DXC Technology Reports Third Quarter Fiscal Year 2022 Results
DXC Technology reported Q3 FY22 revenues of $4.09 billion, a 4.6% decline year-over-year and 1.4% decline organically. Diluted EPS stood at $0.38, with non-GAAP diluted EPS at $0.92. The company recorded $5.0 billion in bookings, resulting in a strong book-to-bill ratio of 1.23x. Operating cash flow reached $696 million, yielding a free cash flow of $550 million. DXC plans to self-fund $1 billion for share repurchases, having already repurchased 6.8 million shares for $213 million during the quarter. Guidance for Q4 FY22 suggests revenues between $4.11 billion and $4.15 billion.
- Strong bookings of $5.0 billion with a book-to-bill ratio of 1.23x.
- Free cash flow of $550 million, significant improvement from prior year.
- Repurchased 6.8 million shares for $213 million, with $1 billion planned for future repurchases.
- Revenue decline of 4.6% year-over-year and 1.4% on an organic basis.
- Net income dropped to $102 million, a significant decline from $1,103 million in the prior year.
- Diluted EPS decreased from $4.29 to $0.38 compared to the previous year.
-
Revenues of
$4.09 billion 4.6% as compared to prior year period, and down1.4% on an organic basis
-
Diluted EPS was
$0.38 $0.92
-
Bookings of
$5.0 billion
-
Operating cash flow of
$696 million $146 million $550 million
-
Repurchased 6.8 million shares for
$213 million $363 million
-
DXC intends to self-fund
$1 billion
“Our third quarter results show the strong progress we are making with our transformation journey. Our focus on operational execution drove continued improvement in revenue, margins, and EPS, as well as an exceptionally strong bookings quarter of
Financial Highlights(1) |
|
Q3 FY22 |
|
Q3 FY21 |
|||
Revenue |
|
$ |
4,089 |
|
$ |
4,288 |
|
YoY Revenue Growth |
|
|
(4.6)% |
|
|
(14.6)% |
|
YoY Organic Revenue Growth (2) |
|
|
(1.4)% |
|
|
(9.7)% |
|
|
|
|
|
|
|||
Net Income |
|
$ |
102 |
|
$ |
1,103 |
|
Net Income as a % of Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|||
EBIT |
|
$ |
189 |
|
$ |
2,032 |
|
EBIT Margin % |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Adjusted EBIT(2) |
|
$ |
355 |
|
$ |
300 |
|
Adjusted EBIT Margin % |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Earnings Per Share (Diluted) |
|
$ |
0.38 |
|
$ |
4.29 |
|
Non-GAAP EPS (Diluted) (2) |
|
$ |
0.92 |
|
$ |
0.84 |
|
|
|
|
|
|
|||
Book-to-Bill |
|
1.23x |
|
1.13x |
|||
(1) In millions, except per-share amounts |
|
(2) Reconciliation of GAAP to Non-GAAP measures provided in Non-GAAP Results. |
Financial Highlights - Third Quarter of Fiscal Year 2022
Revenue was
Net income was
Diluted earnings per share was
Book-to-bill for the quarter was 1.23x. Over the trailing four quarters, the company delivered a book to bill of 1.08x.
During the third quarter, the Company repurchased 6.8 million shares of common stock for a total of
Financial Information by Segment
Global Business Services ("GBS") |
|
Q3 FY22 |
|
Q3 FY21 |
|||
Revenue |
|
$ |
1,946 |
|
$ |
1,921 |
|
YoY Revenue Growth |
|
|
|
|
|
(18.6)% |
|
YoY Organic Revenue Growth |
|
|
|
|
|
(5.9)% |
|
|
|
|
|
|
|||
Segment Profit |
|
$ |
315 |
|
$ |
273 |
|
Segment Profit Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Book-to-Bill |
|
1.28x |
|
1.35x |
|||
GBS segment revenue was
Global Infrastructure Services ("GIS") |
|
Q3 FY22 |
|
Q3 FY21 |
|
Revenue |
|
|
|
|
|
YoY Revenue Growth |
|
(9.5)% |
|
(11.1)% |
|
YoY Organic Revenue Growth |
|
(8.3)% |
|
(13.0)% |
|
|
|
|
|
|
|
Segment Profit |
|
|
|
|
|
Segment Profit Margin |
|
|
|
|
|
|
|
|
|
|
|
Book-to-Bill |
|
1.18x |
|
0.95x |
GIS segment revenue was
Enterprise Technology Stack Highlights
The components of the Enterprise Technology Stack are as follows:
Offerings Revenues |
|
Q3 FY22 |
|
Q2 FY22 |
|
Q1 FY22 |
|
Q4 FY21 |
|
Q3 FY21 |
||||||
Analytics and Engineering |
|
$ |
545 |
|
$ |
520 |
|
$ |
482 |
|
$ |
476 |
|
$ |
462 |
|
Applications |
|
|
1,268 |
|
|
1,216 |
|
|
1,246 |
|
|
1,282 |
|
|
1,225 |
|
Business Process Services |
|
|
116 |
|
|
118 |
|
|
118 |
|
|
133 |
|
|
128 |
|
Cloud and Security |
|
|
471 |
|
|
521 |
|
|
549 |
|
|
551 |
|
|
543 |
|
IT Outsourcing |
|
|
1,111 |
|
|
1,052 |
|
|
1,128 |
|
|
1,171 |
|
|
1,141 |
|
Modern Workplace |
|
|
561 |
|
|
581 |
|
|
577 |
|
|
660 |
|
|
676 |
|
Subtotal |
|
|
4,072 |
|
|
4,008 |
|
|
4,100 |
|
|
4,273 |
|
|
4,175 |
|
M&A and Divestitures |
|
|
|
|
|
|
|
|
|
|
||||||
Revenues |
|
|
17 |
|
|
19 |
|
|
41 |
|
|
112 |
|
|
113 |
|
Total Revenues |
|
$ |
4,089 |
|
$ |
4,027 |
|
$ |
4,141 |
|
$ |
4,385 |
|
$ |
4,288 |
|
Cash Flow
Cash Flow |
|
Q3 FY22 |
|
Q3 FY21 |
|||
Cash Flow from (used in) Operations |
|
$ |
696 |
|
$ |
(187) |
|
Less Capital Expenditures: |
|
|
|
|
|||
Purchase of property and equipment |
|
|
(52) |
|
|
(59) |
|
Transition and transformation contract costs |
|
|
(45) |
|
|
(53) |
|
Software purchased or developed |
|
|
(49) |
|
|
(107) |
|
Free Cash Flow |
|
$ |
550 |
|
$ |
(406) |
|
Cash flow from (used in) operations was
Guidance
The Company's guidance for the fourth quarter and full fiscal year 2022 is as follows:
|
|
Q4 FY22 |
|
FY22 |
|
FY22 |
Fiscal Year Guidance |
Guidance |
Previous Guidance |
Updated Guidance |
|||
Revenues |
|
|
|
|
|
|
Organic Revenue Growth YoY |
|
( |
|
( |
|
( |
Adjusted EBIT Margin |
|
|
|
|
|
|
Net Interest Cost |
|
|
|
|
|
|
Non-GAAP Diluted EPS |
|
|
|
|
|
|
Restructuring and TSI |
|
|
|
|
|
|
Free Cash Flow |
|
|
|
|
|
> |
Non-GAAP Tax Rate |
|
~ |
|
~ |
|
~ |
The Company reaffirmed its longer-term guidance:
-
Positive organic revenue growth of
1% to3% for fiscal year 2024 -
Adjusted EBIT margin of
10% to11% in fiscal year 2024 -
Non-GAAP diluted EPS of
$5.00 $5.25 -
Free cash flow of approximately
$1.5 billion -
Restructuring and TSI of approximately
$100 million
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
A replay of the conference call will be available from approximately two hours after the conclusion of the call until
About
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. For a written description of these factors, see the section titled “Risk Factors” in DXC’s Annual Report on Form 10-K for the fiscal year ended
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 presentation 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, and free cash flow.
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. Free cash flow represents cash flow from operations, less capital expenditures.
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 do not expect 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 from “organic basis” financial results, 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. This approach is used for all results where the functional currency is not the
There are limitations to the use of the Non-GAAP financial measures presented in this report. 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
|
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
(in millions, except per-share amounts) |
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenues |
|
$ |
4,089 |
|
|
$ |
4,288 |
|
|
$ |
12,257 |
|
|
$ |
13,344 |
|
|
|
|
|
|
|
|
|
|
||||||||
Costs of services |
|
|
3,179 |
|
|
|
3,333 |
|
|
|
9,522 |
|
|
|
10,525 |
|
Selling, general and administrative |
|
|
340 |
|
|
|
517 |
|
|
|
1,093 |
|
|
|
1,595 |
|
Depreciation and amortization |
|
|
424 |
|
|
|
475 |
|
|
|
1,294 |
|
|
|
1,492 |
|
Restructuring costs |
|
|
36 |
|
|
|
104 |
|
|
|
248 |
|
|
|
441 |
|
Interest expense |
|
|
38 |
|
|
|
82 |
|
|
|
161 |
|
|
|
284 |
|
Interest income |
|
|
(15 |
) |
|
|
(28 |
) |
|
|
(51 |
) |
|
|
(76 |
) |
Debt extinguishment costs |
|
|
2 |
|
|
|
— |
|
|
|
311 |
|
|
|
— |
|
Gain on disposition of businesses |
|
|
4 |
|
|
|
(2,046 |
) |
|
|
(373 |
) |
|
|
(2,046 |
) |
Other income, net |
|
|
(85 |
) |
|
|
(127 |
) |
|
|
(290 |
) |
|
|
(318 |
) |
Total costs and expenses |
|
|
3,923 |
|
|
|
2,310 |
|
|
|
11,915 |
|
|
|
11,897 |
|
|
|
|
|
|
|
|
|
|
||||||||
Income before income taxes |
|
|
166 |
|
|
|
1,978 |
|
|
|
342 |
|
|
|
1,447 |
|
Income tax expense |
|
|
64 |
|
|
|
875 |
|
|
|
145 |
|
|
|
789 |
|
Net income |
|
|
102 |
|
|
|
1,103 |
|
|
|
197 |
|
|
|
658 |
|
Less: net income attributable to non-controlling interest, net of tax |
|
|
4 |
|
|
|
5 |
|
|
|
9 |
|
|
|
9 |
|
Net income attributable to DXC common stockholders |
|
$ |
98 |
|
|
$ |
1,098 |
|
|
$ |
188 |
|
|
$ |
649 |
|
|
|
|
|
|
|
|
|
|
||||||||
Income per common share: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
0.39 |
|
|
$ |
4.32 |
|
|
$ |
0.74 |
|
|
$ |
2.55 |
|
Diluted |
|
$ |
0.38 |
|
|
$ |
4.29 |
|
|
$ |
0.73 |
|
|
$ |
2.54 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding for: |
|
|
|
|
|
|
|
|
||||||||
Basic EPS |
|
|
250.27 |
|
|
|
254.32 |
|
|
|
252.44 |
|
|
|
254.03 |
|
Diluted EPS |
|
|
254.82 |
|
|
|
255.75 |
|
|
|
257.59 |
|
|
|
255.20 |
|
Selected Consolidated Balance Sheet Data
|
||||||
|
|
As of |
||||
(in millions) |
|
|
|
|
||
Assets |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
2,919 |
|
$ |
2,968 |
Receivables, net |
|
|
3,670 |
|
|
4,156 |
Prepaid expenses |
|
|
600 |
|
|
567 |
Other current assets |
|
|
314 |
|
|
517 |
Total current assets |
|
|
7,503 |
|
|
8,208 |
|
|
|
|
|
||
Intangible assets, net |
|
|
3,575 |
|
|
4,043 |
Operating right-of-use assets, net |
|
|
1,122 |
|
|
1,366 |
|
|
|
629 |
|
|
641 |
Deferred income taxes, net |
|
|
259 |
|
|
289 |
Property and equipment, net |
|
|
2,555 |
|
|
2,946 |
Other assets |
|
|
4,310 |
|
|
4,545 |
Total Assets |
|
$ |
19,953 |
|
$ |
22,038 |
|
|
|
|
|
||
Liabilities |
|
|
|
|
||
Short-term debt and current maturities of long-term debt |
|
$ |
706 |
|
$ |
1,167 |
Accounts payable |
|
|
759 |
|
|
914 |
Accrued payroll and related costs |
|
|
563 |
|
|
698 |
Current operating lease liabilities |
|
|
386 |
|
|
418 |
Accrued expenses and other current liabilities |
|
|
3,111 |
|
|
3,476 |
Deferred revenue and advance contract payments |
|
|
1,001 |
|
|
1,079 |
Income taxes payable |
|
|
202 |
|
|
398 |
Total current liabilities |
|
|
6,728 |
|
|
8,150 |
|
|
|
|
|
||
Long-term debt, net of current maturities |
|
|
4,236 |
|
|
4,345 |
Non-current deferred revenue |
|
|
882 |
|
|
622 |
Non-current operating lease liabilities |
|
|
805 |
|
|
1,038 |
Non-current income tax liabilities and deferred tax liabilities |
|
|
779 |
|
|
854 |
Other long-term liabilities |
|
|
1,436 |
|
|
1,721 |
Total Liabilities |
|
|
14,866 |
|
|
16,730 |
|
|
|
|
|
||
Total Equity |
|
|
5,087 |
|
|
5,308 |
|
|
|
|
|
||
Total Liabilities and Equity |
|
$ |
19,953 |
|
$ |
22,038 |
Condensed Consolidated Statements of Cash Flows
|
||||||||
|
|
Nine Months Ended |
||||||
(in millions) |
|
|
|
|
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net income |
|
$ |
197 |
|
|
$ |
658 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
1,309 |
|
|
|
1,506 |
|
Operating right-of-use expense |
|
|
371 |
|
|
|
463 |
|
Pension & other post-employment benefits, actuarial & settlement losses |
|
|
7 |
|
|
|
2 |
|
Share-based compensation |
|
|
77 |
|
|
|
42 |
|
Deferred taxes |
|
|
17 |
|
|
|
(319 |
) |
Gain on dispositions |
|
|
(402 |
) |
|
|
(2,023 |
) |
Provision for losses on accounts receivable |
|
|
1 |
|
|
|
52 |
|
Unrealized foreign currency exchange gain |
|
|
(20 |
) |
|
|
(60 |
) |
Impairment losses and contract write-offs |
|
|
21 |
|
|
|
68 |
|
Debt extinguishment costs |
|
|
311 |
|
|
|
— |
|
Other non-cash charges, net |
|
|
1 |
|
|
|
(2 |
) |
Changes in assets and liabilities, net of effects of acquisitions and dispositions: |
|
|
|
|
||||
Decrease in assets |
|
|
386 |
|
|
|
88 |
|
Decrease in operating lease liability |
|
|
(371 |
) |
|
|
(463 |
) |
(Decrease) increase in other liabilities |
|
|
(675 |
) |
|
|
392 |
|
Net cash provided by operating activities |
|
|
1,230 |
|
|
|
404 |
|
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
|
||||
Purchases of property and equipment |
|
|
(217 |
) |
|
|
(215 |
) |
Payments for transition and transformation contract costs |
|
|
(152 |
) |
|
|
(189 |
) |
Software purchased and developed |
|
|
(211 |
) |
|
|
(209 |
) |
Payments for acquisitions, net of cash acquired |
|
|
— |
|
|
|
(10 |
) |
Business dispositions |
|
|
519 |
|
|
|
4,942 |
|
Cash collections related to deferred purchase price receivable |
|
|
— |
|
|
|
159 |
|
Proceeds from sale of assets |
|
|
95 |
|
|
|
27 |
|
Short-term investing |
|
|
24 |
|
|
|
— |
|
Other investing activities, net |
|
|
35 |
|
|
|
(5 |
) |
Net cash provided by investing activities |
|
|
93 |
|
|
|
4,500 |
|
|
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
|
||||
Borrowings of commercial paper |
|
|
840 |
|
|
|
854 |
|
Repayments of commercial paper |
|
|
(821 |
) |
|
|
(1,327 |
) |
Borrowings under lines of credit |
|
|
— |
|
|
|
2,500 |
|
Repayment of borrowings under lines of credit |
|
|
— |
|
|
|
(4,000 |
) |
Borrowings on long-term debt |
|
|
19 |
|
|
|
— |
|
Principal payments on long-term debt |
|
|
(2,872 |
) |
|
|
(2,926 |
) |
Payments on finance leases and borrowings for asset financing |
|
|
(855 |
) |
|
|
(694 |
) |
Proceeds from bond issuance |
|
|
2,918 |
|
|
|
993 |
|
Proceeds from stock options and other common stock transactions |
|
|
12 |
|
|
|
1 |
|
Taxes paid related to net share settlements of share-based compensation awards |
|
|
(15 |
) |
|
|
(5 |
) |
Payments for debt extinguishment costs |
|
|
(344 |
) |
|
|
— |
|
Repurchase of common stock and advance payment for accelerated share repurchase |
|
|
(352 |
) |
|
|
— |
|
Dividend payments |
|
|
— |
|
|
|
(53 |
) |
Other financing activities, net |
|
|
10 |
|
|
|
(14 |
) |
Net cash used in financing activities |
|
|
(1,460 |
) |
|
|
(4,671 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
25 |
|
|
|
20 |
|
Net (decrease) increase in cash and cash equivalents including cash classified within current assets held for sale |
|
|
(112 |
) |
|
|
253 |
|
Cash classified within current assets held for sale |
|
|
63 |
|
|
|
(13 |
) |
Net (decrease) increase in cash and cash equivalents |
|
|
(49 |
) |
|
|
240 |
|
Cash and cash equivalents at beginning of year |
|
|
2,968 |
|
|
|
3,679 |
|
Cash and cash equivalents at end of period |
|
$ |
2,919 |
|
|
$ |
3,919 |
|
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 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 |
|
Nine Months Ended |
||||||||||||
(in millions) |
|
|
|
|
|
|
|
|
||||||||
Profit |
|
|
|
|
|
|
|
|
||||||||
GBS profit |
|
$ |
315 |
|
|
$ |
273 |
|
|
$ |
885 |
|
|
$ |
805 |
|
GIS profit |
|
|
102 |
|
|
|
88 |
|
|
|
351 |
|
|
|
147 |
|
All other loss |
|
|
(62 |
) |
|
|
(61 |
) |
|
|
(203 |
) |
|
|
(179 |
) |
Interest income |
|
|
15 |
|
|
|
28 |
|
|
|
51 |
|
|
|
76 |
|
Interest expense |
|
|
(38 |
) |
|
|
(82 |
) |
|
|
(161 |
) |
|
|
(284 |
) |
Restructuring costs |
|
|
(36 |
) |
|
|
(104 |
) |
|
|
(248 |
) |
|
|
(441 |
) |
Transaction, separation and integration-related costs |
|
|
(11 |
) |
|
|
(96 |
) |
|
|
(23 |
) |
|
|
(307 |
) |
Amortization of acquired intangible assets |
|
|
(106 |
) |
|
|
(114 |
) |
|
|
(325 |
) |
|
|
(414 |
) |
Gains and (losses) on dispositions |
|
|
(4 |
) |
|
|
2,046 |
|
|
|
343 |
|
|
|
2,046 |
|
Impairment losses |
|
|
— |
|
|
|
— |
|
|
|
(10 |
) |
|
|
— |
|
Debt extinguishment costs |
|
|
(2 |
) |
|
|
— |
|
|
|
(311 |
) |
|
|
— |
|
Pension and OPEB actuarial and settlement losses |
|
|
(7 |
) |
|
|
— |
|
|
|
(7 |
) |
|
|
(2 |
) |
Income before income taxes |
|
$ |
166 |
|
|
$ |
1,978 |
|
|
$ |
342 |
|
|
$ |
1,447 |
|
|
|
|
|
|
|
|
|
|
||||||||
Segment profit margins |
|
|
|
|
|
|
|
|
||||||||
GBS |
|
|
16.2 |
% |
|
|
14.2 |
% |
|
|
15.5 |
% |
|
|
12.7 |
% |
GIS |
|
|
4.8 |
% |
|
|
3.7 |
% |
|
|
5.4 |
% |
|
|
2.1 |
% |
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, planning, financing and advisory fees and other similar charges associated with mergers, acquisitions, strategic investments, joint ventures, and dispositions and other similar transactions.(1)
- Amortization of acquired intangible assets – includes amortization of intangible assets acquired through business combinations.
- Gains and losses on dispositions – gains and losses related to dispositions of businesses, strategic assets and interests in less than wholly-owned entities.(2)
- Impairment losses – impairment losses on assets classified as long-term on the balance sheet.(3)
- Debt extinguishment costs – costs associated with early retirement, redemption, repayment or repurchase of debt and debt-like items including any breakage, make-whole premium, prepayment penalty or similar costs as well as solicitation and other legal and advisory expenses.(4)
- Pension and OPEB actuarial and settlement gains and losses – pension and OPEB actuarial mark to market adjustments and settlement gains and losses.
- Tax adjustments – discrete tax adjustments to impair or recognize certain deferred tax assets, adjustments for changes in tax legislation and the impact of merger and divestitures. Income tax expense of all other (non-discrete) Non-GAAP adjustments is based on the difference in the GAAP annual effective tax rate (AETR) and overall Non-GAAP provision (consistent with the GAAP methodology).(5)
(1)
|
TSI-Related Costs include fees and other internal and external expenses associated with legal, accounting, consulting, due diligence, investment banking advisory, and other services, as well as financing fees, retention incentives, and resolution of transaction related claims in connection with, or resulting from, exploring or executing potential acquisitions, dispositions and strategic investments, whether or not announced or consummated. |
|
|
The TSI-Related costs for the third quarter of fiscal 2022 include |
|
|
|
The TSI-Related costs for the first nine months of fiscal 2022 include |
|
|
|
(2)
|
Gains and losses on dispositions for the first nine months of fiscal 2022 include a |
|
|
(3) |
Impairment losses on dispositions for the first nine months of fiscal 2022 includes a |
|
|
(4) |
Debt extinguishment costs adjustments for the third quarter of fiscal 2022 include |
|
|
Debt extinguishment costs adjustments for the first nine months of fiscal 2022 reflects |
|
|
|
(5) |
Tax adjustment for the first nine months of fiscal 2022 reflects net revaluation of deferred taxes resulting from changes in non-US jurisdiction tax rates. |
Non-GAAP Results
A reconciliation of reported results to Non-GAAP results is as follows:
|
|
Three Months Ended |
||||||||||||||||||||||||||||
(in millions, except per-share amounts) |
|
As
|
|
Restructuring
|
|
Transaction,
|
|
Amortization
|
|
Gains and
|
|
Debt
|
|
Pension
OPEB
Losses |
|
Tax
|
|
Non-GAAP
|
||||||||||||
Income before income taxes |
|
$ |
166 |
|
|
$ |
36 |
|
$ |
11 |
|
$ |
106 |
|
$ |
4 |
|
$ |
2 |
|
$ |
7 |
|
$ |
— |
|
|
$ |
332 |
|
Income tax expense |
|
|
64 |
|
|
|
4 |
|
|
1 |
|
|
13 |
|
|
— |
|
|
— |
|
|
1 |
|
|
10 |
|
|
|
93 |
|
Net income |
|
|
102 |
|
|
|
32 |
|
|
10 |
|
|
93 |
|
|
4 |
|
|
2 |
|
|
6 |
|
|
(10 |
) |
|
|
239 |
|
Less: net income attributable to non-controlling interest, net of tax |
|
|
4 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
4 |
|
Net income attributable to DXC common stockholders |
|
$ |
98 |
|
|
$ |
32 |
|
$ |
10 |
|
$ |
93 |
|
$ |
4 |
|
$ |
2 |
|
$ |
6 |
|
$ |
(10 |
) |
|
$ |
235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effective Tax Rate |
|
|
38.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28.0 |
% |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS |
|
$ |
0.39 |
|
|
$ |
0.13 |
|
$ |
0.04 |
|
$ |
0.37 |
|
$ |
0.02 |
|
$ |
0.01 |
|
$ |
0.02 |
|
$ |
(0.04 |
) |
|
$ |
0.94 |
|
Diluted EPS |
|
$ |
0.38 |
|
|
$ |
0.13 |
|
$ |
0.04 |
|
$ |
0.36 |
|
$ |
0.02 |
|
$ |
0.01 |
|
$ |
0.02 |
|
$ |
(0.04 |
) |
|
$ |
0.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average common shares outstanding for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS |
|
|
250.27 |
|
|
|
250.27 |
|
|
250.27 |
|
|
250.27 |
|
|
250.27 |
|
|
250.27 |
|
|
250.27 |
|
|
250.27 |
|
|
|
250.27 |
|
Diluted EPS |
|
|
254.82 |
|
|
|
254.82 |
|
|
254.82 |
|
|
254.82 |
|
|
254.82 |
|
|
254.82 |
|
|
254.82 |
|
|
254.82 |
|
|
|
254.82 |
|
|
|
Nine Months Ended |
||||||||||||||||||||||||||||||||
(in millions, except per-share amounts) |
|
As
|
|
Restructuring
|
|
Transaction,
|
|
Amortization
|
|
Gains and
|
|
Impairment
|
|
Debt
|
|
Pension
|
|
Tax
|
|
Non-GAAP
|
||||||||||||||
Income before income taxes |
|
$ |
342 |
|
|
$ |
248 |
|
$ |
23 |
|
$ |
325 |
|
$ |
(343 |
) |
|
$ |
10 |
|
$ |
311 |
|
$ |
7 |
|
$ |
— |
|
|
$ |
923 |
|
Income tax expense |
|
|
145 |
|
|
|
48 |
|
|
6 |
|
|
63 |
|
|
(91 |
) |
|
|
2 |
|
|
73 |
|
|
1 |
|
|
(18 |
) |
|
|
229 |
|
Net income |
|
|
197 |
|
|
|
200 |
|
|
17 |
|
|
262 |
|
|
(252 |
) |
|
|
8 |
|
|
238 |
|
|
6 |
|
|
18 |
|
|
|
694 |
|
Less: net income attributable to non-controlling interest, net of tax |
|
|
9 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
9 |
|
Net income attributable to DXC common stockholders |
|
$ |
188 |
|
|
$ |
200 |
|
$ |
17 |
|
$ |
262 |
|
$ |
(252 |
) |
|
$ |
8 |
|
$ |
238 |
|
$ |
6 |
|
$ |
18 |
|
|
$ |
685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Effective Tax Rate |
|
|
42.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.8 |
% |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic EPS |
|
$ |
0.74 |
|
|
$ |
0.79 |
|
$ |
0.07 |
|
$ |
1.04 |
|
$ |
(1.00 |
) |
|
$ |
0.03 |
|
$ |
0.94 |
|
$ |
0.02 |
|
$ |
0.07 |
|
|
$ |
2.71 |
|
Diluted EPS |
|
$ |
0.73 |
|
|
$ |
0.78 |
|
$ |
0.07 |
|
$ |
1.02 |
|
$ |
(0.98 |
) |
|
$ |
0.03 |
|
$ |
0.92 |
|
$ |
0.02 |
|
$ |
0.07 |
|
|
$ |
2.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Weighted average common shares outstanding for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic EPS |
|
|
252.44 |
|
|
|
252.44 |
|
|
252.44 |
|
|
252.44 |
|
|
252.44 |
|
|
|
252.44 |
|
|
252.44 |
|
|
252.44 |
|
|
252.44 |
|
|
|
252.44 |
|
Diluted EPS |
|
|
257.59 |
|
|
|
257.59 |
|
|
257.59 |
|
|
257.59 |
|
|
257.59 |
|
|
|
257.59 |
|
|
257.59 |
|
|
257.59 |
|
|
257.59 |
|
|
|
257.59 |
|
|
|
Three Months Ended |
|||||||||||||||||||
(in millions, except per-share amounts) |
|
As
|
|
Restructuring
|
|
Transaction,
|
|
Amortization
|
|
Gain on
|
|
Non-GAAP
|
|||||||||
Income before income taxes |
|
$ |
1,978 |
|
|
$ |
104 |
|
$ |
96 |
|
$ |
114 |
|
$ |
(2,046 |
) |
|
$ |
246 |
|
Income tax expense |
|
|
875 |
|
|
|
11 |
|
|
16 |
|
|
26 |
|
|
(903 |
) |
|
|
25 |
|
Net income |
|
|
1,103 |
|
|
|
93 |
|
|
80 |
|
|
88 |
|
|
(1,143 |
) |
|
|
221 |
|
Less: net income attributable to non-controlling interest, net of tax |
|
|
5 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
5 |
|
Net income attributable to DXC common stockholders |
|
$ |
1,098 |
|
|
$ |
93 |
|
$ |
80 |
|
$ |
88 |
|
$ |
(1,143 |
) |
|
$ |
216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Effective Tax Rate |
|
|
44.2 |
% |
|
|
|
|
|
|
|
|
|
|
10.2 |
% |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic EPS |
|
$ |
4.32 |
|
|
$ |
0.37 |
|
$ |
0.31 |
|
$ |
0.35 |
|
$ |
(4.49 |
) |
|
$ |
0.85 |
|
Diluted EPS |
|
$ |
4.29 |
|
|
$ |
0.36 |
|
$ |
0.31 |
|
$ |
0.34 |
|
$ |
(4.47 |
) |
|
$ |
0.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Weighted average common shares outstanding for: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic EPS |
|
|
254.32 |
|
|
|
254.32 |
|
|
254.32 |
|
|
254.32 |
|
|
254.32 |
|
|
|
254.32 |
|
Diluted EPS |
|
|
255.75 |
|
|
|
255.75 |
|
|
255.75 |
|
|
255.75 |
|
|
255.75 |
|
|
|
255.75 |
|
|
|
Nine Months Ended |
||||||||||||||||||||||||||
(in millions, except per-share amounts) |
|
As
|
|
Restructuring
|
|
Transaction,
|
|
Amortization
|
|
Gain on
|
|
Pension and
|
|
Tax
|
|
Non-GAAP
|
||||||||||||
Income before income taxes |
|
$ |
1,447 |
|
|
$ |
441 |
|
$ |
307 |
|
$ |
414 |
|
$ |
(2,046 |
) |
|
$ |
2 |
|
$ |
— |
|
|
$ |
565 |
|
Income tax expense |
|
|
789 |
|
|
|
75 |
|
|
70 |
|
|
95 |
|
|
(903 |
) |
|
|
— |
|
|
(2 |
) |
|
|
124 |
|
Net income |
|
|
658 |
|
|
|
366 |
|
|
237 |
|
|
319 |
|
|
(1,143 |
) |
|
|
2 |
|
|
2 |
|
|
|
441 |
|
Less: net income attributable to non-controlling interest, net of tax |
|
|
9 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
9 |
|
Net income attributable to DXC common stockholders |
|
$ |
649 |
|
|
$ |
366 |
|
$ |
237 |
|
$ |
319 |
|
$ |
(1,143 |
) |
|
$ |
2 |
|
$ |
2 |
|
|
$ |
432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effective Tax Rate |
|
|
54.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.9 |
% |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS |
|
$ |
2.55 |
|
|
$ |
1.44 |
|
$ |
0.93 |
|
$ |
1.26 |
|
$ |
(4.50 |
) |
|
$ |
0.01 |
|
$ |
0.01 |
|
|
$ |
1.70 |
|
Diluted EPS |
|
$ |
2.54 |
|
|
$ |
1.43 |
|
$ |
0.93 |
|
$ |
1.25 |
|
$ |
(4.48 |
) |
|
$ |
0.01 |
|
$ |
0.01 |
|
|
$ |
1.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average common shares outstanding for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS |
|
|
254.03 |
|
|
|
254.03 |
|
|
254.03 |
|
|
254.03 |
|
|
254.03 |
|
|
|
254.03 |
|
|
254.03 |
|
|
|
254.03 |
|
Diluted EPS |
|
|
255.20 |
|
|
|
255.20 |
|
|
255.20 |
|
|
255.20 |
|
|
255.20 |
|
|
|
255.20 |
|
|
255.20 |
|
|
|
255.20 |
|
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 |
||
|
|
|
|
|
Total revenue growth |
|
(4.6) % |
|
(14.6) % |
Foreign currency |
|
1.0 % |
|
(2.3) % |
Acquisitions and divestitures |
|
2.2 % |
|
7.2 % |
Organic revenue growth |
|
(1.4) % |
|
(9.7) % |
|
|
|
|
|
GIS revenue growth |
|
(9.5) % |
|
(11.1) % |
Foreign currency |
|
0.9 % |
|
(2.4) % |
Acquisitions and divestitures |
|
0.3 % |
|
0.5 % |
GIS organic revenue growth |
|
(8.3) % |
|
(13.0) % |
|
|
|
|
|
GBS revenue growth |
|
1.3 % |
|
(18.6) % |
Foreign currency |
|
1.3 % |
|
(2.2) % |
Acquisitions and divestitures |
|
4.4 % |
|
14.9 % |
GBS organic revenue growth |
|
7.0 % |
|
(5.9) % |
EBIT and Adjusted EBIT |
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
(in millions) |
|
|
|
|
|
|
|
|
||||||||
Net income |
|
$ |
102 |
|
|
$ |
1,103 |
|
|
$ |
197 |
|
|
$ |
658 |
|
Income tax expense |
|
|
64 |
|
|
|
875 |
|
|
|
145 |
|
|
|
789 |
|
Interest income |
|
|
(15 |
) |
|
|
(28 |
) |
|
|
(51 |
) |
|
|
(76 |
) |
Interest expense |
|
|
38 |
|
|
|
82 |
|
|
|
161 |
|
|
|
284 |
|
EBIT |
|
|
189 |
|
|
|
2,032 |
|
|
|
452 |
|
|
|
1,655 |
|
Restructuring costs |
|
|
36 |
|
|
|
104 |
|
|
|
248 |
|
|
|
441 |
|
Transaction, separation and integration-related costs |
|
|
11 |
|
|
|
96 |
|
|
|
23 |
|
|
|
307 |
|
Amortization of acquired intangible assets |
|
|
106 |
|
|
|
114 |
|
|
|
325 |
|
|
|
414 |
|
(Gains) and losses on dispositions |
|
|
4 |
|
|
|
(2,046 |
) |
|
|
(343 |
) |
|
|
(2,046 |
) |
Impairment losses |
|
|
— |
|
|
|
— |
|
|
|
10 |
|
|
|
— |
|
Debt extinguishment costs |
|
|
2 |
|
|
|
— |
|
|
|
311 |
|
|
|
— |
|
Pension and OPEB actuarial and settlement losses |
|
|
7 |
|
|
|
— |
|
|
|
7 |
|
|
|
2 |
|
Adjusted EBIT |
|
$ |
355 |
|
|
$ |
300 |
|
|
$ |
1,033 |
|
|
$ |
773 |
|
|
|
|
|
|
|
|
|
|
||||||||
EBIT margin |
|
|
4.6 |
% |
|
|
47.4 |
% |
|
|
3.7 |
% |
|
|
12.4 |
% |
Adjusted EBIT margin |
|
|
8.7 |
% |
|
|
7.0 |
% |
|
|
8.4 |
% |
|
|
5.8 |
% |
Source:
Category: Investor Relations
View source version on businesswire.com: https://www.businesswire.com/news/home/20220202005713/en/
Source:
FAQ
What were DXC Technology's revenues for Q3 FY22?
How much did DXC Technology's diluted EPS change in Q3 FY22?
What was DXC Technology's cash flow situation in Q3 FY22?
What is the guidance for DXC Technology for Q4 FY22?
How much did DXC Technology plan for share repurchases?
