CDW Corp Files 10-Q for Q2 2024

Ticker: CDW · Form: 10-Q · Filed: Jul 31, 2024 · CIK: 1402057

Sentiment: neutral

Topics: 10-Q, financials, reporting

TL;DR

CDW Corp's Q2 24 10-Q is in. Check financials.

AI Summary

CDW Corp filed its 10-Q for the period ending June 30, 2024. The filing covers the second quarter and the first half of the fiscal year. Key financial data and operational details for CDW Corp, headquartered at 200 N Milwaukee Avenue, Vernon Hills, IL, are presented in this report.

Why It Matters

This 10-Q filing provides investors and analysts with the latest financial performance and operational status of CDW Corp, crucial for understanding the company's trajectory.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing standard financial information.

Key Numbers

Key Players & Entities

FAQ

What is the reporting period for this 10-Q filing?

The reporting period for this 10-Q filing is the quarter ended June 30, 2024.

What is CDW Corp's primary business address?

CDW Corp's primary business address is 200 N Milwaukee Avenue, Vernon Hills, IL 60061.

When was CDW Corp formerly known as VH Holdings, Inc.?

CDW Corp was formerly known as VH Holdings, Inc. with a date of name change on June 5, 2007.

What is the SEC file number for CDW Corp?

The SEC file number for CDW Corp is 001-35985.

What is the SIC code for CDW Corp?

The Standard Industrial Classification (SIC) code for CDW Corp is 5961, which corresponds to RETAIL-CATALOG & MAIL-ORDER HOUSES.

Filing Stats: 4,701 words · 19 min read · ~16 pages · Grade level 8.1 · Accepted 2024-07-31 16:17:11

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements: Consolidated Balance Sheets as of June 30 , 2024 and December 31, 2023 3 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 4 Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30 , 2024 and 2023 5 Consolidated Statements of Cash Flows for the Six Months Ended June 30 , 2024 and 2023 6 Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30 , 2024 and 2023 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9

Management ' s Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management ' s Discussion and Analysis of Financial Condition and Results of Operations 21

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 33

Controls and Procedures

Item 4. Controls and Procedures 33

OTHER INFORMATION

PART II OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 35

Risk Factors

Item 1A. Risk Factors 35

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 35

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 35

Other Information

Item 5. Other Information 35

Exhibits

Item 6. Exhibits 36 SIGNATURES 37 Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars and shares in millions, except per share amounts) June 30, 2024 December 31, 2023 Assets (unaudited) Current assets: Cash and cash equivalents $ 665.3 $ 588.7 Accounts receivable, net of allowance for credit losses of $ 32.6 and $ 28.8 , respectively 4,718.8 4,567.5 Merchandise inventory 724.8 668.1 Miscellaneous receivables 545.3 470.5 Prepaid expenses and other 389.4 410.2 Total current assets 7,043.6 6,705.0 Operating lease right-of-use assets 130.9 128.8 Property and equipment, net 186.9 195.5 Goodwill 4,409.3 4,413.4 Other intangible assets, net 1,295.0 1,369.7 Other assets 573.0 472.2 Total Assets $ 13,638.7 $ 13,284.6 Liabilities and Stockholders' Equity Current liabilities: Accounts payable-trade $ 3,118.6 $ 2,881.0 Accounts payable-inventory financing 404.2 430.9 Current maturities of long-term debt 1,203.5 613.1 Contract liabilities 451.4 487.4 Accrued expenses and other current liabilities: Compensation 296.2 303.0 Advertising 145.1 119.9 Sales and income taxes 80.7 52.4 Other 508.4 554.3 Total current liabilities 6,208.1 5,442.0 Long-term liabilities: Debt 4,424.8 5,031.8 Deferred income taxes 151.7 171.4 Operating lease liabilities 161.7 164.0 Other liabilities 517.5 432.9 Total long-term liabilities 5,255.7 5,800.1 Commitments and contingencies (Note 9) Stockholders' equity: Preferred stock, $ 0.01 par value, 100.0 shares authorized; no shares issued or outstanding for both periods — — Common stock, $ 0.01 par value, 1,000.0 shares authorized; 133.6 and 134.1 shares outstanding, respectively 1.3 1.3 Paid-in capital 3,789.9 3,691.3 Accumulated deficit ( 1,481.3 ) ( 1,525.5 ) Accumulated other comprehensive loss ( 135.0 ) ( 124.6 ) Total stockholders' equity 2,174.9 2,042.5 Total Liabilities and Stockholders' Equity $ 13,638.7 $ 13,284.6 The accompanying notes are an integral part of the Consolidated Fina

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions, except per share data, unless otherwise noted) 1. Description of Business and Summary of Significant Accounting Policies Description of Business CDW Corporation ("Parent"), a Fortune 500 company and member of the S&P 500 Index, is a leading multi-brand provider of information technology ("IT") solutions to small, medium and large business, government, education and healthcare customers in the United States ("US"), the United Kingdom ("UK") and Canada. The Company's broad array of offerings ranges from discrete hardware and software products to integrated IT solutions and services that include on-premise and cloud capabilities across hybrid infrastructure, digital experience and security. Throughout this report, the terms the "Company" and "CDW" refer to Parent and its subsidiaries. Parent has two 100% owned subsidiaries, CDW LLC and CDW Finance Corporation. CDW LLC is an Illinois limited liability company that, together with its 100% owned subsidiaries, holds all material assets and conducts all business activities and operations of the Company. CDW Finance Corporation is a Delaware corporation formed for the sole purpose of acting as co-issuer of certain debt obligations and does not hold any material assets or engage in any business activities or operations. Basis of Presentation The accompanying unaudited interim Consolidated Financial Statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 (the "Consolidated Financial Statements") have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP") and the rules and regulations of the US Securities and Exchange Commission (the "SEC") for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to the rules and regula

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions, except per share data, unless otherwise noted) periods within fiscal years beginning after December 15, 2024. Entities are required to apply the amendments on a retrospective basis. The Company is currently evaluating the impact this ASU will have on its disclosures. 3. Accounts Receivable and Contract Balances Accounts Receivable The following table details the total accounts receivable recognized and the related classification on the Consolidated Balance Sheets: June 30, 2024 December 31, 2023 Accounts receivable, current (1) $ 4,718.8 $ 4,567.5 Accounts receivable, noncurrent (2) 488.7 337.5 Total accounts receivable $ 5,207.5 $ 4,905.0 (1) Accounts receivable, current are presented within Accounts receivable, net of allowance for credit losses on the Consolidated Balance Sheets. (2) Accounts receivable, noncurrent are presented within Other assets on the Consolidated Balance Sheets. From time to time, the Company transfers certain accounts receivable, without recourse, to third-party financial companies as a method to reduce the Company's credit exposure and accelerate cash collections. Such transfers are recognized as a sale and the related accounts receivable is derecognized from the Consolidated Balance Sheet upon receipt of payment from the third-party financing company. During the six months ended June 30, 2024 and 2023, the Company sold approximately $ 213 million and $ 219 million of accounts receivable, respectively. Contract Balances Contract assets and liabilities represent the difference in the timing of revenue recognition from receipt of cash from customers. Contract assets represent revenue recognized on performance obligations satisfied or partially satisfied for which the Company has no unconditional right to consideration. Contract liabilities consist of payments received from customers, or such consideration that is contractually due, in advance of providing th

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions, except per share data, unless otherwise noted) from its designated suppliers. The Company does not incur any interest or other incremental expenses associated with these agreements as balances are paid when they are due. Additionally, the Company has no involvement in establishing the terms or conditions of the arrangements between its suppliers and the financial institutions. The amounts outstanding under these agreements as of June 30, 2024 and December 31, 2023 were $ 404 million and $ 431 million, respectively, and are separately presented as Accounts payable-inventory financing on the Consolidated Balance Sheets. The majority of such outstanding amounts relates to a floorplan sub-facility that is incorporated in the Company's Revolving Loan Facility, as defined within Note 6 (Debt). A portion of the Company's availability under the Revolving Loan Facility is reserved to cover the obligation to pay the financial institution. For additional information regarding the Revolving Loan Facility, see Note 6 (Debt). 5. Financial Instruments The Company does not hold or issue derivative financial instruments for trading or speculative purposes. The Company's indebtedness creates interest rate risk on its variable-rate debt. The Company may use derivative financial instruments to manage its exposure to interest rate risk. For additional information, see Note 6 (Debt). The Company has interest rate collar agreements that provide for a contractually specified interest rate cap and an interest rate floor based on a Secured Overnight Financing Rate ("SOFR"). The Company receives payment from the counterparty if SOFR is greater than the cap or pays the counterparty if SOFR is below the floor. If SOFR is between the floor and cap, no payment is due to either party. There were no new interest rate collar agreements executed during the six months ended June 30, 2024. As of June 30, 2024 and December 31, 202

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions, except per share data, unless otherwise noted) 6. Debt June 30, 2024 December 31, 2023 Maturity Date Interest Rate Amount Amount Credit Facility Senior unsecured revolving loan facility December 2026 Variable $ — $ — Term Loan Senior unsecured term loan facility December 2026 Variable 634.5 634.5 Unsecured Senior Notes Senior notes due 2024 December 2024 5.500 % 575.0 575.0 Senior notes due 2025 May 2025 4.125 % 600.0 600.0 Senior notes due 2026 December 2026 2.670 % 1,000.0 1,000.0 Senior notes due 2028 April 2028 4.250 % 600.0 600.0 Senior notes due 2028 December 2028 3.276 % 500.0 500.0 Senior notes due 2029 February 2029 3.250 % 700.0 700.0 Senior notes due 2031 December 2031 3.569 % 1,000.0 1,000.0 Total unsecured senior notes 4,975.0 4,975.0 Receivable financing liability 38.3 56.9 Other long-term obligations 4.9 6.9 Unamortized deferred financing fees ( 24.4 ) ( 28.4 ) Current maturities of long-term debt ( 1,203.5 ) ( 613.1 ) Total long-term debt $ 4,424.8 $ 5,031.8 As of June 30, 2024, the Company is in compliance with the covenants under its credit agreements and indentures. Credit Facility The Company has a variable rate senior unsecured revolving loan facility (the "Revolving Loan Facility") from which it may draw tranches denominated in US dollars, British pounds or Euros. The interest rate is based on SOFR plus a spread adjustment and a margin based on the Company's senior unsecured rating. The Revolving Loan Facility is used by the Company for borrowings, issuances of letters of credit and floorplan financing. As of June 30, 2024, the Company could have borrowed up to an additional $ 1.2 billion under the Revolving Loan Facility. As of June 30, 2024, the Revolving Loan Facility had $ 355 million reserved for the floorplan sub-facility. Term Loan The senior unsecured term loan facility (the "Term Loan Facility") has a variable interest rate. The interest

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions, except per share data, unless otherwise noted) derecognition of the accounts receivable. The proceeds from these arrangements are recognized as a liability and the associated accounts receivable remains on the Consolidated Balance Sheet until the liability is settled. The Company did not execute any transfers under these agreements during the six months ended June 30, 2024. Fair Value The fair values of the unsecured senior notes were estimated using quoted market prices for identical liabilities that are traded in over-the-counter secondary markets. The fair value of the Term Loan Facility was estimated using dealer quotes and other market observable inputs for comparable liabilities. The unsecured senior notes and Term Loan Facility were classified as Level 2 within the fair value hierarchy. The carrying value of the Revolving Loan Facility approximates fair value. The approximate fair values and related carrying values of the Company's long-term debt, including current maturities and excluding unamortized discount and unamortized deferred financing costs, were as follows: June 30, 2024 December 31, 2023 Fair value $ 5,310.7 $ 5,348.2 Carrying value $ 5,652.7 $ 5,673.3 7. Income Ta

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