HP Inc. Reports Fiscal 2018 Third Quarter Results

PALO ALTO, Calif., Aug. 23, 2018 (GLOBE NEWSWIRE) -- HP (NYSE: HPQ)

Third quarter GAAP diluted net earnings per share ("EPS") of $0.54, above the previously provided outlook of $0.47 to $0.51 per share
Third quarter non-GAAP diluted net EPS of $0.52, within the previously provided outlook of $0.49 to $0.52 per share
Third quarter net revenue of $14.6 billion, up 12% (up 9% in constant currency) from the prior-year period
Third quarter net cash provided by operating activities of $1.5 billion
Third quarter free cash flow of $1.4 billion
Third quarter returned $919 million to shareholders in the form of share repurchases and dividends


 
HP Inc.'s fiscal 2018 third quarter financial performance
 Q3 FY18 Q3 FY17 Y/Y
GAAP net revenue ($B)$14.6 $13.112%
GAAP operating margin 7.4%  7.3%0.1pts
GAAP net earnings ($B)$0.9 $0.726%
GAAP diluted net EPS$0.54 $0.4132%
Non-GAAP operating margin 7.3%  7.7%(0.4)pts
Non-GAAP net earnings ($B)$0.8 $0.714%
Non-GAAP diluted net EPS$0.52 $0.4321%
Net cash provided by operating activities ($B)$1.5 $1.8(15)%
Free cash flow ($B)$1.4 $1.7(18)%
       

Notes to table
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
HP Inc. (“HP”) announced fiscal 2018 third quarter net revenue of $14.6 billion, up 12% (up 9% in constant currency) from the prior-year period.

Third quarter GAAP diluted net EPS was $0.54, up from $0.41 in the prior-year period and above the previously provided outlook of $0.47 to $0.51. Third quarter non-GAAP diluted net EPS was $0.52, up from $0.43 in the prior-year period and within the previously provided outlook of $0.49 to $0.52. Third quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $40 million, or $0.02 per share, related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related credits/(charges), and tax adjustments.

“Q3 was another strong quarter, with consistent and balanced performance across segments and regions”, said Dion Weisler, President and CEO, HP Inc.  “We delivered differentiated innovation in our core, advanced our growth initiatives and are investing in our future while delivering profitable growth, with non-GAAP EPS up 21% year over year.”

Asset management
HP’s net cash provided by operating activities in the third quarter of fiscal 2018 was $1.5 billion. Accounts receivable ended the quarter at $4.6 billion, down 2 days quarter over quarter to 28 days. Inventory ended the quarter at $6.1 billion, up 2 days quarter over quarter to 46 days. Accounts payable ended the quarter at $14.2 billion, up 4 days quarter over quarter to 108 days.

HP generated $1.4 billion of free cash flow in the third quarter. Free cash flow includes net cash provided by operating activities and net investments in property, plant and equipment of $117 million.

HP’s dividend payment of $0.1393 per share in the third quarter resulted in cash usage of $0.2 billion. HP also utilized $0.7 billion of cash during the quarter to repurchase approximately 30.4 million shares of common stock in the open market.  As a result, HP returned 66% of its free cash flow to shareholders in the third quarter. HP exited the quarter with $7.1 billion in gross cash, which includes cash and cash equivalents and short-term investments of $0.9 billion included in other current assets.

Fiscal 2018 third quarter segment results

  • Personal Systems net revenue was up 12% year over year (up 9% in constant currency) with a 3.9% operating margin. Commercial net revenue increased 13% and Consumer net revenue increased 10%. Total units were up 6% with Notebooks units up 6% and Desktops units up 7%. 
  • Printing net revenue was up 11% year over year (up 9% in constant currency) with a 16.0% operating margin. Total hardware units were up 12% with Commercial hardware units up 91% and Consumer hardware units up 2%. Supplies net revenue was up 8% (up 6% in constant currency). 

Outlook
For the fiscal 2018 fourth quarter, HP estimates GAAP diluted net EPS to be in the range of $0.48 to $0.51 and non-GAAP diluted net EPS to be in the range of $0.52 to $0.55. Fiscal 2018 fourth quarter non-GAAP diluted net EPS estimates exclude $0.04 per diluted share, primarily related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related credits/(charges), tax adjustments and the related tax impact on these items.

For fiscal 2018, HP raises estimates for GAAP diluted net EPS to be in the range of $2.82 to $2.85 and non-GAAP diluted net EPS to be in the range of $2.00 to $2.03.  Fiscal 2018 non-GAAP diluted net EPS estimates exclude $0.82 per diluted share, primarily related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related credits/(charges), debt extinguishment costs, tax adjustments and the related tax impact on these items.  In addition, HP continues to anticipate generating free cash flow of at least $3.7 billion for fiscal 2018.

More information on HP's earnings, including additional financial analysis and an earnings overview presentation, is available on HP's Investor Relations website at www.hp.com/investor/home.

HP's FY18 Q3 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2018Q3Webcast .

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