- Fiscal 2022 GAAP diluted net earnings per share ("EPS") of
$3.05 , below the previously provided outlook of $3.46 to$3.56 per share - Fiscal 2022 non-GAAP diluted net EPS of
$4.08 , within the previously provided outlook of$4.02 to$4.12 per share - Fiscal 2022 net revenue of
$63.0 billion , down 0.8% from the prior-year period - Fiscal 2022 net cash provided by operating activities of
$4.5 billion , free cash flow of$3.9 billion - Fiscal 2022 returned
$5.3 billion to shareholders in the form of share repurchases and dividends - Fourth quarter GAAP diluted net EPS was negligible, below the previously provided outlook of
$0.44 to$0.54 per share, due to one-time non-cash tax adjustments - Fourth quarter non-GAAP diluted net EPS of
$0.85 , within the previously provided outlook of$0.79 to$0.89 per share - Fourth quarter net revenue of
$14.8 billion , down 11.2% from the prior-year period - Fourth quarter net cash provided by operating activities of
$1.9 billion , free cash flow of$1.8 billion - Fourth quarter returned
$1.0 billion to shareholders in the form of share repurchases and dividends HP Inc. announces dividend increase of 5%HP Inc. announces Future Ready Transformation Plan, estimates annualized gross run rate cost savings of at least$1.4 billion by the end of fiscal 2025, and restructuring and other charges of approximately$1.0 billion
FY22 | FY21 | Y/Y | Q4 FY22 | Q4 FY21 | Y/Y | |||||||||||
GAAP net revenue ($B) | $ | 63.0 | $ | 63.5 | (0.8)% | $ | 14.8 | $ | 16.7 | (11.2)% | ||||||
GAAP operating margin | 7.4% | 8.4% | (1.0) pts | 5.2% | 7.4% | (2.2) pts | ||||||||||
GAAP net earnings1 ($B) | $ | 3.2 | $ | 6.5 | (51)% | $ | -- | $ | 3.1 | (100)% | ||||||
GAAP diluted net EPS1 | $ | 3.05 | $ | 5.33 | (43)% | $ | -- | $ | 2.71 | (100)% | ||||||
Non-GAAP operating margin2 | 8.7% | 9.1% | (0.4) pts | 7.7% | 8.1% | (0.4) pts | ||||||||||
Non-GAAP net earnings2 ($B) | $ | 4.3 | $ | 4.6 | (7)% | $ | 0.9 | $ | 1.1 | (21)% | ||||||
Non-GAAP diluted net EPS2 | $ | 4.08 | $ | 3.79 | 8% | $ | 0.85 | $ | 0.94 | (10)% | ||||||
Net cash provided by operating activities1 ($B) | $ | 4.5 | $ | 6.4 | (30)% | $ | 1.9 | $ | 2.8 | (33)% | ||||||
Free cash flow2 ($B) | $ | 3.9 | $ | 4.2 | (8)% | $ | 1.8 | $ | 0.9 | 94% |
Notes
- For the three and twelve months ended
October 31, 2021 , GAAP net earnings and Net cash provided by operating activities included a net impact of$1,771 million for one-time Oracle Corporation (“Oracle”) litigation proceeds, which resulted in an impact of$1.55 and$1.45 on the GAAP diluted net earnings per share, respectively. - Information about
HP Inc.'s use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below.
Net revenue and EPS results
Fiscal 2022 GAAP diluted net EPS was
Fourth quarter net revenue was
Fourth quarter GAAP diluted net EPS was negligible, down from
“We had a solid end to our fiscal year despite navigating a volatile macro-environment and softening demand in the second half. In Q4 we delivered on our non-GAAP EPS target, while also completing our three-year value creation plan and exceeding our key metrics," said
Asset management
HP’s dividend payment of
The
Fiscal 2022 fourth quarter segment results
- Personal Systems net revenue was
$10.3 billion , down 13% year over year (down 9% in constant currency) with a 4.5% operating margin. Consumer net revenue decreased 25% and Commercial net revenue decreased 6%. Total units were down 21% with Notebooks units down 26% and Desktops units down 3%. - Printing net revenue was
$4.5 billion , down 7% year over year (down 6% in constant currency) with a 19.9% operating margin. Total hardware units were down 3% with Consumer units down 4% and Commercial units up 5%. Consumer net revenue was down 7% and Commercial net revenue was up 1%. Supplies net revenue was down 10% (down 10% in constant currency).
Outlook
For the fiscal 2023 first quarter,
For fiscal 2023,
More information on
Fiscal year 2023 Future Ready Transformation
Today,
About
Use of non-GAAP financial information
To supplement HP’s consolidated condensed financial statements presented on a generally accepted accounting principles (“GAAP”) basis,
Forward-looking statements
This document contains forward-looking statements based on current expectations and assumptions that involve risks and uncertainties. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of
All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, any statements regarding the potential impact of the COVID-19 pandemic and the actions by governments, businesses and individuals in response to the situation; projections of net revenue, margins, expenses, effective tax rates, net earnings, net earnings per share, cash flows, benefit plan funding, deferred taxes, share repurchases, foreign currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring and other charges, planned structural cost reductions and productivity initiatives; any statements of the plans, strategies and objectives of management for future operations, including, but not limited to, our business model and transformation, our sustainability goals, our go-to-market strategy, the execution of restructuring plans (including the fiscal 2023 plan) and any resulting cost savings, net revenue or profitability improvements or other financial impacts; any statements concerning the expected development, demand, performance, market share or competitive performance relating to products or services; any statements concerning potential supply constraints, component shortages, manufacturing disruptions or logistics challenges; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on
Risks, uncertainties and assumptions include factors relating to the effects of the COVID-19 pandemic and the actions by governments, businesses and individuals in response to the situation, the effects of which may give rise to or amplify the risks associated with many of these factors listed here; the need to manage (and reliance on) third-party suppliers, including with respect to component shortages, and the need to manage HP’s global, multi-tier distribution network, limit potential misuse of pricing programs by HP’s channel partners, adapt to new or changing marketplaces and effectively deliver HP’s services; HP’s ability to execute on its strategic plan, including the previously announced initiatives, business model changes and transformation; execution of planned structural cost reductions and productivity initiatives; HP’s ability to complete any contemplated share repurchases, other capital return programs or other strategic transactions; the competitive pressures faced by HP’s businesses; risks associated with executing HP’s strategy and business model changes and transformation and the fiscal 2023 restructuring plan; successfully innovating, developing and executing HP’s go-to-market strategy, including online, omnichannel and contractual sales, in an evolving distribution, reseller and customer landscape; the development and transition of new products and services and the enhancement of existing products and services to meet evolving customer needs and respond to emerging technological trends; successfully competing and maintaining the value proposition of HP’s products, including supplies; challenges to HP’s ability to accurately forecast inventories, demand and pricing, which may be due to HP’s multi-tiered channel, sales of HP’s products to unauthorized resellers or unauthorized resale of HP’s products or our uneven sales cycle; integration and other risks associated with business combination and investment transactions (including the acquisition of Poly); the results of our restructuring plans, including estimates and assumptions related to the cost (including any possible disruption of HP’s business) and the anticipated benefits of the restructuring plans; the protection of HP’s intellectual property assets, including intellectual property licensed from third parties; the hiring and retention of key employees; the impact of macroeconomic and geopolitical trends, changes and events, including the Russian invasion of
As in prior periods, the financial information set forth in this document, including any tax-related items, reflects estimates based on information available at this time. While
HP’s Investor Relations website at investor.hp.com contains a significant amount of information about
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions, except per share amounts)
Three months ended | |||||||||||
Net revenue | $ | 14,801 | $ | 14,664 | $ | 16,675 | |||||
Costs and expenses: | |||||||||||
Cost of revenue | 12,084 | 11,764 | 13,410 | ||||||||
Research and development | 382 | 368 | 445 | ||||||||
Selling, general and administrative | 1,189 | 1,143 | 1,474 | ||||||||
Restructuring and other charges | 70 | 13 | 29 | ||||||||
Acquisition and divestiture charges | 235 | 31 | 28 | ||||||||
Amortization of intangible assets | 74 | 50 | 51 | ||||||||
— | 23 | — | |||||||||
Total costs and expenses | 14,034 | 13,392 | 15,437 | ||||||||
Earnings from operations | 767 | 1,272 | 1,238 | ||||||||
Interest and other, net(a) | (94 | ) | (70 | ) | 2,315 | ||||||
Earnings before taxes | 673 | 1,202 | 3,553 | ||||||||
Provision for taxes(a) | (675 | ) | (83 | ) | (454 | ) | |||||
Net (loss) earnings | $ | (2 | ) | $ | 1,119 | $ | 3,099 | ||||
Net earnings per share: | |||||||||||
Basic | $ | — | $ | 1.09 | $ | 2.75 | |||||
Diluted | $ | — | $ | 1.08 | $ | 2.71 | |||||
Cash dividends declared per share | $ | — | $ | 0.50 | $ | — | |||||
Weighted-average shares used to compute net earnings per share: | |||||||||||
Basic | 998 | 1,024 | 1,128 | ||||||||
Diluted | 1,009 | 1,035 | 1,142 |
(a) Interest and other, net and Provision for taxes includes a gain and corresponding tax expense, respectively, from the one time Oracle litigation proceeds for the three months ended
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(In millions, except per share amounts)
Twelve months ended | |||||||
Net revenue | $ | 62,983 | $ | 63,487 | |||
Costs and expenses: | |||||||
Cost of revenue | 50,648 | 50,070 | |||||
Research and development | 1,593 | 1,907 | |||||
Selling, general and administrative | 5,264 | 5,741 | |||||
Restructuring and other charges | 233 | 245 | |||||
Acquisition and divestiture charges | 318 | 68 | |||||
Amortization of intangible assets | 228 | 154 | |||||
23 | — | ||||||
Total costs and expenses | 58,307 | 58,185 | |||||
Earnings from operations | 4,676 | 5,302 | |||||
Interest and other, net(a) | (235 | ) | 2,209 | ||||
Earnings before taxes | 4,441 | 7,511 | |||||
Provision for taxes(a) | (1,238 | ) | (1,008 | ) | |||
Net earnings | $ | 3,203 | $ | 6,503 | |||
Net earnings per share: | |||||||
Basic | $ | 3.09 | $ | 5.38 | |||
Diluted | $ | 3.05 | $ | 5.33 | |||
Cash dividends declared per share | $ | 1.00 | $ | 0.78 | |||
Weighted-average shares used to compute net earnings per share: | |||||||
Basic | 1,038 | 1,208 | |||||
Diluted | 1,050 | 1,220 |
(a) Interest and other, net and Provision for taxes includes a gain and corresponding tax expense, respectively, from the one time Oracle litigation proceeds for the twelve months ended
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,
OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE
(Unaudited)
(In millions, except per share amounts)
Three months ended | |||||||||||||||||||||||
Amounts | Diluted net earnings per share | Amounts | Diluted net earnings per share | Amounts | Diluted net earnings per share | ||||||||||||||||||
GAAP net (loss) earnings | $ | (2 | ) | $ | — | $ | 1,119 | $ | 1.08 | $ | 3,099 | $ | 2.71 | ||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||
Restructuring and other charges | 70 | 0.07 | 13 | 0.01 | 29 | 0.02 | |||||||||||||||||
Acquisition and divestiture charges | 235 | 0.23 | 31 | 0.03 | 28 | 0.02 | |||||||||||||||||
Amortization of intangible assets | 74 | 0.07 | 50 | 0.05 | 51 | 0.04 | |||||||||||||||||
— | — | 23 | 0.02 | — | — | ||||||||||||||||||
Oracle litigation proceeds | — | — | — | — | (2,304 | ) | (2.01 | ) | |||||||||||||||
Defined benefit plan settlement gains | — | — | — | — | (37 | ) | (0.03 | ) | |||||||||||||||
Non-operating retirement-related credits | (34 | ) | (0.03 | ) | (33 | ) | (0.03 | ) | (38 | ) | (0.03 | ) | |||||||||||
Tax adjustments(a) | 512 | 0.51 | (124 | ) | (0.12 | ) | 248 | 0.22 | |||||||||||||||
Non-GAAP net earnings | $ | 855 | $ | 0.85 | $ | 1,079 | $ | 1.04 | $ | 1,076 | $ | 0.94 | |||||||||||
GAAP earnings from operations | $ | 767 | $ | 1,272 | $ | 1,238 | |||||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||
Restructuring and other charges | 70 | 13 | 29 | ||||||||||||||||||||
Acquisition and divestiture charges | 235 | 31 | 28 | ||||||||||||||||||||
Amortization of intangible assets | 74 | 50 | 51 | ||||||||||||||||||||
— | 23 | — | |||||||||||||||||||||
Non-GAAP earnings from operations | $ | 1,146 | $ | 1,389 | $ | 1,346 | |||||||||||||||||
GAAP operating margin | 5.2 | % | 8.7 | % | 7.4 | % | |||||||||||||||||
Non-GAAP adjustments | 2.5 | % | 0.8 | % | 0.7 | % | |||||||||||||||||
Non-GAAP operating margin | 7.7 | % | 9.5 | % | 8.1 | % |
(a) Includes tax impact on non-GAAP adjustments.
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS,
OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE
(Unaudited)
(In millions, except per share amounts)
Twelve months ended | |||||||||||||||
Amounts | Diluted net earnings per share | Amounts | Diluted net earnings per share | ||||||||||||
GAAP net earnings | $ | 3,203 | $ | 3.05 | $ | 6,503 | $ | 5.33 | |||||||
Non-GAAP adjustments: | |||||||||||||||
Restructuring and other charges | 233 | 0.22 | 245 | 0.20 | |||||||||||
Acquisition and divestiture charges | 318 | 0.30 | 68 | 0.06 | |||||||||||
Amortization of intangible assets | 228 | 0.22 | 154 | 0.13 | |||||||||||
23 | 0.02 | — | — | ||||||||||||
Debt extinguishment costs | — | — | 16 | 0.01 | |||||||||||
Oracle litigation proceeds | — | — | (2,304 | ) | (1.89 | ) | |||||||||
Defined benefit plan settlement gains | — | — | (37 | ) | (0.03 | ) | |||||||||
Non-operating retirement-related credits | (138 | ) | (0.13 | ) | (153 | ) | (0.13 | ) | |||||||
Tax adjustments(a) | 422 | 0.40 | 128 | 0.11 | |||||||||||
Non-GAAP net earnings | $ | 4,289 | $ | 4.08 | $ | 4,620 | $ | 3.79 | |||||||
GAAP earnings from operations | $ | 4,676 | $ | 5,302 | |||||||||||
Non-GAAP adjustments: | |||||||||||||||
Restructuring and other charges | 233 | 245 | |||||||||||||
Acquisition and divestiture charges | 318 | 68 | |||||||||||||
Amortization of intangible assets | 228 | 154 | |||||||||||||
23 | — | ||||||||||||||
Non-GAAP earnings from operations | $ | 5,478 | $ | 5,769 | |||||||||||
GAAP operating margin | 7.4 | % | 8.4 | % | |||||||||||
Non-GAAP adjustments | 1.3 | % | 0.7 | % | |||||||||||
Non-GAAP operating margin | 8.7 | % | 9.1 | % |
(a) Includes tax impact on non-GAAP adjustments.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(In millions)
As of | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 3,145 | $ | 4,299 | |||
Accounts receivable, net | 4,546 | 5,511 | |||||
Inventory | 7,595 | 7,930 | |||||
Other current assets | 4,515 | 4,430 | |||||
Total current assets | 19,801 | 22,170 | |||||
Property, plant and equipment, net | 2,774 | 2,546 | |||||
8,541 | 6,803 | ||||||
Other non-current assets | 7,471 | 7,091 | |||||
Total assets | $ | 38,587 | $ | 38,610 | |||
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||
Current liabilities: | |||||||
Notes payable and short-term borrowings | $ | 218 | $ | 1,106 | |||
Accounts payable | 15,284 | 16,075 | |||||
Other current liabilities | 10,651 | 11,915 | |||||
Total current liabilities | 26,153 | 29,096 | |||||
Long-term debt | 10,796 | 6,386 | |||||
Other non-current liabilities | 4,556 | 4,778 | |||||
Stockholders' deficit | (2,918 | ) | (1,650 | ) | |||
Total liabilities and stockholders' deficit | $ | 38,587 | $ | 38,610 |
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Three months ended | |||||||
Cash flows from operating activities: | |||||||
Net (loss) earnings | $ | (2 | ) | $ | 3,099 | ||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 209 | 200 | |||||
Stock-based compensation expense | 70 | 70 | |||||
Restructuring and other charges | 70 | 29 | |||||
Deferred taxes on earnings | 527 | (512 | ) | ||||
Defined benefit plan settlement gains | — | (37 | ) | ||||
Other, net | 114 | 186 | |||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | 184 | (583 | ) | ||||
Inventory | 803 | 61 | |||||
Accounts payable | (437 | ) | 117 | ||||
Net investment in leases | (61 | ) | (33 | ) | |||
Taxes on earnings | 37 | 45 | |||||
Restructuring and other | (60 | ) | (39 | ) | |||
Other assets and liabilities | 450 | 245 | |||||
Net cash provided by operating activities | 1,904 | 2,848 | |||||
Cash flows from investing activities: | |||||||
Investment in property, plant and equipment | (144 | ) | (172 | ) | |||
Purchases of available-for-sale securities and other investments | (2 | ) | (4 | ) | |||
Maturities and sales of available-for-sale securities and other investments | 1 | 21 | |||||
Collateral posted for derivative instruments | — | 27 | |||||
Payment made in connection with business acquisition, net of cash acquired | (2,731 | ) | (272 | ) | |||
Net cash used in investing activities | (2,876 | ) | (400 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from short-term borrowings with original maturities less than 90 days, net | — | 400 | |||||
Proceeds from debt, net of issuance costs | 89 | 47 | |||||
Payment of debt | (552 | ) | (53 | ) | |||
Stock-based award activities and others | (7 | ) | (9 | ) | |||
Repurchase of common stock | (750 | ) | (1,754 | ) | |||
Cash dividends paid | (249 | ) | (219 | ) | |||
Collateral withdrawn for derivative instruments | 200 | — | |||||
Net cash used in financing activities | (1,269 | ) | (1,588 | ) | |||
(Decrease) increase in cash and cash equivalents | (2,241 | ) | 860 | ||||
Cash and cash equivalents at beginning of period | 5,386 | 3,439 | |||||
Cash and cash equivalents at end of period | $ | 3,145 | $ | 4,299 |
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Twelve months ended | |||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 3,203 | $ | 6,503 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 780 | 785 | |||||
Stock-based compensation expense | 343 | 330 | |||||
Restructuring and other charges | 233 | 245 | |||||
Deferred taxes on earnings | 574 | (605 | ) | ||||
Defined benefit plan settlement gains | — | (37 | ) | ||||
Other, net | 475 | 440 | |||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | 1,260 | (80 | ) | ||||
Inventory | 233 | (2,164 | ) | ||||
Accounts payable | (928 | ) | 1,257 | ||||
Net investment in leases | (155 | ) | (111 | ) | |||
Taxes on earnings | (83 | ) | 64 | ||||
Restructuring and other | (245 | ) | (205 | ) | |||
Other assets and liabilities | (1,227 | ) | (13 | ) | |||
Net cash provided by operating activities | 4,463 | 6,409 | |||||
Cash flows from investing activities: | |||||||
Investment in property, plant and equipment | (791 | ) | (582 | ) | |||
Proceeds from the sale of property, plant and equipment | 26 | — | |||||
Purchases of available-for-sale securities and other investments | (52 | ) | (28 | ) | |||
Maturities and sales of available-for-sale securities and other investments | 9 | 304 | |||||
Collateral posted for derivative instruments | 14 | 148 | |||||
Payment made in connection with business acquisitions, net of cash acquired | (2,755 | ) | (854 | ) | |||
Net cash used in investing activities | (3,549 | ) | (1,012 | ) | |||
Cash flows from financing activities: | |||||||
(Payment of) Proceeds from short-term borrowings with original maturities less than 90 days, net | (400 | ) | 400 | ||||
Proceeds from debt, net of issuance costs | 4,175 | 2,121 | |||||
Payment of debt | (693 | ) | (1,245 | ) | |||
Stock-based award activities and others | (95 | ) | (51 | ) | |||
Repurchase of common stock | (4,297 | ) | (6,249 | ) | |||
Cash dividends paid | (1,037 | ) | (938 | ) | |||
Collateral withdrawn for derivative instruments | 200 | — | |||||
Settlement of cash flow hedges | 79 | — | |||||
Net cash used in financing activities | (2,068 | ) | (5,962 | ) | |||
Decrease in cash and cash equivalents | (1,154 | ) | (565 | ) | |||
Cash and cash equivalents at beginning of period | 4,299 | 4,864 | |||||
Cash and cash equivalents at end of period | $ | 3,145 | $ | 4,299 |
SEGMENT/BUSINESS UNIT INFORMATION
(Unaudited)
(In millions)
Three months ended | Change (%) | ||||||||||||||||
Q/Q | Y/Y | ||||||||||||||||
Net revenue: | |||||||||||||||||
Notebooks | $ | 6,454 | $ | 6,574 | $ | 8,339 | (2 | )% | (23 | )% | |||||||
Desktops | 2,537 | 2,537 | 2,510 | — | % | 1 | % | ||||||||||
Workstations | 535 | 537 | 492 | — | % | 9 | % | ||||||||||
Other(a) | 741 | 441 | 454 | 68 | % | 63 | % | ||||||||||
Personal Systems | 10,267 | 10,089 | 11,795 | 2 | % | (13 | )% | ||||||||||
Supplies | 2,748 | 2,814 | 3,057 | (2 | )% | (10 | )% | ||||||||||
Commercial | 1,108 | 1,036 | 1,097 | 7 | % | 1 | % | ||||||||||
Consumer | 677 | 725 | 725 | (7 | )% | (7 | )% | ||||||||||
Printing | 4,533 | 4,575 | 4,879 | (1 | )% | (7 | )% | ||||||||||
Corporate Investments(b) | 1 | — | 2 | NM | NM | ||||||||||||
Total segment net revenue | 14,801 | 14,664 | 16,676 | 1 | % | (11 | )% | ||||||||||
Other(b) | — | — | (1 | ) | NM | NM | |||||||||||
Total net revenue | $ | 14,801 | $ | 14,664 | $ | 16,675 | 1 | % | (11 | )% | |||||||
Earnings before taxes: | |||||||||||||||||
Personal Systems(a) | $ | 458 | $ | 695 | $ | 764 | |||||||||||
Printing | 903 | 911 | 830 | ||||||||||||||
Corporate Investments | (46 | ) | (58 | ) | (14 | ) | |||||||||||
Total segment earnings from operations | 1,315 | 1,548 | 1,580 | ||||||||||||||
Corporate and unallocated cost and other | (99 | ) | (89 | ) | (164 | ) | |||||||||||
Stock-based compensation expense | (70 | ) | (70 | ) | (70 | ) | |||||||||||
Restructuring and other charges | (70 | ) | (13 | ) | (29 | ) | |||||||||||
Acquisition and divestiture charges | (235 | ) | (31 | ) | (28 | ) | |||||||||||
Amortization of intangible assets | (74 | ) | (50 | ) | (51 | ) | |||||||||||
— | (23 | ) | — | ||||||||||||||
Interest and other, net | (94 | ) | (70 | ) | 2,315 | ||||||||||||
Total earnings before taxes | $ | 673 | $ | 1,202 | $ | 3,553 |
(a) Includes numbers for Poly since acquisition date (
(b) "NM" represents not meaningful.
SEGMENT/BUSINESS UNIT INFORMATION
(Unaudited)
(In millions)
Twelve months ended | Change (%) | |||||||||
Y/Y | ||||||||||
Net revenue: | ||||||||||
Notebooks | $ | 29,183 | $ | 30,522 | (4 | )% | ||||
Desktops | 10,736 | 9,381 | 14 | % | ||||||
Workstations | 2,100 | 1,669 | 26 | % | ||||||
Other(a) | 2,065 | 1,787 | 16 | % | ||||||
Personal Systems | 44,084 | 43,359 | 2 | % | ||||||
Supplies | 11,761 | 12,632 | (7 | )% | ||||||
Commercial | 4,225 | 4,209 | — | % | ||||||
Consumer | 2,916 | 3,287 | (11 | )% | ||||||
Printing | 18,902 | 20,128 | (6 | )% | ||||||
Corporate Investments(b) | 2 | 3 | NM | |||||||
Total segment net revenue | 62,988 | 63,490 | (1 | )% | ||||||
Other(b) | (5 | ) | (3 | ) | NM | |||||
Total net revenue | $ | 62,983 | $ | 63,487 | (1 | )% | ||||
Earnings before taxes: | ||||||||||
Personal Systems(a) | $ | 2,908 | $ | 3,101 | ||||||
Printing | 3,651 | 3,636 | ||||||||
Corporate Investments | (230 | ) | (96 | ) | ||||||
Total segment earnings from operations | 6,329 | 6,641 | ||||||||
Corporate and unallocated cost and other | (508 | ) | (542 | ) | ||||||
Stock-based compensation expense | (343 | ) | (330 | ) | ||||||
Restructuring and other charges | (233 | ) | (245 | ) | ||||||
Acquisition and divestiture charges | (318 | ) | (68 | ) | ||||||
Amortization of intangible assets | (228 | ) | (154 | ) | ||||||
(23 | ) | — | ||||||||
Interest and other, net | (235 | ) | 2,209 | |||||||
Total earnings before taxes | $ | 4,441 | $ | 7,511 |
(a) Includes numbers for Poly since acquisition date (
(b) "NM" represents not meaningful.
SEGMENT OPERATING MARGIN SUMMARY
(Unaudited)
Three months ended | Change (pts) | |||||||||||
Q/Q | Y/Y | |||||||||||
Segment operating margin: | ||||||||||||
Personal Systems | 4.5 | % | 6.9 | % | 6.5 | % | (2.4)pts | (2.0)pts | ||||
Printing | 19.9 | % | 19.9 | % | 17.0 | % | — | 2.9 pts | ||||
Corporate Investments(a) | NM | NM | NM | NM | NM | |||||||
Total segment | 8.9 | % | 10.6 | % | 9.5 | % | (1.7)pts | (0.6)pts |
(a) "NM" represents not meaningful.
CALCULATION OF DILUTED NET EARNINGS PER SHARE
(Unaudited)
(In millions, except per share amounts)
Three months ended | |||||||||||
Numerator: | |||||||||||
GAAP net (loss) earnings | $ | (2 | ) | $ | 1,119 | $ | 3,099 | ||||
Non-GAAP net earnings | $ | 855 | $ | 1,079 | $ | 1,076 | |||||
Denominator: | |||||||||||
Weighted-average shares used to compute basic net earnings per share | 998 | 1,024 | 1,128 | ||||||||
Dilutive effect of employee stock plans(a) | 11 | 11 | 14 | ||||||||
Weighted-average shares used to compute diluted net earnings per share | 1,009 | 1,035 | 1,142 | ||||||||
GAAP diluted net earnings per share | $ | — | $ | 1.08 | $ | 2.71 | |||||
Non-GAAP diluted net earnings per share | $ | 0.85 | $ | 1.04 | $ | 0.94 |
(a) Includes any dilutive effect of restricted stock units, stock options and performance-based awards.
CALCULATION OF DILUTED NET EARNINGS PER SHARE
(Unaudited)
(In millions, except per share amounts)
Twelve months ended | |||||||
Numerator: | |||||||
GAAP net earnings | $ | 3,203 | $ | 6,503 | |||
Non-GAAP net earnings | $ | 4,289 | $ | 4,620 | |||
Denominator: | |||||||
Weighted-average shares used to compute basic net earnings per share | 1,038 | 1,208 | |||||
Dilutive effect of employee stock plans(a) | 12 | 12 | |||||
Weighted-average shares used to compute diluted net earnings per share | 1,050 | 1,220 | |||||
GAAP diluted net earnings per share | $ | 3.05 | $ | 5.33 | |||
Non-GAAP diluted net earnings per share | $ | 4.08 | $ | 3.79 |
(a) Includes any dilutive effect of restricted stock units, stock options and performance-based awards.
Use of non-GAAP financial measures
To supplement HP’s consolidated condensed financial statements presented on a GAAP basis,
These non-GAAP financial measures are not computed in accordance with, or as an alternative to, GAAP in
Use and economic substance of non-GAAP financial measures
Net revenue on a constant currency basis excludes the effect of foreign currency exchange fluctuations calculated by translating current period revenues using monthly exchange rates from the comparative period and excluding any hedging impact recognized in the current period. Non-GAAP operating margin is defined to exclude the effects of any amounts relating to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets and
HP’s management uses these non-GAAP financial measures for purposes of evaluating HP’s historical and prospective financial performance, as well as HP’s performance relative to its competitors. HP’s management also uses these non-GAAP measures to further its own understanding of HP’s segment operating performance.
- Restructuring and other charges are (i) costs associated with a formal restructuring plan and are primarily related to employee separation from service and early retirement costs and related benefits, costs of real estate consolidation and other non-labor charges; and (ii) other charges, which include non-recurring costs that are distinct from ongoing operational costs.
HP excludes these restructuring and other charges (and any reversals of charges recorded in prior periods) for purposes of calculating these non-GAAP measures becauseHP believes that these costs do not reflect expected future operating expenses and do not contribute to a meaningful evaluation ofHP 's current operating performance or comparisons to operating performance in other periods.
HP incurs cost related to its acquisitions and divestitures, which it would not have otherwise incurred as part of its operations. The charges are direct expenses such as third-party professional and legal fees, and integration and divestiture-related costs, as well as non-cash adjustments to the fair value of certain acquired assets such as inventory and certain compensation charges related to cash settlement of restricted stock units and performance-based restricted stock units towards acquisitions. These charges related to acquisitions and divestitures are inconsistent in amount and frequency and are significantly impacted by the timing and nature ofHP 's acquisitions or divestitures.HP believes that eliminating such expenses for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of HP’s current operating performance and comparisons to operating performance in other periods.
HP incurs charges relating to the amortization of intangible assets. Those charges are included in HP’s GAAP earnings, operating margin, net earnings and diluted net EPS. Such charges are significantly impacted by the timing and magnitude of HP’s acquisitions and any related impairment charges. Consequently,HP excludes these charges for purposes of calculating these non-GAAP measures to facilitate a more meaningful evaluation of HP’s current operating performance and comparisons to operating performance in other periods.
Russia exit charges relating to HP’s decision to wind down its business operations inRussia . These charges include costs related to severance, cancellation of contracts, inventory write-downs and other related one-time exit costs.HP excludes these adjustments for the purposes of calculating these non-GAAP measures to facilitate a more meaningful evaluation ofHP 's current operating performance and comparisons to operating performance in other periods.
- Non-operating retirement-related (credits)/charges includes certain market-related factors such as interest cost, expected return on plan assets, amortized actuarial gains or losses, associated with HP’s defined benefit pension and post-retirement benefit plans. The market-driven retirement-related adjustments are primarily due to the changes in the value of pension plan assets and liabilities which are tied to financial market performance and
HP considers these adjustments to be outside the operational performance of the business. Non-operating retirement-related (credits)/charges also include certain plan curtailments, settlements and special termination benefits related to HP’s defined benefit pension and post-retirement benefit plans.HP believes that eliminating such adjustments for purposes of calculating non-GAAP measures facilitates a more meaningful evaluation ofHP 's current operating performance and comparisons to operating performance in other periods.
HP incurs defined benefit plan settlement charges relating toHP pension plans. The charges are associated with the net settlement and remeasurement resulting from voluntary lump sum payments offered to certain vested participants and transfer of certain pension obligations.HP excludes these charges for the purposes of calculating these non-GAAP measures to facilitate a more meaningful evaluation of HP’s current operating performance and comparisons to operating performance in other periods.
HP incurs debt extinguishment costs relating to repurchase of certain of its outstandingU.S. dollar global notes or termination of commitments under revolving credit facilities. These costs primarily included bond repurchase premiums partly offset by gains from fair value hedges.HP excludes these costs for the purposes of calculating these non-GAAP measures to facilitate a more meaningful evaluation ofHP 's current operating performance and comparisons to operating performance in other periods.
- Interest and other, net and Provision for taxes includes a gain and a corresponding tax impact, respectively, from the Oracle litigation proceeds.
HP excluded this one-time item when evaluating its performance for the fourth quarter of fiscal 2021 and fiscal 2021. This represents HP’s interest in the litigation judgement in connection with Oracle’s discontinuation of software support for HP’s Itanium-based line of mission-critical servers. This server business is now part of Hewlett Packard Enterprise (“HPE”) pursuant to the separation ofHP and HPE onNovember 1, 2015 . The awarded damages are being shared equally betweenHP and HPE pursuant to the terms of the separation and distribution agreement.HP believes that eliminating this item for purposes of calculating non-GAAP measures facilitates a more meaningful evaluation ofHP 's current operating performance and comparisons to operating performance in prior and future periods.
HP recorded tax adjustments including tax expenses and benefits from internal reorganizations, realizability of certain deferred tax assets, various tax rate and regulatory changes, and tax settlements across various jurisdictions.HP excludes these adjustments for the purposes of calculating these non-GAAP measures to facilitate a more meaningful evaluation ofHP 's current operating performance and comparisons to operating performance in other periods.
Free cash flow is a non-GAAP measure that is defined as cash flow from operations adjusted for net investment in leases, net investments in property, plant, and equipment and the net impact of the one-time Oracle litigation proceeds received during the fourth quarter of fiscal 2021. Gross cash is a non-GAAP measure that is defined as cash and cash equivalents plus short-term investments and certain long-term investments that may be liquidated within 90 days pursuant to the terms of existing put options or similar rights. HP’s management uses free cash flow and gross cash for the purpose of determining the amount of cash available for investment in HP’s businesses, repurchasing stock and other purposes. HP’s management also uses free cash flow and gross cash to evaluate HP’s historical and prospective liquidity. Because gross cash includes liquid assets that are not included in cash and cash equivalents,
Material limitations associated with use of non-GAAP financial measures
These non-GAAP financial measures may have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of HP’s results as reported under GAAP. Some of the limitations in relying on these non-GAAP financial measures are:
- Items such as amortization of intangible assets, though not directly affecting HP’s cash position, represent the loss in value of intangible assets over time. The expense associated with this change in value is not included in non-GAAP operating margin, non-GAAP net earnings and non-GAAP diluted net EPS, and therefore does not reflect the full economic effect of the change in value of those intangible assets.
- Items such as restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets and
Russia exit charges are excluded from non-GAAP operating margin. In addition, non-operating retirement-related (credits)/charges, defined benefit plan settlement charges, debt extinguishment costs, Oracle litigation proceeds and tax adjustments are excluded from non-GAAP net earnings and non-GAAP diluted net EPS. These items can have a material impact on the equivalent GAAP earnings measure and cash flows.
HP may not be able to immediately liquidate the short-term and certain long-term investments included in gross cash, which may limit the usefulness of gross cash as a liquidity measure.
Other companies may calculate the non-GAAP financial measures differently than
Compensation for limitations associated with use of non-GAAP financial measures
Usefulness of non-GAAP financial measures to investors
Editorial contacts
MediaRelations@hp.com
InvestorRelations@hp.com
Source:
2022 GlobeNewswire, Inc., source