HP Inc. Reports Fiscal 2019 Second Quarter Results

PALO ALTO, Calif., May 23, 2019 (GLOBE NEWSWIRE) --  HP (NYSE: HPQ)

  • Second quarter GAAP diluted net earnings per share ("EPS") of $0.51, above the previously provided outlook of $0.45 to $0.48 per share
  • Second quarter non-GAAP diluted net EPS of $0.53, within the previously provided outlook of $0.50 to $0.53 per share
  • Second quarter net revenue of $14.0 billion, up 0.2% from the prior-year period
  • Second quarter net cash provided by operating activities of $0.9 billion, free cash flow of $0.7 billion
  • Second quarter returned $0.9 billion to shareholders in the form of share repurchases and dividends
HP Inc. fiscal 2019 second quarter financial performance 
  Q2 FY19 Q2 FY18 Y/Y 
GAAP net revenue ($B) $14.0  $14.0  0.2% 
GAAP operating margin 6.6% 6.5% 0.1 pts 
GAAP net earnings ($B) $0.8  $1.1  (26.1)% 
GAAP diluted net EPS $0.51  $0.64  (20.3)% 
Non-GAAP operating margin 7.4% 7.3% 0.1 pts 
Non-GAAP net earnings ($B) $0.8  $0.8  2.9% 
Non-GAAP diluted net EPS $0.53  $0.48  10.4% 
Net cash provided by operating activities ($B) $0.9  $1.1  (18.0)% 
Free cash flow ($B) $0.7  $0.9  (20.3)% 

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 2019 second quarter net revenue of $14.0 billion, up 0.2% (up 2% in constant currency) from the prior-year period.

Second quarter GAAP diluted net EPS was $0.51, down from $0.64 in the prior-year period and above the previously provided outlook of $0.45 to $0.48. Second quarter non-GAAP diluted net EPS was $0.53, up from $0.48 in the prior-year period and within the previously provided outlook of $0.50 to $0.53. Second quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $39 million, or $0.02 per diluted share, related to restructuring and other charges, acquisition-related charges, amortization of intangible assets, non-operating retirement-related (credits)/charges, and tax adjustments.

“We delivered solid Q2 financial results, with strong non-GAAP EPS growing double-digits and coming in at the high end of our outlook,” said Dion Weisler, HP’s President and CEO. “We continue to strike the right balance between driving results today and investing in innovation to deliver long term financial performance.”

Asset management
HP’s net cash provided by operating activities in the second quarter of fiscal 2019 was $0.9 billion. Accounts receivable ended the quarter at $5.4 billion, up 4-days quarter over quarter to 35 days. Inventory ended the quarter at $5.4 billion, up 1-day quarter over quarter to 43 days. Accounts payable ended the quarter at $13.8 billion, up 2 days quarter over quarter to 110 days.

HP generated $0.7 billion of free cash flow in the second quarter. Free cash flow includes net cash provided by operating activities of $0.9 billion less net investments in and proceeds from the sale of property, plant and equipment of $114 million.

HP’s dividend payment of $0.1602 per share in the second quarter resulted in cash usage of $0.2 billion. HP also utilized $0.7 billion of cash during the quarter to repurchase approximately 33.6 million shares of common stock in the open market.  As a result, HP returned 125% of its second quarter free cash flow to shareholders. HP exited the quarter with $3.6 billion in gross cash, which includes cash and cash equivalents and short-term investments.

Fiscal 2019 second quarter segment results

  • Personal Systems net revenue was up 2% year over year (up 5% in constant currency) with a 4.3% operating margin. Commercial net revenue increased 7% and Consumer net revenue decreased 9%. Total units were down 1% with Notebooks units down 5% and Desktops units up 6%.

  • Printing net revenue was down 2% year over year (down 2% in constant currency) with a 16.4% operating margin. Total hardware units were down 4% with Commercial hardware units down 3% and Consumer hardware units down 4%. Supplies net revenue was down 3% (down 3% in constant currency). 

Outlook
For the fiscal 2019 third quarter, HP estimates GAAP diluted net EPS to be in the range of $0.49 to $0.52 and non-GAAP diluted net EPS to be in the range of $0.53 to $0.56. Fiscal 2019 third 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.

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