Dxc Technology Company · NYSE:DXC

Dxc Technology — Q1 2022 Earnings Presentation

44 slides from Dxc Technology's earnings presentation, Aug 4, 2021

1. Slide 1: 1st Quarter FY 2022 Earnings Presentation

   1st Quarter FY 2022 Earnings Presentation August 4, 2021

2. Slide 2: Non-GAAP Financial Measures

   Non-GAAP Financial Measures We present Non-GAAP financial measures which are derived from the statements of operations, cash flow and balance sheets of DXC. These Non-GAAP financial measures include earnings before interest and taxes ("EBIT"), adjusted EBIT, EBIT before depreciation and amortization

3. Slide 3: Forward-Looking Statements

   Forward-Looking Statements All statements in this presentation 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 statem

4. Slide 4: Agenda for Today

   Agenda for Today 1 Overview of Q1 FY22 Results 2 Progress on Our Transformation Journey 3 Q1 FY22 Financial Results, FY22 and FY24 Guidance 4 Closing Remarks 4

5. Slide 5: Continued Strong Performance in Q1 FY22

   Continued Strong Performance in Q1 FY22 Q1 FY22 – Key Metrics and Drivers Revenue $4.14B Revenues down 8% vs. prior year, and down 3.7% on an organic basis* Adjusted EBIT Margin 8.0% 380 bps YoY margin expansion from 4.2% in Q1 FY21 Book-to-Bill 1.12x Continued success in bringing the “new DXC” to t

6. Slide 6: Playbook Phases

   DXC Investor Day Playbook Phases Complete FY23 / FY24 FY22 FY21 ACCELERATION PHASE FOUNDATION STABILIZATION PHASE PHASE We are here 6

7. Slide 7: Transformation Journey – Foundation (FY22) Goals

   DXC Investor Day Transformation Journey – Foundation (FY22) Inspire and Take Care Focus on Optimize Costs Seize the Market Financial Foundation of Our Colleagues Customers Increase Employee Stabilize Year over Expand Book-to-Bill: Financial Engagement: Year Organic Adjusted Foundation: Goals BtB of

8. Slide 8: Transformation Journey: Inspire and Take Care of Our Colleagues

   Transformation Journey Proof points: • New Chief Marketing Officer rounds out our refreshed management team • Investing in our colleagues: Inspire and – Paid annual bonuses that benefited ~45,000 colleagues Take Care of – Merit increases that will touch ~77,500 colleagues Our Colleagues – Taken care

9. Slide 9: Transformation Journey: Focus on Customers

   Transformation Journey Proof points: • Investing in our customers is paying off: – Delivering for customers Focus on – Keeping more of the work we have and generating new business Customers – Driving customer intimacy • Confident we will deliver on our revenue expectations for Q2 and FY22 9

10. Slide 10: Transformation Journey: Optimize Costs

    Transformation Journey Proof points: • Continued progress on cost optimization program: – Contractor conversion Optimize – Real estate Costs – Scaling the Global Innovation & Delivery Centers (GIDCs) – DXC Platform X TM • Cost optimization program drives Q1 FY22 Adjusted EBIT margin of 8.0% • Confid

11. Slide 11: Transformation Journey: Seize the Market

    Transformation Journey Proof points: • Cross-selling to existing accounts and winning new work • Book-to-bill of 1.12x in Q1 FY22 Seize the • 57% of Q1 FY22 bookings were new work and 43% renewals Market • Expect another quarter with a book-to-bill of 1x or greater in Q2 FY22 11

12. Slide 12: Quarterly Results

    Quarterly Results Commentary $4.50 $0.46 $4.14 • Reported revenues down 8.0% YoY • Currency tailwind of 5.7% Revenue ($B) $4.04 • Dispositions reduce revenues by 10.0% • Organic revenue decline of 3.7% Q1 FY21 Q1 FY22 Impact of Divestitures 8.0% 4.2% • Q1 FY22 Adjusted EBIT margin of 8.0% Adjusted ~

13. Slide 13: Quarterly Results

    Quarterly Results Commentary $0.84 • Q1 FY22 Non-GAAP Diluted EPS of $0.84, up 300% YoY Non-GAAP Diluted EPS $0.21 • Increase driven by cost optimization, lower interest expense, and lower tax rate Q1 FY21 Q1 FY22 $182 $110 Restructuring $76 • Restructuring and TSI expense of $76M, down 58% from pri

14. Slide 14: Transformation Journey on Track

    Transformation Journey on Track Organic Revenue Growth Trends (YoY) Adjusted EBIT Margin Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 7.5% 8.0% 7.0% ~0.2% 6.2% ~0.2% 4.2% ~2.2% (3.7%) 6.8% 7.3% ~2.2% (6.5%) 4.0% 2.0% (9.1%) (10.1%) (9.7%) Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Impact of Divestitures Boo

15. Slide 15: Global Business Services (GBS)

    Global Business Services (GBS) Commentary $2.17 $1.89 • “Top of the stack” revenues decreased 13.2% year-over-year $0.45 • Organic revenues increased 2.0% year-over-year Revenue ($B) $1.72 • Strength in Analytics and Engineering consulting projects Q1 FY21 Q1 FY22 Impact of Divestitures 14.4% 9.9% G

16. Slide 16: Global Infrastructure Services (GIS)

    Global Infrastructure Services (GIS) Commentary $2.33 $2.25 • Revenue decreased 3.2% year-over-year • Organic revenues declined 9.1% year-over-year Revenue ($B) • Strategic alternative delayed Modern Workplace transformation journey Q1 FY21 Q1 FY22 5.8% GIS • Q1 FY22 GIS profit margin expanded 480 b

17. Slide 17: Enterprise Technology Stack – Q1 FY22 Performance

    Enterprise Technology Stack – Q1 FY22 Performance Q1 FY22 YoY GAAP YoY Organic Revenue ($M) Book-to-Bill Growth Growth Analytics and Engineering 482 17.9% 12.9% 1.32x GBS Applications 1,246 7.2% 0.6% 1.32x Business Process Services (BPS) 118 (8.1)% (13.0)% 1.13x Cloud and Security 549 13.7% 4.9% 0.8

18. Slide 18: Restructuring and TSI

    Restructuring and TSI $182M $1,148M $909M $866M $110M $76M $570M $550M $9M $300M $72M $67M $100M Q1 FY21 Q1 FY22 FY18 FY19 FY20 FY21 FY22 FY23 FY24 TSI Restructuring Lower Restructuring and TSI Expense Drive >$500 Million in FCF by FY24 18

19. Slide 19: Strengthened Our Balance Sheet

    Strengthened Our Balance Sheet Total Debt • Achieved targeted debt level and leverage $12.0B • Committed to an investment grade credit profile, as demonstrated by our actions $4.9B • Reduced debt by $7.1 billion in past 4 quarters Q1 FY21 Q1 FY22 • Relatively low debt maturities ~$700 million Net De

20. Slide 20: Cash Generation

    Cash Generation (in millions) Q1 FY22 Q1 FY21 Cash (Used In) From Operations $ (29) $ 119 Less capital expenditures Purchase of property and equipment (98) (95) Payments for transition and transformation contract costs (55) (82) Software purchased and developed (122) (48) Free Cash Flow (304) (106)

21. Slide 21: Financial Priorities

    Financial Priorities 1 2 3 4 5 Financial Strengthen Cash Restructuring Capital Foundation Balance Sheet Generation & TSI Allocation • True earnings power • Maintain investment • Improve cash flow • Reduce expense to • Investing in our grade credit rating generation ~$550M in FY22 people and offering

22. Slide 22: Q2 FY22 Outlook

    Q2 FY22 Outlook YoY Organic Adjusted Non-GAAP Revenue Revenue Growth EBIT Margin Diluted EPS $4.08B – $4.13B (1)% – (3)% 8.0% – 8.4% $0.80 – $0.84 Q2 FY22 Financial Targets 22

23. Slide 23: Reaffirming FY22 Outlook

    Reaffirming FY22 Outlook YoY Organic Adjusted Non-GAAP FCF Revenue Revenue Growth EBIT Margin Diluted EPS $16.6B – (1)% – (2)% 8.2% – 8.7% $3.45 – $3.65 $500M $16.8B FY22 Financial Targets 23

24. Slide 24: Reaffirming FY24 Outlook

    Reaffirming FY24 Outlook YoY Organic Adjusted Non-GAAP FCF Revenue Growth EBIT Margin Diluted EPS 1% – 3% 10% – 11% $5.00 – $5.25 ~$1.5B FY24 Financial Targets 24

25. Slide 25: Transformation – Building the Strong Foundation in FY22

    Transformation – Building the Strong Foundation in FY22 TRAJECTORY 1 Improvements in organic revenue, margin and EPS WINNING IN THE MARKET 2 Delivering book-to-bill greater than 1.0x for 5 consecutive quarters FINANCIAL FOUNDATION 3 Debt reduction, reducing restructuring & TSI, and capital allocatio

26. Slide 26: Supplemental Information

    Supplemental Information Q1 FY22 Quarterly Result Details Non-GAAP Reconciliations Definitions 26

27. Slide 27: 1st Quarter Results

    1st Quarter Results Q1 FY22 Q1 FY21 Revenue ($M) $ 4,141 $ 4,502 – YoY Growth – GAAP (8.0%) (1) – YoY Growth – cc (13.7%) (1) – YoY Growth – organic (3.7%) – QtQ Growth – GAAP (5.6%) – YoY Growth – cc (1) (5.8%) – YoY Growth – organic (1) (3.8%) Adjusted EBIT ($M) 332 190 Adjusted EBIT Margin (%) 8.

28. Slide 28: Global Business Services (GBS)

    Global Business Services (GBS) Q1 FY22 Q1 FY21 Revenue ($M) $ 1,887 $ 2,174 – YoY Growth – GAAP (13.2%) – YoY Growth – cc (1) (17.9%) – YoY Growth – organic (1) 2.0% – QtQ Growth – GAAP (5.6%) – YoY Growth – cc (1) (5.7%) – YoY Growth – organic (1) (1.5%) GBS Profit ($M) 272 215 GBS Profit Margin (%

29. Slide 29: Global Infrastructure Services (GIS)

    Global Infrastructure Services (GIS) Q1 FY22 Q1 FY21 Revenue ($M) $ 2,254 $ 2,328 – YoY Growth – GAAP (3.2%) – YoY Growth – cc (1) (9.8%) – YoY Growth – organic (1) (9.1%) – QtQ Growth – GAAP (5.5%) – YoY Growth – cc (1) (5.9%) – YoY Growth – organic (1) (5.7%) GIS Profit ($M) 131 23 GIS Profit Marg

30. Slide 30: Consolidated Statement of Operations

    Consolidated Statement of Operations (preliminary and unaudited) in millions, except per-share amounts Q1 FY22 Q1 FY21 YTD FY21 Revenue $ 4,141 $ 4,502 Costs of services 3,255 3,629 Selling, general and administrative 383 539 Depreciation and amortization 422 492 Restructuring costs 67 72 Interest e

31. Slide 31: Non-GAAP Reconciliation: Organic Revenue Growth %

    Non-GAAP Reconciliation: Organic Revenue Growth % (in millions) Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Total FY21 Q1 FY22 Revenue $ 4,502 $ 4,554 $ 4,288 $ 4,385 $ 17,729 $ 4,141 Prior Year Revenue 4,890 4,851 5,021 4,815 19,577 4,502 YoY Change (388) (297) (733) (430) (1,848) (361) Foreign Exchange 101 (7

32. Slide 32: Non-GAAP Reconciliation: Organic Revenue Growth % – GBS

    Non-GAAP Reconciliation: Organic Revenue Growth % – GBS (in millions) Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Total FY21 Q1 FY22 Revenue $ 2,174 $ 2,242 $ 1,921 $ 1,999 $ 8,336 $ 1,887 Prior Year Revenue 2,159 2,285 2,359 2,308 9,111 2,174 YoY Change 15 (43) (438) (309) (775) (287) Foreign Exchange 38 (35)

33. Slide 33: Non-GAAP Reconciliation: Organic Revenue Growth % – GIS

    Non-GAAP Reconciliation: Organic Revenue Growth % – GIS (in millions) Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Total FY21 Q1 FY22 Revenue $ 2,328 $ 2,312 $ 2,367 $ 2,386 $ 9,393 $ 2,254 Prior Year Revenue 2,731 2,566 2,662 2,507 10,466 2,328 YoY Change (403) (254) (295) (121) (1,073) (74) Foreign Exchange 63

34. Slide 34: Organic Revenue – Enterprise Technology Stack

    Supplemental Financial Information Non-GAAP Reconciliation: Organic Revenue – Enterprise Technology Stack Business Analytics and Cloud and Modern Acquisitions (in millions) Applications Process IT Outsourcing Total Engineering Security Workplace and Divestitures Services (BPS) Revenue $ 482 $ 1,246

35. Slide 35: Reconciliation of Non-GAAP Results

    Reconciliation of Non-GAAP Results Q1 FY22 Transaction, Amortization of Gains and Debt Restructuring Separation and Non-GAAP (in millions except EPS) As Reported Costs Integration- Acquired Losses on Extinguishment Tax Adjustment Results (2) Intangible Assets Dispositions Costs Related Costs Income

36. Slide 36: Bookings

    Bookings FY21 FY22 $1.8B $2.2B $2.5B $2.3B $2.2B $3.5B $2.7B $2.4B $2.4B $2.4B Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Global Business Services Global Infrastructure Services Note: The summation of the quarter bookings number may not equal the full-year number due to rounding 36

37. Slide 37: Non-GAAP Reconciliation: EBIT and Adjusted EBIT

    Non-GAAP Reconciliation: EBIT and Adjusted EBIT (in millions) Q1 FY22 Q1 FY21 Net income (loss) $ 282 $ (199) Income tax expense (benefit) 142 (26) Interest income (20) (23) Interest expense 62 106 EBIT 466 (142) Restructuring costs 67 72 Transaction, separation and integration-related costs 9 110 A

38. Slide 38: Reconciliation: Segment Profit to Income Before Taxes

    Reconciliation: Segment Profit to Income Before Taxes (in millions) Q1 FY22 Q1 FY21 GBS profit $ 272 $ 215 GIS profit 131 23 All other loss (71) (48) Interest income 20 23 Interest expense (62) (106) Restructuring costs (67) (72) Transaction, separation and integration-related costs (9) (110) Amorti

39. Slide 39: EBIT and Adjusted EBITDA Reconciliation

    Supplemental Financial Information EBIT and Adjusted EBITDA Reconciliation EBIT to Adjusted EBIT (in millions) Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Total FY21 Q1 FY22 T4Q PT4Q Net (loss) income $ (199) $ (246) $ 1,103 $ (804) $ (146) $ 282 $ 335 $ (5,725) Income tax (benefit) expense (26) (60) 875 11 800

40. Slide 40: Diluted EPS to Non-GAAP Diluted EPS Reconciliation

    Supplemental Financial Information Diluted EPS to Non-GAAP Diluted EPS Reconciliation Diluted EPS to Non-GAAP Diluted EPS Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Total FY21 Q1 FY22 Diluted EPS $ (0.81) $ (0.96) $ 4.29 $ (3.14) $ (0.59) $ 1.07 Restructuring 0.24 0.83 0.36 0.36 1.79 0.22 Transaction, Separati

41. Slide 41: Q1 FY22 Non-GAAP Results

    Q1 FY22 Non-GAAP Results Transaction, Amortization of Gains and Debt Restructuring Separation and Non-GAAP (in millions except EPS) As Reported Acquired Losses on Extinguishment Tax Adjustment Costs Integration- Results Intangible Assets Dispositions Costs Related Costs (2) Cost of services (exclude

42. Slide 42: Q1 FY21 Non-GAAP Results

    Q1 FY21 Non-GAAP Results Transaction, Pension and Amortization of Restructuring Separation and OPEB Actuarial Non-GAAP (in millions except EPS) GAAP Acquired Costs Integration- and Settlement Results Intangible Assets Related Costs (2) Losses Cost of services (excludes depreciation and amortization

43. Slide 43: Non-GAAP and Other Definitions

    Non-GAAP and Other Definitions Segment profit: Segment revenue 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 an

44. Slide 44: © 2021 DXC Technology Company. All rights reserved.

    © 2021 DXC Technology Company. All rights reserved.

DXC Technology Company — Q1 2022 Earnings Presentation on 6ix