CDW Shares Are Trading Lower After CFO Retirement, Q1 Earnings Beat

CDW Corp CDW reported first-quarter FY21 revenue growth of 10.2% year-on-year to $4.838 billion, beating analysts consensus of $4.61 billion. Average daily sales rose 12% Y/Y to $76.8 million.
Total Corporate segment net sales declined 4% to $1.806 billion; Total Small Business segment net sales rose 12.3% to $433 million; Total Public segment net sales rose 28% to $1.922 billion; Net sales to Education customers of 101.2% Y/Y to $943.3 million; Net sales to Government and Healthcare customers declined 7.8% and 2.3%, respectively to $516.1 million and $462.3 million.
Net sales for CDW's U.K. and Canadian operations rose 22.6% Y/y to $678 million.
The gross margin contracted 80 basis points due to lower product margin, including notebook mix and rate, and overlapping higher-margin configuration services in the previous year, partially offset by an increase in the mix of netted down revenues, primarily Software as a Service.
Non-GAAP operating income rose 21% to $368 million, with the margin expanding 70 basis points to 7.6%.
Non-GAAP net income rose 24.7% to $249 million and adjusted EPS of $1.74 beat analyst consensus of $1.53.
The board approved a quarterly cash dividend of $0.40 to be paid on June 10, 2021.
The company held $878.6 million in cash and equivalents and generated $344.6 million in operating cash flow.
The diversity of customer end markets and solutions portfolio drove the Q1 results, CEO Christine A. Leahy said.
Guidance: Kebo expected 2021 constant currency Non-GAAP EPS growth of low double-digits and exceed the previous 2021 outlook of outpacing the U.S. IT market growth by 200 to 300 basis points on a constant currency basis.
CFO Collin B. Kebo is retiring for family time and other commitments. He will be in the role for a smooth transition with a successor.
Price action: CDW shares traded lower by 1.77% at $173.18 on the last check Wednesday.

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