CDW Corporation (NASDAQ:CDW) Q2 2018 Earnings Conference Call - Final Transcript
Aug 02, 2018 • 08:30 am ET
(Operator Instructions) Amit Daryanani, RBC Capital Markets.
I have a question and a follow-up, I guess, mood to start with. If I think about the growth rate you saw in Q2 around 7.5% and the first half, I think, averaged at 9%, and suddenly you raised the 2018 guide, but it still implies growth is decelerating in the back half to around 5% versus the 9% you saw in H1. Could you just maybe walk through what are the drivers that are driving this deceleration in the back half? Or is it just a healthy dose of conservatism baked into the numbers here?
Yeah. Look, it's a good question. Some of it is just looking at what's in front of us. We've got some pretty challenging comps sitting in front of us. If you think about last year's third quarter, some of it is, you've heard it, some supply chain things knocking around that could impact client devices or another kind of thing that's kind of out there, staring us in the face. So as we have been thinking about this -- and we felt this way since the beginning of the year. Truthfully, we knew that the third quarter would be an interesting challenge. We then have some opportunity to make up some ground in the fourth quarter. So it's really just trying to look at those things in light of the success we've had in the first half of the year. I think the general consensus, if you look at whether it's adding additional customer-facing coworkers or some of the other comments we made, we're pretty -- we feel pretty good about our rhythm of the business. It's just some of those other factors.
Yeah, Amit, I'd just add a couple of thoughts to Tom's comment. One is I think when you think about the first half of the year, we did 9% reported, but obviously currency was a tailwind. So think of it as 8.2% on a constant-currency basis. And remember, we also got the benefit of the supply chain backlog that went in the first half of the year. And so think of it on more of a normalized constant-currency basis, probably something more like in the high 7s is what we ran in the first half of the year. I know you were doing the math on the fly there. But if, I think, you take my thoughts on the full year, it will give you something in the back half of the year in the mid-6s, high 6s constant currency around there. So I don't think the step-down is as great as you thought. And again, Tom has explained some of the drivers around it, but think about the step-up and the overlap we have as we move into the back half of the year, particularly in the international part of the business.
No, perfect. That's really helpful, guys. And if I can just quickly follow-up. I think I heard the netcomm revenues were down