Good day and thank you for standing by. Welcome to the CDW Second 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. Thank you. Please go ahead.

Thank you. Good morning, everyone. Joining me remotely today to review our second quarter results are Chris Leahy, our President and Chief Executive Officer and Collin Kebo, our Chief Financial Officer. Our second 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 would 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 will find reconciliation charts in the slides for today’s webcast and in our earnings release and Form 8-K we furnished 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 UK or Canada. 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 will begin this morning with an overview of second quarter results and drivers of performance and share our updated thoughts on 2021. Collin will then take you through a more detailed look at the financials and capital allocation strategy and outlook. We will move quickly through our prepared remarks as always to ensure we have plenty of time for questions. We had a record second quarter. Our results demonstrate the balance and strength of CDW’s business model and strategy. For the second quarter, net sales were $5.1 billion, a quarterly record in our first quarter over $5 billion of net sales. Net sales grew 17.9% above last year on a reported and average daily sales basis and up 16.3% in constant currency. Gross profit increased 18.2% to $883 million. Non-GAAP operating income was $418 million, an increase of 23.6% and non-GAAP net income per share was $2.02, up 29.3% on a reported basis and up 27.9% in constant currency. Our outstanding results reflect our team’s extraordinary execution and the importance of our scale, industry experience and knowledge and strong customer relationships. The diversity of our customer end markets and breadth of our solutions portfolio continues to serve us well. Our record second quarter performance reflected a rebound in commercial customer spending, driving excellent results in our corporate small business and Canada segments and continued strength in our education channel. Our results reflect strong momentum across our business as technology spending recovers from lower spending last year and also increased demand as customers seek to modernize, optimize and innovate. In 2020, customers prioritize remote enablement and continuity. So far in 2021, customers have prioritized digital transformation, security and hybrid and cloud solutions as well as continued investments in endpoint solutions, driving strong growth for solutions and transactions.…

Thanks, Chris and good morning everyone. I will start my prepared remarks with more detail on the second quarter, move to capital allocation priorities and then finish up with our 2021 outlook. Turning to our second quarter P&L on Slide 8, consolidated net sales were $5.1 billion, up 17.9% on a reported and an average daily sales basis. On a constant currency average daily sales basis, consolidated net sales grew 16.3%. Compared to the second quarter of 2019, net sales increased more than $0.5 billion or 11.2%. On an average daily sales basis, sequential sales increased 4.7% versus the first quarter. Second quarter sales were stronger than expected reflecting several factors. On the demand side, the rebound was sharper than expected in several channels, most impacted by COVID-19 last year. Corporate, Small Business and CDW Canada all delivered very healthy double-digit growth versus 2020 and are up versus 2019. So, the strong growth reflects more than easy comparisons. As Chris mentioned, education momentum continued, delivering the fourth consecutive quarter of over $1 billion of net sales. On the supply side, while the backlog increased several hundred million dollars in the second quarter, the team did a great job leveraging CDW’s competitive advantages and supporting stronger than expected demand, so the backlog did not increase even more. Gross profit for the quarter was $883 million, an increase of 18.2%. Gross margin was 17.2%, up approximately 10 basis points versus last year primarily driven by an increase in the mix of net service contract revenue, primarily software-as-a-service and strong professional services performance, partially offset by overlapping higher margin configuration services for the Census project last year. Turning to SG&A on Slide 9, non-GAAP SG&A increased 13.6%. The increase was primarily driven by payroll costs, including sales compensation, which moves with gross profit…

Thank you. [Operator Instructions] Our first question comes from the line of Matt Cabral with Credit Suisse. Your line is open.

Yes. Thank you very much. It sounds like a strong quarter on the client device side again. There is some concern out in the marketplace around just the sustainability of PC and Chromebook demand. Curious what you’re hearing from your customers around sustainability of demand. And I guess I also heard the commentary about the backlog continuing to grow. Just curious how much of that increase was within PC specifically. And when do you think you’ll actually be able to catch up to that backlog?

Good morning, Matt. It’s Chris. Look, on demand, I would tell you what we’re seeing from customers is continued resiliency and need for devices, whether it is more devices in the hands of people who are working remotely or at least partially remotely kids in school, new use cases the ability to utilize the stimulus dollars now to buy those devices. And then you add on refresh that’s coming up a pretty large installed base that’s looking towards refresh. I would just tell you that the demand feels resilient. Vis-à-vis CDW, we certainly have some tough overlaps, some compares we’re looking at in K12 given the enormous growth last year. But generally speaking, demand remains solid. On the supply side, Chromebooks have really started to ease up a little bit. That’s – the OEMs had to plan for that last fall and they did, but we are still seeing supply constraints with regard to notebooks.

Yes, Matt, I would just add in terms of the composition of the growth in the backlog. As Chris said, notebook certainly contributed to that with Chromebooks getting better, but we did see backlog growth in some of the other areas in the transactional part of the business, things like displays and panels and monitors, things like that. And then we also saw the backlog increase across some infrastructure products.

Got it. That’s helpful. And then for my follow-up, on operating margin, you guys just did 8.1%. And if I look at the first half, you’re slightly below 8%. I guess the full year guidance, if I heard it correctly, is still for mid-7s. So I guess just wondering what the offsets are in the second half of the year. And maybe just help us bridge from that first half to the second half.

Yes. On the full year guide, mid-7s, obviously, there is a range there. I’d expect us probably to be at the stronger end of that mid-7s. But as you think about the back half of the year, as we talked about in our prepared comments, we believe now is the time to invest in the business, and we will continue to aggressively invest in the business. You saw that we added nearly 500 coworkers in the second quarter. As those coworkers come into the P&L, obviously, all of that’s not reflected as we go forward. So we will be carrying two full quarters of expense for that and continuing to make additional investments in the business.

Got it. Thank you very much.

Our next question comes from the line of Amit Daryani with Evercore. Your line is open.

Hi. This is Lexi Curnin on for Amit. So, yes, thank you for taking the question. And I guess, Collin, you just mentioned investing back into the business. And it would be great if you could talk about some of those initiatives that you’re set to undertake there.

Yes, I’m happy to take that. It’s really a variety of initiatives, both organically and inorganically. On the organic side, we continue to invest behind the areas solutions areas that are particularly high value to our customers, so customer-facing coworkers and technical areas, both on the presales and the service delivery side. I think you began to see some of the fruits of those investments in the second quarter as we referenced the success that we were having in the professional services part of the business. We are also making investments in our own digital transformation into our own infrastructure to drive productivity with our sales force and how we interact with customers and just how we scale and operate the business more efficiently.

Great. Thank you so much.

Thanks, Lexi.

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

Good morning. Thank you for taking the questions. I guess first, talk about what the drivers are behind the assumption of greater share gains this year, which is reflected in the 425 to 500 basis point growth premium.

Well, good morning, Katy. Good to hear from you. In terms of our increase, look, if you look at where we’ve had meaningful growth, client devices, video, other hardware categories and what customers’ priorities are going forward, where they are allocating more technology spend to infrastructure needs, we don’t think the market is growing at the same rate that we are growing. So we’re flowing some of that increase through to our premium. And as you know, the CDW tends to outpace the U.S. IT market by more than 200 to 300 basis points in periods of hardware fresh. So we tend to overindex because we have more recognized at the net line. The one thing I would say is supply remains a wildcard. Collin’s talked about it. I’ve talked about it. We’re not underestimating supply. The teams have done a phenomenal job, frankly, in managing it and getting our fair, fair share. But we think that given the mix of what we’re seeing our customers buy and how that hits the top line, that’s what’s driving this – the view on that.

But also just to follow-up on that, Chris, it does seem like the supply environment is working to your favor. It’s hitting everyone but it seems like it’s hitting your business less than others, and that’s also driving some of the share gains. Is that fair?

Well, yes, that is fair, Katy to some extent. Look, our distribution center, our logistics capabilities, all the things that we talk about put us in a position where we – customers are betting on us. They are turning to us as their best bet to get supply, and partners understand that. So I’d like to say we get our fair, fair share. You can say we get our unfair share, but we do tend to benefit in supply-constrained environment. That said, I just – I’ll repeat what we’ve been saying for the past couple of quarters. It’s so prevalent at this point and the visibility is very difficult that it’s hard to really have a good view over the next couple of quarters other than just saying we think it’s going to get a little worse before it gets better. It’s going to continue into next year. But I’ll tell you, we’ve been working very closely with our OEMs, and they have just been terrific. And we’re also working closely with customers to find choices for them if they are willing to move their requirements and their standards, which small businesses or others aren’t. But yes, we generally – because we can create a solution and deliver to customers, we generally get our greater than fair share, if you will.

Thank you for that. I guess maybe a follow-up for Collin. As you turned into the September quarter and the month of July, was – did you see any change in the pace of order growth or the degree of supply constraints in the first few weeks of the current quarter?

Yes, Katy, we’re really not providing more detail on Q3 intra-quarter beyond what we shared in the comments, which was we continue to see strong activity and momentum, particularly with commercial customers and in CDW Canada. And on the supply side, we are expecting modest growth in the backlog as we move throughout the year.

Great. Thank you.

Thanks, Katy.

Our next question comes from the line of Jim Suva with Citi. Your line is open.

Thank you. And congratulations on great results and the increased outlook. There is a bit of a debate out there about double bookings and over-ordering from basically every end market. So I was hoping you could kind of give some commentary because I would kind of assume, and maybe I’m wrong, that small and midsized businesses and Education really can’t and don’t double order because they just don’t have quite a large needs as maybe, say, the Fortune 100 companies where they know they are going to always need so much. Maybe I’m wrong on that, but any thoughts about double ordering from your end markets? And then that leads to the follow-up question part about – the concern about a potential pocket of error or a slowdown post when the supply chain gets back to equilibrium. Any commentaries on those would be great. Thank you.

Yes, sure. Good morning. I’ll start with the first one in terms of double ordering. Of course, that’s something that we would – we always worry about and look at carefully in this type of environment. What I’d tell you is the information that we are working with our OEMs to get and provide some level of visibility to our customers is resonating really well. And therefore, they have a level of content, when CDW says it’s going to be 8 weeks or 12 weeks, and we can get it, that we actually have it or can get it. We have seen minimal. It’s really any double ordering with our customers. So we feel very confident in the new orders have come in, in our backlog and in the way that we’re operating with the customers. In terms of an air pocket, Collin, do you want to chat a little bit about backlog supply and air pockets?

Yes. Sure, Chris. Maybe I’ll just add a little bit on to the double ordering comment as well, Jim. I think also, when you think about what the majority of our customers are ordering, they are not widgets. It’s customized to the specs of a large corporate customer or the needs of the school district. And the thought that you’re going to place an order like that with multiple vendors, I think, is low. At very small and – a small office, home office customer that needs 20 notebooks, it’s impossible that there is some double ordering going on there. Yes. But I think overall, when you look at the backlog, we feel pretty good that those are firm orders sitting in the backlog. The comment I’ll make actually gets into your next one. What we have seen, though, is what I would call an order pull-forward-where customers are placing orders sooner than they might normally because of the supply environment or to try to get ahead of expected price increases from our OEM vendor partners. So sitting in that backlog is a little bit of a pull-forward. And I think that’s getting to your question around the air pocket. I guess the way I think about it is there is a little bit of a hedge here. To the extent that there may then be a little bit of a lull in the ordering. If, at some point in the future, orders return to a normal timing and flow pattern, we would also then have the flush of the backlog at some point in time. So I think maybe that’s one way to think about it.

Great. Thank you so much for the details and clarifications. Appreciate it.

Thanks, Jim.

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

Thank you very much. I wanted to ask about some of the stimulus programs that are out there and being discussed and how you think it may benefit, I realize timing is a question. But thinking about the infrastructure plan that’s being discussed, also E-Rate, I think there were some changes to that. And then are you hearing any of the education customers talking about using some of the prior stimulus, because I think there is still an awful lot of that money floating around. Thank you.

Yes, Shannon. Well, yes, to all your questions, let me start with education. There is the Emerging Connectivity Act which is about $7.1 billion, and we have worked closely with educational systems to tap that. So, that’s been something that the education customers are very focused on and taking advantage of with our help facilitating and navigating. So, absolutely there. And we also say State & Local, we have talked about the three rounds of stimulus funding, last March, last December, this March and how that impact is stable, in particular, because in December’s Appropriations Act, there was no additional funding for State & Local. So, State & Local tended to pause kind of step back and say, what’s going to happen in the next round. Well, in the next round, which is this March, there were dollars allocated to State & Local. So, we have now seen the use of those funds pick up. I would tell you that the first couple of months in this quarter was a lot of assessing, understanding, again, working with our customers to help them understand how to tap the funds and where we get the money, how to get the money, etcetera. But we did see a nice pickup in the last part of second quarter in terms of using the stimulus dollars. So, that’s another area where we are seeing strength in stimulus. In terms of the packages coming forward, the new ones coming out yet to be seen, we will review those. And to the extent that there is opportunity to help our customers, certainly, we will take advantage of those. Clearly, the focus of the administration on things like technology, infrastructure or technology as infrastructure and cyber security are high on the list of priorities for our customers, and we have capabilities that can help them to both implement solutions around those, but more importantly, navigate the stimulus funds. So, we will – I think we will be very effective in doing that.

Okay. Thanks. And then just a quick follow-up, in terms of cash flow, is there anything we should think about – just the demand is so strong in so many areas you have backlog. And that – I mean, how should we think about cash flow dynamics from a working capital perspective in coming quarters, because I would assume it’s somewhat of a fluid situation. Thank you.

Yes. Shannon, from a cash flow perspective, obviously, as the business experiences rapid growth, we do make an investment in working capital, and you saw some of that in the quarter. And as I mentioned in my prepared remarks, we have intentionally been carrying higher inventory levels, specifically customer-specific inventory to help them work through rollouts of their projects. So, I think as long as we are in this choppy supply environment, I would expect inventory to be running higher than typical levels. As it relates to our total free cash flow, we were down in the first half of the year relative to a normal first half of the year. I would attribute that, though, mostly to the strong timing and things we benefit from in the prior year and not indicative of any type of change in the future free cash flow generation capability of the business.

Thank you.

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

Hi. Thanks for taking my questions. Chris, can you give us your thoughts on the Federal business, I mean, you are facing tough comps from the U.S. Census project. But just wondering when that business can turnaround and grow year-on-year. Are there projects that you are seeing where some government agencies probably have PCs that are coming up that are – 10 PCs even that are coming up for replacement. So, just your thoughts on the opportunity set that you have in Federal and when that business can turn around from a year-on-year growth standpoint?

Sure. Good morning, Ruplu. What I would say about the Fed business is we had a number of large opportunities that are going to be rolling out in the second half of the year and others that we are pursuing. Overlapping expenses projects, we knew we had that and we had another – a number of other very large client device projects last year. So, what we have been putting in the back half of the year is not going to be enough likely to overcome that. But look, the beauty of our model is the diversity of our customer end markets. So, we said having such strength last year in the sense of – and kind of coming back to the year, if you will, with I would say, next year, 2022, picking up from a growth perspective, we have got all of our other customer end markets that are going to be constrained. The other thing I would just say is a reminder of the Federal space. The Census deal and some other deals that we are doing there are, frankly, that we are working on that are fairly similar, really reflects the positioning that we have with our customers in that customer end market, which is a real thought leader, a real solutions provider and a services first player. So kudos to the team for continuing to grow our reputation and capabilities and we can see it paying off in the opportunities that we have got in the pipeline.

Got it. Thanks for the details on that, Chris. And just for my follow-up, Collin, can I ask, of the 50 basis points improvement sequentially that you saw in operating margin, is there a way to quantify how much of that was mix versus higher volumes or FX? And is there anything in that that is not sustainable going forward? Thanks.

Yes. Ruplu, if you think about it, the gross margin improved sequentially. We went from a 16.4% to 17.2%. So, that was 80 basis points. Now we have a variable cost structure, so, not all of that passes to the operating margin. I would say that there are some elements of seasonality in that. When you think about – there is a software vendor, a big partner of ours who has a fiscal year end in June. And as we mentioned in our comments, we had very strong software results and very strong cloud and Software as a Service results. So, we did benefit seasonally from mixing into some netted down items there that I wouldn’t expect to recur at necessarily the same pace in the second half of the year. And then also our partner funding improved a bit sequentially from Q1 to Q2. Our partners reimburse some of our advertising. And as we increased our advertising investment sequentially, you saw part of that sitting in the gross margin. So, I think most of the increase then is primarily explained by the gross margin. And then in terms of how you think about the back half of the year, I just – the comment I made to Matt earlier in the call around we are continuing to invest in the business, and that co-worker count gets layered in and you will have full quarter’s worth of that expense coming up in subsequent quarters.

Okay. Thanks for all the details. I appreciate it.

Thanks Ruplu.

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

Yes. Thanks and good morning everyone. I wanted to ask, again, regarding the strength that you are seeing on the corporate side, reacceleration there. And you did talk about on-prem infrastructure spending. Is that just based on pent-up demand? Are you seeing companies reinvest as they are getting back to the office? And in terms of the areas you talked about, networking, you have talked about servers, could you just give more color on what you are seeing there?

Yes. Good morning, Matt. Thanks for the question. It’s a little bit of everything you mentioned there. We certainly are seeing this driven by folks getting back to the office. We are seeing it pent-up demand. I think one of – our leader in the solutions area for our partner relationships kind of refer to 2020 as a range away in terms of as we think about refresh. And that’s not a bad way to think about it. Last year was a pause on a lot of things. So, now we are seeing servers growing double digits. Certainly, what our customers are focusing on is things like workload optimization and application performance. And so that’s where they are focusing to invest in infrastructure. And ultimately, frankly, this is tied to supporting digital transformation, which is at the forefront of every customer’s mind. So I think if we look forward, hybrid work is driving assessment on what customers are going to need, so supporting the office. As we get new next-gen releases in computer technologies, given the analytic heavy nature of the future and the analytics that customers are needing to really win and keep in the marketplace, I think we are going to continue to see some upgrades in the needs there. And then in the other areas like storage, what we are seeing now is a real enhanced focus on data center observability. So, customers are looking at costs and optimizing operations. And so there is a growing and leading system, modest churn and automation. And so our Digital Velocity and ServiceNow businesses are really on fire. And we are just continuing to scrutinize the spend. Now that said, where our customers are ending up, I think, and is proved out by how customers are in-house in the future is a multi-cloud world, which includes on-prem, on-subject cloud-like capabilities, which is growing in terms of – assets as well as multiple clouds that they are using. Last year, I think we talked about, and earlier this year, about customers really taking a step back and reassess how to optimize their infrastructure, and that’s what we are seeing. The good news is whether they are refreshing and updating, whether they are moving to a meter consumption model on time, whether they are going to colo or whether they are moving workloads to various clouds, public clouds, we are helping them at the front end to play in that, then to implement the plan. So, it keeps us right front and center of helping them to deploy their infrastructure strategy.

Got it. Thanks very much for that. And my second question regarding the education market. Obviously, it’s been a huge growth area for you now running roughly 20% of revenue versus low to mid-teens 18, 19. So – and you talked about some of the continued strong drivers, including funding. At some point, though, I would expect a lot of that spending to wind down. So, what should we expect in terms of the base case for that market? It should be higher because you have got a lot more school districts using devices, maintenance, etcetera. But how should we think about that business long-term for you?

Yes, it’s a great question, and we continue to see it as a growth opportunity. If we just think about the various cycles we have been through in K-12, you can go back 10 years, where Chromebooks were introduced and we created this with good service, and then we help to see modernization of the classroom. And every cycle that education has been through, CDW has been at the forefront of helping educators, administrators, technology to figure out the best way to teach kids, to educate in the classroom and now outside the classroom in different ways, in the learning – in the typical facility, at home, in the classroom. So, we continue to see it as a growth opportunity because of the natural evolution of education in this country and in our other markets. I think, certainly, given how strong last year was, in particular, Q4, I don’t think we are going to see the kind of equity and access, the classroom experience opportunities that we are selling into. We are not going to see ourselves overlap or overcome how well we did last quarter. But over the long-term, Matt, I would say it’s a great market. We have fantastic expertise, especially when you think about Amplified IT, the acquisition we did last quarter. And we are seeing traction in the market incredibly strong. So, we are very bullish on K-12.

Okay, great. Thank you.

Our next question comes from the line of Keith Housum with Northcoast Research. Your line is open.

Good morning guys. Just a quick question here on the latest acquisition of Focal Point Data, can you give us a little bit of color in terms of like the margin profile? And I guess what I am trying to look at here is how quick or what’s going to be the impact on the overall operating margins of CDW over the next year or 2 years. I mean I am assuming we would expect that to go higher because of these acquisitions. But hopefully, you could provide some color and some idea of the context.

Hi. Good morning, Keith. We typically would not provide that level of granularity with our acquisitions. I guess it’s – while strategically important and of high value to our customers and sellers, it is a services business. So, in terms of just absolute magnitude of contribution to CDW, I would say the impact will be relatively small. And as we stated in the press release on Monday, I expect it not to have a material impact to earnings for the full year. I guess what I would say, though, is, I mean, if you look at the investments we have been making over the past couple of quarters, we have been picking up the services businesses that are of high value to our customers. And I think collectively, they are contributing to some of the gross margin strength, and you saw that in the second quarter, and we commented on it. So, I wouldn’t call out anything specifically, but would just say, in aggregate, the investments we are making behind the services businesses in the high-growth areas that our value to our customers are helping the margin.

Great. I appreciate it. And then looking at the overall environment now, obviously, raw materials are a significant cost for the complete increases that we are seeing in technology. Is there a way to kind of like provide an average of what you are seeing in terms of price increases within your biggest sellers? I mean are we seeing 4% to 5% increases right now? And is that going to contribute to growth here not only in the second half of the year, but into next year as well?

In terms of contribution to our sales growth, Keith?

Yes.

Yes. That’s a difficult question to answer at a portfolio level, because much of what we sell doesn’t have a hardware unit associated with it, right, when you think about software, services, cloud and then you see things like value shifting to the software for integrated solutions. But maybe one way to think about it is if I pick a big category like client devices, which were up high teens in the quarter, we saw balanced growth in terms of both units and ASPs, average selling price, and that was true for most customer end markets. So, it’s a combination of both unit growth and pricing.

It’s helpful. Thank you.

Our final question comes from the line of Samik Chatterjee with JPMorgan. Your line is open.

Hi. Good morning. Thanks for squeezing me in. I guess in your prepared remarks and through the call, you have talked about investments and this being the right time to invest back in the business. Just wondering how should we think about that and interpret that from a model perspective. Like are we entering a period of time when your OpEx increases will be more in line with revenue growth or does the longer term model still remain kind of for OpEx to be below – OpEx increases to be below revenue growth? And just trying to figure out where we are in terms of time period of investment? And I have a follow-up as well. Thank you.

Yes. Samik, thanks for joining the call and welcome. We haven’t provided multiyear thoughts – just a view for the year. And you can see for the full year, we continue to believe we will deliver a mid-7 operating margin. So, you can then think about those investments being funded within the context of that, those thoughts around the operating margin.

Okay. Just a quick follow-up, I think from – you mentioned for 3Q, you are expecting it to be very in line with seasonality that you have seen historically. If I walk through the numbers and try to get an implied 4Q here, it does look like your – and if I am doing the math right, it looks like you are guiding something very in line again with seasonality. Just thinking with all the backlog that you have and the demand backdrop that we are in, where things are pretty strong, is that the right way to look at it given that expecting a seasonal moderation in December or should we be expecting something better?

Yes. I think you can do the math, given the thoughts on the guide for the third quarter and then what’s left over for the fourth quarter. I would just be careful about your thoughts on the backlog. As we said, we don’t assume an improvement in the backlog at our full year modeling thoughts. So, that’s not captured. And if the backlog were to get worked down, that would be upside to the outlook. And I think when you run the math, on what the implied Q4 growth rate is year-over-year, that’s again just a reflection of some of the big overlaps that we have been talking about, specifically within education in the fourth quarter. Last year, we had the large Mississippi Department of Education deal, and obviously, a big contribution from the census that the devices came back.

Okay, great. Thank you. Thanks for taking my questions.

Okay. Thank you, Samik.

I would now like to turn the call back over to Ms. Chris Leahy for closing remarks.

Thank you, Tania. And let me close by saying I would like to acknowledge first, the incredible dedication of our co-workers around the globe and their extraordinary commitment to serving our customers, partners and all of our CDW stakeholders, particularly this quarter, our first quarter delivering over $5 billion in sales, an extraordinary quarter, supporting our customers. Thank you all. Thank you also to our customers for the great privilege and opportunity to serve you. And to our investors and analysts participating in the call, we appreciate you and your continued interest and support of CDW. We look forward to talking to you again next quarter. Thank you.

This concludes today’s conference call. Thank you for participating. You may now disconnect.