PALO ALTO, Calif., Aug. 29, 2023 (GLOBE NEWSWIRE) — HP (NYSE: HPQ)
- Third quarter GAAP diluted internet earnings per share (“EPS”) of $zero.seventy six, above the beforehand offered outlook of $zero.61 to $0.71 per share
- Third quarter non-GAAP diluted internet EPS of $zero.86, inside the beforehand offered outlook of $zero.eighty one to $zero.ninety one per share
- Third quarter internet income of $13.2 billion, down 9.9% from the prior-yr period
- Third quarter internet cash offered by operating activities of $1.0 billion, free money move of $zero.9 billion
- Third quarter returned $0.3 billion to shareholders in the type of dividends
- Retired long-term debt of $1.1 billion
| HP Inc.’s fiscal 2023 third quarter monetary performance | ||||||||
| Q3 FY23 | Q3 FY22 | Y/Y | ||||||
| GAAP internet income ($B) | $ | 13.2 | $ | 14.6 | (9.9)% | |||
| GAAP working margin | 7.2% | eight.6% | (1.4) pts | |||||
| GAAP internet earnings ($B) | $ | zero.eight | $ | 1.1 | (32)% | |||
| GAAP diluted internet EPS | $ | zero.seventy six | $ | 1.08 | (30)% | |||
| Non-GAAP operating margin | 8.8% | 9.4% | (zero.6) pts | |||||
| Non-GAAP internet earnings ($B) | $ | 0.9 | $ | 1.1 | (19)% | |||
| Non-GAAP diluted internet EPS | $ | 0.86 | $ | 1.03 | (17)% | |||
| Internet money offered by working activities ($B) | $ | 1.0 | $ | 0.4 | 148% | |||
| Free cash move ($B) | $ | zero.9 | $ | zero.three | 214% | |||
Notes to table
Details about HP Inc.’s use of non-GAAP monetary info is offered beneath “Use of non-GAAP financial info” under.
Internet income and EPS outcomes
HP Inc. and its subsidiaries (“HP”) introduced fiscal 2023 third quarter internet income of $13.2 billion, down 9.9% (down 7.four% in fixed foreign money) from the prior-yr period.
“We delivered a strong quarter of sequential progress, combining robust innovation with disciplined execution to realize profitable PC market share and achieve our non-GAAP EPS goal,” stated Enrique Lores, HP President and CEO. “Whereas we anticipate another quarter of sequential progress in This fall, the exterior surroundings has not improved as shortly as anticipated and we are moderating our expectations in consequence. We remain confident in our capacity to drive long-term progress and value creation as we give attention to the things we will control and make continued progress towards our Future Ready plan.”
Third quarter GAAP diluted internet EPS was $0.seventy six, down from $1.08 within the prior-yr period and above the previously offered outlook of $zero.sixty one to $zero.seventy one. Third quarter non-GAAP diluted internet EPS was $zero.86, down from $1.03 in the prior-yr period and inside the beforehand offered outlook of $zero.81 to $zero.ninety one. Third quarter non-GAAP internet earnings and non-GAAP diluted internet EPS excludes after-tax changes of $93 million, or $0.10 per diluted share, related to restructuring and other expenses, acquisition and divestiture costs, amortization of intangible belongings, debt extinguishment profit, non-operating retirement-related credits and tax adjustments.
Asset administration
HP’s internet money offered by operating activities in the third quarter of fiscal 2023 was $1.0 billion. Accounts receivable ended the quarter at $four.four billion, up 1 day quarter over quarter to 30 days. Inventory ended the quarter at $7.2 billion, down three days quarter over quarter to sixty two days. Accounts payable ended the quarter at $14.1 billion, up three days quarter over quarter to 123 days.
HP generated $zero.9 billion of free cash movement in the third quarter. Free money circulate consists of internet cash offered by working actions of $1.zero billion adjusted for internet investments in leases of $31 million and internet investments in property, plant and gear of $137 million.
HP’s dividend cost of $zero.2625 per share within the third quarter resulted in money utilization of $0.3 billion. HP exited the quarter with $1.7 billion in gross money, which incorporates cash, money equivalents and restricted cash of $1.7 billion, and brief-time period investments of $3 million included in other current belongings. Cash, money equivalents and restricted cash consists of $forty five million of restricted money associated to quantities collected and held on behalf of a third social gathering for trade receivables beforehand bought.
Fiscal 2023 third quarter phase outcomes
- Private Techniques internet income was $eight.9 billion, down 11% yr over yr (down 8% in fixed foreign money) with a 6.6% working margin. Shopper PS internet revenue was down 12% and Business PS internet revenue was down 11%. Complete models have been up three% with Shopper PS models up 8% and Business PS models flat.
- Printing internet income was $four.3 billion, down 7% yr over yr (down 5% in constant foreign money) with an 18.6% operating margin. Shopper Printing internet revenue was down 28% and Business Printing internet income was down 6%. Supplies internet income was down 2% (flat in constant foreign money). Complete hardware models have been down 19% general, with Shopper Printing models down 20% and Business Printing models down 8%.
Outlook
For the fiscal 2023 fourth quarter, HP estimates GAAP diluted internet EPS to be in the range of $0.65 to $0.77 and non-GAAP diluted internet EPS to be within the range of $zero.85 to $zero.97. Fiscal 2023 fourth quarter non-GAAP diluted internet EPS estimates exclude $0.20 per diluted share, primarily related to restructuring and other fees, acquisition and divestiture expenses, amortization of intangible belongings, non-operating retirement-related credit, tax adjustments and the associated tax impression on these things.
For fiscal 2023, HP estimates GAAP diluted internet EPS to be in the vary of $2.95 to $3.07 and non-GAAP diluted internet EPS to be in the range of $three.23 to $three.35. Fiscal 2023 non-GAAP diluted internet EPS estimates exclude $zero.28 per diluted share, primarily associated to restructuring and different fees, acquisition and divestiture costs, amortization of intangible belongings, debt extinguishment benefit, non-working retirement-associated credits, tax changes and the related tax influence on these things. For fiscal 2023, HP anticipates producing free cash move of approximately $3.0 billion.
More info on HP’s earnings, including further financial evaluation and an earnings overview presentation, is obtainable on HP’s Investor Relations website at investor.hp.com.
HP’s FY23 Q3 earnings conference call is accessible by way of audio webcast at www.hp.com/investor/2023Q3Webcast.
About HP Inc.
HP Inc. (NYSE: HPQ) is a worldwide know-how chief and creator of options that allow individuals to convey their ideas to life and hook up with the issues that matter most. Working in more than one hundred seventy nations, HP delivers a wide range of progressive and sustainable units, providers and subscriptions for private computing, printing, 3D printing, hybrid work, gaming, and more. For extra info, please go to http://www.hp.com.
Use of non-GAAP monetary info
To supplement HP’s consolidated condensed financial statements introduced on a usually accepted accounting rules (“GAAP”) basis, HP supplies internet revenue on a continuing foreign money foundation, non-GAAP complete working expense, non-GAAP working profit, non-GAAP operating margin, non-GAAP tax price, non-GAAP internet earnings, non-GAAP diluted internet EPS, free cash circulate, gross money and internet cash (debt) monetary measures. HP additionally offers forecasts of non-GAAP diluted internet EPS and free cash circulate. Reconciliations of these non-GAAP financial measures to probably the most instantly comparable GAAP financial measures are included within the tables under or elsewhere within the supplies accompanying this information launch. In addition, an evidence of the methods during which HP’s administration uses these non-GAAP measures to guage its business, the substance behind HP’s determination to make use of these non-GAAP measures, the material limitations related to using these non-GAAP measures, the way through which HP’s management compensates for those limitations, and the substantive explanation why HP’s management believes that these non-GAAP measures present helpful info to buyers is included beneath “Use of non-GAAP monetary measures” after the tables under. This additional non-GAAP financial info is just not meant to be thought-about in isolation or as an alternative to internet revenue, working expense, operating revenue, operating margin, tax price, internet earnings, diluted internet EPS, money offered by (used in) working activities or cash, cash equivalents and restricted money prepared in accordance with GAAP.
Forward-wanting statements
This doc incorporates forward-wanting statements based mostly on current expectations and assumptions that involve risks and uncertainties. If the risks or uncertainties ever materialize or the assumptions show incorrect, they might have an effect on the enterprise and results of operations of HP Inc. and its consolidated subsidiaries which may differ materially from those expressed or implied by such forward-wanting statements and assumptions.
All statements aside from statements of historical reality are statements that could possibly be deemed ahead-wanting statements, together with, but not restricted to, any statements relating to the influence of the COVID-19 pandemic; projections of internet income, margins, bills, efficient tax rates, internet earnings, internet earnings per share, cash flows, benefit plan funding, deferred taxes, share repurchases, overseas foreign money trade rates or other financial gadgets; any projections of the amount, timing or impression of value financial savings or restructuring and other expenses, deliberate structural value reductions and productiveness initiatives; any statements of the plans, strategies and aims of management for future operations, together with, however not restricted to, our business model and transformation, our sustainability objectives, our go-to-market strategy, the execution of restructuring plans and any ensuing value financial savings (including the fiscal 2023 plan), internet income or profitability improvements or other financial impacts; any statements in regards to the anticipated improvement, demand, efficiency, market share or aggressive efficiency referring to products or services; any statements concerning potential supply constraints, element shortages, manufacturing disruptions or logistics challenges; any statements relating to current or future macroeconomic developments or occasions and the impression of those tendencies and events on HP and its monetary efficiency; any statements relating to pending investigations, claims, disputes or different litigation matters; any statements of expectation or belief as to the timing and expected advantages of acquisitions and other enterprise combination and funding transactions (including the current acquisition of Plantronics, Inc. (“Poly”)); and any statements of assumptions underlying any of the foregoing. Forward-wanting statements can even usually be identified by phrases resembling “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “tasks,” “will,” “would,” “might,” “can,” “might,” and comparable terms.
Dangers, uncertainties and assumptions that would affect our business and results of operations embrace elements referring to the influence of macroeconomic and geopolitical tendencies, modifications and events, including the Russian invasion of Ukraine and pressure across the Taiwan Strait and the regional and international ramifications of those occasions; current volatility in international capital markets, will increase in benchmark rates of interest, the consequences of inflation and instability of monetary establishments; risks associated with HP’s worldwide operations; the consequences of the COVID-19 pandemic; the execution and efficiency of contracts by HP and its suppliers, clients, shoppers and companions, including logistical challenges with respect to such execution and performance; modifications in estimates and assumptions HP makes in reference to the preparation of its monetary statements; the necessity to handle (and reliance on) third-social gathering suppliers, including with respect to element shortages, and the necessity to handle HP’s international, multi-tier distribution network, restrict potential misuse of pricing packages by HP’s channel companions, adapt to new or altering marketplaces and successfully deliver HP’s providers; HP’s capacity to execute on its strategic plans, together with the previously announced initiatives, enterprise mannequin modifications and transformation; execution of planned structural value reductions and productivity initiatives; HP’s capacity to finish any contemplated share repurchases, other capital return packages or other strategic transactions; the competitive pressures faced by HP’s businesses; risks associated with executing HP’s technique and business model modifications and transformation; efficiently innovating, creating and executing HP’s go-to-market technique, together with online, omnichannel and contractual gross sales, in an evolving distribution, reseller and customer landscape; the event and transition of latest services and the enhancement of present services to satisfy evolving buyer wants and reply to rising technological developments; efficiently competing and maintaining the worth proposition of HP’s products, including provides; challenges to HP’s capacity to precisely forecast inventories, demand and pricing, which can be as a consequence of HP’s multi-tiered channel, sales of HP’s merchandise to unauthorized resellers or unauthorized resale of HP’s products or our uneven gross sales cycle; integration and different dangers related to enterprise combination and funding transactions; the outcomes of our restructuring plans (together with the fiscal 2023 plan), together with estimates and assumptions related to the fee (including any attainable disruption of HP’s business) and the anticipated advantages of our restructuring plans; the safety of HP’s intellectual property belongings, together with intellectual property licensed from third parties; the hiring and retention of key staff; disruptions in operations from system safety risks, knowledge protection breaches, cyberattacks, excessive climate circumstances or other effects of local weather change, medical epidemics or pandemics such as the COVID-19 pandemic, and other pure or artifical disasters or catastrophic occasions; the impression of modifications to federal, state, native and overseas legal guidelines and laws, including environmental laws and tax laws; our aspirations related to environmental, social and governance matters; potential impacts, liabilities and costs from pending or potential investigations, claims and disputes; the effectiveness of our inner management over monetary reporting and different dangers which might be described in HP’s Annual Report on Type 10-Okay for the fiscal yr ended October 31, 2022 and HP’s other filings with the Securities and Trade Commission.
As in prior durations, the monetary info set forth in this document, together with any tax-associated gadgets, reflects estimates based mostly on info out there presently. Whereas HP believes these estimates to be affordable, these quantities might differ materially from reported quantities in HP’s Quarterly Studies on Type 10-Q for the fiscal quarter ended July 31, 2023, Annual Report on Type 10-Okay for the fiscal yr ending October 31, 2023, and HP’s different filings with the Securities and Trade Commission. The ahead-wanting statements in this document are made as of the date of this doc and HP assumes no obligation and does not intend to update these forward-wanting statements.
HP’s Investor Relations web site at investor.hp.com incorporates a big quantity of information about HP, together with monetary and different info for buyers. HP encourages buyers to go to its website on occasion, as info is up to date, and new info is posted. The content of HP’s web site isn’t included by reference into this document or in some other report or document HP information with the SEC, and any references to HP’s website are meant to be inactive textual references only.
| HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (In hundreds of thousands, besides per share amounts) |
|||||||||||
| Three months ended | |||||||||||
| July 31, 2023 | April 30, 2023 | July 31, 2022 | |||||||||
| Internet income | $ | 13,196 | $ | 12,907 | $ | 14,648 | |||||
| Prices and expenses: | |||||||||||
| Value of income | 10,374 | 9,993 | 11,764 | ||||||||
| Analysis and improvement | 354 | 410 | 368 | ||||||||
| Selling, basic and administrative | 1,302 | 1,397 | 1,142 | ||||||||
| Restructuring and other costs | 75 | 200 | 13 | ||||||||
| Acquisition and divestiture fees | 48 | 74 | 32 | ||||||||
| Amortization of intangible belongings | 91 | 86 | 50 | ||||||||
| Russia exit costs | — | — | 23 | ||||||||
| Complete costs and bills | 12,244 | 12,one hundred sixty | 13,392 | ||||||||
| Earnings from operations | 952 | 747 | 1,256 | ||||||||
| Curiosity and different, internet | (sixteen | ) | (one hundred sixty | ) | (70 | ) | |||||
| Earnings before taxes | 936 | 587 | 1,186 | ||||||||
| (Provision for) benefit from taxes | (one hundred seventy | ) | 467 | (64 | ) | ||||||
| Internet earnings | $ | 766 | $ | 1,054 | $ | 1,122 | |||||
| Internet earnings per share: | |||||||||||
| Primary | $ | zero.seventy seven | $ | 1.06 | $ | 1.10 | |||||
| Diluted | $ | zero.seventy six | $ | 1.06 | $ | 1.08 | |||||
| Cash dividends declared per share | $ | 0.52 | $ | — | $ | zero.50 | |||||
| Weighted-common shares used to compute internet earnings per share: | |||||||||||
| Primary | 993 | 991 | 1,024 | ||||||||
| Diluted | 1,002 | 998 | 1,035 | ||||||||
HP revised its prior period monetary statements for an accounting correction associated to a income contract in the Personal Methods phase. The impression of those revisions was not materials to HP’s beforehand filed financial statements. See “Notes to the Consolidated Condensed Financial Statements, “Notice 1. Basis of Presentation” and “Observe 14. Revision of Prior Period Financial Statements” included in the Quarterly Report on Type 10-Q for the quarter ended July 31, 2023, to be filed with the SEC. Because of this, the Firm is presently assessing the character of any deficiency in its inner management over monetary reporting. In connection with these revisions, the Firm has additionally corrected the timing of other unrelated immaterial changes which have been beforehand made within the durations the Company identified them.
| HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (In tens of millions, except per share quantities) |
|||||||
| Nine months ended | |||||||
| July 31, 2023 | July 31, 2022 | ||||||
| Internet income | $ | 39,901 | $ | 48,136 | |||
| Prices and bills: | |||||||
| Value of income | 31,378 | 38,564 | |||||
| Analysis and improvement | 1,167 | 1,271 | |||||
| Selling, common and administrative | 4,030 | four,074 | |||||
| Restructuring and different fees | 416 | 148 | |||||
| Acquisition and divestiture expenses | 206 | 84 | |||||
| Amortization of intangible belongings | 262 | 154 | |||||
| Russia exit fees | — | 23 | |||||
| Complete costs and expenses | 37,459 | forty four,318 | |||||
| Earnings from operations | 2,442 | three,818 | |||||
| Curiosity and other, internet | (357 | ) | (141 | ) | |||
| Earnings earlier than taxes | 2,085 | three,677 | |||||
| Profit from (provision for) taxes | 204 | (522 | ) | ||||
| Internet earnings | $ | 2,289 | $ | three,one hundred fifty five | |||
| Internet earnings per share: | |||||||
| Primary | $ | 2.31 | $ | 3.00 | |||
| Diluted | $ | 2.29 | $ | 2.ninety seven | |||
| Cash dividends declared per share | $ | 1.05 | $ | 1.00 | |||
| Weighted-common shares used to compute internet earnings per share: | |||||||
| Primary | 991 | 1,052 | |||||
| Diluted | 999 | 1,064 | |||||
| HP INC. AND SUBSIDIARIES ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS, OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE (Unaudited) (In hundreds of thousands, besides per share amounts) |
|||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||
| July 31, 2023 | April 30, 2023 | July 31, 2022 | |||||||||||||||||||||
| Amounts | Diluted internet earnings per share |
Quantities | Diluted internet earnings per share |
Amounts | Diluted internet earnings per share |
||||||||||||||||||
| GAAP internet earnings | $ | 766 | $ | zero.76 | $ | 1,054 | $ | 1.06 | $ | 1,122 | $ | 1.08 | |||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Restructuring and other expenses | seventy five | zero.07 | 200 | 0.20 | thirteen | 0.01 | |||||||||||||||||
| Acquisition and divestiture costs | forty eight | 0.05 | seventy four | zero.07 | 32 | zero.03 | |||||||||||||||||
| Amortization of intangible belongings | ninety one | 0.09 | 86 | 0.09 | 50 | zero.05 | |||||||||||||||||
| Russia exit expenses | — | — | — | — | 23 | 0.02 | |||||||||||||||||
| Debt extinguishment profit | (one hundred fifteen | ) | (0.eleven | ) | — | — | — | — | |||||||||||||||
| Non-working retirement-associated credits | (12 | ) | (zero.01 | ) | (13 | ) | (0.01 | ) | (34 | ) | (0.03 | ) | |||||||||||
| Tax changes(a) | 6 | zero.01 | (616 | ) | (zero.62 | ) | (one hundred forty | ) | (0.13 | ) | |||||||||||||
| Non-GAAP internet earnings | $ | 859 | $ | zero.86 | $ | 785 | $ | 0.seventy nine | $ | 1,066 | $ | 1.03 | |||||||||||
| GAAP earnings from operations | $ | 952 | $ | 747 | $ | 1,256 | |||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Restructuring and other expenses | seventy five | 200 | thirteen | ||||||||||||||||||||
| Acquisition and divestiture expenses | forty eight | seventy four | 32 | ||||||||||||||||||||
| Amortization of intangible belongings | ninety one | 86 | 50 | ||||||||||||||||||||
| Russia exit expenses | — | — | 23 | ||||||||||||||||||||
| Non-GAAP earnings from operations | $ | 1,166 | $ | 1,107 | $ | 1,374 | |||||||||||||||||
| GAAP working margin | 7.2 | % | 5.8 | % | 8.6 | % | |||||||||||||||||
| Non-GAAP adjustments | 1.6 | % | 2.8 | % | 0.eight | % | |||||||||||||||||
| Non-GAAP operating margin | eight.8 | % | eight.6 | % | 9.4 | % | |||||||||||||||||
(a) Consists of tax influence on non-GAAP adjustments.
| HP INC. AND SUBSIDIARIES ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS, OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE (Unaudited) (In hundreds of thousands, besides per share quantities) |
|||||||||||||||
| 9 months ended | |||||||||||||||
| July 31, 2023 | July 31, 2022 | ||||||||||||||
| Quantities | Diluted internet earnings per share |
Quantities | Diluted internet earnings per share |
||||||||||||
| GAAP internet earnings | $ | 2,289 | $ | 2.29 | $ | three,one hundred fifty five | $ | 2.97 | |||||||
| Non-GAAP adjustments: | |||||||||||||||
| Restructuring and other expenses | 416 | 0.forty two | 148 | zero.15 | |||||||||||
| Acquisition and divestiture costs | 206 | zero.21 | 84 | zero.08 | |||||||||||
| Amortization of intangible belongings | 262 | 0.26 | 154 | zero.14 | |||||||||||
| Russia exit costs | — | — | 23 | 0.02 | |||||||||||
| Debt extinguishment benefit | (107 | ) | (0.eleven | ) | — | — | |||||||||
| Non-operating retirement-associated credit | (35 | ) | (zero.04 | ) | (103 | ) | (0.10 | ) | |||||||
| Tax adjustments(a) | (656 | ) | (zero.65 | ) | (116 | ) | (zero.12 | ) | |||||||
| Non-GAAP internet earnings | $ | 2,375 | $ | 2.38 | $ | three,345 | $ | three.14 | |||||||
| GAAP earnings from operations | $ | 2,442 | $ | three,818 | |||||||||||
| Non-GAAP changes: | |||||||||||||||
| Restructuring and different fees | 416 | 148 | |||||||||||||
| Acquisition and divestiture expenses | 206 | 84 | |||||||||||||
| Amortization of intangible belongings | 262 | 154 | |||||||||||||
| Russia exit expenses | — | 23 | |||||||||||||
| Non-GAAP earnings from operations | $ | three,326 | $ | four,227 | |||||||||||
| GAAP operating margin | 6.1 | % | 7.9 | % | |||||||||||
| Non-GAAP adjustments | 2.2 | % | 0.9 | % | |||||||||||
| Non-GAAP working margin | eight.three | % | 8.eight | % | |||||||||||
(a) Consists of tax impression on non-GAAP adjustments.
| HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (In hundreds of thousands) |
|||||||
| As of | |||||||
| July 31, 2023 | October 31, 2022 | ||||||
| ASSETS | |||||||
| Current belongings: | |||||||
| Cash, cash equivalents and restricted cash | $ | 1,718 | $ | three,one hundred forty five | |||
| Accounts receivable, internet | four,367 | 4,546 | |||||
| Stock | 7,197 | 7,615 | |||||
| Different current belongings | four,181 | four,431 | |||||
| Complete current belongings | 17,463 | 19,737 | |||||
| Property, plant and gear, internet | 2,783 | 2,774 | |||||
| Goodwill | 8,614 | eight,541 | |||||
| Different non-present belongings | 7,772 | 7,443 | |||||
| Complete belongings | $ | 36,632 | $ | 38,495 | |||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
| Present liabilities: | |||||||
| Notes payable and brief-term borrowings | $ | 443 | $ | 218 | |||
| Accounts payable | 14,123 | 15,303 | |||||
| Different present liabilities | 10,624 | 10,668 | |||||
| Complete present liabilities | 25,one hundred ninety | 26,189 | |||||
| Lengthy-term debt | 9,236 | 10,796 | |||||
| Different non-present liabilities | 4,451 | four,535 | |||||
| Stockholders’ deficit | (2,245 | ) | (three,025 | ) | |||
| Complete liabilities and stockholders’ deficit | $ | 36,632 | $ | 38,495 | |||
| HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In tens of millions) |
|||||||
| Three months ended | |||||||
| July 31, 2023 | July 31, 2022 | ||||||
| Money flows from operating activities: | |||||||
| Internet earnings | $ | 766 | $ | 1,122 | |||
| Changes to reconcile internet earnings to internet money offered by operating activities: | |||||||
| Depreciation and amortization | 217 | 181 | |||||
| Inventory-based mostly compensation expense | 91 | 70 | |||||
| Restructuring and other expenses | 75 | 13 | |||||
| Deferred taxes on earnings | 51 | fifty two | |||||
| Different, internet | (97 | ) | fifty seven | ||||
| Modifications in working belongings and liabilities, internet of acquisitions: | |||||||
| Accounts receivable | (246 | ) | 985 | ||||
| Inventory | (10 | ) | seven hundred | ||||
| Accounts payable | 801 | (1,472 | ) | ||||
| Internet investment in leases | (31 | ) | (53 | ) | |||
| Taxes on earnings | 24 | (117 | ) | ||||
| Restructuring and other | (seventy seven | ) | (39 | ) | |||
| Other belongings and liabilities | (588 | ) | (1,a hundred and five | ) | |||
| Internet cash offered by working activities | 976 | 394 | |||||
| Cash flows from investing actions: | |||||||
| Investment in property, plant and gear | (137 | ) | (195 | ) | |||
| Proceeds from the sale of property, plant and gear | — | 25 | |||||
| Purchases of obtainable-for-sale securities and other investments | (1 | ) | (42 | ) | |||
| Maturities and sales of obtainable-for-sale securities and different investments | — | 1 | |||||
| Collateral returned for by-product devices | 9 | — | |||||
| Internet money used in investing actions | (129 | ) | (211 | ) | |||
| Cash flows from financing activities: | |||||||
| Proceeds from brief-time period borrowings with unique maturities less than 90 days, internet | 200 | — | |||||
| Proceeds from debt, internet of issuance prices | 60 | 2,026 | |||||
| Cost of debt and related costs | (1,067 | ) | (45 | ) | |||
| Inventory-based mostly award actions and others | — | 9 | |||||
| Repurchase of widespread inventory | — | (1,029 | ) | ||||
| Cash dividends paid | (259 | ) | (255 | ) | |||
| Settlement of cash movement hedges | (3 | ) | 20 | ||||
| Internet cash (utilized in) offered by financing actions | (1,069 | ) | 726 | ||||
| (Lower) improve in money, money equivalents and restricted cash | (222 | ) | 909 | ||||
| Money, cash equivalents and restricted money at starting of period | 1,940 | 4,477 | |||||
| Money, cash equivalents and restricted cash at end of interval | $ | 1,718 | $ | 5,386 | |||
| HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In hundreds of thousands) |
|||||||
| 9 months ended | |||||||
| July 31, 2023 | July 31, 2022 | ||||||
| Money flows from working actions: | |||||||
| Internet earnings | $ | 2,289 | $ | three,one hundred fifty five | |||
| Changes to reconcile internet earnings to internet money offered by operating activities: | |||||||
| Depreciation and amortization | 638 | 571 | |||||
| Inventory-based mostly compensation expense | 353 | 273 | |||||
| Restructuring and different expenses | 416 | 149 | |||||
| Deferred taxes on earnings | (774 | ) | fifty one | ||||
| Different, internet | (61 | ) | 361 | ||||
| Modifications in operating belongings and liabilities, internet of acquisitions: | |||||||
| Accounts receivable | one hundred eighty | 1,a hundred and one | |||||
| Inventory | 364 | (570 | ) | ||||
| Accounts payable | (1,133 | ) | (491 | ) | |||
| Internet funding in leases | (eighty two | ) | (94 | ) | |||
| Taxes on earnings | 354 | (one hundred sixty five | ) | ||||
| Restructuring and other | (244 | ) | (185 | ) | |||
| Other belongings and liabilities | (704 | ) | (1,597 | ) | |||
| Internet money offered by working activities | 1,596 | 2,559 | |||||
| Money flows from investing activities: | |||||||
| Investment in property, plant and gear | (459 | ) | (647 | ) | |||
| Proceeds from the sale of property, plant and gear | — | 26 | |||||
| Purchases of obtainable-for-sale securities and different investments | (6 | ) | (50 | ) | |||
| Maturities and gross sales of obtainable-for-sale securities and other investments | 18 | 8 | |||||
| Collateral (posted) returned for by-product devices | (118 | ) | 14 | ||||
| Cost made in connection with enterprise acquisitions, internet of money acquired | (5 | ) | (24 | ) | |||
| Internet cash used in investing activities | (570 | ) | (673 | ) | |||
| Cash flows from financing activities: | |||||||
| Proceeds from (cost of) brief-term borrowings with unique maturities less than ninety days, internet | one hundred ninety | (four hundred | ) | ||||
| Proceeds from debt, internet of issuance costs | 177 | four,086 | |||||
| Cost of debt and associated prices | (1,654 | ) | (141 | ) | |||
| Stock-based mostly award actions and others | (86 | ) | (88 | ) | |||
| Repurchase of widespread inventory | (one hundred | ) | (3,547 | ) | |||
| Cash dividends paid | (777 | ) | (788 | ) | |||
| Collateral returned for by-product equipment | (200 | ) | — | ||||
| Settlement of money stream hedges | (three | ) | 79 | ||||
| Internet money utilized in financing activities | (2,453 | ) | (799 | ) | |||
| (Lower) improve in money, money equivalents and restricted cash | (1,427 | ) | 1,087 | ||||
| Cash, cash equivalents and restricted money at beginning of interval | 3,one hundred forty five | 4,299 | |||||
| Money, money equivalents and restricted cash at end of interval | $ | 1,718 | $ | 5,386 | |||
| HP INC. AND SUBSIDIARIES SEGMENT/BUSINESS UNIT INFORMATION (Unaudited) (In hundreds of thousands) |
|||||||||||||||||
| Three months ended | Change (%) | ||||||||||||||||
| July 31, 2023 | April 30, 2023 | July 31, 2022 | Q/Q | Y/Y | |||||||||||||
| Internet income: | |||||||||||||||||
| Business PS | $ | 6,201 | $ | 5,916 | $ | 6,956 | 5 | % | (11 | )% | |||||||
| Shopper PS | 2,731 | 2,253 | three,117 | 21 | % | (12 | )% | ||||||||||
| Private Techniques(a) | eight,932 | eight,169 | 10,073 | 9 | % | (eleven | )% | ||||||||||
| Provides | 2,768 | 3,006 | 2,814 | (8 | )% | (2 | )% | ||||||||||
| Business Printing | 974 | 1,089 | 1,036 | (11 | )% | (6 | )% | ||||||||||
| Shopper Printing | 521 | 641 | 725 | (19 | )% | (28 | )% | ||||||||||
| Printing | 4,263 | four,736 | four,575 | (10 | )% | (7 | )% | ||||||||||
| Corporate Investments(c) | 1 | three | — | NM | NM | ||||||||||||
| Complete phase internet revenue | thirteen,196 | 12,908 | 14,648 | 2 | % | (10 | )% | ||||||||||
| Different(c) | — | (1 | ) | — | NM | NM | |||||||||||
| Complete internet income | $ | thirteen,196 | $ | 12,907 | $ | 14,648 | 2 | % | (10 | )% | |||||||
| Earnings before taxes:(b) | |||||||||||||||||
| Personal Methods | $ | 592 | $ | 431 | $ | 674 | |||||||||||
| Printing | 794 | 899 | 904 | ||||||||||||||
| Corporate Investments | (32 | ) | (38 | ) | (fifty eight | ) | |||||||||||
| Complete phase earnings from operations | 1,354 | 1,292 | 1,520 | ||||||||||||||
| Corporate and unallocated value and different | (97 | ) | (ninety | ) | (76 | ) | |||||||||||
| Inventory-based mostly compensation expense | (91 | ) | (95 | ) | (70 | ) | |||||||||||
| Restructuring and other expenses | (75 | ) | (200 | ) | (thirteen | ) | |||||||||||
| Acquisition and divestiture costs | (forty eight | ) | (seventy four | ) | (32 | ) | |||||||||||
| Amortization of intangible belongings | (91 | ) | (86 | ) | (50 | ) | |||||||||||
| Russia exit expenses | — | — | (23 | ) | |||||||||||||
| Interest and different, internet | (sixteen | ) | (one hundred sixty | ) | (70 | ) | |||||||||||
| Complete earnings earlier than taxes | $ | 936 | $ | 587 | $ | 1,186 | |||||||||||
(a) Efficient first quarter of fiscal 2023, HP realigned the Personal Techniques enterprise models reporting construction into Business PS and Shopper PS to align with its buyer market segmentation. HP has reflected this variation to its prior reporting durations on an as-if basis. The reporting change had no impression to beforehand reported phase internet revenue and phase earnings from operation, consolidated internet income, internet earnings or internet earnings per share (“EPS”).
(b) Effective first quarter of fiscal 2023, in connection with organizational realignments, sure costs which have been earlier mirrored underneath “Company and unallocated value and different”, have now been reclassified to the Personal Techniques and Printing segments. HP has mirrored this alteration to its prior reporting durations on an as-if foundation. The reporting change had no impression to previously reported phase internet income, consolidated internet revenue, internet earnings or internet EPS.
(c) “NM” represents not meaningful.
| HP INC. AND SUBSIDIARIES SEGMENT/BUSINESS UNIT INFORMATION (Unaudited) (In tens of millions) |
||||||||||
| 9 months ended | Change (%) | |||||||||
| July 31, 2023 | July 31, 2022 | Y/Y | ||||||||
| Internet income: | ||||||||||
| Business PS | $ | 18,499 | $ | 22,600 | (18 | )% | ||||
| Shopper PS | 7,787 | 11,171 | (30 | )% | ||||||
| Private Techniques(a) | 26,286 | 33,771 | (22 | )% | ||||||
| Provides | eight,631 | 9,013 | (four | )% | ||||||
| Business Printing | 3,119 | 3,117 | — | % | ||||||
| Shopper Printing | 1,861 | 2,239 | (17 | )% | ||||||
| Printing | 13,611 | 14,369 | (5 | )% | ||||||
| Corporate Investments(c) | 5 | 1 | NM | |||||||
| Complete phase internet income | 39,902 | 48,141 | (17 | )% | ||||||
| Different(c) | (1 | ) | (5 | ) | NM | |||||
| Complete internet revenue | $ | 39,901 | $ | forty eight,136 | (17 | )% | ||||
| Earnings earlier than taxes:(b) | ||||||||||
| Personal Methods | $ | 1,498 | $ | 2,332 | ||||||
| Printing | 2,563 | 2,725 | ||||||||
| Corporate Investments | (103 | ) | (184 | ) | ||||||
| Complete phase earnings from operations | three,958 | 4,873 | ||||||||
| Company and unallocated value and different | (279 | ) | (373 | ) | ||||||
| Inventory-based mostly compensation expense | (353 | ) | (273 | ) | ||||||
| Restructuring and different costs | (416 | ) | (148 | ) | ||||||
| Acquisition and divestiture expenses | (206 | ) | (eighty four | ) | ||||||
| Amortization of intangible belongings | (262 | ) | (154 | ) | ||||||
| Russia exit expenses | — | (23 | ) | |||||||
| Curiosity and different, internet | (357 | ) | (141 | ) | ||||||
| Complete earnings before taxes | $ | 2,085 | $ | three,677 | ||||||
(a) Efficient first quarter of fiscal 2023, HP realigned the Private Techniques enterprise models reporting construction into Business PS and Shopper PS to align with its buyer market segmentation. HP has mirrored this alteration to its prior reporting durations on an as-if basis. The reporting change had no influence to beforehand reported phase internet income and phase earnings from operation, consolidated internet revenue, internet earnings or internet EPS.
(b) Effective first quarter of fiscal 2023, in reference to organizational realignments, certain costs which have been earlier reflected beneath “Company and unallocated value and different”, have now been reclassified to the Personal Methods and Printing segments. HP has reflected this modification to its prior reporting durations on an as-if basis. The reporting change had no impression to beforehand reported phase internet income, consolidated internet income, internet earnings or internet EPS.
(c) “NM” represents not significant.
| HP INC. AND SUBSIDIARIES SEGMENT OPERATING MARGIN SUMMARY (Unaudited) |
||||||||||||
| Three months ended | Change (pts) | |||||||||||
| July 31, 2023 | April 30, 2023 | July 31, 2022 | Q/Q | Y/Y | ||||||||
| Phase operating margin:(a) | ||||||||||||
| Personal Methods | 6.6 | % | 5.three | % | 6.7 | % | 1.3 pts | (0.1) pts | ||||
| Printing | 18.6 | % | 19.zero | % | 19.eight | % | (0.4) pts | (1.2) pts | ||||
| Corporate Investments(b) | NM | NM | NM | NM | NM | |||||||
| Complete phase | 10.three | % | 10.0 | % | 10.four | % | 0.three pts | (zero.1) pts | ||||
(a) Effective at the start of the first quarter of fiscal 2023, in connection with organizational realignments, certain prices which have been earlier reflected beneath “Corporate and unallocated value and different”, have now been reclassified to the Personal Techniques and Printing segments. HP has mirrored this variation to its prior reporting durations on an as-if basis. The reporting change had no influence to previously reported phase internet income, consolidated internet income, internet earnings or internet EPS.
(b) “NM” represents not meaningful.
| HP INC. AND SUBSIDIARIES CALCULATION OF DILUTED NET EARNINGS PER SHARE (Unaudited) (In tens of millions, besides per share quantities) |
|||||||||||
| Three months ended | |||||||||||
| July 31, 2023 | April 30, 2023 | July 31, 2022 | |||||||||
| Numerator: | |||||||||||
| GAAP internet earnings | $ | 766 | $ | 1,054 | $ | 1,122 | |||||
| Non-GAAP internet earnings | $ | 859 | $ | 785 | $ | 1,066 | |||||
| Denominator: | |||||||||||
| Weighted-average shares used to compute primary internet earnings per share | 993 | 991 | 1,024 | ||||||||
| Dilutive impact of employee inventory plans(a) | 9 | 7 | 11 | ||||||||
| Weighted-average shares used to compute diluted internet earnings per share | 1,002 | 998 | 1,035 | ||||||||
| GAAP diluted internet earnings per share | $ | 0.76 | $ | 1.06 | $ | 1.08 | |||||
| Non-GAAP diluted internet earnings per share | $ | 0.86 | $ | 0.79 | $ | 1.03 | |||||
(a) Consists of any dilutive impact of restricted stock models, inventory choices and performance-based mostly awards.
| HP INC. AND SUBSIDIARIES CALCULATION OF DILUTED NET EARNINGS PER SHARE (Unaudited) (In hundreds of thousands, except per share quantities) |
|||||||
| 9 months ended | |||||||
| July 31, 2023 | July 31, 2022 | ||||||
| Numerator: | |||||||
| GAAP internet earnings | $ | 2,289 | $ | three,one hundred fifty five | |||
| Non-GAAP internet earnings | $ | 2,375 | $ | 3,345 | |||
| Denominator: | |||||||
| Weighted-common shares used to compute primary internet earnings per share | 991 | 1,052 | |||||
| Dilutive effect of worker stock plans(a) | eight | 12 | |||||
| Weighted-common shares used to compute diluted internet earnings per share | 999 | 1,064 | |||||
| GAAP diluted internet earnings per share | $ | 2.29 | $ | 2.97 | |||
| Non-GAAP diluted internet earnings per share | $ | 2.38 | $ | 3.14 | |||
(a) Consists of any dilutive impact of restricted stock models, stock choices and efficiency-based mostly awards.
Use of non-GAAP financial measures
To supplement HP’s consolidated condensed monetary statements introduced on a GAAP basis, HP offers internet income on a continuing foreign money foundation, non-GAAP complete operating expense, non-GAAP working profit, non-GAAP operating margin, non-GAAP tax fee, non-GAAP internet earnings, non-GAAP diluted internet EPS, free cash stream, gross cash and internet money (debt). HP additionally supplies forecasts of non-GAAP diluted internet EPS and free money movement.
These non-GAAP financial measures usually are not computed in accordance with, or as an alternative choice to, GAAP in america. Reconciliations of those non-GAAP financial measures to probably the most immediately comparable GAAP financial measures are included within the tables above or elsewhere within the supplies accompanying this news launch.
Use and financial substance of non-GAAP monetary measures
Internet income on a continuing foreign money foundation excludes the effect of overseas foreign money trade fluctuations calculated by translating present interval revenues using month-to-month trade charges from the comparative interval and excluding any hedging impression acknowledged in the current period. Non-GAAP working margin is defined to exclude the consequences of any quantities referring to restructuring and other costs, acquisition and divestiture fees, amortization of intangible belongings and Russia exit costs. Non-GAAP internet earnings and non-GAAP diluted internet EPS include internet earnings or diluted internet EPS excluding those same costs, outlined profit plan settlement costs, non-working retirement related (credit)/costs, debt extinguishment prices (benefits), tax changes and the amount of further taxes or tax advantages related to every non-GAAP merchandise.
HP’s management uses these non-GAAP monetary measures for purposes of evaluating HP’s historic and potential monetary efficiency, in addition to HP’s efficiency relative to its rivals. HP’s management additionally uses these non-GAAP measures to additional its personal understanding of HP’s phase operating efficiency. HP believes that excluding the gadgets talked about above for these non-GAAP financial measures allows HP’s administration to raised understand HP’s consolidated financial performance in relation to the working results of HP’s segments, as HP’s administration does not consider that the excluded gadgets are reflective of ongoing working results. Extra specifically, HP’s administration excludes each of those gadgets talked about above for the following reasons:
- Restructuring and different costs are (i) costs associated with a proper restructuring plan and are primarily related to worker separation from service and early retirement prices and related benefits, prices of actual estate consolidation and other non-labor costs; and (ii) other expenses, which incorporates non-recurring costs including those because of info know-how rationalization efforts and transformation program management and are distinct from ongoing operational prices. HP excludes these restructuring and other costs (and any reversals of costs recorded in prior durations) for purposes of calculating these non-GAAP measures as a result of HP believes that these prices don’t mirror anticipated future working expenses and don’t contribute to a significant evaluation of HP’s present working efficiency or comparisons to working performance in other durations.
- HP incurs value associated to its acquisitions and divestitures, which it might not have in any other case incurred as part of its operations. The fees are direct bills reminiscent of third-get together professional and authorized fees, integration and divestiture-related costs, in addition to non-money adjustments to the truthful worth of certain acquired belongings corresponding to stock and sure compensation expenses associated to money settlement of restricted inventory models and performance-based mostly restricted inventory models in the direction of acquisitions. These expenses associated to acquisitions and divestitures are inconsistent in quantity and frequency and are significantly impacted by the timing and nature of HP’s acquisitions or divestitures. HP believes that eliminating such expenses for purposes of calculating these non-GAAP measures facilitates a extra meaningful evaluation of HP’s current working efficiency and comparisons to operating performance in different durations.
- HP incurs expenses referring to the amortization of intangible belongings. Those costs are included in HP’s GAAP earnings, working margin, internet earnings and diluted internet EPS. Such expenses are considerably impacted by the timing and magnitude of HP’s acquisitions and any related impairment expenses. Consequently, HP excludes these expenses for purposes of calculating these non-GAAP measures to facilitate a extra meaningful analysis of HP’s current operating efficiency and comparisons to working performance in different durations.
- Russia exit fees referring to HP’s choice to wind down its enterprise operations in Russia. These costs embrace costs related to severance, cancellation of contracts, stock write-downs and different related one-time exit costs. HP excludes these changes for the needs of calculating these non-GAAP measures to facilitate a extra significant analysis of HP’s current operating efficiency and comparisons to working performance in different durations.
- HP incurs debt extinguishment (profit)/costs consists of certain (achieve)/loss related to repurchase of certain of its excellent U.S. greenback international notes or termination of commitments underneath revolving credit amenities. These (achieve)/loss resulting from debt redemption transactions are partially or more than offset by prices comparable to bond repurchase premiums, financial institution charges, unpaid accrued pursuits, and so forth. HP excludes these (profit)/prices for the needs of calculating these non-GAAP measures to facilitate a more significant analysis of HP’s present operating performance and comparisons to operating efficiency in other durations.
- Non-operating retirement-related (credit)/expenses consists of sure market-associated elements corresponding to curiosity value, anticipated return on plan belongings, amortized actuarial features or losses, associated with HP’s defined benefit pension and publish-retirement benefit plans. The market-pushed retirement-associated adjustments are primarily because of the modifications in the value of pension plan belongings and liabilities which are tied to monetary market efficiency and HP considers these adjustments to be outdoors the operational performance of the enterprise. Non-operating retirement-related (credits)/costs also embrace sure plan curtailments, settlements and particular termination advantages associated to HP’s defined profit pension and publish-retirement benefit plans. HP believes that eliminating such changes for functions of calculating non-GAAP measures facilitates a extra meaningful analysis of HP’s present operating performance and comparisons to operating performance in different durations.
- HP incurs defined profit plan settlement expenses referring to HP pension plans. The fees are related to the web settlement and remeasurement resulting from voluntary lump sum funds provided to sure vested individuals and transfer of sure pension obligations. HP excludes these costs for the needs of calculating these non-GAAP measures to facilitate a extra significant analysis of HP’s present operating performance and comparisons to operating efficiency in different durations.
- HP recorded tax adjustments together with tax bills and advantages from inner reorganizations, realizability of certain deferred tax belongings, numerous tax price and regulatory modifications, and tax settlements throughout numerous jurisdictions. HP excludes these changes for the needs of calculating these non-GAAP measures to facilitate a more significant evaluation of HP’s present operating efficiency and comparisons to working performance in different durations.
Free money move is a non-GAAP measure that is defined as cash circulate (used in) offered by operations activities adjusted for internet investment in leases and internet investments in property, plant, and gear. Gross cash is a non-GAAP measure that is defined as cash, money equivalents and restricted money plus brief-time period investments and certain long-term investments that could be liquidated within ninety days pursuant to the phrases of present put choices or comparable rights. HP’s management uses free cash stream and gross cash for the aim of figuring out the amount of cash out there for investment in HP’s companies, repurchasing stock and different purposes. HP’s administration additionally makes use of free cash move and gross money to guage HP’s historic and potential liquidity. Because gross money consists of liquid belongings that aren’t included in cash, cash equivalents and restricted money, HP believes that gross cash offers a helpful assessment of HP’s liquidity. As a result of free cash stream consists of internet cash (utilized in) offered by operating actions adjusted for internet investment in leases and internet investments in property, plant and gear. HP believes that free money movement supplies a more accurate and full assessment of HP’s liquidity and capital assets. Internet money (debt) is outlined as gross cash less gross debt after adjusting the impact of unamortized premium/discount on debt issuance, debt issuance prices and positive factors/losses on rate of interest swaps.
Key Progress Areas
Key Progress Areas characterize HP’s companies which administration expects to develop at a price quicker than HP’s core enterprise with accretive margins in the long run. HP’s Key Progress Areas are comprised of:
- Hybrid Techniques: Video conferencing solutions, cameras, headsets, voice, and associated software capabilities
- Gaming: Gaming PCs (Omen, Victus, and so forth.), HyperX and gaming accessories
- Workforce Providers & Solutions: Managed providers (Managed Print Service and Gadget-as-a-Service), digital providers and lifecycle providers
- Shopper Subscriptions: On the spot Ink, different shopper subscriptions and shopper digital providers
- Industrial Graphics: Giant Format Industrial, Page Broad Press (PWP), Indigo and Page Large Industrial packaging options and supplies
- 3D & Personalization: Portfolio of additive manufacturing solutions and supplies together with finish-to-finish options comparable to molded fiber, footwear and orthotics
Workforce Providers & Options (“WSS”), previously often known as Workforce Solutions, now aligns to the newly created WSS group that’s targeted on enabling providers led product offerings throughout Printing and Private Techniques. This now excludes hardware revenues for sure transactional deals with a service connect. Peripherals has been built-in into Gaming, and Hybrid techniques together with all products and options acquired from Plantronics, Inc. (“Poly”). Shopper Subscriptions was beforehand generally known as Shopper Providers.
In fourth quarter of fiscal 2022, HP had disclosed full yr Key Progress Areas revenues of “over $11 billion”. The modifications to WSS lowered the beforehand disclosed revenues to roughly $10 billion for the fiscal yr 2022.
Material limitations associated with use of non-GAAP financial measures
These non-GAAP monetary measures might have limitations as analytical tools, and these measures should not be thought-about in isolation or as an alternative to evaluation of HP’s results as reported beneath GAAP. A number of the limitations in relying on these non-GAAP monetary measures are:
- Gadgets similar to amortization of intangible belongings, although indirectly affecting HP’s cash position, characterize the loss in worth of intangible belongings over time. The expense associated with this alteration in value is just not included in non-GAAP operating margin, non-GAAP internet earnings and non-GAAP diluted internet EPS, and subsequently does not mirror the complete financial impact of the change in worth of these intangible belongings.
- Gadgets reminiscent of restructuring and other expenses, acquisition and divestiture expenses, amortization of intangible belongings and Russia exit costs are excluded from non-GAAP operating margin. In addition, non-operating retirement-associated (credit)/expenses, defined profit plan settlement expenses, debt extinguishment costs and tax changes are excluded from non-GAAP internet earnings and non-GAAP diluted internet EPS. These things can have a cloth impression on the equivalent GAAP earnings measure and money flows.
- HP might not be capable of instantly liquidate the brief-term and sure lengthy-term investments included in gross money, which can restrict the usefulness of gross money as a liquidity measure.
Other corporations might calculate the non-GAAP monetary measures in another way than HP, limiting the usefulness of these measures for comparative purposes.
Compensation for limitations associated with use of non-GAAP monetary measures
HP accounts for the restrictions on its use of non-GAAP financial measures by relying primarily on its GAAP results and using non-GAAP financial measures solely supplementally. HP additionally supplies reconciliations of each non-GAAP monetary measure to its most instantly comparable GAAP measure within this information release and in other written supplies that embrace these non-GAAP financial measures, and HP encourages buyers to assessment these reconciliations rigorously.
Usefulness of non-GAAP monetary measures to buyers
HP believes that providing internet income on a continuing foreign money basis, non-GAAP complete operating expense, non-GAAP operating profit, non-GAAP working margin, non-GAAP tax price, non-GAAP internet earnings, non-GAAP diluted internet EPS, free money circulate, gross money and internet cash (debt) to buyers in addition to the related GAAP monetary measures offers buyers with larger perception to the knowledge used by HP’s management in its financial and operational choice making and permits buyers to see HP’s results “by means of the eyes” of management. HP additional believes that providing this info higher allows HP’s buyers to know HP’s operating performance and financial situation and to guage the efficacy of the methodology and knowledge used by HP’s management to guage and measure such efficiency and financial situation. Disclosure of these non-GAAP financial measures also facilitates comparisons of HP’s operating performance with the performance of different corporations in HP’s business that supplement their GAAP results with non-GAAP monetary measures that could be calculated in an analogous method.
Editorial contacts
HP Inc. Media Relations
[email protected]
HP Inc. Investor Relations
[email protected]
Supply: HP Inc.