CDW (CDW) 5 May 212021 Q1 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the CDW First Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Brittany Smith, Vice President of Investor Relations and Financial Planning and Analysis. Please go ahead.

Thank you. Good morning, everyone.

to President first and and our Financial today Chris results Collin remotely Chief our Leahy, Chief Officer. me review quarter our are Kebo, Joining Executive Officer;

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

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

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

You'll release find all we rates Form otherwise today are dollar in period XXXX, reconciliation to comparable today's note in furnished and Please SEC amount unless the indicated. today. X-K in references in our to slides our remarks webcast that for and charts growth increases earnings or the versus the

first without conference turn to also CDW written today. permission rebroadcast the me website our recorded Chris. today With XXXX represent that remind to there results day not company. sales the compared from all property addition, quarter of the and net from posted for Also, be call the is let or you later references or hardware, of In XXXX. U.S. U.K. Replay as fewer was want be Canada. to services growth and that, I specific of selling call this to to and include CDW do software may will in only one not webcast the this rates over

first our you quarter share thoughts through Thank this you, take Brittany. drivers and at quickly capital begin on time I'll and updated will to results an first had overview and XXXX. have a remarks then our Collin we ensure for move a outlook. more through quarter. of prepared of of performance We'll plenty questions. morning with look detailed strategy financials, We allocation our strong

Our strength demonstrate of and business and the balance CDW's model strategy. results

basis constant in results on solutions portfolio fewer to reported of XXXX, XX% and an net balance XX. the remote share operating was and strong currency. million, well, For basis income XX%. currency. as providing And XX.X% non-GAAP billion, X.X% adjusted million. above year's net X% demand of first daily an day $X.XX, of last increased continued XXXX diversity end income was serve we driving up our quarter business than a XX.X% The in for our on X up per to $XXX the average were first quarter, year profit for in increase Non-GAAP sales sales $X.X in of Gross constant end-of-quarter impact last up overlap solutions. surge markets $XXX the and and us

most lower stimulus. became Customer quarter, due rebounded. last government of and year new customers impacted count, environment signs as the COVID and about COVID rates early the more During optimistic by vaccination macroeconomic saw first recovery higher to spending we channels case

the environments, infrastructure and spend strengthening interact future, they X unique solutions portfolio for focused CDW resource help Customers outcomes This enablement, reasons. transformation. and how continue with COVID. more on remote for our customers We for solutions design digital and needs, reconfiguring solutions Customers our quarter, distribution customers investments technology technical cloud hybrid to allocated remote combined customers. optimization, hybrid customers, portfolio. best to and growth to with broad driving We and due industrializing were to delayed choose logistical services past knowledge capabilities security, our and simple enablement the had been that and our for restarting advise, projects orchestrate extensive

a industry. know who their First, customers business partner want their and

Second, partner model is are and the marketplace. brand, will with and fundamental in deep on why is has And continue These CDW technical reasons informed outcome, customers and first outperformed in want optimal the the quarter to a third, want agnostic partner to broad across they capabilities. who who and opinion. an technology win focused to one consumption

services, will accelerate our solutions work and technology. similar logistics customers share client situation capabilities, component of supply and to provider that During and partner since relevance Last second and education has issues. position of balance of Amplified navigate availability We and continue a achieve and likely investing the Google schools some outcomes software quarter, been we first, logistical and devices educational availability we on been XXXX. culture customers cloud-based our infrastructure is fluid. our for strategy CDW and quarter potentially more quarter, distribution ended. has and services high-growth IT extensive help liquidity deep and challenges. The partner year. the and supply through of vendor first half into centers' will strong we puts caused remained a together, first great and and customers' sheet supply leading partner challenging Disruption issues acquisition year for been since to relationships a products IT. is Constraints executing leveraged constraints have premium capabilities, including next the against in both the our through a by solutions Supply chain education high focused Amplified

continued become first Corporate performance. drove while deeper recover. declined hybrid and a as declined. look remote spend enablement customer in environment at tools, video take customer sales to desktop X% expectations investments end a let's the market model that work Customer quarter future Now other and notebooks will

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enablement, government single high to customers projects, solution leading digit. and sales netcomm and Federal center data declined remote growth decreased Our team with digits. both channel mid-single in solid for transactional spend. Net helped our

growth, spending again equity for administration. models, as Healthcare K-XX. hybrid, their invest return transactional to loss, us ways meaningful over quarters they turn blended quarter as wait-and-see However, to led Customers excluding learning help by returning for Customers prepare generated to in-person. accelerated strong solutions to categories. Higher both and a digits, Census engagements customers from digits, Department solutions Customers the low state well their by increased single of grew and continued and X%, local optimistic students. remote, declined expertise plans a to Defense channel to capabilities assess drove paused under funding improvement to vaccination prior our Federal increased address powered and achieving elective took grew quarters. performance. variety procedures transactional Bureau, the the and U.S. income and for focus the enable during to as versus solution the stimulus new a approach on stimulus to which Service high digits. customers a for learning as a were more XXX% due ed pace. The and across digits. holistic Growth the as for of high Education K-XX Device access support single decreased single triple prior schools slowed

their fiscal customers. operations, government represents U.K. customers Solutions net both by growth and results basis. by Strong team refreshing sales data Canadian education updating reported year-end and returned increased a markets were driven XX% the currency, Canada over centers. Other, which for spending our high In the team and to increased local U.K. by digits, as driven well investment care drove double and continued single-digit growth. as health on

deep product from portfolio. performance Our base from broad quarter our benefited customer and diversity first of the and our

strong meet excellent demands double of across channels, growth double increasing digits. solutions increased Transactions Hardware to to growth. single client returned critical was continued to We digits, the by driven XX% all device customers. low our notebook and leading growth, digits strong up

in high growth declined profit digits remains gross due a software licenses, Software but decline software solid. single to

year, fundamental and contribution digits, key of grew Census low when professional our for driven and services approach decreased services are our to managed our strength proposition. double a the strong by digits Services enabler While overlapping the project in value single from go-to-market services. last adjusted

excellent security, productivity Service, delivered strong cloud driven double our across Cloud markets, practice. as spend collaboration. customer Infrastructure in increased all customer also a end in and digits growth by We robust growth

expect solutions customer for strong to deliver. well We to positioned cloud demand continue, we are and

industries and well our Our suite performance. other strategy full when of success and portfolio differently. important The our growth. first of and or executing drivers markets, services solutions the landscape quarter X-part of combined They macro serves end impact reflects performance customer and operating diversity for past and across challenges IT various of external end the our markets ongoing our us future of our impact our financial customer customers balanced are

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me X quarter. action Let examples help how share customers we last strategy in of and our

spring. digital language had machine last a it Our upgrade team our Small technology customer helped Business to all upgrade natural on primary postponed customer due to hit learning with processing server data infrastructure utilize expenditures. that to and the COVID team its its after technology account been platforms enables froze and the COVID working center. In manager customer's early capital a at XXXX, was

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the acquired As of first at IT the I end shared we Amplified earlier, quarter.

needed Amplified schools. teachers Amplified system Education collaboration communication frictionless right hardware, CDW's software, the that with about different and our started of with portfolio. the the community State for to customer support excited its formats, access execute are to with and strengths We full and tools capabilities to cloud our school to education to centralized complete solutions enhance services stack go of CDW IT's this service standardized together relationships across full customers. in drive its vision vehicles to market enabled XXX engagement opportunity immediately. and with learning help contract so IT approximately The orchestrate our against the We and extensive students combined deep Department to and and its leverage provide outcomes tools to and technology and it the to and

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to We plans future fall, expect at to partners continue to our customers to this our coworkers be of office continue our better serve than underway can. team least remote else work reimagine until and anyone by with to ReunITe our

on thoughts updated our share XXXX. now me Let

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as teams encouraged quarter, said, our about I how of quarter. second are the about which, cautious supply more the For first demand date we has the That become and the are since challenged customer to environment, end are executing. mentioned, we

prospects infrastructure will and are changes, essential including never of taxes, and in important return sectors play an in the other been increasingly to vaccine While the wildcards new of there Technology ahead. our COVID all confidence such economy as years business variants, and role higher. the be to rollout, potential policy office the more will have

right our role than We profitable a to deliver best our customers strategy that enhance have is and partner confidence position partners, serve now have to competitive the as we customers growth. our trusted sustainable and CDW's more ever. important strategic

We their objectives will what IT best, their advantages do address and to out-execute our we customers continue our achieve leverage our strategic help to do competition. priorities and competitive

the call plans turn for on I words we today. I want quarter, transition Before to say about earlier a his announced the over to Collin comments the few CFO

evolution established past a since and consistent Collin's be close strong I over want finance he note, XXXX. CDW colleague First, and Collin years, best-in-class as significant in XX been has over it's for a our a his thank as has market-leading XX truly years the Collin played his to partnership. appreciated contributions CFO our personal to and wonderful public his leadership growth to company, On I've greatly of a team. and a role

are support it Board the on over CDW transition. to the to smooth ensure appreciative Collin's to With for to I'll commitment his and We Collin. that, successor search remain turn in also a of

days also at confident and Thanks, the team it the are all the and CDW making day. of good has everyone. I CDW so to you, best Chris, bringing coworkers for been leadership I'll for and rewarding years want morning, company thank team ahead. and special. I been thank stronger to CDW, finance career, XX but My its my never have want most miss I'm the every among

start Following capital and with with retiring up detail outlook. finish with can first to prepared forward to looking priorities I'll my more quarter, more successful allocation family a spend remarks I'm XXXX on transition, so move I our helping the time and then others.

daily Consolidated sales we quarter. our XX% XX.X%. fourth daily sales daily an as fewer the up sales an $X.X selling first had X sequential a on versus quarter on were net sales to decreased Slide consolidated X. Turning X.X% constant P&L billion, grew On average XX.X% basis, basis, average a sales and net basis on sales reported On average day. basis currency

were stronger sales reflecting quarter First expected, than factors. several

Small CDW and declines and side, demand previous strong than slope CDW Business, most the all meaningfully last Canada and quarter. of delivered better On recovery improved the timing impacted channels the in the and expected several was by U.K. COVID-XX Corporate Healthcare growth versus year. in

rate XX.X%, the X.X% environment, for team was continued demand of million, margin year, coming and supply, sales down was versus primarily the was XX On into side, Software driven great daily the supply vendor notebook down configuration down and mix on education year, doubling and year. customers, a in capabilities to in of able the prior did revenues, basis a was our the average strong the partially coupled Gross last and sales increase the compared relationships navigating as job challenging Gross leveraging overlapping a for our an of work Census an resulted education portion and distribution basis. to in backlog This an mix points which on than strong higher higher-margin normal lower year. margin, services increase by from last netted with profit by the Chromebooks, partner a X.X% net project product $XXX quarter reported offset basis including Service. primarily

SG&A SG&A Turning driven debt lower The expense. lower to and decrease and primarily Non-GAAP entertainment expense decreased bad travel was on by Slide X. X.X%.

increased our at XX,XXX. a our quarter income, last cost support Coworker credit the count by offset Coworker to the $XXX XXX in and recall, offset increased investments coworkers, fourth XXX year, of digital areas decreases digital to income coworker by organic and in IT. driven count actions our and partially from management high-growth an million, structure. margin to reserve quarter, operating our areas increase income by variable the XX, GAAP were first was XX The business. Amplified operating of benefit over of quarter, approximately count the of for Non-GAAP in you partially inorganic end Non-GAAP higher coworkers. These was $XXX impact as result the COVID-XX. XX.X%. high first better XX%. count from reflects coworker in investments high-growth transformation solution support XXXX. operating customer-facing Year-over-year was including the margin which of increased solution cost by reflects operating of performance, was X.X%, a investments increase expected up loss up our reflecting transformation, driven record million, If coworkers we own

was down by Interest from April primarily year's million, a due Moving and X.X%. XXXX. refinancing, rate decrease lower $XX in last savings to notes Slide offset The XX. was expense partially of to LIBOR issued

GAAP year. we effective $XX first shown tax quarter XX. our Our rate, add-backs, to million Slide To consistent compared income as taxes XX.X%. rate, non-GAAP XX, to expense adjust shown Slide This in with of $XX resulted was last non-GAAP tax effective tax net on on million get

the our down to XX rate, intangible was For due income versus basis global primarily effective lower non-GAAP low-taxed year's lower and quarter, nondeductible tax XX.X%, rate last points expenses.

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

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

strong Turning Free billion of benefited balance we $X.X million cash $XXX saw the out free and billion. we remains record for given million, approximately on This with to was was Census. XX. March with onetime but items. of $XXX plus quarter shown vendors of of availability as a which than extended Slide cash lighter as cash and reverse Slide some timing related $X.X and to payment mixed flow, were terms the year's on XX. QX, timing sheet equivalents billion. $X.X net was debt made and revolver cash payments the from typical At flow the XX, quarter, first In expected last cash Liquidity

we dividends quarter, at $XXX $XXX cash with returning million deployed $XX and million the approximately and including share million to our average share. per of of purchasing allocation priorities, IT For consistent an price of repurchases Amplified capital shareholders, $XXX

investments cash XX. we DIO to days, from choppy XX support conversion Moving driven was primarily days X-month average by increase first The was Slide year's supply up made in X-day inventory a last to cycle quarter. through customers The environment. increase in the X as

capital allocation on XX. Slide Turning to

the remain priorities same. Our

in the To at dividend approximately target net will line and increases, of with in increase income. First, net these the forward. grow non-GAAP dividend income to non-GAAP guide earnings we going with line XX%

with Xx, Second, ensure net of place, up of turn at have in structure a year-end. the We ratio leverage first to the Xx. from we quarter a right capital targeted ended X.X X.X

growth in The acquisition supplement of acquisitions. IT that is cash Amplified fourth, with highlighted active a evaluating We after and through dividends targets. example Third, organic of share this. strategic M&A remain to repurchases. M&A excess return And great Chris shareholders

move Going investments, organic our forward, leverage net range through target to closer we to cash to of of combination M&A return continue X.X and Xx to a to expect shareholders.

We continue for shareholders the share approximately return balance dividends. $X billion with to including XXXX, $X.X billion expect least from to to at repurchases in

activity, as monitor we do, the M&A Of needed. course, adjust liquidity, we'll as always environment, closely leverage and macroeconomic

high outlook for The be the degree to confidence. forecast continues Slide challenging XXXX with a current to environment on Moving XX. of to

writings encouraged activity by and with digits the We're CDW good momentum, building customers, seeing small a business where up U.K. Canada side, particularly and for year-over-year demand are commercial and CDW were also healthy we April double at corporate the basis. on activity On U.S.

quarter. the On side, increased uncertainty has since the supply first

hardware times commercial supply pockets demand, Our market lead is approximately grow certain X with more and to IT visibility normal than challenged. for ago, infrastructure With feels backlog extending the U.S. that displays outlook updated Net particularly becoming is Notebooks, at than increasing X%. are with stronger of customers, constrained. challenged is our higher Chromebooks, context, and months more suppliers. and but

be grow constant assuming for tailwind British a dollar. in Currency the expected Canadian net to exchange of market XX Amplified CDW full $X.XX the to the to including rates faster to points XXX $X.XX sales and is contribution the XXX year, expect points We approximately from pound basis currency, basis to than of IT. the

Moving P&L. down the

it, of is points non-GAAP the to share the earnings to expect XX for to double Currency approximately low last income We updated to over now mid-X% for margin We continue in share per non-GAAP non-GAAP XXXX. increase earnings per This XX% be contribute quarter. to full currency in growth. additional share $X.XX digits, earnings expect an XX.X%. approximately expected operating constant growth year range per basis outlook is an call

on annual can amortization, and from interest for thoughts depreciation effective be last XX. non-GAAP expense and modeling rate and Additional Page tax are found quarter the unchanged

quarter. to thoughts the second for modeling Moving

second did our half, as February basis typically the XX.X% half, to from we On QX to earnings sales we quarter. first an on call, to uncertainty. of assumes Based half. in approximately on because provide XX% split to the increase second growth would half first double-digit expect assessment, the not average the QX split daily This current XX.X% to year-over-year be we sequential low a second and XX% sales a slight equates

demand, the and health We supply non-GAAP believe good the timing feel that pace uncertainty a stronger more expect backlog per of quarters next to second earnings be share in the to line and out even potentially share would or us We with earnings question with enabling outlook. supply into year work down about to is keep the resilient, XXXX. across upside to non-GAAP turns If full be of X grow business the growth. per quarter

thoughts cash on on the components modeling flow XX. Slide be of can Additional found

free remains sales, of cash rates. rule at X.XX% thumb flow of current X.XX% unchanged long-term to assuming tax net Our

range. XXXX XXXX of end to the to the or below slightly cash delivery, significant flow at contributed we timing continue be over free expect to the Given impacts that low

points expect rule thumb. as slightly percent continue points sales, to approximately of XX basis XX to CapEx net XX basis to of We run higher than a historical the

in choice us time digital and trusted partner transformation As our position to CDW fortify enabling and we believe business, our we of to now before, accelerate own the for investment partners. make is customers vendor competitive in the mentioned

calls. will business As concludes questions. open it macro that, environment we financial ask on [Operator Instructions] future on With the provide do, views for updated Cristal I'll That up earnings always we summary. and the our to

first the line Your Instructions] Daryanani Evercore. [Operator from of with question Amit comes

basis, pleasure margin, the It's at Collin, progressing hold lot. retirement. you. in a lowest be one seen I been a a question, least on is by step we've guess with gross And a drop how on I'll year? maybe really bit best sequential on margins clients of I'm the first back gross of a luck we little while. talk year-over-year. happened Please drove working what then on But your what asked this the basis, to the the a go and will as through sequential getting

Thanks, sequential driver there's is strong education. driven Chromebooks we've things. would by some product recurring notebook, Amit. and the the I had in biggest basis, in year-over-year and margin On particularly growth rate. both say mix Obviously,

fiscal for was quarter in those the U.K. strong growth in tended of a to devices. Canadian businesses. very was and had end customers. their year-end happened We those markets, our in a be strong in deals client a year fiscal and that thing many really It other The lot of public

of that spilled devices device done. majority decommissioned the was market services mix for it the from end the quarter, have part, over strong the A into Census little had Service internationally. the last most as year. the you of as a QX public In first from So we Device previous benefited and but client quarter, we offering configuration

some of provide But of about more quarter-to-quarter and NGLI if margin the you from thoughts think an of It can think as our margin, that's can structure, margin gross tend to the We around puts I and to variety because takes some you gross cost you quarters. we As couple as know, just factors. a of variable don't based next on on on focus bounce outlook. the share variable. about do

services perspective, a as gross the I our from to businesses. would to items think well grow expect continuing us and longer-term higher-margin as tailwind margin XXX% trend secular I

Chromebooks. we've that think headwinds, to perspective, of particularly margin talked continuous there's terms from some some things this see. hardware for devices product client that In hardware there's And about mix, but commoditization about, I a within time, and then mix, the think you can and

normalized I I a over more prioritizing we saw more customers couple a We're to bit longer customers beginning where prioritize would to period willing the wait where quarters through price. are little think customer because went and speed describe past behavior environment of we as speed what price execution move unique and over the into a over as urgency supply a threat From ago. programs as in might of the great just a special isn't there's out and perspective, kind obviously, pandemic OEM of few an existential with challenges was aggressive and they there it quarters with pricing as OEMs some getting environment. on business normalized channel continuity aren't as

So I think you have a lot of things going on there.

frame, pivot digits to up of I on or business that's before. power a where high exceed cash premium XXX this have has and the part XXXX gross margin ticks handle into we a And the income a why where line is our single I'd that we XXX profitable double that's point of and hardware, digits low time as the XXXX even our top through like flow. meaningful to model of we sell lot to do focus cycles been We to and free point is, on by growth basis we the EPS amount, 'XX but think non-GAAP it. the operating

cyclical and year how curious faster the normalized, business averages, you And just would business double that topic. are digit, is perhaps as macro services software lagging start forward. hardware we line versus different expect stack recovery? you seen expect of growing we maybe something? can Chris, at a the And or or to hardware by curious, somewhat. That and as go But in a grow I end follow the this than I'm software on you've IT something Chris more with services just budgets of with the helpful. is CDW if up normal you software should onset the services and really is become this as

Amit. budgets eye I'd thing, they're on uptick to the where really see customers we continue vaccine keep the say, to and in spending their going environment, continue And One dictate work a look, this macro Yes. and close rollout, through if to that's hardware refresh. as

but terms about be In can the before. tell mix this quarter, and on not as as software, we Depending be of licenses portfolio. saw licenses continues we've across software, look, to you, the fairly lumpy of license SaaS strong, -- that strong quite shorter-term talked I'll

move important, refresh. software still start critically So we full obviously, forward to as It's diminish don't a to the to hardware stack. notwithstanding expect we the in year,

So we'll depending strong. continue being bounce bought or just on I think down. going to netted and software see to It's it's not whether what's around

congrats on a nice and Perfect, quarter.

Amit. Thanks,

comes Your next Huberty from with Stanley. question Katy Morgan of the line

clarification a first. Just

hardware Chromebook follow-up. And have IDC both And think do think or increase I north that? of software ago, Or is point. this Why PC is since X driven? X% it the at appropriate months then you think if forecast? the X% of broad-based and a forecast than I it largely you about is more

it's take Okay. I'll that. Chris. Katy,

and input variety customer couple IDCs forecasts growth as do out of heard partner a the CIO I'd I -- minute, rate a you think the think of out the you market question on sources. the we from some VAR know, was And of a cut and given and surveys And the triangulate I for thoughts. I there. of inputs but IT We Gartners. share

some focus surveys, impact for third-party not sure very the about. to that than are chain cautious supply lag analysts. And little are while external the of I'm the demand the of a market of And many how I current others. the if more they incorporating forecasts feels we've the on think you healthy, talked forecast that, CIO conditions tend

So But of pretty we feels the the that right, that we've a see the based as confident update changes what now. we go year, rate landed through right growth as do, feel on on course, we we'll in we market. always

your Or increase, more the largely is PC-driven? broad-based is that? it than And in mind,

solutions, view. -- but it's in to broadly overweighted say that's demand across transactional really overweighted market to clients, growth our and would is I The rate it's of it's driven. both and driving the and hardware

you. for And Collin, just a follow-up

whether and April April the months just so the you in growth you between into growth as the given revenue increased last gap writings about Can writings growth constraints? strong or gap in quarter. the X supply talk mentioned that You moved and

What while and consistent were went quarter ended first higher-than-normal And it say with the end year as was the Katy. beginning year. some where some we the and would downs quarter, ups a is Yes, came ups at we by we was the the relatively with the of time by backlog backlog. through the there market, downs I into and

with pace ahead the tell first sales sales Where that well of writings writing each we've been would shipments. generally of kept we're subsequent seen that backlog So to has quarter, would more you other. us in the end that that tell increase and and the

Congratulations Okay. on retirement, Collin.

you. Thank

next Your with of Cross line Cross question Shannon from Research. comes the

be, will money you you significant with wondering just and be how the regard that's was the benefits? are little about I mean of has, I to I touched a -- know on going amount during into a bit thinking flooding call, guess, there's education. stimulus, it I but

think I of to a fair going as is funding well. amount have government

thinking your guess? benefit, do you it in ahead, that, customer are maybe and continue through think how you how as mix stimulus will about So to I long -- look given you

great It in a question, sure. our That's Yes. for will a mind tailwind be Shannon.

takes it to the elephant the I moving time actually little think getting like system. through it get about some a an through bit snake. It

are have think available there where So customers. funds then in team December and actually understands and that and for the benefit in frankly, and then we most their our different stimulus are a help about when understanding March last the where been last dollars particular, through been most dollars. see and acts stimulus local bills that have Healthcare, for recently bit how they goes where March, and we K-XX customers you the state X And and spend passed quite when a going that have the our can and in

those it funds. to So our as help tailwind to we and do understand see an utilize customers absolute how to look us best

local the March, to K-XX. recent of $XXX going look state and you Rescue billion $XXX the billion at most going American about Plan to there's in and If

forward the and we So they technology to out invest in use certainly current come of look them helping those environment. as

from hardware continued specific see a within I Or stack mean are we any it the move Chromebook will perspective? is that stimulus? up areas a sales? there maybe targeted Are

solutions. So yes, we to customer-centric K-XX example. if with what for take market we call We go

to areas school-facing, strategic example. customers. of Think think focused we're for of of are important most that think on those So and transformation, K-XX, classroom our networking augmentation.

how certainly, and be -- So and turns dollars going we the beneficiaries through of of end and integration we the really are K-XX with the those we to actually starting dollars stimulus capabilities them bear And health But to consultative because care, the helps a the the then bringing at can know capabilities. for that who after that maximize stack, needle. role to stimulus, day, implementation, to state a work through bear. CDW the local our bring holistic in they and role design management to use

from with line Tindle James. Your of next comes the Adam Raymond question

on think growth the of the Chris, contracted. you're out I versus wanted coming to the raising market, which growth I the premium today. premium cycle, start And last

of is the you cycles? elevated that at regardless the cycle more noticing reflective versus stay raise to do product today think remaining So for that wondering, an you're changes you device of I'm demand Or premium are growth enabling longer? structural last stronger

to we at ourselves hold to points recognized tend when know, full be premium outperform you our We lot we when Well, that does revenue, premium. higher as the the is than that. XXX of to hardware, for which start basis a accountable sell XXX And tend market we year.

sense a XXX points. to we the it you think When mix hardware, So XXX that lot to of basis seems up us. to brought of make to about

through basis we those XXX Census just year, about XXX points the up at If a XXX of So take to which XXX XXX to to if basis out our basis X I points. points year the math. we're good baseline, bringing contribute premium last looking -- by go this premium

down durable outlook where the much times we more say see basis. I depends we'll on it So or I when as we we we whether on sell items, line sales would have that's full we In to mix. sales kind we, years a hardware, tend netted ask or of when forecast of muted. because recognize top outperformance, when the more for what In we slower really said, have outperform not and about you of have hardware, high net

higher to them our premium got when of generally we're mix the We've business. of the where and because we that the is go IT commit they range mix So And need hesitant exactly customers the to model the of need a products of full beauty us. of the business.

that bringing to us at toggling to higher see a but any point soon, need customers don't level I up So where our rather us.

you mean Understood. gross grew dead to a much ask. the the there's I'm for aspects on be of going follow-up, have to a demand, this And know some sure this segments. normal. devices international been strong where I'm I like margin and I notebook one gross to time. Sequentially, gross but than But compression have and Collin, are which is job But higher most, among SMB margin more as so I do maybe won't some horse congrats, miss that there's going margin. beat

of or on like-for-like pain increases you So And basis, inflation share? seeing that you're I to in sharing be, of would Is why? some gain eating price you guess helping a margin? that's the more the pressure gross product or question on are there some

mean, first, -- Adam. thank you. Yes, we I

This From to the of seeing an highly really bit would a the speed all that think aside, compression deeper road. And costs before. they competitive mix are that issues right? marketplace. a are of because there, putting table a normal buying that competitive, the they not seeing different some And OEM made things. but the now off You're couple that phase job I Again, think obviously overtaking that -- a the costs One, as moving the quickly more And unique we're was that, pandemic IT higher some right. in environment competitive much in a we one comments the some of where passing aggressively some is of of -- terms their way and last they're customers form the behavior. channel I go perspective, certain I've categories. I a supply that basis on characterize of to behavior. kind won't XXXX that parts increases. return in drives like in compete But every and in more supply in And as margin and so isn't the just that of normal environment invest of more the wrestling customer little in to gain just nature of product purchase challenges, input I are battling miss irrational, with I and possible them down share. things higher getting out and just to competitive they we prioritizing execution in a they're of of that point were special into incentivized the normal instances, mission-critical IT price not buying as might those where taking pricing and along programs it environment as we're

reported as of unit model, lower work a gross make $XXX for Now notebook. to a up a the per going about And you increase on math goes XX%, if, percentage. if we've of works, gross price price think about just that cost-plus do a we the talked way by years. over the argument's profit X% sake, is or on notebook we be that margin But

some the some that changes So of preceding versus some margin we're I quarters. of driving are of on dynamics product the think are the those seeing currently

comes Your Suisse. Cabral from next question Matt of with line the Credit

a public on if wanted about could infrastructure Collin, your there some side. what momentum I'm forward. my back guess, I just be also going you're balancing trends toward best more little guess extend I'd Chris, underneath desire I step the data business you hear and coming push across forward? their categories wondering are in taking customers cloud on the retirement, the or on I guess to on expand your storage, the to how seeing on-prem a this I curious into center accelerate the invest going congratulations all back, talk good move versus refresh the server, in footprint netcomm? perspective like And the for to to

back. start step let with -- a It's me

in they're about the in around or to frankly who bit of And our across are got large when who news the cautious back. that yet the aren't the to get ready quite hear -- not across employees certainly a customers tell If our returning rushing. customers, office. They're they've there those of to on planning you Small still of are both get think want I'd to and say, a back because going Commercial you, organizations little spectrum. people returning most pretty summer, the Business while are you couple you a quickly back and Those office still see and I'll still, sides

around hybrid of and world are to here couple now would as I months. to time happens to -- hybrid planning stay where flexible now what might see over a the and we vaccination right are and clearly, people where be the flexible and is that in how of pace thinking just next said, first, have accelerate say years. we're got for the So patient a customers All couple environment, calling We've environment. Hyflex our

-- in And so still we them. are we with are the planning

couple about optimize, the We of months. whether real to are more and great and cloud, to need strongly on-prem get are over really upgrade to now have throughout the call plans interest. old solutions, seeing think infrastructure and I'll readily are we we heavily still which the start phase to move whether window assessment to upgrade of it available cloud-like of, But a old it, that past to in customers more customers had some just

-- would are we're reflective. and that So still what they're I say, still Matt, more is assessing customers being

durable get approach for strategic the business reflective a mentioned, advantage of a going was measured, there be what's just year, now long competitive As term. to there's a to more And rush Collin last continuity. on kind

right infrastructure. infrastructure, would see come later We netcomm One to back mean? that hardware what is well. is all just midyear what's I getting go as on We office. seen away, hardware going on-prem server And benefits stronger. it's customers heading uptick. now. the really really expect quite to we'd are have be to the is So most more cloud year spending Obviously, a customers saw the in or not doing going as are said, optimal. really -- weighing to does there's But customers life Storage

wanted slight in and And helpful. for know the really I growth, quarter. And I sequential little commentary bit guess my the second heard I I as to That's on a I from off follow-up, a more strong much think to coming of quarter more we're the meaningfully the really business was year, last the look base. I to up prior first I quarter. quarter first back if guess typically second dig

little a wider of could trajectory or side the wondering you if bridge on in and the gap some is maybe business? bit just I'm education the So much the the just to help supply normalization speak challenges how versus just

Yes, would driver abnormal I biggest here. education say the is single seasonality

driven If across increase from the you you markets. one factor end has far, look in historically the what sequential when look is, growth by to number our education QX QX,

base. we've education typical just a we the So with And abnormal unusual much stronger about peak several season talked seasonality. quarters education or into of now come

device had a we carried just a quarter, particularly bit we say every finish driver. U.K. just the on my finish first strong quarter in But a ones touched couple in year-end I I the comments. in I public of it's the an we again, year. And the also revenue unusually prepared So and year completed that's year-end Canada. to public first know first decommissioning. but other this in then little the Census as of strong would

We with that forward. have no are Census completely going revenue done and

I over course this about, backlog one full But the don't if and have supply more terms confidence up the keep supply even sequential whittling in into the actually, that think supply in don't of I into at If quarter. to and or the is that demand, more thing with on first was growth second that point, of I provide the of -- resilient of build backlog we is We quarter. relatively was made greater, into think would demand back I if we is the this comment that other supply can down half that answers the unchanged though, just than and visibility year. some think could greater think upside begin year the the and outlook think resilient can that earlier, is. I it and our

question comes Bhattacharya the from with of next Bank Ruplu line of Your America.

Collin, give at? are best pleasure for you it to first details at and in you And distribution was centers a would retirement. spend invest you this some point what utilization areas are in? Can your with for what facility? the you CapEx And another need you you is as well. your What investing working us question on wishing running year? My

Ruplu. Thanks,

investments little of better the transformation, into we that can of lot CapEx, own terms again, own is call. with we're tools for our supply But sellers, interact making customers talked flexibility. as and going making our AI, about as our be and CDW frictionless bit resiliency digital on well a in a more that chain, transactions more our as this both how In well as those

going about So I those CapEx would across buckets. think

years, the center. of In have would X.X another another terms we -- adding distribution center, don't know I build that distribution square in a next million few foot

customers a and U.S. look perspective. working through muscles our utilization. and dynamic we how flexible thinking bringing helping and the and can, think models, that Look, doubt question and environment. There's a organizations at would and in flexing inventory Yes. choppy us and that. on this our Part across our where centers from of distribution busy. I think through more are it you to with no the I about chain supply had for Oh, is we optimize that footprint staging third-party really them configuring logistics

more more It's the and it use like renting some a flexible what over think sense term. there. we of need again, as we a model is space get the a there of in we longer So term supply tight. better of would I And look capacity until demand and short

your So is think working are that back is this given the currently gave question from you into of certain are being And morning, coworkers do the My travel year What of to the for home revenue mean, going how regions revenue working for about for able second into I guidance get sites updated And impact acceptance lockdowns, and home? the coworkers percent being customer from versus is back projects? Chris. full is certain mix year? coworkers able the you for that dependent that? of the to percent on a go

for Thanks question. the

me with first. the start Let second part

the get people customer or office when or many to Our how guidance on back dependent isn't we going sites. into on

job. So staying we've team job has done great productive. really of and great a The connected staying a done

not dependent not that. on we're So -- it's

office In of a that, of going back think terms the couple to things. about how and we

we all, of have First on of coworkers the both ends spectrum.

As still cautious most fully. be some through I mentioned the we've until eager do, before, get who pandemic are as some back are more got companies who and to we really

getting created to So started networking for way, guidance -- for customers we've together what social way. in and done around our opportunities would to with in a customer-facing coworkers a and get are to given have that together customer We've like we've together safe to coworkers and time happen. is come again who safe also who

remote way, provision service site. doing our comfortable also been have with are in now who a customers up opening we've But we us We allowing on who pandemic. very throughout which also customers are and back the have

We et have bases that cetera. are opening,

and say, we're guess well I'd I look, productivity a connectivity doing So from perspective. very

it together imagine We And country. state, in-person. are you can within or each customers on with starting to happening get depends each for example, what's

center want fits That's and with We want actually and U.K. way their continue to garden key keeps continues and I do to so we together. to We don't this in think we're just want the able for partners is than to a customers was pubs and culture together do that engaged anyone can our be going have customers But starts. to to our do how and this get -- coworkers high-performing right. customer had us. the really at back big better our we and else. serve come the event work the highly open, of together that a really

comes next of Investment. question line from Jim Your with Suva Citigroup the

they of to you to are coming back in-person kind to still mix meetings very Or see to in-person going pre-COVID do they to type and weighted? that what Or businesses notebook-centric any work As they're they PC kind some are level? small-sized of seeing and preference are back back works, come installing start of work? you and when mid-

lower spectrum. on to end a the if would take we're work, of are many I say were actually still how in scale to of the you much X back XXX, very

remotely. we number who have work a still customers So are continuing of very large to

use the For ability folks those a office in to continued mobile we're are -- the to be ability flexible around in a who office into the going What different office. way. employees, observing on move in the some basis, have and going the office a is the back investment

more Things do density have that And depends we're in question the like what that's more of have obviously, environment notebook industry. even office? your are what that who they is be that's enterprise-level collaboration in term. if flexible in So Now can notebooks, do office discussion that contemplating move I notebooks, hoteling at higher customers the around overall, expect and capabilities. some home? of really is, the mobile our points includes would end home coworkers, the and spaces customers lockers -- collaboration We what long desktop and are really whether a work our need employees are doing have the of the ability say take have you to And preponderance more is for a to with you over hybrid But devices view to the on helpful. for a it to work and seeing the now.

school? stocked Or lapping what's be they and sectors, and to installations? do more not that Are they Or Chromebook going are PC going there procurement cycle to X aren't? of going kind Just going of districts up summer less education COVID, they who do and Or very Great. to of in the still we're be of catch and this are to kind are kind a like more, needing notebook And the for back now view much to some of others be are that. going a to they little for maybe curious like your and they because who more are dependent? Chromebook year are government schools infrastructure? actually fully lot for

and continues to they're K-XX get also schools the trying device to such I ratio access start that one-on-one to remain and is might loss, equity happened have for to there are that are gaps if pandemic. for demand a I something a I'll gap Device as referring over these K-XX, learning couple education, because of about with guess Yes. to strong that there think things.

headroom of compares for plenty going With there's So last face are forward. regard CDW, devices to what from we tough year.

tough So if you year, think last growth demand is very our strong. about but compares, the over

walls they're experience, use looking the much at that ways. in of outside hybrid ways the more experience, technology really as are all The -- that experience, of classroom the other figure a going with figuring thing optimal they within in-class. classroom Schools but blended schools have we're out be next school creative to I would learning and or a the can the would say classroom working -- create school year, and is, the schools within into most how to we're

call I flat upticks infrastructure, newer then are particular interactive solutions an from that getting older work screen panels we but would expect So see availabilities of and and of think there old it perspective, audio now, And visual. networking there. to are better. The

So that's help classroom. really another opportunity the to modernize

opportunity strong well. will the So network demand opportunity remain a be net-net, with for to infrastructure, for and will but good regard as devices, augmentation video

Sheerin Stifel. with line from Your the Matt next question of comes

seems to there, being companies Windows started the out when to PC leveling that And upgrade or I regarding obviously and some like devices going still years backlog. just lapping it XX. constraints question X-year given off another the upgrade point but there's cycle talk the been wanted now. anniversary There's X on that's to down, X client also to be ask seem we're at the to

you to talk upgrade devices notebook client and and So the cycle thoughts there? could your

Sure, Yes. Matt.

Let me and -- about bit we'll maybe talk a headwinds. little tailwinds

density. We've the in think new how engage tailwinds, our in for seen device work certainly, and for and with talked learning So Then new there or when we've great example, remote-enabled ways. Catalyst, terms need devices, a customers lot about we their cases. it's of today, that customers use about uptick are more remote a whether in

demand got you've So from there.

we leverage Corporate nicely, pretty last to year We've got low. through. then flowing have those And Small got are ability also and You've are get over the recovering the stimulus. that and our -- leverage the dollars comparables Business segments

in positives we some got refresh go you we've to refresh, expect Then absolutely, see have So mentioned 'XX, continue there. to the XXXX and seen that would and on.

are we selling into So that.

to our side, thing is would picking On devices the been the last K-XX. in then we're client frankly, the There's overlaps we And in solutions. segments still the of big XXXX endpoint the like it's though some strong. headwind headwinds had wildcard, economy including just employment to Small is challenges helpful, there. up, over otherwise, a regard that's with and visibility space And the the Business look, quite lot But for emphasize that real continued I facing. be demand and looks

I from Okay. And strong for looking are including coworker a continue additional just relatively this the demand? year But XX your you last quick about, to expand coworkers, count outlook given the headcount, XXX the to acquisition. talked think, you one regarding

going are continue acquisitions in invest business, as it's Collin our mentioned. transformation, coworkers, absolutely We or Yes. to whether other to digital

coworkers. our in invest to continue will certainly we So

of Keith next question comes from Northcoast. with the Housum Your line

Collin, I'll retirement. on congratulations echo a

to that customers this CDW their of hands? into the terms power, I pricing some just that chain fact it's any the its In currently have product in, of does guess, supply we're in of get environment with some harder

per se. No, power Keith, I wouldn't think pricing

competitive think probably supply is least on to advantage the our to share. I secure ability the more available at tenants and getting the fair

willing ultimately, wait. ability And say, or quarters function couldn't now is different wasn't environment the ago, customer to price think willingness and of the through think competitive versus, X, X your to I wait. it what's customer's that's where a the I

will huge know say. opportunity is would So incremental along there's pass what I a to what bear pricing that I don't market beyond the

products? Fair the Or side? components that's the enough. they Fair are the enough. on facing, chain logistical side on are you're And in terms that more into going challenges more supply the challenges final of the

say glass of would the I -- it's all challenges associated I and then, of and The challenges -- and of natural things that. those the processor ports well like canals it And obviously, both. again, all with -- mean, documented, logistics and the things. is but shortage just disasters components

So events of are it impacting confluence a supply. is that really

CEO, back President questions. closing no now further have call for We to the remarks. will and I turn Leahy, Chris

Thank to all of customers, to today. to on dedication and the committed the incredible our you. call really I CDW you everyone they're our extraordinarily would of And stakeholders. recognize coworkers serving around globe the our thank our and approach like partners

it bring support appreciate continued serve call, this and Our for every in and with interest customers analysts To quarter. you. participating and single we coworkers CDW, and to we And investors next look the opportunity of you. forward our Thank you to our you you to day. again thank your and privilege talking

concludes This conference call. today's

may You now disconnect.