CDW Corporation reported third-quarter sales growth of 17.7% alongside a narrower gross margin, leaving revenue higher while the share of sales retained after direct costs declined.
CDW reported net sales of $6.75 billion for the three months ended Sept. 30, up from $5.74 billion in the same period a year earlier. The company disclosed the results in an earnings release attached as Exhibit 99.1 to a Form 8-K filed with the U.S. Securities and Exchange Commission on Nov. 4. Gross profit increased 10.3% to $1.39 billion.
Gross margin fell to 20.5% from 21.9%, a decline of 1.4 percentage points. Gross margin measures gross profit as a share of sales, so its decline means gross profit made up a smaller portion of revenue than in the year-earlier quarter, even as its total increased. CDW attributed the decrease to shifts in the mix of products sold and lower margins in some categories.
Net income increased 6.5% to $309.8 million. Diluted earnings per share rose 11.6% to $2.46, while non-GAAP net income per diluted share gained 20.4% to $3.26. Both per-share measures grew faster than net income, based on the company's reported figures.
Commercial sales grew 20.8% to $3.98 billion. Government sales rose 9.9%, and Education sales increased 7.5%. Sales from the U.K. and Canadian operations, grouped as “Other,” increased 26% to $880.1 million. The listed growth rates ranged from 7.5% in Education to 26% in Other. CDW said customer demand across storage, servers, mobile devices and software helped support sales growth.
The company's board declared a quarterly cash dividend of 68 cents per share, about 8% higher than last year's dividend. Shareholders of record on Nov. 25 are scheduled to receive payment Dec. 10. The dividend announcement was included as a separate exhibit in the filing.
