CDW Beats On Q2 Earnings Aided By Economic Recovery, Declares Dividend, Raises FY21 Outlook

CDW Corp CDW reported second-quarter FY21 net sales growth of 17.9% year-on-year to $5.15 billion, beating the analyst consensus of $4.96 billion.
Average daily sales rose 17.9% Y/Y to $80.4 million.
Net sales from the Total Corporate segment increased 27.3% Y/Y to $1.98 billion, and the Total Small Business segment rose 59.8% to $483 million.
Total Public segment net sales improved 2.9% to $2.1 billion. An increase in net sales to Education customers by 26.8% and Healthcare customers by 7.0% drove the growth. Net sales to Government customers decreased 28.7%.
Net sales for CDW's UK and Canadian operations, combined as "Other" for financial reporting purposes, grew 23.8% Y/Y to $600 million.
Gross profit increased 18.2% to $883 million, and the gross margin expanded ten bps to 17.2%. An increase in the mix of net service contract revenue, primarily Software as a Service, and increased net sales and margins on professional services drove the expansion.
The non-GAAP operating margin expanded 40 bps to 8.1%.
Non-GAAP EPS of $2.02 beat the analyst consensus of $1.80.
CDW generated $344.9 million in operating cash flow during the six months ended Jun. 30. The company held $501.2 million in cash and equivalents.
CDW's board approved a quarterly cash dividend of $0.40 per share payable on Sep. 10 to stockholders of record on Aug. 25.
"Demand from commercial customers increased sharply as economies rebounded and customers turned to CDW for expertise across the full technology solutions stack," said CEO Christine A. Leahy.
Outlook: CDW expects to exceed its 2021 outlook to outpace US IT market growth by 200 bps- 300 bps on a constant currency basis.
CDW raised 2021 constant currency non-GAAP EPS growth expectations from low double-digits to the mid-teens versus the analyst consensus of $7.38.
Price action: CDW shares traded higher by 1.24% at $187.35 on the last check Wednesday.

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