CDW Corp. Growth Now Qualifies As Solid

Our earnings preview for CDW Corp (CDWC) said:

14.6% sales growth doable given Berbee acquisition.

They did it and then some.

CDW Reports First Quarter Results: Financial News:

Total sales in the first quarter of 2007 were $1.859 billion compared to $1.589 billion in the first quarter of 2006, an increase of 17.0 percent. Average daily sales in the first quarter of 2007 were $29.049 million compared to $24.822 million in the first quarter of 2006, representing a 17.0 percent increase. There were 64 billing days in both the first quarter of 2007 and the first quarter of 2006. CDW completed the acquisition of Berbee Information Networks on October 11, 2006. Total sales for the first quarter of 2006 do not include Berbee sales, while the first quarter of 2007 sales include Berbee sales. Excluding Berbee sales in the first quarter of 2007, and therefore on a non-GAAP basis, total sales were $1.716 billion, an increase of 8.0 percent compared to total sales of $1.589 billion for the first quarter of 2006 and average daily sales for the first quarter of 2007 were $26.819 million, an increase of 8.0 percent compared to average daily sales for the first quarter of 2006 of $24.822 million.

Net income was $76.8 million in the first quarter of 2007 compared to $61.7 million in the first quarter of 2006, an increase of 24.5 percent. Diluted earnings per share were $0.96 in the first quarter of 2007 compared to diluted earnings per share of $0.75 in the first quarter of 2006.

Consensus estimates called for $0.85 on $1.82 billion in sales. And while the 8% organic growth rate in sales was below both consensus 5-year growth forecasts of 11.7% and the “double-digit” growth investors seem to assume is the norm for tech companies, it is certainly an improvement from recent quarters and is now sufficient to be called “solid.”

Looking at the balance sheet, about the only thing to complain about was a slight increase in the allowance for doubtful accounts, which occurred despite a slight reduction in accounts receivable. It suggests that a customer or two may not be paying the bills, but is nothing we would worry much about unless the trend continues as so far it isn’t a very large change and probably reflects normal variation.

CDWC 1-yr chart: