

(516.8)

Non-GAAP Operating Income After-Tax

$ 586.1

$ 660.4

$ 697.3

$ 900.3

$1,012.6

$1,039.4

$1,217.6

$1,517.4

$1,508.9

$1,440.8

$1,470.7

Denominator

Trailing 5-point avg. AR(3)

$1,909.4

$2,251.7

$2,535.5

$2,850.2

$3,233.7

$3,527.3

$3,982.9

$4,984.6

$4,928.7

$5,230.9

$5,394.9

Trailing 5-point avg.

Inventory

387.1

422.0

457.5

481.9

582.4

677.2

833.2

943.4

749.1

670.3

680.7

Trailing 5-point avg. AP(4)

(1,184.4)

(1,470.8)

(1,726.4)

(1,946.8)

(2,270.0)

(2,412.3)

(2,754.9)

(3,632.9)

(3,309.6)

(3,446.8)

(3,578.8)

Working Capital

$1,112.1

$1,202.9

$1,266.6

$1,385.3

$1,546.1

$1,792.2

$2,061.2

$2,295.1

$2,368.2

$2,454.4

$2,496.8

Return on Working Capital

52.7 %

54.9 %

55.1 %

65.0 %

65.5 %

58.0 %

59.1 %

66.1 %

63.7 %

58.7 %

58.9 %

2015 have not been updated to reflect the adoption of Topic 606.

For 2018 and beyond, the normalized effective tax rate is 26%. The prior rate for 2016 through 2017 was 37%, and for all prior periods before was 39%.

Includes Accounts receivable and Miscellaneous receivables.

Includes Accounts payable-trade, Accounts payable-inventory financing and cash overdrafts.

Disclaimer

CDW Corporation published this content on May 07, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 07, 2025 at 12:17 UTC.