CDW's Challenging Quarter: Missed Sales Targets, Decline Across Key Segments

CDW Corp CDW shares are trading lower after the company reported worse-than-expected fiscal first-quarter 2024 results.

Net sales declined 4.5% Y/Y to $4.87 billion, missing the consensus of $5.00 billion. 

Adjusted EPS of $1.92 missed the consensus of $2.15. 

Net sales from the Total Corporate segment declined 3.1% Y/Y to $2.14 billion, and the Total Small Business segment decreased 7.4% Y/Y to $381 million.

Total Public segment net sales fell 4.9% Y/Y to $1.73 billion due to a decline in net sales to Education customers by 10.4% Y/Y.

Net sales for CDW's U.K. and Canadian operations, combined as "Other" for financial reporting purposes, fell 6.5% Y/Y to $631 million.

Average daily sales fell 4.5% Y/Y to $76.1 million. Gross margin expanded to 21.8% from 21.3% a year ago, aided by a more favorable contribution of netted-down revenue, primarily software as a service.

The adjusted operating margin was 8.3% vs. 8.5% a year ago. 

CDW held $803.8 million in cash and equivalents as of March 31, 2024.

Dividend: CDW declared a quarterly cash dividend per share of 62 cents.

“First quarter IT market conditions were weaker than expected, with caution, concern, and complexity adversely impacting customers’ capital investment decisions and elongating customer decision-making. The resulting decline in solutions spend was partially offset by demand for client devices,” CFO Albert J. Miralles said. “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.”

CDW stock gained 42% in the last 12 months. Investors can gain exposure to the stock via Argent Mid Cap ETF AMID and Professionally Managed Portfolios Congress SMid Growth ETF CSMD.

Price Action: CDW shares are down 10.2% at $217.24 at last check Wednesday.

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Image generated using artificial intelligence via Midjourney.