CDW Stock Gains On Solid Q2 Beat; Sales Decline 8.5%

CDW Corp CDW reported a Q2 FY23 net sales decline of 8.5% Y/Y to $5.63 billion, beating the consensus of $5.40 billion. 

Average daily sales fell 8.5% Y/Y to $87.9 million. 

Net sales from the Total Corporate segment declined 15.6% Y/Y to $2.25 billion, and the Total Small Business segment decreased 20.8% Y/Y to $396 million.

Total Public segment net sales grew 2.3% Y/Y to $2.30 billion, led by an increase in net sales to Government customers by 11.8% Y/Y.

Net sales for CDW's U.K. and Canadian operations, combined as "Other" for financial reporting purposes, fell 7.0% Y/Y to $690 million.

Margins: Gross margin expanded to 21.0% from 19.0% a year ago, aided by higher product margin on the lower mix in notebooks, increased rate across various categories, and a favorable mix of netted down revenue (mainly within software as a service).

The non-GAAP operating margin was around 9.4% vs. 8.4% a year ago.

Non-GAAP EPS of $2.56 beat the consensus of $2.35. 

CDW held $203.9 million in cash and equivalents as of June 30, 2023.

Dividend: CDW declared a quarterly cash dividend per share of $0.59, payable on September 12, 2023, to stockholders of record as on August 25, 2023.

"Through this ongoing period of economic uncertainty, customers continue to turn to CDW to address their mission-critical IT and operational needs across the full IT solutions stack and lifecycle. We remain well-positioned to attain our target of exceeding US IT market growth by 200 to 300 basis points on a constant currency basis. To achieve this, we will continue our laser focus on meeting the needs of our more than 250,000 customers around the globe and remaining the partner of choice for more than 1,000 leading and emerging technology brands as the IT market continues to evolve," stated Christine A. Leahy, chair and chief executive officer. 

Price Action: CDW shares are trading higher by 6.66% at $199.80 on the last check Wednesday.