DXC
$35.83
Dxc Technology
$1.23
3.55%
Earnings Details
2nd Quarter September 2019
Monday, November 11, 2019 4:15:00 PM
Tweet Share Watch
Summary

Dxc Technology Misses

Dxc Technology (DXC) reported 2nd Quarter September 2019 earnings of $1.38 per share on revenue of $4.9 billion. The consensus earnings estimate was $1.44 per share on revenue of $4.9 billion. The Earnings Whisper number was $1.46 per share. Revenue fell 3.2% compared to the same quarter a year ago.

The company said in its earnings presentation it now expects fiscal 2020 earnings of $5.25 to $5.75 per share on revenue of $19.50 billion to $19.80 billion. The company's previous guidance was earnings of $7.00 to $7.75 per share on revenue of $20.20 billion to $20.70 billion and the current consensus earnings estimate is $7.30 per share on revenue of $20.23 million for the year ending March 31, 2020.

Results
Reported Earnings
$1.38
Earnings Whisper
$1.46
Consensus Estimate
$1.44
Reported Revenue
$4.85 Bil
Revenue Estimate
$4.94 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

DXC Technology Reports Second Quarter Fiscal 2020 Results

  • Q2 earnings per share from continuing operations was $(8.19), including the cumulative impact of certain items of $(9.57) per share, reflecting goodwill impairment, restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets, gain on arbitration award, and a tax adjustment related to prior restructuring charges
  • Q2 non-GAAP earnings per share was $1.38
  • Q2 loss from continuing operations was $(2,115) million, including the cumulative impact of certain items of $(2,477) million, reflecting goodwill impairment, restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets, gain on arbitration award, and a tax adjustment related to prior restructuring charges
  • Q2 non-GAAP income from continuing operations was $362 million
  • Q2 EBIT of $(1,962) million, adjusted for certain items is $529 million and adjusted EBIT margin was 10.9%, compared with 15.9% in the prior year
  • Q2 net cash provided by operating activities was $1,651 million
  • Q2 adjusted free cash flow was $739 million

TYSONS, Va.--(BUSINESS WIRE)--DXC Technology (NYSE: DXC) today reported results for the second quarter of fiscal year 2020, representing the period from July 1 through September 30, 2019.

"During my first two months as CEO, I have met with many of our largest customers and most of our people around the world,” said Mike Salvino, president and CEO. “I am very pleased with our global talent base, capabilities and the scale and scope of our offerings. DXC has a loyal, global customer base for whom we manage mission-critical operations. I am confident that by strengthening our focus on our people, customers and operational execution, we will deliver better financial results and be positioned to grow profitably while unlocking value for our shareholders."

Financial Highlights - Second Quarter Fiscal 2020

  • Diluted earnings per share from continuing operations was $(8.19) in the second quarter, including $(11.10) per share of goodwill impairment, $(0.11) per share of restructuring costs, $(0.18) per share of transaction, separation and integration-related costs, $(0.45) per share of amortization of acquired intangible assets, $2.43 per share of gain on arbitration award, and $(0.11) per share of tax adjustment related to prior restructuring charges. This compares with $0.92 in the year ago period.
  • Non-GAAP diluted earnings per share from continuing operations was $1.38. This compares with $2.02 in the year ago period.
  • Revenue in the second quarter was $4,851 million. Revenue decreased 3.2% compared with $5,013 million in the prior year.
  • Loss from continuing operations before income taxes was $(1,999) million in the second quarter, including $(2,887) million of goodwill impairment, $(32) million of restructuring costs, $(53) million of transaction, separation and integration-related costs, $(151) million of amortization of acquired intangibles, and $632 million of gain on arbitration award. This compares with $332 million in the year ago period.
  • Non-GAAP income from continuing operations before income taxes was $492 million compared with $749 million in the year ago period.
  • Net loss was $(2,115) million for the second quarter, including $(2,887) million of goodwill impairment, $(28) million of restructuring costs, $(48) million of transaction, separation and integration-related costs, $(117) million of amortization of acquired intangibles, $632 million of gain on arbitration award, and $(29) million of tax adjustment related to prior restructuring charges. This compares with $259 million in the prior year period.
  • Non-GAAP net income was $362 million.
  • Adjusted EBIT was $529 million in the second quarter compared with $799 million in the prior year. Adjusted EBIT margin was 10.9% compared with 15.9% in the year ago quarter.
  • Net cash provided by operating activities was $1,651 million in the second quarter, compared with $480 million in the year ago period.
  • Adjusted free cash flow was $739 million in the second quarter.

Global Business Services (GBS)

GBS revenue was $2,285 million in the quarter compared with $2,111 million for the prior year. GBS revenue increased 8.2% year-over-year, including an unfavorable foreign currency exchange rate impact of 2.3%. GBS revenues increased 10.5% year-over-year at constant currency reflecting contribution from acquisitions, including Luxoft. GBS profit margin in the quarter was 15.7%, compared with 18.9% in the prior year, reflecting investments to support Digital hiring and capabilities. New business awards for GBS were $1.9 billion in the second quarter.

Global Infrastructure Services (GIS)

GIS revenue was $2,566 million in the quarter compared with $2,902 million for the prior year. GIS revenues decreased 11.6% year-over-year, including an unfavorable foreign currency exchange rate impact of 2.5%. GIS revenues decreased 9.1% year-over-year at constant currency, reflecting declines in our traditional infrastructure businesses. GIS profit margin in the quarter was 9.5%, compared with 16.3% in the prior year, reflecting a slowdown in delivery cost take-out actions. New business awards for GIS were $1.9 billion in the second quarter.

Returning Capital to Shareholders

During the second quarter, DXC Technology returned $306 million to shareholders, consisting of $56 million in common stock dividends and $250 million in share repurchases.

Earnings Conference Call and Webcast

DXC Technology senior management will host a conference call and webcast to discuss these results today at 4:45 p.m. EST. The dial-in number for domestic callers is 888-204-4368. Callers who reside outside of the United States should dial +1-929-477-0402. The passcode for all participants is 1570708. The webcast audio and any presentation slides will be available on DXC Technology’s Investor Relations website.

A replay of the conference call will be available from approximately two hours after the conclusion of the call until November 18, 2019. The replay dial-in number is 888-203-1112 for domestic callers and +1-719-457-0820 for callers who reside outside of the United States. The replay passcode is also 1570708. A replay of this webcast will also be available on DXC Technology’s Investor Relations website.

Non-GAAP Measures

In an effort to provide investors with supplemental financial information, in addition to the preliminary and unaudited financial information presented on a GAAP basis, we have also disclosed in this press release preliminary non-GAAP information including: constant currency, earnings before interest and taxes ("EBIT"), adjusted EBIT, adjusted EBIT margin, adjusted free cash flow, and non-GAAP results including non-GAAP income from continuing operations before taxes, non-GAAP income from continuing operations and non-GAAP EPS from continuing operations.

About DXC Technology

DXC Technology (NYSE: DXC), the world’s leading independent, end-to-end IT services company, manages and modernizes mission-critical systems, integrating them with new digital solutions to produce better business outcomes. The company’s global reach and talent, innovation platforms, technology independence and extensive partner network enable more than 6,000 private- and public-sector customers in 70 countries to thrive on change. For more information, visit www.dxc.technology.

All statements in this press release that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” These statements represent current expectations and beliefs, and no assurance can be given that the results described in such statements will be achieved. Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of our control. For a written description of these factors, see the section titled “Risk Factors” in DXC's Annual Report on Form 10-K for the fiscal year ended March 31, 2019, and any updating information in subsequent SEC filings including DXC's upcoming Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2019. No assurance can be given that any goal or plan set forth in any forward-looking statement can or will be achieved, and readers are cautioned not to place undue reliance on such statements which speak only as of the date they are made. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events except as required by law.

Condensed Consolidated Statements of Operations

 

(preliminary and unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

(in millions, except per-share amounts)

 

September 30,

2019

 

September 30,

2018

 

September 30,

2019

 

September 30,

2018

 

 

 

 

 

 

 

 

 

Revenues

 

$

4,851

 

 

$

5,013

 

 

$

9,741

 

 

$

10,295

 

 

 

 

 

 

 

 

 

 

Costs of services

 

3,679

 

 

3,518

 

 

7,301

 

 

7,385

 

Selling, general and administrative

 

489

 

 

569

 

 

996

 

 

1,009

 

Depreciation and amortization

 

467

 

 

484

 

 

937

 

 

955

 

Goodwill impairment losses

 

2,887

 

 

 

 

2,887

 

 

 

Restructuring costs

 

32

 

 

157

 

 

174

 

 

342

 

Interest expense

 

104

 

 

83

 

 

195

 

 

168

 

Interest income

 

(67

)

 

(33

)

 

(97

)

 

(65

)

Gain on arbitration award

 

(632

)

 

 

 

(632

)

 

 

Other income, net

 

(109

)

 

(97

)

 

(227

)

 

(191

)

Total costs and expenses

 

6,850

 

 

4,681

 

 

11,534

 

 

9,603

 

 

 

 

 

 

 

 

 

 

(Loss) income from continuing operations before income taxes

 

(1,999

)

 

332

 

 

(1,793

)

 

692

 

Income tax expense

 

116

 

 

73

 

 

154

 

 

202

 

(Loss) income from continuing operations

 

(2,115

)

 

259

 

 

(1,947

)

 

490

 

Income from discontinued operations, net of tax

 

 

 

 

 

 

 

35

 

Net (loss) income

 

(2,115

)

 

259

 

 

(1,947

)

 

525

 

Less: net income (loss) attributable to non-controlling interest, net of tax

 

4

 

 

(3

)

 

9

 

 

4

 

Net (loss) income attributable to DXC common stockholders

 

$

(2,119

)

 

$

262

 

 

$

(1,956

)

 

$

521

 

 

 

 

 

 

 

 

 

 

(Loss) income per common share:

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

Continuing operations

 

$

(8.19

)

 

$

0.93

 

 

$

(7.44

)

 

$

1.72

 

Discontinued operations

 

 

 

 

 

 

 

0.12

 

 

 

$

(8.19

)

 

$

0.93

 

 

$

(7.44

)

 

$

1.84

 

Diluted:

 

 

 

 

 

 

 

 

Continuing operations

 

$

(8.19

)

 

$

0.92

 

 

$

(7.44

)

 

$

1.69

 

Discontinued operations

 

 

 

 

 

 

 

0.12

 

 

 

$

(8.19

)

 

$

0.92

 

 

$

(7.44

)

 

$

1.81

 

 

 

 

 

 

 

 

 

 

Cash dividend per common share

 

$

0.21

 

 

$

0.19

 

 

$

0.42

 

 

$

0.38

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding for:

 

 

 

 

 

 

 

 

Basic EPS

 

258.71

 

 

281.37

 

 

262.83

 

 

282.89

 

Diluted EPS

 

258.71

 

 

285.78

 

 

262.83

 

 

287.53

 

Selected Consolidated Balance Sheet Data

 

(preliminary and unaudited)

 

 

 

As of

(in millions)

 

September 30, 2019

 

March 31, 2019

Assets

 

 

 

 

Cash and cash equivalents

 

$

2,880

 

 

$

2,899

 

Receivables, net

 

4,611

 

 

5,181

 

Prepaid expenses

 

671

 

 

627

 

Other current assets

 

328

 

 

359

 

Total current assets

 

8,490

 

 

9,066

 

 

 

 

 

 

Intangible assets, net

 

6,293

 

 

5,939

 

Operating right-of-use assets, net

 

1,482

 

 

 

Goodwill

 

5,784

 

 

7,606

 

Deferred income taxes, net

 

330

 

 

355

 

Property and equipment, net

 

3,555

 

 

3,179

 

Other assets

 

3,582

 

 

3,429

 

Total Assets

 

$

29,516

 

 

$

29,574

 

 

 

 

 

 

Liabilities

 

 

 

 

Short-term debt and current maturities of long-term debt

 

$

1,471

 

 

$

1,942

 

Accounts payable

 

1,603

 

 

1,666

 

Accrued payroll and related costs

 

684

 

 

652

 

Current operating lease liabilities

 

489

 

 

 

Accrued expenses and other current liabilities

 

2,943

 

 

3,355

 

Deferred revenue and advance contract payments

 

1,571

 

 

1,630

 

Income taxes payable

 

213

 

 

208

 

Total current liabilities

 

8,974

 

 

9,453

 

 

 

 

 

 

Long-term debt, net of current maturities

 

7,698

 

 

5,470

 

Non-current deferred revenue

 

234

 

 

256

 

Non-current operating lease liabilities

 

1,139

 

 

 

Non-current income tax liabilities and deferred tax liabilities

 

1,269

 

 

1,184

 

Other long-term liabilities

 

1,332

 

 

1,486

 

Total Liabilities

 

20,646

 

 

17,849

 

 

 

 

 

 

Total Equity

 

8,870

 

 

11,725

 

 

 

 

 

 

Total Liabilities and Equity

 

$

29,516

 

 

$

29,574

 

Condensed Consolidated Statements of Cash Flows

 

(preliminary and unaudited)

 

 

 

Six Months Ended

(in millions)

 

September 30,

2019

 

September 30,

2018

Cash flows from operating activities:

 

 

 

 

Net (loss) income

 

$

(1,947

)

 

$

525

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

946

 

 

1,002

 

Goodwill impairment losses

 

2,887

 

 

 

Operating right-of-use expense

 

340

 

 

 

Share-based compensation

 

48

 

 

41

 

Gain on dispositions

 

(4

)

 

(65

)

Unrealized foreign currency exchange gains

 

(50

)

 

(12

)

Other non-cash charges, net

 

2

 

 

(18

)

Changes in assets and liabilities, net of effects of acquisitions and dispositions:

 

 

 

 

Decrease (increase) in assets

 

167

 

 

(483

)

Decrease in operating lease liability

 

(340

)

 

 

Decrease in other liabilities

 

(464

)

 

(141

)

Net cash provided by operating activities

 

1,585

 

 

849

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

(192

)

 

(133

)

Payments for transition and transformation contract costs

 

(158

)

 

(183

)

Software purchased and developed

 

(126

)

 

(125

)

Payments for acquisitions, net of cash acquired

 

(1,921

)

 

(43

)

Business dispositions

 

 

 

(65

)

Cash collections related to deferred purchase price receivable

 

371

 

 

445

 

Proceeds from sale of assets

 

40

 

 

57

 

Short-term investing

 

(75

)

 

 

Other investing activities, net

 

14

 

 

(1

)

Net cash used in investing activities

 

(2,047

)

 

(48

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Borrowings of commercial paper

 

2,879

 

 

1,158

 

Repayments of commercial paper

 

(2,866

)

 

(1,158

)

Borrowings on long-term debt, net of discount

 

2,198

 

 

483

 

Principal payments on long-term debt

 

(519

)

 

(2,036

)

Payments on finance leases and borrowings for asset financing

 

(421

)

 

(475

)

Borrowings for USPS spin transaction

 

 

 

1,114

 

Proceeds from bond issuance

 

 

 

753

 

Proceeds from stock options and other common stock transactions

 

10

 

 

36

 

Taxes paid related to net share settlements of share-based compensation awards

 

(12

)

 

(20

)

Repurchase of common stock and advance payment for accelerated share repurchase

 

(650

)

 

(447

)

Dividend payments

 

(107

)

 

(105

)

Other financing activities, net

 

(32

)

 

11

 

Net cash provided by (used in) financing activities

 

480

 

 

(686

)

Effect of exchange rate changes on cash and cash equivalents

 

(37

)

 

(64

)

Net (decrease) increase in cash and cash equivalents

 

(19

)

 

51

 

Cash and cash equivalents at beginning of year

 

2,899

 

 

2,729

 

Cash and cash equivalents at end of period

 

$

2,880

 

 

$

2,780

 

Segment Results

The following table summarizes segment revenue for the second quarter and first six months of fiscal 2020 and 2019:

Segment Revenue

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(in millions)

 

September 30,

2019

 

September 30,

2018

 

% Change

 

% Change in

Constant Currency

Global Business Services

 

$

2,285

 

 

$

2,111

 

 

8.2

%

 

10.5%

Global Infrastructure Services

 

2,566

 

 

2,902

 

 

(11.6

)%

 

(9.1)%

Total Revenues

 

$

4,851

 

 

$

5,013

 

 

(3.2

)%

 

(0.8)%

 

 

Six Months Ended

(in millions)

 

September 30,

2019

 

September 30,

2018

 

% Change

 

% Change in

Constant Currency

Global Business Services

 

$

4,444

 

 

$

4,324

 

 

2.8

%

 

5.4%

Global Infrastructure Services

 

5,297

 

 

5,971

 

 

(11.3

)%

 

(8.3)%

Total Revenues

 

$

9,741

 

 

$

10,295

 

 

(5.4

)%

 

(2.6)%

We define segment profit as segment revenues less costs of services, segment selling, general and administrative, depreciation and amortization, and other income (excluding the movement in foreign currency exchange rates on our foreign currency denominated assets and liabilities and the related economic hedges). The Company does not allocate to its segments certain operating expenses managed at the corporate level. These unallocated costs include certain corporate function costs, stock-based compensation expense, pension and OPEB actuarial and settlement gains and losses, restructuring costs, transaction, separation and integration-related costs, and amortization of acquired intangible assets.

Segment Profit

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

(in millions)

 

September 30,

2019

 

September 30,

2018

 

September 30,

2019

 

September 30,

2018

Profit

 

 

 

 

 

 

 

 

GBS profit

 

$

359

 

 

$

400

 

 

$

725

 

 

$

803

 

GIS profit

 

243

 

 

473

 

 

583

 

 

947

 

All other loss

 

(73

)

 

(74

)

 

(127

)

 

(148

)

Interest income

 

67

 

 

33

 

 

97

 

 

65

 

Interest expense

 

(104

)

 

(83

)

 

(195

)

 

(168

)

Restructuring costs

 

(32

)

 

(157

)

 

(174

)

 

(342

)

Transaction, separation and integration-related costs

 

(53

)

 

(128

)

 

(158

)

 

(198

)

Amortization of acquired intangible assets

 

(151

)

 

(132

)

 

(289

)

 

(267

)

Goodwill impairment losses

 

(2,887

)

 

 

 

(2,887

)

 

 

Gain on arbitration award gain

 

632

 

 

 

 

632

 

 

 

(Loss) income from continuing operations before income taxes

 

$

(1,999

)

 

$

332

 

 

$

(1,793

)

 

$

692

 

 

 

 

 

 

 

 

 

 

Segment profit margins

 

 

 

 

 

 

 

 

GBS

 

15.7

%

 

18.9

%

 

16.3

%

 

18.6

%

GIS

 

9.5

%

 

16.3

%

 

11.0

%

 

15.9

%

Non-GAAP Financial Measures

We present non-GAAP financial measures of performance which are derived from the statements of operations of DXC. These non-GAAP financial measures include earnings before interest and taxes ("EBIT"), adjusted EBIT, non-GAAP income before income taxes, non-GAAP net income and non-GAAP EPS, constant currency revenues, net debt and net debt-to-total capitalization.

We present these non-GAAP financial measures to provide investors with meaningful supplemental financial information, in addition to the financial information presented on a GAAP basis. Non-GAAP financial measures exclude certain items from GAAP results which DXC management believes are not indicative of core operating performance. DXC management believes these non-GAAP measures allow investors to better understand the financial performance of DXC exclusive of the impacts of corporate-wide strategic decisions. DXC management believes that adjusting for these items provides investors with additional measures to evaluate the financial performance of our core business operations on a comparable basis from period to period. DXC management believes the non-GAAP measures provided are also considered important measures by financial analysts covering DXC, as equity research analysts continue to publish estimates and research notes based on our non-GAAP commentary, including our guidance around non-GAAP EPS targets.

Non-GAAP financial measures exclude certain items from GAAP results which DXC management believes are not indicative of operating performance such as the amortization of acquired intangible assets and transaction, separation and integration-related costs.

Incremental amortization of intangible assets acquired through business combinations may result in a significant difference in period over period amortization expense on a GAAP basis. We exclude amortization of certain acquired intangibles assets as these non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Although DXC management excludes amortization of acquired intangible assets, primarily customer related intangible assets from its non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and support revenue generation. Any future transactions may result in a change to the acquired intangible asset balances and associated amortization expense.

There are limitations to the use of the non-GAAP financial measures presented in this report. One of the limitations is that they do not reflect complete financial results. We compensate for this limitation by providing a reconciliation between our non-GAAP financial measures and the respective most directly comparable financial measure calculated and presented in accordance with GAAP. Additionally, other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes between companies.

Reconciliation of Non-GAAP Financial Measures

DXC's non-GAAP adjustments include:

  • Restructuring costs - reflects costs, net of reversals, related to workforce optimization and real estate charges.
  • Transaction, separation and integration-related costs - reflects costs related to integration planning, financing, and advisory fees associated with the HPES Merger and other acquisitions and costs related to the separation of USPS.
  • Amortization of acquired intangible assets - reflects amortization of intangible assets acquired through business combinations.
  • Goodwill impairment losses - reflects impairment losses on goodwill.
  • Arbitration award gain - reflects a gain related to the HPES merger arbitration award.
  • Tax adjustment - for fiscal 2020 periods, reflects the impact of tax entries related to prior restructuring charges, and for fiscal 2019 periods, reflects the estimated non-recurring benefit of the Tax Cuts and Jobs Act of 2017. Income tax expense of other non-GAAP adjustments is computed by applying the jurisdictional tax rate to the pre-tax adjustments on a jurisdictional basis.

EBIT and Adjusted EBIT

A reconciliation of net income to adjusted EBIT is as follows:

 

 

Three Months Ended

 

Six Months Ended

(in millions)

 

September
30, 2019

 

September
30, 2018

 

September
30, 2019

 

September
30, 2018

Net (loss) income

 

$

(2,115

)

 

$

259

 

 

$

(1,947

)

 

$

525

 

Income from discontinued operations, net of taxes

 

 

 

 

 

 

 

(35

)

Income tax expense

 

116

 

 

73

 

 

154

 

 

202

 

Interest income

 

(67

)

 

(33

)

 

(97

)

 

(65

)

Interest expense

 

104

 

 

83

 

 

195

 

 

168

 

EBIT

 

(1,962

)

 

382

 

 

(1,695

)

 

795

 

Restructuring costs

 

32

 

 

157

 

 

174

 

 

342

 

Transaction, separation, and integration-related costs

 

53

 

 

128

 

 

158

 

 

198

 

Amortization of acquired intangible assets

 

151

 

 

132

 

 

289

 

 

267

 

Goodwill impairment losses

 

2,887

 

 

 

 

2,887

 

 

 

Gain on arbitration award

 

(632

)

 

 

 

(632

)

 

 

Adjusted EBIT

 

$

529

 

 

$

799

 

 

$

1,181

 

 

$

1,602

 

 

 

 

 

 

 

 

 

 

Adjusted EBIT margin

 

10.9

%

 

15.9

%

 

12.1

%

 

15.6

%

EBIT margin

 

(40.4

)%

 

7.6

%

 

(17.4

)%

 

7.7

%

Adjusted Free Cash Flow

A reconciliation of net cash provided by operating activities to adjusted free cash flow is as follows:

(in millions)

 

Three Months Ended
September 30, 2019

 

Six Months Ended
September 30, 2019

Net cash provided by operating activities

 

$

1,651

 

 

$

1,585

 

Net cash used in investing activities (1)

 

(225

)

 

(1,972

)

Acquisitions, net of cash acquired

 

10

 

 

1,921

 

Payments on capital leases and other long-term asset financings

 

(211

)

 

(421

)

Payments on transaction, separation and integration-related costs

 

41

 

 

135

 

Payments on restructuring costs

 

105

 

 

197

 

Arbitration award

 

(632

)

 

(632

)

Adjusted free cash flow

 

$

739

 

 

$

813

 

                               

(1)

 

Excludes short-term investments.

Non-GAAP Results

A reconciliation of reported results to non-GAAP results is as follows:

 

 

Three Months Ended September 30, 2019

(in millions, except per-share amounts)

 

As
Reported

 

Restructuring
Costs

 

Transaction,
Separation and
Integration-
Related Costs

 

Amortization of
Acquired
Intangible
Assets

 

Goodwill
Impairment
Losses

 

Gain on
Arbitration
Award

 

Tax
Adjustment

 

Non-GAAP
Results

Costs of services (excludes depreciation and amortization and restructuring costs)

 

$

3,679

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

3,679

 

Selling, general and administrative (excludes depreciation and amortization and restructuring costs)

 

489

 

 

 

 

(53

)

 

 

 

 

 

 

 

 

 

436

 

(Loss) income from continuing operations before income taxes

 

(1,999

)

 

32

 

 

53

 

 

151

 

 

2,887

 

 

(632

)

 

 

 

492

 

Income tax expense

 

116

 

 

4

 

 

5

 

 

34

 

 

 

 

 

 

(29

)

 

130

 

Net (loss) income

 

(2,115

)

 

28

 

 

48

 

 

117

 

 

2,887

 

 

(632

)

 

29

 

 

362

 

Less: net income attributable to non-controlling interest, net of tax

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

Net (loss) income attributable to DXC common stockholders

 

$

(2,119

)

 

$

28

 

 

$

48

 

 

$

117

 

 

$

2,887

 

 

$

(632

)

 

$

29

 

 

$

358

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate

 

(5.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

26.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS from continuing operations

 

$

(8.19

)

 

$

0.11

 

 

$

0.19

 

 

$

0.45

 

 

$

11.16

 

 

$

(2.44

)

 

$

0.11

 

 

$

1.38

 

Diluted EPS from continuing operations

 

$

(8.19

)

 

$

0.11

 

 

$

0.18

 

 

$

0.45

 

 

$

11.10

 

 

$

(2.43

)

 

$

0.11

 

 

$

1.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

258.71

 

 

258.71

 

 

258.71

 

 

258.71

 

 

258.71

 

 

258.71

 

 

258.71

 

 

258.71

 

Diluted EPS

 

258.71

 

 

260.03

 

 

260.03

 

 

260.03

 

 

260.03

 

 

260.03

 

 

260.03

 

 

260.03

 

 

 

Six Months Ended September 30, 2019

(in millions, except per-share amounts)

 

As
Reported

 

Restructuring
Costs

 

Transaction,
Separation and
Integration-
Related Costs

 

Amortization of
Acquired
Intangible
Assets

 

Goodwill
Impairment
Losses

 

Gain on
Arbitration
Award

 

Tax
Adjustment

 

Non-GAAP
Results

Costs of services (excludes depreciation and amortization and restructuring costs)

 

$

7,301

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

7,301

 

Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)

 

996

 

 

 

 

(158

)

 

 

 

 

 

 

 

 

 

838

 

(Loss) income from continuing operations before income taxes

 

(1,793

)

 

174

 

 

158

 

 

289

 

 

2,887

 

 

(632

)

 

 

 

1,083

 

Income tax expense

 

154

 

 

32

 

 

27

 

 

65

 

 

 

 

 

 

(29

)

 

249

 

Net (loss) income

 

(1,947

)

 

142

 

 

131

 

 

224

 

 

2,887

 

 

(632

)

 

29

 

 

834

 

Less: net income attributable to non-controlling interest, net of tax

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

Net (loss) income attributable to DXC common stockholders

 

$

(1,956

)

 

$

142

 

 

$

131

 

 

$

224

 

 

$

2,887

 

 

$

(632

)

 

$

29

 

 

$

825

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

(8.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

23.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS from continuing operations

 

$

(7.44

)

 

$

0.54

 

 

$

0.50

 

 

$

0.85

 

 

$

10.98

 

 

$

(2.40

)

 

$

0.11

 

 

$

3.14

 

Diluted EPS from continuing operations

 

$

(7.44

)

 

$

0.54

 

 

$

0.50

 

 

$

0.85

 

 

$

10.91

 

 

$

(2.39

)

 

$

0.11

 

 

$

3.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

262.83

 

 

262.83

 

 

262.83

 

 

262.83

 

 

262.83

 

 

262.83

 

 

262.83

 

 

262.83

 

Diluted EPS

 

262.83

 

 

264.61

 

 

264.61

 

 

264.61

 

 

264.61

 

 

264.61

 

 

264.61

 

 

264.61

 

 

 

Three Months Ended September 30, 2018

(in millions, except per-share amounts)

 

As Reported

 

Restructuring
Costs

 

Transaction,
Separation and
Integration-Related
Costs

 

Amortization of
Acquired
Intangible Assets

 

Non-GAAP Results

Costs of services (excludes depreciation and amortization and restructuring costs)

 

$

3,518

 

 

$

 

 

$

 

 

$

 

 

$

3,518

 

Selling, general and administrative (excludes depreciation and amortization and restructuring costs)

 

569

 

 

 

 

(128

)

 

 

 

441

 

Income from continuing operations before income taxes

 

332

 

 

157

 

 

128

 

 

132

 

 

749

 

Income tax expense

 

73

 

 

41

 

 

30

 

 

32

 

 

176

 

Income from continuing operations

 

259

 

 

116

 

 

98

 

 

100

 

 

573

 

Income from discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

Net income

 

259

 

 

116

 

 

98

 

 

100

 

 

573

 

Less: net (loss) attributable to non-controlling interest, net of tax

 

(3

)

 

 

 

 

 

 

 

(3

)

Net income attributable to DXC common stockholders

 

$

262

 

 

$

116

 

 

$

98

 

 

$

100

 

 

$

576

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

22.0

%

 

 

 

 

 

 

 

23.5

%

 

 

 

 

 

 

 

 

 

 

 

Basic EPS from continuing operations

 

$

0.93

 

 

$

0.41

 

 

$

0.35

 

 

$

0.36

 

 

$

2.05

 

Diluted EPS from continuing operations

 

$

0.92

 

 

$

0.41

 

 

$

0.34

 

 

$

0.35

 

 

$

2.02

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding for:

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

281.37

 

 

281.37

 

 

281.37

 

 

281.37

 

 

281.37

 

Diluted EPS

 

285.78

 

 

285.78

 

 

285.78

 

 

285.78

 

 

285.78

 

 

 

Six Months Ended September 30, 2018

(in millions, except per-share amounts)

 

As Reported

 

Restructuring
Costs

 

Transaction,
Separation and
Integration-Related
Costs

 

Amortization of
Acquired Intangible
Assets

 

Tax
Adjustment

 

Non-GAAP
Results

Costs of services (excludes depreciation and amortization and restructuring costs)

 

$

7,385

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

7,385

 

Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)

 

1,009

 

 

 

 

(198

)

 

 

 

 

 

811

 

Income from continuing operations before income taxes

 

692

 

 

342

 

 

198

 

 

267

 

 

 

 

1,499

 

Income tax expense (benefit)

 

202

 

 

82

 

 

46

 

 

65

 

 

(33

)

 

362

 

Income from continuing operations

 

490

 

 

260

 

 

152

 

 

202

 

 

33

 

 

1,137

 

Income from discontinued operations, net of tax

 

35

 

 

 

 

 

 

 

 

 

 

35

 

Net income

 

525

 

 

260

 

 

152

 

 

202

 

 

33

 

 

1,172

 

Less: net income attributable to non-controlling interest, net of tax

 

4

 

 

 

 

 

 

 

 

 

 

4

 

Net income attributable to DXC common stockholders

 

$

521

 

 

$

260

 

 

$

152

 

 

$

202

 

 

$

33

 

 

$

1,168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

29.2

%

 

 

 

 

 

 

 

 

 

24.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS from continuing operations

 

$

1.72

 

 

$

0.92

 

 

$

0.54

 

 

$

0.71

 

 

$

0.12

 

 

$

4.01

 

Diluted EPS from continuing operations

 

$

1.69

 

 

$

0.90

 

 

$

0.53

 

 

$

0.70

 

 

$

0.11

 

 

$

3.94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding for:

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

282.89

 

 

282.89

 

 

282.89

 

 

282.89

 

 

282.89

 

 

282.89

 

Diluted EPS

 

287.53

 

 

287.53

 

 

287.53

 

 

287.53

 

 

287.53

 

 

287.53

 

 

Richard Adamonis, Corporate Media Relations, +1-862-228-3481, radamonis@dxc.com
Shailesh Murali, M&A and Investor Relations, +1-703-245-9700, smurali30@dxc.com
Jonathan Ford, Investor Relations, +1-703-245-9700, jonathan.ford@dxc.com

Source: DXC Technology