PALO ALTO, Calif., February 28, 2023 – (GlobeNewswire) – HP (NYSE: HPQ)
- First quarter GAAP diluted net earnings per share (“EPS”) of $0.49, within the previously provided outlook of $0.47 to $0.57 per share
- First quarter non-GAAP diluted net EPS of $0.75, within the previously provided outlook of $0.70 to $0.80 per share
- First quarter net revenue of $13.8 billion, down 18.8% from the prior-year period
- First quarter net cash used in operating activities of $(16) million, free cash flow of $(0.2) billion
- First quarter returned $0.4 billion to shareholders in the form of share repurchases and dividends
Net revenue and EPS results
HP Inc. and its subsidiaries (“HP”) announced fiscal 2023 first quarter net revenue of $13.8 billion, down 18.8% (down 14.7% in constant currency) from the prior-year period.
“We delivered on our non-GAAP EPS target despite industry-wide headwinds, reflecting disciplined execution across our business,” said Enrique Lores, HP President and CEO. “The Future Ready plan we announced last quarter is having an immediate impact, as we continue to reduce our costs while maintaining investments in long-term growth.”
First quarter GAAP diluted net EPS was $0.49, down from $0.99 in the prior-year period and within the previously provided outlook of $0.47 to $0.57. First quarter non-GAAP diluted net EPS was $0.75, down from $1.10 in the prior-year period and within the previously provided outlook of $0.70 to $0.80. First quarter non-GAAP net earnings and non-GAAP diluted net EPS excludes after-tax adjustments of $262 million, or $0.26 per diluted share, related to restructuring and other charges, acquisition and divestiture related charges, amortization of intangible assets, debt extinguishment costs, non-operating retirement-related (credits)/charges, and tax adjustments.
HP’s net cash used in operating activities in the first quarter of fiscal 2023 was $(16) million. Accounts receivable ended the quarter at $4.3 billion, flat quarter over quarter at 28 days. Inventory ended the quarter at $7.3 billion, up 3 days quarter over quarter to 60 days. Accounts payable ended the quarter at $13.5 billion, down 4 days quarter over quarter to 110 days.
HP generated $(0.2) billion of free cash flow in the first quarter. Free cash flow includes net cash used in operating activities of $(16) million adjusted for net investments in leases of $16 million and net investments in property, plant and equipment of $192 million.
HP’s dividend payment of $0.2625 per share in the first quarter resulted in cash usage of $0.3 billion. HP also utilized $0.1 billion of cash during the quarter to repurchase approximately 3.6 million shares of common stock in the open market. HP exited the quarter with $1.8 billion in gross cash, which includes cash, cash equivalents and restricted cash, and short-term investments of $18 million included in other current assets. Cash, cash equivalents and restricted cash includes $364 million of restricted cash related to amounts collected and held on behalf of a third party for trade receivables previously sold.
Fiscal 2023 first quarter segment results
- Personal Systems net revenue was $9.2 billion, down 24% year over year (down 20% in constant currency) with a 5.4% operating margin. Consumer PS net revenue decreased 36% and Commercial PS net revenue decreased 18%. Total units were down 28% with Consumer PS units down 33% and Commercial PS units down 24%.
- Printing net revenue was $4.6 billion, down 5% year over year (down 2% in constant currency) with a 18.9% operating margin. Consumer Printing net revenue was down 3% and Commercial Printing net revenue was up 2%. Supplies net revenue was down 7% (down 6% in constant currency). Total hardware units were up 2% overall, with Consumer Printing units up 3% and Commercial Printing units down 8%.
For the fiscal 2023 second quarter, HP estimates GAAP diluted net EPS to be in the range of $0.40 to $0.50 and non-GAAP diluted net EPS to be in the range of $0.73 to $0.83. Fiscal 2023 second quarter non-GAAP diluted net EPS estimates exclude $0.33 per diluted share, primarily related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, non-operating retirement-related (credits)/charges, tax adjustments and the related tax impact on these items.
For fiscal 2023, HP reaffirms GAAP diluted net EPS to be in the range of $2.22 to $2.62 and non-GAAP diluted net EPS to be in the range of $3.20 to $3.60. Fiscal 2023 non-GAAP diluted net EPS estimates exclude $0.98 per diluted share, primarily related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, debt extinguishment costs, non-operating retirement-related (credits)/charges, tax adjustments and the related tax impact on these items. For fiscal 2023, HP anticipates generating free cash flow in the range of $3.0 to $3.5 billion.
More information on HP’s earnings, including additional financial analysis and an earnings overview presentation, is available on HP’s Investor Relations website at investor.hp.com.
HP’s FY23 Q1 earnings conference call is accessible via audio webcast at www.hp.com/investor/2023Q1Webcast.
About HP Inc.
HP Inc. (NYSE: HPQ) is a global technology leader and creator of solutions that enable people to bring their ideas to life and connect to the things that matter most. Operating in more than 170 countries, HP delivers a wide range of innovative and sustainable devices, services and subscriptions for personal computing, printing, 3D printing, hybrid work, gaming, and more. For more information, please visit http://www.hp.com.
Use of non-GAAP financial information
To supplement HP’s consolidated condensed financial statements presented on a generally accepted accounting principles (“GAAP”) basis, HP provides net revenue on a constant currency basis, non-GAAP total operating expense, non-GAAP operating profit, non-GAAP operating margin, non-GAAP tax rate, non-GAAP net earnings, non-GAAP diluted net EPS, free cash flow, gross cash and net cash (debt) financial measures. HP also provides forecasts of non-GAAP diluted net EPS and free cash flow. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables below or elsewhere in the materials accompanying this news release. In addition, an explanation of the ways in which HP’s management uses these non-GAAP measures to evaluate its business, the substance behind HP’s decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which HP’s management compensates for those limitations, and the substantive reasons why HP’s management believes that these non-GAAP measures provide useful information to investors is included under “Use of non-GAAP financial measures” after the tables below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for net revenue, operating expense, operating profit, operating margin, tax rate, net earnings, diluted net EPS, cash (used in) provided by operating activities or cash, cash equivalents and restricted cash prepared in accordance with GAAP.
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, they could affect the business and results of operations of HP Inc. and its consolidated subsidiaries which may differ materially from those expressed or implied by such forward-looking statements and assumptions.
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 impact of the COVID-19 pandemic; 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 and any resulting cost savings (including the fiscal 2023 plan), 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 HP and its financial performance; any statements regarding pending investigations, claims, disputes or other litigation matters; any statements of expectation or belief as to the timing and expected benefits of acquisitions and other business combination and investment transactions (including the recent acquisition of Plantronics, Inc. (“Poly”)); and any statements of assumptions underlying any of the foregoing. Forward-looking statements can also generally be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will,” “would,” “could,” “can,” “may,” and similar terms.
Risks, uncertainties and assumptions that could affect our business and results of operations include factors relating to the impact of macroeconomic and geopolitical trends, changes and events, including the Russian invasion of Ukraine and tension across the Taiwan Strait and the regional and global ramifications of these events; recent volatility in global capital markets, increases in benchmark interest rates and the effects of inflation; risks associated with HP’s international operations; the effects of the COVID-19 pandemic; the execution and performance of contracts by HP and its suppliers, customers, clients and partners, including logistical challenges with respect to such execution and performance; changes in estimates and assumptions HP makes in connection with the preparation of its financial statements;; 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 plans, 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; 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; the results of our restructuring plans (including the 2023 plan), including estimates and assumptions related to the cost (including any possible disruption of HP’s business) and the anticipated benefits of our restructuring plans; the protection of HP’s intellectual property assets, including intellectual property licensed from third parties; the hiring and retention of key employees; disruptions in operations from system security risks, data protection breaches, cyberattacks, extreme weather conditions or other effects of climate change, medical epidemics or pandemics such as the COVID-19 pandemic, and other natural or manmade disasters or catastrophic events; the impact of changes to federal, state, local and foreign laws and regulations, including environmental regulations 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; and other risks that are described in HP’s Annual Report on Form 10-K for the fiscal year ended October 31, 2022 and HP’s other filings with the Securities and Exchange Commission.
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 believes these estimates to be reasonable, these amounts could differ materially from reported amounts in HP’s Quarterly Reports on Form 10-Q for the fiscal quarters ended January 31, 2023, April 30, 2023 and July 31, 2023, Annual Report on Form 10-K for the fiscal year ended October 31, 2023, and HP’s other filings with the Securities and Exchange Commission. The forward-looking statements in this document are made as of the date of this document and HP assumes no obligation and does not intend to update these forward-looking statements.
HP’s Investor Relations website at investor.hp.com contains a significant amount of information about HP, including financial and other information for investors. HP encourages investors to visit its website from time to time, as information is updated, and new information is posted. The content of HP’s website is not incorporated by reference into this document or in any other report or document HP files with the SEC, and any references to HP’s website are intended to be inactive textual references only.