- Revenues of $3.39 billion for Q4 FY24, down 5.7% as compared to
prior year, and down 4.9% on an organic basis
- Q4 FY24 Diluted earnings per share was $(1.10) vs. $(3.38) in
the prior year quarter. Q4 FY24 Non-GAAP diluted earnings per share
was $0.97 vs. $1.02 in the prior year quarter
- Q4 FY24 operating cash flow of $280 million, less capital
expenditures of $125 million, results in $155 million of free cash
flow. For the full year, we delivered $756 million of free cash
flow, the third consecutive year of free cash flow over $700
million
- Q4 FY24 Book-to-bill ratio of 0.94x and trailing twelve-month
book-to-bill of 0.91x
DXC Technology (NYSE: DXC) today reported results for the fourth
quarter of fiscal year 2024.
Raul Fernandez, Chief Executive Officer commented: “My first
months as CEO have strengthened my view of the incredible talent of
our employees and the value we bring to our customers every day.
DXC is trusted with providing mission critical services to leading
companies around the world, helping customers modernize their
business processes, and generating value by providing process
knowledge, world class engineering talent, and AI capabilities to a
wide range of Industries. With our track record of service delivery
excellence, our skilled employees and recent management additions I
have great confidence in our future."
Financial Highlights(1)
Q4 FY24
Q4 FY23
FY24
FY23
Revenue
$
3,386
$
3,591
$
13,667
$
14,430
YoY Revenue Growth
(5.7
)%
(10.4
)%
(5.3
)%
(11.3
)%
YoY Organic Revenue Growth(2)
(4.9
)%
(2.9
)%
(4.1
)%
(2.7
)%
Net Income
$
(195
)
$
(758
)
$
86
$
(566
)
Net Income as a % of Sales
(5.8
)%
(21.1
)%
0.6
%
(3.9
)%
EBIT(2)
$
(289
)
$
(1,146
)
$
193
$
(820
)
EBIT Margin %(2)
(8.5
)%
(31.9
)%
1.4
%
(5.7
)%
Adjusted EBIT(2)
$
283
$
320
$
1,016
$
1,157
Adjusted EBIT Margin %(2)
8.4
%
8.9
%
7.4
%
8.0
%
Earnings Per Share (Diluted)
$
(1.10
)
$
(3.38
)
$
0.46
$
(2.48
)
Non-GAAP EPS (Diluted)(2)
$
0.97
$
1.02
$
3.13
$
3.47
Book-to-Bill
0.94x
1.04x
0.91x
1.02x
(1)
In millions, except per-share amounts and
numbers presented as percentages and ratios.
(2)
Reconciliation of GAAP to Non-GAAP
measures provided in Non-GAAP Results.
Financial Highlights - Fourth Quarter of Fiscal Year
2024
Revenue was $3.39 billion, down 5.7% as compared to prior year
period, and down 4.9% on an organic basis. The revenue performance
was primarily driven by declines in Modern Workplace and Cloud and
ITO. Organic revenue growth came in above DXC's guidance range.
Net income was $(195) million, or (5.8)% of sales, compared to
$(758) million, or (21.1)% of sales, in the prior year quarter. Net
income was higher due to lower adjustment in the mark to market of
the pensions. EBIT was $(289) million or (8.5)% of sales. Net
income and EBIT included the following items: amortization of
acquired intangible assets of $88 million, restructuring costs of
$20 million, net losses on dispositions of $17 million, and a $445
million mark to market pension adjustment. Excluding these items,
adjusted EBIT was $283 million and adjusted EBIT margin was 8.4%,
above the Company’s guidance range. Adjusted EBIT was $37 million
below the prior year quarter, mainly driven by $20 million lower
non-cash pension income, and lower gains on asset sales of $19
million.
Diluted earnings per share was $(1.10) and non-GAAP diluted
earnings per share was $0.97, above the guidance range.
During the fourth quarter of fiscal year 2024, the Company
repurchased 6.2 million shares of common stock for a total of $138
million. DXC has retired about 32% of its shares outstanding since
the start of fiscal year 2022.
Financial Information by Segment - Fourth Quarter of Fiscal
Year 2024
Global Business Services
("GBS")(1)
Q4 FY24
Q4 FY23
FY24
FY23
Revenue
$
1,712
$
1,751
$
6,820
$
6,960
YoY Revenue Growth
(2.2
)%
(7.5
)%
(2.0
)%
(8.4
)%
YoY Organic Revenue Growth(2)
(0.3
)%
3.3
%
1.4
%
2.4
%
Segment Profit
$
228
$
240
$
835
$
912
Segment Profit Margin
13.3
%
13.7
%
12.2
%
13.1
%
Book-to-Bill
0.99x
1.04x
0.96x
1.05x
(1)
In millions, except per-share amounts and
numbers presented as percentages and ratios.
(2)
Reconciliation of GAAP to Non-GAAP
measures provided in Non-GAAP Results.
GBS segment revenue was $1,712 million, down 2.2% compared to
the prior year period and down 0.3% on an organic basis. GBS growth
was impacted by lower levels of Analytics and Engineering and
Applications revenues, partially offset by the continued growth in
Insurance. GBS segment profit was $228 million and segment profit
margin was 13.3%, down 40 bps compared to prior year. GBS bookings
were $1.7 billion for a book-to-bill of 0.99x, and 0.96x on a
trailing twelve months basis.
Global Infrastructure Services
("GIS")(1)
Q4 FY24
Q4 FY23
FY24
FY23
Revenue
$
1,674
$
1,840
$
6,847
$
7,470
YoY Revenue Growth
(9.0
)%
(13.0
)%
(8.3
)%
(13.8
)%
YoY Organic Revenue Growth(2)
(9.3
)%
(8.5
)%
(9.3
)%
(7.2
)%
Segment Profit
$
124
$
143
$
437
$
507
Segment Profit Margin
7.4
%
7.8
%
6.4
%
6.8
%
Book-to-Bill
0.89x
1.03x
0.86x
0.99x
(1)
In millions, except per-share amounts and
numbers presented as percentages and ratios.
(2)
Reconciliation of GAAP to Non-GAAP
measures provided in Non-GAAP Results.
GIS segment revenue was $1,674 million, down 9.0% compared to
the prior year period, and down 9.3% on an organic basis. GIS
segment revenue performance was impacted by continued organic
revenue declines in Modern Workplace and Cloud Infrastructure &
ITO. GIS segment profit was $124 million with a segment profit
margin of 7.4%, down 40 bps as compared to prior year. GIS bookings
were $1.4 billion for a book-to-bill of 0.89x, and 0.86x on a
trailing twelve months basis.
Offering Highlights
The results for our six offerings are as follows:
Offerings Revenues
Q4 FY24
Q3 FY24
Q2 FY24
Q1 FY24
Q4 FY23
Analytics and Engineering
$
552
$
555
$
561
$
546
$
558
Applications
769
759
762
770
780
Insurance Software & BPS
391
382
386
382
390
Security
104
109
109
111
113
Cloud Infrastructure & ITO
1,186
1,168
1,209
1,209
1,270
Modern Workplace
384
426
409
423
457
Subtotal
3,386
3,399
3,436
3,441
3,568
M&A and Divestitures
Revenues
—
—
—
5
23
Total Revenues
$
3,386
$
3,399
$
3,436
$
3,446
$
3,591
Cash Flow
Cash Flow
Q4 FY24
Q4 FY23
FY24
FY23
Cash Flow from Operations
$
280
$
415
$
1,361
$
1,415
Less Capital Expenditures:
Purchase of Property and Equipment
(38
)
(55
)
(182
)
(267
)
Transition and Transformation Contract
Costs
(39
)
(57
)
(198
)
(223
)
Software Purchased or Developed
(48
)
(34
)
(225
)
(188
)
Free Cash Flow
$
155
$
269
$
756
$
737
Cash flow from operations was $280 million in the fourth quarter
of fiscal year 2024, as compared to $415 million in the fourth
quarter of fiscal year 2023, and capital expenditures were $125
million in the fourth quarter of fiscal year 2024, as compared to
$146 million in the fourth quarter of fiscal year 2023. Free cash
flow (cash flow from operations, less capital expenditures) was
$155 million in the fourth quarter of fiscal year 2024, as compared
to $269 million in the fourth quarter of fiscal year 2023. For the
full year, free cash flow increased from $737 million in fiscal
year 2023 to $756 million in fiscal year 2024.
Guidance
The Company's guidance for the first quarter and full fiscal
year 2025 is presented in the table below.
Key Metrics
Q1 FY25 Guidance
FY25 Guidance
Lower End
Higher End
Lower End
Higher End
Organic Revenue Growth %
(8.0)%
(7.0)%
(6.0)%
(4.0)%
Adjusted EBIT Margin
5.5%
6.0%
6.0%
7.0%
Non-GAAP Diluted EPS
$0.55
$0.60
$2.50
$3.00
Free Cash Flow
~$400
Revenue
Revenue $
$3,100
$3,150
$12,670
$12,950
Acquisition & Divestitures Revenues
%
(0.1)%
—%
Foreign Exchange Impact on Revenues %
(1.7)%
(1.2)%
Others
Pension Income Benefit*
~$22
~$90
Net Interest Expense
~$21
~$95
Non-GAAP Tax Rate
~30%
~30%
Weighted Average Diluted Shares
Outstanding
~182
~184
Restructuring & TSI Expense
~$375
Capital Lease / Asset Financing
Payments
~$275
Foreign Exchange Assumptions
Current Estimate
Current Estimate
$/Euro Exchange Rate
$1.06
$1.06
$/GBP Exchange Rate
$1.25
$1.25
$/AUD Exchange Rate
$0.65
$0.65
*Pension benefit is split between Cost Of
Sales (COS) & Other Income:
Fiscal year 2025: Net pension
benefit of $90 million; $45 million service cost in COS, $135
million pension benefit in Other income
Fiscal year 2024: Net pension
benefit of $92 million; $53 million service cost in COS, $145
million pension benefit in Other income
DXC does not provide a reconciliation of non-GAAP measures that
it discusses as part of its guidance because certain significant
information required for such reconciliation is not available
without unreasonable efforts or at all, including, most notably,
the impact of significant non-recurring items. Without this
information, DXC does not believe that a reconciliation would be
meaningful.
Earnings Conference Call and Webcast
DXC Technology senior management will host a conference call and
webcast to discuss these results on May 16, 2024, at 5:00 p.m. EDT.
The dial-in number for domestic callers is +1 (888) 330-2455.
Callers who reside outside of the United States should dial +1
(240) 789-2717. The passcode for all participants is 4164760. 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 May
23, 2024. The phone number for the replay is +1 (800) 770-2030 or
+1 (647) 362-9199. The replay passcode is 4164760.
About DXC Technology
DXC Technology (NYSE: DXC) helps global companies run their
mission critical systems and operations while modernizing IT,
optimizing data architectures, and ensuring security and
scalability across public, private and hybrid clouds. The world’s
largest companies and public sector organizations trust DXC to
deploy services to drive new levels of performance,
competitiveness, and customer experience across their IT estates.
Learn more about how we deliver excellence for our customers and
colleagues at DXC.com.
Forward-Looking Statements
All statements in this press release that do not directly and
exclusively relate to historical facts constitute “forward-looking
statements.” Forward-looking statements often include words such as
“anticipates,” “believes,” “estimates,” “expects,” “forecast,”
“goal,” “intends,” “objective,” “plans,” “projects,” “strategy,”
“target,” and “will” and words and terms of similar substance in
discussions of future operating or financial performance.
Forward-looking statements include, among other things, statements
with respect to our future financial condition, results of
operations, cash flows, business strategies, operating efficiencies
or synergies, divestitures, competitive position, growth
opportunities, share repurchases, dividend payments, plans and
objectives of management and other matters. 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. Important
factors that could cause actual results to differ materially from
those described in forward-looking statements include, but are not
limited to: our inability to succeed in our strategic objectives;
the risk of liability, reputational damages or adverse impact to
business due to service interruptions, from security breaches,
cyber-attacks, other security incidents or disclosure of
confidential information or personal data; compliance, or failure
to comply, with obligations arising under new or existing laws,
regulations, and customer contracts relating to the privacy,
security and handling of personal data; our product and service
quality issues; our inability to develop and expand our service
offerings to address emerging business demands and technological
trends, including our inability to sell differentiated services
amongst our offerings; our inability to compete in certain markets
and expand our capacity in certain offshore locations and risks
associated with such offshore locations, such as the on-going
conflict between Russia and Ukraine; failure to maintain our credit
rating and ability to manage working capital, refinance and raise
additional capital for future needs; difficulty in understanding
the changes to our business model by financial or industry analysts
or our failure to meet our publicly announced financial guidance;
public health crises such as the COVID-19 pandemic; our
indebtedness and potential material adverse effect on our financial
condition and results of operations; the competitive pressures
faced by our business; our inability to accurately estimate the
cost of services, and the completion timeline of contracts; failure
by us or third party partners to deliver on commitments or
otherwise breach obligations to our customers; the risks associated
with climate change and natural disasters; increased scrutiny of,
and evolving expectations for, sustainability and environmental,
social, and governance initiatives; our inability to attract and
retain key personnel and maintain relationships with key partners;
the risks associated with prolonged periods of inflation or current
macroeconomic conditions, including the current decline in economic
growth rates in the United States and in other countries, the
possibility of reduced spending by customers in the areas we serve,
the uncertainty related to our cost-takeout efforts, continuing
unfavorable foreign exchange rate movements, and our ability to
close new deals in the event of an economic slowdown; the risks
associated with our international operations, such as risks related
to currency exchange rates; our inability to comply with existing
and new laws and regulations, including social and environmental
responsibility regulations, policies and provisions, as well as
customer and investor demands; our inability to achieve the
expected benefits of our restructuring plans; our inadvertent
infringement of third-party intellectual property rights or
infringement of our intellectual property rights by third parties;
our inability to procure third-party licenses required for the
operation of our products and service offerings; risks associated
with disruption of our supply chain; our inability to maintain
effective disclosure controls and internal control over financial
reporting; potential losses due to asset impairment charges; our
inability to pay dividends or repurchase shares of our common
stock; pending investigations, claims and disputes and any adverse
impact on our profitability and liquidity; disruptions in the
credit markets, including disruptions that reduce our customers’
access to credit and increase the costs to our customers of
obtaining credit; counterparty default risk in our hedging program;
our failure to bid on projects effectively; financial difficulties
of our customers and our inability to collect receivables; our
inability to maintain and grow our customer relationships over time
and to comply with customer contracts or government contracting
regulations or requirements; our inability to succeed in our
strategic transactions; changes in tax rates, tax laws, and the
timing and outcome of tax examinations; risks following the merger
of Computer Sciences Corporation (“CSC”) and Enterprise Services
business of Hewlett Packard Enterprise Company’s (“HPES”)
businesses, including anticipated tax treatment, unforeseen
liabilities, and future capital expenditures; risks following the
spin-off of our former U.S. Public Sector business (the “USPS”) and
its related mergers with Vencore Holding Corp. and KeyPoint
Government Solutions in June 2018 to form Perspecta Inc. (including
its successors and permitted assigns, “Perspecta”); volatility of
the price of our securities, which is subject to market and other
conditions. 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, 2023, and any updating
information in subsequent SEC filings, including DXC’s upcoming
Annual Report on Form 10-K for the year ended March 31, 2024.
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.
About 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:
earnings before interest and taxes ("EBIT"), EBIT margin, adjusted
EBIT, adjusted EBIT margin, non-GAAP diluted EPS, organic revenues,
organic revenue growth, free cash flow, and non-GAAP tax rate.
We believe EBIT, EBIT margin, adjusted EBIT, adjusted EBIT
margin, and non-GAAP diluted EPS provide investors with useful
supplemental information about our operating performance after
excluding certain categories of expenses.
One category of expenses excluded from adjusted EBIT, adjusted
EBIT margin, and non-GAAP diluted EPS, incremental amortization of
intangible assets acquired through business combinations, which, if
included, may result in a significant difference in period over
period amortization expense on a GAAP basis. We exclude
amortization of certain acquired intangible 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.
Another category of expenses excluded from adjusted EBIT,
adjusted EBIT margin, and non-GAAP diluted EPS, is impairment
losses, which, if included, may result in a significant difference
in period-over-period expense on a GAAP basis. We exclude
impairment losses as these non-cash amounts, reflect generally an
acceleration of what would be multiple periods of expense and are
not expected to occur frequently. Further assets such as goodwill
may be significantly impacted by market conditions outside of
management’s control.
We believe organic revenue growth provides investors with useful
supplemental information about our revenues after excluding the
effect of currency exchange rate fluctuations for currencies other
than U.S. dollars and the effects of acquisitions and divestitures
in the periods presented. See below for a description of the
methodology we use to present organic revenues.
Selected references are made to revenue growth on an “organic
basis” so that certain financial results can be viewed without the
impact of fluctuations in foreign currency rates and without the
impacts of acquisitions and divestitures, thereby providing
comparisons of operating performance from period to period of the
business that we have owned during all periods presented. Organic
revenue growth is calculated by dividing the year-over-year change
in GAAP revenues attributed to organic growth by the GAAP revenues
reported in the prior comparable period. Organic revenue is
calculated as constant currency revenue excluding the impact of
mergers, acquisitions or similar transactions until the one-year
anniversary of the transaction and excluding revenues of
divestitures during the reporting period. This approach is used for
all results where the functional currency is not the U.S.
dollar.
Free cash flow represents cash flow from operations, less
capital expenditures. Free cash flow is utilized by our management,
investors, and analysts to evaluate cash available to pay debt,
repurchase shares, and provide further investment in the
business.
There are limitations to the use of the non-GAAP financial
measures presented in this press release. 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.
Condensed Consolidated Statements of
Operations
(preliminary and unaudited)
Three Months Ended
Twelve Months Ended
(in millions, except per-share
amounts)
March 31, 2024
March 31, 2023
March 31, 2024
March 31, 2023
Revenues
$
3,386
$
3,591
$
13,667
$
14,430
Costs of services
2,588
2,742
10,576
11,246
Selling, general and administrative
295
387
1,244
1,375
Depreciation and amortization
349
375
1,404
1,519
Restructuring costs
20
81
111
216
Interest expense
76
63
298
200
Interest income
(56
)
(46
)
(214
)
(135
)
Loss (gain) on disposition of
businesses
17
(202
)
(79
)
(190
)
Other expense, net
406
1,354
218
1,084
Total costs and expenses
3,695
4,754
13,558
15,315
(Loss) income before income taxes
(309
)
(1,163
)
109
(885
)
Income tax (benefit) expense
(114
)
(405
)
23
(319
)
Net (loss) income
(195
)
(758
)
86
(566
)
Less: net income (loss) attributable to
non-controlling interest, net of tax
5
(2
)
(5
)
2
Net (loss) income attributable to DXC
common stockholders
$
(200
)
$
(756
)
$
91
$
(568
)
(Loss) income per common share:
Basic
$
(1.10
)
$
(3.38
)
$
0.46
$
(2.48
)
Diluted
$
(1.10
)
$
(3.38
)
$
0.46
$
(2.48
)
Weighted average common shares outstanding
for:
Basic EPS
181.06
223.92
195.80
228.99
Diluted EPS
181.06
223.92
198.78
228.99
Selected Condensed Consolidated Balance
Sheet Data
(preliminary and unaudited)
As of
(in millions)
March 31, 2024
March 31, 2023
Assets
Cash and cash equivalents
$
1,224
$
1,858
Receivables, net
3,253
3,441
Prepaid expenses
512
565
Other current assets
146
255
Assets held for sale
—
5
Total current assets
5,135
6,124
Intangible assets, net
2,130
2,569
Operating right-of-use assets, net
731
909
Goodwill
532
539
Deferred income taxes, net
804
460
Property and equipment, net
1,671
1,979
Other assets
2,857
3,247
Assets held for sale - non-current
11
18
Total Assets
$
13,871
$
15,845
Liabilities
Short-term debt and current maturities of
long-term debt
$
271
$
500
Accounts payable
846
782
Accrued payroll and related costs
558
569
Current operating lease liabilities
282
317
Accrued expenses and other current
liabilities
1,437
1,836
Deferred revenue and advance contract
payments
866
1,054
Income taxes payable
134
120
Liabilities related to assets held for
sale
—
9
Total current liabilities
4,394
5,187
Long-term debt, net of current
maturities
3,818
3,900
Non-current deferred revenue
671
788
Non-current income tax liabilities and
deferred tax liabilities
556
587
Non-current operating lease
liabilities
497
648
Non-current pension obligations
423
463
Other long-term liabilities
446
449
Liabilities related to assets held for
sale - non-current
—
3
Total Liabilities
10,805
12,025
Total Equity
3,066
3,820
Total Liabilities and Equity
$
13,871
$
15,845
Condensed Consolidated Statements of
Cash Flows
(preliminary and unaudited)
Twelve Months Ended
(in millions)
March 31, 2024
March 31, 2023
Cash flows from operating activities:
Net income (loss)
$
86
$
(566
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
1,433
1,551
Operating right-of-use expense
353
404
Pension & other post-employment
benefits, actuarial & settlement losses (gains)
445
1,431
Share-based compensation
109
108
Deferred taxes
(416
)
(609
)
Gain on dispositions
(131
)
(260
)
Provision for losses on accounts
receivable
—
(1
)
Unrealized foreign currency exchange
(gains) losses
(7
)
8
Impairment losses and contract
write-offs
18
47
Amortization of debt issuance costs and
discount
5
4
Cash surrender value in excess of premiums
paid
(14
)
(17
)
Other non-cash charges, net
9
4
Changes in assets and liabilities, net of
effects of acquisitions and dispositions:
Decrease in receivables
176
412
Decrease (Increase) in prepaid expenses
and other current assets
211
(119
)
Decrease in accounts payable and
accruals
(278
)
(424
)
Increase (Decrease) in income taxes
payable and income tax liability
13
(161
)
Decrease in operating lease liability
(353
)
(404
)
(Decrease) Increase in advance contract
payments and deferred revenue
(290
)
11
Other operating activities, net
(8
)
(4
)
Net cash provided by operating
activities
1,361
1,415
Cash flows from investing activities:
Purchases of property and equipment
(182
)
(267
)
Payments for transition and transformation
contract costs
(198
)
(223
)
Software purchased and developed
(225
)
(188
)
Business dispositions
26
(147
)
Proceeds from sale of assets
75
171
Other investing activities, net
13
19
Net cash used in investing activities
(491
)
(635
)
Cash flows from financing activities:
Borrowings of commercial paper
1,784
1,514
Repayments of commercial paper
(1,887
)
(1,757
)
Principal payments on long-term debt
—
(63
)
Payments on finance leases and borrowings
for asset financing
(430
)
(511
)
Proceeds from stock options and other
common stock transactions
—
2
Taxes paid related to net share
settlements of share-based compensation awards
(35
)
(17
)
Repurchase of common stock
(898
)
(669
)
Other financing activities, net
(21
)
(6
)
Net cash used in financing activities
(1,487
)
(1,507
)
Effect of exchange rate changes on cash
and cash equivalents
(17
)
(97
)
Net decrease in cash and cash equivalents
including cash classified within current assets held for sale
(634
)
(824
)
Cash classified within current assets held
for sale
—
10
Net decrease in cash and cash
equivalents
(634
)
(814
)
Cash and cash equivalents at beginning of
year
1,858
2,672
Cash and cash equivalents at end of
year
$
1,224
$
1,858
Segment Profit
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
generally include certain corporate function costs, stock-based
compensation expense, pension and other post-retirement benefits
(“OPEB”) actuarial and settlement gains and losses, restructuring
costs, transaction, separation and integration-related costs, and
amortization of acquired intangible assets.
Three Months Ended
Twelve Months Ended
(in millions)
March 31, 2024
March 31, 2023
March 31, 2024
March 31, 2023
GBS profit
$
228
$
240
$
835
$
912
GIS profit
124
143
437
507
All other loss
(69
)
(63
)
(256
)
(262
)
Subtotal
$
283
$
320
$
1,016
$
1,157
Interest income
56
46
214
135
Interest expense
(76
)
(63
)
(298
)
(200
)
Restructuring costs
(20
)
(81
)
(111
)
(216
)
Transaction, separation and
integration-related costs
(1
)
(4
)
(7
)
(16
)
Amortization of acquired intangibles
(88
)
(97
)
(354
)
(402
)
Merger related indemnification
(1
)
(25
)
(16
)
(46
)
SEC matter
—
—
—
(8
)
Gains on dispositions
(17
)
202
115
190
Arbitration loss
—
(20
)
—
(29
)
Impairment losses
—
(11
)
(5
)
(19
)
Pension and OPEB actuarial and settlement
losses
(445
)
(1,430
)
(445
)
(1,431
)
(Loss) income before income taxes
$
(309
)
$
(1,163
)
$
109
$
(885
)
Segment profit margins
GBS
13.3
%
13.7
%
12.2
%
13.1
%
GIS
7.4
%
7.8
%
6.4
%
6.8
%
Reconciliation of Non-GAAP Financial Measures
Our non-GAAP adjustments include:
- Restructuring costs – includes costs, net of reversals, related
to workforce and real estate optimization and other similar
charges.
- Transaction, separation and integration-related (“TSI”) costs –
includes costs related to integration, separation, planning,
financing and advisory fees and other similar charges associated
with mergers, acquisitions, strategic investments, joint ventures,
and dispositions and other similar transactions incurred within one
year of such transactions closing, except for costs associated with
related disputes, which may arise more than one year after
closing.
- Amortization of acquired intangible assets – includes
amortization of intangible assets acquired through business
combinations.
- Pension and OPEB actuarial and settlement gains and losses –
pension and OPEB actuarial mark to market adjustments and
settlement gains and losses.
- Merger related indemnification - in fiscal 2024, primarily
represents the Company’s current estimate of potential liability to
HPE for tax related indemnifications; and in fiscal 2023,
represents the Company’s then current estimate of potential
liability to HPE for tax related indemnifications; indemnification
on the Forsyth v. HP Inc. and HPE litigation; and the Company’s
final liability to HPE on the Oracle v. HPE litigation. These
obligations are related to the HPES merger.
- SEC Matter - represents the Company’s liability related to a
previously disclosed investigation into its historical
determination and disclosure of certain “transaction, separation,
and integration-related costs” as part of the Company’s non-GAAP
adjustments.
- Gains and losses on dispositions – gains and losses related to
dispositions of businesses, strategic assets and interests in less
than wholly-owned entities.(1)
- Arbitration loss - reflects losses arising from arbitration
decisions in the third and fourth quarters of fiscal 2023.
- Impairment losses – non-cash charges associated with the
permanent reduction in the value of the Company’s assets (e.g.,
impairment of goodwill and other long-term assets including fixed
assets and impairments to deferred tax assets for discrete changes
in valuation allowances). Future discrete reversals of valuation
allowances are likewise excluded.(2)
- Tax adjustments – discrete tax adjustments to impair or
recognize certain deferred tax assets, adjustments for changes in
tax legislation, and adjustments to transition tax. Income tax
expense (benefit) from the impact of merger and divestitures is
separately computed based on the underlying transaction. Income tax
expense of all other (non-discrete) non-GAAP adjustments is
computed by applying the jurisdictional tax rate to the pre-tax
adjustments on a jurisdictional basis.(3)
(1)
During fiscal 2024, the Company sold
insignificant businesses and a strategic investment and made
adjustments to estimated amounts from prior years’ dispositions
that resulted in a net gain of $115 million. During fiscal 2023,
the Company had a net gain of $190 million from the disposition of
certain businesses, including a pre-tax gain of $215 million from
the sale of its FDB business partially offset by a loss of $25
million from the sale of certain insignificant businesses.
(2)
Impairment losses on dispositions for
fiscal 2024 include $5 million of charges associated with certain
strategic investments accounted for within Other income, net.
Impairment losses on dispositions for fiscal 2024 included $4
million of Net income attributable to non-controlling interest, net
of tax. Impairment losses for fiscal 2023 include an $8 million
impairment charge for customer related intangible assets and an $11
million impairment charge associated with a strategic
investment.
(3)
Tax adjustments for fiscal 2024 include
$(92) million of changes in valuation allowances on deferred tax
assets, $(7) million of adjustments to transition tax, and $2
million of revaluation of deferred taxes resulting from changes in
non-U.S. jurisdiction tax rates. Tax adjustments for fiscal 2023
include $(5) million changes in valuation allowances on deferred
tax assets, $(28) million of adjustments to transition tax, and
$(87) million of revaluation of deferred taxes resulting from
changes in non-U.S. jurisdiction tax rates.
Non-GAAP Results
A reconciliation of reported results to non-GAAP results is as
follows:
Three Months Ended March 31,
2024
(in millions, except per-share
amounts)
As Reported
Restructuring
Costs
Transaction, Separation
and Integration- Related Costs
Amortization of
Acquired Intangible Assets
Merger related
Indemnification
Gains and Losses on
Dispositions
Pension and OPEB
Actuarial and Settlement Gains and
Losses
Tax Adjustment
Non-GAAP
Results
(Loss) income before income taxes
$
(309
)
$
20
$
1
$
88
$
1
$
17
$
445
$
—
$
263
Income tax (benefit) expense
(114
)
5
—
22
2
(6
)
109
60
78
Net (loss) income
(195
)
15
1
66
(1
)
23
336
(60
)
185
Less: net income attributable to
non-controlling interest, net of tax
5
—
—
—
—
—
2
—
7
Net (loss) income attributable to DXC
common stockholders
$
(200
)
$
15
$
1
$
66
$
(1
)
$
23
$
334
$
(60
)
$
178
Effective Tax Rate
36.9
%
29.7
%
Basic EPS
$
(1.10
)
$
0.08
$
0.01
$
0.36
$
(0.01
)
$
0.13
$
1.84
$
(0.33
)
$
0.98
Diluted EPS
$
(1.10
)
$
0.08
$
0.01
$
0.36
$
(0.01
)
$
0.13
$
1.82
$
(0.33
)
$
0.97
Weighted average common shares outstanding
for:
Basic EPS
181.06
181.06
181.06
181.06
181.06
181.06
181.06
181.06
181.06
Diluted EPS
181.06
183.47
183.47
183.47
183.47
183.47
183.47
183.47
183.47
Twelve Months Ended March 31,
2024
(in millions, except per-share
amounts)
As Reported
Restructuring
Costs
Transaction, Separation
and Integration- Related Costs
Amortization of
Acquired Intangible Assets
Merger Related
Indemnification
Gains and Losses on
Dispositions
Impairment
Losses
Pension and OPEB
Actuarial and Settlement Gains and
Losses
Tax Adjustment
Non-GAAP Results
Income before income taxes
$
109
$
111
$
7
$
354
$
16
$
(115
)
$
5
$
445
$
—
$
932
Income tax expense
23
23
1
75
14
(26
)
1
109
97
317
Net income
86
88
6
279
2
(89
)
4
336
(97
)
615
Less: net loss attributable to
non-controlling interest, net of tax
(5
)
—
—
—
—
—
(4
)
2
—
(7
)
Net income attributable to DXC common
stockholders
$
91
$
88
$
6
$
279
$
2
$
(89
)
$
8
$
334
$
(97
)
$
622
Effective Tax Rate
21.1
%
34.0
%
Basic EPS
$
0.46
$
0.45
$
0.03
$
1.42
$
0.01
$
(0.45
)
$
0.04
$
1.71
$
(0.50
)
$
3.18
Diluted EPS
$
0.46
$
0.44
$
0.03
$
1.40
$
0.01
$
(0.45
)
$
0.04
$
1.68
$
(0.49
)
$
3.13
Weighted average common shares outstanding
for:
Basic EPS
195.80
195.80
195.80
195.80
195.80
195.80
195.80
195.80
195.80
195.80
Diluted EPS
198.78
198.78
198.78
198.78
198.78
198.78
198.78
198.78
198.78
198.78
Three Months Ended March 31,
2023
(in millions, except per-share
amounts)
As Reported
Restructuring
Costs
Transaction, Separation
and Integration Related Costs
Amortization of
Acquired Intangible Assets
Merger Related
Indemnification and Arbitration Loss
Gains and Losses on
Dispositions
Pension and OPEB
Actuarial and Settlement Gains and Losses
Impairment
Losses
Tax Adjustment
Non-GAAP Results
(Loss) income from continuing operations,
before taxes
$
(1,163
)
$
81
$
4
$
97
$
45
$
(202
)
$
1,430
$
11
$
—
$
303
Income tax (benefit) expense
(405
)
16
1
19
24
1
291
3
120
70
Net (loss) income
(758
)
65
3
78
21
(203
)
1,139
8
(120
)
233
Less: net loss attributable to
non-controlling interest, net of tax
(2
)
—
—
—
—
—
2
—
—
—
Net (loss) income attributable to DXC
common stockholders
$
(756
)
$
65
$
3
$
78
$
21
$
(203
)
$
1,137
$
8
$
(120
)
$
233
Effective Tax Rate
34.8
%
23.1
%
Basic EPS
$
(3.38
)
$
0.29
$
0.01
$
0.35
$
0.09
$
(0.91
)
$
5.08
$
0.04
$
(0.54
)
$
1.04
Diluted EPS
$
(3.38
)
$
0.29
$
0.01
$
0.34
$
0.09
$
(0.89
)
$
5.00
$
0.04
$
(0.53
)
$
1.02
Weighted average common shares outstanding
for:
Basic EPS
223.92
223.92
223.92
223.92
223.92
223.92
223.92
223.92
223.92
223.92
Diluted EPS
223.92
227.58
227.58
227.58
227.58
227.58
227.58
227.58
227.58
227.58
Fiscal Year Ended March 31,
2023
(in millions, except per-share
amounts)
As Reported
Restructuring
Costs
Transaction, Separation
and Integration- Related Costs
Amortization
of Acquired
Intangible Assets
Merger Related
Indemnification,
Arbitration Loss, and SEC
Matter
Gains and Losses on
Dispositions
Impairment Losses
Pension and OPEB
Actuarial and Settlement Gains and
Losses
Tax Adjustment
Non-GAAP
Results
(Loss) income before income taxes
$
(885
)
$
216
$
16
$
402
$
83
$
(190
)
$
19
$
1,431
$
—
$
1,092
Income tax (benefit) expense
(319
)
44
3
81
31
25
4
291
120
280
Net (loss) income
(566
)
172
13
321
52
(215
)
15
1,140
(120
)
812
Less: net income attributable to
non-controlling interest, net of tax
2
—
—
—
—
—
—
2
—
4
Net (loss) income attributable to DXC
common stockholders
$
(568
)
$
172
$
13
$
321
$
52
$
(215
)
$
15
$
1,138
$
(120
)
$
808
Effective Tax Rate
36.0
%
25.6
%
Basic EPS
$
(2.48
)
$
0.75
$
0.06
$
1.40
$
0.23
$
(0.94
)
$
0.07
$
4.97
$
(0.52
)
$
3.53
Diluted EPS
$
(2.48
)
$
0.74
$
0.06
$
1.38
$
0.22
$
(0.92
)
$
0.06
$
4.89
$
(0.52
)
$
3.47
Weighted average common shares outstanding
for:
Basic EPS
228.99
228.99
228.99
228.99
228.99
228.99
228.99
228.99
228.99
228.99
Diluted EPS
228.99
232.62
232.62
232.62
232.62
232.62
232.62
232.62
232.62
232.62
The above tables serve to reconcile the non-GAAP financial
measures to the most directly comparable GAAP measures. Please
refer to the “About Non-GAAP Measures” section of the press release
for further information on the use of these non-GAAP measures.
Year-over-Year Organic Revenue
Growth
Fiscal Year 2024
(in millions)
Q1 FY24
Q2 FY24
Q3 FY24
Q4 FY24
FY24
Total revenue growth
(7.0
)%
(3.6
)%
(4.7
)%
(5.7
)%
(5.3
)%
Foreign currency
0.7
%
(2.0
)%
(1.7
)%
0.2
%
(0.7
)%
Acquisition and divestitures
2.7
%
2.0
%
1.9
%
0.6
%
1.9
%
Organic revenue growth
(3.6
)%
(3.6
)%
(4.5
)%
(4.9
)%
(4.1
)%
GBS revenue growth
(3.1
)%
(0.2
)%
(2.4
)%
(2.2
)%
(2.0
)%
Foreign currency
0.8
%
(1.6
)%
(1.4
)%
0.6
%
(0.4
)%
Acquisition and divestitures
5.6
%
4.2
%
4.1
%
1.3
%
3.8
%
GBS organic revenue growth
3.3
%
2.4
%
0.3
%
(0.3
)%
1.4
%
GIS revenue growth
(10.6
)%
(6.8
)%
(6.8
)%
(9.0
)%
(8.3
)%
Foreign currency
0.7
%
(2.3
)%
(2.1
)%
(0.3
)%
(1.0
)%
Acquisition and divestitures
—
%
—
%
—
%
—
%
—
%
GIS organic revenue growth
(9.9
)%
(9.1
)%
(8.9
)%
(9.3
)%
(9.3
)%
Fiscal Year 2023
(in millions)
Q1 FY23
Q2 FY23
Q3 FY23
Q4 FY23
FY23
Total revenue growth
(10.5
)%
(11.4
)%
(12.8
)%
(10.4
)%
(11.3
)%
Foreign currency
5.8
%
7.4
%
6.6
%
3.9
%
6.0
%
Acquisition and divestitures
2.1
%
2.5
%
2.4
%
3.6
%
2.6
%
Organic revenue growth
(2.6
)%
(1.5
)%
(3.8
)%
(2.9
)%
(2.7
)%
GBS revenue growth
(6.8
)%
(8.5
)%
(10.7
)%
(7.5
)%
(8.4
)%
Foreign currency
5.9
%
7.4
%
6.4
%
3.8
%
5.9
%
Acquisition and divestitures
3.7
%
4.5
%
4.5
%
7.0
%
4.9
%
GBS organic revenue growth
2.8
%
3.4
%
0.2
%
3.3
%
2.4
%
GIS revenue growth
(13.5
)%
(14.0
)%
(14.7
)%
(13.0
)%
(13.8
)%
Foreign currency
5.8
%
7.5
%
6.7
%
4.0
%
6.0
%
Acquisition and divestitures
0.5
%
0.7
%
0.6
%
0.5
%
0.6
%
GIS organic revenue growth
(7.2
)%
(5.8
)%
(7.4
)%
(8.5
)%
(7.2
)%
EBIT and Adjusted
EBIT
Fiscal Year 2024
(in millions)
Q1 FY24
Q2 FY24
Q3 FY24
Q4 FY24
FY24
Net income (loss)
$
42
$
99
$
140
$
(195
)
$
86
Income tax expense (benefit)
36
29
72
(114
)
23
Interest income
(49
)
(53
)
(56
)
(56
)
(214
)
Interest expense
66
78
78
76
298
EBIT
95
153
234
(289
)
193
Restructuring costs
20
35
36
20
111
Transaction, separation and
integration-related costs
1
3
2
1
7
Amortization of acquired intangible
assets
89
89
88
88
354
Merger-related indemnification
11
2
2
1
16
Gains and losses on disposition of
businesses
5
(33
)
(104
)
17
(115
)
Impairment losses
3
2
—
—
5
Pension and OPEB actuarial and settlement
losses
—
—
—
445
445
Adjusted EBIT
$
224
$
251
$
258
$
283
$
1,016
EBIT margin
2.8
%
4.5
%
6.9
%
(8.5
)%
1.4
%
Adjusted EBIT margin
6.5
%
7.3
%
7.6
%
8.4
%
7.4
%
Fiscal Year 2023
(in millions)
Q1 FY23
Q2 FY23
Q3 FY23
Q4 FY23
FY23
Net income (loss)
$
103
$
28
$
61
$
(758
)
$
(566
)
Income tax expense (benefit)
19
26
41
(405
)
(319
)
Interest income
(20
)
(28
)
(41
)
(46
)
(135
)
Interest expense
37
44
56
63
200
EBIT
139
70
117
(1,146
)
(820
)
Restructuring costs
33
53
49
81
216
Transaction, separation, and
integration-related costs
2
4
6
4
16
Amortization of acquired intangible
assets
104
101
100
97
402
Merger related indemnification
10
—
11
25
46
SEC matter
—
8
—
—
8
Gains and losses on disposition of
businesses
(29
)
32
9
(202
)
(190
)
Arbitration loss
—
—
9
20
29
Pension and OPEB actuarial and settlement
losses
—
1
—
1,430
1,431
Impairment losses
—
—
8
11
19
Adjusted EBIT
$
259
$
269
$
309
$
320
$
1,157
EBIT margin
3.7
%
2.0
%
3.3
%
(31.9
)%
(5.7
)%
Adjusted EBIT margin
7.0
%
7.5
%
8.7
%
8.9
%
8.0
%
Source: DXC Technology
Category: Investor Relations
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240516831985/en/
John Sweeney, CFA, VP of Investor Relations, +1-980-315-3665,
john.sweeney@dxc.com
Sean B. Pasternak, Corporate Media Relations, +1-647-975-7326,
sean.pasternak@dxc.com
Grafico Azioni DXC Technology (NYSE:DXC)
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Grafico Azioni DXC Technology (NYSE:DXC)
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