CDW Clocks 23% Net Sales Growth In Q1; Margins Expand On Favorable Product Mix

CDW Corp CDW reported first-quarter FY22 net sales growth of 23% year-on-year to $5.95 billion, beating the consensus of $5.67 billion. Average daily sales rose 23% Y/Y to $94.4 million.
Net sales from the Total Corporate segment increased 45.5% Y/Y to $2.63 billion, and the Total Small Business segment rose 21.1% to $524 million.
Total Public segment net sales grew 5.8% to $2.03 billion. An increase in net sales to Healthcare customers by 26.8% and Government customers by 5.4% drove the growth. Net sales to Education customers decreased by 4.3%.
Net sales for CDW's U.K. and Canadian operations, combined as "Other" for financial reporting purposes, grew 12.8% Y/Y to $765 million.
Margins: Gross margin expanded by 220 bps to 18.6%, driven by a more favorable product mix and rate, a higher mix of net service contract revenue, primarily within SaaS, and increased net sales and margins on professional services. The non-GAAP operating margin was flattish at around 7.8%.
Non-GAAP EPS of $2.20 beat the consensus of $2.01.
CDW held $386.9 million in cash and equivalents.
Dividend: CDW board approved a quarterly cash dividend per share of $0.50, payable on June 10, 2022, to all stockholders of record on May 25, 2022.
Outlook: CDW reiterated its expectation to exceed its 2022 outlook to outpace U.S. IT market growth by 200 bps - 300 bps on a constant currency basis.
Price Action: CDW shares closed higher by 2.16% at $167.68 on Tuesday.

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