CDW (CDW) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were $5.5 billion, down 2.0% year-over-year, with gross profit of $1.2 billion and a stable gross margin of 21.8%.

• Operating income increased 0.7% to $482 million, while net income was stable at $316 million; non-GAAP net income per share was $2.63, down 3.2%.

• Market conditions were challenging, with strong demand for cloud and services but continued pressure on hardware and elongated sales cycles.

• Actions underway include growing cloud and software capabilities, enhancing digital customer experience, and improving sales productivity.

• Board approved a quarterly cash dividend of $0.625 per share, payable December 2024, marking the 11th consecutive year of increases.

Financial highlights

• Gross profit for Q3 2024 was $1.2 billion, down 2.2% year-over-year, with gross margin steady at 21.8%.

• Non-GAAP operating income was $534 million, down 4% year-over-year; non-GAAP operating income margin was 9.7%.

• Adjusted free cash flow was $261 million for the quarter and $764 million year-to-date; free cash flow for nine months was $838 million.

• Net debt at period end was $4.87 billion, with cash and equivalents at $947 million.

• Cash conversion cycle averaged 17 days, up from 15 days a year ago.

Outlook and guidance

• 2024 gross profit expected to decline low single digits, with gross margin similar to 2023.

• Full-year non-GAAP EPS expected to be down mid-single digits year-over-year.

• Fourth quarter guidance anticipates low to mid-single digit gross profit declines and high single-digit EPS decline year-over-year.

• U.S. IT market expected to be roughly flat with 2023; company targets outperformance by 200–300 bps.

• Annual adjusted free cash flow expected at 80–90% of non-GAAP net income; capex $120–140 million.