HP Inc. Reports Fiscal 2019 Full Year and Fourth Quarter Results

PALO ALTO, CA – (GlobeNewswire) – November 26, 2019 – HP (NYSE: HPQ)

  • Fiscal 2019 GAAP diluted net earnings per share (“EPS”) of $2.07, below the previously provided outlook of $2.31 to $2.35 per share
  • Fiscal 2019 non-GAAP diluted net EPS of $2.24, above the previously provided outlook of $2.18 to $2.22 per share
  • Fiscal 2019 net revenue of $58.8 billion, up 0.5% from the prior-year period
  • Fiscal 2019 net cash provided by operating activities of $4.7 billion, free cash flow of $4.0 billion
  • Fiscal 2019 returned $3.4 billion to shareholders in the form of share repurchases and dividends
  • Fourth quarter GAAP diluted net EPS of $0.26, below the previously provided outlook of $0.51 to $0.55 per share
  • Fourth quarter non-GAAP diluted net EPS of $0.60, above the previously provided outlook of $0.55 to $0.59 per share
  • Fourth quarter net revenue of $15.4 billion, up 0.3% from the prior-year period
  • Fourth quarter net cash provided by operating activities of $0.6 billion, free cash flow of $0.4 billion
  • Fourth quarter returned $0.7 billion to shareholders in the form of share repurchases and dividends

HP Inc.’s fiscal 2019 full-year and fourth quarter financial performance

Net revenue and EPS results

HP Inc.  and its subsidiaries (“HP”) announced fiscal 2019 net revenue of $58.8 billion, up 0.5% (up 2.0% in constant currency) from the prior-year period.

Fiscal 2019 GAAP diluted net EPS was $2.07, down from $3.26 in the prior-year period and below the previously provided outlook of $2.31 to $2.35. Fiscal 2019 non-GAAP diluted net EPS was $2.24, up from $2.02 in the prior-year period and above the previously provided outlook of $2.18 to $2.22. Fiscal 2019 non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $257 million, or $0.17 per diluted share, related to restructuring and other charges, acquisition-related charges, amortization of intangible assets, non-operating retirement-related credits/(charges), and tax adjustments.

Fourth quarter net revenue was $15.4 billion, up 0.3% (up 1.8% in constant currency) from the prior-year period.

Fourth quarter GAAP diluted net EPS was $0.26, down from $0.91 in the prior-year period and below the previously provided outlook of $0.51 to $0.55. Fourth quarter non-GAAP diluted net EPS was $0.60, up from $0.54 in the prior-year period and above the previously provided outlook of $0.55 to $0.59. Fourth quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $511 million, or $0.34 per diluted share, related to restructuring and other charges, acquisition-related charges, amortization of intangible assets, non-operating retirement-related credits/(charges), and tax adjustments.

“2019 marks our third consecutive year of revenue, non-GAAP operating profit and non-GAAP earnings growth, with non-GAAP EPS up 11% and strong free cash flow of $4 billion,” said Enrique Lores, President and CEO, HP Inc. “We delivered an excellent Q4, with 11% non-GAAP EPS growth. Our strategy is working and we are confident in our business heading into FY20.”

Asset management

HP generated $4.7 billion in net cash provided by operating activities and $4.0 billion of free cash flow in fiscal 2019. Free cash flow includes net cash provided by operating activities and net investments in property, plant and equipment of $0.7 billion. HP utilized approximately $2.4 billion of cash during fiscal 2019 to repurchase approximately 118 million shares of common stock in the open market. When combined with the almost $1.0 billion of cash used to pay dividends, HP returned 85% of its free cash flow to shareholders in fiscal 2019.

HP’s net cash provided by operating activities in the fourth quarter of fiscal 2019 was $0.6 billion. Accounts receivable ended the quarter at $6.0 billion, up 2 days quarter over quarter to 35 days. Inventory ended the quarter at $5.7 billion, down 3 days quarter over quarter to 41 days. Accounts payable ended the quarter at $14.8 billion, down 6 days quarter over quarter to 107 days.

HP generated $0.4 billion of free cash flow in the fourth quarter. Free cash flow includes net cash provided by operating activities and net investments in property, plant and equipment of $0.2 billion.

HP’s dividend payment of $0.1602 per share in the fourth quarter resulted in cash usage of $0.2 billion. HP also utilized $0.5 billion of cash during the quarter to repurchase approximately 25 million shares of common stock in the open market.  As a result, HP returned 178% of its fourth quarter free cash flow to shareholders. HP exited the quarter with $4.5 billion in gross cash, which includes cash and cash equivalents.

Fiscal 2019 fourth quarter segment results

  • Personal Systems net revenue was up 4% year over year (up 5% in constant currency) with a 5.3% operating margin. Commercial net revenue increased 8% and Consumer net revenue decreased 4%. Total units were up 8% with Notebooks units up 9% and Desktops units up 5%.
  • Printing net revenue was down 6% year over year (down 5% in constant currency) with a 15.6% operating margin. Total hardware units were down 9% with Commercial hardware units down 1% and Consumer hardware units down 10%. Supplies net revenue was down 7% (down 7% in constant currency).

Outlook

For the fiscal 2020 first quarter, HP estimates GAAP diluted net EPS to be in the range of $0.39 to $0.42 and non-GAAP diluted net EPS to be in the range of $0.53 to $0.56. Fiscal 2020 first quarter non-GAAP diluted net EPS estimates exclude $0.14 per diluted share, primarily related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related credits/(charges), tax adjustments and the related tax impact on these items.

For fiscal 2020, HP estimates GAAP diluted net EPS to be in the range of $2.00 to $2.10 and non-GAAP diluted net EPS to be in the range of $2.24 to $2.32.  Fiscal 2020 non-GAAP diluted net EPS estimates exclude $0.22 to $0.24 per diluted share, primarily related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related credits/(charges), tax adjustments and the related tax impact on these items.

More information on HP’s earnings, including additional financial analysis and an earnings overview presentation, is available on HP’s Investor Relations website at www.hp.com/investor/home.

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