INVESTOR PRESENTATION Fall 2017
DISCLAIMERS Forward-Looking Statements Statements in this document that are not statements of historical fact are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including without limitation statements regarding the future financial performance of CDW. These statements involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. These risks and uncertainties include, among others, global and regional economic conditions; decreases in spending on technology products; CDW's relationships with vendor partners and availability of their products; continued innovations in hardware, software and services offerings by CDW's vendor partners; substantial competition that could reduce CDW's market share; CDW's substantial indebtedness and ability to generate sufficient cash to service such indebtedness; restrictions imposed by agreements relating to CDW's indebtedness on its operations and liquidity; changes in, or the discontinuation of, CDW's share repurchase program or dividend payments; the continuing development, maintenance and operation of CDW's information technology systems; potential breaches of data security; potential failures to comply with Public segment contracts or applicable laws and regulations; potential failures to provide high-quality services to CDW's customers; potential losses of any key personnel; potential interruptions of the flow of products from suppliers; potential adverse occurrences at one of CDW's primary facilities or customer data centers; CDW's dependence on commercial delivery services; CDW's exposure to accounts receivable and inventory risks; fluctuations in foreign currency; future acquisitions or alliances; fluctuations in CDW's operating results; current and future legal proceedings and audits; potential acceleration of CDW's deferred cancellation of debt income; and other risk factors or uncertainties identified from time to time in CDW's filings with the SEC. Although CDW believes that the expectations reflected in such forwardlooking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Reference is made to a more complete discussion of forwardlooking statements and applicable risks contained under the captions "Forward-Looking Statements" and "Risk Factors" in CDW's Annual Report on Form 10-K for the year ended December 31, 2016 and subsequent filings with the SEC. CDW undertakes no obligation to update or revise any of its forward-looking statements, whether as a result of new information, future events or otherwise unless required by law. Non-GAAP Financial Information EBITDA is defined as consolidated net income before interest expense, income tax expense, depreciation and amortization. Adjusted EBITDA, which is a measure defined in the Company s credit agreements, means EBITDA adjusted for certain items which are described in the financial statement tables on investor.cdw.com ( Non-GAAP Reconciliations ). Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of Net sales. Non-GAAP net income excludes, among other things, charges related to the amortization of acquisition-related intangible assets, equity-based compensation, acquisition and integration expenses, and gains and losses from the extinguishment of long-term debt. Consolidated net sales growth on a constant currency basis is defined as consolidated net sales growth excluding the impact of foreign currency translation on net sales compared to the prior period. EBITDA, Adjusted EBITDA, Non-GAAP net income, Non-GAAP net income per diluted share, Non-GAAP net income per diluted share, on a constant currency basis, organic net sales, consolidated and organic net sales growth on a constant currency basis are considered non-gaap financial measures. Generally, a non-gaap financial measure is a numerical measure of a company s performance or financial position that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP net income per diluted share on a constant currency basis is defined as Non-GAAP net income per diluted share excluding the impact of foreign currency translation on Non-GAAP net income per share compared to the prior period. Organic net sales growth is defined as net sales growth excluding the impact of acquisitions within the last twelve months. Organic net sales growth on a constant currency basis is defined as organic net sales growth excluding the impact of foreign currency translation on organic sales compared to the prior period. The Company believes these measures provide analysts, investors and management with helpful information regarding the underlying operating performance of the Company s business, as they remove the impact of items that management believes are not reflective of underlying operating performance. The Company uses these measures to evaluate period-over-period performance as management believes they provide a more comparable measure of the underlying business. Additionally, Adjusted EBITDA is a measure in the credit agreement governing our Senior Secured Term Loan Facility ( Term Loan ) used to evaluate the Company s ability to make certain investments, incur additional debt and make restricted payments, such as dividends and share repurchases, as well as whether the Company is required to make additional principal prepayments on the Term Loan beyond the quarterly amortization payments. Our medium term annual targets are provided on a non-gaap basis because certain reconciling items are dependent on future events that either cannot be controlled, such as currency impacts or interest rates, or reliably predicted because they are not part of the Company's routine activities, such as acquisition and integration expenses. The financial statement tables available on investor.cdw.com ( Non-GAAP Reconciliations ) include a reconciliation of non-gaap financial measures to the applicable most comparable GAAP financial measures. Non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. 2
CDW OVERVIEW Market-leading provider of integrated technology solutions to business, government, education and healthcare customers for 30+ years Based in Illinois, ~7,500 coworkers in North America and ~1,000 in the UK; ~2/3 are customer-facing Full range of hardware, software and services technology solutions Offers 100,000+ products and services from 1,000+ brands to more than 250,000 customers in the US, UK and Canada Sweet spot is customers with <5,000 employees Attractive business model with demonstrated track record of profitable growth Net Sales ($bn) $7.2 $8.8 $9.6 $10.1 $10.8 $12.1 GAAP Net Inc. & Adj. EBITDA¹ ($mm) $13.0 $14.0 2009 2010 2011 2012 2013 2014 2015 2016 ($373) $465 $602 ($29) $17 $717 $767 $809 $119 $133 $245 $907 $1,019 $403 $424 $1,117 2009 2010 2011 2012 2013 2014 2015 2016 GAAP Net Income (Loss) Adj EBITDA $ Strong ROWC: 55% 2 3 ¹ Please see Adj. EBITDA reconciliation to net income (loss) on page 27 2 Please see ROWC calculation on page 29
RECENT PERFORMANCE AGAINST ANNUAL TARGETS Q2 2017 Medium-Term Targets 2016-2018 Average Daily Sales Growth 1 % 9.0% 2 U.S. IT growth + 200-300bps in constant currency Adjusted EBITDA 3 Margin % 7.9% High 7% to 8% Non-GAAP EPS Growth% 10.0% 4 Low double-digits in constant currency 1 Consolidated constant currency growth = 9.8%. Please see reconciliation on page 32 2 There were 64 selling days for the three months ended June 30, 2017 and 2016. 3 Defined as Adj. EBITDA/Net Sales. Please see reconciliation on page 30 4 Please see Non-GAAP Net Income per diluted share, on a constant currency basis reconciliation on page 31. Consolidated constant currency growth = 10.8% 4
LARGE AND GROWING MARKET OPPORTUNITY Large Market Size and Attractive Growth Profile Partners Increasingly Reliant on the Indirect Channel Total US, UK and Canada IT Market 2 : ~$890B Direct 40% CDW Current Addressable Market 1 : ~$290B Indirect 60% CDW $14.0B 2015-2019 CAGR IT Spending: 3.0%² Increased ~300bps since 2007 3 1 IDC, Company 10-Ks, Wall Street research, VAR500 database, CDW internal estimates as of 11/2016 2 IDC Worldwide Black Book, 11/16/2016, includes Consumer and B2B for US, UK and Canada markets 3 IDC Routes to Market, 11/1/2016 5
SUSTAINED MARKET SHARE GAINS ACROSS BUSINESS CYCLES US IT Spending Growth 8.3% 1 CDW Net Sales Growth 2 9.0% 490 bps 6.9% 270 bps 430 bps 3.4% 4.2% 4.7% 2001-2016 2005-2016 2009-2016 Top 5 Providers 3 Represent ~10% of CDW s US Addressable Market Majority of the Market is Fragmented Across Thousands of Value-Added Resellers 6 1 IDC Worldwide Black Book, 11/16/16 2 2016 Organic Net Sales only, excluding CDW UK. Please see reconciliation on page 33 3 Estimated market share for top 5 publicly traded companies: CDW, Insight North America, PC Connection, PC Mall, and e-plus as of 12/31/2016.
UNIQUELY POSITIONED TO DELIVER CUSTOMER AND PARTNER VALUE Vendor Partner Value CDW Intimate Knowledge of IT Environment and Landscape VALUE TO VENDOR PARTNERS: More than 250,000 customers Large and established customer channels Strong distribution and implementation capabilities Customer relationships driving insight into technology roadmaps VALUE TO CUSTOMERS: Broad selection of multi-branded IT solutions Value-added services Highly-skilled specialists and engineers Solutions across IT lifecycle 7 CDW Sits Between Customers and Vendor Partners Creating Value for Both
BALANCED PORTFOLIO OF CUSTOMER CHANNELS 2016 Net Sales ($14B) Net Sales Growth % Healthcare Other (Canada, UK) $1.4 Corporate (>250 coworkers) '08-'09 Growth (Other includes ATS & Canada) -22% -18% 11% 3% 0% Total Growth -4% (11%) $1.7 $5.9 '09-'11 CAGR (Other includes ATS & Canada) 19% 14% 3% 7% 30% 29% 16% Education (K-12, Higher Ed) $2.0 09-'15 CAGR (Other includes ATS & Canada) 11% 5% 5% 10% 15% 14% 10% $1.9 Government (Federal, State & Local) $1.1 Small Businesses (<250 coworkers) 15 16 Growth Other Includes Canada & CDW UK (Aug 2015-Dec 16) 0% 5% 10% 11% 3% 63% 8% Diverse Customer Channels and Geography Create Multiple Drivers of Growth and Diversification Against Macro and Exogenous Headwinds 8
LEADING SALES CHANNEL FOR KEY VENDOR PARTNERS Major Vendor Partners Emerging Vendor Partners Mission-Critical for Key Vendors 9
PROVEN TRACK RECORD OF EVOLVING WITH IT TRENDS Highly Integrated and Interconnected Technology Ecosystem Complexity / Productivity and Growth Benefits Hardware and Software Products Printers Storage Networking Electronics Monitors Software Cables Servers Computers Accessories Office Services 10 Early 2000s Products Current Integrated Solutions
HIGHLY-SKILLED SALES AND SERVICES CAPABILITIES Total Coworkers Increased by 36%* Specialists Advanced Services Delivery Engineers +93% Field Sellers Account Managers +30% 2006 2016 * North American operations Specialists and Engineers Allow CDW to Deliver Increasingly Complex IT Solutions 11
HIGHLY SKILLED TECHNICAL ORGANIZATION CLOUD Cloud Planning Services World class portfolio Migration, Integration and Managed SOFTWARE Software Lifecycle Advisory Services Design and Optimization Services Portfolio Management DIGITAL WORKSPACE Network Solutions Consult, Design and Architect Communications, Mobility and Productivity SECURITY Architecture and Design Advisory Services Managed Security SERVICES IT Advisory Service IT Architecture Services IT Managed Services DATA CENTER Hybrid Consultancy Converged and Hyperconverged Infrastructure Software Defined Data Center 5,400+ 150+ 880+ certifications ITIL certifications technology engineers 12
COMPREHENSIVE SUITE OF CLOUD SOLUTIONS Public, Private and Hybrid >250 SaaS, IaaS and PaaS offerings 30+ Categories 70+ Partners 13
CAPTURING SHARE IN GROWING SOLUTIONS AREAS 70% 24% 23% 29% 3% 8% 15% 7% 7% 7% 3% 14% Data Center Unified Communications Security Mobility Cloud Services Projected 2013-2016 Market CAGR 1 CDW Customer Spend Growth 2013-2016 2 Enabling Customers to Navigate Increasingly Complex IT Market 1 IDC as of June 2016 CDW U.S. Addressable Market 2 CDW CAGR based on the 2014-2016 customer spend 14
INTERNATIONAL PRESENCE TO BETTER SERVE CUSTOMERS 15 Located in 9 countries Regularly export to 100+ Supplement with fulfillment partners and export capabilities
SUSTAINABLE COMPETITIVE ADVANTAGES Scale and Scope Highly Engaged And Performance Driven Culture Highly-Skilled Sales and Services Capabilities Distribution National Footprint with International Capabilities Deep and Experienced Management Superior Value Differentiated Growth Strong ROWC 16
STRONG FINANCIAL PERFORMANCE Net Sales ($bn) GAAP and Non-GAAP Net Income 1 ($mm) $8.8 $9.6 $10.1 $10.8 $12.1 $13.0 $14.0 $13.7 $14.5 $199 $247 $314 $410 $504 $569 $535 $585 2010 2011 2012 2013 2014 2015 2016 Q2'16 LTM Q2'17 LTM 2011 2012 2013 2014 2015 2016 Q2'16 LTM GAAP NI NGNI Q2'17 LTM Net Leverage Ratio 2 Adj. EBITDA 3 ($mm) and Margin 4 (%) 7.9x 6.4x 5.0x 4.5x 3.4x 3.0x 2.9x 2.7x 2.8x $809 $717 $767 $602 $907 $1,019 $1,117 $1,073 $1,148 6.8% 7.5% 7.6% 7.5% 7.5% 7.8% 8.0% 7.8% 7.9% 17 Q2'10 Q2'11 Q2'12 Q2'13 Q2'14 Q2 '15 Q2 16 Q1 17 Q2 17 2010 2011 2012 2013 2014 2015 2016 Q2'16 LTM 1 Please see Non-GAAP Net Income reconciliation to net income (loss) on page 28 2 Defined in our credit agreement, on a consolidated basis, as the ratio of total debt at period-end excluding any unamortized discount and/or premium and unamortized deferred financing costs, less cash and cash equivalents, to trailing twelve months (TTM) Adjusted EBITDA, a non-gaap measure defined in our credit agreement. The Senior Secured Term Loan Facility calculates Adjusted EBITDA on a trailing twelve month basis. 3 Please see Adj. EBITDA reconciliation to net income (loss) on page 27 4 Defined as Adj. EBITDA/Net Sales. Please see reconciliation on page 30 Q2'17 LTM
RESILIENT BUSINESS MODEL Gross Margin % 15.8% 16.5% 16.5% 16.3% 15.9% 16.3% 16.6% 6.8% 7.5% 7.6% 7.5% 7.5% 7.8% 8.0% 9.0% 9.1% 9.0% 8.9% 8.4% 8.5% 8.7% 84.2% 83.5% 83.5% 83.7% 84.1% 83.7% 83.4% 2010 2011 2012 2013 2014 2015 2016 COGS as a % of sales Adjusted SG&A + Adv % of Sales Adjusted EBITDA Margin Net Sales 18
STRONG RETURN ON WORKING CAPITAL CDW UK Acquisition Return on Working Capital (%) 26.6% 32.8% 42.0% 47.2% 47.8% 51.5% 52.6% 52.1% 2009 2010 2011 2012 2013 2014 2015 2016 19
AMPLIFYING OPERATING RESULTS $4.00 $300 Non-GAAP Earnings per Share (in $) $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $1.83 $2.37 $2.93 $3.43 $250 $200 $150 $100 $50 Interest Expense (in $M) $- 2013 2014 2015 2016 $0 EPS Interest Expense 20
CAPITAL ALLOCATION PRIORITIES Priorities Objectives Actions Increase Dividends Annually Target 30% payout of FCF in 5 years (1) 49% increase to $0.64/share Maintain Net Leverage Ratio (2) ~2.5 to 3.0 times Net Leverage Currently at 2.8x (3) Supplement Organic Growth with M&A Tuck-in, accretive deals CDW UK acquisition Return Excess FCF after Dividends & M&A Through Share Repurchase Offset incentive plan dilution and supplement EPS growth Repurchase program 21 1 Target established November 2014 2 Defined in the Company's credit agreement, on a consolidated basis, as the ratio of total debt at period-end excluding any unamortized discount and/or premium and unamortized deferred financing costs, less cash and cash equivalents, to trailing twelve months (TTM) Adjusted EBITDA, a non- GAAP measure defined in the Company's credit agreement. 3 As of June 30, 2017
ANNUAL MEDIUM-TERM TARGETS MEDIUM-TERM TARGET 2013 2016 2016 2018 Sales Growth % U.S. IT growth + 200-300 bps U.S. IT growth + 200-300 bps in constant currency Adjusted EBITDA Margin Target Range % Mid 7% High 7% to 8% Non-GAAP EPS Growth % Mid-teens Low double-digits in constant currency 22
CAPITAL RETURNS SINCE IPO Dividends Paid (in $Millions) Share Repurchases (in $Millions) $78.7 $367.5 $52.9 $241.3 $33.6 $7.3 2013 2014 2015 2016 2015 2016 Returned approximately $1.2B since 2013* *Includes Q1 and Q2 2017 23
INVESTMENT HIGHLIGHTS ~$290B addressable market opportunity with attractive growth potential Clear leader with sustained market share gains in a highly fragmented market Proven ability to evolve and capitalize on IT trends Flexible, nimble performance-driven culture generating a strong financial track record Attractive business model with sustainable competitive advantages Multiple levers for growth and creation of shareholder value 24
Q&A
APPENDIX
ADJUSTED EBITDA RECONCILIATION (Unaudited) ($ in millions) 2009 2010 2011 2012 2013 2014 2015 (vii) 2016 (vii) 2017 LTM Q2 Net income (loss) $ (373.4) $ (29.2) $ 17.1 $ 119.0 $ 132.8 $ 244.9 $ 403.1 $ 424.4 $ 427.7 Depreciation and amortization 218.2 209.4 204.9 210.2 208.2 207.9 227.4 254.5 256.5 Income tax expense (benefit) (87.8) (7.8) 11.2 67.1 62.7 142.8 243.9 248.0 202.4 Interest expense, net 431.7 391.9 324.2 307.4 250.1 197.3 159.5 146.5 147.1 EBITDA $ 188.7 $ 564.3 $ 557.4 $ 703.7 $ 653.8 $ 792.9 $ 1,033.9 $ 1,073.4 $ 1,033.7 Adjustments: Equity-based compensation 15.9 11.5 19.5 22.1 8.6 16.4 31.2 39.2 44.8 Net loss (gain) on extinguishments of long-term debt (2.0) 118.9 17.2 64.0 90.7 24.3 2.1 59.5 (Income) loss from equity investments (i) (0.1) (0.1) (0.3) (0.6) (2.2) 10.1 (1.1) 0.3 IPO and secondary-offering related expenses (ii) 75.0 1.4 0.8 Acquisition and integration expenses (iii) 10.2 7.3 5.9 Gain on remeasurement of equity investment (iv) (98.1) Goodwill impairment 241.8 Other adjustments (v) 19.0 28.1 21.6 23.9 7.7 7.8 6.1 (3.6) 3.7 Adjusted EBITDA $ 465.4 $ 601.8 $ 717.3 $ 766.6 $ 808.5 $ 907.0 $ 1,018.5 $ 1,117.3 $ 1,147.9 Net Sales $ 7,162.6 $ 8,801.2 $ 9,602.4 $ 10,128.2 $ 10,768.6 $ 12,074.5 $ 12,988.7 $ 13,981.9 $ 14,519.7 Adjusted EBITDA Margin (vi) 6.5% 6.8% 7.5% 7.6% 7.5% 7.5% 7.8% 8.0% 7.9% (i) Represents the Company's share of net (income) loss from the Company's equity investments. 2015 includes the Company's 35% share of CDW UK's (previously known as Kelway) net loss which includes the Company's 35% share of an expense related to certain equity awards granted by one of the sellers to CDW UK coworkers in July 2015 prior to the acquisition. (ii) 2013 includes IPO related expenses of $74.3 million, consisting of (1) acceleration charge for certain equity awards and related employer payroll taxes ($40.7 million); (2) RDU Plan cash retention pool accrual ($7.5 million); (3) management services agreement termination fee ($24.4 million); and (4) other expenses ($1.7 million). 2013 also includes $0.7 million of secondary-offering related expenses. 2014 and 2015 include various secondary offerings completed during that time. (iii) Comprised of expenses related to CDW UK. (iv) Represents the gain resulting from the remeasurement of the Company's previously held 35% equity investment to fair value upon the completion of the acquisition of CDW UK. (v) Other adjustments primarily include items such as sponsor fees, historical retention costs, expenses related to the consolidated of office space, settlement payments received from the Dynamic Random Access Memory class 27 action lawsuits and certain consulting and debt related professional fees. (vi) Defined as Adjusted EBITDA divided by Net sales. (vii) 2015 and 2016 reflects the impact of consolidating CDW UK's financial results for five months and twelve months, respectively.
NON-GAAP NET INCOME RECONCILIATION (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) 28 (Unaudited) ($ in millions) 2012 2013 2014 2015 (ix) 2016 (ix) LTM Q2' 17 Net income (loss) $ 119.0 $ 132.8 $ 244.9 $ 403.1 $ 424.4 $ 427.7 Amortization of intangibles (i) 163.7 161.2 161.2 173.9 187.2 185.1 Equity-based compensation 22.1 8.6 16.4 31.2 39.2 44.8 Equity-based compensation related to equity investment (ii) 20.0 Net loss on extinguishments of long-term debt 17.2 64.0 90.7 24.3 2.1 59.5 Interest expense adjustment related to extinguishments of long-term debt (iii) (3.3) (7.5) (1.1) IPO and secondary-offering related expenses (iv) 75.0 1.4 0.8 Acquisition and integration expenses (v) 10.2 7.3 5.9 Gain on remeasurement of equity investment (vi) (98.1) Other adjustments (vii) (6.3) (0.6) 2.9 (5.4) 2.4 Aggregate adjustment for income taxes (viii) (71.6) (113.5) (103.0) (64.8) (85.8) (140.2) Non-GAAP net income $ 247.1 $ 314.3 $ 409.9 $ 503.5 $ 569.0 $ 585.2 Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names. Represents the Company's 35% share of an expense related to certain equity awards granted by one of the sellers to CDW UK coworkers in July 2015 prior to the Company's acquisition. Reflects adjustments to interest expense resulting from debt extinguishments. Represents the difference between interest expense previously recognized under the effective interest method and actual interest paid. 2013 includes IPO related expenses of $74.3 million, consisting of (1) acceleration charge for certain equity awards and related employer payroll taxes ($40.7 million); (2) RDU Plan cash retention pool accrual ($7.5 million); (3) management services agreement termination fee ($24.4 million); and (4) other expenses ($1.7 million). 2013 also includes $0.7 million of secondary-offering related expenses. 2014 and 2015 includes various secondary offerings completed during that time. Comprised of expenses related to CDW UK. Represents the gain resulting from the remeasurement of the Company's previously held 35% equity investment to fair value upon the completion of the acquisition of CDW UK. Other adjustments primarily include items such as expenses related to the consolidation of office space, settlement payments received from the Dynamic Random Access Memory class action lawsuits and the favorable resolution of a local sales tax matter. Aggregate adjustment for income taxes consists of the following: 2012 2013 2014 2015 2016 LTM Q2' 17 Total Non-GAAP adjustments $ 199.7 $ 295.0 $ 268.0 $ 165.2 $ 230.4 $ 297.7 Weighted-average statutory effective rate 39.0% 39.0% 39.0% 38.0% 36.0% 36.0% Income tax (77.9) (115.1) (104.5) (62.8) (82.9) (107.2) Deferred tax adjustment due to law changes (4.0) (1.5) (1.5) Excess tax benefits from equity-based compensation (1.8) (32.0) Withholding tax expense on the unremitted earnings of our Canadian subsidiary 3.3 Non-deductible adjustments and other 6.3 1.6 1.5 (1.3) 0.4 0.5 Total aggregate adjustment for income taxes $ (71.6) $ (113.5) $ (103.0) $ (64.8) $ (85.8) $ (140.2) 2015 and 2016 reflects the impact of consolidating CDW UK's financial results for five months and twelve months, respectively.
RETURN ON WORKING CAPITAL (ROWC) CALCULATION (Unaudited) ($ in millions) 2009 2010 2011 2012 2013 2014 2015 2016 LTM Q2' 2017 Numerator Income from operations $ (31.9) $ 352.7 $ 470.7 $ 510.6 $ 508.6 $ 673.0 $ 742.0 $ 819.2 $ 835.6 Amortization of intangibles (i) 168.9 166.8 165.7 163.7 161.2 161.2 173.9 187.2 185.1 Debt-related refinancing costs (ii) 5.6 3.8 Non-cash equity-based compensation 15.9 11.5 19.5 22.1 8.6 16.4 31.2 39.2 44.8 Goodwill impairment 241.8 Other one-time items as incurred (iii) 1.4 68.7 0.8 12.0 4.5 6.4 Adjusted NOPBT 396.1 536.6 659.7 696.4 747.1 851.4 959.1 1,050.1 1,071.9 Taxes (iv) (154.5) (209.3) (257.3) (271.6) (291.4) (332.0) (374.1) (388.6) (396.6) Adjusted NOPAT $ 241.6 $ 327.3 $ 402.4 $ 424.8 $ 455.7 $ 519.4 $ 585.1 $ 661.6 $ 675.2 Denominator Trailing 5-point avg. AR (incl. misc. rec.) $ 1,008.9 $ 1,210.7 $ 1,352.5 $ 1,400.1 $ 1,502.0 $ 1,629.6 $ 1,909.4 $ 2,248.8 $ 2,268.1 Trailing 5-point avg. Inventory 252.8 286.9 317.4 330.3 357.5 396.2 387.1 448.9 459.5 Trailing 5-point avg. AP (354.9) (500.4) (712.0) (831.2) (906.7) (1,017.8) (1,184.4) (1,470.8) (1,504.7) Working Capital $ 906.8 $ 997.2 $ 957.9 $ 899.2 $ 952.8 $ 1,008.0 $ 1,112.1 $ 1,226.9 $ 1,222.9 Return on Working Capital (ROWC) 26.6% 32.8% 42.0% 47.2% 47.8% 51.5% 52.6% 53.9% 55.2% (i) Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names. (ii) Represents fees and costs expensed related to the December 2010 and March 2011 amendments to the Company's prior term loan facility. (iii) Includes IPO and secondary-offering related expenses, litigation items, acquisition and integration expenses and expenses related to the consolidation of office locations north of Chicago. (iv) Based on a normalized statutory tax rate of 37% for 2017 and 2016. Prior to 2016, the normalized statutory tax rate was 39.0%. 29
ADJUSTED EBITDA MARGIN RECONCILIATION Unaudited ($mm) 2009 2010 2011 2012 2013 2014 2015 2016 LTM Q2 2017 Net Sales $7,162.6 $8,801.2 $9,602.4 $10,128.2 $10,768.2 $12,074.5 $12,988.7 $13,981.9 $14,519.7 Adjusted EBITDA $465.4 $601.8 $717.3 $766.6 $808.5 $907 $1,018.5 $1,117.3 $1,147.9 Adjusted EBITDA Margin 6.5% 6.8% 7.5% 7.6% 7.5% 7.5% 7.8% 8.0% 7.9% 30
NON-GAAP NET INCOME PER DILUTED SHARE, ON A CONSTANT CURRENCY BASIS (Unaudited) ($ and shares in millions, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2017 2016 % Change (1) 2017 2016 % Change (1) Net income $ 141.0 $ 117.5 $ 198.7 $ 195.3 Amortization of intangibles 46.3 47.1 92.4 94.6 Equity-based compensation 11.5 9.7 23.6 18.1 Net Loss on extinguishments of long-term debt 57.4 Integration expenses 2.0 2.2 2.5 3.8 Other adjustments 3.7 0.3 4.9 (2.8) Aggregate adjustment for income taxes (41.3) (21.2) (95.0) (40.7) Non-GAAP Net Income (2) * $ 163.2 $ 155.6 4.9% $ 284.5 $ 268.3 6.0% Foreign currency translation (3) (1.2) (1.9) Non-GAAP Net Income, on a constant currency basis* $ 163.2 $ 154.4 5.7% $ 284.5 $ 266.4 6.8% Shares used in computing Non-GAAP net income per diluted share and Non-GAAP net income per diluted share, on a constant currency basis 159.0 166.7 160.9 167.8 Non-GAAP net income per diluted share* $ 1.03 $ 0.93 10.0% $ 1.77 $ 1.60 10.6% Non-GAAP net income per diluted share, on a constant currency basis* $ 1.03 $ 0.93 10.0% $ 1.77 $ 1.59 11.4% (1) There were 64 selling days for the three months ended June 30, 2017 and 2016. There were 128 selling days for the six months ended June 30, 2017 and 2016. (2) See Slide 10 and 13 in the Webcast Slides for details on the adjustments to Non-GAAP Net Income. (3) Represents the effect of translating the prior year results of CDW Canada and CDW UK at the average exchange rates applicable in the current year. 31 * Non-GAAP Net income, Non-GAAP Net Income per diluted share, Non-GAAP Net income on a constant currency basis and Non-GAAP Net Income per diluted share on a constant currency basis are non-gaap financial measures. For a discussion of non-gaap financial measures, see Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 3, 2017.
CONSOLIDATED NET SALES GROWTH ON A CONSTANT CURRENCY BASIS (Unaudited) ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2017 2016 % Change (1) 2017 2016 % Change (1) Consolidated Net sales, as reported $ 3,994.4 $ 3,664.6 9.0% $ 7,319.1 $ 6,781.3 7.9% Foreign currency translation (ii) (27.6) (54.4) Consolidated Net sales, on a constant currency basis* $ 3,994.4 $ 3,637.0 9.8% $ 7,319.1 $ 6,726.9 8.8% (i) There were 64 and 128 selling days during the three and six months ended June 30, 2017 and 2016, respectively. (ii) Represents the effect of translating the prior year results of CDW Canada and CDW UK at the average exchange rates applicable in the current year. * Consolidated Net sales growth on a constant currency basis is a non-gaap financial measure. For a discussion of non-gaap financial measures, see Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 3, 2017. 32
2016 CONSOLIDATED ORGANIC NET SALES GROWTH ON A CONSTANT CURRENCY BASIS (Unaudited) ($ in millions) Year Ended December 31, 2016 2015 % Change Average Daily % Change (1) Consolidated Net sales, as reported $ 13,981.9 $ 12,988.7 7.6% 7.6% Impact of acquisition (2) (503.9) Consolidated Organic Net sales 13,478.0 12,988.7 Foreign currency translation (3) (76.3) Consolidated Organic Net sales, on a constant currency basis* $ 13,478.0 $ 12,912.4 4.4% 4.4% (1) There were 254 selling days for both years ended December 31, 2016 and 2015, respectively. (2) Excludes CDW UK's year-to-date results through July 2016 for the year ended December 31, 2016 as the acquisition was completed on August 1, 2015. (3) Represents the effect of translating the prior year results of CDW Canada and CDW UK at the average exchange rates applicable in the current year. Includes the impact of consolidating five months of CDW UK's financial results for the twelve months ended December 31, 2015. * Organic net sales growth and organic net sales growth on a constant currency basis are non-gaap financial measures. For a discussion of non-gaap financial measures, see Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 7, 2017. 33
MATURITY PROFILE 34
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