CDW Corporation EBITDA jumped on 11.0% and EBITDA Margin increased slightly on 0.69 pp from 8.3% to 9.0%
02/10/2021 • About CDW Corporation (
$CDW) • By InTwits
CDW Corporation reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 9.0% in 2020 vs. 8.3% in 2019 vs. 7.7% in 2016
- CDW Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.7%.
- The company has highly profitable business model: ROIC is 23.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.6x while industry average is -0.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 2.4%. Revenue growth showed acceleration in 20Q4 - it increased 9.2% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.7 pp from 1.4% to 4.1% in 2020. EBITDA Margin followed a growing trend at 0.33 pp per annum in 2016-2020.
Gross Margin increased slightly on 0.52 pp from 16.9% to 17.4% in 2020. During 2016-2020 Gross Margin bottomed in 2017 at 16.5% and was growing since that time. SG&A as a % of Revenue showed almost no change in 2020. During 2016-2020 SG&A as a % of Revenue bottomed in 2019 at 10.6%.
Net Income margin showed almost no change in 2020. Net Income margin stuck to a growing trend at 0.30 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
CDW Corporation's CAPEX/Revenue was 0.86% in 2020. CAPEX/Revenue showed almost no change from 2017 to 2020. It's average level of CAPEX/Revenue for the last three years was 0.90%.
Return on investment
The company operates at high and attractive ROIC (23.5%) and ROE (69.9%). ROIC decreased on 2.5 pp from 26.0% to 23.5% in 2020. ROE decreased on 6.3 pp from 76.1% to 69.9% in 2020. During the last 5 years ROIC topped in 2019 at 26.0%. ROE grew at 8.5 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 1.6x Net Debt / EBITDA and 2.5x Debt / EBITDA. Net Debt / EBITDA dropped on 0.6x from 2.2x to 1.6x in 2020. Debt surged on 18.5% while cash jumped on 816%. Net Debt/EBITDA declined at -0.3x per annum in 2016-2020.
CDW Corporation has no short term refinancing risk: cash is higher than short term debt (1,461.3%).
Valuation and dividends
CDW Corporation's trades at EV/EBITDA 15.2x and P/E 28.4x.
Management team
CDW Corporation's CEO Christine A Leahy "Chris" has spent 2 years with the company. The company's CFO is Collin B Kebo. Collin B Kebo has 3 years tenure at the company.
Financial and operational results
FY ended 12/31/2020
CDW Corporation ($CDW) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 13,982 | 14,833 | 16,241 | 18,032 | 18,468 | 2.4% |
| Gross Profit | 2,327 | 2,450 | 2,707 | 3,040 | 3,210 | 5.6% |
| SG&A | 1,508 | 1,584 | 1,720 | 1,906 | 2,031 | 6.5% |
| EBITDA | 1,074 | 1,127 | 1,253 | 1,494 | 1,658 | 11.0% |
| EBIT | 819 | 867 | 987 | | | |
| Tax | 248 | 138 | 198 | | | |
| Net Income | 424 | 523 | 643 | 737 | 789 | 7.0% |
| Stock Based Compensation | 39 | 44 | 41 | | | |
Balance Sheet
|
|---|
| Cash | 264 | 144 | 206 | 154 | 1,410 | 815.7% |
| Accounts Receivable | 2,169 | 2,329 | 2,671 | | | |
| Inventory | 452 | 412 | 454 | | | |
| Accounts Payable | 1,653 | 1,816 | 2,006 | | | |
| Short Term Debt | 19 | 26 | 25 | 64 | 97 | 50.3% |
| Long Term Debt | 3,216 | 3,210 | 3,183 | 3,414 | 4,025 | 17.9% |
Cash flow
|
|---|
| Capex | 64 | 81 | 86 | 236 | 158 | -33.1% |
| Dividends | 79 | 107 | 139 | | | |
Ratios
|
|---|
| Revenue growth | 7.6% | 6.1% | 9.5% | 11.0% | 2.4% | |
| EBITDA growth | 10.8% | 5.0% | 11.1% | 19.2% | 11.0% | |
|
|---|
| Gross Margin | 16.6% | 16.5% | 16.7% | 16.9% | 17.4% | 0.5% |
| EBITDA Margin | 7.7% | 7.6% | 7.7% | 8.3% | 9.0% | 0.7% |
| EBIT Margin | 5.9% | 5.8% | 6.1% | | |
| SG&A, % of revenue | 10.8% | 10.7% | 10.6% | 10.6% | 11.0% | 0.4% |
| SBC, % of revenue | 0.3% | 0.3% | 0.3% | | |
| Net Income Margin | 3.0% | 3.5% | 4.0% | 4.1% | 4.3% | 0.2% |
| CAPEX, % of revenue | 0.5% | 0.5% | 0.5% | 1.3% | 0.9% | -0.5% |
|
|---|
| ROIC | 18.8% | 20.1% | 23.1% | 26.0% | 23.5% | -2.5% |
| ROE | 39.6% | 51.5% | 65.6% | 76.1% | 69.9% | -6.3% |
| Net Debt/EBITDA | 2.8x | 2.7x | 2.4x | 2.2x | 1.6x | -0.6x |
People
|
|---|
| Insider ownership | 1.2% | 1.2% | 1.2% | | | |
| Employees | 8,516 | 8,726 | 9,019 | | | |
| Revenue/Employee, th. $ | 1,642 | 1,700 | 1,801 | | | |
CDW Corporation ($CDW) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 4,389 | 4,366 | 4,756 | 4,956 | | 10.9% | -5.7% | -3.1% | 9.2% |
| EBITDA | 337 | 409 | 450 | 409 | | 11.1% | 6.5% | 2.4% | 11.4% |
| Net Income | 168 | 189 | 193 | 238 | | 9.8% | -3.8% | -4.2% | 28.4% |
Balance Sheet
|
|---|
| Cash | 214 | 958 | 1,250 | 1,410 | | -24.8% | 392.8% | 648.7% | 815.7% |
| Short Term Debt | 34 | 38 | 72 | 97 | | -67.2% | -61.2% | 29.1% | 50.3% |
| Long Term Debt | 3,568 | 4,000 | 4,010 | 4,025 | | 6.5% | 19.8% | 20.0% | 17.9% |
Ratios
|
|---|
| Gross Margin | 17.2% | 17.1% | 17.4% | 17.8% | | 0.3% | 0.4% | 0.7% | 0.6% |
| EBITDA Margin | 7.7% | 9.4% | 9.5% | 8.2% | | 0.0% | 1.1% | 0.5% | 0.2% |
| Net Income Margin | 3.8% | 4.3% | 4.1% | 4.8% | | -0.0% | 0.1% | -0.0% | 0.7% |
Peers in Technology Distributors
Below you can find CDW Corporation benchmarking vs. other companies in Technology Distributors industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Galaxy Next Generation Inc ($GAXY) | - | 3.7% | - | - | 23.3% |
| Wayside Technology Group, Inc. ($WSTG) | - | -61.6% | 13.0% | 15.1% | 20.5% |
| Insight Enterprises, Inc. ($NSIT) | - | 22.2% | 5.6% | 9.2% | 7.9% |
| Synnex Corporation ($SNX) | - | 21.2% | 17.6% | 18.5% | 3.9% |
| EACO Corp ($EACO) | - | 5.7% | 23.1% | 14.5% | 1.8% |
| |
|---|
| Median (8 companies) | 5.3% | 4.2% | 8.3% | 14.5% | 2.8% |
|---|
| CDW Corporation ($CDW) | - | 6.1% | 9.5% | 11.0% | 2.4% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Galaxy Next Generation Inc ($GAXY) | 70.0% | 61.4% | - | 6.1% | 51.0% |
| EACO Corp ($EACO) | 29.3% | 28.5% | 28.5% | 27.7% | 27.2% |
| ADDvantage Technologies Group, Inc. ($AEY) | 32.2% | 30.4% | 23.7% | 16.5% | 23.3% |
| PC Connection, Inc. ($CNXN) | 13.8% | 13.1% | 15.2% | 16.0% | 16.2% |
| Insight Enterprises, Inc. ($NSIT) | 13.5% | 13.7% | 14.0% | 14.7% | 15.6% |
| |
|---|
| Median (8 companies) | 13.8% | 16.9% | 15.6% | 14.5% | 15.9% |
|---|
| CDW Corporation ($CDW) | 16.6% | 16.5% | 16.7% | 16.9% | 17.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| EACO Corp ($EACO) | 4.7% | 4.5% | 5.9% | 6.4% | 6.6% |
| Synnex Corporation ($SNX) | 3.6% | 3.9% | 3.9% | 5.0% | 5.7% |
| Insight Enterprises, Inc. ($NSIT) | 3.4% | 3.3% | 4.1% | 4.0% | 4.4% |
| Arrow Electronics, Inc. ($ARW) | 4.4% | 4.1% | 4.5% | 1.4% | 4.1% |
| PC Connection, Inc. ($CNXN) | 3.4% | 3.1% | 3.7% | 4.6% | 3.5% |
| |
|---|
| Median (8 companies) | 3.4% | 3.5% | 4.0% | 4.3% | 3.8% |
|---|
| CDW Corporation ($CDW) | 7.7% | 7.6% | 7.7% | 8.3% | 9.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| EACO Corp ($EACO) | 0.3% | 5.5% | 0.8% | 0.8% | 3.0% |
| ADDvantage Technologies Group, Inc. ($AEY) | 0.8% | 0.4% | 0.3% | 1.1% | 1.2% |
| Synnex Corporation ($SNX) | 0.9% | 0.6% | 0.6% | 0.6% | 0.8% |
| Galaxy Next Generation Inc ($GAXY) | 0.0% | 15.1% | - | 0.0% | 0.8% |
| Arrow Electronics, Inc. ($ARW) | 0.7% | 0.8% | 0.5% | 0.5% | 0.4% |
| |
|---|
| Median (8 companies) | 0.4% | 0.5% | 0.5% | 0.7% | 0.6% |
|---|
| CDW Corporation ($CDW) | 0.5% | 0.5% | 0.5% | 1.3% | 0.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| EACO Corp ($EACO) | 22.2% | 16.1% | 21.2% | 23.0% | 14.6% |
| Insight Enterprises, Inc. ($NSIT) | 20.7% | 19.3% | 20.0% | 14.7% | 13.7% |
| Synnex Corporation ($SNX) | 13.5% | 13.7% | 9.6% | 11.6% | 11.7% |
| Arrow Electronics, Inc. ($ARW) | 12.5% | 12.1% | 13.3% | 1.4% | 11.3% |
| PC Connection, Inc. ($CNXN) | 18.6% | 16.6% | 17.0% | 19.6% | 11.2% |
| |
|---|
| Median (8 companies) | 12.1% | 9.9% | 11.2% | 14.7% | 11.3% |
|---|
| CDW Corporation ($CDW) | 18.8% | 20.1% | 23.1% | 26.0% | 23.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Arrow Electronics, Inc. ($ARW) | 2.2x | 2.3x | 2.2x | 7.5x | 1.9x |
| Synnex Corporation ($SNX) | 1.2x | 2.1x | 3.9x | 2.4x | 1.3x |
| Insight Enterprises, Inc. ($NSIT) | -0.9x | 0.9x | 0.2x | 2.7x | 1.1x |
| EACO Corp ($EACO) | -0.7x | 1.2x | 0.5x | 0.5x | 1.0x |
| PC Connection, Inc. ($CNXN) | -0.5x | -0.6x | -0.9x | -0.6x | -0.9x |
| |
|---|
| Median (6 companies) | 0.1x | 0.9x | 0.5x | 1.4x | 1.1x |
|---|
| CDW Corporation ($CDW) | 2.8x | 2.7x | 2.4x | 2.2x | 1.6x |
