CDW · Earnings call · 2026Q2T · Full report
Working Capital and Cash Flow
CDW Corp · 2026-08-05 · Importance 32 · Surprise 24 · In source text
Adjusted free cash flow was $278 million year-to-date, equal to 42% of non-GAAP net income, below CDW's 80% to 90% conversion target. The three-month average cash conversion cycle was 21 days, within the company's high-teens to low-20s target range. Inventory increased approximately $400 million from year-end as CDW positioned products to support customer urgency amid pricing and supply-chain conditions. Management expects inventory to be rationalized as the environment normalizes and cash-flow conversion to improve during the second half.
Key facts
- Written production is very strong through July, written production continues to exceed invoicing, leading to a higher backlog
- Expect cash flow conversion to normalize over the balance of the year and have line of sight towards achieving expectations despite first half below rule of thumb
- Inventory increased by about $400 million since the end of the year
- Adjusted free cash flow year-to-date was $278 million or 42% of non-GAAP net income for the first half
- 3-month average cash conversion cycle was 21 days, within target of high teens to low 20s
- Q2 free cash flow was $27 million and free cash flow as a percent of net income for the first half was approximately 45% (46% referenced by analyst)
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| revenue | positive | probable | — | Written production is very strong through July, written production continues to exceed invoicing, leading to a higher backlog |
| cash | positive | probable | — | Expect cash flow conversion to normalize over the balance of the year and have line of sight towards achieving expectations despite first… |
| assets | positive | realized | — | Inventory increased by about $400 million since the end of the year |