Q4 2021 CDW Corp Earnings Call

Speaker 1: Hello and welcome to today's CDW fourth quarter 2021 earnings call. My name is Bailey and I will be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to pass the conference over to Kevin White, Director of Investor Relations. Kevin, please go ahead.

Hello, and welcome to today's CDW fourth quarter 2021 earnings call. My name is Bailey and that will be the moderator for todays call all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end if you would like to ask a question. Please.

Press Star followed by one on your telephone keypad I would now like to pass the conference over to.

Kevin White director of Investor Relations Kevin. Please go ahead.

Speaker 2: Thank you, Bailey. Good morning, everyone. Joining me today to review our fourth quarter and full year results are Chris Leahy, our President and Chief Executive Officer, and Al Morales, our Chief Financial Officer.

Thank you Barry Good morning, everyone. Joining me today to review, our fourth quarter and full year results are Chris Leahy, Our President and Chief Executive Officer, now morale is our chief financial Officer.

Speaker 2: Our fourth quarter earnings release was distributed this morning and is available on our website, investor.cdw.com, along with supplemental slides that can be used to follow along during the call.

Our fourth quarter earnings release was distributed this morning and is available on our website investor CDW Dot com along with supplemental slides that can be used to follow along during the call.

Speaker 2: I'd like to remind you that certain comments made in this presentation are considered forward-looking statements under the Private Securities Reform Act of 1995.

To remind you that certain comments made in this presentation are considered forward looking statements under the private Securities Reform Act of 1095.

Speaker 2: Those statements are subject to risk and uncertainties that could cause actual results to differ materially.

Those statements are subject to risks and uncertainties that could cause actual results to differ materially.

Speaker 2: Additional information concerning these risks and uncertainties as contained in the earnings release and the Form 8K we furnished to the SEC today and companies other filings with SEC.

Additional information concerning these risks and uncertainties is contained in the earnings release and the form 8-K, we furnished to the SEC today and company's other filings with SEC.

Speaker 2: CDW assumes no obligation to update the information presented during this webcast. Our presentation also includes certain non-GAAP financial measures, including non-GAAP operating income, non-GAAP operating income margin, non-GAAP net income, and non-GAAP earnings per share. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules.

CDW assumes no obligation to update the information presented during this webcast.

Our presentation also includes certain non-GAAP financial measures, including non-GAAP operating income non-GAAP operating income margin non-GAAP net income and non-GAAP earnings per share.

All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules you'll.

You'll find reconciliation charts in the slides for today's webcast and in our earnings release and form 8-K, we furnished to the SEC today.

Speaker 2: Please note that our financial results presented include the results from our acquisition of serious computer solutions, which closed on December 1st, 2021. References to growth rates on dollar amount changes in our remarks today are versus the comparable period in 2020, unless otherwise indicated. Also note there is one extra selling day in the fourth quarter of 2021 compared to the fourth quarter of 2020, and net sales growth rates are provided as an average daily sales.

Please note that our financial results presented include the results from our acquisition of serious computer solutions, which closed on December one 2021.

References to growth rates on dollar amount changes in our remarks today are versus the comparable period in 2020, unless otherwise indicated.

Also note there was one extra selling day in the fourth quarter 2021 compared to the fourth quarter of 2020 and net sales growth rates are provided as an average daily sales.

Speaker 2: References to growth rates for hardware, software, and services today represent U.S. net sales only and include Sirius. They do not include results from CDW UK or Canada. References to growth rates for specific products and solutions, including cloud security, today represent U.S. net sales only and exclude Sirius.

References to growth rates for hardware software and services today represent U S. Net sales only and include serious they do not include results from CDW, UK or Canada Rec.

References to growth rates for specific products and solutions, including cloud security today represent U S. Net sales net.

Net sales only and exclude serious.

Speaker 2: The historic combined information of CDW and Sirius discussed herein is for illustrative purposes only and is not necessarily indicative of results that would have been achieved had the acquisition occurred at the beginning of the period presented.

The historic combined information of CDW and serious discussed herein is for illustrative purposes, only and is not necessarily indicative of results that would have been achieved had the acquisition occurred at the beginning of the period presented.

Speaker 2: Replay of the webcast will be posted to our website later today. I also want to remind you that this conference call is property of CDW and may not be recorded or rebroadcast without specific written permission from the company. With that, let me turn the call over to Chris.

Replay of the webcast will be posted to our website. Later today I also want to remind you that this conference call is property of CDW and may not be recorded or rebroadcast without specific written permission from the company.

With that let me turn the call over to Chris.

Speaker 2: Thank you, Kevin. Good morning, everyone. Thank you for joining us today. I'll begin our call with an overview of our full year and fourth quarter performance and share some thoughts on our strategic progress and expectations for 2022. Then I'll hand the call over to Al, who will take you through a more detailed review of the financials, as well as our capital allocation strategy and outlook. We'll move quickly through our prepared remarks to ensure we have plenty of time for questions.

Thank you Kevin Good morning, everyone. Thank you for joining us today I'll begin our call with an overview of our full year and fourth quarter performance and share some thoughts on our strategic progress and expectations for 2022, then I will hand, the call over to Al who will take you through a more detailed review of the financials as well as our capital allocation strategy and outlook, we will move.

Quickly through our prepared remarks to ensure we have plenty of time for questions.

Speaker 2: 2021 was a year of both strong financial performance and strategic progress. The teams delivered a twenty one billion dollars in net sales with excellent profitability. Margins improved in our 13 percent increase in sales translated to a 17 percent increase in both non-GAAP operating income and non-GAAP net income. Share repurchases amplified this growth and non-GAAP net income per share increased 21 percent to $7.97.

2021 was a year of both strong financial performance and strategic progress.

<unk> delivered a $21 billion in net sales with excellent profitability margins.

Margins improved in our 13% increase in sales translated to a 17% increase in both non-GAAP operating income and non-GAAP net income share repurchases amplified this growth in non-GAAP net income per share increased 21% to $7 97.

Speaker 2: These exceptional results demonstrate the power of our resilient business model, a model that has enabled us to deliver industry-leading performance year after year, including through the past two years of a global health crisis, unprecedented supply interruptions, and evolving customer priorities.

These exceptional results demonstrate the power of our resilient business model a model that has enabled us to deliver industry, leading performance year after year, including through the past two years of a global health crisis unprecedented supply interruptions and evolving customer priorities.

Speaker 2: You see the power of our model and the performance across our balanced portfolio of customer and markets over the past two years. As you know we have five U.S. sales channels corporate small business health care government which includes federal and state and local customers and education with K-12 and higher ed. We also have our UK and Canadian operations each serving public and commercial customers. All of these operations represent meaningful businesses in their own right.

You see the power of our model and the performance across our balanced portfolio of customer end markets over the past two years as.

As you know we have five U S sales channels corporate small business healthcare government, which includes federal and state and local customers in education with K 12, and higher Ed.

We also have our UK and Canadian operations, each serving public and commercial customers.

All of these operations represent meaningful businesses in their own right.

Speaker 2: Often different factors impact customer end markets, sometimes macro and sometimes industry specific. This was the case over the past two years as customers across our diverse end markets experienced the impact of the pandemic very differently. In 2020, public customer spend fueled by education and government offset commercial and international declines and net sales increased 2%.

Often different factors impact customer end markets, sometimes macro and sometimes industry specific.

This was the case over the past two years as customers across our diverse end markets experienced the impact of the pandemic very differently in.

In 2020 public customer spend fueled by education, and government offset commercial and international declines in net sales increase.

<unk> increased 2%.

Speaker 2: In 2021, our 13% sales increase was powered by strong commercial and international customer spend, which more than offset flat public sales.

In 2021 or 13%.

The increase was powered by strong commercial and international customer spend which more than offset flat public sales.

Speaker 2: The past two years also highlighted the power of our business model in our product and solutions performance. With more than 100,000 products and solutions from over 1,000 leading and emerging brands, we are well positioned to meet our customers' needs, whether transactional or highly complex.

The past two years also highlighted the power of our business model and our product and solutions performance with more than 100000 products and solutions from over 1000, leading and emerging brands, we are well positioned to meet our customers' needs whether transactional or highly complex.

Speaker 2: In 2020, customers prioritized remote enablement and continuity. Transactions increased, driven by the ability to deliver endpoint solutions to meet unprecedented work from home and learn from home needs. At the same time, solutions declined as customers focused their spend on addressing critical endpoint projects.

In 2020 customers prioritize remote enablement and continuity transactions increased driven by the ability to deliver end point solutions can be unprecedented work from home and learn from home needs at the same time solutions declined as customers focus their spend on addressing critical endpoint projects in 2021.

Speaker 2: In 2021, while work from home and learn from home enablement remained key priorities, customers reprioritized investments to enable the future and add resiliency to their operations to strengthen and secure infrastructure, platforms and endpoints, both transactions and solutions.

While work from home and learn from home enablement remain key priorities customers re prioritized investments to enable the future and add resiliency to their operations to strengthen and secure infrastructure platforms and end points.

<unk> transactions and solutions increased.

Speaker 2: Our ability to help customers address their priorities during two years of unprecedented supply challenges another example of the power of our business model. We leveraged our competitive advantages our distribution centers are extensive logistics capabilities deep vendor partner relationships and strong balance sheet and liquidity position to navigate the environment. And our sellers and technical coworkers helped customers find alternative solutions from our deep portfolio whenever possible.

Our ability to help customers address their priorities during two years of unprecedented supply challenges. Another example of the power of our business model, we leveraged our competitive advantages our distribution centers, our extensive logistics capabilities deep vendor partner relationships and strong balance sheet and liquidity position to navigate the environment.

And our sellers and technical coworkers helped customers find alternative solutions from our deep portfolio whenever possible.

Speaker 2: In 2020, we were able to deliver more than 11 million client devices, despite meaningful supply shortages in endpoint devices. In 2021, while facing extended lead times for transactions and solutions, we delivered solid growth in both categories.

In 2020, we were able to deliver more than 11 million client devices, despite meaningful supply shortages and endpoint devices.

In 2021, while facing extended lead times for transactions and solutions, we delivered solid growth in both categories.

Speaker 2: As you can see, our resilient business model had a significant impact on our ability to profitably grow during an unprecedented period. Looking at performance over the past two years, net sales are up 15% since 2019, and our annual net sales compound growth rate with 7.5%. Profitability improved at a faster rate with compound annual growth rates for growth profit and non-gap operating income of 8%, and 10%, respectively.

As you can see our resilient business model had a significant impact on our ability to profitably grow during an unprecedented period.

Looking at performance over the past two years net sales are up 15% since 2019, and our annual net sales compound growth rate was seven 5%.

Profitability improved at a faster rate with compound annual growth rates for gross profit and non-GAAP operating income of 8% and 10% respectively.

Speaker 2: Of course, our business model is not the only component of our formula that a profitably outgrivel US market. Our success would not be possible without the dedication of our talented team of 14,000 co-workers, including the more than 2600 new serious co-workers who joined us in December . During the past two years, time and again, CW co-workers demonstrated why they are so vital to our ability to successfully deliver industry leading performance year after year. Let's take a closer look at what the team delivered.

Of course, our business model is not the only component of our formulated profitably outgrow the U S market, our success would not be possible without the dedication of our talented team of 14000 coworkers, including the more than 2600, new serious co workers, who joined US in December during the past two years time and again.

CDW coworkers demonstrated why they are so vital to our ability to successfully deliver industry leading performance year after year.

Let's take a closer look at what the team has delivered for the fourth quarter.

Speaker 2: For the quarter, net sales were $5.5 billion, including $197 million of results from Sirius, which closed on December 1st. On an average daily sales and constant currency basis, net sales increased 9.6%.

For the quarter net sales were $5 5 billion, including $197 million of results from serious which closed on December one.

On an average daily sales in constant currency basis, net sales increased nine 6%.

Speaker 2: Non-Gap Met income was $285 million in the quarter, up 8.2%. And non-Gap Met income per share was $2.08, up 14% from last year.

non-GAAP net income was $285 million in the quarter up eight 2% and non-GAAP net income per share was $2 eight.

Up 14% from last year.

Speaker 2: The teams leverage the combination of our broad and deep portfolio, extensive technical knowledge and unique logistical and distribution capabilities to advise, design and orchestrate full outcomes to address customers priorities across all of our customer and market markets. Outcomes that deliver five key organizational benefits innovation, lower cost.

The teams leverage the combination of our broad and deep portfolio extensive technical knowledge and unique logistical and distribution capabilities to advise design and orchestrate full outcomes to address customers' priorities across all of our customer end markets.

Comment that deliver five key organizational benefits innovation lower cost.

Speaker 2: agility, risk mitigation, and enhanced experiences for customers and co-workers. Let's take a look.

<unk> risk mitigation and enhanced experiences for customers and coworkers, let's take a look.

Speaker 2: Corporate delivered a 33% increase with excellent performance across both transactions and solutions. Digital transformation, agility, and security remain top priorities. End point solutions remain the key focus area and the team delivered another quarter of strong double digit growth in client devices.

Corporate delivered a 33% increase with excellent performance across both transactions and solutions.

Digital transformation agility and security remains top priorities endpoint.

<unk> remains a key focus area and the team delivered another quarter of strong double digit growth in client devices.

Speaker 2: Small business delivered another exceptional quarter, up 31%, with strong growth across both transactions and solutions. The team continued to help customers with remote enablement. Security performance was up mid-teens as the team helped customers address risk mitigation needs, delivering penetration testing and incident response, as well as backup and recovery solutions.

Small business delivered another exceptional quarter up 31% with.

With strong growth across both transactions and solutions.

The team continued to help customers with remote enablement security performance was up mid teens at the team help customers address risk mitigation needs delivering penetration testing and incident response, as well as backup and recovery solutions.

Speaker 2: On the public side of the business, excellent performance in both healthcare and higher ed was not enough to offset expected declines in government in K-12, and total public net sales declined 13 percent. Healthcare's 20 percent increase continued to reflect return to projects that had been put on hold. That concludes our remarks. Thank you.

On the public side of the business excellent performance in both health care and higher Ed was not enough to offset expected declines in government and K 12, and total public net sales declined 13%.

Health care is 20% increase continued to reflect returned to projects that had been put on hold.

Speaker 2: Security remained a top priority. Cloud adoption was strong, in part driven by efficiency needs that customers dealt with COVID-19 and acute care.

Security remains a top priority.

Cloud adoption was strong in part driven by efficiency needs at customers dealt with COVID-19 and acute care.

Speaker 2: The expected decline in federal reflected the lumpy nature of government contracts as a team's face to meaningful overlaps in the fourth quarter of 2020, the wind down of our devices of service solution for the US Census Bureau and a large client device program. Results also reflected the impact of flow-nice and contracting practices we shared last quarter.

The expected decline in federal reflected the lumpy nature of government contracts as the team phase two meaningful overlaps in the fourth quarter of 2020, the wind down of our device as a service solution for the U S Census Bureau, and a large client device program.

Results also reflected the impact of slowness in contracting practices, we shared last quarter.

Speaker 2: We are beginning to see green shoots and there's no change to our expectation that trends will reverse later in 2022.

We are beginning to see green shoots and there is no change to our expectation that trends will reverse later in 2022.

Speaker 2: State and local posted a high single digit decline. The team delivered a high single digit increase in solutions driven by helping customers upgrade security. This could not overcome the team's 2020 strong fourth quarter performance when they helped customers take advantage of the year end use it or lose it care fund.

State and local posted a high single digit decline the team delivered a high single digit increase in solutions driven by helping customers upgrade security. This could not overcome the team's 2020 strong fourth quarter performance when they help customers take advantage of the year and use it or lose it care funds.

Speaker 2: As we shared last quarter, we continue to help our customers work through the planning required to evaluate multiple funding opportunities and multi-year phasing and expect funded projects to begin implementation as we move through 2022.

As we shared last quarter, we continue to help our customers work through the planning required to evaluate multiple funding opportunities and multiyear phasing and expect funded projects to begin implementation as we move through 2022.

Speaker 2: Higher ed strong double digit performance was offset by the expected decline in K-12 and overall education sales increased 9%. On top of 2020's fourth quarter, remarkable 142% growth.

Higher Ed strong double digit performance was offset by the expected decline in K 12, and overall education sales increased 9% on top of 2024th quarter remarkable 142% growth.

Speaker 2: Higher ed growth reflected our ability to meet growing demand for student success programs. These programs use technology to give institutions an edge, including comprehensive endpoint solutions, improved security, campus connectivity, as well as enhancing the dorm room experience.

Ed growth reflected our ability to meet growing demand for student success programs. These programs use technology could give institutions and edge, including comprehensive endpoint solutions improved security campus connectivity as well as enhancing the dorm room experience.

Speaker 2: The K-12 team delivered excellent net sales performance against very tough, unseasonal fourth quarter 22 compares. Consistent with expectations we've previously shared net sales declined. Although down year over year, fourth quarter client device sales were more than double a typical pre-COVID fourth quarter.

The K 12 team delivered excellent net sales performance against very tough on seasonal fourth quarter 'twenty two compares.

Consistent with expectations. We previously shared net sales declined although down year over year fourth quarter client device sales were more than double a typical pre COVID-19 fourth quarter.

Speaker 2: Both the UK and Canada delivered high-teens local market growth.

Both the UK and Canada delivered high teens local market growth.

Speaker 2: Combined in our other results, average daily sales for these two markets increased 20% in U.S. dollars. Customer priorities in both markets were similar to those in the U.S.

Combined in our other results average daily sales for these two markets increased 20% in U S dollars.

Customer priorities in both markets were similar to those in the U S.

Speaker 2: Our success address in customer priorities is evident in our fourth quarter portfolio performance where we delivered balanced growth across transactions and solutions, both increasing mid-single digits. On the transaction side, client devices increased mid-single digits. While client device supply improved in some areas and we were able to help more customers adopt alternative providers, overall supply remained constrained and we exited a year with an elevated backlog.

Our success addressing customer priorities is evident in our fourth quarter portfolio performance, where we delivered balanced growth across transactions and solutions, both increasing mid single digits.

On the transaction side client devices increased mid single digits, while client device supply improved in some areas and we were able to help more customers adopt alternative providers overall supply remains constrained and we exited the year with an elevated backlog.

Speaker 2: Tight supply continued to impact prices, which our teams were generally able to pass along. Video and audio delivered another impressive quarter.

Tight supply continued to impact prices, which our teams were generally able to pass along.

Video and audio delivered another impressive quarter.

Speaker 2: Solutions grows with driven by strong software and servers performance. Riding remains strong as customers turn to CW for expertise across the full technology solution stack and entire life cycle. Lead times extended in several key solutions areas, notably netcom, enterprise storage and servers. Remaining solutions orders increased at URIM.

Solutions growth was driven by strong software and servers performance writings remains strong as customers turn to CDW for expertise across the full technology solution stack, an entire lifecycle lead times extended in several key solutions areas, notably Netcom enterprise storage and servers.

Remaining solutions orders increased at year end.

Speaker 2: Once again, the team delivered strong double digit growth in cloud driven by robust growth in security, infrastructure as a service and productivity. Security cloud growth was driven by the success of our comprehensive strategy of security assessment, data protection and threat mitigation with many solutions delivered via cloud and software. Overall security spend in the quarter increased mid-teens.

Once again the team delivered strong double digit growth in cloud driven by robust growth in security infrastructure as a service and productivity.

Security cloud growth was driven by the success of our comprehensive strategy at security assessments data protection and threat mitigation with many solutions delivered via cloud and software.

Overall security spend in the quarter increased mid teens.

Speaker 2: Our ability to meet customer needs in the quarter across the IT continuum translated into a mid-single-digit US hardware fail.

Our ability to meet customer needs in the quarter across the continuum translated into a mid single digit U S hardware sales.

Speaker 2: 20% digit increase in software and more than 50% increased in services.

20% digit increase in software and more than 50% increase in services.

Speaker 2: Services growth reflected the ongoing success of our strategy and was balanced across professional and managed services.

Services growth reflected the ongoing success of our strategy and was balanced across professional and managed services.

Speaker 2: Recent acquisitions are paying off, contributing meaningfully to this quarter's growth.

Recent acquisitions are paying off contributing meaningfully to this quarter's growth.

Speaker 2: So as you can see, our fourth quarter delivered a strong finish to an excellent year of financial performance.

So as you can see our fourth quarter delivered a strong finish to an excellent year of financial performance.

Speaker 2: 2021 was also a year of excellent strategic progress against our three-part strategy for growth, which is to first acquire new customers and capture share. Second, enhance our solutions capabilities and third, extend our services capabilities.

2021 was also a year of excellent strategic progress against our three part strategy for growth, which is to first acquire new customers and capture share second enhance our solutions capabilities and third extending our services capabilities.

Speaker 2: In 2021, we made excellent progress against all three of these pillars. Acquisitions made during the year, Vocal Point, Amplified IT, and Sirius, as well as integration progress for our 2020 acquisitions of IGNW and Aptris, furthered our strategy to bolster our services capability. Deep services capabilities are critical to our ability to deliver full organizational outcomes across the full stack and the entire lifecycle. This is an important source of differentiation in the marketplace.

In 2021, we made excellent progress progress against all three of these pillars.

Acquisitions made during the year focal point amplified and theories as well as integration progress for our 2020 acquisitions of IGN Wm Amtrust furthered our strategy to bolster our services capability.

Deep services capabilities are critical to our ability to deliver full organizational outcomes across the full stack in the entire lifecycle. This is an important source of differentiation in the marketplace let.

Speaker 2: Let me share a quick example of how this is showing up in our performance.

Let me share a quick example of how this is showing up in our performance.

Speaker 2: Our acquisition of Amplified IT in August deepened our already strong offering in the education space, particularly in the Google ecosystem, which is the largest education platform in the US.

Our acquisition of amplified in August deepened, our already strong offering in the education space, particularly in the Google ecosystem, which is the largest education platform in the U S.

Speaker 2: Amplified IT's expertise as a systems integrator enables us to facilitate end-to-end solutions for education customers. This leads to greater customer engagement and stickiness and provides insights into opportunities to further help our customers across the full IT lifecycle.

Amplified <unk> expertise as a systems integrator enables us to facilitate end to end solutions for education customers. This leads to greater customer engagement and stickiness and provides insights into opportunities to further help our customers across the full lifecycle.

Speaker 2: During the fourth quarter, the CDW Amplified for Education team worked closely with Google and Internet2 teams to make it easier for institutions to adopt Google Workspace for Education Plus.

During the fourth quarter, the CDW amplified for education team worked closely with Google and Internet to team to make it easier for institutions to adopt Google workspace for education plus in.

Speaker 2: In addition to ease of procurement, with the Amplified iTeam team on board, we were able to deliver additional value to customers through much needed deep technical expertise and services. Expertise and services that deliver organizational outcomes, enhance collaboration, streamline instruction, and a secure learning environment.

In addition to ease of procurement with the amplified it team on board, we were able to deliver additional value to customers through much needed deep technical expertise and services expertise and services that deliver organizational outcomes enhance collaboration streamlined instruction and a secure learning environment.

Speaker 2: This joint campaign generated more than 30 net new awards in the fourth quarter with more than $11 million in total contract value over the next several years.

This joint campaign generated more than 30 net new awards in the fourth quarter with more than $11 million in total contract value over the next several years.

Speaker 2: This is a great example of how we leverage our powerful business model to quickly deliver customer benefits from newly acquired capabilities. It is also a great example of how our acquisitions enhance our ability to deliver full outcomes across the full stack and the entire IT lifecycle.

This is a great example of how we leverage our powerful business model to quickly deliver customer benefits from newly acquired capabilities. It is also great example of our how our acquisitions enhance our ability to deliver full outcomes across the full stack in the entire lifecycle.

Speaker 2: Internal investments made in 2021 also enhanced our ability to deliver on this strategy. These included digital investments and proprietary portals to drive customer and seller productivity. We also added 1,000 new coworkers in addition to the nearly 3,000 coworkers who joined us via acquisition.

Internal investments made in 2021 also enhance our ability to deliver on this strategy. These included digital investments in proprietary portals to drive customer and seller productivity.

We also added 1000, new coworkers. In addition to the nearly 3000 coworkers who joined US via acquisition.

Speaker 2: Just over half of all new co-workers in 2021 are in technical roles.

Just over half of all new co workers in 2021 are in technical roles.

Speaker 2: Whether acquired or homegrown investments in our three-part growth strategy are integral to our ability to consistently and profitably outgrow the U.S. IT market, that brings me to our thoughts about...

Whether acquired our homegrown investments in our three part growth strategy are integral to our ability to consistently and profitably outgrow the U S market.

That brings me to our thoughts about 2022.

Speaker 2: In 2022, we will continue to execute against our three-part strategy with a focus on the recent integrations. A top priority in this area is the disciplined integration of Sirius. Work is moving apace led by a dedicated seasoned executive. The team's mission is, just as it's been with all of our acquisitions, to ensure our customers are able to quickly reap the benefits of our combination.

In 2022, we will continue to execute and execute against our three part strategy with a focus on the recent integrations.

A top priority in this area is the disciplined integration of serious work is moving a pace led by a dedicated seasoned executive team.

Teams mission is just has its been with all of our acquisitions to ensure our customers are able to quickly reap the benefits of our combination.

Speaker 2: and we are making excellent and swift progress in that area.

And we are making excellent and swift progress in that area.

Speaker 2: For example, I'm pleased to share that our new serious co-workers ahead of CDW email address on day one, a seemingly small accomplishment with really big impact.

For example, I'm pleased to share that our new theories co workers ahead of CDW E Mail address on day, one a seemingly small accomplishment with really big impact.

Speaker 2: Turning to 2022 financial performance, our outlook is built off a combined 2021 CW and serious net sales figure of $23 billion, which includes 2.2 billion of full year serious results.

Turning to 2022 financial performance our outlook is build off a combined 2021, CW and serious net sales figure of $23 billion, which includes $2 2 billion of full year serious results.

Speaker 2: Top line performance for Sirius was relatively flat compared to 2020 as they overcame a number of large projects and the impact of supply interruptions. Which services an area of focus for Sirius delivered double digit growth.

Top line performance for Sirius was relatively flat compared to 2020 as they overcame a number of large projects and the impact of supply interruptions managed services an area of focus for serious deliberate delivered double digit growth.

Speaker 2: In 2022, as Sirius is integrated into the fabric of CDW, we expect its operations to grow in line with total CDW.

In 2022 as serious as integrated into the fabric of CDW, we expect its operations to grow in line with total CDW.

Speaker 2: Given current market dynamics are 2022 baseline outlook calls for US IT market growth of 3.1 percent plus two to 300 basis points in constant currency of CDW out performance.

Given current market dynamics, our 2022 baseline outlook calls for U S. It market growth of three and one 5% plus 2% to 300 basis points in constant currency of CDW outperformance.

Speaker 2: This outlook reflects our view on three key drivers. First, we expect a moderation in US GDP growth. Second, we expect the impact of supply on our results in 2022 to remain fairly consistent with its impact at year end 2021. And third, we expect customer priorities in 2022 will increasingly require integrated solutions that leverage our services, cloud, and hybrid expertise.

This outlook reflects our view on three key drivers first we expect a moderation in U S GDP growth.

Second we expect the impact of supply on our results in 2022 to remain fairly consistent with its impact at year end 2021 and.

And third we expect customer priorities in 2022 will increasingly require integrated solutions that leverage our services cloud and hybrid expertise.

Speaker 2: Wildcards remain, ongoing supply and macro impacts, particularly in small business.

Wildcards remain ongoing supply and macro impacts, particularly in small business.

Speaker 2: Of course, as we always do, we will update you on our thoughts as we move through the year. I'm extremely proud of the excellent financial performance and strategic progress we've made during the past two years. In 2022, we will continue to do what we do best, leverage our competitive advantages to help our customers address their IT priorities and achieve their strategic objectives and out execute the competition.

Of course, as we always do we will update you on our thoughts as we move through the year I'm extremely proud of the excellent financial performance and strategic progress. We've made during the past two years and 2022, we will continue to do what we do best leverage our competitive advantages to help our customers address their it priorities and achieve their strategic objectives.

And out execute the competition.

Speaker 2: If the pandemic has shown us anything, it is that technology is essential to all sectors of our economy and will play an increasingly important role in the years ahead. That means our role as a trusted strategic partner to our customers is more important now than ever. And I remain confident that we have the right strategy in place. And with that, let me turn it over to Al who will share more detail on our financial performance. Al?

If the pandemic has shown US anything it is that technology is essential to all sectors of our economy and will play an increasingly important role in the years ahead.

That means our role as a trusted strategic partner to our customers is more important now than ever and I remain confident that we have the right strategy in place.

And with that let me turn it over to al who will share more detail on our financial performance al.

Speaker 2: Thanks, Chris, and good morning, everyone. I'll start my prepared remarks with more detail in the fourth quarter, move to Capitol allocation priorities, and finish up with our 2022 outlook.

Thanks, Chris and good morning, everyone I'll start my prepared remarks with more detail on the fourth quarter move to capital allocation priorities and finish up with our 2022 outlook.

Speaker 2: Turning to our fourth quarter P&L on slide eight, and salary net sales were $5.5 billion, including one month contribution from serious of $197 million.

Turning to our fourth quarter P&L on slide eight consolidated net sales were $5 5 billion.

Include one month contribution from serious of $197 million.

Speaker 2: Consolidated net sales were up 11.7%. On a reported basis, and 9.9% on an average daily sales basis, as we had one extra selling day.

Consolidated net sales were up 11, 7% on a reported basis and nine 9% on an average daily sales basis, as we had one extra selling day.

Speaker 2: On a constant currency average daily sales basis, in saladating net sales, we're 9.6%. Including 3.9, the 3.9 points of contribution, and serious.

On a constant currency average daily sales basis consolidated net sales were nine 6%, including three nine to three.

Three nine points of contribution.

Serious.

Speaker 2: Consistent with the last quarter, net sales and channels, most impacted by COVID-19 last year, corporate, small business, and international, continuing to rebound, hosting strong double-digit growth in the quarter, and delivering sales above 2019 levels.

Consistent with the last quarter net sales and channels most impacted by COVID-19 last year.

Corporate small business and international continue to rebound posting strong double digit growth in the quarter and delivering sales above 2019 levels.

Speaker 2: This quarter's growth also benefited from strong double-digit performance in health care, but was tempered by the expected decline in government and education.

This quarter's growth also benefited from strong double digit performance.

<unk> care was tempered by the expected decline in government and education.

Speaker 2: On the supply side, our overall backlog increased a few hundred million dollars in the quarter, reflecting constraints similar to last year. Backlog remained elevated.

On the supply side, our overall backlog increased a few hundred million dollars in the quarter, reflecting constraints similar to last year.

Backlog remained elevated year over year.

Speaker 2: We continue to make strategic investments in inventory, support our customers through this constrained supply environment. The team, once again, did a great job leveraging CDW's competitive advantages, but the backlog did not increase even more.

We continue to make strategic investments in inventory to support our customers through this constrained supply environment.

Once again did a great job leveraging cdw's competitive advantages so the backlog did not increase even more.

Speaker 2: First project for the quarter was $970, $76 million. An increase of 10.8% on a reported basis, and resulted in a strong, first margin of 17.6%.

Gross profit for the quarter was 970 $76 million, an increase of 10, 8% on a reported basis and resulted in a strong gross margin of 17, 6%.

Speaker 2: This margin was positively impacted by the increase in the mix of net service contract revenue, primarily software as a service, in addition to strong professional services performance.

Gross margin was positively impacted by the increase in the mix of net service contract revenue primarily software as a service. In addition to strong professional services performance.

Speaker 2: This is more than offset by lower product margin and overlapping high margin configurations in the prior year.

This was more than offset by lower product margin and overlapping high margin configurations from the prior year.

Speaker 2: Sirius' gross profit margin was consistent with their historical performance and was modestly accreted to the overall gross margin for the quarter.

Sirius is gross profit margin was consistent with their historical performance and was modestly accretive to the overall gross margin for the quarter.

Speaker 2: Turning to SGA on slide 9, non-GAAP SGA increased 9.2 percent. This reflected the impact of consolidating one month of incremental serious expense.

Turning to SG&A on slide nine non-GAAP SG&A increased nine 2%.

This reflected the impact of consolidating one month of incremental serious expenses.

Speaker 2: ?Services Sales Compensation ??? ?Services Revenirs? So reflected, Higher performance space Ltd.

Curious if sales compensation as a percentage of <unk> and services revenues.

So reflected higher performance base.

Higher attainment against financial goals.

And investments in the business.

Accounts.

Cool.

Speaker 2: summit on the In Witcher

<unk> thousand 994 up $2826 from the third quarter and $3.

Of the 942 over prior year.

Speaker 2: The increase in co-worker counseling quarter reflects the addition of over 2,600 serious co-workers and other organic and inorganic co-worker investments to support high-growth solution areas and our own digital transformation.

The increase in co worker count during the quarter reflects the addition of over 12 2600 dollar 2600 series coworkers and other organic and inorganic coworker investments.

Support high growth solution areas.

<unk> digital transformation.

Speaker 2: Gap operating income was $339 million, up 2.1%.

GAAP operating income was $339 million up two 1% non.

Speaker 2: non-GAAP operating income was $425 million, up 12.9%. non-GAAP operating income

non-GAAP operating income was $425 million.

Up 12, 9%.

non-GAAP operating income margin.

Almost seven 7%.

Speaker 2: As we shared on last quarter's call, investments made in the fourth quarter drove an operating margin.

As we shared on last quarter's call investments made in the fourth quarter drove an operating margin.

Which delivered our full year outlook here.

Speaker 2: Sirius' non-gap operating margin was consistent with their historic performance and was marginally creative for the quarter.

Curious as non-GAAP operating margin was consistent with their historic performance and was marginally accretive for the quarter.

Speaker 2: Moving to slide 10, interest expense is $43 million, up 16.9%. Increase reflects the incremental expense on the $2.5 billion of notes issued in December to finance the serious acquisition.

Moving to slide 10 interest expense was $43 million up 16, 9%.

The increase reflects the incremental expense on the $2 $5 billion.

Notes issued in December that financed serious acquisition.

Speaker 2: Our gap affected tax rate shown on slide 11 was 25.1%.

Our GAAP effective tax rate shown on slide 11 was 25, 1%.

To get to.

Speaker 2: non-GAAP effective tax rate. We adjust taxes consistent with non-GAAP net income add-backs as shown on slide 12.

The non-GAAP effective tax rate, we adjust taxes consistent with non-GAAP net income add backs as shown on slide 12.

Speaker 2: For the quarter, our non-GAAP effective tax rate was 24.5%, up 230 basis points versus last year's rate, primarily due to one-time tax benefits recognized in the prior year.

For the quarter, our non-GAAP effective tax rate was 24, 5% up 230 basis points versus last year's rate, primarily due to onetime tax benefits recognized in the prior year.

Speaker 2: As you can see on slide 13, with fourth quarter weighted average dollar-loaded shares outstanding a non-GAF net income with $285 million dollars in the quarter.

As you can see on slide 13, with fourth quarter weighted average diluted shares outstanding.

non-GAAP net income was $285 million.

In the quarter up eight 2%.

Speaker 3: non-GAAP net income per share was $2.08, up 14% from last year.

non-GAAP net income per share was $2 eight of.

A 14% from last.

Last year and reflects the impact of share repurchases.

Speaker 3: Turning the full year results from slides 14 through 19, as Chris mentioned, 2021 performance reflected exceptional execution against an effective strategy along with the power of our business model and balanced portfolio.

Turning to full year results on slides 14 through 19, as Chris mentioned 2021 performance reflected exceptional execution against an effective strategy along with the power of our business model and balanced portfolio.

Speaker 3: Next sales were $20.8 billion, an increase of 12.7% on a reported basis, and average daily sales basis.

Net sales were $20 8 billion, an increase of 12, 7% on a reported basis.

And average daily sales basis.

Speaker 3: On a constant currency average daily sales basis, four-year consolidated net sales grew 11.9%, including 110 basis point contributions from Syria.

On a constant currency average daily sales basis full year consolidated net sales grew 11, 9%, including a 110 basis point contribution from serious.

Speaker 3: Gross profit was $3.6 billion, up 11.2%, and gross profit margin was 17.1%, down approximately 30 basis points year over year.

Gross profit was $3 6 billion.

Up 11, 2% and gross profit margin was 17, 1% down approximately 30 basis points year over year.

Speaker 3: In 2021, software and services accounted for approximately 41% of total gross profit, up 100 basis points from last year.

In 2021 software and services accounted for approximately 41% of gross total gross profit up 100 basis points from last year.

Speaker 3: The increase reflects investment in our services and solution capabilities, and continued shift in the netted down revenues like software as a service.

The increase reflects investment in our services and solution capabilities and a continued shift into netted down revenues like software as a service.

Speaker 3: Before moving down the rest of the full year P&L, I want to take a moment to put netted down revenues into perspective.

Before moving.

Moving down the rest of the full year P&L I want to take a moment to put put.

Netted down revenues into perspective.

Speaker 3: Any down revenues result from software as a service, software assurance, and warranty solutions, as well as aging commission fees.

Netted down revenues results from software as a service software assurance and warranty solutions as well as agent Commission fees we.

Speaker 3: We are not the primary obligor for these solutions and thus record gross profit as our revenue. And why you sometimes hear us refer to these as a hundred percent gross margin item.

We are not the primary obligor for these solutions and thus record gross profit as our revenue and why you sometimes hear us refer to these as a 100% gross margin items.

Speaker 3: In the past, we've shared examples of how this accounting treatment has a dampening effect on our absolute net sales dollars, but is neutral to gross profit dollars, and the rest results in higher gross margins, all else equal.

In the past who shared examples of how the accounting treatment has a dampening effect on our absolute net sales dollars, but is neutral the gross profit dollars.

This results in higher gross margins all else equal.

Speaker 3: Over the last five years, our knitted down revenue streams as a percentage of total gross revenues or customer spend has increased 10 percentage points.

Over the last five years are netted down revenue streams as a percentage of total gross revenues or customer spend has increased 10 percentage points.

Speaker 3: greater mix reflects increased customer spend on fast growing netted down revenue streams like cloud and security.

A greater mix reflects increased customer spend on fast growing netted down revenue streams like cloud and security.

Speaker 3: Long term has we continued to execute on our growth strategy and invest in the complete capability necessary to ensure we are meeting the evolving needs of our customers. We expect the next further in the high growth neted down revenue streams.

Long term as we continue to execute on our growth strategy and invest in the capabilities necessary to ensure we are meeting the needs evolving needs of our customers. We expect the next further into high growth netted down revenue streams.

Speaker 3: This mixed dynamics will pressure net sales while remaining neutral to gross profit and expanding gross margin.

It's mixed dynamics will pressure net sales, while remaining neutral to gross profit and expanding gross margins.

Speaker 3: This, of course, is subject to hardware refresh cycles and other mixed components of the business.

This of course is subject to hardware refresh cycles and other mix components of the business.

Speaker 3: While much of what I've described is tied into the accounting treatment, it is also a reflection of our success in the execution of our strategy to capture, share, enhance capabilities in high-growth solutions and expand services.

While much of what I've described is tied into the accounting treatment. It is also.

Inflection of our success in the execution of our strategy to capture share enhanced capabilities in high growth solutions expand services.

Speaker 3: Returning to the full year P&L, operating income was $1.4 billion and non-GAAP operating income was $1.6 billion of 17.1%.

Returning to the full year P&L.

Operating income was $1 4 billion and non-GAAP operating income was $1 6 billion.

Of 17, 1%.

Speaker 3: Net income was $989 million. non-GAAP net income was $1.1 billion of 17.2%.

Net income was $989 million non-GAAP net income was $1 1 billion.

Of 17, 2%.

Speaker 3: Non-Gap net income per share with $7.97 of 20.9%.

non-GAAP net income per share was $7 97 up 29%.

Speaker 3: Turning to the balance sheet on slide 20. On December 31st, cash and cash equivalents were $258 million. And that debt was $6.6 billion.

Turning to the balance sheet on slide 22.

December 31, cash and cash equivalents with $268 million and.

Net debt was $6 6 billion.

Speaker 3: The liquidity remains strong with cash plus revolver availability of approximately $1.2 billion.

Liquidity remains strong with cash plus revolver availability of approximately $1 2 billion.

Moving to slide 21 of.

Speaker 3: three-month average cash conversion cycle of 24 days, of seven days from last year's fourth quarter. In addition to our strategy of holding customer-driven stocking positions, increase reflected mixing out of vendors with longer payment cycles and the timing of customer receipts.

Three month average cash conversion cycle was 24 days up seven days from last year's fourth quarter.

In addition to our strategy of holding customer driven stocking positions increase reflected mixing out of vendors with longer payment cycles, and the timing of customer receipts.

Speaker 3: This is partially offset by the timing of payments at the end of the year.

This is partially offset by the timing of payments at the end of the year.

Speaker 3: Full year free cash flow is $477 million, as shown on slide 22. $1.2 billion of free cash flow which benefited from timing, one-time items, and advantageous vendor payment terms.

Full year free cash flow was $477 million as shown on slide $22 $2 billion of free cash flow, which benefited from timing, one time items and advantageous vendor payment terms.

In 2000.

Speaker 3: 2021, our free cash flow was also impacted by increased working capital to support our strong four-year growth.

2021, our free cash flow was also impacted by increased working capital to support our strong full year growth.

Speaker 3: We also leverage our strong balance sheet and distribution capabilities to make strategic investment in inventory, supporter customers in this unprecedented supply environment.

We also leveraged our strong balance sheet and distribution capabilities to make strategic investments in inventory support our customers in this unprecedented supply environment.

Speaker 3: As a result, 2021 free cash flow was below a rule of thumb of 33 quarters to 4.25% of sales.

As a result, 2021 free cash flow was below our rule of thumb of three and three quarters to 4.25% of sales.

Speaker 3: Timing differences, one-time items, and noted investments resulted in asymmetrical free cash flows across 2020 and 2021. In aggregate, 2020 and 2021 free cash flows balanced out and equated to forward on our capital allocation objectives and deployed more than $1.7 billion of cash to shareholders, which included $235 billion to share repurchases at an average price of the prime.

Timing differences, one time items and noted investments resulted in asymmetrical free cash flows across 2020 in 2021 in.

In aggregate 2020, and 2021 free cash flows balanced out and equated to flavored on our capital allocation objectives and deployed more than one $7 billion of.

Of cash to shareholders, which included $235 billion to share repurchases.

At an average price of a product.

Approximately $172 per share.

Speaker 3: Turning to 2022 capital allocation priorities on slide 23.

Turning to 2022 capital allocation priorities on slide 23.

Speaker 3: Our objectives remain consistent with what we shared last quarter. First increase the dividend in line with non-GAAP net income.

Our objectives remain consistent with what we shared last quarter.

First increased the dividend in line with non-GAAP net income.

Speaker 3: Last November , we increased the dividend 25% set income into growing line with earnings.

Last November we increased the dividend 25%.

Net income and to grow in line with earnings.

Ensure we have the right capital structure.

Speaker 3: structure in place with a targeted net leverage ratio of 2.5, ended this year at 3.4 times above our range due to the financing of the serious acquisition. We intend to optimize the use of the new technology to ensure that the

Structure in place with a targeted net leverage ratio of two five.

We ended this year at three four times above our range due to the financing of the serious acquisition.

We intend to optimize the use of cash flow after.

Speaker 3: paying dividends to focus on reducing debt until we return to our net leverage range.

And dividend it focus on reducing debt until we return to our net leverage range.

Speaker 3: We continue to expect to achieve this by the end of 2022.

We continue to expect to achieve this by the end of 2022.

Speaker 3: As a result of this focus, we'll put a lower priority on our third and fourth capital allocation priorities of M&A and share repurchases until net leverage is in our target range.

As a result of this focus will put a lower priority on our third and fourth capital allocation priorities of M&A and share repurchases until net leverages in our target range.

Speaker 3: Moving to the outlook for 2022 on slide 24.

Moving to the outlook for 2022 on slide 24.

Speaker 3: As Chris mentioned, our outlook is built off the combined 2021 TDW and serious results, which presents these numbers as if we own serious at the start of 2021. Let me walk you through how this looks.

As Chris mentioned, our outlook is build off the combined 2021, CDW and serious results, which presents these numbers as if we owned serious at the start of 2021, let.

Let me walk you through how this looks.

Speaker 3: starting with sales. Given what we're seeing in the market now, our baseline outlook assumes U.S. market growth three and a half percent.

Starting with sales given what we're seeing in the market now a baseline outlook assumes U S market growth three 5%.

Speaker 3: We currently expect combined net sales to grow 200 to 300 basis points faster than the market in constant currency.

We currently expect combined net sales to grow 200 to 300 basis points faster than the market in constant currency.

Speaker 3: On a combined basis, CDW's net sales would have been $22.9 billion in 2021.

On a combined basis TDD Cdw's net sales would have been $22 $9 billion in 2021 <unk>.

Speaker 3: including $2.17 billion from Syria.

Including two $1 7 billion from serious.

Speaker 3: We expect Sirius to grow in line with total CDW.

We expect serious to grow in line with total CDW.

Speaker 3: Right now 2022 feels like a normal demand environment. We expect it will reflect a greater mix in the net...

Right now 2022 feels like a normal demand environment and expect it will reflect a greater mix in a net.

Speaker 3: headed down revenues as we overlap strong client advice Yep,

I think down revenues as we overlapped strong client device sales.

Speaker 3: Our baseline outlook assumes that supply does not materially impact net sales beyond what we've been experiencing.

Our baseline outlook assumes that supply does not materially impact net sales beyond what we've been experiencing.

Speaker 3: We would expect it to be at the lower end of our premium range if we mix more into netted down revenue streams than expected and or experience elevated levels of supply.

We would expect it to be to be at the lower end of our premium range. If we mix more into netted down revenue streams and expected and or experienced elevated levels of supply constraints.

Speaker 3: We would be at the higher end if hardware growth is strong and supply improves.

We would be at the higher end if hardware growth is strong and supply improves.

Speaker 3: Currency is expected to be neutral for the full year, assuming exchange rates of $1.37 to the British pound and 0.8 to Canadian dollars.

Currency is expected to be neutral for the full year, assuming exchange rates of $1 37 to the British pound.

Eight of the Canadian dollar.

Speaker 3: Moving down the P&L, we expect non-GAAP operating income margin to be in the low 8% range. Our non-GAAP earnings per share would have been $8.49 in 2021 on a full year combined basis compared to our reported $7.97, which included one month of series.

Moving down the P&L, we expect non-GAAP operating income margin in the low 8% range. Our non-GAAP earnings per share would have been $8 49.

In 2021 on a full year combined basis compared to our reported $7 97.

Which included one month of series.

Speaker 3: We expect non-GAAP earnings per share to grow high single digits in 2022. Call it nine and a quarter percent plus or minus 50 basis points in constant currency on a combined basis.

We expect non-GAAP earnings per share to grow high single digits in 2022 call it 9.25% plus or minus 50 basis points in constant currency on a combined basis.

Speaker 3: This equates to approximately 16 to 17 percent growth in constant currency on a reported basis.

This equates to approximately 16% to 17% growth in <unk>.

Constant currency on a reported basis.

Speaker 3: As Chris mentioned, the integration work with Sirius is progressing. Given the nature of the integrated sales, we will not be breaking out Sirius results going forward.

As Chris mentioned, the <unk> integration work with Sirius is progressing.

Given the nature of the integrated sales, we will not be breaking out serious results going forward.

Speaker 3: Please remember we hold ourselves accountable for delivering our combined financial outlook on an annual constant currency basis.

Please remember we hold ourselves accountable for delivering our combined financial outlook on an annual constant currency basis.

Speaker 3: Slide 24 provides our expected net sales split for the year. We expect net sales in the first...

Slide 24 provides our expected net sales split for the year, we expect net sales in the first two.

Speaker 3: Sirius' sales split is slightly higher in the second half than historic CDW.

Serious a sales split is slightly higher in the second half to historic CDW.

Speaker 3: Historically, we see a sequential decline from Q4 to Q1. This year, on a reported basis, we expect first quarter sequential growth in the low single digits, reflecting three months of contribution from serious versus one month in Q4.

Historically, we see a sequential decline from Q4 to Q1.

This year on a reported basis, we expect first quarter sequential growth in the low single digits.

Reflecting three months of contribution from serious versus one month in Q4.

Speaker 3: We expect first quarter cost and currency non-gap earnings for share growth relative to Q1 2021 to be in the low mid teens reflecting seasonality and channel mess.

We expect first quarter constant currency non-GAAP earnings per share growth relative to Q1 2021 to be in the low mid teens, reflecting seasonality and channel mix.

Speaker 3: Modeling thoughts for annual depreciation, amortization, interest expense, and the non-GAAP effective tax rate can also be found on slide 25.

Modeling thoughts for annual depreciation and amortization interest expense and the non-GAAP effective tax rate can also be found on slide 25.

Speaker 3: In addition, you can see our long-term free cash flow rule of thumb remains unchanged at 3.75% to 4.25% of net sales, assuming current tax rate.

In addition, you can see our long term free cash flow.

The thumb remains unchanged at three and three quarters to 4.25% of net sales assuming current tax rates.

Speaker 3: We expect CapEx to run approximately 70 to 75 basis points as a percentage of net sales, reflecting our continued view that now is the time to continue to accelerate investment in our own digital transformation, enabling us to further fortify our competitive position, make CDW the trusted partner of choice for customers and vendor partners.

We expect Capex to run approximately 70 to 75 basis points as a percentage of net sales, reflecting our continued view that now is the time to continue to accelerate investment in our own digital transformation, enabling us to further fortify our competitive position make CDW that.

Trusted partner of choice for customers and vendor partners.

Speaker 3: That concludes the financial summary. As we always do, we will provide updated views on the macro environment and our business on future earnings calls. And with that, I'll ask the oppor-

That concludes the financial summary.

We always do we will provide updated views on the macro environment and our business on future earnings calls.

And with that I'll ask the operator to open it up for questions.

Speaker 3: Can we please ask each of you to limit your questions to one with a brief follow-up? Thank you.

Can we please ask each of you to limit your questions to one.

A follow up thank you.

Okay.

Speaker 1: Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If for any reason you would like to remove that call, please press star followed by 2.

Thank you maybe would like to ask a question. Please press star followed by one on your telephone keypad. If any reason you would like to remove that call. Please press star followed by two.

Speaker 1: Okay our first question comes from Amit Dhariani from Evercore. Amit, please go ahead.

Okay first question.

Comes from.

<unk> <unk> from Evercore.

Please go ahead.

Speaker 1: Thanks for asking my question. Good morning, everyone. You know, my first question really is around this EPS guys for 22. I think you talked about 16, 17% EPS growth for 22. Can you just talk about what are you really assuming out of the serious acquisition in that EPS number? And really the two parts I'd love to kind of get some clarity on is, you know, A, Chris, I'd love to understand how you think about the scale synergies.

Thanks, a lot for your question good morning, everyone.

Yes. My first question really is along with the EPS guide for 'twenty two.

About 17% EPS growth was 22 can you just talk about what arguably is moving out of the <unk> acquisition and that EPS number and it really is a two parter I'd love to kind of get some clarity on it.

Chris I'd love to understand how you think about it.

The scale synergies now to consider as we go forward.

Okay.

Speaker 3: Good morning, Amit. This is Al. So just a couple things to note. So I think we've given you some component parts to get a sense for EPS. So number one obviously our reported EPS for 2021 was seven dollars ninety seven cents. That includes one month of contribution for serious cost.

Good morning, Amit. This is al so just a couple of things to note. So I think we've given you.

Some of the component parts to get a sense for EPS. So number one obviously our reported EPS for 2021 was $7 97.

That includes one month of contribution for serious.

Speaker 3: We've also provided you what would be a combined CDW and serious result for 2021 is if they were together for the full year. That's $8.49.

We've also provided you with.

B, a combined CDW and serious result for 2021 as if they were together for the full year at $8 49.

Speaker 3: So the way you should think about it is if you walk forward from that $849 to our outlook there of 9.25% growth, you get a sense for the combined entities and what they contribute. The other data point I would just give you is that we noted that from a top line perspective, we expect that Sirius would grow at the same rate as we provided in that top line outlook.

So the way you should think about it is if you walk forward from that $8 49 to our outlook there of 9.25% growth you get a sense for the combined entities and what they contribute the other data point I would just give you is that we noted that from a top line perspective, we would expect that serious.

Good.

We grow at the same rate as we provided in that.

Top line outlook.

Speaker 3: To your question on synergies, so here's what I would say. Look, we're very focused on the integration of the combined entities, and we expect through that, you know, we're going to find value in terms of synergies on the revenue front.

To your question on synergies.

Here's what I would say look we're very focused on the integration of the combined entities and we expect through that.

We're going to find value in terms of synergies on the revenue front.

Speaker 3: We're certainly looking hard at procurement efficiencies, systems consolidation, facilities consolidation, all of those components. And we expect we're going to get value. But I would just mention that it's critically important as we talk about our strategy that we continue to invest.

We're certainly looking hard at procurement efficiencies.

Systems consolidation facilities consolidation all of those those components and we expect we're going to get value.

Amit I would just mentioned that it's critically important as we talk about our strategy and we continue to invest in.

Speaker 3: in our strategy and I would say as it pertains to synergies reinvest.

In our strategy and I would say as it pertains to synergies reinvest and so while we expect we're going to see value. We expect that a lot of those the values, we get from the synergies to be reinvested in 2022.

Speaker 3: And so while we expect we're going to see value, we expect that a lot of those, the values we get from this energy reinvested in 2022.

Okay.

Yeah.

Speaker 4: Perfect. And as I think about the balance between transactional versus solution, how do you think that stacks up in Calendula 22 and do you think the supply environment maybe stops getting worse at least through 22 or how do you think that's negative? I'd love to get the sense from the mix and then supply environment.

Perfect.

As I think about the balance between transactional versus Houston.

How do you think that stacks up in calendar 'twenty, two and do you think the supply environment.

May be stopped getting worse at least through 'twenty, two or how do you kind of think of that measure would love to get the sense from the mix and then supply environment.

Speaker 3: Sure, this is Al. Look, I would say, you know, comments on the supply environment, Q4 looked very similar to the prior quarters.

Sure. This is Alan look I would say.

Comments on the supply environment Q4 looked very similar to the prior quarters in terms of the supply environment, our backlog increased consistent with.

Speaker 3: in terms of the supply environment, are backlog increased consistent with those previous quarters, call it a couple hundred million of backlog increase. Look, there are some puts and takes in terms of what supply chain look like in Q4, and I would say probably a bit more challenge on the solution side of the business. And I think that's natural as these efforts evolve over time. As we wrap up wanted to let you know that this is a commercial effort. That companies are exactly where they're headed into how they do the sign. Go global, scale migration. And we'll talk about that early. You will start to see stations

But those previous quarters call. It a couple hundred million.

Backlog increase.

Look there are some puts and takes in terms of what supply chain look like in Q4, and I would say probably.

A bit more challenge on the solutions side that side of the business and I think that's natural.

As these efforts evolve over time as we look forward into 2022, we don't really see any meaningful and insight.

Speaker 3: As we look forward into 2022, we don't really see any meaningful end in sight. I would say as we think about kind of our interactions and what we hear and observe from a partner and product perspective.

I would say as we think about kind of our interactions and what we hear and observed from our partner and product perspective.

Speaker 3: Maybe there's silver lining there that's some of the transparency.

Maybe there is a silver lining there that some of the transparency has improved so theres a better line of sight of lead times, and where things stand, but I am not sure that that we would translate that into any indication that things are going to get better in the near term and so really we're hunkered down on consistent similar.

Speaker 3: has improved so there's a better line of sight of lead times and where things stand, but I'm not sure that we would translate that into any indication that things are gonna get better in the near term. And so really we're hunkered down on consistent, similar outlook with respect to the supply chain environment and we'll continue to execute as we have during this time. Thank you.

Outlook with respect to the supply chain environment, and we'll continue to execute as we have during this time.

Perfect. Thank you.

Speaker 1: Thank you for your question. The next question comes from Adam Tindall of Raymond James. Adam, please go ahead.

Youre welcome. Thank you Amit for your question.

The next question comes from Adam Tindle of Raymond James Adam. Please go ahead.

Speaker 3: Okay, thank you and good morning, Al. I just wanted to start on 2022 guidance and the revenue buildup implies around 6% growth for the full year, but it looks like you're gonna be starting at about half that level based on the Q1 guidance.

Okay. Thank you and good morning Al I, just wanted to start on 2022 guidance and the revenue buildup implies around 6% growth for the full year, but it looks like youre going to be starting at about half that level based on the Q1 guidance and as we think about compares getting tougher as the year progresses, there's questions around.

Speaker 3: And as we think about compares getting tougher as the year progresses, there's questions around how long the device ecosystem tailwinds are going to last as the year progresses. Maybe you can double click on those fears and why you built in acceleration in your over your growth as the year progresses to start with. Thanks.

Following the device ecosystem <unk> are going to last as the year progresses, maybe you can double click on those fears and why you built an acceleration in year over year growth as the year progresses to start with.

Speaker 3: Thanks, Adam. Yeah, I think you hit a lot of the right point. So look, on the full year, we're confident in our growth expectations, there certainly is a timing and effect. And there are a few puts and takes in that regard. So number one, in terms of sequentially from Q4, Q1, we've got the positive that we'll have three months of contribution from Syria.

Sure. Thanks, Adam.

I think you hit a lot of the right points. So look on the full year.

We're confident in our growth expectations, there certainly is a timing effect and.

There are a few puts and takes in that regard so number one.

In terms of sequentially from Q4 Q1.

We've got the positive that we will have three months of contribution from serious.

Speaker 3: That certainly helps from a top line perspective. You will recall we have some tough comps.

That certainly helps from a topline perspective.

We'll recall, we have some tough comps otherwise in particularly in education with Q1, so that is a bit of an offsetting effect. So.

Speaker 3: otherwise and particularly in education with Q1 so that has a bit of an offsetting effect. So when we add up that along with our typical seasonality.

When we add up that along with our typical seasonality.

Speaker 3: you know we would we would we would be back to kind of our forty eight fifty two split in terms of seasonality uh... now look there's the wild card

We would see would be back to kind of our 48 52 split in terms of seasonality.

Now look there's the wildcards.

Speaker 3: And those wildcards include what type of product throughput are we seeing and will it be more hardware focused versus...

And those wildcards include.

What type of product throughput or are we seeing any.

<unk>.

Will it be more hardware focused versus services and solution and I would just say obviously the obvious wildcard of supply.

Speaker 3: services and solutions and I would just say the obvious wild card of supply and that will certainly change the shape.

And that will certainly change the shape and direction of timing by quarter.

Speaker 3: and direction of timing by quarter.

Speaker 3: Okay, understood. And maybe just as a follow up, you onboarded over 2,500 employees from Syria. So I just had a question on integration, Chris.

Okay understood and maybe just as a follow up.

<unk> on boarded over to 2005 hundred employees from serious and I just had a question on integration, Chris you talked about the CDW culture, how it permeates and customer facing co workers compensation metrics are generally aligned with key metrics like gross profit dollar growth and returns on capital as you think about the serious employees that youre, taking on maybe you can.

Speaker 3: You talked about the CDW culture, how it permeates and customer facing coworkers, compensation metrics are generally aligned with key metrics like those profit dollar growth and returns on capital. As you think about the serious employees that you're taking on, maybe you can touch on their comp metrics and any potential plan changes to that. And Al, if you could touch on the systems integration piece of this, that would be helpful. Thanks.

Touch on the comp metrics and any potential land changes to that and al If you could touch on the systems integration piece of this that would be helpful. Thank you.

Speaker 2: Morning Adam, I sure I'd love to, you know, integration is going really quite well. And, you know, it's, I'd say moving with smart speed. We're very disciplined, as you know, but we also understand moving with the appropriate amount of speed to make sure that our customers are benefiting from the combined organizations is critically important. You also know the lenses we look through when we assess potential acquisitions and cultures right up there on the list, it's so important to us.

Good morning, Adam sure I'd Love to integration is going really quite well and.

It's I'd say moving with smart speed.

We're very disciplined as you know, but we also understand moving with the appropriate amount of speed to make sure that our customers are benefiting from the combined organizations is critically important.

You also know the lens as we look through when we assess potential acquisitions and culture is right up there on the list since it's so important to us and the serious co workers now CDW coworkers are fully aligned with our culture of customer first co worker, one and collaborative I would say and we're already seeing.

Speaker 2: And the serious co-workers, now CW co-workers are fully aligned with our culture, customer first, co-worker first, and collaborative, I would say. And we're already seeing benefits of us coming together, winning deals together, going to eat customers together. In terms of the comp schemes, this is what I would tell you Adam, they are similarly performance-based with similar metrics.

The benefits of us coming together winning deals together.

Going to the customers together in terms of the comp schemes. This is what I would tell you Adam.

They are they are similarly performance based with similar metrics from an integration perspective, we are taking the 2022 year very methodically because we of course once you get to compensation right, but from a cost and incentive lens very similar to CDW and again.

Speaker 2: From an integration perspective, we are taking the 2022 year very methodically because we of course want to get compensation right. But from a cost and incentive lens, very similar to CW. And again, the teams are already coming together, collaborating with each other, on deals, sending referrals across to each other. And it's, I'm really pleased with how it's going.

The teams are already coming together collaborating with.

With each other on deals sending referrals across.

To each other and I'm really pleased with how it's going.

Speaker 3: and Zell, I just had a couple things. So number one.

Adam This is al I'll, just add a couple of things so number one.

Speaker 3: just from a compensation perspective, Chris had to keep points there in terms of alignment. Just keep in mind because their business has a higher proportion of services solutions. That variable fixed component of the business looks a little different. They have a higher cost to serve with their technical staff. And so that will shift. I don't think that's a diametrical shift immediately. But we'll see that over time as we integrate.

Just from a compensation perspective, Chris Chris hit the key points there in terms of alignment just keep in mind because of their business.

It has a higher proportion of.

Services solutions that.

That variable fixed component of the business looks a little different they have a higher cost to serve.

With their technical staff and so that will shift I don't think thats, a diametrical shift immediately but we will see that over time as we integrate.

Speaker 3: On your question on systems consolidation, look, it's a little early days. I think we've laid down the foundation of kind of a initial evaluation of systems. And I think we're pleased to see that.

On your question on systems consolidation look it's a little early days I think we've laid down the foundation of kind of initial evaluation of systems and I think we're pleased to see that.

Speaker 3: There's really strong infrastructure from a serious perspective. And so we're really lining up for an approach of best and breed.

There is really strong infrastructure from a serious perspective, and so we're really lining up for an approach of best in breed.

Speaker 3: From a systems perspective, we think there's going to be opportunities to take on some of the technology tools they have as well as vice versa. So we'll share more as we have that, but we're making good progress in that front. Very helpful, thanks.

From a systems perspective, we think there's going to be opportunities.

To take on some of the technology tools, they have as well as vice versa. So we.

We'll share more as we have that but but we're making good progress on that front.

Very helpful. Thanks, and congrats on the results.

Thanks, Adam.

Speaker 1: Thank you, Adam. Our next question comes from Matthew sharing from Staifor. Matthew, please go ahead.

Thank you Adam.

Next question comes from Matthew Sheerin from Stifel.

Please go ahead.

Speaker 1: Yes, thank you and good morning. Chris, I was hoping you could expand a little bit on your outlook for the year in terms of in market. What should we be thinking about on the commercial side of the business, which has been accelerating versus the public sector, which you've talked about, you know, tough comps in education and in government?

Yes, Thank you and good morning.

Chris I was hoping you could.

Expand a little bit on your outlook for the year in terms of end market.

What should we be thinking about on the commercial side of the business, which has been accelerating versus the public sector, which you talked about tough comps in education and government.

Speaker 2: Sure, morning, Matt, you know, as we look at 2022, I'll just let me try to simplify by segment. What we've seen in the commercial space.

Sure Good morning, Matt.

As we look at 2022 I'll, just let me try to simplify by segment.

What we've seen in the commercial space both.

Speaker 2: corporate and small business has been I would say very positive signs of recovery and You know our expectations are for continues solid growth

Corporate and small business has been I would say very positive signs of recovery.

And our expectations are for continued solid growth, but at a decelerated rate from 2021, we talked about education and the unseasonably. So on seasonality there. The one thing I would say about education, the emergency connectivity funds.

Speaker 2: but at a decelerated rate from 2021. We talked about education in the unseasonal, you know, unseasonality there. The one thing I would say about education, the emergency connectivity funds.

Speaker 2: availability, go through the middle of the summer. So they end a Q2. So we're going to see one would expect some nice uplift there, but then, you know, growth will be a little muted for the rest of the year.

Availability goes through the middle of the summer. So the end of Q2, so we're going to see one would expect some nice uplift there, but then.

Growth will be a little muted for the rest of the year.

Speaker 2: Higher ed, doing great work in higher ed and expect to continue to see solid growth throughout the...

Higher Ed.

Doing great work in higher Ed and expect to continue to see solid growth throughout the year.

Speaker 2: Healthcare, I would tell you is recovering very nicely and we would expect it to recover above the 2019 levels if we go back two years. So solid growth.

Health care I would tell you is Ricky.

Recovering very nicely and we would expect it to recover above the 20% 2019 levels. If we go back two years, so solid growth there.

Speaker 2: Government, we are not changing our expectation that we're going to expect to see turn around there in the federal space. And in state and local, frankly, as we see, funds start to flow a little bit more into the state and local, but certainly going to see a return to growth in government in our view.

Government, we are not changing our expectation that we're going to expect to see turnaround there in.

The federal space and in state and local frankly, as we see funds start to flow a little bit more into the state and local but certainly going to see returned to growth in government and our view.

Speaker 2: And then international, that'll be continued to be solid again, if, but it is accelerated rate, very similar to what I said about the commercial space. Now, of course, the key wild cards are supply.

And then international and that will be continue to be solid again.

But at a decelerated rate very similar to what I said about the commercial space now of course, the key wildcards are supply and that obviously can be a plus or minus and then the macro environment.

Speaker 2: And that obviously can be a plus or a minus. And then the macro environment, you know, and what we see happen both with the virus.

And what we see happening both with the virus.

Speaker 2: you know, but equally inflation, employment and all of that. But right now we feel, look, we feel like there's very good momentum going into the year. There's strong demand and we're feeling very positive about where we're positioned to meet that demand.

But equally inflation employment and all of that but right now we feel like we feel like there's very good momentum going into the year Theres strong demand and we're feeling very positive about where we're positioned to meet that demand.

Speaker 1: Okay, great, that's very helpful. And just regarding your commentary just about the product and component constraints, we're hearing from other resellers that some customers are moving or accelerating the move toward off-prem, cloud-based computing storage, et cetera, because of those constraints. Are you seeing that at all from your customers? Yeah, that's what I would say.

Okay, Great that's very helpful and just regarding.

Your commentary just about the product and component constraints. We are hearing from other retailers that some customers are moving or accelerating the move towards off Prem cloud based computing storage et cetera.

Are those constraints are you seeing that at all from your customers.

Yeah, Matt what I would say is.

Speaker 2: It's part of the conversation, and we are seeing accelerations of the cloud, but we've said this before, our clients are being very thoughtful about the strategy and what technology best serves their organizational needs.

It's part of the conversation.

We are seeing acceleration to the cloud, but we've said this before our clients are being very thoughtful about the strategy and what technology best serves their organizational needs.

Speaker 2: you know whether it is agility, whether it is risk mitigation, cloud versus on-prem. So we were certainly having the conversations and the great news is with the breadth of our expertise.

Whether it is agility, whether it is risk mitigation cloud versus on Prem. So we are certainly having the conversations and the great news is with the breadth of our expertise.

Speaker 2: Our customers are really appreciating that we can sit down and explore all options with them. That's really unique in the marketplace.

Our customers are really appreciating that we can sit down and explore all options with them that's really unique in the marketplace.

Speaker 2: But they're making the decisions, I would say, with the right amount of discipline. And not just wholesale lift and shift because they can't get the product. They are being frustrated by patients.

But they're not they're making the decisions I would say with the right amount of discipline.

And not just wholesale lift and shift because they get can't get the product they are being patient frustrated about patient.

Speaker 2: So I think that's the way I answer the question. Certainly acceleration to the cloud, but thoughtful as they go and on-prem is also.

I think that's the way I'd answer the question a question certainly acceleration to the cloud, but thoughtful as they go and on Prem is also.

Speaker 2: I think we're going to see some strength and on-prem this year. As customers return to the office and infrastructure refresh continues to happen. This year, we're going to see some strength and on-prem this year.

I think we're going to see some some strength in on Prem this year.

As.

Customers returned to the office and infrastructure refresh continues to happen.

Okay. Thanks very much.

Speaker 1: Thank you, Matthew. The next question comes from Group Group Glatagaya from Bank of America. Please go ahead. Hi. Good morning. Thank you for taking my questions. I wanted to ask a couple more questions on the revenue growth guide for both of fiscal 2022, as well as for the first quarter.

Thank you Matthew.

Next question comes from.

<unk> <unk> from Bank of America. Please go ahead.

Good morning. Thank you for taking my questions I wanted to ask a couple more questions on the revenue growth guide for both the fiscal 2022 as well as for the first quarter.

Speaker 5: How is there a way to quantify what you've baked in in terms of headwind from supply shortages in the full year guides, either on a dollar basis or on a year over year growth headwind basis? And are you assuming that PC demand sustained throughout?

Is there a way to quantify.

What you baked in in terms of headwind from supply shortages in the full year guidance either on a dollar basis or on a year over year growth headwind basis and are you assuming that PC demand sustains throughout the full year.

Speaker 3: or let me start with that in Christmas, I had something ahead there. So we are assuming no change in this apply environment relative to what we experienced in 2021. So just recall if you look back the last three quarters, we've quoted that our backlog has increased several hundred million dollars through 2021. That's notwithstanding that,

Sure let me.

Let me start with that and Chris may have something to add there. So we are assuming no change in the supply environment relative to what we experienced in 2021. So just to recall if you look back the last three quarters.

We've quoted that our backlog has increased several hundred million dollars.

Through through 2021.

That's notwithstanding that.

Speaker 3: written demand continue to be extremely strong so if you look at our actual printed results there are times we look at it and say you can't really see the effect of the significant backlog so

Written demand continue to be extremely strong. So if you look at our actual printed results. There are times, we look at it and say you can't really see the effect of the significant backlog so.

Speaker 3: I think our expectation would be that supply and chain will continue to work as it has. And I think you may have some

Our expectation would be that supply chain.

We'll continue to work as it has.

Speaker 3: Plus, as in minus through that in terms of solutions versus transactions and byproduct, but a lo and behold, I think that supply and chain and assumptions are very consistent with what we've seen in 2021.

And I think you may have some pluses and minus through that in terms of solutions versus transactions and byproduct, but lo and behold I think that supply and chairman.

Functions are very consistent with what we've seen in 2021.

And on PC demand any and your thoughts on how that sustains throughout the year.

Speaker 2: Yeah, Rufu, I'll take that good morning. Yeah, on PC demand, look, I think...

Yes, I'll take that good morning, yeah on PC demand look.

I think.

Speaker 2: We will see a Q1 is going to be a tough quarter because of the overlaps for sure. And as we move through the year,

We will see it.

Q1 is going to be a tough quarter because of the overlaps for sure and as we move through the year.

Speaker 2: We expect to continue to see corporate, commercial, small business, international continued strengths there, provided that the recovery that we're seeing continues and provided the macroenvironment continues. When you think about the puts and takes across 2022, supply can be a plus or minus.

We.

To continue to see corporate commercial small business International continued strength there provided that the recovery that we're seeing continues and provided the macro environment continues when you think about the puts and takes across 2022 supply can be a plus or minus.

Speaker 2: I mentioned the emergency connectivity funds for K-12. That will be a plus. Macro can be a plus or a minus. But generally speaking, here's what I'd say about PCs. And it's consistent with our commentary of the past. We really do see client devices as a tool for employees, as a tool for people generally, and expectations of using this productivity at increased.

I mentioned the emergency connectivity funds for K 12 that that'll be a plus macro can be a plus or minus but generally speaking here's what I'd say about Pcs and is consistent with our commentary of the past, we really do see client devices as a tool for employees is the <unk>.

For people generally in expectations of using <unk> for productivity increase and the demand for client devices for remote and then as people frankly come back to the office and are working in the office and remotely and anywhere also AD demand in the market.

Speaker 2: and the demand for client devices for remote and then as people frankly come back to the office and are working in the office and remotely and anywhere, also add demand to the market.

Speaker 2: The other thing we've talked about is technology cycles and technology innovation and upgrades happening more quickly than we've typically seen in the past. And when you think about remote and virtual, think about breakage. And so you've got a couple of pressure points putting cycle times, you know, compressing cycle times.

The other thing we've talked about is technology cycles, and technology innovation and upgrades happening more quickly than than we've typically seen in the past and when you think about remote and virtual think about break breakage and so you've got a couple of pressure points, putting cycle times compressing.

Speaker 2: The last thing I would say is new use cases. We continue to see endpoint devices in new use cases in the digital transformation. So I guess think about PCs this year as still solid performance moderating growth, especially compared to last year. And by the time we get to the end of the year, when you look at where we are, and you think about the refresh opportunities from 2017 and 18, those are going to be opening up. And then we get wind.

Cycle times, the last thing I would say is new use cases, we continue to see endpoint devices and new use cases in the digital transformation. So I guess think about Pcs this year as.

Still solid performance moderating growth, especially compared to last year and by the time, we get to the end of the year. When you look at where we are and you think about the refresh opportunities from 2017 and 18 those are going to be opening up and then we've got win win 10 end of life coming so people.

Speaker 2: when can end of life coming. So we, people are buying PCs. We are in a very good position to make sure that we get our fair share of inventory to supply them. And while we see moderating growth, we don't see, you know, we don't see, um...

People are buying Pcs, we are in a very good position to make sure that we get our fair share of inventory to supply them and while we see moderating growth we don't see we don't see.

Speaker 2: We just see it as a positive contribution to our overall performance.

We just see it as a positive contribution to our overall performance.

Speaker 5: Okay, thanks for the details there, Chris. Can I just ask a follow up on the first quarter revenue guide? I think you're guiding low single digit year on year growth. I mean, to me it seems a little bit lower than normal seasonality on a quarter on the quarter base.

Okay. Thanks for the details there Chris can I just ask a follow up on the first quarter revenue Guide I think you are guiding low single digit year on year growth.

To me it seems a little bit.

More than normal seasonality on a quarter on quarter basis.

Speaker 5: And that's with the fact that you have the serious acquisition layered in as well.

And that's with the fact that you have the serious acquisition layered in as well for three months. So how can you just how much of that would you say is because you have more netted down items, which are impacting the sales growth.

Speaker 5: So, Al, can you just, you know, how much of that would you say is because you have more netted down items which are impacting the sales?

Speaker 5: Alvars says other year on your headwind. So, can you any way to quantify that sequential decline? And...

Versus other year on year headwinds any any way to quantify that sequential decline.

Revenues on a daily basis of between 42 and <unk>.

Speaker 3: Sure, we'll put a little dress up first, just on a year over your basis.

Sure let me address that so first just on a year over year basis.

Speaker 3: The growth is not muted. It's in the teens in terms of...

That growth is not muted.

It's in the teens in terms of growth I think just on the comment on the sequential is one obviously coming off of a very strong Q4.

Speaker 3: I think just on the comment on this sequentially, the one obviously coming off of a very strong Q4, but the comment.

But the comps.

Speaker 3: The comps for education, much more significant in Q1 relative to Q4 there. And so that needs to be the impact. You get a bit of a kind of contragone, the other way with again, serious, but there's some of the puts and takes. If you just focus on that year over year, there was a strong.

Comps for education, much more significant in Q1 relative to Q4, there and so that mutes the impact.

You get a bit of a kind of contra going the other way with again serious but there are some of the puts and takes if you just focus on that year over year, there was very strong.

Okay.

Speaker 2: I'm sorry, this is Chris here. I would just add that as we think about 2022 and 20

I'd just add yes.

I'm sorry, it's Chris here I would just add that as we think about 2022 and 2021 generally I think we would call 2020 to a more normalized I'll call it buying environment.

Speaker 2: I think we would call 2022 a more normalized I'll call a buying environment. You know, we had tremendous hardware sales in 2021 and client demand and, you know, we've said that and we are strategy is around building our services and cloud capabilities and we do expect that 2022 is going to require additional services and cloud capabilities which net down. So I think we'll see more normalized netting down for 2022.

We had a tremendous hardware sales in 2021 and client demand and we've said that and we are our strategy is around building our services and cloud capabilities and we do expect that.

'twenty two is going to.

Require additional services and cloud capabilities, which net down.

So I think we will see more normalized netting down for 2022.

Speaker 5: That makes sense. Congrats on the strong execution in the quarter.

Okay that makes sense and congrats on the strong execution in the quarter.

Thank you.

Speaker 1: Thank you for your question. The next question comes from Eric Woodring from Morgan Stanley . Eric, please go ahead.

Thank you for your question.

The next question comes from Erik Woodring from Morgan Stanley Eric. Please go ahead.

Speaker 1: Thank you, morning everyone. Congrats on the quarter. Next, speaking with you guys, just giving your commentary around supply chain headwind, just to get your kick on how you think in the inventory will trend in 2022. And if you need to continue kind of growing your strategic pre-purchases, or if that can become a tail end for you in 2022. And then I will follow. Thanks.

Hey, good morning, everyone.

Congrats on the quarter Nice speaking with you guys.

Just given your commentary around supply chain headwinds just curious to get your take on how you think inventory will trend in 2022, and if you need to continue kind of growing your strategic pre purchases or if that can become a tailwind for you in 2022, and then I have a follow up thanks.

Speaker 3: Yes, so, uh, good morning, Eric. This is now, so first, again, just backdrop, you know, our expectation is that, as we said, you're now supply chain would look similar to 2021. I think we've mentioned before, uh, there is a component of, uh, backlog and supply chain, and includes pull forward of business. And I think, uh, I think, uh, I think, uh, I think,

Yes.

Eric This is al So first again just backdrop, our expectation is that as we sit here now supply chain would look similar to 2021 I think we've mentioned before there is a component of backlog in supply chain and includes pull forward of business and I think.

Speaker 3: As our partners became more and more clued into and kind of gotten clarity of lead times and so forth, they've encouraged us and encouraged customers to get in line. And I think through 2021, that has happened. And we would expect that will continue to happen. Um.

As our partners became more and more clued into and kind of have gotten clarity.

Lead times, and so forth. They are encouraged us and encourage customers to get in line and I think through 2021 that has happened.

And we would expect that will continue to happen.

Speaker 3: in terms of how that plays out and what that might look like. I think that now I think we could look at our backlog and say we've got a pretty balanced portfolio there of pull forward business as well as care and business. So for those very reasons.

Sure.

In terms of how that plays out and what that might look like.

I think that now I think we have look at our backlog and say, we've got a pretty balanced.

Portfolio, there of pull forward business as well as well as current business and so for those very reasons.

Speaker 3: We don't believe that the backlog will

We don't believe that the backlog will ultimately result, or.

Speaker 3: Ultimately result or play out as a full flush or a big bang if you will. It's going to feather in over time.

Play out has as a full flush or a big Bang. If you will it's going to feather in over time.

Speaker 3: So I think it's going to be probably a bit episodic in terms of continued progress from individual partners and products in terms of how that plays out and how fast it moves. But again, as we sit here now.

So I think it's going to be probably a bit episodic in terms of.

Continued progress from individual partners and products in terms of how that plays out and how fast it moves but again as we sit here now you would say we would not expect that to be.

Speaker 3: We would say we would not expect that to be anything that happens near term.

Anything that happens near term and our hope is that later 2022, we start to see that further out.

Speaker 3: And our hope is that later 2020, we start to see that feather out.

Speaker 6: Okay, thank you. And then maybe just a quick look back, you know, organic growth of call it eight points in 4Q was pretty strong in ahead of, I think, your annual guidance would have implied. So just as you look across segments, maybe some commentary on where you believe you've outperformed your expectations versus three months ago. And then maybe, you know, was that a product of sharegames? Was that a product of stronger market growth? Just any way to decipher some of the outperformance in 4Q. But again, thanks.

Okay. Thank you and then maybe just a quick look back.

Organic growth of call it eight points and <unk> was pretty strong and ahead of I think with your annual guidance would have implied so just.

As you look across segments, maybe some commentary on where you believe you've outperformed your expectations versus three months ago, and then maybe was that a product of share gains was that product a stronger market growth just any way to decipher some of the outperformance in <unk>, but again thanks.

Speaker 2: Sure, yeah, happy to do that. You know, as we look at Q4.

Sure, Yes happy to do that as we look at Q4.

Speaker 2: and the strength across the segments. The nice thing is it was balanced across transactions and solutions. And I do think I'm not going to go back and supply chain, but I do think supply chain ended up impacting growth.

And the strength across the.

The segments. The nice thing is it was balanced across transactions and solutions and I do think I'm not going to go back into supply chain, but I do think supply chain ended up impacting growth.

Speaker 2: and some categories across each. But that said, look, I think in every element, whether it was client devices or infrastructure or cloud.

In some categories across each but that said.

Look I think in every in every element, whether it was client devices or infrastructure or cloud I feel confident the team has really been outperforming the market in a very balanced way when.

Speaker 2: I feel confident the team has really been outperforming the market in a very balanced way.

Speaker 2: you know, when you think about the acquisitions we've made in our ability to integrate them very quickly into the organization as practice groups and as part of the larger CDW areas like security and focal point and what we bring to market there and the speed that we're growing there or our digital velocity practice in our service now automation practice and how that is flowing into 54% growth in our services category. So I feel very good that we are outperforming and I feel very good that we are outperforming

When you think about the acquisitions, we've made and our ability to integrate them very quickly into the organization as practice groups and as part of a larger CDW.

Areas like security and focal point and what we bring to market there and the speed that we're growing there or our digital velocity practice and our service now automation practice and how that is flowing into 54% growth in our services category.

I feel very good that we are outperforming take.

Thanks, Chris.

Speaker 1: Thank you Eric. The next question comes from Jim Souver from City Group. Jim please go ahead.

Thank you Eric the next question comes from Jim Suva from Citigroup, Jim. Please go ahead.

Speaker 3: Thank you. And I only have one question. It's probably directed towards Chris. In your prepared comments, you talked about in 2020, a big strength year of K through 12, and then in 2021, more of a pivot to enterprise. So Chris, I'm just kind of asking, is we look into say 2022.

Thank you and I only have one question probably directed towards Chris in your prepared comments you talked about in 2020, a big strength U K through 12.

In 2021 more of a pivot to enterprise so Chris I'm, just kind of asking as we look into 2022.

Speaker 3: The end market's one strength or maybe is it cloud, is it services or type of product that you see maybe being stronger and say 2022 versus 2021. Thank you.

The end markets, what strength or maybe is it cloud services or type of products that you see maybe being stronger in say 2022 versus 2021. Thank you.

Speaker 2: Sure, so, you know, customers are still across all of the segments. Customers are still prioritizing whether it's remote.

Sure so.

Customers are still across all of the segments customers are still prioritizing whether its remote.

Speaker 2: work from home, learn from home, just remote work, work from anywhere, and virtual settings. So, solutions that address those needs are going to continue to drive a solid performance. At the same time, I think the pandemic is really...

Work from home learn from home just remote work work from anywhere and.

Virtual settings, so solutions that address those needs are going to continue to drive a solid performance at the same time.

I think the pandemic is really likely going to impact our customers in a slightly different way as we think about 2022, because we're all more prepared to deal with it. So we are seeing customers, absolutely pivot or enhance their investment portfolio and focus on infrastructure.

Speaker 2: likely going to impact our customers in a slightly different way as we think about 2022 because we're all more prepared to deal with it. So we are seeing customers absolutely pivot or enhance their investment portfolio and focus on infrastructure. Both on-prem refresh, on-prem new technology, particularly software driven, as well as cloud options to drive resiliency, to drive agility, to drive securing

Both on Prem refresh on Prem, New technology, particularly software driven as well as cloud option to drive resiliency to drive agility to drive securing.

Speaker 2: platforms and endpoint devices. They're not coming back on budgets at all. In fact, they might be expanding them, but having to be very disciplined about cost containment. So again, our expertise across the full spectrum allows us with our customers to have conversations that can drive costs.

Platform and endpoint devices.

Theyre not cutting back on budgets at all in fact, they might be expanding them, but having too.

To be very disciplined about cost containment so again.

Our expertise across the full spectrum allows us with our customers to have conversations that can drive cost reduction cost management in a way that makes it even more valuable, but we're not finding commercial customers or other customers for that matter, who are reducing technology investment.

Speaker 2: reduction cost management in a way that makes it even more valuable. But we're not finding commercial customers or other customers for that matter who are reducing technology in VES.