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What changed in CDW Corporation's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CDW Corporation's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+259 added−245 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-26)

Top changes in CDW Corporation's 2024 10-K

259 paragraphs added · 245 removed · 209 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeHealth and Safety We are committed to prioritizing the health and well-being of our coworkers and addressing the mission driven needs of our business partners. We dedicate time and resources to identify safety hazards of all types, mitigate safety risk and routinely train our coworkers using industry best-practices as our standard.
Biggest changeWe dedicate time and resources to identify safety hazards of all types, mitigate safety risk and routinely train our coworkers using industry best-practices as our standard, as well as provide increased access to mental health resources. Oversight and Management Our Coworker Success organization is responsible for the strategy and management of coworker-related matters, working in concert with all our leaders.
We believe competitive sources of supply are available in substantially all of the product categories that we offer. Competition The market for technology products and services is highly competitive and subject to economic conditions and rapid technological changes.
We believe competitive sources of supply are available in substantially all of the product categories that we offer. Competition The market for technology products, solutions and services is highly competitive and subject to economic conditions and rapid technological changes.
Our value proposition to our customers Our value proposition to our vendor partners ● Broad selection of products and multi-branded IT solutions ● Access to over 250,000 customers ● Value-added services with integration capabilities ● Large and established customer channels ● Highly-skilled specialists and engineers ● Strong distribution and implementation capabilities ● Solutions across IT lifecycle ● Customer relationships driving insight into technology roadmaps Customers We provide integrated IT solutions to over 250,000 small, medium and large business, government, education and healthcare customers throughout the US, UK and Canada.
Our value proposition to our customers Our value proposition to our vendor partners ● Broad selection of products and multi-branded IT solutions ● Access to over 250,000 customers ● Value-added services with integration capabilities ● Large and established customer channels ● Highly-skilled specialists and engineers ● Strong distribution and implementation capabilities ● Solutions across IT lifecycle ● Customer relationships driving insight into technology roadmaps Customers We provide integrated IT solutions to over 250,000 business, government, education and healthcare customers throughout the US, UK and Canada.
Our goal is to have our customers, regardless of their size, view us as a trusted adviser and extension of their IT resources. Our multi-brand offering approach across our vendor partners enables us to provide the solutions and services that best address each customer’s specific requirements to enable their desired business outcomes.
Our goal is to have our customers, regardless of their size, view us as a trusted adviser and extension of their IT workforce. Our multi-brand offering approach across our vendor partners enables us to provide the solutions and services that best address each customer’s specific requirements to enable their desired business outcomes.
We are a security solutions integrator that combines our expertise in design, solution architecture and implementation services.
We are a security solutions integrator that combines our expertise in advisory, design, solution architecture and implementation services.
We serve our customers through sales teams focused on customer end-markets that are supported by technical specialists and highly-skilled service delivery engineers. Our market segmentation allows us to customize our offerings and to provide enhanced expertise in designing and implementing IT solutions that meet our customer’s specific needs. We have three reportable segments: Corporate, Small Business and Public.
We serve our customers through sales teams focused on customer end-markets that are supported by highly-skilled specialists and engineers. Our market segmentation allows us to customize our offerings and to provide enhanced expertise in designing and implementing IT solutions that meet our customer’s specific needs. We have three reportable segments: Corporate, Small Business and Public.
Item 1. Business Our Company CDW Corporation (together with its subsidiaries, the “Company,” “CDW” or “we”), a Fortune 500 company and member of the S&P 500 Index, is a leading multi-brand provider of information technology (“IT”) solutions to small, medium and large business, government, education and healthcare customers in the United States (“US”), the United Kingdom (“UK”) and Canada.
Item 1. Business Our Company CDW Corporation (together with its subsidiaries, the “Company,” “CDW” or “we”), a Fortune 500 company and member of the S&P 500 Index, is a leading multi-brand provider of information technology (“IT”) solutions to business, government, education and healthcare customers in the United States (“US”), the United Kingdom (“UK”) and Canada.
We also have two other operating segments: CDW UK and CDW Canada, each of which do not meet the reportable segment quantitative thresholds and, accordingly, are included in an all other category (“Other”). 4 Table of Contents In our US business, which represents approximately 90% of our Net sales, we currently have five dedicated customer channels: corporate, small business, government, education and healthcare, each of which generated approximately $1.6 billion or greater in Net sales in 2023.
We also have two other operating segments: CDW UK and CDW Canada, each of which do not meet the reportable segment quantitative thresholds and, accordingly, are included in an all other category (“Other”). 4 Table of Contents In our US business, which represents approximately 90% of our Net sales, we currently have five dedicated customer channels: corporate, small business, government, education and healthcare, each of which generated $1.5 billion or greater in Net sales in 2024.
We have capabilities to provide integrated IT solutions in more than 150 countries for customers with primary locations in the US, UK and Canada, which are large and growing markets. These are highly fragmented markets served by thousands of IT resellers and solutions providers.
We have capabilities to provide integrated IT solutions in approximately 150 countries for customers with primary locations in the US, UK and Canada, which are large and growing markets. These are highly fragmented markets served by thousands of IT resellers and solutions providers.
Inventory Management We operate two distribution centers in North America and one distribution center in the UK which combined are more than 1 million square feet in size. Leveraging our distribution and logistics capabilities, we handle and ship approximately 35 million units annually on an aggregate basis from our distribution centers.
Inventory Management We operate two distribution centers in North America and one distribution center in the UK, which combined provide more than 1 million square feet in size. Leveraging our distribution and logistics capabilities, we handle and ship approximately 26 million units annually on an aggregate basis from our distribution centers.
We also have drop-shipment arrangements with many of our OEMs and wholesale distributors, which permit us to offer products to our customers without having to take physical delivery at our distribution centers. These arrangements represented approximately 55% of total North America Net sales in 2023.
We also have drop-shipment arrangements with many of our OEMs and wholesale distributors, which permit us to offer products to our customers without having to take physical delivery at our distribution centers. These arrangements represented approximately 54% of total North America Net sales in 2024.
Our website and the information contained on that site, or connected to that site, are not incorporated into and are not a part of this report. Information about our Executive Officers The following table lists the name, age as of February 26, 2024 and positions of each executive officer of the Company. Name Age Position Christine A.
Our website and the information contained on that site, or connected to that site, are not incorporated into and are not a part of this report. Information about our Executive Officers The following table lists the name, age as of February 21, 2025 and positions of each executive officer of the Company. Name Age Position Christine A.
We believe that demand for IT will continue to outpace general economic growth in the markets we serve, fueled by new technologies, including hybrid and cloud computing, virtualization, mobility and artificial intelligence, as well as growing end-user demand for security, efficiency and productivity.
We believe that demand for IT will outpace general economic growth in the markets we serve, fueled by new technologies, including hybrid and cloud computing and artificial intelligence, as well as growing end-user demand for security, efficiency and productivity.
Net sales to customers in the UK and Canada combined generated $2.6 billion in 2023. We believe this diversity of customer end-markets provides us with multiple avenues for growth and has been a key factor in our ability to weather economic and technology cycles and continue to gain market share.
Net sales to customers in the UK and Canada combined generated $2.5 billion in 2024. We believe this diversity of customer end-markets provides us with multiple avenues for growth and has been a key factor in our ability to weather economic and technology cycles and gain market share.
Our solutions are delivered in physical, virtual and cloud-based environments through approximately 10,900 customer-facing coworkers, including sellers, highly-skilled technology specialists and advanced service delivery engineers. We are a leading sales channel partner for many original equipment manufacturers (“OEMs”), software publishers and cloud providers (collectively, our “vendor partners”), whose products we sell or include in the solutions we offer.
Our solutions are delivered in physical, virtual and cloud-based environments through approximately 10,900 customer-facing coworkers, including sellers, highly-skilled specialists and engineers. We are a leading sales channel partner for many original equipment manufacturers (“OEMs”), software publishers, cloud providers (collectively, our “vendor partners”) and wholesale distributors, whose products we sell or include in the solutions we offer.
In 2023, we generated $2.0 billion of Net sales from each of our three largest vendor partners.
In 2024, we generated $2.0 billion of Net sales from each of our three largest vendor partners.
We provide customers with cloud solutions and services through public cloud solutions, which reside off customer premises on a public (shared) infrastructure, private cloud solutions, which reside on customer premises, and hybrid cloud solutions that deliver the benefits of both public and private solutions.
We provide customers with technology solutions and services on the public cloud, which reside off-premise on a public (shared) infrastructure, private cloud solutions, which reside on customer premises and hybrid cloud solutions that deliver the benefits of both public and private options.
Our migration, integration and managed services help our customers simplify cloud adoption, as well as the ongoing management of cloud solutions, across the entire IT lifecycle. Service delivery engineers work with our customers to design cloud solutions meeting their organizational, technology and financial objectives.
Our migration, integration and managed services help our customers simplify cloud adoption and management, across the entire IT lifecycle. Engineers work with our customers to design cloud solutions meeting their organizational, technology and financial objectives.
Smaller, local or regional value-added resellers typically focus on a single solution suite or portfolio of solutions from one or two vendor partners. 5 Table of Contents We believe we are well positioned to compete within this marketplace due to our competitive advantages. We expect the competitive landscape to continue to evolve as new technologies are developed.
Smaller, local or regional value-added resellers typically focus on a single solution suite or portfolio of solutions from one or two vendor partners. 5 Table of Contents We believe we are well positioned to compete within this marketplace due to our competitive advantages.
Sona Chawla 56 Chief Growth and Innovation Officer since January 2020; President, Kohl’s Corporation (an omnichannel retailer) from May 2018 to October 2019 and Chief Operating Officer, Kohl’s Corporation from November 2015 to May 2018. Christina M.
Sona Chawla 57 Chief Growth and Innovation Officer since January 2020; President, Kohl’s Corporation (an omnichannel retailer) from May 2018 to October 2019 and Chief Operating Officer, Kohl’s Corporation from November 2015 to May 2018. Elizabeth H.
We have received the highest level of certification from major vendor partners such as Cisco, Dell EMC, Hewlett Packard Enterprise, IBM, Microsoft, NetApp, Nutanix, Palo Alto Networks, Samsung and VMware which reflects the extensive product and solution knowledge and capabilities that we bring to our customers’ IT challenges.
We have received the highest level of certification from major vendor partners such as Broadcom Inc., Cisco, Dell Technologies, Hewlett Packard Enterprise, IBM, Lenovo, Microsoft, NetApp, Nutanix, Palo Alto Networks and Samsung which reflects the extensive product and solution knowledge and capabilities that we bring to our customers.
We believe our websites and software tools, which provide electronic order processing and advanced features, such as order tracking, reporting and asset management, make it easy for customers to transact business with us and ultimately strengthen our customer relationships. Available Information We maintain a website at www.cdw.com.
We believe our websites and software tools, which provide electronic order processing and advanced features, such as order tracking, reporting and asset management, make it easy for customers to transact business with us and ultimately strengthen our customer relationships.
Although we believe customers increasingly view technology purchases as solutions rather than discrete product and service categories, our Net sales by major category, based upon our internal category classifications, was as follows: Year Ended December 31, 2023 2022 2021 (dollars in millions) Net Sales Percentage of Total Net Sales Net Sales Percentage of Total Net Sales Net Sales Percentage of Total Net Sales Hardware: Notebooks/Mobile Devices $ 4,690.5 21.9 % $ 6,179.7 26.0 % $ 6,659.4 32.0 % Netcomm Products 3,185.4 14.9 2,729.7 11.5 1,950.9 9.4 Collaboration (3) 1,909.7 8.9 2,394.8 10.1 2,218.8 10.7 Data Storage and Servers (3) 2,240.7 10.5 2,479.0 10.4 2,044.9 9.8 Desktops 1,069.1 5.0 1,284.9 5.4 1,203.6 5.8 Other Hardware (3) 2,607.2 12.3 3,022.9 12.7 2,692.0 12.9 Total Hardware 15,702.6 73.5 18,091.0 76.1 16,769.6 80.6 Software (1) 3,799.3 17.8 3,684.9 15.5 2,802.4 13.5 Services (1) 1,761.3 8.2 1,842.0 7.8 1,126.1 5.4 Other (2) 112.8 0.5 130.8 0.6 122.7 0.5 Total Net sales $ 21,376.0 100.0 % $ 23,748.7 100.0 % $ 20,820.8 100.0 % (1) Certain software and services revenue is recorded on a net basis for accounting purposes.
Although we believe customers increasingly view technology purchases as solutions rather than discrete product and service categories, our Net sales by major category, based upon our internal category classifications, was as follows: Year Ended December 31, 2024 2023 2022 (dollars in millions) Net Sales Percentage of Total Net Sales Net Sales Percentage of Total Net Sales Net Sales Percentage of Total Net Sales Hardware: Notebooks/Mobile Devices $ 5,089.9 24.2 % $ 4,690.5 21.9 % $ 6,179.7 26.0 % Netcomm Products 2,538.2 12.1 3,185.4 14.9 2,729.7 11.5 Collaboration 1,770.6 8.4 1,909.7 8.9 2,394.8 10.1 Data Storage and Servers 2,133.8 10.2 2,240.7 10.5 2,479.0 10.4 Desktops 1,111.2 5.3 1,069.1 5.0 1,284.9 5.4 Other Hardware 2,575.4 12.3 2,607.2 12.3 3,022.9 12.7 Total Hardware 15,219.1 72.5 15,702.6 73.5 18,091.0 76.1 Software (1) 3,804.4 18.1 3,799.3 17.8 3,684.9 15.5 Services (1) 1,867.3 8.9 1,761.3 8.2 1,842.0 7.8 Other (2) 107.9 0.5 112.8 0.5 130.8 0.6 Total Net sales $ 20,998.7 100.0 % $ 21,376.0 100.0 % $ 23,748.7 100.0 % (1) Certain software and services revenue is recorded on a net basis for accounting purposes.
Miralles 54 Senior Vice President and Chief Financial Officer since September 2021; Executive Vice President and Chief Financial Officer, CNA Financial Corporation (a commercial property and casualty insurance company) from February 2020 to September 2021; President, CNA Warranty from October 2019 to September 2021; Executive Vice President and Chief Risk Officer of the CNA Insurance Companies from January 2018 to October 2019. 9 Table of Contents
Miralles 55 Chief Financial Officer and Senior Vice President, Enterprise Business Operations since January 2025; Senior Vice President and Chief Financial Officer from September 2021 to January 2025; Executive Vice President and Chief Financial Officer, CNA Financial Corporation (a commercial property and casualty insurance company) from February 2020 to September 2021; President, CNA Warranty from October 2019 to September 2021; Executive Vice President and Chief Risk Officer of the CNA Insurance Companies from January 2018 to October 2019.
Partners We provide more than 100,000 products and services from more than 1,000 vendor partners, including well-established companies such as Adobe, APC, Apple, Cisco, Dell EMC, Google, Hewlett Packard Enterprise, HP Inc., IBM, Intel, Lenovo, Microsoft, NetApp, Nutanix, Palo Alto Networks, Pure Storage, Samsung and VMware, as well as from emerging technology companies to expand our portfolio.
Partners We offer more than 100,000 products and services from more than 1,000 vendor partners, including well-established companies such as Adobe, APC, Apple, Amazon Web Services, Broadcom Inc., Cisco, Dell Technologies, Google, Hewlett Packard Enterprise, HP Inc., IBM, Intel, Lenovo, Microsoft, NetApp, Nutanix, Palo Alto Networks, Pure Storage and Samsung, as well as from emerging technology companies.
We provide a comprehensive benefits package to our coworkers, including healthcare, retirement plans with profit sharing and match, tuition assistance, inclusive parental leave policies, adoption assistance, paid time off, paid volunteer hours and philanthropic match programs based upon eligibility and location.
We provide a comprehensive benefits package to our coworkers, including healthcare, retirement plans with profit sharing and match, tuition assistance, parental leave policies, adoption assistance, paid time off, paid volunteer hours and philanthropic match programs based upon eligibility and location. Health and Safety We are committed to prioritizing the health and well-being of our coworkers.
Our solutions provide the tools that allow our customers’ employees to share knowledge, ideas and information among each other and with clients and partners effectively, securely and quickly. • Security : We assess our customers’ security needs and provide them with tools and services to help effectively manage risk.
Our solutions provide the tools that allow our customers’ employees to share knowledge, ideas and information among each other and with clients and partners effectively, securely and quickly. • Security : We assess our customers’ security needs and provide them with tools and services to help effectively manage risk, increase business continuity and operational efficiency, and improve their end user experience.
These capabilities help us to continuously enhance productivity, ship customer orders quickly and efficiently, respond appropriately to industry changes and provide high quality customer service.
Our systems provide us with thorough and detailed information regarding key aspects of our business. These capabilities help us to continuously enhance productivity, ship customer orders quickly and efficiently, respond appropriately to industry changes and provide high quality customer service.
IT is important to both critical business operations and to drive greater growth and productivity. To help our customers accomplish this, we have built a robust portfolio of solutions across hybrid infrastructure, digital experience, security and services that we provide in physical, virtual or cloud-based environments.
To help our customers accomplish this, we have built a robust portfolio of solutions across hybrid infrastructure, digital experience, security, digital velocity and services that we provide in on-premise, hybrid or cloud-based environments.
As a result, the category percentage of Net sales is not representative of the category percentage of gross profits. (2) Includes items such as delivery charges to customers.
As a result, the category percentage of Net sales is not representative of the category percentage of gross profits.
Leahy 59 Chair of our Board of Directors since January 1, 2023; President and Chief Executive Officer and member of our Board of Directors since January 2019; Chief Revenue Officer from July 2017 to December 2018; Senior Vice President - International, Chief Legal Officer and Corporate Secretary from May 2016 to July 2017; Senior Vice President, General Counsel and Corporate Secretary from January 2007 to May 2016.
Leahy 60 Chair of our Board of Directors since January 2023; President and Chief Executive Officer and member of our Board of Directors since January 2019; Chief Revenue Officer from July 2017 to December 2018.
This competitive environment includes the ability to tailor specific solutions to customer needs, the quality and breadth of product and service offerings, knowledge and expertise of sales force, customer service, price, product availability, speed of delivery and credit availability. We face competition from resellers, direct manufacturers, large service providers, cloud providers, telecommunication companies, and to a lesser extent retailers.
This competitive environment includes the ability to tailor solutions to customer needs, the quality and breadth of product and service offerings, knowledge and expertise of sales force, customer service, price, product availability, speed of delivery and credit availability.
Kulevich 58 Senior Vice President, General Counsel and Corporate Secretary since October 2017 and Interim Chief People Officer since November 2023; Vice President and Deputy General Counsel from May 2016 to October 2017; Vice President and Assistant General Counsel from May 2014 to May 2016; Senior Director, Ethics and Compliance from July 2006 to May 2014. Albert J.
Kulevich 59 Senior Vice President, General Counsel and Corporate Secretary since October 2017 and Interim Chief People Officer from November 2023 to September 2024. Albert J.
We offer a broad portfolio of integrated solutions that include the following on-premise, hybrid and cloud capabilities: • Services : We help organizations design, orchestrate and manage technology for their unique needs. Our offerings demonstrate our expertise in the most critical technology areas for our customers.
For each of the solutions areas above, we provide services that help organizations plan, design, configure, orchestrate and manage technology for their unique needs. Our offerings demonstrate our expertise in the most critical technology areas for our customers.
Our customer solutions can take the form of hardware, software or Software as a Service across a multitude of categories such as: endpoint security, email security, web security, intrusion prevention, 6 Table of Contents authentication, firewall, virtual private network services and network access control. Security consulting engagements include security assessment, policy and procedure gap analysis, security roadmaps and health checks.
Our customer solutions can take the form of hardware, software or Software as a Service across a multitude of categories such as: endpoint security, email security, web security, intrusion prevention, identity and access 6 Table of Contents management, next-generation firewall, security service edge, security information and event management, exposure and threat management, governance, risk and compliance, data security and governance, cloud infrastructure entitlement management, virtual private network services, network access control and physical security.
We have built a strong sales organization and deep services and solutions capabilities over time and expect to continue to invest to enhance these capabilities. We believe the combination of our competitive advantages of scale, performance driven culture and enhanced capabilities will help drive sustainable, profitable growth for us today and in the future.
We believe the combination of our competitive advantages of scale, performance-driven culture and enhanced capabilities will help drive sustainable, profitable growth for us today and in the future. Our scale enables us to have a national and international footprint, as well as invest in resources to meet specific customer end-market needs.
In addition, these systems enable centralized management of key functions, including purchasing, inventory management, billing and collection of accounts receivable, sales, distribution and financial accounting and reporting. Our systems provide us with thorough and detailed information regarding key aspects of our business.
Information Technology Systems We maintain customized IT and unified communication systems that enhance our ability to provide prompt, efficient and expert service to our customers. In addition, these systems enable centralized management of key functions, including purchasing, inventory management, billing and collection of accounts receivable, sales, distribution and financial accounting and reporting.
As a result of our relationships with vendor partners, a significant portion of our advertising and marketing expenses is reimbursed through cooperative advertising programs. These programs are at the discretion of our vendor partners and are typically tied to sales or other commitments to be met by us within a specified period.
These programs are at the discretion of our vendor partners and are typically tied to sales or other commitments to be met by us within a specified period. We believe that our results and analytical techniques for measuring marketing efficacy differentiates us from our competitors.
Our scale enables our ability to invest in technical coworkers who work directly with our sellers to help customers implement increasingly complex IT solutions. We have cross-border relationships that enable us to serve the needs of our US, UK and Canadian-based customers in more than 150 countries. Our strong, execution-oriented culture is underpinned by our compensation system.
We have cross-border relationships that enable us to serve the needs of our US, UK and Canadian-based customers in approximately 150 countries. Our strong, execution-oriented culture is underpinned by our compensation system. Our Offerings Our offerings range from discrete hardware and software products and services to complex integrated solutions including one or more of these elements.
We target current and prospective customers through integrated marketing programs including email, display ads, paid search, social media, events and sponsorships. These programs are supported by integrated communication efforts targeting technology decision-makers, influencers and the general public using a combination of expert technology articles, videos, case studies, media interviews and speaking events.
These programs are supported by integrated communication efforts targeting technology decision-makers, influencers and the general public using a combination of expert technology articles, videos, case studies, media interviews and speaking events. 8 Table of Contents As a result of our relationships with vendor partners, a significant portion of our advertising and marketing expenses is reimbursed through cooperative advertising programs.
Our Board understands the importance of our inclusive, performance-driven culture to our ongoing success and is actively engaged with our President and Chief Executive Officer and our Chief People Officer across a broad range of human capital management topics. 8 Table of Contents Marketing We market the CDW brand to US, UK and Canadian audiences through various channels, including mass media, digital, print, social media and other emerging channels.
Our Board understands the importance of our respectful, performance-driven culture to our ongoing success and is actively engaged with our Chair and Chief Executive Officer and our Chief Human Resources Officer across a broad range of human capital management topics.
Our hardware category includes notebooks/mobile devices (including t ablets), network communications (“netcomm products”), desktop computers, collaboration, data storage and servers and other hardware. Our software category includes cloud solutions, software assurance, application suites, security, virtualization, operating systems and network management. Our services include advisory and design, software development, implementation, managed services and warranties.
Our software category includes cloud solutions, software assurance, application suites, security, virtualization, collaboration and productivity applications, operating systems and network management. Our services include advisory and design, software development, implementation, managed services and warranties. IT is important to both critical business operations and to drive greater growth and productivity.
We have approximately 15,100 coworkers across the globe, with 11,700 coworkers in the US and 3,400 coworkers in international locations. More than 50% of our US Net sales are generated by account managers who have more than seven years of tenure with CDW.
More than 50% of our US Net sales are generated by account managers who have more than seven years of tenure with CDW. Our coworker relations are strong, and none of our coworkers are represented by a labor union or covered by a collective bargaining agreement.
We leverage best-in-class partner technology platforms to seamlessly architect and manage disparate IT platforms into integrated business technology solutions. • Hybrid Infrastructure : We assess our customers application infrastructure need, design flexible, resilient and efficient solutions and manage the solution throughout its lifecycle.
We offer a broad portfolio of integrated solutions that include the following on-premise, hybrid and cloud capabilities: • Hybrid Infrastructure : We assess our customers application infrastructure need, design flexible, resilient and efficient solutions and manage the solution throughout its lifecycle.
Our Offerings Our offerings range from discrete hardware and software products and services to complex integrated solutions including one or more of these elements. We believe our customers increasingly view technology purchases as integrated solutions vital to their strategies and missions rather than discrete product and services categories.
We believe our customers increasingly view technology purchases as integrated solutions vital to their strategies, business outcomes and missions rather than discrete product and services categories. Our hardware category includes notebooks/mobile devices (including tablets), network communications (“netcomm products”), collaboration hardware, data storage and servers, desktop computers and other hardware.
Our service delivery engineers have expertise which include integrated cloud, collaboration, data center, mobility and security business technology, from the physical to the application laye r.
Our highly-skilled specialists and engineers have expertise in integrated cloud, collaboration, data center, mobility and security business technology, from the physical to the application layer. We leverage best-in-class partner technology platforms to seamlessly architect and manage disparate IT platforms into integrated business technology solutions.
Our scale enables us to have a national and international footprint, as well as invest in resources to meet specific customer end-market needs. Our sellers are organized around unique customer end-markets that are both vertically and geographically focused.
Our sellers are organized around unique customer end-markets that are both vertically and geographically focused. Our scale enables our ability to invest in specialists and engineers who work directly with our sellers to help customers implement complex IT solutions.
Corley 56 Chief Commercial and Operating Officer since January 2020; Chief Operating Officer from January 2019 to January 2020; Senior Vice President, Commercial and International Markets from July 2017 to December 2018; Senior Vice President, Corporate Sales from September 2011 to July 2017. Frederick J.
Connelly 59 Chief Commercial Officer since October 2024; Senior Vice President, Vertical Markets, from January 2024 to October 2024; Senior Vice President, Healthcare from September 2022 to December 2023; Chief Human Resources Officer and Senior Vice President, Coworker Services from December 2018 to September 2022. Frederick J.
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(3) Prior period amounts have been reclassified to conform with current period presentation. 7 Table of Contents Our Internal Capabilities Human Capital Management Our culture is reflected through our coworkers, who are driven to serve our customers, our partners, our communities and all our stakeholders.
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We face competition from resellers, manufacturers who sell directly to customers, large service providers and system integrators, cloud providers, e-commerce companies, and office supply retailers, among others.
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We provide our coworkers with diverse experiences, engagement opportunities, strong training and development, competitive compensation and meaningful careers, which creates a high-performance culture that is central to CDW’s success. We know that an inclusive environment produces the best ideas, and our coworkers are driven to finding the best technology solutions to enable the mission-driven needs of our customers.
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We expect the competitive landscape to continue to evolve as new technologies and consumption models emerge, such as cloud-based and other “as a service” solutions, hyper-converged infrastructure, embedded software solutions and solutions that incorporate artificial intelligence.
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Our coworker relations are strong, and none of our coworkers are represented by a labor union or covered by a collective bargaining agreement. Diversity, Equity and Inclusion CDW’s commitment to diversity, equity and inclusion is a core value that shapes who we are and how we work, grow and do business.
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We focus on providing high quality service to gain new customers and retain existing customers. We have built a strong sales organization and deep services and solutions capabilities over time and expect to continue to invest to enhance these capabilities.
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We remain steadfast in our commitment to a culture of inclusion and equity, where everyone feels they belong. Our diversity, equity and inclusion efforts foster an inclusive environment for coworkers and job candidates that cannot be separated from how we work with customers, partners and the community. It all comes back to our character, values and ethics as an organization.
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We enable our customers with artificial intelligence (“AI”) solutions that empower their end users and drive efficiency in business-critical functions.
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We are focused on making sure our values are reflected in our behavior where everyone feels they are seen, heard and valued. Coworker Engagement We strive to create a culture of collaboration, belonging and individual growth and reward.
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Security consulting engagements include security maturity assessments, policy and procedure gap analysis, security roadmaps and health checks. • Digital Velocity: We deliver advanced digital transformation solutions that enable organizations to modernize their IT infrastructure, applications and operations. Leveraging expertise in cloud-native deployment, DevOps, artificial intelligence and automation, we help customers improve business outcomes through scalable and secure technology implementations.
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We also monitor guidance from leading health authorities and have implemented robust safety protocols at our distribution centers. These include enhanced personal protective equipment, expanded health and safety training and increased access to mental health resources. Oversight and Management Our Coworker Services organization is responsible for the strategy and management of coworker-related matters, working in concert with all our leaders.
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We enable specific customer business needs through customer software engineering engagements, providing custom application development, modernization and integration services, as well as talent orchestration solutions that give our customers access to technical resources that supplement their workforce for project-based engagements and periods of peak demand.
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We believe that our results and analytical techniques for measuring marketing efficacy differentiates us from our competitors. Information Technology Systems We maintain customized IT and unified communication systems that enhance our ability to provide prompt, efficient and expert service to our customers.
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(2) Includes items such as delivery charges to customers. 7 Table of Contents Our Internal Capabilities Human Capital Management Our long-standing values and philosophies of success are based on fostering a welcoming, respectful, accountable and fair culture where coworkers have the opportunity to thrive.
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This culture, along with strong training and development, competitive compensation and opportunities for meaningful careers, drives business results and competitive advantage. We have approximately 15,100 coworkers across the globe, with 11,500 coworkers in the US and 3,600 coworkers in international locations.
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One CDW One CDW reflects the work we do to find, attract and retain top talent, encourage a welcoming and respectful culture, create meaningful partnerships across teams, and ensure coworkers have the tools and opportunities to grow and help the business succeed. Coworker Engagement We strive to create a culture of collaboration, respect and individual growth and reward.
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Marketing We market the CDW brand to US, UK and Canadian audiences through various channels, including mass media, digital, print, social media and other emerging channels. We target current and prospective customers through integrated marketing programs including email, display ads, paid search, social media, events and sponsorships.
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We are in the process of implementing a new enterprise resource planning (“ERP”) system, along with other system transformation initiatives, that will enable us to streamline processes and enhance visibility in our key business processes. The significant system transformation initiatives, including ERP, are anticipated to be released in 2025 with incremental system transformation releases continuing in 2026.
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Available Information We maintain a website at www.cdw.com.
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Katherine E. Sanderson 49 Senior Vice President, Coworker Success and Chief Human Resources Officer since September 2024; Executive Vice President and Chief Human Resources Officer, R1 RCM (a healthcare technology and services company) from November 2018 to September 2024. 9 Table of Contents

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

75 edited+14 added−7 removed89 unchanged
Biggest changeAdditionally, if we fail to effectively manage our workforce, we may need to terminate or reposition coworkers within our Company to eliminate an abundance of or to reconfigure resources, which could damage our coworker relations and our ability to attract and retain key personnel. 13 Table of Contents If we are unable to attract, develop, engage and retain key personnel, or if our approach to workforce management is ineffective, our relationships with our vendor partners and customers and our ability to expand our offerings of value-added services and solutions could be adversely affected.
Biggest changeIf we are unable to attract, develop, engage and retain key personnel, or if our approach to workforce management, including management of our offshore operations, is ineffective, our relationships with our vendor partners and customers and our ability to expand our offerings of value-added services and solutions could be adversely affected.
Further, the sale, spin-off or combination of any of our wholesale distributors or key vendor partners and/or certain of their business units, including any such sale to or combination with a vendor with whom we do not currently have a commercial relationship or whose products we do not sell, or our inability to develop relationships with new and emerging vendors and vendors that we have not historically represented in the marketplace, could have an adverse impact on our business, results of operations or cash flows.
Further, the sale, spin-off or combination of any of our key vendor partners or wholesale distributors and/or certain of their business units, including any such sale to or combination with a vendor with whom we do not currently have a commercial relationship or whose products we do not sell, or our inability to develop relationships with new and emerging vendors and vendors that we have not historically represented in the marketplace, could have an adverse impact on our business, results of operations or cash flows.
In addition, if we are unable to anticipate and expand our capabilities to keep pace with changes in technology and new hardware, software and services, for example by providing the appropriate training to our account managers, technology specialists and engineers to enable them to effectively sell and deliver such new offerings to customers, our business, results of operations or cash flows could be adversely affected.
In addition, if we are unable to anticipate and expand our capabilities to keep pace with changes in technology and new hardware, software and services, for example by providing the appropriate training to our account managers, specialists and engineers to enable them to effectively sell and deliver such new offerings to customers, our business, results of operations or cash flows could be adversely affected.
Furthermore, although we have redundant systems at a separate location to back up our primary systems, there can be no assurance that these redundant systems will operate properly if and when required. Moreover, software vulnerabilities within the third-party information technology systems we use are discovered and reported on nearly a daily basis.
Furthermore, although we have redundant systems at a separate location to back up our primary systems, there can be no assurance that these redundant systems will operate properly if and when required. Moreover, software vulnerabilities within the third-party information technology software and systems we use are discovered and reported on nearly a daily basis.
We have privacy and data security policies, practices and controls in place that are designed to prevent security breaches; however, as newer technologies evolve, as more business is conducted over the internet and remotely, as we acquire more business operations from targets with differing or inadequate cybersecurity and data protection controls and as the portfolio of the service providers we exchange confidential information, software and/or hardware with expands, we have been subject to breaches in security and are increasingly likely to be exposed to risks from breaches in security, including those arising from human error, negligence or mismanagement or from illegal or fraudulent acts, such as cyberattacks.
We have privacy and data security policies, practices and controls in place that are designed to prevent security breaches; however, as newer technologies evolve, as more business is conducted over the internet and remotely, as we acquire more business operations from targets with differing cybersecurity and data protection controls and as the portfolio of the service providers we exchange confidential information, software and/or hardware with expands, we have been subject to breaches in security and are increasingly likely to be exposed to risks from breaches in security, including those arising from human error, negligence or mismanagement or from illegal or fraudulent acts, such as cyberattacks.
In addition, as we seek to expand our offerings of value-added services and solutions, our success will even more heavily depend on attracting and retaining highly skilled technology specialists and engineers, for whom the market is extremely competitive. In order to attract, retain and motivate key personnel in a competitive marketplace, it is important to provide a competitive compensation package.
In addition, as we seek to expand our offerings of value-added services and solutions, our success will even more heavily depend on attracting and retaining highly-skilled specialists and engineers, for whom the market is extremely competitive. In order to attract, retain and motivate key personnel in a competitive marketplace, it is important to provide a competitive compensation package.
We, and some third parties upon which we rely, regularly experience malicious attacks and other attempts to gain unauthorized access to our systems, and attacks against us by state-sponsored organizations and nation-states may increase during periods of intense diplomatic or armed conflicts. Further, security breaches may go undetected and persist in our environments for extended periods.
We, and third parties upon which we rely, regularly experience malicious attacks and other attempts to gain unauthorized access to our systems, and attacks against us by state-sponsored organizations and nation-states may increase during periods of intense diplomatic or armed conflicts. Further, security breaches may go undetected and persist in our environments for extended periods.
Substantial competition could reduce our market share and significantly harm our financial performance. We compete with hardware resellers, manufacturers who sell directly to customers, large service providers and system integrators, communications service providers, cloud providers, e-commerce companies and office supply retailers, among others.
Substantial competition could reduce our market share and significantly harm our financial performance. We compete with resellers, manufacturers who sell directly to customers, large service providers and system integrators, communications service providers, cloud providers, e-commerce companies and office supply retailers, among others.
Issues relating to the use or capabilities of artificial intelligence, including social and ethical issues, in hardware, software and services offerings may result in reputational harm and liability and increased costs.
Issues relating to the use or capabilities of artificial intelligence, including social, ethical and safety issues, in hardware, software and services offerings may result in reputational harm, liability or increased costs.
Our level of indebtedness could have important consequences, including the following: • making it more difficult for us to satisfy our obligations with respect to our indebtedness; • requiring us to dedicate a substantial portion of our cash flow from operations to debt service payments on our and our subsidiaries’ debt, which reduces the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes; • requiring us to comply with restrictive covenants in our senior credit facilities and indentures, which limit the manner in which we conduct our business; • making it more difficult for us to obtain vendor financing from our vendor partners, including original equipment manufacturers and software publishers; • limiting our flexibility in planning for, or reacting to, changes in the industry in which we operate; • placing us at a competitive disadvantage compared to any of our less-leveraged competitors; • increasing our vulnerability to both general and industry-specific adverse economic conditions; and • limiting our ability to obtain additional debt or equity financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements and increasing our cost of borrowing.
Our level of indebtedness could have important consequences, including the following: • making it more difficult for us to satisfy our obligations with respect to our indebtedness; • requiring us to dedicate a substantial portion of our cash flow from operations to debt service payments on our and our subsidiaries’ debt, which reduces the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes; • requiring us to comply with restrictive covenants in our senior credit facilities and indentures, which limit the manner in which we conduct our business; • making it more difficult for us to obtain financing from our vendor partners, including original equipment manufacturers, software publishers and cloud providers, and our wholesale distributors; • limiting our flexibility in planning for, or reacting to, changes in the industry in which we operate; • placing us at a competitive disadvantage compared to any of our less-leveraged competitors; • increasing our vulnerability to both general and industry-specific adverse economic conditions; and • limiting our ability to obtain additional debt or equity financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements and increasing our cost of borrowing.
Noncompliance with contract provisions, government procurement regulations or other applicable laws or regulations (including the False Claims Act, the Medicare and Medicaid Anti-Kickback Statute or similar laws of the jurisdictions for our business activities outside of 16 Table of Contents the US) or security clearance and confidentiality requirements could result in civil, criminal and administrative liability, including substantial monetary fines or damages, termination of government contracts or other public sector customer contracts, and suspension, debarment or ineligibility from doing business with governmental entities or other customers in the public sector.
Noncompliance with contract provisions, government procurement regulations or other applicable laws or regulations (including the False Claims Act, the Medicare and Medicaid Anti-Kickback Statute or similar laws of the jurisdictions for our business activities outside of the US) or security clearance and confidentiality requirements could result in civil, criminal and administrative liability, including substantial monetary fines or damages, termination of government contracts or other public sector customer contracts, and suspension, debarment or ineligibility from doing business with governmental entities or other customers in the public sector.
Our Gross profit fluctuates due to numerous factors, some of which may be outside of our control, including general macroeconomic conditions including inflation; pricing pressures; changes in product costs from our vendor partners; the availability of price protection, purchase discounts and incentive programs from our vendor partners; changes in product, order size and customer mix; the risk of some items in our inventory becoming obsolete; increases in product and delivery costs that we cannot pass on to customers; and general market and competitive conditions.
Our Gross profit fluctuates due to numerous factors, some of which may be outside of our control, including general macroeconomic conditions including inflation; pricing pressures; 15 Table of Contents changes in product costs from our vendor partners; the availability of price protection, purchase discounts and incentive programs from our vendor partners; changes in product, order size and customer mix; the risk of some items in our inventory becoming obsolete; increases in product and delivery costs that we cannot pass on to customers; and general market and competitive conditions.
Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly. Certain of our borrowings, primarily borrowings under our senior credit facilities, are at variable rates of interest and expose us to interest rate risk. As of December 31, 2023, we had $635 million of variable rate debt outstanding.
Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly. Certain of our borrowings, primarily borrowings under our senior credit facilities, are at variable rates of interest and expose us to interest rate risk. As of December 31, 2024, we had $635 million of variable rate debt outstanding.
Factors not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, results of operations and cash flows. Business and Operational Risks Our business depends on our vendor partner relationships and the terms of the agreements governing those relationships.
Factors not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, results of operations and cash flows. Business and Operational Risks Our business depends on our vendor partner and wholesale distributor relationships and the terms of the agreements governing those relationships.
Although we have not experienced a material security breach to date, the evolving and escalating nature of cybersecurity threats, in light of new and sophisticated methods used by criminals and cyberterrorists, state-sponsored 12 Table of Contents organizations and nation-states, including computer viruses, malware, ransomware, phishing, misrepresentation, social engineering and forgery, make it increasingly challenging to anticipate, detect and defend against these threats.
Although we have not experienced a material security breach to date, the evolving and escalating nature of cybersecurity threats, in light of new and sophisticated methods used by criminals and cyberterrorists, state-sponsored organizations and nation-states, including computer viruses, malware, ransomware, phishing, misrepresentation, social engineering and forgery, make it increasingly challenging to anticipate, detect and defend against these threats.
A significant portion of our sales are derived from products manufactured by Apple, Cisco, Dell EMC, HP Inc., Lenovo and Microsoft. In addition, purchases from two wholesale distributors, Ingram Micro and TD SYNNEX, represent over 25% of our total purchases.
A significant portion of our sales are derived from products manufactured by Apple, Cisco, Dell Technologies, HP Inc., Lenovo and Microsoft. In addition, purchases from two wholesale distributors, Ingram Micro and TD SYNNEX, represent over 25% of our total purchases.
In addition, a sustained labor shortage or increased turnover rates within our coworker base could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain coworkers, and could adversely affect our business, results of operations or cash flows.
A sustained labor shortage or increased turnover rates within our coworker base could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain coworkers, and could adversely affect our business, results of operations or cash flows.
To the extent that a vendor’s offering that is in high demand is not available to us for resale in one or more customer channels, and there is not a competitive offering from another 10 Table of Contents vendor that we are authorized to sell in such customer channels, our business, results of operations or cash flows could be adversely impacted.
To the extent that a vendor’s offering that is in high demand is not available to us for resale in one or more customer channels, and there is not a competitive offering from another vendor that we are authorized to sell in such customer channels, our business, results of operations or cash flows could be adversely impacted.
If the warehouse and distribution equipment or operations at one of our distribution centers were to be seriously damaged or disrupted by a natural disaster, which may increase in number or severity as a result of climate change, or other adverse occurrence, including disruption related to political or social unrest, we could utilize another distribution center or third-party distributors to ship products to our customers.
If the warehouse and distribution equipment or operations at one of our distribution centers or such facilities or operations of our outsource partners were to be seriously damaged or disrupted by a natural disaster, which may increase in number or severity as a result of climate change, or other adverse occurrence, including disruption related to political or social unrest, we could utilize another distribution center or third-party distributors to ship products to our customers.
In addition, some of our hardware and software vendor partners sell, and could intensify their efforts to sell, their products directly to our customers. Moreover, traditional OEMs have increased their services capabilities through mergers and acquisitions with service providers, which could potentially increase competition in the market to provide comprehensive technology solutions to customers.
In addition, some of our hardware and software vendor partners sell, and could intensify their efforts to sell, their products directly to our customers. Moreover, traditional OEMs have increased their services capabilities through mergers and acquisitions, which could potentially increase competition in the market to provide comprehensive technology solutions to customers.
However, this may not be sufficient to avoid interruptions in our service and may not enable us to meet all of the needs of our customers and would cause us to incur incremental operating costs.
However, this may not be sufficient to avoid interruptions in our service and may not enable us to meet all of the needs of our customers and could cause us to incur incremental operating costs.
A natural disaster or other adverse occurrence at any of our major data storage locations, managed services sites or third-party provider locations could negatively impact our business, results of operations or cash flows. Increases in the cost of commercial delivery services or disruptions of those services could materially adversely impact our business.
A natural disaster or other adverse occurrence at any of our major data storage locations, managed services sites or third-party provider locations could negatively impact our business, results of operations or cash flows. 14 Table of Contents Increases in the cost of commercial delivery services or disruptions of those services could materially adversely impact our business.
We also are dependent upon our vendor partners for the development and marketing of hardware, software and services to compete effectively with hardware, software and services of vendors whose products and services we do not currently offer or that we are not authorized to offer in one or more customer channels.
We also are dependent upon our vendor partners for the development and marketing of hardware, software and services to compete effectively with hardware, software and services of vendors whose products and services we do not currently offer or 10 Table of Contents that we are not authorized to offer in one or more customer channels.
There can be no assurance that the intended benefits of our investments, acquisitions and alliances will be realized, or that those benefits will offset these 14 Table of Contents numerous risks or other unforeseen factors, any of which could adversely affect our business, results of operations or cash flows.
There can be no assurance that the intended benefits of our investments, acquisitions and alliances will be realized, or that those benefits will offset these numerous risks or other unforeseen factors, any of which could adversely affect our business, results of operations or cash flows.
As a public company, we also are subject to increasingly complex public disclosure, corporate governance and accounting requirements that increase compliance costs and require significant management focus. Risks Related to Our Indebtedness Our level of indebtedness could adversely affect our business.
As a public company, we also are subject to increasingly complex public disclosure, corporate governance and accounting requirements that increase compliance costs and require significant management focus. 18 Table of Contents Risks Related to Our Indebtedness Our level of indebtedness could adversely affect our business.
Political events, trade and other international disputes, war, terrorism, natural disasters, public health issues, including pandemics such as COVID-19, industrial accidents and other business interruptions can harm or disrupt international commerce and the global economy, and could have a material adverse effect on the Company and its customers, suppliers, contract manufacturers, logistics providers, distributors, cellular network carriers and other channel partners.
Political events, trade and other international disputes, geopolitical tensions, war, terrorism, natural disasters, public health issues, including pandemics such as COVID-19, industrial accidents and other business interruptions can harm or disrupt international commerce and the global economy, and could have a material adverse effect on the Company and its customers, suppliers, outsource partners, logistics providers, distributors, cellular network carriers and other channel partners.
Our global operations span a variety of legal regimes, subjecting us to numerous complex, diverse, evolving and at times potentially inconsistent laws and regulations in a number of areas, including labor and employment, advertising, e-commerce, tax, trade, import and export controls, economic and trade sanctions, anti-corruption, data privacy and security requirements, competition, climate, environmental and health and safety.
Our global operations span a variety of legal regimes, subjecting us to numerous complex, diverse, evolving and at times potentially inconsistent or conflicting laws and regulations in a number of areas, including labor and employment, advertising, e-commerce, tax, trade, import and export controls, economic and trade sanctions, anti-corruption, data privacy and security requirements, competition, environmental, social and governance and health and safety.
If the lenders under our senior credit facilities accelerate the repayment of borrowings, we may not have sufficient assets to repay our senior credit facilities and our other indebtedness or the ability to borrow sufficient funds to refinance such indebtedness.
If the lenders under our senior credit facilities accelerate the repayment of borrowings, we may not have sufficient assets to repay our senior credit facilities and our other indebtedness or the ability to borrow sufficient funds to refinance such 19 Table of Contents indebtedness.
To the extent that we incur additional indebtedness, the risks associated with our level of indebtedness described above, including our possible inability to service our debt, will increase. As of December 31, 2023, we had $1.2 billion available for additional borrowing under our Revolving Loan Facility.
To the extent that we incur additional indebtedness, the risks associated with our level of indebtedness described above, including our possible inability to service our debt, could increase. As of December 31, 2024, we had $1.2 billion available for additional borrowing under our Revolving Loan Facility.
We expect the competitive landscape to continue to evolve as new technologies and consumption models emerge, such as cloud-based and other “as a service” solutions, hyper-converged infrastructure and embedded software solutions.
We expect the competitive landscape to continue to evolve as new technologies and consumption models emerge, such as cloud-based and other “as a service” solutions, hyper-converged infrastructure, embedded software solutions and solutions that incorporate artificial intelligence.
Also, once implemented, the new information technology systems, updates to existing information technology systems and related technology may not provide the intended efficiencies or anticipated benefits, or could be defective or improperly installed, and could add costs, complications and disruptions to our ongoing operations.
Also, once implemented, the new information technology systems, updates to existing information technology systems and related technology may not provide the intended efficiencies or anticipated benefits, or could be defective, contain a security vulnerability or improperly installed or managed, and could add costs, complications and disruptions to our ongoing operations.
However, we do not have any long-term contracts with our vendor partners and many of these arrangements are terminable upon notice by either party. A reduction in vendor partner programs or funding or our failure to timely react to changes in vendor partner programs or funding could have an adverse effect on our business, results of operations or cash flows.
However, our contracts with our vendor partners are primarily short-term and many of these arrangements are terminable upon notice by either party. A reduction in vendor partner programs or funding or our failure to timely react to changes in vendor partner programs or funding could have an adverse effect on our business, results of operations or cash flows.
As of December 31, 2023, we had $5.6 billion of total debt outstanding and $431 million of obligations outstanding under our inventory financing agreements, and the ability to borrow an additional $1.2 billion under our senior unsecured revolving loan facility (the “Revolving Loan Facility”).
As of December 31, 2024, we had $5.8 billion of total debt outstanding and $355 million of obligations outstanding under our inventory financing agreements, and the ability to borrow an additional $1.2 billion under our senior unsecured revolving loan facility (the “Revolving Loan Facility”).
Our disclosure on 17 Table of Contents these matters and our failure, or perceived failure, to meet our commitments (including with respect to climate change) or otherwise effectively address these matters may erode customer trust or confidence, particularly if they receive considerable publicity or result in litigation, and could have a negative impact on our business.
Our disclosure on these matters and our failure, or perceived failure, to meet our commitments (including with respect to climate change) or otherwise effectively address these matters may erode customer trust or confidence, particularly if such failures or perceived failures receive considerable publicity or result in litigation, and could have a negative impact on our business.
Our stockholders may not be able to resell their shares of common stock at or above the price at which they purchased such shares, due to fluctuations in the market price of our common stock, which may be caused by a number of factors, many of which we cannot control, including the risk factors described in this Annual Report on Form 10-K and the following: • changes in financial estimates by any securities analysts who follow our common stock, our failure to meet these estimates or failure of securities analysts to maintain coverage of our common stock; • downgrades by any securities analysts who follow our common stock; • future sales of our common stock by our officers, directors and significant stockholders; • market conditions or trends in our industry or the economy as a whole including market expectations of changes in interest rates; • investors’ perceptions of our prospects; • announcements by us or our competitors of significant contracts, acquisitions, joint ventures or capital commitments; and • changes in key personnel. 19 Table of Contents In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies, including companies in our industry.
Our stockholders may not be able to resell their shares of common stock at or above the price at which they purchased such shares, due to fluctuations in the market price of our common stock, which may be caused by a number of factors, many of which we cannot control, including the risk factors described in this Annual Report on Form 10-K and the following: • changes in financial estimates by any securities analysts who follow our common stock, our failure to meet these estimates or failure of securities analysts to maintain coverage of our common stock; • downgrades by any securities analysts who follow our common stock; • future sales of our common stock by our officers, directors and significant stockholders; • market conditions or trends in our industry or the economy as a whole including market expectations of changes in interest rates; • investors’ perceptions of our prospects; • announcements by us or our competitors of significant contracts, acquisitions, joint ventures or capital commitments; and • changes in key personnel.
An adverse change in government spending policies (such as budget cuts or limitations), shifts in budget priorities, reductions in revenue levels or significant government shutdowns could cause our impacted public sector customers or our other customers that do business with impacted public sector customers to reduce or delay their purchases or to terminate or not renew their contracts with us, which could adversely affect our business, results of operations or cash flows.
An adverse change or anticipated change in government spending or funding policies (such as budget cuts or limitations), shifts in budget priorities, reductions in revenue levels or significant government shutdowns could cause our customers to reduce or delay their purchases or to terminate or not renew their contracts with us, which could adversely affect our business, results of operations or cash flows.
We have experienced and could continue to experience product constraints due to the failure of suppliers to accurately forecast customer demand, or to manufacture sufficient quantities of product to meet customer demand (including as a result of shortages of product components), among other reasons.
We have experienced and could in the future experience product constraints due to the failure of suppliers to accurately forecast customer demand, or to manufacture sufficient quantities of product to meet customer demand (including as a result of shortages of product components), among 16 Table of Contents other reasons.
Manufacturing interruptions or delays, including as a result of the financial instability or bankruptcy of manufacturers, significant labor disputes such as strikes, natural disasters (which may increase in number or severity as a result of climate change), political or social unrest, armed conflict, pandemics (such as the COVID-19 pandemic) or other public health crises, or other adverse occurrences affecting any of our suppliers’ facilities, could disrupt our supply chain.
Manufacturing interruptions or delays, including as a result of the financial instability or bankruptcy of manufacturers, significant labor disputes such as strikes, natural disasters (which may increase in number or severity as a result of climate change), political or social unrest, armed conflict, pandemics (such as the COVID-19 pandemic) or other public health crises, or other adverse occurrences affecting any of our suppliers’ facilities, could disrupt our supply chain and cause volatility in our level of inventory and delays in completion of orders and installations for our customers.
Weak or unstable economic conditions generally, inflation and actions taken by central banks to counter inflation, sustained uncertainty about global political conditions (such as that caused by UK’s exit from the European Union in 2020, referred to as “Brexit”), periods of intense diplomatic or armed conflict, government spending cuts and the impact of new government policies (including the introduction of new or increased taxes, the imposition of minimum taxes or new or increased limitations on deductions, credits or other tax benefits), or a tightening of credit markets, including as a result of rising interest rates or bank failures, could cause our customers and potential customers to postpone or reduce spending on technology products or services or put downward pressure on prices, which could have an adverse effect on our business, results of operations or cash flows.
Weak or unstable economic conditions generally, inflation and actions taken by central banks to counter inflation (such as those that prevailed in recent years), sustained uncertainty about global political conditions, periods of intense diplomatic or armed conflict, government spending cuts and the impact of new government policies (including the introduction of new or increased taxes, the imposition of minimum taxes or new or increased limitations on deductions, credits or other tax benefits, or any other changes to tax laws), or a tightening of credit markets, including as a result of rising interest rates or bank failures, could cause our customers and potential customers to postpone or reduce spending on technology products or services or put downward pressure on prices, which could have an adverse effect on our business, results of operations or cash flows.
Upon the occurrence of an event of default under our senior credit facilities, the lenders: • will not be required to lend any additional amounts to us; • could elect to declare all borrowings outstanding thereunder, together with accrued and unpaid interest and fees, to be due and payable; or • could require us to apply all of our available cash to repay these borrowings. 18 Table of Contents The acceleration of amounts outstanding under our senior credit facilities would likely trigger an event of default under our existing indentures.
Upon the occurrence of an event of default under our senior credit facilities, the lenders: • will not be required to lend any additional amounts to us; • could elect to declare all borrowings outstanding thereunder, together with accrued and unpaid interest and fees, to be due and payable; or • could require us to apply all of our available cash to repay these borrowings.
Social and ethical issues relating to the use of new and evolving technologies such as artificial intelligence (“AI”) in our hardware, software and service offerings, as well as in our internal platforms, may result in reputational harm and liability.
Social, ethical and safety issues relating to the use of new and evolving technologies such as artificial intelligence-based technologies, including generative AI in our hardware, software and service offerings, as well as in our internal platforms, may result in reputational harm and liability.
Our success is heavily dependent upon our ability to attract, develop, engage and retain key personnel to manage, lead, innovate and grow our business, including our key executive, management, sales, services and technical coworkers. Additionally, we rely on outsource partners to execute and deliver on certain functions within the organization.
Our success is heavily dependent upon our ability to attract, develop, engage and retain key personnel to manage, lead, innovate and grow our business, including our key executive, management, sales, services, specialists and engineers. Additionally, we rely on offshore operations to execute and deliver on certain functions within the organization.
The evaluation of and compliance with these laws, regulations and similar requirements may be onerous and expensive, and may have other adverse impacts on our business, results of operations or cash flows, the risk of which will be heightened as we expand the products and services we offer, expand into new markets and channels and expand internationally.
The evaluation of and compliance with these laws, regulations and similar requirements, including evolving laws and regulations and regulatory overhaul during any change in federal administration, may be onerous and expensive, and may have other adverse impacts on our business, results of operations or cash flows, the risk of which will be heightened as we expand the products and services we offer, expand into new markets and channels and expand internationally.
The deterioration of the earnings from, or other available assets of, our subsidiaries for any reason could also limit or impair their ability to pay dividends or other distributions to us.
The deterioration of the earnings from, or other available assets of, our subsidiaries for any reason could also limit or impair their ability to pay dividends or other distributions to us. Item 1B. Unresolved Staff Comments None.
The quality and our utilization of the information generated by our information technology systems, and our success in implementing new systems and upgrades, could adversely affect, among other things, our ability to: • conduct business with our customers, including delivering services and solutions to them; • provide the means to effectively manage global operations across time zones; 11 Table of Contents • keep pace with changes and innovation and compete effectively; • effectuate comprehensive and reliable data collection, maintenance and governance; • manage our inventory, accounts receivable and accounts payable; • support planned growth in services and solutions and continued evolution of the business; • purchase, sell, ship and invoice our hardware and software products and provide and invoice our services efficiently and on a timely basis; and • maintain our cost-efficient operating model while scaling our business.
The quality and our utilization of the information generated by our information technology systems, and our success in implementing new systems and upgrades, including our transformation initiatives, could adversely affect, among other things, our ability to: • conduct business with our customers, including delivering services and solutions to them; • provide the means to effectively manage global operations across time zones; • keep pace with changes and innovation and compete effectively; • effectuate comprehensive and reliable data collection, maintenance and governance; • manage our inventory, accounts receivable and accounts payable; • support planned growth in services and solutions and continued evolution of the business; • purchase, sell, ship and invoice our hardware and software products and provide and invoice our services efficiently and on a timely basis; • maintain an effective internal control environment around our financial close process and regulatory reporting requirements; • execute the financial close processes and deliver our required financial reporting with the SEC; and • maintain our cost-efficient operating model while scaling our business.
It may require significant time and expense to upgrade and integrate such systems and controls, and if we are unable to do so in a timely manner, or at all, failures or breaches of such systems could harm our reputation, business and results of operations due to failure to comply with customer, partner, legal or regulatory obligations.
It may require significant time and expense to upgrade and integrate such systems and controls, and if we are unable to do so in a timely manner, or at all, failures or breaches of such systems could harm our reputation, business and results of operations due to failure to comply with customer, partner, legal or regulatory obligations. 12 Table of Contents Breaches of data security and the failure to protect our information technology systems from cybersecurity threats could adversely impact our business.
In the event that supply chain pressures ease, we may experience changes in average selling prices and our gross margins on certain products as customers become more price sensitive. Our supply chain is also exposed to risks related to international operations.
Supply chain pressures have and could in the future cause us to experience changes in average selling prices and our gross margins on certain products as customers have become and could in the future become more price sensitive. Our supply chain is also exposed to risks related to international operations.
Our success is dependent on the accuracy, proper utilization and continuing operation, maintenance and development of our information technology systems, including our business systems, such as our sales, customer management, financial and accounting, marketing, purchasing, warehouse management, e-commerce and mobile systems, as well as our operational platforms, including voice and data networks and power systems.
Our success is dependent on the accuracy, proper utilization and continuing operation, maintenance and development of our information technology systems, including our business systems, such as our sales, customer management, financial and accounting, marketing, purchasing, warehouse management, e-commerce and mobile systems, as well as our operational platforms, including voice and data networks and power systems, which may include third-party hosted systems or systems that may utilize cloud technologies outside of our control.
For example, we may be subject to increased costs and use of operational resources associated with complying with any new climate-related laws and regulations.
For example, we may be subject to increased costs and use of operational resources associated with complying with a myriad of new environmental, social and governance related laws and regulations.
In the past, securities class action litigation has followed periods of market volatility. If we were involved in securities litigation, we could incur substantial costs, and our resources and the attention of management could be diverted from our business. In the future, we may also issue our securities in connection with investments or acquisitions.
If we were involved in securities litigation, we could incur substantial costs, and our resources and the attention of management could be diverted from our business. 20 Table of Contents In the future, we may also issue our securities in connection with investments or acquisitions.
Litigation, infringement claims, governmental proceedings and investigations, audits or indemnification claims involve uncertainties and the eventual outcome of any such matter could adversely affect our business, results of operations or cash flows.
In addition, these matters could lead to increased costs or interruptions of our normal business operations. Litigation, infringement claims, governmental proceedings and investigations, audits or indemnification claims involve uncertainties and the eventual outcome of any such matter could adversely affect our business, results of operations or cash flows.
Decreases in spending on technology products and services by our public and private sector customers due to, among other things, customer spending decisions and government spending policies may have an adverse impact on our business. Our sales are impacted by customer spending decisions on technology, including refresh decisions, customer initiatives that drive technology spending and customer budget priorities.
Decreases or delays in spending on technology products and services by our customers due to, among other things, customer spending decisions and government spending and funding policies may have an adverse impact on our business. Our sales are impacted by customer decisions on budget priorities and technology spending, including decisions to defer any such spending.
Moreover, supply chain disruptions have caused and could continue to cause us to experience more volatility in our level of inventory and delays in completion of orders and installations for our customers and could further exacerbate current inflationary pressures.
Moreover, supply chain disruptions have caused and could in the future cause us to experience more volatility in our level of inventory and delays in completion of orders and installations for our customers and could exacerbate inflationary pressures, such as those that prevailed in recent years.
Current and future litigation, infringement claims, governmental proceedings and investigations, audits or indemnification claims that we face may result in substantial costs and expenses and significantly divert the attention of our management regardless of the outcome. In addition, these matters could lead to increased costs or interruptions of our normal business operations.
In addition, we are subject to indemnification claims under various contracts. Current and future litigation, infringement claims, governmental proceedings and investigations, audits or indemnification claims that we face may result in substantial costs and expenses and significantly divert the attention of our management regardless of the outcome.
The interruption of the flow of products from suppliers could disrupt our supply chain. Our business depends on the timely supply of products in order to meet the demands of our customers.
Our business depends on the timely supply of products in order to meet the demands of our customers.
In connection with our services business, some of our coworkers have access to our customers’ confidential data and other information. Additionally, third parties, such as data center colocation and hosted solution partners, provide services to us and also provide services as a component of our services delivery to customers and to customer systems.
Additionally, third parties, such as data center colocation and hosted solution partners, provide services to us and also provide services as a component of our services delivery to customers and to customer systems.
If we lose any of our key personnel, are unable to attract and retain the talent required for our business, our labor costs significantly increase or our approach to workforce management, inclusive of outsourcing, is ineffective, our business could be disrupted and our financial performance could suffer.
If any of the foregoing were to occur, our reputation with our customers, our brand and our business, results of operations or cash flows could be adversely affected. 13 Table of Contents If we lose any of our key personnel, are unable to attract and retain the talent required for our business, our labor costs significantly increase or our approach to workforce management is ineffective, our business could be disrupted and our financial performance could suffer.
Interest rates increased significantly during 2023 and may continue to do so. When interest rates increase, our debt service obligations on the variable rate indebtedness increase even though the amount borrowed remains the same, and could negatively impact our net income absent any derivative instruments.
When interest rates increase, our debt service obligations on the variable rate indebtedness increase even though the amount borrowed remains the same, and could negatively impact our net income absent any derivative instruments. From time to time, we may execute derivative instruments to reduce interest rate volatility, subject to acceptable terms.
Additionally, such adverse change in government spending policies, shifts in budget priorities or reductions in revenue levels could impact cash collections from contracts with our impacted public sector customers or other customers that do business with impacted public sector customers, which could adversely affect our business, results of operations or cash flows.
Additionally, such adverse change in government spending policies, shifts in budget priorities or reductions in revenue levels could impact cash collections from contracts which could adversely affect our business, results of operations or cash flows. The interruption of the flow of products from suppliers could disrupt our supply chain.
We maintain and periodically upgrade many of our information technology systems, some of which are complex, costly and time consuming. If our information technology systems are not properly maintained or enhanced, the attention of our coworkers could be diverted and our ability to provide the level of service our customers demand could be constrained for some time.
If our information technology systems are not properly maintained or enhanced, the attention of our coworkers could be diverted and our ability to provide the level of service our customers demand could be constrained for some time. Further, new information technology systems and updates to existing information technology systems may not properly integrate with other information technology systems.
Breaches of data security and the failure to protect our information technology systems from cybersecurity threats could adversely impact our business. Our business involves the handling, storage and transmission of proprietary information and sensitive or confidential data, including personal information of coworkers, customers, partners and others, which we must do in compliance with applicable law.
Our business involves the handling, storage and transmission of proprietary information and sensitive or confidential data, including personal information of coworkers, customers, partners and others, which we must do in compliance with applicable law. In connection with our services business, some of our coworkers have access to our customers’ confidential data and other information.
Risks Related to Ownership of Our Common Stock Our common stock price may be volatile and may decline regardless of our operating performance, and holders of our common stock could lose a significant portion of their investment. The market price for our common stock may be volatile.
We cannot assure you we will enter into such derivative instruments in the future or that such instruments will be effective. Risks Related to Ownership of Our Common Stock Our common stock price may be volatile and may decline regardless of our operating performance, and holders of our common stock could lose a significant portion of their investment.
In addition, the adoption of new or modified procurement regulations and other requirements may increase our compliance costs and reduce our gross margins, which could have a negative effect on our business, results of operations or cash flows.
In addition, the adoption of new or modified procurement regulations and other requirements may increase our compliance costs and reduce our gross margins, which could have a negative effect on our business, results of operations or cash flows. 17 Table of Contents We are exposed to risks from legal proceedings and audits, including intellectual property infringement claims, which may result in substantial costs and expenses or interruption of our normal business operations.
Increased focus and potential government regulation in the space of AI ethics may also increase the burden and cost of research and development in this area, subjecting us to brand or reputational harm, competitive harm or legal liability.
Increased focus and potential government regulation of AI may also increase the burden and cost of compliance in this area, subjecting us to brand or reputational harm, competitive harm and/or legal liability. Failure to address AI issues by us or others in our industry could undermine public confidence in AI and slow adoption of AI in our products and services.
We are exposed to risks from legal proceedings and audits, including intellectual property infringement claims, which may result in substantial costs and expenses or interruption of our normal business operations. We are party to various legal proceedings that arise in the ordinary course of our business, which include commercial, employment, tort and other litigation.
We are party to various legal proceedings that arise in the ordinary course of our business, which include commercial, employment, tort and other litigation.
The hardware, software and services we offer increasingly utilize AI, and, as with many innovations, AI presents risks and challenges that could affect its adoption, and therefore our business. If we use, enable or offer solutions that draw controversy due to their perceived or actual impact on society, we may experience brand or reputational harm, competitive harm or legal liability.
If we use, enable or offer solutions that draw controversy due to their perceived or actual impact on society, we may experience brand or reputational harm, competitive harm and/or legal liability.
We are also exposed to inventory risks as a result of the rapid technological changes that affect the market and pricing for the products we sell.
Significant failures of customers to timely pay all amounts due to us could adversely affect our business, results of operations or cash flows. We are also exposed to inventory risks as a result of the rapid technological changes that affect the market and pricing for the products we sell.
Our sales are dependent on continued innovations in technology by our vendor partners and the competitiveness of their offerings, and our ability to partner with new and emerging technology providers. The technology industry is characterized by rapid innovation and the frequent introduction of new and enhanced hardware, software and services, such as cloud-based and other “as a service” solutions.
Our sales are dependent on continued innovations in technology by our vendor partners and the competitiveness of their offerings, and our ability to partner with new and emerging technology providers.
In addition, we are subject to proceedings, investigations and audits by federal, state, international, national, provincial and local authorities, including as a result of our significant sales to governmental entities.
In addition, we are subject to proceedings, investigations and audits by federal, state, international, national, provincial and local authorities, including as a result of our significant sales to governmental entities. For example, the Company received a Civil Investigative Demand, issued by the US Department of Justice (“DOJ”) on June 11, 2024, in connection with a False Claims Act investigation.
We also are subject to audits by various partners, group purchasing organizations and customers, including government agencies, relating to purchases and sales under various contracts. In addition, we are subject to indemnification claims under various contracts.
The DOJ requested information relating to bids the Company submitted for contracts funded in whole or in part by the Schools and Libraries Program (E-Rate Program). We also are subject to audits by various partners, group purchasing organizations and customers, including government agencies, relating to purchases and sales under various contracts.
This would require us to sell a greater number of products to achieve the same level of Net sales and Gross profit. If such a reduction in prices occurs and we are unable to attract new customers and sell increased quantities of products, our sales growth and profitability could be adversely affected.
If such a reduction in prices occurs and we are unable to attract new customers and sell increased quantities of products, our sales growth and profitability could be adversely affected. 11 Table of Contents The success of our business depends on the continuing development, maintenance and operation of our information technology systems.
If and when cyberattacks target and successfully exploit these vulnerabilities, we take steps designed to contain and limit the impact on our business. Any disruption to or infiltration of our information technology systems could significantly harm our reputation, business and results of operations due to failure to comply with customer, partner, legal or regulatory obligations.
If and when cyberattacks target and successfully exploit these vulnerabilities, we take steps designed to contain and limit the impact on our business.
Additionally, the development, adoption and use for AI is still in its early stages, and ineffective or inadequate AI development or deployment practices by us or our vendor partners could result in unintended consequences. AI technologies are complex and rapidly evolving, and we face significant competition in the market and from other companies regarding such technologies.
AI technologies are complex and rapidly evolving, and we face significant competition in the market and from other companies regarding such technologies. Further, the responsible development and deployment of AI requires ongoing investment in research, development and governance, which could adversely affect our results of operation or cash flows.
Our sales to our public sector customers, and our other customers that do business with our public sector customers in particular, are impacted by government spending policies, budget priorities 15 Table of Contents and revenue levels.
Our customer’s spending decisions and budget priorities have and can be impacted by government spending and funding policies, especially but not exclusively for our public sector, healthcare and education customers, and our other customers that do business with our public sector customers or otherwise rely directly or indirectly on government funding.
This risk is heightened during periods of global or industry-specific economic downturn or uncertainty, during periods of rising interest rates or, in the case of public sector customers, during periods of budget constraints. Significant failures of customers to timely pay all amounts due to us could adversely affect our business, results of operations or cash flows.
These risks are heightened during periods of global or industry-specific economic downturn or uncertainty, during periods of rising interest rates or, in the case of public sector customers, during periods of budget constraints or budget cuts. Further, evolving product delivery models, such as multi-year subscriptions, may result in prolonged risk as customer terms extend in duration.
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Failure to address AI ethics issues by us or others in our industry could undermine public confidence in AI and slow adoption of AI in our products and services.
Added
The technology industry is characterized by rapid innovation and the frequent introduction of new and enhanced hardware, software and services, such as cloud-based and other “as a service” solutions, hyper-converged infrastructure, embedded software solutions and solutions that incorporate artificial intelligence.
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The success of our business depends on the continuing development, maintenance and operation of our information technology systems.
Added
Certain of the hardware, software and services we offer increasingly utilize AI, and, as with many innovations, AI presents risks and challenges that could affect its adoption, and therefore our business.
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Further, new information technology systems and updates to existing information technology systems may not properly integrate with other information technology systems.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis reporting includes updates on our information security strategy, key cyber risks and threats and our progress towards protecting the Company from such risks and threats, assessments of our cybersecurity program and emerging trends.
Biggest changeThe CTO and CISO regularly provide reporting on cybersecurity matters to both senior management and the Audit Committee and at least annually to the Board of Directors. This reporting includes updates on our information security strategy, key cyber risks and threats, our progress towards protecting the Company from such risks and threats, assessments of our cybersecurity program and emerging trends.
Our information security management program is ISO 27001 certified, and we undergo routine audits by an independent, certified accreditation body to maintain this certification. Our program is designed to guide our practices which are based on relevant industry frameworks and laws.
Our corporate information security management program is ISO 27001 certified, and we undergo routine audits by an independent, certified accreditation body to maintain this certification. Our program is designed to guide our practices which are based on relevant industry frameworks and laws.
The CISO has extensive background in that role at an enterprise level and has over 20 years of experience in the field of cybersecurity.
The CISO has extensive 21 Table of Contents background in that role at an enterprise level and has over 20 years of experience in the field of cybersecurity.
Removed
The CTO and CISO regularly provide reporting on cybersecurity matters to both senior management and the Audit Committee and at least annually to the Board of Directors.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties As of December 31, 2023, we owned or leased a total of 2.3 million square feet of space, primarily in the US, UK and Canada. We own two properties: a 513,240 square foot distribution center in North Las Vegas, Nevada, and a combined office and a 442,400 square foot distribution center in Vernon Hills, Illinois.
Biggest changeItem 2. Properties As of December 31, 2024, we owned or leased a total of 2.3 million square feet of space, primarily in the US, UK and Canada. We own two properties: a 513,240 square foot distribution center in North Las Vegas, Nevada, and a combined office and a 442,400 square foot distribution center in Vernon Hills, Illinois.
Leases covering our currently occupied leased properties expire at varying dates, all within the next 12 years. We anticipate no difficulty in retaining occupancy through lease renewals, month-to-month occupancy or replacing the leased properties with equivalent properties. We believe that suitable additional or substitute leased properties will be available as required.
Leases covering our currently occupied leased properties expire at varying dates, all within the next 11 years. We anticipate no difficulty in retaining occupancy through lease renewals, month-to-month occupancy or replacing the leased properties with equivalent properties. We believe that suitable additional or substitute leased properties will be available as required.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings We are party to various legal proceedings that arise in the ordinary course of our business, which include commercial, intellectual property, employment, tort and other litigation matters. For additional information regarding legal proceedings, refer to Note 16 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements. 21 Table of Contents
Biggest changeItem 3. Legal Proceedings We are party to various legal proceedings that arise in the ordinary course of our business, which include commercial, intellectual property, employment, tort and other litigation matters. For additional information regarding legal proceedings, refer to Note 16 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDecember 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 CDW Corp $ 100 $ 178 $ 167 $ 261 $ 231 $ 297 S&P 500 100 129 150 190 153 190 S&P 500 Information Technology 100 148 211 281 200 312 CDW Peers 100 132 152 215 169 213 Recent Sales of Unregistered Securities None.
Biggest changeDecember 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 CDW Corp $ 100 $ 93 $ 147 $ 129 $ 167 $ 129 S&P 500 100 116 148 119 148 182 S&P 500 Information Technology 100 142 190 135 211 286 CDW Peers 100 116 163 128 162 173 Recent Sales of Unregistered Securities None.
Our peer group index for 2023 consists of the following companies: Accenture plc, Arrow Electronics, Inc., Avnet, Inc., Best Buy Company, Inc., CGI Group Inc., Cognizant Technology Solutions Corporation, DXC Technology Company, Flex Ltd., Genuine Parts Company, Henry Schein, Inc., Hewlett Packard Enterprise Company, Insight Enterprises, Inc., Jabil, Inc., LKQ Corporation, TD SYNNEX Corporation, W.W.
Our peer group index for 2024 consists of the following companies: Accenture plc, Arrow Electronics, Inc., Avnet, Inc., Best Buy Company, Inc., CGI Group Inc., Cognizant Technology Solutions Corporation, DXC Technology Company, Flex Ltd., Genuine Parts Company, Henry Schein, Inc., Hewlett Packard Enterprise Company, Insight Enterprises, Inc., Jabil, Inc., LKQ Corporation, TD SYNNEX Corporation, W.W.
The following graph compares the cumulative total shareholder return, calculated on a dividend reinvested basis, on $100 invested at the closing of the market on December 31, 2018 through and including the market close on December 31, 2023, with the cumulative total return for the same time period of the same amount invested in the Standard & Poor’s 500 Stock 23 Table of Contents (“S&P 500”) Index, the S&P 500 Information Technology Index and a peer group index.
The following graph compares the cumulative total shareholder return, calculated on a dividend reinvested basis, on $100 invested at the closing of the market on December 31, 2019 through and including the market close on December 31, 2024, with the cumulative total return for the same time period of the same amount invested in the Standard & Poor’s 500 Stock 23 Table of Contents (“S&P 500”) Index, the S&P 500 Information Technology Index and a peer group index.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock has been listed on the Nasdaq Global Select Market since June 27, 2013 under the symbol “CDW.” Holders As of February 20, 2024, there were 4 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock has been listed on the Nasdaq Global Select Market since June 27, 2013 under the symbol “CDW.” Holders As of February 18, 2025, there were 5 holders of record of our common stock.
The number of beneficial stockholders is substantially greater than the number of holders of record because a portion of our common stock is held through brokerage firms. Dividends On February 7, 2024, we announced that our Board of Directors declared a quarterly cash dividend on our common stock of $0.62 per share.
The number of beneficial stockholders is substantially greater than the number of holders of record because a portion of our common stock is held through brokerage firms. Dividends On February 5, 2025, we announced that our Board of Directors declared a quarterly cash dividend on our common stock of $0.625 per share.
On February 7, 2024, we announced that our Board of Directors authorized a $750 million increase to our share repurchase program (which was incremental to the amount remaining under the $750 million authorization announced on February 8, 2023) under which we may repurchase shares of our common stock from time to time in privately negotiated transactions, open market purchases or other transactions as permitted by securities laws and other legal requirements.
On February 5, 2025, we announced that our Board of Directors authorized a $750 million increase to our share repurchase program (which was incremental to the approximately $588 million remaining as of December 31, 2024 under the $750 million authorization announced on February 7, 2024) under which we may repurchase shares of our common stock from time to time in privately negotiated transactions, open market purchases or other transactions as permitted by securities laws and other legal requirements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Issuer Purchases of Equity Securities Information relating to the Company’s purchases of its common stock during the three months ended December 31, 2023 is as follows: Period Total Number of Shares Purchased (in millions) Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program (in millions) Maximum Dollar Value of Shares that May Yet be Purchased Under the Plan or Program (1) (in millions) October 1 through October 31, 2023 0.1 $ 204.19 0.1 $ 369.6 November 1 through November 30, 2023 0.1 212.56 0.1 352.7 December 1 through December 31, 2023 0.0 219.02 0.0 337.6 Total 0.2 0.2 (1) The amounts presented in this column are the remaining total authorized value to be spent after each month’s repurchases.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Issuer Purchases of Equity Securities Information relating to the Company’s purchases of its common stock during the three months ended December 31, 2024 is as follows: Period Total Number of Shares Purchased (in millions) Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program (in millions) Maximum Dollar Value of Shares that May Yet be Purchased Under the Plan or Program (1) (in millions) October 1 through October 31, 2024 0.1 $ 216.91 0.1 $ 720.4 November 1 through November 30, 2024 0.3 185.98 0.3 659.7 December 1 through December 31, 2024 0.4 177.39 0.4 587.6 Total 0.8 0.8 (1) The amounts presented in this column are the remaining total authorized value to be spent after each month’s repurchases.
The dividend will be paid on March 12, 2024 to all stockholders of record as of the close of business on February 26, 2024.
The dividend will be paid on March 11, 2025 to all stockholders of record as of the close of business on February 25, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCash Flows Cash flows from operating, investing and financing activities are as follows: Year Ended December 31, (dollars in millions) 2023 2022 Net cash provided by (used in): Operating Activities $ 1,598.7 $ 1,335.9 Investing Activities Capital expenditures (148.2) (127.8) Acquisitions of businesses, net of cash acquired (76.4) (36.7) Other (5.0) — Cash flows used in investing activities (229.6) (164.5) Financing Activities Net change in accounts payable - inventory financing (23.7) 84.6 Other cash flows from financing activities (1,075.0) (1,186.7) Cash flows used in financing activities (1,098.7) (1,102.1) Effect of exchange rate changes on cash and cash equivalents 3.1 (12.2) Net increase in cash and cash equivalents $ 273.5 $ 57.1 33 Table of Contents Operating Activities Cash flows from operating activities are as follows: Year Ended December 31, (dollars in millions) 2023 2022 Change Net income $ 1,104.3 $ 1,114.5 $ (10.2) Adjustments for the impact of non-cash items (1) 375.6 388.0 (12.4) Net income adjusted for the impact of non-cash items 1,479.9 1,502.5 (22.6) Changes in assets and liabilities: Accounts receivable (2) (54.5) (34.8) (19.7) Merchandise inventory 139.0 111.9 27.1 Accounts payable-trade (3) (55.4) (260.0) 204.6 Other (4) 89.7 16.3 73.4 Net cash provided by operating activities $ 1,598.7 $ 1,335.9 $ 262.8 (1) Includes items such as depreciation and amortization, deferred income taxes, provision for credit losses and equity-based compensation expense.
Biggest changeThe payment of any future dividends will be at the discretion of our Board of Directors and will depend upon our results of operations, financial condition, business prospects, capital requirements, contractual restrictions (including in current or future agreements governing our indebtedness), restrictions imposed by applicable law, tax considerations and other factors that our Board of Directors deems relevant. 32 Table of Contents Cash Flows Cash flows from operating, investing and financing activities are as follows: Year Ended December 31, (dollars in millions) 2024 2023 Net cash provided by operating activities $ 1,277.3 $ 1,598.7 Investing Activities: Capital expenditures (122.6) (148.2) Purchases of short-term investments (211.1) — Acquisitions of businesses, net of cash acquired (323.9) (76.4) Other (1.6) (5.0) Cash flows used in investing activities (659.2) (229.6) Financing Activities: Net change in accounts payable - inventory financing (75.7) (23.7) Other cash flows from financing activities (611.2) (1,075.0) Cash flows used in financing activities (686.9) (1,098.7) Effect of exchange rate changes on cash, cash equivalents and restricted cash (12.2) 3.1 Net (decrease) increase in cash, cash equivalents and restricted cash $ (81.0) $ 273.5 Operating Activities Cash flows from operating activities are as follows: Year Ended December 31, (dollars in millions) 2024 2023 Change Net income $ 1,077.8 $ 1,104.3 $ (26.5) Adjustments for the impact of non-cash items (1) 362.2 375.6 (13.4) Net income adjusted for the impact of non-cash items 1,440.0 1,479.9 (39.9) Changes in assets and liabilities: Accounts receivable (2) (559.4) (54.5) (504.9) Merchandise inventory (3) 61.1 139.0 (77.9) Accounts payable-trade (4) 443.8 (55.4) 499.2 Other (5) (108.2) 89.7 (197.9) Net cash provided by operating activities $ 1,277.3 $ 1,598.7 $ (321.4) (1) Includes items such as depreciation and amortization, deferred income taxes, provision for credit losses and equity-based compensation expense.
Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial condition that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with US GAAP.
Non-GAAP Financial Measure Reconciliations Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial condition that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with US GAAP.
That is, when the customer has the ability to direct the use of and obtain substantially all of the benefits from the good or service. For the sale of hardware and software, this is generally upon delivery to the customer.
That is, when the customer has the ability to direct the use of and obtain substantially all of the benefits from the good or service. For the sale of hardware, this is generally upon delivery to the customer.
All guarantees by Parent and the Guarantors are joint and several, and full and unconditional; provided that guarantees by the Guarantor Subsidiaries are subject to certain customary release provisions contained in the indentures governing the Notes.
All guarantees by Parent and the Guarantor Subsidiaries are joint and several, and full and unconditional; provided that guarantees by the Guarantor Subsidiaries are subject to certain customary release provisions contained in the indentures governing the Notes.
(4) Defined as Cash flows provided by operating activities less capital expenditures, adjusted to include cash flows from financing activities that relate to the purchase of inventory.
(4) Defined as Net cash provided by operating activities less capital expenditures, adjusted to include cash flows from financing activities that relate to the purchase of inventory.
Issuers and Guarantors of Debt Securities Each series of our outstanding unsecured senior notes (the “Notes”) are issued by CDW LLC and CDW Finance Corporation (the “Issuers”) and are guaranteed by CDW Corporation (“Parent”) and certain of CDW LLC’s direct and indirect, 100% owned, domestic subsidiaries (the “Guarantor Subsidiaries” and, together with Parent, the “Guarantors”).
Issuers and Guarantors of Debt Securities Each series of our outstanding unsecured senior notes (collectively, the “Notes”) are issued by CDW LLC and CDW Finance Corporation (the “Issuers”) and are guaranteed by Parent and certain of CDW LLC’s direct and indirect, 100% owned, domestic subsidiaries (the “Guarantor Subsidiaries” and, together with Parent, the “Guarantors”).
Average daily sales is defined as Net sales divided by the number of selling days. (2) Represents the effect of translating Net sales for the year ended December 31, 2022 of CDW UK and CDW Canada at the average exchange rates applicable in 2023.
Average daily sales is defined as Net sales divided by the number of selling days. (2) Represents the effect of translating Net sales for the year ended December 31, 2023 of CDW UK and CDW Canada at the average exchange rates applicable in 2024.
Revenue Recognition We sell some of our products and services as part of bundled contract arrangements containing multiple performance obligations, which may include a combination of different products and services. Significant judgment may be required when determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together.
Revenue Recognition We sell some of our products and services as part of bundled contract arrangements containing multiple performance obligations, which may include a combination of different products and services. Significant judgment may be required when 35 Table of Contents determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together.
We may from time to time repurchase one or more series of our outstanding unsecured senior notes, depending on market conditions, contractual commitments, our capital needs and other factors. Repurchases of our senior notes may be made by open market or private transactions and may be pursuant to Rule 10b5-1 plans or otherwise.
We may from time to time repurchase one or more series of our outstanding unsecured senior notes, depending on market conditions, contractual commitments, our capital needs and other factors. Repurchases of our senior notes may be made by open market or privately negotiated transactions and may be pursuant to Rule 10b5-1 plans or otherwise.
The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit.
The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions and other factors. Changes in these estimates and assumptions could materially affect the 36 Table of Contents determination of fair value and goodwill impairment for each reporting unit.
For a discussion of results for the year ended December 31, 2022, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on February 24, 2023.
For a discussion of results for the year ended December 31, 2023, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 26, 2024.
(2) Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names. (3) Includes cost related to strategic transformation initiatives focused on optimizing various operations and systems. (4) Includes costs related to the workforce reduction program and charges related to the reduction of our real estate lease portfolio.
(2) Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names. (3) Includes cost related to strategic transformation initiatives focused on optimizing various operations and systems. 30 Table of Contents (4) Includes costs related to workforce reductions and charges related to the reduction of our real estate lease portfolio.
Our solutions are delivered in physical, virtual and cloud-based environments through approximately 10,900 customer-facing coworkers, including sellers, highly-skilled technology specialists and advanced service delivery engineers. We are a leading sales channel partner for many original equipment manufacturers (“OEMs”), software publishers and cloud providers (collectively, our “vendor partners”), whose products we sell or include in the solutions we offer.
Our solutions are delivered in physical, virtual and cloud-based environments through approximately 10,900 customer-facing coworkers, including sellers, highly-skilled specialists and engineers. We are a leading sales channel partner for many original equipment manufacturers, software publishers, cloud providers (collectively, our “vendor partners”) and wholesale distributors, whose products we sell or include in the solutions we offer.
Free cash flow is defined as cash flows provided by operating activities less capital expenditures. Adjusted free cash flow is defined as Free cash flow adjusted to include certain cash flows from financing activities incurred in the normal course of operations or as capital expenditures.
Adjusted free cash flow is defined as Free cash flow adjusted to include certain cash flows from financing activities incurred in the normal course of operations or as capital expenditures.
However, our past estimates of fair value would not have indicated an impairment when revised to include subsequent years’ actual results. We completed our annual impairment analysis during the fourth quarter of 2023.
However, since our last quantitative analysis, our past estimates of fair value would not have indicated an impairment when revised to include subsequent years’ actual results. We completed our annual impairment analysis during the fourth quarter of 2024.
We have orchestrated solutions by leveraging netcomm products, security, software and hybrid and cloud offerings to help customers achieve their objectives. 25 Table of Contents • Changes in spending policies, budget priorities and funding levels, including current and future stimulus packages, are key factors influencing the purchasing levels of Government, Healthcare and Education customers.
We have orchestrated solutions by leveraging security, software and hybrid and cloud offerings to help customers achieve their objectives. 25 Table of Contents • Changes and uncertainty related to spending policies, budget priorities, timing and funding levels, including stimulus packages, are key factors influencing the purchasing levels of government, healthcare and education customers.
Components of our cash conversion cycle are as follows: December 31, (in days) 2023 2022 Days of sales outstanding (DSO) (1) 77 71 Days of supply in inventory (DIO) (2) 13 17 Days of purchases outstanding (DPO) (3) (73) (67) Cash conversion cycle 17 21 (1) Represents the rolling three-month average of the balance of Accounts receivable, net at the end of the period, divided by average daily Net sales for the same three-month period.
Components of our cash conversion cycle are as follows: December 31, (in days) 2024 2023 Days of sales outstanding (DSO) (1) 84 77 Days of supply in inventory (DIO) (2) 13 13 Days of purchases outstanding (DPO) (3) (79) (73) Cash conversion cycle 18 17 (1) Represents the rolling three-month average of the balance of the current portion of Accounts receivable, net at the end of the period, divided by average daily Net sales for the same three-month period.
Non-GAAP operating income excludes, among other things, charges related to the amortization of acquisition-related intangible assets, equity-based compensation and the associated payroll taxes, acquisition and integration expenses, transformation initiatives and workplace optimization. Non-GAAP operating income margin is defined as Non-GAAP operating income as a percentage of Net sales.
Non-GAAP operating income margin is defined as Non-GAAP operating income as a percentage of Net sales. Non-GAAP net income and Non-GAAP net income per diluted share exclude, among other things, charges related to the amortization of acquisition-related intangible assets, equity-based compensation and the associated payroll taxes, acquisition and integration expenses, transformation initiatives, workplace optimization and their associated income tax effects.
Income tax expense Income tax expense was $346 million for the year ended December 31, 2023, compared to $373 million for the year ended December 31, 2022. The effective income tax rate, expressed by calculating income tax expense as a percentage of Income before income taxes, was 23.9% and 25.1% for 2023 and 2022, respectively.
Income tax expense was $358 million for the year ended December 31, 2024, compared to $346 million for the year ended December 31, 2023. The effective income tax rate, expressed by calculating income tax expense as a percentage of Income before income taxes, was 24.9% and 23.9% for 2024 and 2023, respectively.
In addition, netted down revenue has an unfavorable impact to DSO and a favorable impact to DPO as the corresponding receivables and payables reflect the gross amounts due from customers and due to vendors while the corresponding sales and cost of sales are reflected on a net basis within Net sales.
Netted down revenue results in an increase in both DSO and DPO as the corresponding receivables and payables reflect the gross amounts due from customers and due to vendors while the corresponding sales and cost of sales are reflected on a net basis within Net sales.
Revenues from professional services are primarily recognized using an input method, which requires management to make estimates regarding the amount of resources required for each engagement in order to satisfy the performance obligation. 36 Table of Contents Goodwill Goodwill is allocated to reporting units expected to benefit from the business combination.
Depending on the arrangement, revenues from fixed fee contracts on professional services are recognized using an input method, which requires management to make estimates regarding the amount of resources required for each engagement in order to satisfy the performance obligation. Goodwill Goodwill is allocated to reporting units expected to benefit from the business combination.
(3) Defined as days of sales outstanding in Accounts receivable and certain receivables due from vendors plus days of supply in Merchandise inventory minus days of purchases outstanding in Accounts payable and Accounts payable-inventory financing, based on a rolling three-month average.
(3) Defined as days of sales outstanding related to the current portion of Accounts receivable and certain receivables due from vendors, plus days of supply in Merchandise inventory, minus days of purchases outstanding related to the current portion of Accounts payable and Accounts payable- 26 Table of Contents inventory financing, based on a rolling three-month average.
Recent Accounting Pronouncements The information set forth in Note 2 (Recent Accounting Pronouncements) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report is incorporated herein by reference.
Recent Accounting Pronouncements See the information set forth in Note 2 (Recent Accounting Pronouncements) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report.
Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP net income, Non-GAAP net income per diluted share, Net sales on a constant currency basis, Free cash flow and Adjusted free cash flow are considered non-GAAP financial measures.
Our non-GAAP performance measures include Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP net income, Non-GAAP net income per diluted share and Net sales on a constant currency basis, and our non-GAAP financial condition measures include Free cash flow and Adjusted free cash flow.
Non-GAAP operating income and Non-GAAP operating income margin Year Ended December 31, (dollars in millions) 2023 % of Net Sales 2022 % of Net Sales % Change Operating income, as reported $ 1,680.9 7.9 % $ 1,735.2 7.3 % (3.1) % Amortization of intangibles (1) 154.4 167.9 Equity-based compensation 93.7 91.1 Acquisition and integration expenses 30.0 48.3 Transformation initiatives (2) 27.1 6.3 Workplace optimization (3) 47.7 — Other adjustments 5.3 1.7 Non-GAAP operating income $ 2,039.1 9.5 % $ 2,050.5 8.6 % (0.6) % (1) Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
Non-GAAP operating income and Non-GAAP operating income margin Year Ended December 31, (dollars in millions) 2024 Percentage of Net Sales 2023 Percentage of Net Sales Percent Change Operating income, as reported $ 1,651.3 7.9 % $ 1,680.9 7.9 % (1.8) % Amortization of intangibles (1) 150.9 154.4 Equity-based compensation 64.7 93.7 Transformation initiatives (2) 34.8 27.1 Acquisition and integration expenses 12.2 30.0 Workplace optimization (3) 25.4 47.7 Other adjustments 7.7 5.3 Non-GAAP operating income $ 1,947.0 9.3 % $ 2,039.1 9.5 % (4.5) % (1) Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
Liquidity and Capital Resources Overview We finance our operations and capital expenditures with cash from operations and borrowings under our revolving loan facility. As of December 31, 2023, we had $1.2 billion of availability for borrowings under our revolving loan facility.
Liquidity and Capital Resources Overview We finance our operations and capital expenditures with cash from operations and borrowings under our variable rate senior unsecured revolving loan facility (the “Revolving Loan Facility”). As of December 31, 2024, we had $1.2 billion of availability for borrowings under our Revolving Loan Facility.
Net sales on a constant currency basis Year Ended December 31, (dollars in millions) 2023 2022 % Change (1) Net sales, as reported $ 21,376.0 $ 23,748.7 (10.0) % Foreign currency translation (2) — (28.2) Net sales, on a constant currency basis $ 21,376.0 $ 23,720.5 (9.9) % (1) There were 254 selling days for both the years ended December 31, 2023 and 2022.
Net sales on a constant currency basis Year Ended December 31, (dollars in millions) 2024 2023 Percent Change (1) Net sales, as reported $ 20,998.7 $ 21,376.0 (1.8) % Foreign currency translation (2) — 32.5 Net sales, on a constant currency basis $ 20,998.7 $ 21,408.5 (1.9) % (1) There were 254 selling days for both the years ended December 31, 2024 and 2023.
Overview CDW Corporation, a Fortune 500 company and member of the S&P 500 Index, is a leading multi-brand provider of information technology (“IT”) solutions to small, medium and large business, government, education and healthcare customers in the US, the UK and Canada.
Overview CDW Corporation (“Parent”), a Fortune 500 company and member of the S&P 500 Index, is a leading multi-brand provider of information technology (“IT”) solutions to business, government, education and healthcare customers in the United States (“US”), the United Kingdom (“UK”) and Canada.
We believe that the most important of these measures and ratios include average daily sales, Gross profit, Net income, Operating income, Operating income margin, Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP net income, Net sales on a constant currency basis, Net income per diluted share, Non-GAAP net income per diluted share, Free cash flow, Adjusted free cash flow, Cash and cash equivalents, cash conversion cycle and debt levels including available credit.
We believe that the most important of these measures and ratios include Gross profit, Gross profit margin, Operating income, Operating income margin, Non-GAAP operating income, Non-GAAP operating income margin, Net income, Non-GAAP net income, Net income per diluted share, Non-GAAP net income per diluted share, Average daily sales, Net cash provided by operating activities, Adjusted free cash flow, Cash conversion cycle and Net debt.
Average daily sales is defined as Net sales divided by the number of selling days. 28 Table of Contents Operating income by segment, in dollars and as a percentage of Net sales, and the year-over-year percentage change was as follows: Year Ended December 31, 2023 2022 (dollars in millions) Operating Income Operating Income Margin Operating Income Operating Income Margin Percent Change in Operating Income Segments: (1) Corporate $ 846.8 9.5 % $ 931.7 9.0 % (9.1) % Small Business 177.3 11.4 186.8 9.6 (5.1) Public 735.0 8.8 681.7 8.0 7.8 Other (2) 142.1 5.6 130.7 4.5 8.7 Headquarters (3) (220.3) nm* (195.7) nm* 12.6 Total Operating income $ 1,680.9 7.9 % $ 1,735.2 7.3 % (3.1) % *nm - Not meaningful (1) Segment operating income includes the segment’s direct operating income, allocations for certain Headquarters’ costs, allocations for income and expenses from logistics services, certain inventory adjustments and volume rebates and cooperative advertising from vendors.
Operating income by segment, in dollars and as a percentage of Net sales by segment, and the year-over-year percentage change are as follows: Year Ended December 31, 2024 2023 (dollars in millions) Operating Income Operating Income Margin Operating Income Operating Income Margin Operating Income Dollar Change Percent Change in Operating Income Segments: (1) Corporate $ 879.5 10.0 % $ 846.8 9.5 % $ 32.7 3.9 % Small Business 181.0 11.9 177.3 11.4 3.7 2.1 Public 745.9 9.1 735.0 8.8 10.9 1.5 Other (2) 112.1 4.5 142.1 5.6 (30.0) (21.1) Headquarters (3) (267.2) nm* (220.3) nm* (46.9) 21.3 Total Operating income $ 1,651.3 7.9 % $ 1,680.9 7.9 % $ (29.6) (1.8) % *nm - Not meaningful 28 Table of Contents (1) Segment operating income includes the segment’s direct operating income, allocations for certain Headquarters’ costs, allocations for income and expenses from logistics services, certain inventory adjustments and volume rebates and cooperative advertising from vendors.
We performed a quantitative analysis for all reporting units and determined that the fair values of each reporting unit substantially exceeded their carrying values and, therefore, no impairment existed. Business combinations We allocate purchase price consideration to the assets acquired and liabilities assumed based on their fair values as of the acquisition date.
The last quantitative analysis was performed in the fourth quarter of 2023, and it was determined that the fair values of each reporting unit substantially exceeded their carrying values, resulting in no goodwill impairment. Business combinations We allocate purchase price consideration to the assets acquired and liabilities assumed based on their fair values as of the acquisition date.
In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle, defined as days of sales outstanding in accounts receivable plus days of supply in inventory minus days of purchases outstanding in accounts payable, based on a rolling three-month average.
(5) The change is primarily due to higher Miscellaneous receivables and Prepaid expenses and other in 2024. 33 Table of Contents In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle, defined as days of sales outstanding in accounts receivable plus days of supply in inventory minus days of purchases outstanding in accounts payable, based on a rolling three-month average.
The uncertainty in the current economic environment resulted in, and may continue to result in, a delay, pause or reduction of investments in technology by our customers. • Customers continue to balance priorities to focus on solutions that lead to business optimization, cost management and security risk management and in many cases are reassessing the timing of IT refresh cycles and pausing or deferring their IT spend.
The uncertainty in the current economic environment resulted in, and may continue to result in, a delay, pause or reduction of investments in technology by our customers. • Customers are evaluating the complex technology landscape in order to balance priorities and focus on solutions that lead to business optimization, cost management and security risk management, resulting in a more measured approach to their IT spending.
(3) Represents the rolling three-month average of the combined balance of Accounts payable-trade, excluding cash overdrafts, and Accounts payable-inventory financing at the end of the period divided by average daily Cost of sales for the same three-month period. The cash conversion cycle decreased to 17 days at December 31, 2023, compared to 21 days at December 31, 2022.
(3) Represents the rolling three-month average of the combined balance of the current portion of Accounts payable-trade, excluding cash overdrafts, and Accounts payable-inventory financing at the end of the period divided by average daily Cost of sales for the same three-month period.
Average Daily Sales is defined as Net sales divided by the number of selling days. (2) Defined as Total debt minus Cash and cash equivalents.
Average daily sales is defined as Net sales divided by the number of selling days.
Technology trends are likely to change as customers prioritize the projects that produce the most important outcomes for their business. Key Business Metrics We monitor a number of financial and non-financial measures and ratios on a regular basis in order to track the progress of our business and make adjustments as necessary.
Key Business Metrics We monitor a number of financial and non-financial measures and ratios on a regular basis in order to track the progress of our business and make adjustments as necessary.
For the definitions of Non-GAAP measures and reconciliations to the most directly comparable US GAAP measure, see “Results of Operations - Non-GAAP Financial Measure Reconciliations.” 26 Table of Contents The results of certain key business metrics are as follows: Year Ended December 31, (dollars in millions, except per share amounts) 2023 2022 Net sales $ 21,376.0 $ 23,748.7 Gross profit 4,652.4 4,686.6 Operating income 1,680.9 1,735.2 Net income 1,104.3 1,114.5 Non-GAAP operating income 2,039.1 2,050.5 Non-GAAP net income 1,346.2 1,341.5 Net income per diluted share 8.10 8.13 Non-GAAP net income per diluted share 9.88 9.79 Average daily sales (1) 84.2 93.5 Net debt (2) 5,056.2 5,607.5 Cash conversion cycle (in days) (3) 17 21 Cash provided by operating activities 1,598.7 1,335.9 Adjusted free cash flow (4) 1,426.8 1,292.7 (1) There were 254 selling days for both the years ended December 31, 2023 and 2022.
For the definitions, discussion of management’s use of Non-GAAP measures and reconciliations to the most directly comparable US GAAP measure, see “Results of Operations - Non-GAAP Financial Measure Reconciliations.” The results of certain key business metrics for the comparative periods are as follows: Year Ended December 31, (dollars in millions, except per share amounts) 2024 2023 Net sales $ 20,998.7 $ 21,376.0 Gross profit $ 4,602.4 $ 4,652.4 Gross profit margin 21.9 % 21.8 % Operating income $ 1,651.3 $ 1,680.9 Operating income margin 7.9 % 7.9 % Non-GAAP operating income $ 1,947.0 $ 2,039.1 Non-GAAP operating income margin 9.3 % 9.5 % Net income $ 1,077.8 $ 1,104.3 Non-GAAP net income $ 1,287.2 $ 1,346.2 Net income per diluted share $ 7.97 $ 8.10 Non-GAAP net income per diluted share $ 9.52 $ 9.88 Average daily sales (1) $ 82.7 $ 84.2 Net debt (2) $ 5,125.1 $ 5,056.2 Cash conversion cycle (in days) (3) 18 17 Net cash provided by operating activities $ 1,277.3 $ 1,598.7 Adjusted free cash flow (4) $ 1,079.0 $ 1,426.8 (1) Defined as Net sales divided by the number of selling days.
Macroeconomic uncertainty persists as a result of the current inflationary environment, the corresponding increase in interest rates driven by monetary policy and lower economic growth rates in the United States and other countries.
Macroeconomic uncertainty persists as a result of the inflationary environment and the corresponding level of interest rates driven by monetary policy.
For additional information regarding our debt and refinancing activities, see Note 9 (Debt) to the accompanying Consolidated Financial Statements. Inventory Financing Agreements We have entered into agreements with certain financial intermediaries to facilitate the purchase of inventory from various suppliers under certain terms and conditions. These amounts are classified separately as Accounts payable-inventory financing on the Consolidated Balance Sheets.
For additional information regarding our debt and refinancing activities, see Note 8 (Debt) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report. Inventory Financing Agreements We have entered into agreements with certain financial intermediaries to facilitate the purchase of inventory from various suppliers under certain terms and conditions to enhance working capital.
Management uses these measures to evaluate period-over-period performance as management believes they provide a more comparable measure of the underlying business. We also present Free cash flow and Adjusted free cash flow as we believe these measures provide more information regarding our liquidity and capital resources. Certain non-GAAP financial measures are also used to determine certain components of performance-based compensation.
We also present non-GAAP financial condition measures as we believe they provide analysts, investors and management with more information regarding our liquidity and capital resources. Certain non-GAAP financial measures are also used to determine certain components of performance-based compensation.
We believe Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP net income, Non-GAAP net income per diluted share and Net sales on a constant currency basis provide analysts, investors and management with useful information regarding the underlying operating performance of our business, as they remove the impact of items that management believes are not reflective of underlying operating performance.
We believe our non-GAAP performance measures provide analysts, investors and management with useful information regarding the underlying operating performance of our business, as they remove the impact of items that management believes are not reflective of underlying operating performance. Management uses these measures to evaluate period-over-period performance as management believes they provide a more comparable measure of the underlying business.
(3) Includes costs related to the workforce reduction program and charges related to the reduction of our real estate lease portfolio. 30 Table of Contents Non-GAAP net income and Non-GAAP net income per diluted share Year Ended December 31, 2023 Year Ended December 31, 2022 (dollars in millions) Income before income taxes Income tax expense (1) Net income Income before income taxes Income tax expense (1) Net income Net Income % Change US GAAP, as reported $ 1,450.2 $ (345.9) $ 1,104.3 $ 1,487.8 $ (373.3) $ 1,114.5 (0.9) % Amortization of intangibles (2) 154.4 (40.2) 114.2 167.9 (44.6) 123.3 Equity-based compensation 93.7 (47.6) 46.1 91.1 (30.4) 60.7 Acquisition and integration expenses 30.0 (7.8) 22.2 48.3 (12.4) 35.9 Transformation initiatives (3) 27.1 (7.1) 20.0 6.3 (1.6) 4.7 Workplace optimization (4) 47.7 (12.4) 35.3 — — — Net loss on extinguishment of long-term debt — — — 1.6 (0.4) 1.2 Other adjustments 5.3 (1.2) 4.1 1.7 (0.5) 1.2 Non-GAAP $ 1,808.4 $ (462.2) $ 1,346.2 $ 1,804.7 $ (463.2) $ 1,341.5 0.4 % Net income per diluted share, as reported $ 8.10 $ 8.13 Non-GAAP net income per diluted share $ 9.88 $ 9.79 Shares used in computing US GAAP and Non-GAAP net income per diluted share 136.3 137.0 (1) Income tax on non-GAAP adjustments includes excess tax benefits associated with equity-based compensation.
Non-GAAP net income and Non-GAAP net income per diluted share Year Ended December 31, 2024 Year Ended December 31, 2023 (dollars and shares in millions, except per share amounts) Income before income taxes Income tax expense (1) Net income Income before income taxes Income tax expense (1) Net income Net Income Percent Change US GAAP, as reported $ 1,435.4 $ (357.6) $ 1,077.8 $ 1,450.2 $ (345.9) $ 1,104.3 (2.4) % Amortization of intangibles (2) 150.9 (39.2) 111.7 154.4 (40.2) 114.2 Equity-based compensation 64.7 (26.7) 38.0 93.7 (47.6) 46.1 Transformation initiatives (3) 34.8 (9.1) 25.7 27.1 (7.1) 20.0 Acquisition and integration expenses 12.2 (2.1) 10.1 30.0 (7.8) 22.2 Workplace optimization (4) 25.4 (6.6) 18.8 47.7 (12.4) 35.3 Other adjustments 6.9 (1.8) 5.1 5.3 (1.2) 4.1 Non-GAAP $ 1,730.3 $ (443.1) $ 1,287.2 $ 1,808.4 $ (462.2) $ 1,346.2 (4.4) % Net income per diluted share, as reported $ 7.97 $ 8.10 Non-GAAP net income per diluted share $ 9.52 $ 9.88 Shares used in computing US GAAP and Non-GAAP net income per diluted share 135.2 136.3 (1) Income tax on non-GAAP adjustments includes excess tax benefits associated with equity-based compensation.
T he dividend will be pa id on March 12, 2024 to all stockholders of record as of the close of business on February 26, 2024.
The dividend will be paid on March 11, 2025 to all stockholders of record as of the close of business on February 25, 2025.
The Notes and the related guarantees are the Issuers’ and the Guarantors’ senior unsecured obligations and are: • structurally subordinated to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries and • rank equal in right of payment with all of the Issuers’ and the Guarantors’ existing and future unsecured senior debt.
The Notes and the related guarantees are the Issuers’ and the Guarantors’ senior unsecured obligations and are: • structurally subordinated to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries and • rank equal in right of payment with all of the Issuers’ and the Guarantors’ existing and future unsecured senior debt. 34 Table of Contents The following tables set forth Balance Sheet information as of December 31, 2024 and December 31, 2023, and Statement of Operations information for the years ended December 31, 2024 and 2023 for the accounts of the Issuers and the accounts of the Guarantors (the “Obligor Group”).
Additionally, sales in our Public segment have historically been higher in the third quarter than in other quarters primarily due to the buying patterns of the federal government and education customers. Since 2020, we have experienced variability compared to historic seasonality trends. Seasonality by channel is expected to continue to be different than historical experience.
Seasonality While we have not historically experienced seasonality throughout the year, sales in our Public segment have historically been higher in the second and third quarter than in other quarters primarily due to the buying patterns of education and government customers.
(2) Includes costs related to strategic transformation initiatives focused on optimizing various operations and systems.
(2) Includes costs related to strategic transformation initiatives focused on optimizing various operations and systems. (3) Includes costs related to workforce reductions and charges related to the reduction of our real estate lease portfolio.
The increase in Gross profit margin was primarily driven by a more favorable contribution of netted down revenue, primarily software as a service, and higher product margin due to lower mix in notebooks and increased margin rate across various categories.
Gross profit margin, expressed as a percentage of Net sales, increased 10 basis points to 21.9% primarily driven by a higher contribution of netted down revenue, primarily software as a service, partially offset by lower product margin due to mix and rate in notebooks/mobile devices.
For additional information regarding the inventory financing and debt activities, see Note 7 (Inventory Financing Agreements) and Note 9 (Debt) to the accompanying Consolidated Financial Statements. 34 Table of Contents Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, results of operations or liquidity.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, results of operations or liquidity.
Balance Sheet Information December 31, (dollars in millions) 2023 2022 Current assets $ 5,770.0 $ 5,588.3 Goodwill 3,939.7 3,939.7 Other assets 1,978.4 2,032.6 Total Non-current assets 5,918.1 5,972.3 Current liabilities 4,975.4 4,369.3 Long-term debt 5,031.4 5,792.9 Other liabilities 697.7 641.9 Total Long-term liabilities 5,729.1 6,434.8 Statements of Operations Information Year Ended December 31, (dollars in millions) 2023 2022 Net sales $ 18,759.4 $ 20,741.8 Gross profit 4,106.4 4,156.6 Operating income 1,507.3 1,584.7 Net income 945.6 1,005.8 Commitments and Contingencies The information set forth in Note 16 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report is incorporated herein by reference. 35 Table of Contents Critical Accounting Policies and Estimates The preparation of the Consolidated Financial Statements in accordance with US GAAP requires management to make use of certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities in the Consolidated Financial Statements and accompanying notes.
Balance Sheet Information December 31, (dollars in millions) 2024 2023 Current assets $ 6,395.9 $ 5,770.0 Goodwill 4,158.3 3,939.7 Other assets 2,502.1 1,978.4 Total Non-current assets $ 6,660.4 $ 5,918.1 Current liabilities $ 4,990.6 $ 4,975.4 Long-term debt 5,606.8 5,031.4 Other liabilities 1,166.1 697.7 Total Long-term liabilities $ 6,772.9 $ 5,729.1 Statements of Operations Information Year Ended December 31, (dollars in millions) 2024 2023 Net sales $ 18,494.0 $ 18,759.4 Gross profit 4,116.9 4,106.4 Operating income 1,560.5 1,507.3 Net income 1,014.1 945.6 Commitments and Contingencies The information set forth in Note 16 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report.
For additional information about our share repurchase program, refer to Note 12 (Stockholders’ Equity) to the accompanying Consolidated Financial Statements. 32 Table of Contents Dividends A summary of 2023 dividend activity for our common stock is as follows: Dividend Amount Declaration Date Record Date Payment Date $ 0.590 February 7, 2023 February 24, 2023 March 10, 2023 0.590 May 3, 2023 May 25, 2023 June 13, 2023 0.590 August 2, 2023 August 25, 2023 September 12, 2023 0.620 November 1, 2023 November 24, 2023 December 12, 2023 $ 2.390 On February 7, 2024 , we announced that our Board of Directors declared a quarterly cash dividend on our common stock of $0.620 per share.
Dividends A summary of 2024 dividend activity for our common stock is as follows: Dividend Amount Declaration Date Record Date Payment Date $ 0.620 February 6, 2024 February 26, 2024 March 12, 2024 0.620 April 30, 2024 May 24, 2024 June 11, 2024 0.620 July 30, 2024 August 26, 2024 September 10, 2024 0.625 October 29, 2024 November 25, 2024 December 10, 2024 $ 2.485 O n February 5, 2025, we announced that our Board of Directors declared a quarterly cash dividend on our common stock of $0.625 per share.
We also have two other operating segments: CDW UK and CDW Canada, each of which do not meet the reportable segment quantitative thresholds and, accordingly, are included in an all other category (“Other”). We may sell all or only select products that our vendor partners offer.
We also have two other operating segments: CDW UK and CDW Canada, each of which do not meet the reportable segment quantitative thresholds and, accordingly, are included in an all other category (“Other”). We are vendor, technology and consumption model unbiased, with a solutions portfolio including more than 100,000 products and services from more than 1,000 leading and emerging brands.
We do not incur any interest expense associated with these agreements as balances are paid when they are due. For additional information, see Note 7 (Inventory Financing Agreements) to the accompanying Consolidated Financial Statements. Share Repurchase Program During 2023, we repurchased 2.6 million shares of our common stock for $500 million under the previously announced share repurchase program.
For additional information, see Note 7 (Inventory Financing Agreements) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report. Share Repurchase Program During 2024, we repurchased 2.4 million shares of our common stock for $500 million under the previously announced share repurchase program.
Current technology trends are focused on delivering greater flexibility and efficiency, as well as designing and managing IT securely.
Current technology trends are focused on delivering greater flexibility and efficiency, as well as designing and managing IT securely. These trends are driving customer adoption of cloud, artificial intelligence, software defined architectures and hybrid on-premise and off-premise combinations.
Segment Results of Operations Net sales by segment, in dollars and as a percentage of total Net sales, and the year-over-year dollar and percentage change in Net sales are as follows: Year Ended December 31, 2023 2022 (dollars in millions) Net Sales Percentage of Total Net Sales Net Sales Percentage of Total Net Sales Dollar Change Percent Change (1) Corporate $ 8,960.8 41.9 % $ 10,350.1 43.6 % $ (1,389.3) (13.4) % Small Business 1,556.0 7.3 1,938.9 8.2 (382.9) (19.7) Public: Government 2,669.1 12.5 2,574.3 10.8 94.8 3.7 Education 3,298.3 15.4 3,621.4 15.2 (323.1) (8.9) Healthcare 2,338.3 10.9 2,355.6 9.9 (17.3) (0.7) Total Public 8,305.7 38.8 8,551.3 35.9 (245.6) (2.9) Other 2,553.5 12.0 2,908.4 12.3 (354.9) (12.2) Total Net sales $ 21,376.0 100.0 % $ 23,748.7 100.0 % $ (2,372.7) (10.0) % (1) There were 254 selling days for both the years ended December 31, 2023 and 2022.
The higher effective income tax rate for the year ended December 31, 2024 as compared to the prior year was primarily attributable to lower excess tax benefits on equity-based compensation. 27 Table of Contents Segment Results of Operations Net sales by segment, in dollars and as a percentage of total Net sales, and the year-over-year dollar and percentage change in Net sales by segment are as follows: Year Ended December 31, 2024 2023 (dollars in millions) Net Sales Percentage of Total Net Sales Net Sales Percentage of Total Net Sales Dollar Change Percent Change (1) Corporate $ 8,837.2 42.1 % $ 8,960.8 41.9 % $ (123.6) (1.4) % Small Business 1,523.5 7.3 1,556.0 7.3 (32.5) (2.1) Public: Government 2,486.9 11.8 2,669.1 12.5 (182.2) (6.8) Education 3,167.3 15.1 3,298.3 15.4 (131.0) (4.0) Healthcare 2,503.5 11.9 2,338.3 10.9 165.2 7.1 Total Public 8,157.7 38.8 8,305.7 38.8 (148.0) (1.8) Other 2,480.3 11.8 2,553.5 12.0 (73.2) (2.9) Total Net sales $ 20,998.7 100.0 % $ 21,376.0 100.0 % $ (377.3) (1.8) % (1) There were 254 selling days for both the years ended December 31, 2024 and 2023.
We provide our vendor partners with a cost-effective way to reach customers and deliver a consistent brand experience through our established end-market coverage, technical expertise and extensive customer access. We have three reportable segments: Corporate, Small Business and Public. Our Corporate segment primarily serves US private sector business customers with more than 250 employees.
We provide our vendor partners with a cost-effective way to reach customers and deliver a consistent brand experience through our established end-market coverage, technical expertise and extensive customer access. We may sell all or only select products that our vendor partners offer.
Our broad array of offerings ranges from discrete hardware and software products to integrated IT solutions and services that include on-premise and cloud capabilities across hybrid infrastructure, digital experience and security. We are vendor, technology and consumption model unbiased, with a solutions portfolio including more than 100,000 products and services from more than 1,000 leading and emerging brands.
Our broad array of offerings ranges from discrete hardware and software products to integrated IT solutions and services that include on-premise and cloud capabilities across hybrid infrastructure, digital experience and security. We have three reportable segments: Corporate, Small Business and Public. Our Corporate segment primarily serves US private sector business customers with more than 250 employees.
Results of Operations Results of operations, in dollars and as a percentage of Net sales are as follows: Year Ended December 31, 2023 2022 Dollars in Millions Percentage of Net Sales Dollars in Millions Percentage of Net Sales Net sales $ 21,376.0 100.0 % $ 23,748.7 100.0 % Cost of sales 16,723.6 78.2 19,062.1 80.3 Gross profit 4,652.4 21.8 4,686.6 19.7 Selling and administrative expenses 2,971.5 13.9 2,951.4 12.4 Operating income 1,680.9 7.9 1,735.2 7.3 Interest expense, net (226.6) (1.1) (235.7) (1.0) Other expense, net (4.1) — (11.7) — Income before income taxes 1,450.2 6.8 1,487.8 6.3 Income tax expense (345.9) (1.6) (373.3) (1.6) Net income $ 1,104.3 5.2 % $ 1,114.5 4.7 % Net sales Net sales decreased $2,373 million, or 10.0%, to $21,376 million for the year ended December 31, 2023, compared to $23,749 million for the year ended December 31, 2022.
For additional information on Net sales, Gross profit and Operating income by segment, see the “Segment Results of Operations.” Year Ended December 31, (dollars in millions) 2024 2023 Percent Change Net sales $ 20,998.7 $ 21,376.0 (1.8) % Cost of sales 16,396.3 16,723.6 (2.0) Gross profit 4,602.4 4,652.4 (1.1) Gross profit margin 21.9% 21.8% Selling and administrative expenses 2,951.1 2,971.5 (0.7) Operating income 1,651.3 1,680.9 (1.8) Operating income margin 7.9% 7.9% Interest expense, net (214.5) (226.6) (5.3) Other expense, net (1.4) (4.1) *nm Income before income taxes 1,435.4 1,450.2 (1.0) Income tax expense (357.6) (345.9) 3.4 Net income $ 1,077.8 $ 1,104.3 (2.4) % *nm - Not meaningful The year ended December 31, 2024 compared with the year ended December 31, 2023 Net sales decreased $377 million, or 1.8%, with lower Net sales across all operating segments.
Operating income Operating income decreased $54 million, or 3.1%, to $1,681 million for the year ended December 31, 2023, compared to $1,735 million for the year ended December 31, 2022. Interest expense, net Interest expense, net includes interest expense and interest income.
Operating income decreased $30 million, or 1.8%, to $1,651 million for the year ended December 31, 2024, compared to $1,681 million for the year ended December 31, 2023. Interest expense, net decreased $12 million, or 5.3%, primarily due to increased interest income earned on higher average cash balances.
Investing Activities Net cash used in investing activities increased $65 million in 2023 compared to 2022. This increase was primarily due to higher acquisition activity in 2023 and increased capital expenditures. Financing Activities Net cash used in financing activities decreased $3 million in 2023 compared to 2022.
Investing Activities Net cash used in investing activities increased $430 million in 2024 compared to 2023. This increase was primarily due to the acquisition of Mission Cloud Services, Inc. and purchases of short-term investments in 2024. Financing Activities Net cash used in financing activities decreased $412 million in 2024 compared to 2023.
Free cash flow and Adjusted free cash flow Year Ended December 31, (dollars in millions) 2023 2022 Net cash provided by operating activities $ 1,598.7 $ 1,335.9 Capital expenditures (148.2) (127.8) Free cash flow 1,450.5 1,208.1 Net change in accounts payable - inventory financing (23.7) 84.6 Adjusted free cash flow (1) $ 1,426.8 $ 1,292.7 (1) Defined as Cash flows provided by operating activities less capital expenditures, adjusted to include cash flows from financing activities that relate to the purchase of inventory. 31 Table of Contents Seasonality While we have not historically experienced significant seasonality throughout the year, sales in our Corporate segment, which primarily serves US private sector business customers with more than 250 employees, have historically been higher in the fourth quarter than in other quarters due to customers spending their remaining technology budget dollars at the end of the year.
Free cash flow and Adjusted free cash flow Year Ended December 31, (dollars in millions) 2024 2023 Net cash provided by operating activities $ 1,277.3 $ 1,598.7 Capital expenditures (122.6) (148.2) Free cash flow 1,154.7 1,450.5 Net change in accounts payable - inventory financing (75.7) (23.7) Adjusted free cash flow (1) $ 1,079.0 $ 1,426.8 (1) Defined as Net cash provided by operating activities less capital expenditures, adjusted to include cash flows from financing activities that relate to the purchase of inventory.
Non-GAAP net income excludes, among other things, charges related to acquisition-related intangible asset amortization, equity-based compensation, acquisition and integration expenses, transformation initiatives, workplace optimization and the associated tax effects of each. Net sales on a constant currency basis is defined as Net sales excluding the impact of foreign currency translation on Net sales compared to the prior period.
These non-GAAP performance measures and non-GAAP financial condition measures are collectively referred to as “non-GAAP financial measures.” Non-GAAP operating income excludes, among other things, charges related to the amortization of acquisition-related intangible assets, equity-based compensation and the associated payroll taxes, acquisition and integration expenses, transformation initiatives and workplace optimization.
As a percentage of Net sales, Gross profit margin increased 210 basis points to 21.8% for the year ended December 31, 2023.
Results of Operations Results of operations, including Gross profit margin and Operating income margin, expressed as Gross profit and Operating income as a percentage of Net sales, respectively, for the years ended December 31, 2024 and 2023 are below.
No additional mandatory payments are required on the remaining principal amount until its maturity date on December 1, 2026. As of December 31, 2023, we had total unsecured indebtedness of $5.6 billion and we were in compliance with the covenants under our credit agreements and indentures.
During the fourth quarter of 2024, we redeemed the remaining outstanding 5.500% Senior Notes due 2024, which were scheduled to mature on December 1, 2024, at par for $184 million. As of December 31, 2024, we had total unsecured indebtedness of $5.8 billion, and we were in compliance with the covenants under our credit agreements and indentures.
Corporate Corporate segment Net sales for the year ended December 31, 2023 decreased $1,389 million, or 13.4%, compared to the year ended December 31, 2022. This decrease in Net sales was across various hardware categories and services, partially offset by increases in netcomm products.
The year ended December 31, 2024 compared with the year ended December 31, 2023 Corporate segment Net sales decreased $124 million, or 1.4%, primarily due to a decrease in netcomm products, partially offset by an increase in notebooks/mobile devices and software. Corporate segment Gross profit dollars decreased $28 million, or 1.3%, although partially offset by increased netted down revenue.
These trends are driving customer adoption of solutions such as those delivered via cloud, software defined architectures and hybrid on-premise and off-premise combinations, as well as the evolution of the IT consumption model to more “as a service” offerings, including software as a service and infrastructure as a service, in addition to ongoing managed and professional service arrangements.
The trends are further driven by the evolution of the IT consumption model to more “as a service” offerings, including software as a service and infrastructure as a service, in addition to ongoing managed and professional service arrangements. Technology trends are likely to evolve as customers prioritize spend that will produce the most important outcomes for their business.
Non-GAAP Financial Measure Reconciliations We have included reconciliations of Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP net income, Non-GAAP net income per diluted share, Net sales on a constant currency basis, Free cash flow and Adjusted free cash flow for the years ended December 31, 2023 and 2022 below.
We have included reconciliations of our non-GAAP financial measures to the most comparable US GAAP financial measures for the years ended December 31, 2024 and 2023 below.
Other Net sales in Other, which is comprised of results from our UK and Canadian operations, for the year ended December 31, 2023 decreased $355 million, or 12.2%, compared to the year ended December 31, 2022.
Public segment Operating income increased $11 million, or 1.5%, primarily due to decreased acquisition and integration costs. Net sales in Other, which is comprised of results from our UK and Canadian operations, decreased $73 million, or 2.9%, primarily due to a decrease in software related to the UK operations. Other Gross profit dollars decreased $5 million, or 0.9%.
See Note 9 (Debt) and Note 11 (Leases) to the accompanying Consolidated Financial Statements for additional information regarding future maturities of debt and operating leases. Long-Term Debt and Financing Arrangements During the year ended December 31, 2023, we prepaid $150 million on our senior unsecured term loan facility without penalty.
For additional information regarding future maturities of debt and operating leases, see Note 8 (Debt) and Note 11 (Leases), respectively, to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report.
Public Public segment Net sales for the year ended December 31, 2023 decreased $246 million, or 2.9%, compared to the year ended December 31, 2022. This decrease was across various categories, primarily notebooks/mobile devices and collaboration hardware within Education, partially offset by netcomm products and software across all sales channels.
Most notably netcomm products decreased across all sales channels and collaboration products decreased within the Education sales channel, partially offset by an increase in notebooks/mobile devices across all channels. Public segment Gross profit dollars decreased $8 million, or 0.5%. Gross profit margin increased 20 bps, to 20.3%, primarily due to increased netted down revenue.
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In this section, we present Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP net income, Non-GAAP net income per diluted share, Net sales on a constant currency basis, Free cash flow and Adjusted free cash flow, which are non-GAAP financial measures.
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Financial measures include both US GAAP, the accounting principles generally accepted in the United States of America, and Non-GAAP, which excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with US GAAP.
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We believe Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP net income, Non-GAAP net income per diluted share and Net sales on a constant currency basis provide analysts, investors and management with helpful information regarding the underlying operating performance of our business, as they remove the impact of items that management believes are not reflective of underlying operating performance.
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There were 254 selling days for both the years ended December 31, 2024 and 2023. (2) Defined as Total debt minus Cash and cash equivalents and Short-term investments.
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The decline in Net sales occurred across all operating segments. Continued economic uncertainty has led customers to focus their business priorities, resulting in a reduction or delay in their hardware spend.
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The decrease was primarily due to a decrease in netcomm, partially offset by an increase in notebooks/mobile devices. Continued economic uncertainty and the complex technology landscape has led customers to be cautious and measured in their approach to technology spending, leading to a decline in Net sales.
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For additional information, see the “Segment Results of Operations” below. 27 Table of Contents Gross profit Gross profit decreased $34 million, or 0.7%, to $4,652 million for the year ended December 31, 2023, compared to $4,687 million for the year ended December 31, 2022.
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Gross profit decreased $50 million, or 1.1%, primarily due to lower Net sales across all operating segments.
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Selling and administrative expenses Selling and administrative expenses increased $20 million, or 0.7%, to $2,972 million for the year ended December 31, 2023, compared to $2,951 million for the year ended December 31, 2022.
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Selling and administrative expenses decreased $20 million, or 0.7%, primarily due to lower performance-based compensation, including equity-based compensation, consistent with lower attainment against certain financial measures, and lower workforce optimization costs, partially offset by a higher provision for expected credit losses and transformation and other related costs in the current year.
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The increase was driven by costs related to the reduction of our workforce and real estate portfolio (collectively “workplace optimization”) and increased payroll expenses associated with higher year-over-year average coworker count, partially offset by reduced discretionary expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFor additional information on our financial instruments and debt, see Note 8 (Financial Instruments) and Note 9 (Debt) to the accompanying Consolidated Financial Statements. Foreign Currency Risk We transact business in foreign currencies other than the US dollar, primarily the British pound and the Canadian dollar, which exposes us to foreign currency exchange rate fluctuations.
Biggest changeBased on our floating rate debt and derivative instruments outstanding at December 31, 2024 and 2023, a 100 basis point change would have no material impact on our results. Foreign Currency Risk We transact business in foreign currencies other than the US dollar, primarily the British pound and the Canadian dollar, which exposes us to foreign currency exchange rate fluctuations.
We manage our exposure to interest rate risk through the proportion of fixed-rate debt and variable-rate debt in our debt portfolio. 37 Table of Contents Additionally, from time to time, we may execute derivative instruments in order to manage the risk associated with changes in interest rates on borrowings under our variable-rate debt facilities.
We manage our exposure to interest rate risk through the proportion of fixed-rate debt and variable-rate debt in our debt portfolio. Additionally, from time to time, we may execute derivative instruments in order to manage the risk associated with changes in interest rates on borrowings under our variable-rate debt facilities.
The direct effect of foreign currency fluctuations on our results of operations has not been material as the majority of our results of operations are denominated in US dollars. 38 Table of Contents
The direct effect of foreign currency fluctuations on our results of operations has not been material as the majority of our results of operations are denominated in US dollars.
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For additional information on our financial instruments and debt, see Note 9 (Fair Value Measurements and Financial Instruments) and Note 8 (Debt), respectively, to the accompanying Consolidated Financial Statements in Part II Item 8 of this report.
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A hypothetical 10% change between the US dollar and the currencies from our international operations would have no material impact on our results for the years ended December 31, 2024 and 2023. 37 Table of Contents

Other CDW 10-K year-over-year comparisons