CDW - Earnings call transcript Q4 2021

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Operator

Hello and welcome to today's CDW Fourth Quarter 2021 Earnings Call. My name is Bailey and I'll be the moderator for today's for. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. [Operator Instructions]. I would now like to pass the conference over to Kevin White, Director of Investor Relations. ahead. go please Kevin,

Kevin White

Good Bailey. morning, you, everyone. Thank

today Chris Leahy, me Al our to Executive review are results Miralles, Officer. Financial quarter fourth Chief our and our Officer, Joining President Chief and

considered website, distributed quarter fourth and on that supplemental to be earnings you that was follow Those forward-looking the Reform certain are investor.cdw.com, statements the Our comments presentation made like this and along to with Litigation along XXXX. remind in Private during cause to release risks Act to is are of could actual morning statements available can this used slides subject Securities that our differ under call. uncertainties results materially. I'd

we concerning is obligation today and uncertainties SEC during these filings earnings and contained in information company's release the the update risks this no to Form assumes furnished webcast. SEC. CDW other the the Additional presented X-K information with to in and the

income, presentation most also SEC income have GAAP certain measures, net non-GAAP reconciled margin, non-GAAP financial Our in accordance non-GAAP measures includes comparable rules. and the earnings to All per non-GAAP been non-GAAP measures share. operating directly income, non-GAAP with operating including

quarter XXXX. Sirius webcast reconciliation today Solutions, today. our Form the changes in in find for in XXXX to sales. Computer on not and include rebroadcast software, presented will occurred at Sirius. remarks an from provided the permission and to hardware, include not combined to one the webcast include rates References our slides not results X, and our growth our are rates US CDW indicative UK financial the and You'll results would earnings from of of our that, have growth may and unless beginning only of which Please there from fourth release for X-K also today's only Replay acquisition to charts achieved represent to net and furnished or purposes on that of we specific represent dollar to extra and written and SEC later in the note conference results The property is turn today or December for amount CDW the and closed growth including to net otherwise day products Canada. References as the security comparable solutions sales indicated. sales do be today is of XXXX sales discussed this Sirius. fourth rates Also today. is References call are for versus had compared website illustrative the specific daily the quarter necessarily presented. the services herein XXXX exclude me information net average to that remind period you of selling been in They Chris. are cloud CDW of without period and results company. want that over With historic I call recorded be posted the acquisition growth note that rates the Sirius US let

Christine Leahy

you as of a we strong more questions. both We'll our non-GAAP translated These ensure share income and to a year teams hand Thank delivered progress $XX strategic sales on I'll Share call to our overview excellent and our non prepared increase expectations XX% net growth net for income move profitability. exceptional and power to an who joining industry-leading our with sales with full XXXX. Margins and strategic everyone. improved begin including Thank XXXX morning, the outlook. years resilient unprecedented enabled per operating increase year, and through Then to for allocation of thoughts and the call in non-GAAP of GAAP our interruptions us through priorities. performance in this you, year quarter billion Kevin. progress. the Good XX% review plenty a through of quickly detailed evolving some after performance increased share fourth The health well repurchases has I'll net you past results a Al, performance over take to will of today. and year and both our of a financial income. was strategy demonstrate the time $X.XX. capital financials in amplified have crisis, us our deliver customer as XX% model for business that two and model, global remarks supply

the two years. model power of over see portfolio customer You and our end the markets performance balanced our across past of the

As includes federal we health higher which with customers, US local five government sales K-XX have you – and business, channels and care, ed. education small know, and and state corporate,

have our each also operations Canadian customers. and We and public commercial UK serving

This years two and right. emerging commercial was over which XXXX, public XXX,XXX our products model the in very solutions All experienced over highlighted past performance, sometimes by product powered the two customer own The brands. case declines leading spend, government, sometimes business diverse increased fueled operations sales pandemic customer their net of markets, sales past was these X%. more and different impact across as our meaningful than end our of and Often markets In years In customer international X,XXX and XX% macro and differently. represent from businesses and the by flat more strong our public the and factors specific. also the spend, in commercial with and end offset solutions industry customers of XXXX, impact international sales. increase power offset education than

meet resiliency transactional from to customers unprecedented enable remained their their Transactions XXXX, to by operations solutions driven key secure priorities, infrastructure, focus and enablement At transactions In customers XXXX, home platforms and solutions declined same critical home enablement and remote customers' add increased time, while from from on increased. or to positioned prioritized needs, deliver spend We customers the from and are and as reprioritized strengthen addressing home projects. endpoints. the Both In whether and to solutions learn future ability investments complex. to continuity. home endpoint meet work learn the our highly needs. and well endpoint to work

than Our years address navigate of ability of to our is example model. leveraged priorities our challenge competitive find endpoint extended despite from our technical lead possible. times meaningful advantages, facing supply and power customers while growth another client liquidity million deep two helped portfolio customers environment. were and business more delivered In strong supply transactions XXXX, deep sellers capabilities, partner XXXX, distribution solutions, our we for both and we alternative unprecedented to our relationships sheet balance In deliver coworkers And We extensive help the during the logistics able XX devices to of in devices. their and in our shortages position centers, solid vendor whenever solutions categories.

grow business a to As significant our profitably period. you had see, on can resilient an model impact ability during unprecedented our

at rate the and XX%, net a compound our X.X%. rate X% Looking operating and sales was compound Profitability of annual annual since income profit sales years, improved non-GAAP over past performance at and XX% for growth rates two net respectively. are up gross XXXX faster growth with

profitably is outgrow Of formula component the our not course, business only model to the our US market. of

who dedication including talented XX,XXX Our of joined possible in of the without team success than coworkers, more would us be the Sirius X,XXX our not December. coworkers new

vital our year again, coworkers to industry-leading deliver year. past CDW During why to demonstrated are time years, they and ability two successfully after the so performance

Let's closer take fourth the at what teams the a for look delivered quarter.

teams an net to lower coworkers. for For up billion, deep portfolio, unique On and X.X%. closed year. net from technical $XXX combination that net logistical daily to average our orchestrate Non-GAAP of address customers' million customer cost, all net including and results mitigation up markets. and full constant on across which of experiences and design and was the organizational leveraged agility, innovation, December capabilities $X.XX, from risk – last and XX% priorities income income X. knowledge our extensive The the sales Sirius, in end deliver currency basis, increased outcomes were quarter, customers X.X%, was quarter, share $X.X the of five enhanced and $XXX million Outcomes advise, and sales non-GAAP per key sales benefits distribution broad

both with priorities. up across penetration recovery testing help Security exceptional mitigation continued and quarter, growth XX%, backup focus growth Digital area solutions of business across a strong top and the address security remote performance Endpoint key devices. strong as transformation, as agility well team another team the enablement. team incident and double-digit look. increase mid-teens in The remained both up helped and solutions. transactions Let's performance XX% Small take a Corporate solutions. response with remained delivering was customers as a quarter and delivered needs, excellent client another transactions and delivered risk solutions. delivered with to customers

care's was as last the acute government XXXX lumpy and the the offset – sales excellent continued healthcare quarter higher Health federal the in XX%. in return needs efficiency to top reflected to customers faced On contracts of device been and projects two COVID-XX a program. care. slowness put contracting the large for and not declined public adoption hold. impact service to net solution expected remained K-XX, of we in client of the shared XX% the with was driven on fourth Security by US overlaps public in wind and decline Cloud Bureau quarter. expected in had side nature our meaningful devices Census practices government declines of in increase performance enough and down to also and reflected a business, as priority. that The part Results strong, both total of teams reflect the ed dealt

advantage year-end driven CARE could quarter the a The We State digit in posted helped that they not change the increase strong our are overcome reverse funds. trends XXXX. customers and This beginning XXXX digit delivered upgrade high-single decline. there's customers later security. solutions, to greenshoots high-single will team of team's a performance take and fourth local by to see when expectation no helping in use-it-or-lose-it

to ed endpoint give delivered Higher in required ability performance against was including well through previously multiple ed an sales fourth and last quarter projects K-XX, we we've expected of experience. success overall declined. X% top meet The customers to enhancing sales growth room Consistent double-digit planning quarter As improved shared, institutions shared performance expectations and edge, use XXX% growth. remarkable student funding implementation decline strong as on evaluate move we with help offset the connectivity XXXX comprehensive to programs education by increased funded technology the compares. multi-year net growing unseasonal XXXX security, solutions, through XXXX. tough programs. phasing sales we reflected Higher fourth expect our work K-XX campus as and dorm for as begin opportunities the continue These team quarter, to very demand our to excellent net

quarter client in the high than double to average both fourth year, fourth sales priorities UK market Canada pre-COVID over and typical device sales quarter. in dollars. similar those Although increased Both these other in results, local were growth. year the Combined US. down markets were in for XX% two more markets a delivered daily Customer our US teens

priorities addressing fourth evident we Our delivered is across our mid-single solutions increasing customer transactions success growth and performance digits. portfolio in balanced both quarter where

devices mid-single side, transaction client the On digits. increased

were While year continued we generally Video elevated overall to Tight pass we impressive our client able to which and device prices to the were and alternative audio teams with supply and exited delivered quarter. providers, adopt more remained supply another areas help supply along. customers improved impact some constrained in an backlog. able

in comprehensive quarter as our growth the success data cloud Writings security double-digit cloud by driven strong the security mid-teens. turn threat strategy times increased robust netcom, solution was orders across and growth driven performance. spend entire in year-end. productivity. as growth solutions full Lead technology solutions storage several remain the delivered Remaining Solutions security, servers. many delivered was assessments, strong by at of enterprise solutions a extended key team and stack in CDW service, software expertise protection driven and cloud, to lifecycle. strong increased areas, by Security Once via and infrastructure servers notably with the and mitigation Overall of for again, software. and growth customers in

than meet our the Recent and acquisitions this across in translated in quarter reflected ongoing XX% US paying the off, services. a increase managed meaningfully success mid-single increase to balanced growth. professional growth ability was Our across hardware continuum sales, the more needs of are Services and into digit customer to quarter's strategy contributing services. and XX% in IT software

organizational see, and capabilities; customers year can new and to our extend In our finish third, a strategic XXXX, you progress as of made at integration Acquisitions enhance marketplace. excellent our strong So, the acquire against pillars. second, three Deep the a Aptris made differentiation services year growth, capabilities these capture deliver quarter all strategy first which our to performance. to ability the important share; as Sirius, for is delivered our entire of we our during is IGNW source well IT Amplified solutions an lifecycle. outcomes financial was progress are XXXX capabilities. and furthered This services three-part and capabilities. Point, services bolster critical of Focal fourth across in also the progress our full full to to of for stack excellent year, and an as against strategy XXXX acquisitions our excellent

performance. up share is me this quick a example in our showing Let of how

platform largest in solutions expertise facilitate provides a education Our opportunities IT August stickiness insights space, acquisition of customers. our the This for particularly the systems the US. Amplified education IT's Amplified integrator the IT the our us ecosystem, strong help greater already offering engagement in as enables Google in is and in to which education into customers full leads lifecycle. to to and end-to-end across further customer deepened

During education plus. CDW make to team it for Education easier Google the and for closely with the to Google institutions quarter, team adopt InternetX Workspace Amplified worked for fourth

value In we proprietary much enhance million through the deliver how deliver enhance ease expertise across newly acquired to a on benefits procurement, ability with the made the customer and It streamlined total generated $XX next deliver entire that a we quickly drive productivity. also investments of great services, IT outcomes our acquisitions contract IT included secure deep the XX customers customer board, outcomes, quarter example leverage of This This collaboration, of needed XXXX our and awards business new net seller example more and addition to several with stack ability is services environment. instruction, our in portals investments organizational technical how capabilities. value from able additional than These also Amplified to a deliver over to powerful digital years. and to Internal in and is than on model full in campaign strategy. joint learning full team the more deliver lifecycle. enhanced expertise to in this were fourth our great to

XXXX also We the via in coworkers addition nearly new added us coworkers to acquisition. X,XXX who joined

are and will making technical that thoughts integrations. and as our our three-part we dedicated our new is XXXX. reap all or the our area. of roles. in swift seasoned mission of profitably apace XXXX, quickly A combination. to outgrow progress acquired The Work coworkers top is on And executive. US investments integral all Sirius. are our with area excellent me a to focus been moving homegrown, of That just to the execute are against this half are priority is, consistently able the IT with a integration ability the disciplined led it's about by ensure XXXX over to our Whether in benefits team's in in acquisitions, three-part recent we of customers Just growth in brings continue to strategy market. our to In strategy

had For Sirius our one, on example, a I'm with day seemingly really pleased that new small big a accomplishment, impact. email CDW to but share coworkers address

total double-digit expect as relatively full-year and Turning line the interruptions. Sirius and CDW. into to to XXXX overcame line its a billion, Sirius, of in they growth. focus fabric which net is of operations billion Sirius our performance, is of In services, CDW results. figure CDW, was Sirius area Managed number for sales off includes impact of financial flat grow with $X.X a we Sirius to combined performance projects large the XXXX, built XXXX of as for $XX an of outlook XXXX Top supply delivered integrated compared

key X.X%, Given current on outlook outperformance. plus to drivers. XXXX three constant view of points US of XXX market basis baseline IT points our for basis dynamics, outlook calls This our in reflects XXX market growth currency CDW

First, US moderation GDP we in expect growth. a

supply will consistent particularly XXXX ongoing cloud integrated remain in with impact in business. small in expect expect And macro our we our and impacts, Wildcards of require we at priorities increasingly on and third, XXXX impact that to leverage expertise. year-end hybrid results solutions Second, fairly services, customer remain the XXXX. its supply

than will of thoughts our Of continue IT has shown that on trusted and competitive customers is advantages help through economy essential If the we you of our we will proud ever. increasingly the we do, and more XXXX, will their a in us best now the all our in address have we means And I'm leverage role ahead. the we made course, excellent the on to to years. that, do our our is me is what the always do turn and important will their achieve financial Al, as strategic during move share performance strategic with technology important that two update anything, our sectors priorities the pandemic And past partner as we to out-execute detail performance. That extremely objectives confident I competition. an and who over right to as remain to strategic customers role year. financial strategy our it it In years play let progress place. we've Al? more

Al Miralles

fourth up with I'll remarks And my and outlook. good with more on to start XXXX priorities Chris. morning, quarter, capital everyone. our allocation the Thanks, prepared move detail finish

Consistent a year the channels $XXX COVID-XX on of impacted net on last billion, net slide including sales including basis sales currency constant our daily quarter in $X.X one-month add by Consolidated last X.X%, basis, net sales X.X% and to sales were XXXX reported continued to of from levels. sales on On posting extra as contribution and P&L – and million. net corporate, we average sales small – XX.X% Sirius quarter, selling X. rebound, a X.X most an Consolidated basis, with quarter Turning fourth growth delivering contribution sales the day. consolidated Sirius. were average strong business points was one international from daily above double-digit in up

double-digit health This quarter's care in performance in tempered the growth strong and by government also from benefit declines education. was expected that

backlog year-over-year. dollars side, quarter, Backlog hundred constraints a in elevated to year. few last On remained the supply similar million our the overall reflecting increased

in CDW's profit a increase We again continue backlog through and services the revenue, our basis customers and net the was to lower product team overall million, performance. was configurations margin constrained high by Sirius' historical their the service, consistent overlapping than job accretive great in quarter margin strategic professional leveraging inventory, in did margin in a supply primarily addition the increase more an increase did contract resulted environment, on mix advantages, support was to make for by and so impacted investments the quarter. this to modestly margin more. was once the was profit service offset gross of not for strong even performance, strong year. as Gross prior the gross with of XX.X% a a $XXX margin positively of Gross software reported the and gross XX.X%. competitive in margin This

$XXX up own a high GAAP sales income Sirius' was X.X%. to X.X%. reflects higher This SG&A increased net with X. areas digital and up counts. addition the million, to month XX.X%. on was XX,XXX, our inorganic investments coworker the attainment over reflected growth Non-GAAP incremental goals Sirius third is services as and higher counts against percentage of Sirius was expenses. coworker performance-based margin impact Increasing Turning increase investments were one the year. transformation. X,XXX including of higher and counts coworker quarter the given consistent quarter sales support The consolidating operating from Coworker increased solution solutions Non-GAAP slide operating the the over and $XXX overall performance of million, prior organic operations, compensation, financial end other at of than Non-GAAP core the up business, income compensation SG&A in X.X%. which of X,XXX higher and also operating better mix our coworkers during reflects revenues. income quarter operating the of and X,XXX reflected

call, an our and for As in full-year historic marginally with margin quarter's we investments was the shared accretive fourth drove consistent last quarter made their margin quarter. operating on which performance delivered non-GAAP operating outlook. the Sirius' was

$X.X expense $XX Interest incremental issued acquisition. Sirius Moving to up to slide December on finance notes reflected the increase of XX. billion in million, XX.X%. The was expense the the

taxes as on Our add-backs slide net tax GAAP was to on consistent non-GAAP non-GAAP effective adjust rate slide shown XX.X%. get our XX tax XX. effective To rate, shown with we income

rate rate, benefits tax For primarily XXX XX.X%, year's last points the in basis effective up due was year. tax recognized quarter, our non-GAAP the to prior versus one-time

average slide GAAP $X.XX, with As you diluted quarter fourth can XX, share of XXX outstanding shares million, income weighted was see per down on net X.X%.

share million income net net was in share and income from XX% $XXX the impact was quarter, Our last $X.XX, up up the Non-GAAP per repurchases. reflects non-GAAP X.X%. of year

full Turning results on year to slides XX. XX through

solution of gross gross and a last continued billion, As sales Sirius. contribution performance of with reported model XXXX currency a on strategy margin and services profit, from an year. portfolio. $X.X profit $XX.X basis from sales XX XX.X%, capabilities sales power full-year and like XXX increase investment services On increase net basis accounted service. and basis XX.X%, along our revenues a basis, software constant netted XX% points sales up points billion, an down reflected was basis including Chris execution XX.X% daily approximately into consolidated were was and in average for balanced shift a basis. average the mentioned, XXXX, The against our as of down grew daily year-over-year. XXX XX.X%, approximately point and profit exceptional up software Gross Net In total effective business reflects

full-year profit these profit margin primary why sometimes neutral to software to hear thus software for accounting warranty the absolute the but of take rest as and record XXX% shared else dollars, a sales gross perspective. revenues margins want service, I gross how to solutions, obligor dollars put we of a commission agent thus revenues net as results and our as a gross this treatment well you In and to us moment past, into and items. revenue effect the down refer in examples assurance results netted higher gross has dampening equal. Before as down all not solutions on these our as from We're moving P&L, down the Netted fees. is

the necessary we margin. netted business. we growth five Over refresh years, revenue down mix a the continue This, spend our are course, mix revenue to is will other and spend gross last gross percentage This to revenue The further expect as on in to percentage gross Long to greater the growing customer cycles our reflects of mix the ensure neutral remaining down fast netted meeting high the subject invest a term, components net customer streams. increased in mix of and has netted or revenues our security. needs we strength while strategy increased pressure and execute of profit on points. dynamics XX total sales of evolving streams, down like expanding growth and cloud customers, as hardware capabilities

enhance Non-GAAP was net income also to $X.X and accounting Non-GAAP $X.XX, the million. it in was non-GAAP $X.X to up XX.X%. to full-year services. share billion operating Net much solution P&L. $XXX income was what up $X.X per was was income While income the XX.X%. net up I've billion, reflection XX.X%. of our in is billion, Operating strategy capabilities expand and income capture treatment, growth described execution success tied of is high of the our a Returning share,

on with sheet approximately $X.X net to December cash Turning revolver XX, $XXX debt were equivalents availability Liquidity billion. On cash cash plus of the slide and billion. and was million remains XX. $X.X strong balance

days cycle XX, up X was cash to year's Moving from days, last fourth the slide conversion three-month average XX quarter.

million, addition of customer-driven receipts. advantageous than holding vendors our terms. payments of the is at full-year support our by In year's $XXX positions, This our payment cycles from items, to is stocking increased as year. cash partially longer strategy last reflected mixing shown impacted billion by This strong offset was timing customer on capital In and of lighter the flow, $X.X slide also timing flow out end the cash to record flow free of with Full-year payment cash the the of XXXX, timing, and which free XX. free was one-time of growth. working benefited increase vendor

leveraged We this to unprecedented sheet distribution in supply to balance our our investments and strong inventory also environment. customers in support strategic capabilities make

was X.X% to result, and of equated a In below flows cash share. rule out of resulted cash slightly across investments above sales. of of our an of the of on free $X.X high XXXX flows balanced capital In items $X.X X.XX% $XXX thumb than net XXXX. asymmetrical share delivered of average shareholders, to cash end price XXXX to and of cash and differences, more at and free As we our aggregate, a cash thumb. flow Timing per in which billion approximately noted sales, XXXX billion X.XX% of XXXX free included XXXX, repurchases one-time and to free flow objectives rule allocation deployed $XXX million dividends and

on capital slide XXXX priorities allocation to Turning XX.

shared we Our last objectives remain consistent with what quarter.

to First, we line net grow non-GAAP of XX% target in increases, $X with future will a approximately non-GAAP guide dividend earnings. November, the increase increased annually. dividend Last income income. to we line of the To net XX% continue and in with to dividend

structure Second, our we to financing times. year our focus this net a net X of with of cash until at times flow ensure X.X We we X.X capital ended ratio have of targeted the due in right range place to leverage debt to dividends to use leverage return paying the acquisition. the reducing the We after on to optimize range. intend Sirius above

end achieve continue of this XXXX. by We the expect to to

repurchases, of we'll a is capital allocation fourth priorities put focus, this priority of our on third result in lower a target leverage and so As and and net range. our M&A share

to outlook XX. the on slide for XXXX Moving

which built these results, As is own Sirius combined of outlook presents numbers mentioned, we the at Sirius if CDW the XXXX. start Chris and as our off XXXX

XXX you walk market through billion in $XX.X points in constant US to to expect growth market On been outlook sales Starting with We seeing points net XXXX, now, basis. CDW's me what faster X.X%. combined Let basis we're market a currently baseline the including would grow $X.XX how basis Sirius. combined our have net than looks. assumes this XXX sales, given billion in the sales currency. from

device We with expect like a expect environment now, Sirius to as a grow strong overlap normal in mix feels it and we revenues in demand greater total Right line reflect XXXX the client netted will down CDW. sales.

outlook supply the mixed We be streams premium to would be been levels neutral Currency pound if sales experiencing. hardware strong full not range at and/or it expected into than revenue beyond assumes to lower and the netted at the baseline to the to net Canadian if elevated down more growth exchange to does we've is what of would higher materially British that be be Our our end dollar. supply We expected $X.XX end impact we've experienced $X.XX expect is supply rates improves. assuming year, and of the constraints. for of

operating down margin Moving to be expect P&L, non-GAAP low the income the range. we in X%

been reported included XXXX Our to basis would non-GAAP earnings $X.XX, Sirius. our full per a one compared $X.XX month on in combined year which share have of

reported This in approximately to call earnings XX% constant non-GAAP or high-single it basis to X.XX%, digits currency XX% XX equates basis. points a plus growth share per grow a currency on on in expect We combined basis. constant in minus XXXX, to

And ourselves on the accountable basis. we As XX an Slide net for remember, split sales currency constant integrated breaking the Sirius provides annual going out work outlook is combined year. expected sales, results financial of with forward. not the be delivering integration progressing. for Chris we hold our will our mentioned, nature Sirius Please the given

we slightly split line Historically, the sales of to the sales expect second higher our the in year in CDW. on from norm we sequential of We versus of year, net first month historic reflecting This than XX%. to sequential be Sirius' historic half in the a low-single with in months is half XX% Sirius QX to decline first QX. growth see a one quarter QX. from reported basis, three in expect contribution digits,

can Modeling effective per XXXX non-GAAP the found quarter in earnings We constant also for seasonality mid-teens, be channel be amortization, expect QX mix. rate and non-GAAP growth reflecting share low first slide interest to expense, on currency and the thoughts annual depreciation, tax to XX. relative

In net X.XX% our of current addition, at rates. X.XX% tax rule remains thumb long-term flow free cash to you assuming can unchanged sales, of see

percentage to accelerate points now basis partners. to own of partner in basis the financial to XX points our that concludes CapEx expect and time as for vendor is position, That net summary. sales, choice transformation, reflecting to continue digital trusted continued us enabling a to We XX our the run of view customers, CDW the investment fortify approximately our further make competitive

with a And updated on As with questions business we the to always macroenvironment that, it calls. future to follow can brief on ask limit up? you we earnings the and ask to we one do, for up And I'll will provide Thank views each operator your questions. open you. our please of

Operator

[Operator Instructions].

Daryanani question Evercore. Amit first comes from from Our

Amit Daryanani

for is question really around My EPS first XXXX. this guide

love I'd I A, synergies the two think about really understand the do think is, you the on talked Chris, in clarity any And number? you you have synergies love the how about are get I'd as that parts acquisition from you out forward. Can to growth XX%, from XX% narrative you for scaled what number? of And that EPS kind XXXX. secondly, then embedded Sirius really, transactions assuming talk go just cost we to about EPS Sirius of in some

Al Miralles

to Just a couple of things note.

get for we've So, component EPS. sense some given I a think you parts to

what EPS our were XXXX as and CDW one That was one, of the XXXX So for number combined We've result if for reported they year. includes be $X.XX. full obviously, Sirius. together would for $X.XX. also provided for contribution a month Sirius That's you

think you that walk entities sense for a and they if the what it the about get X.XX% forward of to from our growth, So, contribute. outlook you $X.XX combined should you there way is

noted point same The To you perspective, top provided we line just rate your give line expect that, that would synergies. is from we I other data that that at the a in would question grow Sirius on outlook. top we'd as

And all strategy through about would continue integration at I our So, we would we mention I and systems We're we're synergies as looking front. it's facilities of going value value. revenue find Amit, that say we of say. that, critically it those procurement very here's we would we're entities. strategy. as to get hard of certainly synergies, talk the our that we're reinvest. expect consolidation, expect the on going to what important terms to in consolidations, I efficiencies, And on Look, invest to in focused But, combined just components, the pertains

see we XXXX. while in going so, we're synergy to expect And get that of be lot the those value, we a expect values from reinvested we

Amit Daryanani

supply XXXX? of think narrative? the you of getting And sense do maybe starts As worse in How then up kind the to think balance would at stacks get through about I think you how versus and I think do XXXX? that supply mix calendar love do environment? transactional that the solution, of you environment least between a

Al Miralles

QX comments to Look, say, the would terms in on similar environment, of supply quarters environment. supply the prior very the looked I

backlog solution it in in consistent are Our and would of some challenged chain quarters, backlog I Look, natural couple QX. supply And terms with think increased as probably million those of I increase. efforts bit a the puts on time. over these And look side evolve that's what previous takes like of a call there the say business. hundred more would

interactions As the we hear end improved. maybe meaningful and has we in partner of kind look lining really perspective, I about and think transparency we product into what don't of would as see and any silver say, some there a observe sight. we our forward there's from XXXX, that

where into get going but things that line that of are stand, indication would in we and of translate times sure So, lead term. to of any near things there's better not sight I'm better the a

respect to on environment similar consistent we'll have we're so, time. continue and we this chain really, this with execute to outlook And supply down during as hunkered

Operator

Tindle Adam Raymond comes of from The James. next question

Adam Tindle

are there's device the to the to have click as the those ecosystem year tailwinds you growth with. wanted year guidance. think the growth full going on Al, in level around QX can but buildup compares you're long that questions the double And on to in the year, fears about starting year-over-year and I why as progresses, last just around And acceleration half be for on how XXXX based as as year the tougher start guidance. start you built revenue progresses. X% about progresses we at getting to implies looks Maybe going like

Al Miralles

I right think you points. a hit the lot of

expectations. effect. full the on confident And timing takes a our and look, growth puts There certainly So, there year, in and we're is few are a in that regard.

QX, So, QX the have contribution we'll number one, Sirius. three terms from of to from in we've that positive months got of sequentially

So top from perspective. helps a that line certainly

that bit we education, in QX, recall particularly a of and some tough an effect. comps, so with otherwise, will offsetting You has have

add So, typical of back be seasonality. when we we with in up that, kind would our our of along split seasonality, XX/XX to terms

solution? versus direction those of wildcards the certainly type And are will and focused product what Now, be we that wildcards. it and I wildcard and the more obvious say will just would seeing quarter. and include look, by throughput services timing there's the hardware is change of shape And supply

Adam Tindle

onboarded had as just a and X,XXX Sirius Maybe up, integration, over on a follow Chris. employees from you I just question

aligned talked growth metrics culture, gross key like generally on and with it customer-facing permeates dollar the are metrics CDW about profit how You coworkers, compensation returns capital.

you changes would that employees helpful. planned Sirius touch on And, their Al, to that comp be this, systems that. integration could the you're maybe piece potential about can think you touch you taking the metrics on, and of if on any As

Christine Leahy

moving speed sure Integration are appropriate say amount smart to very benefiting the speed. that moving organizations as is I'd important. well. disciplined it's know, critically we with the combined make from you going We're but really quite is of with And customers our also understand

lens us know Sirius coworkers together. culture list. coming already we to customers deals going the would right together, so And winning we assess with seeing we're up fully meet You collaborative, culture, through coworkers, acquisitions our potential the are us. look say, is is now It customer-first, together, when and there also on important to aligned and and CDW coworker-first that I benefits of the

and of methodically this I From of terms performance similar across compensation And Adam. pleased each year to teams we, the we already the But lens, is course, a with each are comp cost together CDW. In coming it's right. other. tell very with will the are schemes, metrics. similar on similarly from I'm again, And They're XXXX how get to referrals what really you, perspective, to other very taking want an based sending incentive deals, with integration collaborating going. because

Al Miralles

I'll just a of couple add things.

of number in perspective, one, key from hit terms Chris just alignment. compensation the points So there a

different. cost services technical staff. business proportion a of have higher keep mind, higher that variable They serve because solutions, Just their in with their fixed business of component little a has a to the looks

time systems shift. see will a on little it's consolidation, integrate. as I that's question a don't that On diametrical shift over immediately. that so, think we days. look, And We'll early your

from kind evaluation I laid systems. of of of And we're foundation to we've a down think Sirius pleased perspective. I strong that think see there's the initial the really infrastructure

systems some tools of have, to and really versa. the we best they breed so, as on going as take technology we're be vice for well a And opportunities of lining approach perspective, from up an to there's in think

front. that we'll progress as good that, we on So, making but share more we're have

Operator

question next Matthew Our comes from Sheerin from Stifel.

Matthew Sheerin

end about, tough government? side the little versus Chris, business, on which been the we the your has expand thinking of terms about on sector, for was talked should outlook and What year a you've of education market. bit which public in I you hoping in could commercial be accelerating, comps the

Christine Leahy

growth, goes unseasonality look at recovery. availability the the our say, end to we QX. the and funds emergency say for in one signs so let segment. connectivity by solid corporate of As are space, the middle thing would through of and at summer, try business, rate positive from decelerated We commercial me I of but has about XXXX. talked both the there. XXXX, education, What a very simplify about small expectations The we've seen And continued the I would education been,

Health see rest we growth So, But growth tell be go it the year. recovering the a of very expect if we're ed you, to doing in to XXXX levels, would nicely. some uplift And the continue we the to throughout back would great care, to ed, is two above would expect years. solid will recover Higher I and there. then year. expect, going nice higher see, muted for little one work

return as our expectation into we're at to about decelerated in and flow to local, see state to government we little again, growth be to changing see not are that state said see we Government, the more there. and rate. a going that'll I to the in local, And our there to a similar but expect and view. solid a turnaround to growth in in bit the certainly space but start solid what then funds space. Very international, federal frankly, commercial going So continue

but the we're But can and right good a and obviously employment both virus, what where Now, there's And key we're feeling inflation, into strong the going course, and the or that. then, like now, we very feel that very supply. demand to demand. plus year. that see we macroenvironment all wildcards There's And happen momentum about minus. be are equally the of positive of positioned a with meet

Matthew Sheerin

because toward off-prem, Just customers? Are regarding cloud-based some are customers we're product your accelerating commentary constraints. about and of that at you constraints, seeing computing moving et component those that the the move cetera, hearing all just other from resellers or your from storage,

Christine Leahy

cloud. mitigation, Not are this is our thoughtful what very agility, But cloud what it risk of about the acceleration versus said serves before, we organizational are being whether Whether conversation. it's and – we've technology seeing strategy clients And needs. say to on-prem. the I their it best is part the is would

in say, are being patient. the because would making lift discipline, can't They the of and with they're are we really and are expertise, just is, the down shift not breadth the the with marketplace. can wholesale of patient. conversations. great right them. that product. customers news explore and really certainly we I the decisions, options appreciating having Frustrated, unique our but That's our sit And So they the amount get all But with

see Certainly, infrastructure return in on-prem to this So, acceleration go continues question. that's year think as cloud, strength they and answer I office customers also think – thoughtful the is to we're the happen. on-prem going some way but the refresh as I'd the to to and I

Operator

The America. from comes next from Bhattacharya question of Bank Ruplu

Ruplu Bhattacharya

there growth a on headwind on demand for of supply revenue a in way of the are terms or to in baked basis guide, questions Al, quarter. is year? you've as sustains guide more that throughout well what the XXXX so to from the headwind ask couple growth a fiscal in full both as wanted PC basis? on dollar the a the I full-year year-over-year for first assuming you shortages quantify And either

Al Miralles

Let me may add there. start something to with have that. And Chris

So, what XXXX. we in are experienced to supply in assuming change we no the environment relative

written back we've dollars through just last if XXXX. several quarters, million So, our recall, extremely three demand look the quoted that has that That's increased notwithstanding strong. to hundred backlog continue be

it times look of if there printed So, at significant the effect look results, backlog. really and say, you are at you we actual our can't the see

our And very and versus of lo are I would XXXX. I with work and expectation in that will supply terms So, supply I byproducts. solutions think that through to assumptions think behold, may it think continue seen that But be in has. consistent minuses chain some transactions as what and we've you have pluses

Ruplu Bhattacharya

thoughts any year? throughout on sustains demand, PC on the how that And

Christine Leahy

small plus. That'll plus macroenvironment move can emergency see international, PCs look, the can of have funds tough anywhere, I come think strength add or the business, a We our there, people we quarter devices the employees, a frankly continue demand in for a a see the connectivity we going as be across a K-XX. On sure. generally expectations demand, recovery and continued devices for using the and and And here's office demand and puts provided corporate, then working I them of of commentary be the year, with continues as be and commercial, about that past. PC the what the because to as generally for office for tool tool the we to and And is provided that see to market. you expect are productivity the seeing to say minus. people to also increased. and or really do QX overlaps, remote client takes a back remotely I'd speaking, minus. the will for it's as When consistent Macro client we're through XXXX, about continues. be supply for for think a mentioned plus But and

and The seen think about the talked remote about and happening than quickly cycles in technology is about upgrades and innovation when typically breakage. virtual, other we've more thing think And you we've technology past.

couple pressure And I cycle of last times points putting thing The cases. so, you've use a say times. cycle would compressing – got new is

to new see in We use endpoint digital devices continue the and transformation. cases

think to the especially year moderating we growth you PCs still you look life compared opportunities at opening are And be and where when as then end and time of are, XXXX by we've XX XXXX, those about I So, up last year, performance, coming. going think we of to get guess, the refresh year. got and this about from solid to Win the the end

very a overall see in just our we And a to are fair good we them. sure we PCs, to position while of that share it make to inventory buying we are people So, as supply see moderating get growth, positive contribution our performance.

Ruplu Bhattacharya

quarter-on-quarter follow-up a it acquisition lower first seems To bit a on guiding with you fact on little think months. revenue three the me, growth. have I ask digit in basis. that's just than layered you're the And that seasonality the Sirius low-single well a guide? I as for Can quarter year-on-year normal

other is say you would that more sales netted of growth because headwinds. down much how you So, are which versus items, have year-on-year the impacting

basis quantify and revenues way in sequential on between that to decline XQ? XQ daily a So, any

Al Miralles

it. address me Let

It's a teens of year-over-year in on in just the basis, first, the So, muted. not is growth terms growth.

sequential is comps but obviously education, strong coming mutes QX in much off relative just the to so the significant on there, on one that more the comment – and I QX, for think a the very of the QX impact.

going You of some there's the of with, Sirius, get again, way but kind of a contra takes. a and bit puts other the

If that very year-over-year, was you just strong. on focus that

Christine Leahy

and to net as we've cloud down. would – XXXX and hardware And additional client here. which add services require I'll generally, said demand. XXXX I more that expect around tremendous services just capabilities. had would Chris we And that capabilities, call environment. building think our cloud and normalized, our do We and XXXX, strategy is think and sales is we I going we buying XXXX it, call that, a It's about XXXX in

netting normalized we'll think for more see I So, down XXXX.

Operator

question next Stanley. from Woodring The from Erik comes Morgan

Erik Woodring

Just given your chain commentary around supply headwinds.

Just in you tailwind XXXX. your And that strategic will a pre think up. XXXX. have get can I to kind for follow need curious purchases your growing inventory And on of or take if how trend become you a if you in to continue then

Al Miralles

similar [Technical just chain would Difficulty], again, First, XXXX. to look supply

so we've think pull and kind chain, of component of and business. they've through And that a that have there as happened. before, encouraged forth, has we I became more mentioned will more of XXXX, expect includes in backlog forward I continue is in get And supply line. of think into encouraged clarity customers gotten And think to partners happen. to clued would I and and and times lead us our

business of portfolio that look and pull our say that and got how plays we've terms might out think I that there In forward well like, – I as we a pretty balanced now of what think backlog at current as could look business.

so, over play a for very or if reasons, will. you a those time. will in flush result don't And that or It's we as ultimately bang, backlog out to feather the believe full going big

of to terms So, would term. it bit out how and a say I here feather to And that episodic fast expect that start and in we individual our terms to we see partners is not probably to be think that plays going from how it's But sit continue later that be moves. we of out. that, XXXX, anything now, we products in would as happens again, progress near hope

Erik Woodring

your quick Maybe think, organic pretty guidance growth of, just in back, it, It points call X look XQ. a I ahead sort of what implied. of, strong and was annual

you've of product months where believe Is you across gains? segments, expectations product just outperformance And anyway decipher So, commentary to some of look you your stronger three outperformed a is some growth, versus just in that maybe ago. of XQ? market on the as maybe that then share

Christine Leahy

you and the chain or at confident I I across thing supply to every growth – said, growing supply think larger going them team devices or think the like into up go When market that chain, practice in look ability made in as been the categories the and solutions. way. to And the CDW, security in integrate infrastructure think quickly on and not nice each. acquisitions a across into cloud, has some think about part groups feel very of Focal I as I'm we we've transactions segments, the strength but balanced across the Point that do very our we and services it what it do there market Digital back organization bring areas is to As I balanced was our impacting and we're there look, XX% our flowing whether ServiceNow practice how our the really automation and growth ended element, that that QX or practice the was But in Velocity outperforming and speed and category. client into is

in So, I particular, are those share, investing. are and we growth where very in we taking high good feel that areas outperforming

Operator

Suva Jim from comes question next The Citigroup. from

Jim Suva

big a talked more In a towards one to directed in It's prepared I in And XXXX, question. enterprise. in comments, probably your K-XX. only you pivot XXXX, Chris. then, strength of have about, year

services as of say, strength stronger being in, see say, you XXXX, is look XXXX? maybe that markets, XXXX end it of Chris, into, just So, the what maybe Is or cloud? asking, type it kind versus you I'm or products –

Christine Leahy

still the and are from still segments, work, virtual work of are remote, from from anywhere, it's whether customers – Customers work learn just prioritizing, across settings. home, home, all remote

as going that slightly prepared are all way to different to I really to think is solid a At pandemic those solutions going same likely needs because about So, more our deal with time, we're in performance. it. the XXXX a address impact think continue drive we the to customers

and are drive securing to refresh, focus software to or technology, well endpoint on infrastructure, on-prem we platforms cloud on-prem portfolio both pivot resiliency, particularly as absolutely drive their So, as enhance seeing agility, and drive new driven, to options, devices. customers investment

how That's think from year XXXX. the I what very as balanced we we're really So, products, a it describe portfolio. suggests the seeing across XXXX, into about customers going

Operator

from next The comes from question Cross Research. Cross Shannon

Shannon Cross

that's in you're going what price obviously, of Chris, to key to you're to environment other the terms you to of being general, pressures. be industry, Just with absorb some to offset relation hearing able customers their of inflationary something increases? bit willingness the in hearing what can talk from because, the about a frankly, sort your

Christine Leahy

hearing. Here's and what investment. number I am is one Nobody technology. commercial price likes but all technology the increases, customers, People virtually

at not on they're back budgets all. to budget a there's if spend, cutting So,

to cost might they having fact, very In be But expanding containment. disciplined be about them.

So, our all. us, cost again, management matter, more a that drive allows customers, across way commercial customers even to reduction, technology in have our expertise the makes But spectrum valuable. investments full we're finding cost that not or who at can for customers, are reducing conversations with that us other

And all to the technology being good to the things winning, that companies news. and organizations trying is again, do are doing that's competitive, essential to educating, trying are So, to to to do.

add if And, along. obviously, So, we're point. not seeing know don't anything. we're passing any I material this Al, impact at you'd prices

Al Miralles

a of couple just comments, Shannon. Yeah,

in solutions say about done And an and think terms partially product. exceptional job to capacity. free supply They're a helped function chain that, accept are And varied they're in pockets, substitutes different different availability willing a willing to say and getting of that's quite the some I products, customers is just ways. creative. partners of more have ASPs kind in I'd bit obviously, have certainly to it up by doing So, our environment. same. of would

Written is our our serve pass how sure largely financial done right, is they to be And would impacts, making these price say happen do as strong. can extremely we demand for we're job on bring best So the that. pertains is to insulate I nice it then, getting job, Written and price pressure. focused really customers what there increases through are just I a from definitely And us, and perspective. in and customers continues where profit best obviously, ourselves that think solutions. through we a that we've gross

Shannon Cross

really from are Is done take any you've You've guided mix benefits higher which, obviously, we absolutely margin, all acquisition? past. the should the actually operating business? issues low we than that or just core the know is X% Or there in synergies, improvement? you driving could as again, to I'm then, bucket about if account little what's bit And curious the a into margin think talked I but you of about for kind

Al Miralles

margins we First, made have that notwithstanding progress and margins. on would Sirius, our we our would expect gross NGOI

Sirius And of You that's make and well. organizations to together, we that add obviously accretive the really as meaningful. coming actually going think the power that's

it's Just organic. low of outlook are that keep the and to providing X, so mind, and combination in that inorganic we

versus But transactional like keep our good continue sit to that be mind, influenced are right, feel supply to here we progress much is prospects how our by business solutions. make Just chain, be the in really about wildcards, margins. again, as will things it there by we on will influenced today,

Operator

from comes Instructions]. Chatterjee [Operator next The J.P. Morgan. from question Samik

Samik Chatterjee

couple guess quick really. for Al, I ones of a

I think announced if acquisition, do was go forma Sirius to time expected the I the back the you margin that XX.X%. to pro gross profit

to give if about how had through gross should number XXXX margins the I forma about? rate margin looking was the I on color talked the for strength how think pro some you you and can So, relative me exit gross that just

Al Miralles

meeting investor margins gross that Yes, we've than on higher for really provided noted ours. pointing Sirius, back are their we what the to

otherwise. to that we so, And is our effect through. in again, going to expect that come accretive certainly And progress, addition would

Now, look, outlook. don't we provide

where apply sense But on our be. if to think out, we're you quote you I'm outlook we perspective, gross make. progress coming specifically not margins going for NGOI the I going expect of good an margin So to we're what get a would from you math the

Samik Chatterjee

which on again, Sirius up think Follow flat I talked in is you about revenue XXXX. –

business XXXX with talked rest CDW. in well. And You're more in line that of look reinvestments to expecting growth as the in about you

on? which Is how your in this then acceleration relative purpose of towards the about reinvestment about Is a industry? think of contribute should we How that this? reinvestment? more growth to would into So, more the should growth Sirius, from the here we think accelerating the outperformance in driving content

Christine Leahy

Let me start with that one.

I think we that as starting them place, reminder and together. a are swiftly with actively bringing Sirius, a

groups of way. a areas into the it. CDW done, bring our going acquisitions holistic into we they've been think you literally when are the other integrate recently practice can that to really in some organization tuck technology So, we've of Sirius, and

basis So, to is expect has about the of to expect to the in points say when market, advantages and perform performed drive, points always think mean future, we above as least the teams CDW as XXX we basis competitive the our with XXX what market. we Sirius growth outperforming at benefit we we

as think about combined opposed to standalone it basis we So, contribution. on a Sirius a

Al Miralles

comments thing add of terms and just I synergies. one maybe And value about your in add we the would there

going impacts where made an long accretive values will those if the benefits. powerful believe that margin. saying on into fully value. and talked a provide run, we and run, those and real the immediate we've putting together synergies And business, combined run And back So, perspective, be think the we look, lead think that's that's that certainly we will put to can upside short to to think the let's taking long perspective run, long I from be entities about from more do continue Look, is. them

further we that and will reinforce on our accretion those the investments that will future. show strategy reinvestments XXXX our So, on in think and progress, on for of great build our terms progress margin

Operator

comes Research. Housum from final Northcoast Our from question Keith

Keith Housum

In in US guys terms price as in line? to a how increases guess GDP are contribution are you as was terms bit about growth increases impacting, how I guess, of color little I the industry, thinking the price the that hoping guys you I top of your the expect, well

Al Miralles

one strong. and don't I of written if I super continues have reiterate the demand impact. to in I single answer say the know will be that terms Look,

And digital in own the demand. have different not technology Chris our think continuing the forward and base been to of about think in go transformation. in stopped invest vast product that that to the is said, like their importance fact prices, looking power of So, I across our technology it set, pockets of a the as efforts we testament customer and which growth has to meaningful and is,

had demand if continue. will that And is so, top terms [indiscernible] think still belief it's look from meaningful is impact. you line don't we largely really, in definitely perspective, revenue, there. a a And our of

Keith Housum

people trying seems but IT prices a lot X.X% not bit the that I demand a in perhaps a of there, higher. forecasts it's are to of like questioning I'm kind yet guess it the is just of further is growth. lot we've there's X.X% the consistent across point I'm little unpack talked and why US that to, the out have increased, number

Christine Leahy

Well, let me add. just

And the drive as cetera, wildcards year, I macro right to the et we're we environment, the we in of the on do, through moderation of obviously, be. always more now, as think people go those things. year is it estimates seeing what update to of view labor clear the the but could will in at in of XXXX. course Look, GDP. for uncertain what hearing expect where but beginning we'll through all year shortages, you're up, will, eyed start taking as trends, a know we these We ASPs move the a Inflationary

Operator

no additional time. waiting are There questions you. Thank this at

the pass and over please Chris I'll Leahy, So, President. conference go Chris, to CEO ahead.

Christine Leahy

to Thank the serve look day. our and customers you. you Bailey. CDW and all call, again forward CDW in you. we appreciate analysts the investors you commitment privilege we quarter. around serving interest and absolute and our recognize opportunity To the our and and you this to to to participating talking our globe partners a next to of support Have great And continued thank of your for incredible customers, their our extraordinary and Thank to you, stakeholders. want dedication I coworkers

Operator

the earnings quarter This CDW concludes fourth XXXX call.

You your may line. now disconnect

CDW (CDW) 9 Feb 222021 Q4 Earnings call transcript