DXC Technology Reports First Quarter Fiscal Year 2024 Results
DXC Technology reported mixed results for Q1 FY24. Revenue was $3.45 billion, down 7.0% year-over-year and 3.6% organically. Diluted EPS was $0.17, while Non-GAAP Diluted EPS was $0.63. The company generated $127 million in operating cash flow and $(75) million in free cash flow. DXC achieved a book-to-bill ratio of 0.89x for the quarter and 1.03x for the trailing twelve months.
Key highlights include:
- Repurchased 11.0 million shares for $280 million
- GBS segment revenue down 3.1% but up 3.3% organically
- GIS segment revenue down 10.6% and 9.9% organically
- Reduced FY24 guidance due to challenging economic environment
DXC remains committed to completing its $1 billion share repurchase program in FY24.
DXC Technology ha riportato risultati misti per il primo trimestre dell'anno fiscale 2024. Il fatturato è stato di 3,45 miliardi di dollari, in calo del 7,0% rispetto all'anno precedente e del 3,6% in termini organici. EPS diluito è stato di 0,17 dollari, mentre l'EPS diluito Non-GAAP è stato di 0,63 dollari. L'azienda ha generato 127 milioni di dollari in flusso di cassa operativo e $(75) milioni di dollari in flusso di cassa libero. DXC ha raggiunto un rapporto book-to-bill di 0,89x per il trimestre e 1,03x per gli ultimi dodici mesi.
I punti salienti includono:
- Riacquisto di 11,0 milioni di azioni per 280 milioni di dollari
- Ricavi del segmento GBS in calo del 3,1%, ma in crescita del 3,3% in termini organici
- Ricavi del segmento GIS in calo del 10,6% e del 9,9% in termini organici
- Riduzione delle previsioni per l'anno fiscale 2024 a causa di un contesto economico difficile
DXC rimane impegnata a completare il suo programma di riacquisto di azioni da 1 miliardo di dollari nell'anno fiscale 2024.
DXC Technology informó resultados mixtos para el primer trimestre del año fiscal 2024. Los ingresos fueron de 3.45 mil millones de dólares, una disminución del 7.0% en comparación con el año anterior y del 3.6% orgánicamente. EPS diluido fue de 0.17 dólares, mientras que el EPS diluido No-GAAP fue de 0.63 dólares. La compañía generó 127 millones de dólares en flujo de efectivo operativo y $(75) millones en flujo de caja libre. DXC logró una relación book-to-bill de 0.89x para el trimestre y 1.03x para los últimos doce meses.
Los puntos clave incluyen:
- Recompra de 11.0 millones de acciones por 280 millones de dólares
- Los ingresos del segmento GBS disminuyeron un 3.1% pero aumentaron un 3.3% orgánicamente
- Los ingresos del segmento GIS disminuyeron un 10.6% y un 9.9% orgánicamente
- Reducción de las previsiones para el año fiscal 2024 debido a un entorno económico desafiante
DXC sigue comprometida a completar su programa de recompra de acciones de 1 mil millones de dólares en el año fiscal 2024.
DXC 테크놀로지는 2024 회계연도 1분기에 혼합된 결과를 보고했습니다. 매출은 34.5억 달러로 전년 대비 7.0% 감소하고, 유기적으로는 3.6% 감소했습니다. 희석된 EPS는 0.17 달러였고, 비-GAAP 희석 EPS는 0.63 달러였습니다. 회사는 운영 현금 흐름으로 1억 2700만 달러, 자유 현금 흐름으로는 $(7500만) 달러를 생성했습니다. DXC는 분기 동안 0.89배의 북투빌 비율을 달성했으며, 지난 12개월 동안은 1.03배를 기록했습니다.
주요 내용은 다음과 같습니다:
- 2억 8000만 달러에 1100만 주를 재매입했습니다.
- GBS 부문의 매출은 3.1% 감소했지만 유기적으로는 3.3% 증가했습니다.
- GIS 부문의 매출은 10.6% 감소하고 유기적으로는 9.9% 감소했습니다.
- 어려운 경제 환경으로 인해 2024 회계연도 가이던스를 하향 조정했습니다.
DXC는 2024 회계연도에 10억 달러의 자사주 매입 프로그램을 완료하기 위해 계속 노력하고 있습니다.
DXC Technology a rapporté des résultats mitigés pour le premier trimestre de l'exercice 2024. Le chiffre d'affaires s'est élevé à 3,45 milliards de dollars, en baisse de 7,0 % par rapport à l'année précédente et de 3,6 % en organique. Le BPA dilué était de 0,17 dollar, tandis que le BPA dilué Non-GAAP était de 0,63 dollar. L'entreprise a généré 127 millions de dollars de flux de trésorerie d'exploitation et $(75) millions de dollars de flux de trésorerie libre. DXC a atteint un ratio book-to-bill de 0,89x pour le trimestre et de 1,03x pour les douze derniers mois.
Les points clés incluent :
- Rachat de 11,0 millions d'actions pour 280 millions de dollars
- Chiffre d'affaires du segment GBS en baisse de 3,1 %, mais en hausse de 3,3 % en organique
- Chiffre d'affaires du segment GIS en baisse de 10,6 % et de 9,9 % en organique
- Réduction des prévisions pour l'exercice 2024 en raison d'un environnement économique difficile
DXC reste déterminée à compléter son programme de rachat d'actions de 1 milliard de dollars au cours de l'exercice 2024.
DXC Technology berichtete über gemischte Ergebnisse für das erste Quartal des Geschäftsjahres 2024. Der Umsatz betrug 3,45 Milliarden Dollar, was einem Rückgang von 7,0 % im Jahresvergleich und 3,6 % organisch entspricht. Verdünntes EPS lag bei 0,17 Dollar, während das Nicht-GAAP-verdünnte EPS bei 0,63 Dollar lag. Das Unternehmen erzielte 127 Millionen Dollar an operativem Cashflow und $(75) Millionen Dollar an freiem Cashflow. DXC erreichte ein Book-to-Bill-Verhältnis von 0,89x für das Quartal und 1,03x für die letzten zwölf Monate.
Wichtige Highlights sind:
- Rückkauf von 11,0 Millionen Aktien für 280 Millionen Dollar
- Umsatz im GBS-Segment um 3,1 % rückläufig, aber organisch um 3,3 % gestiegen
- Umsatz im GIS-Segment um 10,6 % rückläufig und organisch um 9,9 % gesunken
- Gesenkter Ausblick für das Geschäftsjahr 2024 aufgrund eines herausfordernden wirtschaftlichen Umfelds
DXC bleibt verpflichtet, ihr Rückkaufprogramm von 1 Milliarde Dollar im Geschäftsjahr 2024 abzuschließen.
- Repurchased 11.0 million shares for $280 million, retiring 21% of outstanding shares since FY22
- GBS segment showed strong organic revenue growth of 3.3%
- Trailing twelve-month book-to-bill ratio of 1.03x indicates future revenue potential
- Commitment to complete $1 billion share repurchase program in FY24
- Revenue decreased 7.0% year-over-year to $3.45 billion
- Diluted EPS declined to $0.17 from $0.43 in Q1 FY23
- Free cash flow was negative at $(75) million
- GIS segment revenue declined 10.6% year-over-year
- Reduced guidance for FY24 due to challenging economic environment
-
Revenues of
for Q1 FY24, down$3.45 billion 7.0% as compared to prior year period, and down3.6% on an organic basis -
Diluted Earnings Per Share was
and Non-GAAP Diluted Earnings Per Share was$0.17 in Q1 FY24$0.63 -
Q1 FY24 operating cash flow of
, less capital expenditures of$127 million , results in$202 million of free cash flow$(75) million - Book-to-bill ratio of 0.89x and trailing twelve-month book-to-bill of 1.03x
-
Returned
to shareholders by repurchasing 11.0 million shares in Q1 FY24. Remain on-track to complete the$280 million share repurchase program in FY24$1 billion
Mike Salvino, DXC Chairman, President and Chief Executive Officer commented: “Our first quarter FY24 financial performance was mixed. While revenue and margin fell short of our expectations, free cash flow was better than expected. Our performance was impacted by lower than anticipated resale and project revenues. As a result of these factors, today we are reducing our guidance to reflect the challenging economic environment."
Mr. Salvino continued: “We are proud of the continued strong performance of our higher margin GBS segment. With our new operating model in place, we are confident that we can drive continued strong business momentum for GBS and improve the performance of GIS. We remain confident in our execution and are committed to delivering on our
Financial Highlights(1) |
|
Q1 FY24 |
|
Q1 FY23 |
||||
Revenue |
|
$ |
3,446 |
|
|
$ |
3,707 |
|
YoY Revenue Growth |
|
|
(7.0 |
)% |
|
|
(10.5 |
)% |
YoY Organic Revenue Growth(2) |
|
|
(3.6 |
)% |
|
|
(2.6 |
)% |
|
|
|
|
|
||||
Net Income |
|
$ |
42 |
|
|
$ |
103 |
|
Net Income as a % of Sales |
|
|
1.2 |
% |
|
|
2.8 |
% |
|
|
|
|
|
||||
EBIT(2) |
|
$ |
95 |
|
|
$ |
139 |
|
EBIT Margin %(2) |
|
|
2.8 |
% |
|
|
3.7 |
% |
|
|
|
|
|
||||
Adjusted EBIT(2) |
|
$ |
224 |
|
|
$ |
259 |
|
Adjusted EBIT Margin %(2) |
|
|
6.5 |
% |
|
|
7.0 |
% |
|
|
|
|
|
||||
Earnings Per Share (Diluted) |
|
$ |
0.17 |
|
|
$ |
0.43 |
|
Non-GAAP EPS (Diluted)(2) |
|
$ |
0.63 |
|
|
$ |
0.75 |
|
|
|
|
|
|
||||
Book-to-Bill (TTM) |
|
1.03x |
|
1.06x |
||||
Book-to-Bill |
|
0.89x |
|
0.87x |
||||
(1) In millions, except per-share amounts and numbers presented as percentages and ratios |
||||||||
(2) Reconciliation of GAAP to Non-GAAP measures provided in Non-GAAP Results. |
Financial Highlights - First Quarter of Fiscal Year 2024
Revenue was
Net income was
Diluted earnings per share was
On a trailing twelve months basis, the company delivered a book to bill of 1.03x.
During the first quarter of fiscal year 2024, the Company repurchased 11.0 million shares of common stock for a total of
Financial Information by Segment
Global Business Services ("GBS")(1) |
|
Q1 FY24 |
|
Q1 FY23 |
||||
Revenue |
|
$ |
1,703 |
|
|
$ |
1,758 |
|
YoY Revenue Growth |
|
|
(3.1 |
)% |
|
|
(6.8 |
)% |
YoY Organic Revenue Growth(2) |
|
|
3.3 |
% |
|
|
2.8 |
% |
|
|
|
|
|
||||
Segment Profit |
|
$ |
192 |
|
|
$ |
210 |
|
Segment Profit Margin |
|
|
11.3 |
% |
|
|
11.9 |
% |
|
|
|
|
|
||||
Book-to-Bill (TTM) |
|
1.01x |
|
1.17x |
||||
Book-to-Bill |
|
0.84x |
|
0.98x |
||||
(1) In millions |
||||||||
(2) Reconciliation of GAAP to Non-GAAP measures provided in Non-GAAP Results. |
GBS segment revenue was
Global Infrastructure Services ("GIS")(1) |
|
Q1 FY24 |
|
Q1 FY23 |
||||
Revenue |
|
$ |
1,743 |
|
|
$ |
1,949 |
|
YoY Revenue Growth |
|
|
(10.6 |
)% |
|
|
(13.5 |
)% |
YoY Organic Revenue Growth(2) |
|
|
(9.9 |
)% |
|
|
(7.2 |
)% |
|
|
|
|
|
||||
Segment Profit |
|
$ |
91 |
|
|
$ |
127 |
|
Segment Profit Margin |
|
|
5.2 |
% |
|
|
6.5 |
% |
|
|
|
|
|
||||
Book-to-Bill (TTM) |
|
1.04x |
|
0.96x |
||||
Book-to-Bill |
|
0.94x |
|
0.77x |
||||
(1) In millions |
||||||||
(2) Reconciliation of GAAP to Non-GAAP measures provided in Non-GAAP Results. |
GIS segment revenue was
Offering Highlights
The results for our six offerings are as follows:
Offerings Revenues |
|
Q1 FY24 |
|
Q4 FY23 |
|
Q3 FY23 |
|
Q2 FY23 |
|
Q1 FY23 |
|||||
Analytics and Engineering |
|
$ |
546 |
|
$ |
558 |
|
$ |
535 |
|
$ |
524 |
|
$ |
503 |
Applications |
|
|
770 |
|
|
780 |
|
|
762 |
|
|
755 |
|
|
785 |
Insurance Software & BPS |
|
|
382 |
|
|
390 |
|
|
371 |
|
|
363 |
|
|
367 |
Security |
|
|
111 |
|
|
113 |
|
|
112 |
|
|
108 |
|
|
105 |
Cloud Infrastructure & ITO |
|
|
1,209 |
|
|
1,270 |
|
|
1,283 |
|
|
1,309 |
|
|
1,396 |
Modern Workplace |
|
|
423 |
|
|
457 |
|
|
433 |
|
|
436 |
|
|
448 |
Subtotal |
|
|
3,441 |
|
|
3,568 |
|
|
3,496 |
|
|
3,495 |
|
|
3,604 |
M&A and Divestitures |
|
|
|
|
|
|
|
|
|
|
|||||
Revenues |
|
|
5 |
|
|
23 |
|
|
70 |
|
|
71 |
|
|
103 |
Total Revenues |
|
$ |
3,446 |
|
$ |
3,591 |
|
$ |
3,566 |
|
$ |
3,566 |
|
$ |
3,707 |
Cash Flow
Cash Flow |
|
Q1 FY24 |
|
Q1 FY23 |
||||
Cash Flow from Operations |
|
$ |
127 |
|
|
$ |
163 |
|
Less Capital Expenditures: |
|
|
|
|
||||
Purchase of property and equipment |
|
|
(55 |
) |
|
|
(68 |
) |
Transition and transformation contract costs |
|
|
(62 |
) |
|
|
(57 |
) |
Software purchased or developed |
|
|
(85 |
) |
|
|
(50 |
) |
Free Cash Flow |
|
$ |
(75 |
) |
|
$ |
(12 |
) |
Cash flow from operations was
Guidance
The Company's guidance for the second quarter and full fiscal year 2024 is as follows:
Key Metrics |
|
Q2 FY24 Guidance |
|
FY24 Guidance |
||||
|
Lower End |
Higher End |
Q2 FY23 |
|
Lower End |
Higher End |
FY23 |
|
Organic Revenue Growth % |
|
(5.5)% |
(4.5)% |
(1.5)% |
|
(4.0)% |
(3.0)% |
(2.7)% |
Adjusted EBIT Margin |
|
|
|
|
|
|
|
|
Non-GAAP Diluted EPS |
|
|
|
|
|
|
|
|
Free Cash Flow |
|
|
|
|
|
|
||
Revenue |
|
|
|
|
|
|
||
Revenue $ |
|
|
|
|
|
|
|
|
Acquisition & Divestitures Revenues % |
|
(2.0)% |
(2.5)% |
|
(1.8)% |
(2.6)% |
||
Foreign Exchange Impact on Revenues % |
|
|
(7.4)% |
|
|
(6.0)% |
||
Others |
|
|
|
|
|
|
||
Pension Income Benefit* |
|
|
|
|
|
|
||
Net Interest Expense |
|
|
|
|
|
|
||
Non-GAAP Tax Rate |
|
~ |
|
|
~ |
|
||
Weighted Average Diluted Shares Outstanding |
|
203 |
207 |
233 |
|
196 |
205 |
233 |
Restructuring & TSI Expense |
|
|
|
|
|
|
||
Capital Lease / Asset Financing payments |
|
|
|
|
|
|
||
Foreign Exchange Assumptions |
|
Current Estimate |
Q2 FY23 |
|
Current Estimate |
FY23 |
||
$/Euro exchange rate |
|
|
|
|
|
|
||
$/GBP exchange rate |
|
|
|
|
|
|
||
$/AUD exchange rate |
|
|
|
|
|
|
||
*Pension benefit is split between Cost Of Sales (COS) & Other Income: |
||||||||
Fiscal year 2024: Net pension benefit of |
||||||||
Fiscal year 2023: Net pension benefit of |
DXC does not provide a reconciliation of Non-GAAP measures that it discusses as part of its guidance because certain significant information required for such reconciliation is not available without unreasonable efforts or at all, including, most notably, the impact of significant non-recurring items. Without this information, DXC does not believe that a reconciliation would be meaningful.
Earnings Conference Call and Webcast
DXC Technology senior management will host a conference call and webcast to discuss these results on August 2, 2023, at 5:00 p.m. EDT. The dial-in number for domestic callers is +1 (888) 330-2455. Callers who reside outside of
A replay of the conference call will be available from approximately two hours after the conclusion of the call until August 9, 2023. The phone number for the replay is +1 (800) 770-2030 or +1 (647) 362-9199. The replay passcode is 4164760.
About DXC Technology
DXC Technology (NYSE: DXC) helps global companies run their mission critical systems and operations while modernizing IT, optimizing data architectures, and ensuring security and scalability across public, private and hybrid clouds. The world’s largest companies and public sector organizations trust DXC to deploy services to drive new levels of performance, competitiveness, and customer experience across their IT estates. Learn more about how we deliver excellence for our customers and colleagues at DXC.com.
Forward-Looking Statements
All statements in this press release that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” Forward-looking statements often include words such as “anticipates,” “believes,” “estimates,” “expects,” “forecast,” “goal,” “intends,” “objective,” “plans,” “projects,” “strategy,” “target,” and “will” and words and terms of similar substance in discussions of future operating or financial performance. Forward-looking statements include, among other things, statements with respect to our future financial condition, results of operations, cash flows, business strategies, operating efficiencies or synergies, divestitures, competitive position, growth opportunities, share repurchases, dividend payments, plans and objectives of management and other matters. These statements represent current expectations and beliefs, and no assurance can be given that the results described in such statements will be achieved. Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of our control. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the ongoing coronavirus disease 2019 (“COVID-19”) pandemic and the impact of varying private and governmental responses that affect our customers, employees, vendors and the economies and communities where they operate. Important factors that could cause actual results to differ materially from those described in forward-looking statements include, but are not limited to: the uncertainty of the magnitude, duration, geographic reach of the COVID-19 crisis, its impact on the global economy and the impact of current and potential travel restrictions, stay-at-home orders, vaccine mandates and economic restrictions implemented to address the crisis; our inability to succeed in our strategic objectives; the risk of liability or damage to our reputation resulting from security incidents, including breaches, and cyber-attacks to our systems and networks and those of our business partners, insider threats, disclosure of sensitive data or failure to comply with data protection laws and regulations in a rapidly evolving regulatory environment, in each case, whether deliberate or accidental; our inability to develop and expand our service offerings to address emerging business demands and technological trends, including our inability to sell differentiated services amongst our offerings; our inability to compete in certain markets and expand our capacity in certain offshore locations and risks associated with such offshore locations such as Russia’s recent invasion of
No assurance can be given that any goal or plan set forth in any forward-looking statement can or will be achieved, and readers are cautioned not to place undue reliance on such statements which speak only as of the date they are made. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events except as required by law.
About Non-GAAP Measures
In an effort to provide investors with supplemental financial information, in addition to the preliminary and unaudited financial information presented on a GAAP basis, we have also disclosed in this press release preliminary Non-GAAP information including: earnings before interest and taxes ("EBIT"), EBIT margin, Adjusted EBIT, Adjusted EBIT margin, Non-GAAP diluted EPS, organic revenues, organic revenue growth, free cash flow, and non-GAAP tax rate.
We believe EBIT, EBIT margin, Adjusted EBIT, Adjusted EBIT margin, and Non-GAAP diluted EPS provide investors with useful supplemental information about our operating performance after excluding certain categories of expenses.
One category of expenses excluded from Adjusted EBIT, Adjusted EBIT margin, and Non-GAAP diluted EPS, incremental amortization of intangible assets acquired through business combinations, may result in a significant difference in period over period amortization expense on a GAAP basis. We exclude amortization of certain acquired intangible assets as these non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Although DXC management excludes amortization of acquired intangible assets primarily customer-related intangible assets from its Non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and support revenue generation. Any future transactions may result in a change to the acquired intangible asset balances and associated amortization expense.
Another category of expenses excluded from Adjusted EBIT, Adjusted EBIT margin, and Non-GAAP diluted EPS, impairment losses, may result in a significant difference in period-over-period expense on a GAAP basis. We exclude impairment losses as these non-cash amounts, reflect generally an acceleration of what would be multiple periods of expense and are not expected to occur frequently. Further assets such as goodwill may be significantly impacted by market conditions outside of management’s control.
We believe organic revenue growth provides investors with useful supplemental information about our revenues after excluding the effect of currency exchange rate fluctuations for currencies other than
Selected references are made to revenue growth on an “organic basis” so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates and without the impacts of acquisitions and divestitures, thereby providing comparisons of operating performance from period to period of the business that we have owned during all periods presented. Organic revenue growth is calculated by dividing the year-over-year change in GAAP revenues attributed to organic growth by the GAAP revenues reported in the prior comparable period. Organic revenue is calculated as constant currency revenue excluding the impact of mergers, acquisitions or similar transactions until the one-year anniversary of the transaction and excluding revenues of divestitures during the reporting period. This approach is used for all results where the functional currency is not the
Free cash flow represents cash flow from operations, less capital expenditures. Free cash flow is utilized by our management, investors, and analysts to evaluate cash available to pay debt, repurchase shares, and provide further investment in the business.
There are limitations to the use of the Non-GAAP financial measures presented in this press release. One of the limitations is that they do not reflect complete financial results. We compensate for this limitation by providing a reconciliation between our Non-GAAP financial measures and the respective most directly comparable financial measure calculated and presented in accordance with GAAP. Additionally, other companies, including companies in our industry, may calculate Non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes between companies.
Condensed Consolidated Statements of Operations |
||||||||
(preliminary and unaudited) |
||||||||
|
|
Three Months Ended |
||||||
(in millions, except per-share amounts) |
|
June 30, 2023 |
|
June 30, 2022 |
||||
|
|
|
|
|
||||
Revenues |
|
$ |
3,446 |
|
|
$ |
3,707 |
|
|
|
|
|
|
||||
Costs of services |
|
|
2,719 |
|
|
|
2,930 |
|
Selling, general and administrative |
|
|
327 |
|
|
|
349 |
|
Depreciation and amortization |
|
|
344 |
|
|
|
389 |
|
Restructuring costs |
|
|
20 |
|
|
|
33 |
|
Interest expense |
|
|
66 |
|
|
|
37 |
|
Interest income |
|
|
(49 |
) |
|
|
(20 |
) |
Loss (gain) on disposition of businesses |
|
|
5 |
|
|
|
(29 |
) |
Other income, net |
|
|
(64 |
) |
|
|
(104 |
) |
Total costs and expenses |
|
|
3,368 |
|
|
|
3,585 |
|
|
|
|
|
|
||||
Income before income taxes |
|
|
78 |
|
|
|
122 |
|
Income tax expense |
|
|
36 |
|
|
|
19 |
|
Net income |
|
|
42 |
|
|
|
103 |
|
Less: net income attributable to non-controlling interest, net of tax |
|
|
6 |
|
|
|
1 |
|
Net income attributable to DXC common stockholders |
|
$ |
36 |
|
|
$ |
102 |
|
|
|
|
|
|
||||
Income per common share: |
|
|
|
|
||||
Basic |
|
$ |
0.17 |
|
|
$ |
0.44 |
|
Diluted |
|
$ |
0.17 |
|
|
$ |
0.43 |
|
|
|
|
|
|
||||
Weighted average common shares outstanding for: |
|
|
|
|
||||
Basic EPS |
|
|
210.11 |
|
|
|
232.48 |
|
Diluted EPS |
|
|
213.75 |
|
|
|
237.38 |
|
Selected Condensed Consolidated Balance Sheet Data |
||||||
(preliminary and unaudited) |
||||||
|
|
As of |
||||
(in millions) |
|
June 30, 2023 |
|
March 31, 2023 |
||
Assets |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
1,576 |
|
$ |
1,858 |
Receivables, net |
|
|
3,285 |
|
|
3,441 |
Prepaid expenses |
|
|
652 |
|
|
565 |
Other current assets |
|
|
231 |
|
|
255 |
Assets held for sale |
|
|
— |
|
|
5 |
Total current assets |
|
|
5,744 |
|
|
6,124 |
|
|
|
|
|
||
Intangible assets, net |
|
|
2,441 |
|
|
2,569 |
Operating right-of-use assets, net |
|
|
849 |
|
|
909 |
Goodwill |
|
|
539 |
|
|
539 |
Deferred income taxes, net |
|
|
512 |
|
|
460 |
Property and equipment, net |
|
|
1,922 |
|
|
1,979 |
Other assets |
|
|
3,281 |
|
|
3,247 |
Assets held for sale - non-current |
|
|
5 |
|
|
18 |
Total Assets |
|
$ |
15,293 |
|
$ |
15,845 |
|
|
|
|
|
||
Liabilities |
|
|
|
|
||
Short-term debt and current maturities of long-term debt |
|
$ |
694 |
|
$ |
500 |
Accounts payable |
|
|
701 |
|
|
782 |
Accrued payroll and related costs |
|
|
613 |
|
|
569 |
Current operating lease liabilities |
|
|
303 |
|
|
317 |
Accrued expenses and other current liabilities |
|
|
1,587 |
|
|
1,836 |
Deferred revenue and advance contract payments |
|
|
1,008 |
|
|
1,054 |
Income taxes payable |
|
|
151 |
|
|
120 |
Liabilities related to assets held for sale |
|
|
— |
|
|
9 |
Total current liabilities |
|
|
5,057 |
|
|
5,187 |
|
|
|
|
|
||
Long-term debt, net of current maturities |
|
|
3,891 |
|
|
3,900 |
Non-current deferred revenue |
|
|
749 |
|
|
788 |
Non-current operating lease liabilities |
|
|
598 |
|
|
648 |
Non-current income tax liabilities and deferred tax liabilities |
|
|
579 |
|
|
587 |
Other long-term liabilities |
|
|
816 |
|
|
912 |
Liabilities related to assets held for sale - non-current |
|
|
— |
|
|
3 |
Total Liabilities |
|
|
11,690 |
|
|
12,025 |
|
|
|
|
|
||
Total Equity |
|
|
3,603 |
|
|
3,820 |
|
|
|
|
|
||
Total Liabilities and Equity |
|
$ |
15,293 |
|
$ |
15,845 |
Condensed Consolidated Statements of Cash Flows |
||||||||
(preliminary and unaudited) |
||||||||
|
|
Three Months Ended |
||||||
(in millions) |
|
June 30, 2023 |
|
June 30, 2022 |
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net income |
|
$ |
42 |
|
|
$ |
103 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
351 |
|
|
|
398 |
|
Operating right-of-use expense |
|
|
90 |
|
|
|
106 |
|
Share-based compensation |
|
|
23 |
|
|
|
28 |
|
Deferred taxes |
|
|
(50 |
) |
|
|
(38 |
) |
Gain on dispositions |
|
|
(9 |
) |
|
|
(62 |
) |
Provision for losses on accounts receivable |
|
|
2 |
|
|
|
2 |
|
Unrealized foreign currency exchange loss |
|
|
23 |
|
|
|
46 |
|
Impairment losses and contract write-offs |
|
|
7 |
|
|
|
— |
|
Other non-cash charges, net |
|
|
(2 |
) |
|
|
3 |
|
Changes in assets and liabilities, net of effects of acquisitions and dispositions: |
|
|
|
|
||||
Decrease (Increase) in assets |
|
|
63 |
|
|
|
(69 |
) |
Decrease in operating lease liability |
|
|
(90 |
) |
|
|
(106 |
) |
Decrease in other liabilities |
|
|
(323 |
) |
|
|
(248 |
) |
Net cash provided by operating activities |
|
|
127 |
|
|
|
163 |
|
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
|
||||
Purchases of property and equipment |
|
|
(55 |
) |
|
|
(68 |
) |
Payments for transition and transformation contract costs |
|
|
(62 |
) |
|
|
(57 |
) |
Software purchased and developed |
|
|
(85 |
) |
|
|
(50 |
) |
Business dispositions, net of cash sold |
|
|
(7 |
) |
|
|
(36 |
) |
Proceeds from sale of assets |
|
|
11 |
|
|
|
14 |
|
Short-term investing |
|
|
(3 |
) |
|
|
— |
|
Other investing activities, net |
|
|
2 |
|
|
|
5 |
|
Net cash used in investing activities |
|
|
(199 |
) |
|
|
(192 |
) |
|
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
|
||||
Borrowings of commercial paper |
|
|
546 |
|
|
|
292 |
|
Repayments of commercial paper |
|
|
(305 |
) |
|
|
(239 |
) |
Payments on finance leases and borrowings for asset financing |
|
|
(131 |
) |
|
|
(159 |
) |
Proceeds from stock options and other common stock transactions |
|
|
— |
|
|
|
1 |
|
Taxes paid related to net share settlements of share-based compensation awards |
|
|
(33 |
) |
|
|
(12 |
) |
Repurchase of common stock and advance payment for accelerated share repurchase |
|
|
(285 |
) |
|
|
(272 |
) |
Other financing activities, net |
|
|
(2 |
) |
|
|
(5 |
) |
Net cash used in financing activities |
|
|
(210 |
) |
|
|
(394 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
— |
|
|
|
(50 |
) |
Net decrease in cash and cash equivalents including cash classified within current assets held for sale |
|
|
(282 |
) |
|
|
(473 |
) |
Cash classified within current assets held for sale |
|
|
— |
|
|
|
10 |
|
Net decrease in cash and cash equivalents |
|
|
(282 |
) |
|
|
(463 |
) |
Cash and cash equivalents at beginning of year |
|
|
1,858 |
|
|
|
2,672 |
|
Cash and cash equivalents at end of period |
|
$ |
1,576 |
|
|
$ |
2,209 |
|
Segment Profit
We define segment profit as segment revenues less costs of services, segment selling, general and administrative, depreciation and amortization, and other income (excluding the movement in foreign currency exchange rates on our foreign currency denominated assets and liabilities and the related economic hedges). The Company does not allocate to its segments certain operating expenses managed at the corporate level. These unallocated costs generally include certain corporate function costs, stock-based compensation expense, pension and other post-retirement benefits (“OPEB”) actuarial and settlement gains and losses, restructuring costs, transaction, separation and integration-related costs, and amortization of acquired intangible assets.
|
|
Three Months Ended |
||||||
(in millions) |
|
June 30, 2022 |
|
June 30, 2021 |
||||
GBS profit |
|
$ |
192 |
|
|
$ |
210 |
|
GIS profit |
|
|
91 |
|
|
|
127 |
|
All other loss |
|
|
(59 |
) |
|
|
(78 |
) |
Subtotal |
|
$ |
224 |
|
|
$ |
259 |
|
Interest income |
|
|
49 |
|
|
|
20 |
|
Interest expense |
|
|
(66 |
) |
|
|
(37 |
) |
Restructuring costs |
|
|
(20 |
) |
|
|
(33 |
) |
Transaction, separation and integration-relation costs |
|
|
(1 |
) |
|
|
(2 |
) |
Amortization of acquired intangible assets |
|
|
(89 |
) |
|
|
(104 |
) |
Merger related indemnification |
|
|
(11 |
) |
|
|
(10 |
) |
(Loss) gain on disposition of businesses |
|
|
(5 |
) |
|
|
29 |
|
Impairment losses |
|
|
(3 |
) |
|
|
— |
|
Income before income taxes |
|
$ |
78 |
|
|
$ |
122 |
|
|
|
|
|
|
||||
Segment profit margins |
|
|
|
|
||||
GBS |
|
|
11.3 |
% |
|
|
11.9 |
% |
GIS |
|
|
5.2 |
% |
|
|
6.5 |
% |
Reconciliation of Non-GAAP Financial Measures
Our Non-GAAP adjustments include:
- Restructuring costs – includes costs, net of reversals, related to workforce and real estate optimization and other similar charges.
- Transaction, separation and integration-related (“TSI”) costs – includes costs related to integration, separation, planning, financing and advisory fees and other similar charges associated with mergers, acquisitions, strategic investments, joint ventures, and dispositions and other similar transactions incurred within one year of such transactions closing, except for costs associated with related disputes, which may arise more than one year after closing.
- Amortization of acquired intangible assets – includes amortization of intangible assets acquired through business combinations.
- Merger related indemnification - in fiscal 2024, represents the Company’s current estimate of potential liability to HPE for a tax related indemnification; and in fiscal 2023, represents the Company’s estimate of potential liability to HPE for indemnification following the outcome of the Oracle v. HPE litigation in June 2022. These obligations are pursuant to the HPES merger.
- Gains and losses on dispositions – gains and losses related to dispositions of businesses, strategic assets and interests in less than wholly-owned entities.(1)
- Impairment losses – non-cash charges associated with the permanent reduction in the value of the Company’s assets (e.g., impairment of goodwill and other long-term assets including fixed assets and impairments to deferred tax assets for discrete changes in valuation allowances). Future discrete reversals of valuation allowances are likewise excluded.(2)
- Tax adjustments – discrete tax adjustments to impair or recognize certain deferred tax assets and adjustments for changes in tax legislation. Income tax expense (benefit) of merger and divestitures is separately computed based on the underlying transaction. Income tax expense of all other (non-discrete) non-GAAP adjustments is computed by applying the jurisdictional tax rate to the pre-tax adjustments on a jurisdictional basis.
(1) |
During the first quarter of fiscal 2024 and fiscal 2023, the Company sold insignificant businesses that resulted in a loss of |
|||
|
||||
(2) |
Impairment losses for the first quarter of fiscal 2024 include a |
Non-GAAP Results
A reconciliation of reported results to Non-GAAP results is as follows:
|
|
Three Months Ended June 30, 2023 |
|||||||||||||||||||||||||||||
(in millions, except per-share amounts) |
|
As Reported |
|
Restructuring Costs |
|
Transaction, Separation and Integration-Related Costs |
|
Amortization of Acquired Intangible Assets |
|
Merger Related Indemnification |
|
Gains and Losses on Dispositions |
|
Impairment Losses |
|
Tax Adjustments |
|
Non-GAAP Results |
|||||||||||||
Income before income taxes |
|
$ |
78 |
|
|
$ |
20 |
|
$ |
1 |
|
$ |
89 |
|
$ |
11 |
|
$ |
5 |
|
$ |
3 |
|
|
$ |
— |
|
|
$ |
207 |
|
Income tax expense |
|
|
36 |
|
|
|
5 |
|
|
— |
|
|
21 |
|
|
11 |
|
|
— |
|
|
1 |
|
|
|
(3 |
) |
|
|
71 |
|
Net income |
|
|
42 |
|
|
|
15 |
|
|
1 |
|
|
68 |
|
|
— |
|
|
5 |
|
|
2 |
|
|
|
3 |
|
|
|
136 |
|
Less: net income attributable to non-controlling interest, net of tax |
|
|
6 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4 |
) |
|
|
— |
|
|
|
2 |
|
Net income attributable to DXC common stockholders |
|
$ |
36 |
|
|
$ |
15 |
|
$ |
1 |
|
$ |
68 |
|
$ |
— |
|
$ |
5 |
|
$ |
6 |
|
|
$ |
3 |
|
|
$ |
134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Effective Tax Rate |
|
|
46.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34.3 |
% |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Basic EPS |
|
$ |
0.17 |
|
|
$ |
0.07 |
|
$ |
— |
|
$ |
0.32 |
|
$ |
— |
|
$ |
0.02 |
|
$ |
0.03 |
|
|
$ |
0.01 |
|
|
$ |
0.64 |
|
Diluted EPS |
|
$ |
0.17 |
|
|
$ |
0.07 |
|
$ |
— |
|
$ |
0.32 |
|
$ |
— |
|
$ |
0.02 |
|
$ |
0.03 |
|
|
$ |
0.01 |
|
|
$ |
0.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Weighted average common shares outstanding for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Basic EPS |
|
|
210.11 |
|
|
|
210.11 |
|
|
210.11 |
|
|
210.11 |
|
|
210.11 |
|
|
210.11 |
|
|
210.11 |
|
|
|
210.11 |
|
|
|
210.11 |
|
Diluted EPS |
|
|
213.75 |
|
|
|
213.75 |
|
|
213.75 |
|
|
213.75 |
|
|
213.75 |
|
|
213.75 |
|
|
213.75 |
|
|
|
213.75 |
|
|
|
213.75 |
|
|
|
Three Months Ended June 30, 2022 |
||||||||||||||||||||||
(in millions, except per-share amounts) |
|
As Reported |
|
Restructuring Costs |
|
Transaction, Separation and Integration-Related Costs |
|
Amortization of Acquired Intangible Assets |
|
Merger Related Indemnification |
|
Gains and Losses on Dispositions |
|
Non-GAAP Results |
||||||||||
Income before income taxes |
|
$ |
122 |
|
|
$ |
33 |
|
$ |
2 |
|
$ |
104 |
|
$ |
10 |
|
$ |
(29 |
) |
|
$ |
242 |
|
Income tax expense |
|
|
19 |
|
|
|
8 |
|
|
— |
|
|
24 |
|
|
2 |
|
|
9 |
|
|
|
62 |
|
Net income |
|
|
103 |
|
|
|
25 |
|
|
2 |
|
|
80 |
|
|
8 |
|
|
(38 |
) |
|
|
180 |
|
Less: net income attributable to non-controlling interest, net of tax |
|
|
1 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
1 |
|
Net income attributable to DXC common stockholders |
|
$ |
102 |
|
|
$ |
25 |
|
$ |
2 |
|
$ |
80 |
|
$ |
8 |
|
$ |
(38 |
) |
|
$ |
179 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Effective Tax Rate |
|
|
15.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
25.6 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic EPS |
|
$ |
0.44 |
|
|
$ |
0.11 |
|
$ |
0.01 |
|
$ |
0.34 |
|
$ |
0.03 |
|
$ |
(0.16 |
) |
|
$ |
0.77 |
|
Diluted EPS |
|
$ |
0.43 |
|
|
$ |
0.11 |
|
$ |
0.01 |
|
$ |
0.34 |
|
$ |
0.03 |
|
$ |
(0.16 |
) |
|
$ |
0.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average common shares outstanding for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic EPS |
|
|
232.48 |
|
|
|
232.48 |
|
|
232.48 |
|
|
232.48 |
|
|
232.48 |
|
|
232.48 |
|
|
|
232.48 |
|
Diluted EPS |
|
|
237.38 |
|
|
|
237.38 |
|
|
237.38 |
|
|
237.38 |
|
|
237.38 |
|
|
237.38 |
|
|
|
237.38 |
|
The above tables serve to reconcile the Non-GAAP financial measures to the most directly comparable GAAP measures. Please refer to the “About Non-GAAP Measures” section of the press release for further information on the use of these Non-GAAP measures.
Year-over-Year Organic Revenue Growth
|
|
Three Months Ended |
||||
|
|
June 30, 2023 |
|
June 30, 2022 |
||
Total revenue growth |
|
(7.0 |
)% |
|
(10.5 |
)% |
Foreign currency |
|
0.7 |
% |
|
5.8 |
% |
Acquisition and divestitures |
|
2.7 |
% |
|
2.1 |
% |
Organic revenue growth |
|
(3.6 |
)% |
|
(2.6 |
)% |
|
|
|
|
|
||
GBS revenue growth |
|
(3.1 |
)% |
|
(6.8 |
)% |
Foreign currency |
|
0.8 |
% |
|
5.9 |
% |
Acquisition and divestitures |
|
5.6 |
% |
|
3.7 |
% |
GBS organic revenue growth |
|
3.3 |
% |
|
2.8 |
% |
|
|
|
|
|
||
GIS revenue growth |
|
(10.6 |
)% |
|
(13.5 |
)% |
Foreign currency |
|
0.7 |
% |
|
5.8 |
% |
Acquisition and divestitures |
|
— |
% |
|
0.5 |
% |
GIS organic revenue growth |
|
(9.9 |
)% |
|
(7.2 |
)% |
EBIT and Adjusted EBIT
|
|
Three Months Ended |
||||||
(in millions) |
|
June 30, 2023 |
|
June 30, 2022 |
||||
Net income |
|
$ |
42 |
|
|
$ |
103 |
|
Income tax expense |
|
|
36 |
|
|
|
19 |
|
Interest income |
|
|
(49 |
) |
|
|
(20 |
) |
Interest expense |
|
|
66 |
|
|
|
37 |
|
EBIT |
|
|
95 |
|
|
|
139 |
|
Restructuring costs |
|
|
20 |
|
|
|
33 |
|
Transaction, separation and integration-related costs |
|
|
1 |
|
|
|
2 |
|
Amortization of acquired intangible assets |
|
|
89 |
|
|
|
104 |
|
Merger related indemnification |
|
|
11 |
|
|
|
10 |
|
Loss (gain) on disposition of businesses |
|
|
5 |
|
|
|
(29 |
) |
Impairment losses |
|
|
3 |
|
|
|
— |
|
Adjusted EBIT |
|
$ |
224 |
|
|
$ |
259 |
|
|
|
|
|
|
||||
EBIT margin |
|
|
2.8 |
% |
|
|
3.7 |
% |
Adjusted EBIT margin |
|
|
6.5 |
% |
|
|
7.0 |
% |
Source: DXC Technology
Category: Investor Relations
View source version on businesswire.com: https://www.businesswire.com/news/home/20230802395160/en/
John Sweeney, CFA, VP of Investor Relations, +1-980-315-3665, john.sweeney@dxc.com
Sean B. Pasternak, Corporate Media Relations, +1-647-975-7326, sean.pasternak@dxc.com
Source: DXC Technology
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