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CDW Corp (CDW) Q1 Earnings & Revenues Top Estimates, Up Y/Y
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CDW Corporation (CDW - Free Report) reported solid results for first-quarter 2021. The company’s first-quarter non-GAAP earnings per share of $1.74 surpassed the Zacks Consensus Estimate by 13%.
Moreover, the reported figure increased 26.2% year over year, mainly on higher revenues, improved product margin, better product mix, lower interest expenses and a reduction in the effective tax rate.
The company’s quarterly revenues of $4.84 billion outpaced the consensus mark of $4.61 billion. The top-line figure also increased 10.2% year over year on a reported basis and 10.9% at constant currency.
Quick recovery from the COVID-19 pandemic-led disruptions, especially in Small Business, CDW Canada and CDW U.K., combined with improvements in Corporate and Healthcare were key positives. Moreover, higher sales to education customers were a tailwind.
Net sales of CDW’s Corporate segment, amounting to $1.8 billion, witnessed a 5.5% decline on a year-over-year basis.
Meanwhile, the Small Business segment’s net sales of $432.7 million grew 10.5% year over year.
Coming to the Public segment, net sales of $1.9 billion grew 26% from the year-earlier quarter. Moreover, revenues from Education customers were up a whopping 98.1%, more than offsetting the 9.2% and 3.8% declines in net sales to customers from Government and Healthcare, respectively.
Net sales in Other (Canadian and UK operations) improved 20.7% to $677.5 million.
CDW’s gross profit of $795.2 million climbed 5.1% on a year-over-year basis. Gross margin contracted 80 basis points (bps) to 16.4% due to a higher mix of lower-margin products, including notebooks, which overlapped higher-margin configuration services for the Census project last year. However, an increase in the mix of netted down revenues, primarily Software as a Service, was a breather for the gross margin.
Non-GAAP operating income grew 21% year on year to $367.7 million. Additionally, non-GAAP operating margin advanced 70 bps to 7.6% on the back of benefits from the company’s then variable cost structure.
Net interest expenses declined 6.1% year on year to $36 million.
Non-GAAP effective tax rate for the March-end quarter was 19.5%, lower than the year-ago quarter’s 20.7%.
Balance Sheet and Cash Flow
CDW exited the first quarter with cash and cash equivalents of $878.6 million compared with $1.41 billion witnessed at the end of December 2020.
The company has a long-term debt of $3.91 billion compared with the prior quarter’s $3.86 billion.
CDW generated $344.6 million of cash flow from operational activities and $101 million of free cash flow during the first quarter of 2021.
Separately, the company announced that its board of directors has authorized a quarterly cash dividend of 40 cents per share to be paid out on Jun 10 to all stockholders of record as of May 25.
Furthermore, the company noted that the dividend rate has increased more than nine-fold since its IPO in June 2013. Since then, the company has returned about $3.8 billion to shareholders through dividend payments and repurchases.
Long-term earnings growth rate for Lam Research, Vishay Intertechnology and LG Display is currently projected at 32.8%, 20.26% and 29.8%, respectively.
Zacks Top 10 Stocks for 2021
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Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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CDW Corp (CDW) Q1 Earnings & Revenues Top Estimates, Up Y/Y
CDW Corporation (CDW - Free Report) reported solid results for first-quarter 2021. The company’s first-quarter non-GAAP earnings per share of $1.74 surpassed the Zacks Consensus Estimate by 13%.
Moreover, the reported figure increased 26.2% year over year, mainly on higher revenues, improved product margin, better product mix, lower interest expenses and a reduction in the effective tax rate.
The company’s quarterly revenues of $4.84 billion outpaced the consensus mark of $4.61 billion. The top-line figure also increased 10.2% year over year on a reported basis and 10.9% at constant currency.
Quick recovery from the COVID-19 pandemic-led disruptions, especially in Small Business, CDW Canada and CDW U.K., combined with improvements in Corporate and Healthcare were key positives. Moreover, higher sales to education customers were a tailwind.
CDW Corporation Price, Consensus and EPS Surprise
CDW Corporation price-consensus-eps-surprise-chart | CDW Corporation Quote
Quarter in Detail
Net sales of CDW’s Corporate segment, amounting to $1.8 billion, witnessed a 5.5% decline on a year-over-year basis.
Meanwhile, the Small Business segment’s net sales of $432.7 million grew 10.5% year over year.
Coming to the Public segment, net sales of $1.9 billion grew 26% from the year-earlier quarter. Moreover, revenues from Education customers were up a whopping 98.1%, more than offsetting the 9.2% and 3.8% declines in net sales to customers from Government and Healthcare, respectively.
Net sales in Other (Canadian and UK operations) improved 20.7% to $677.5 million.
CDW’s gross profit of $795.2 million climbed 5.1% on a year-over-year basis. Gross margin contracted 80 basis points (bps) to 16.4% due to a higher mix of lower-margin products, including notebooks, which overlapped higher-margin configuration services for the Census project last year. However, an increase in the mix of netted down revenues, primarily Software as a Service, was a breather for the gross margin.
Non-GAAP operating income grew 21% year on year to $367.7 million. Additionally, non-GAAP operating margin advanced 70 bps to 7.6% on the back of benefits from the company’s then variable cost structure.
Net interest expenses declined 6.1% year on year to $36 million.
Non-GAAP effective tax rate for the March-end quarter was 19.5%, lower than the year-ago quarter’s 20.7%.
Balance Sheet and Cash Flow
CDW exited the first quarter with cash and cash equivalents of $878.6 million compared with $1.41 billion witnessed at the end of December 2020.
The company has a long-term debt of $3.91 billion compared with the prior quarter’s $3.86 billion.
CDW generated $344.6 million of cash flow from operational activities and $101 million of free cash flow during the first quarter of 2021.
Separately, the company announced that its board of directors has authorized a quarterly cash dividend of 40 cents per share to be paid out on Jun 10 to all stockholders of record as of May 25.
Furthermore, the company noted that the dividend rate has increased more than nine-fold since its IPO in June 2013. Since then, the company has returned about $3.8 billion to shareholders through dividend payments and repurchases.
Zacks Rank and Other Key Picks
CDW currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology sector include Lam Research Corporation (LRCX - Free Report) , Vishay Intertechnology, Inc. (VSH - Free Report) and LG Display Co., Ltd. (LPL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Lam Research, Vishay Intertechnology and LG Display is currently projected at 32.8%, 20.26% and 29.8%, respectively.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>