cdw investor presentation · 1. 2016 onwards reflects the adoption of topic 606. 2. non-gaap...

CDW INVESTOR PRESENTATION2020 | WINTER / SPRING

investor.CDW.com

DISCLAIMERS

Forward-Looking StatementsThis presentation contains forward-looking statements, which are any predictions, projections, or otherstatements about future events. These statements are based on current expectations and assumptionsthat are subject to risks and uncertainties. Actual results could materially differ because of factorsdiscussed on CDW’s earnings release dated February 6, 2020, in the comments made during theconference call, and in the risk factors section of CDW’s Form 10-K, Form 10-Q and other reports andfilings with the Securities and Exchange Commission. CDW does not undertake any duty to update anyforward-looking statement.

Non-GAAP Financial InformationThis presentation contains certain “non-GAAP financial measures,” including Non-GAAP operatingincome, Non-GAAP operating income margin, Non-GAAP net income, Non-GAAP net income perdiluted share, and Free cash flow. Generally, a non-GAAP financial measure is a numerical measure ofa company’s performance or financial position that either excludes or includes amounts that arenot normally excluded or included in the most directly comparable measure calculated and presentedin accordance with GAAP. For a reconciliation of non-GAAP financial measures to the applicablemost comparable GAAP financial measures, see the financial statement tables in the Appendix ofthis presentation and on investor.cdw.com. Non-GAAP financial measures used by CDW maydiffer from similar measures used by other companies, even when similar terms are used to identifysuch measures.

2 | INVESTOR PRESENTATION

TRACK RECORD OF PROFITABLE GROWTH

1. 2016 onwards reflects the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).

• Market-leading provider of integrated technologysolutions to business, government, education and healthcare customers for 35+ years

• Coworkers: ~7,600 US and ~2,300 international;~2/3 are customer-facing

• Full range of technology solutions including hardware, software and services

• Offers 100,000+ products and services from 1,000+ brands to more than 250,000 customers in the US, UK and Canada

• “Sweet spot” is customers with <5,000 employees

$8.8 $9.6 $10.1 $10.8$12.1 $13.0 $13.7

$14.8$16.2

$18.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

$353$471 $511 $509

$673$742 $820 $867

$987$1,134

$531$656 $696 $747

$851$961

$1,048 $1,107$1,217

$1,368

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Operating Income Non-GAAP Operating Income

• Attractive business model with demonstrated track record of profitable growth

NET SALES ($B)(1)

OPERATING INCOME ($MM)


1. Estimated market share for top 4 publicly traded IT solutions companies: CDW, Insight North America, PC Connection, and e-Plus as of December 31, 2019.2. IDC Worldwide Black Book, December 6, 2019, includes Consumer and B2B for US, UK and Canada markets.3. IDC and CDW internal estimates as of January 2020.4. For year ended December 31, 2019.

Total US, UK andCanada IT Market(2):

~$1,100B

CDW Current Addressable Market(3):

~$360B

CDW:$18B(4)

2015-2020 CAGR IT Spending: 5.0%(2)

CDW plus the next three largest publicly traded IT solutions companies(1) represent less than 10% of CDW’s US addressablemarket.

The majority of the market is fragmented across thousands of value-added resellers.

TOTAL ADDRESSABLE MARKET

LARGE AND GROWING MARKET OPPORTUNITY


1. IDC Worldwide Black Book, December 6, 2019.2. IDC/CDW Market Model, December 31, 2019.

4.9%5.3%

7.8%

9.7%

2006-2019 2009-2019

US IT Spending CAGR CDW Net Sales CAGR

290 bps440 bps

(1)

Indirect60%

Direct40%

Indirect increased~300 bps since 2007(2)

SUSTAINED MARKET SHARE GAINS ACROSS BUSINESS CYCLES

CONSISTENT, FASTER-THAN-MARKET-GROWTH PARTNERS INCREASINGLY RELIANT ON THE INDIRECT CHANNEL


VALUE TO CUSTOMERS:

• Broad selection of products and multi-branded IT solutions

• Value-added services with integration capabilities

• Highly-skilled specialists and engineers

• Solutions across IT lifecycle

VALUE TO VENDOR PARTNERS:

• Access to more than 250,000 customers

• Large and established customer channels

• Strong distribution and implementation capabilities

• Customer relationships driving insight into technology roadmaps

INTIMATE KNOWLEDGE OF IT ENVIRONMENT

AND LANDSCAPEVENDOR PARTNER

VALUE

CUSTOMER VALUE

CDW Sits Between Customers and Vendor Partners, Creating Value for Both

UNIQUELY POSITIONED TO DELIVER CUSTOMER AND PARTNER VALUE


19% 14%3% 7%

30% 29%-22% -18%

11% 3%

-4%

1. 2015 Net sales adjusted to reflect a comparable 2011 Net sales segmentation: (1) US and CDW Canada Net sales only; (2) Advanced Technology Services (ATS) business classified under Other; (3) decrease and increase in Corporate and Small Business, respectively, of $150 million to reflect account moves between the two segments.

’09–’11 CAGR(Other includes ATS & Canada)

+16%

’08–’09 Growth(Other includes ATS & Canada) (11)%

7%4%

6%

11%8% 8%

’11–’15 CAGR(1)

(Other includes ATS & Canada)

+7%

6% 8% 10% 7% 4%’15–’19 CAGR

(Other includes CDW UK & Canada

Aug 2015 – Dec 2019)

+9%

TOTAL GROWTH

$7.5B

$1.5B$2.5B

$2.4B

$1.9B

$2.2B

Small Business(<250 employees)

Government(Federal, State & Local)

Education(K-12, Higher Ed)

Healthcare

Corporate(>250 employees)

Other(UK, Canada)

BALANCED PORTFOLIO OFFERS MULTIPLE GROWTH DRIVERSDIVERSE CUSTOMER CHANNELS AND GEOGRAPHY CREATE MULTIPLE DRIVERS OF GROWTH AND DIVERSIFICATION AGAINST MACRO AND EXOGENOUS HEADWINDS

2019 NET SALES ($18.0B) NET SALES GROWTH %

0%

27%


MAJOR VENDOR PARTNERS EMERGING VENDOR PARTNERS

CDW IS MISSION-CRITICAL FOR KEY VENDOR PARTNERS


Hardware and Software Products

Monitors

Computers

Printers

Software

Accessories

Storage

Cables

Servers

Networking

Com

plex

ity /

Pro

duct

ivity

And

Gro

wth

Bene

fits

EARLY 2000s NOW

Highly Integrated and Interconnected Technology Ecosystem

Infrastructure Workspace

Support

Security

PROVEN TRACK RECORD OF EVOLVING WITH IT TRENDS

CDW AMPLIFIEDTM

SERVICES


1. As of December 31, 2019.2. Subcomponent of Customer-Facing Coworkers.

~6,800CUSTOMER-FACINGCOWORKERS

>3,000TECHNICALCOWORKERS(2)

HIGHLY SKILLED SERVICES AND SALES CAPABILITIES(1)

NON CUSTOMER–FACING COWORKERS

100%

0%

50%

SEVICES DELIVERY

PRE-SALE SPECIALISTS

SELLERS

OTHER CUSTOMER-FACING

Our strong technical organization includesmore than 3,000 technical coworkers,including pre-sales specialists and advancedservices delivery engineers, allowing CDWto deliver increasingly complex IT solutions.


CDW AMPLIFIEDTM SERVICES• Infrastructure Services• Security Services• Workspace Services• Support Services

CLOUD• Cloud Planning Services• World Class Portfolio• Migration, Integration and Managed

DIGITAL WORKSPACE• Network Solutions• Consult, Design and Architect• Communications, Mobility and Productivity

SOFTWARE• Software Lifecycle Advisory Services• Design and Optimization Services• Portfolio Management• Application Modernization

SECURITY• Architecture and Design• Advisory Services• Managed Security

INFRASTRUCTURE• Hybrid Consultancy• Next-Gen Infrastructure• Software Defined Data Center

BROAD PORTFOLIO OF SOLUTIONS AND SERVICES


With a portfolio of more than 250 cloud offerings, CDW is able to help customers with private, public or hybrid cloud solutions.

COMPREHENSIVE SUITE OF CLOUD SOLUTIONS


Able to provide IT solutions to 150+ countries (1)

1. As of December 31, 20192. Includes countries in the trailing 24 months that CDW has exported to or is able to supplement export capabilities with via fulfillment partners.

Located in 10 countriesAble to export to (2)

No presence

INTERNATIONAL PRESENCE TO BETTER SERVE CUSTOMERS



SUSTAINABLE COMPETITIVE ADVANTAGES

Scale andScope

SUPERIOR VALUE DIFFERENTIATED GROWTH STRONG ROWC

Highly Engaged Performance -Driven Culture

Highly-SkilledSales and

ServiceCapabilities

RobustDistributionCapabilities

Multinational Footprint WithInternationalCapabilities

Deep andExperiencedManagement

Non-GAAP operating income ($MM)

1. 2016 onwards reflects the adoption of Topic 606.2. Non-GAAP operating income excludes, among other things, charges related to the amortization of acquisition-related intangible assets, equity-based compensation and associated payroll taxes, and acquisition and integration expenses. Non-GAAP operating income margin is

defined as Non-GAAP operating income as a percentage of Net sales.3. Defined as the ratio of total debt at period-end excluding any unamortized discount and/or premium and deferred financing costs, less cash and cash equivalents, to trailing twelve months (TTM) Non-GAAP operating income plus depreciation and amortization in SG&A (excluding

amortization expenses for acquisition-related intangible assets).

$8.8 $9.6 $10.1 $10.8$12.1 $13.0 $13.7

$14.8$16.2

$18.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

NET SALES $B

$531$656 $696 $747 $851

$961$1,048 $1,107

$1,217$1,368

6.0%6.8% 6.9% 6.9% 7.1% 7.4% 7.7% 7.5% 7.5% 7.6%

0.04

0.06

0.08

0.1

0.12

0.14

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

OPERATING INCOME AND MARGIN(2)

GAAP operating income ($MM) Non-GAAP Margin (%)

$86 $199 $247

$314 $410

$504 $570 $606

$794

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

NET INCOMEGAAP net income ($MM)Non-GAAP net income ($MM)

$9027.5x

5.7x5.0x

3.9x3.2x 3.2x

2.7x 2.6x 2.3x 2.2x

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

NET LEVERAGE RATIO(3)

STRONG FINANCIAL PERFORMANCE (1)


1. See Return on Working Capital (ROWC) calculation on page 25.

32.5%

41.8%

47.2% 47.8%51.5% 52.7%

54.9% 55.1%

65.0% 65.5%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

ROW

C (%

)

Highly focused on managing the balance sheet and generating attractive returns on invested capital.

STRONG RETURN ON WORKING CAPITAL(1)


1. Defined as the ratio of total debt at period-end excluding any unamortized discount and/or premium and deferred financing costs, less cash and cash equivalents, to TTM non-GAAP operating income plus depreciation and amortization in SG&A (excluding amortization expenses for acquisition-related intangible assets).

2. As of December 31, 2019.3. CDW acquired Scalar Decisions Inc., a premier Canadian IT solutions and services provider, on February 1, 2019, and Aptris Inc., a premier IT service management solutions provider, on October 1, 2019.

Increase Dividends Annually

Maintain Net Leverage Ratio(1)

Supplement Organic Growth with M&A

Return Excess FCF after Dividends & M&A Through Share Repurchases

OBJECTIVESPRIORITIES ACTIONSTarget ~25% Payout of Non-GAAP

Net Income; Grow In-line with Earnings

~2.5 to 3.0 Times Net Leverage Ratio

Expand CDW’s Strategic Capabilities

Offset to Incentive Plan Dilution and to Supplement EPS Growth

28.8% increase in November 2019 to $1.52/Share Annually

Currently at 2.2x(2)

Scalar Decisions Inc. and Aptris Inc.Acquisitions(3)

Suspended share repurchase program

2020 CAPITAL ALLOCATION PRIORITIES


1. From IPO through December 31, 2019.

$7

$34

$53

$79

$107

$139

$183

2013 2014 2015 2016 2017 2018 2019

$241

$367

$534 $522

$657

2015 2016 2017 2018 2019

DIVIDENDS PAID ($MM) SHARE REPURCHASES ($MM)

RETURNED MORE THAN $2.9B SINCE 2013(1)


• ~$360B addressable market opportunity with attractive growth potential

• Clear leader with sustained market share gains in a highly fragmented market

• Proven ability to evolve and capitalize on IT trends

• Flexible, nimble performance-driven culture generating a strong financial track record

• Attractive business model with sustainable competitive advantages

• Multiple levers for growth and creation of shareholder value

INVESTMENT HIGHLIGHTS


APPENDIX


NON-GAAP OPERATING INCOME RECONCILIATION: 2010-2014


NON-GAAP OPERATING INCOME RECONCILIATION: 2015-2019


NON-GAAP NET INCOME RECONCILIATION: 2010-2014


NON-GAAP NET INCOME RECONCILIATION: 2015-2019


RETURN ON WORKING CAPITAL CALCULATION


$61

$575 $600 $1,438

$600

$66 $359

$1,040

2020 2021 2022 2023 2024 2025 2026 2027 2028

DEBT MATURITY PROFILEAs of December 31, 2019($MM)

$1.45B ABL - Drawn

Senior Notes 5.5% Due 2024

$1.45B ABL - Floorplan


$1.45B ABL - Undrawn

CDW UK Term Loan L+140


CDW UK Revolving Credit - Undrawn

Term Loan L+175 w/No Floor

Weighted Average Rate: 4.3%

Weighted Average Maturity: 6.4 years


For a copy of this presentation, please access CDW’s investor relations website at: http://investor.cdw.com/

cdw investor presentation · 1. 2016 onwards reflects the adoption of topic 606. 2. non-gaap...

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