Good morning, ladies and gentlemen, and welcome to the CDW First Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Brittany Smith, Vice President of Investor Relations and Financial Planning and Analysis. Please go ahead.

Thank you. Good morning, everyone. Joining me remotely today to review our first quarter results are Chris Leahy, our President and Chief Executive Officer; and Collin Kebo, our Chief Financial Officer. Our first quarter earnings release was distributed this morning and is available on our website, investor.cdw.com, along with supplemental slides that you can use to follow along during the call. I'd like to remind you that certain comments made in this presentation are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. Those statements are subject to risks and uncertainties that could cause actual results to differ materially. Additional information concerning these risks and uncertainties is contained in the earnings release and Form 8-K we furnished to the SEC today and in the company's other filings with the SEC. 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 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 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. Please note that all references to growth rates or dollar amount increases in our remarks today are versus the comparable period in 2020, unless otherwise indicated. In addition, all references to growth rates for hardware, software and services today represent U.S. net sales only and do not include the results from CDW U.K. or Canada. Also, there was one fewer selling day in the first quarter of 2021 as compared to 2020. Replay of this webcast will be posted to our website later today. I also want to remind you that this conference call is the 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.

Thank you, Brittany. I'll begin this morning with an overview of first quarter results and drivers of performance and share our updated thoughts on 2021. Collin will then take you through a more detailed look at our financials, capital allocation strategy and outlook. We'll move quickly through our prepared remarks to ensure we have plenty of time for questions. We had a strong first quarter. Our results demonstrate the balance and strength of CDW's business model and strategy. For the first quarter, net sales were $4.8 billion, 12% above last year on an average daily sales basis adjusted for the impact of 1 fewer business day in the first quarter of 2021 than 2020, and up 10.9% in constant currency. Gross profit increased 5.1% to $795 million. Non-GAAP operating income was $368 million, an increase of 21%. And non-GAAP net income per share was $1.74, up 26. 2% on a reported basis and up 25.3% in constant currency. The diversity of our end markets and solutions portfolio continued to serve us well, providing balance and driving our strong results as we overlap last year's end-of-quarter surge in demand for remote solutions. During the first quarter, we saw early signs of recovery as customers became more optimistic about the macroeconomic environment due to lower COVID case count, higher vaccination rates and new government stimulus. Customer spending and channels most impacted by COVID last year rebounded. We continue to help customers with remote enablement, resource optimization, security, hybrid and cloud solutions and digital transformation. This past quarter, customers allocated more technology spend to infrastructure needs, driving growth for our solutions portfolio. Customers were focused on investments for the future, reconfiguring how they interact customers, strengthening hybrid environments, industrializing remote enablement and restarting projects that had been delayed due to COVID. We combined…

Thanks, Chris, and good morning, everyone. My 13 years at CDW have been among the most rewarding of my career, and I want to thank you, the leadership team and all coworkers for making CDW so special. I also want to thank the finance team for bringing it every day. I'll miss CDW, but I'm confident the company has never been stronger and its best days are ahead. Following a successful transition, I'm looking forward to retiring so I can spend more time with family and helping others. I'll start my prepared remarks with more detail on the first quarter, move to capital allocation priorities and then finish up with our 2021 outlook. Turning to our first quarter P&L on Slide 8. Consolidated net sales were $4.8 billion, up 10.2% on a reported basis and 12% on an average daily sales basis as we had 1 fewer selling day. On a constant currency average daily sales basis, consolidated net sales grew 10.9%. On an average daily sales basis, sequential sales decreased 3.9% versus the fourth quarter. First quarter sales were stronger than expected, reflecting several factors. On the demand side, the timing and slope of the recovery was better than expected in several channels most impacted by COVID-19 last year. Small Business, CDW Canada and CDW U.K. all delivered strong growth and declines in Corporate and Healthcare improved meaningfully versus the previous quarter. On the supply side, our team did a great job navigating the challenging environment, leveraging our distribution capabilities and strong vendor partner relationships and was able to work down a portion of the backlog in Chromebooks, which was higher than normal coming into the year. This supply, coupled with continued strong demand from education customers, resulted in education net sales doubling compared to the prior year. Gross…

[Operator Instructions] Your first question comes from the line of Amit Daryanani with Evercore.

Collin, best of luck on your retirement. It's really been a pleasure working with you. I guess maybe first question, this is the one I'm getting asked by clients a lot. Please step back and talk a little bit of what happened to gross margin, at least on a sequential basis, I'll hold on the year-over-year. But what drove the drop on a sequential basis, the lowest we've seen in a while. And then how will be gross margins progressing as we go through the year?

Thanks, Amit. On both the year-over-year and sequential basis, there's some recurring things. I would say the biggest driver is product margin particularly driven by notebook, mix and rate. Obviously, we've had strong growth in Chromebooks in education. The other thing that happened in the quarter was really strong growth in our U.K. and Canadian businesses. It was a fiscal year-end for many of their public customers. We had a very strong fiscal year end in those markets, and a lot of those deals tended to be in client devices. So you have public and client device end market mix internationally. In the previous quarter, Q4 benefited from strong configuration services as we decommissioned the majority of the devices we had from the Census Device as a Service offering last year. A little of that spilled over into the first quarter, but for the most part, it was done. As you think about gross margin, as you know, we don't provide an outlook. It can bounce around from quarter-to-quarter based on a variety of factors. We do tend to focus on the NGLI margin because of our variable cost structure, and that's more variable. But if I can just share some thoughts on some of the puts and takes to gross margin as you think about the next couple of quarters. I think from a tailwind perspective, I would expect the longer-term secular trend to 100% gross margin items and as well as us continuing to grow our higher-margin services businesses. In terms of headwinds, we've talked about this for some time, but there's hardware mix, and particularly within the hardware mix, client devices and Chromebooks. And then from a product margin perspective, I think some things to think about, there's that continuous commoditization that you can see. I think…

That is really helpful. And if I can just follow up with Chris on a different topic. Chris, you've seen this hardware business grow double digit, software and services is lagging somewhat. I'm curious, is this something normal that you would expect as we are at the onset of a macro cyclical recovery? And perhaps as IT budgets become more normalized, should we expect the software and services business to start growing in line with or faster than CDW averages, maybe by the end of the year or something? But just curious how you stack the hardware versus software and services as you go forward.

Yes. One thing, Amit. And I'd say, look, as customers continue to work through their budgets and keep a close eye on the macro environment, the vaccine rollout, that's really going to dictate where they're spending and if we continue to see this uptick in hardware refresh. In terms of software, look, that can be fairly lumpy as we've talked about before. Depending on the mix of software, this quarter, we saw license -- shorter-term licenses and licenses not as strong, but I'll tell you, SaaS continues to be quite strong across the portfolio. So we don't expect software to start to diminish as we move forward in the year, notwithstanding a hardware refresh. It's still critically important, obviously, to the full stack. So I think we'll continue to see software strong. It's just going to bounce around depending on what's being bought and whether or not it's netted down.

Perfect, and congrats on a nice quarter.

Thanks, Amit.

Your next question comes from the line of Katy Huberty with Morgan Stanley.

Just a clarification first. I think IDC forecast hardware or software both of north of 6% at this point. Why do you think 4% is the appropriate forecast? And if you think about the increase since 3 months ago, is it largely PC and Chromebook driven? Or is it more broad-based than that? And then I have a follow-up.

Okay. Katy, it's Chris. I'll take that. I think I heard -- you cut out for a minute, but I think the question was on the IT market rate of growth given some of the forecasts out there. And as you know, we triangulate from a variety of sources. We do customer input partner inputs the CIO and VAR surveys and the IDCs and Gartners. And I'd share a couple of thoughts. I think the forecast tend to lag current market conditions for the third-party analysts. And while demand feels very healthy, I'm not sure how many of the external forecasts are incorporating the impact of supply chain that we've talked about. And the CIO surveys, if you focus on that, they are a little more cautious than some of the others. So we feel pretty confident that we've landed on a growth rate that feels right, right now. But of course, as we go through the year, as we always do, we'll update based on what we see the changes in the market.

And is the increase, in your mind, largely PC-driven? Or is it more broad-based than that?

I would say it's overweighted to -- it's overweighted to hardware and clients, but it's really broadly driven. The demand is across both transactional and solutions, and that's driving the market rate of growth in our view.

And Collin, just a follow-up for you. You mentioned strong writings growth in the April quarter. Can you just talk about the gap in the last 3 months or so between writings growth and revenue growth and whether that gap increased as you moved into April given the supply constraints?

Yes, Katy. What I would say is we came into the year with a higher-than-normal backlog. And while there were some ups and downs as we went through the quarter and some ups and downs by end market, by the time we ended the first quarter, the backlog was relatively consistent with where it was at the beginning of the year. So that would tell you that writings in sales and sales generally kept pace with each other. Where we've seen the backlog increase has been more subsequent to the end of the first quarter, and that would tell us that we're writing well ahead of shipments.

Okay. Congratulations on retirement, Collin.

Thank you.

Your next question comes from the line of Shannon Cross with Cross Research.

I was just wondering with regard -- I know you touched on it a little bit during the call, but stimulus, how are you thinking about the benefits? I mean there's a significant amount of money that's going to be, I guess, has, and will be flooding into education. I think government is going to have a fair amount of funding as well. So as you look ahead, given your customer mix in that, how are you thinking about stimulus maybe through -- and how long do you think it will continue to benefit, I guess?

Yes. That's a great question, Shannon. It will be a tailwind in our mind for sure. I think about it a little bit like getting an elephant through the snake. It takes some time to actually get it moving through the system. So when you think about the 3 different stimulus acts that have been passed last March and then last December and then most recently in March, there are funds that have been available for state and local K-12 and Healthcare, in particular, where we see the most benefit for our customers. And we have a team actually that goes through the stimulus bills and understands where the dollars are going and frankly, help our customers quite a bit in understanding how and where and when they can spend their dollars. So we see it as an absolute tailwind and our customers do look to us to help understand how best to utilize those funds. If you look at the most recent of the American Rescue Plan in March, there's about $350 billion going to state and local and $130 billion going to K-12. So we certainly look forward to helping them use those and invest in technology as they come out of the current environment.

Are there any specific areas that are targeted within stimulus? I mean is it continued Chromebook sales? Or will we see maybe a move up the stack from a hardware perspective?

So yes, if we take K-12 for example. We go to market with what we call customer-centric solutions. So we're focused on those areas that are most strategic and important to our customers. K-12, for example. Think of classroom transformation, think of school-facing, think of networking augmentation. So certainly, after the stack, starting with a consultative role in a design role and then bringing to bear our implementation, integration and management capabilities. But we -- K-12 really turns to CDW and state and local health care, who are going to be beneficiaries of the stimulus, for the holistic capabilities that we bring to bear. And at the end of the day, that actually helps them maximize the dollars they can use through stimulus because we know how to work those dollars through the needle.

Your next question comes from the line of Adam Tindle with Raymond James.

Chris, I wanted to start on the growth premium versus the market, which you're raising today. And I think coming out of the last cycle, the growth premium contracted. So I'm wondering, is the raise today more reflective of device demand remaining stronger for longer? Or do you think that you're noticing structural changes versus the last cycle that are enabling you to stay at an elevated growth premium regardless of product cycles?

Well, our premium does tend to be 200 to 300 basis points higher than the market when we start the year. We hold ourselves accountable for that. And when we sell a lot of hardware, as you know, which is recognized at full revenue, we tend to outperform that premium. So we brought it up to 300 to 400 basis points. When you think about the mix of hardware, that seems to make a lot of sense to us. So if I just go through the math. If we take Census out of the baseline, which contribute about 2 -- 200 to 240 basis points to premium last year, we're looking at a good 500 to 600 basis points this year by bringing our premium up those 100 basis points. So when you ask about whether or not we, as I said, kind of durable forecast or outlook for outperformance, I would say it really depends on the mix. In years where we have high hardware, we tend to outperform because we recognize much of what we sell on a full net sales basis. In times when we have slower sales of hardware, and we have more netted down items, that's when we'll see the top line more muted. So we're hesitant to commit to a higher premium generally because of the mix of the business. And the beauty of the model is exactly that mix of the business. We've got the full range of IT products and we go where our customers need them when they need us. So I don't see us bringing that up to a higher level at any point soon, but rather toggling to where our customers need us.

Understood. And maybe as a follow-up, Collin, congrats, and I'm sure there's going to be some aspects of the job that you won't miss like this one where I'm going to beat a dead horse on gross margin. But I do have to ask. I mean I know there's notebook demand, but devices have been strong for some time. Sequentially, SMB and international grew most, which are among the higher gross margin segments. But this gross margin compression is so much more than normal. So I guess the question would be, on a like-for-like product basis, are you seeing pressure on gross margin? And why? Is there inflation or price increases that you're eating more of or sharing in some of the pain that's helping you to gain some share?

Yes, Adam. I mean, we -- first, thank you. You're right. This is one of the parts of the job that I won't miss down the road. But putting all the mix issues aside, we are seeing some product margin compression in certain categories. And just to go a little bit deeper on some of the comments I've made before. Again, I just -- I think 2020 was really unique in the way that customers were prioritizing speed and execution overtaking every last basis point off the table in terms of their IT buying behavior. And I think now that we're moving into a different phase of the pandemic where that mission-critical nature of getting that IT purchase as quickly as possible just isn't there, we're seeing a return to kind of some of that more normal customer buying behavior. I would characterize the competitive environment as competitive, not irrational, but we compete in a highly competitive marketplace. From an OEM perspective, they are obviously wrestling with higher input costs and supply challenges, right? And so because of that -- that drives a couple of things. One, they are not incentivized to aggressively invest as much in the channel and special pricing programs and things like that, that they might in a more normal supply environment and a more normal competitive environment where they're battling it out to gain share. And in some instances, they're taking those higher costs and passing them along in the form of price increases. Now we do work on a cost-plus model, as we've talked about over the years. But if you just think about the math of the way a price increase works, if, for argument's sake, we make $100 per unit of gross profit on a notebook. And that notebook price goes up by 5% or 10%, that is going to be a lower reported gross margin percentage. So I think those are some of the dynamics that are driving some of the changes we're seeing on product margin currently versus some of the preceding quarters.

Your next question comes from the line of Matt Cabral with Credit Suisse.

Collin, I also wanted to extend my congratulations on your retirement, all the best going forward. Chris, I guess, good to hear some momentum coming back into the business on the infrastructure side. I guess I'm wondering if you could expand a little more on what you're seeing underneath there and talk about trends across the data center in categories like server, storage, netcomm? And I guess taking a step back, I'd be curious for your perspective on just how customers are balancing the desire to refresh or invest in their on-prem footprint versus this push to accelerate the move toward the public cloud going forward?

It's -- let me start with a step back. If you think across our customers, you hear quite a bit about when people are going back or returning to the office. And I'll tell you, while certainly there you see in the news a couple of large organizations that are returning to the office pretty quickly in the summer, most of our customers around -- across Commercial and Small Business are still, I'd say, not rushing. They're still planning and they're still a little cautious because they've got employees on both sides of the spectrum. Those who want to get back and those who frankly aren't yet ready to get back. So first, I would just say we're in a time right now where as the vaccination pace might accelerate and we see what happens over the next couple of years. We've got to be patient for a couple of months. All that said, clearly, the hybrid world is here to stay and our customers are thinking and planning around how to have flexible -- where people are now calling Hyflex environment, hybrid and flexible environment. And so we are in the -- we are still planning with them. We are seeing some customers that have had just old infrastructure and a real need to upgrade get to it over the past couple of months. But we are still heavily in the phase of, I'll call it, assessment to optimize, whether old plans to upgrade throughout the window and we start to move more to cloud, whether customers think more strongly about on-prem cloud-like solutions, which are now really readily available and of great interest. So what I would say, Matt, is that we're still -- customers are still assessing and they're being more reflective. As Collin mentioned, last year, there was just a kind of a rush to get business continuity. And now there's a more measured, reflective strategic approach on what's going to be durable competitive advantage for the long term. So what does that all mean? We have seen customers spending more on infrastructure, hardware infrastructure. Obviously, cloud is doing really quite well. We saw a server uptick. Storage is getting stronger. One would expect we'd see netcomm really come to life later in the year or midyear as customers are heading back to the office. But there's -- on-prem hardware is not going to go away, it's just what's going to be most optimal. And as I said, customers are really weighing the benefits right now.

That's really helpful. And I guess as my follow-up, I wanted to dig in a little bit more on the commentary for the second quarter. And I think I heard slight sequential growth, and I know we're coming off of a really strong first quarter base. I guess if I look back prior to last year, the business was typically up much more meaningfully from the first quarter to the second quarter. So I'm wondering if you could just help bridge the gap a little bit and just speak to how much is maybe normalization on the education side or some of the supply challenges versus just the trajectory in the wider business?

Yes, I would say abnormal education seasonality is the single biggest driver here. If you look historically what has driven the increase in sequential growth from Q1 to Q2, education is, by far, the number one factor when you look across our end markets. So we just come into the typical education peak season with a much stronger base. And we've talked about several quarters now of unusual or abnormal education seasonality. So I would say that's the first driver. I touched on a couple of other ones in my prepared comments. But again, just an unusually strong public year-end finish in the U.K. and Canada. I know it's public year-end every year in the first quarter, but we just had a particularly strong finish this year. And then we also carried a little bit of Census revenue in the first quarter as we completed the device to decommissioning. We are completely done with that and have no Census revenue going forward. I think the other thing that I would think about, and I made this comment in one of the answers earlier, was that our backlog was relatively unchanged over the course of the first quarter. If supply is more resilient than we think -- actually, I don't think it is. But if supply is more resilient and we can begin whittling down that backlog or if demand is even greater, and supply can keep up with that greater demand, I think that could provide some upside in terms of sequential growth and into the back half of the year. We just don't have the visibility at this point, though, to build that confidence on supply into the full year outlook and into the second quarter.

Your next question comes from the line of Ruplu Bhattacharya with Bank of America.

Collin, it was a pleasure working with you and wishing you the best for your retirement. My first question is for you as well. Can you give us some details on CapEx spend this year? What areas are you investing in? And what utilization are your distribution centers running at? And at what point would you need to invest in another facility?

Thanks, Ruplu. In terms of our own CapEx, again, we talked about this a little bit on the call. But a lot of that is going into our own digital transformation, and that can be better tools for our sellers, more AI, how our customers interact with CDW and making those transactions more frictionless as well as investments we're making in supply chain, both resiliency as well as flexibility. So I would think about CapEx going across those buckets. In terms of adding another distribution center, I don't know that in the next few years, we would have a -- build another 0.5 million square foot distribution center. I think we would look at more dynamic and flexible models, working with third-party logistics organizations and really thinking through how to optimize our footprint across the U.S. from a supply chain perspective. Oh, and I think you had a question on utilization. Yes. Look, the distribution centers are busy. There's no doubt about that. Part of that is us flexing our muscles and where we can, bringing inventory in and configuring that and staging it for our customers and helping them through this choppy environment. So there is some capacity there. It's tight. And again, I think we would use more of a flexible model and more of a renting space in the short term as we need it until we get a better sense of what supply and demand look like over the longer term.

My second question is for Chris. What percent of your coworkers are currently working from home? And given certain regions are going back into lockdowns, I mean, how do you think about that? And is the updated revenue guidance for the year that you gave this morning, is that dependent on a certain percent of coworkers being able to go back into the customer sites and get acceptance for projects? So is the mix of coworkers working from home versus being able to travel impact the revenue for the full year?

Thanks for the question. Let me start with the second part first. Our guidance isn't dependent on when or how many people we get back into the office or going on to customer sites. So we've really done a great job. The team has done a great job of staying connected and staying productive. So we're not -- it's not dependent on that. In terms of going back to the office and how we think about that, a couple of things. First of all, we have coworkers on both ends of the spectrum. As I mentioned before, as most companies do, we've got some who are really eager to be back and some who are still cautious until we get through the pandemic more fully. So what we've done is we've created opportunities for customer -- for coworkers to come together and have social and networking time in a safe way. We've also given guidance to our coworkers who are customer-facing around getting together with customers who would like to get together again in a safe way, and that started to happen. We also have customers who are very comfortable with our service provision in a remote way, which we've been doing throughout the pandemic. But we also have customers who are now opening up and allowing us back on site. We have bases that are opening, et cetera. So I guess I'd say, look, we're doing very well from a productivity and connectivity perspective. We are starting to get together with customers in-person. And you can imagine it depends on what's happening within each state, for example, or each country. I think the U.K. just had their garden pubs open, and that was a big event and customers do want to get together. But we're going to do this right. We don't really want to do this with fits and starts. That's really the key for us. We want to be able to have our coworkers come back together in a way that is -- continues our highly engaged and high-performing culture and keeps the customer at the center of how we actually work together so we can continue to serve our customers and partners better than anyone else.

Your next question comes from the line of Jim Suva with Citigroup Investment.

As you start to see some mid- and small-sized businesses coming back to work and in-person meetings and in-person works, are you seeing that they are still very kind of PC notebook-centric weighted? Or are they going back to kind of pre-COVID mix level? Or any type of preference to what they're installing when they do come back to work?

I would say if you were to take a scale of 1 to 100, how many are actually back in work, we're still very much on the lower end of the spectrum. So we still have a very large number of customers who are continuing to work remotely. For those who are going -- have some folks going back into the office. What we're observing is a continued investment in mobile employees, the ability to be in the office on a flexible basis, the ability to move around the office and use the office in a different way. Now the question is, what work are you doing in the office? And do you need to have more -- even more collaboration spaces and the ability for your employees to have mobile devices that they can move around with and take home? So I would say our view is that the flexible hybrid work environment is what the preponderance of our customers expect to be in over the long term. And that includes notebooks, a higher density end of notebooks, obviously, more enterprise-level collaboration capabilities. We do have some customers who are contemplating whether to have a desktop in the office and a notebook at home for coworkers, it really depends on the industry. Things like lockers and hoteling are really points of discussion now. But that's what we're seeing overall, if that's helpful.

Great. And now that we're lapping 1 year of COVID, like for the education and government sectors, are they still very much needing to catch up and do a lot more PC and Chromebook installations? Or are they kind of this summer going to be in the procurement cycle for schools going back to school? Are they going to be like a little less notebook and Chromebook dependent? Or are they actually going to be more, because maybe there are some districts who are fully stocked and others who aren't? Or are they not going to do more infrastructure? Just kind of curious of kind of what's your view for that.

Yes. I guess if I think about K-12 education, I'll start with K-12, there are a couple of things. Device demand continues to remain strong because there is such a gap to that one-on-one device ratio that schools are trying to get to for equity and access and also for something they're referring to as learning loss, these gaps that might have happened over the pandemic. So there's plenty of headroom for devices going forward. With regard to CDW, what we face are tough compares from last year. So if you think about our growth over last year, very tough compares, but the demand is strong. The other thing I would say is, as we're going into the next school year, schools are figuring -- and we're working with schools to figure out how to create the most optimal classroom experience, and that would be a blended experience, hybrid experience, all in-class. Schools really have -- they're looking at the ways of learning that they can use technology within a classroom or outside the classroom but within the walls of the school in much more creative ways. So from an infrastructure, I call it networking and particular perspective, we would expect to see upticks there. And then think of audio and visual. The older interactive flat screen panels are getting old now, but there are newer availabilities of solutions that work better. So that's another opportunity to help really modernize the classroom. So net-net, demand will remain strong with regard to devices, but the opportunity for infrastructure, network augmentation and for video will be a good opportunity as well.

Your next question comes from the line of Matt Sheerin with Stifel.

I just wanted to ask another question regarding the client devices and the PC upgrade cycle that's going on 3 to 4 years now. There's been talk obviously at some point that leveling off or being down, but we're also seem to be lapping the 4-year anniversary when companies started to upgrade to Windows 10. And given the constraints out there, it seems like there's still backlog. So could you talk to the client devices and notebook upgrade cycle and your thoughts there?

Yes. Sure, Matt. Let me -- we'll talk a little bit about maybe tailwinds and headwinds. So when we think about tailwinds, certainly, the need for more remote devices, and we've talked a lot about that today, whether it's remote-enabled work or learning and device density. Then there are new use cases. We've seen a great uptick in Catalyst, for example, in terms of how our customers engage with their customers in new ways. So you've got demand from there. You've got leverage -- get the ability to leverage the stimulus. We've got those dollars flowing through. And then we also have our Corporate and Small Business segments that are recovering nicely, and the comparables over last year are pretty low. So we've got some positives in there. Then you mentioned the refresh, absolutely, 2017 and '18, we have seen and would expect to continue to see that refresh go on. So we are selling into that. On the headwind side, look, we had big overlaps over 2020 in some of our segments including K-12. And the economy is still a wildcard, though employment looks like it's picking up, and that's been quite helpful, frankly, in the Small Business space with regard to endpoint solutions. And then the last thing I would just emphasize is the headwinds and the challenges that we're facing. There's real lot visibility there. But otherwise, the demand for client devices continued to be strong.

Okay. And just a last quick one regarding the headcount, you talked about, I think, 200 additional coworkers, including 40 from the acquisition. But are you looking to continue to expand your coworker count this year given the relatively strong outlook for demand?

Yes. We absolutely are going to continue to invest in our business, whether it's coworkers, other acquisitions or digital transformation, as Collin mentioned. So we certainly will continue to invest in our coworkers.

Your next question comes from the line of Keith Housum with Northcoast.

Collin, I'll echo a congratulations on retirement. In terms of this supply chain environment that we're currently in, does CDW have any pricing power, I guess, with some of its customers in the fact that it's just harder to get some of the product into their hands?

No, Keith, I wouldn't think pricing power per se. I think the competitive advantage is probably more on the ability to secure supply to the tenants available and getting at least our fair share. I think ultimately, your ability to price through it is a function of the competitive environment and the customer's willingness to wait. And I think that's what's different now versus, say, 2, 3 quarters ago, where the customer wasn't willing or couldn't wait. So I don't know that there's a huge opportunity to pass along incremental pricing beyond what the market will bear is what I would say.

Fair enough. Fair enough. And in terms of the supply chain challenges that you're facing, are the challenges more on the logistical side? Or are they more on the components side that's going into the final products?

I would say it's both. The components -- I mean, obviously, the processor shortage is well documented, but things like glass and -- it just -- all of the challenges associated with that. And then, again, the logistics challenges of ports and canals and natural disasters and all of those things. So it is really a confluence of events that are impacting supply.

We have no further questions. I will now turn the call back to Chris Leahy, President and CEO, for closing remarks.

Thank you. And thank you to everyone on the call today. I would like to really recognize the incredible dedication of our coworkers around the globe and they're extraordinarily committed approach to serving our customers, our partners and all of our CDW stakeholders. Our coworkers bring it every single day. And thank you to our customers for the privilege and opportunity to serve you. To our investors and analysts participating in this call, we appreciate you and your continued interest and support of CDW, and we look forward to talking with you again next quarter. Thank you.

This concludes today's conference call. You may now disconnect.