Slide 1: HP Inc. Q3 FY20
HP INC. Q3 FY20 August 27, 2020 http://investor.hp.com
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements based on current expectations and assumptions that involve risks and uncertainties. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of HP Inc. and its consolidated subsidia
Slide 3: Use of non-GAAP financial information
Use of non-GAAP financial information HP has included non-GAAP financial measures in this presentation to supplement HP’s consolidated financial statements presented on a GAAP basis. Definitions of these non-GAAP financial measures and reconciliations of these non-GAAP financial measures to the most
Slide 4: Q3 FY20 highlights
Q3 FY20 highlights • Net revenue of $14.3 billion, down 2.1% from the prior-year period and down 0.2% in constant currency1 • Non-GAAP diluted net earnings per share2 of $0.49, above the previously provided outlook of $0.39 to $0.45 per share • GAAP diluted net earnings per share of $0.52, above the
Slide 5: Q3 FY20 results overview
Q3 FY20 results overview Non-GAAP Non-GAAP Non-GAAP Growth Growth Non-GAAP $ in millions Net revenue y/y% CC1 y/y% OP $3 OP OP OP % of rev3 $ y/y3 % of rev y/y3 Printing $3,933 (19.9)% (18.8)% $480 12.2% $(285) (3.4) pts Personal Systems $10,360 6.9% 9.2% $570 5.5% $23 (0.1) pts Corp investments / O
Slide 6: Q3 FY20 mix by segment and region
Q3 FY20 mix by segment and region Net revenue Non-GAAP operating profit2 By key segment and business unit1 By key segment3 Net revenue by region Workstations and Other Personal Systems Printing – Supplies 18% $1.1 billion 6% Desktops 15% Printing – Commercial $14.3 Hardware4 5% Printing 46% of total
Slide 7: Revenue and non-GAAP diluted net EPS performance
Revenue and non-GAAP diluted net EPS performance 1 Revenue (Billions) Non-GAAP diluted net EPS1 $18 $0.70 $0.65 $0.60 $0.58 $0.60 $16 $0.52 $0.54 $0.53 $0.52 $0.51 $0.49 $0.50 $14 $0.40 $0.30 $12 $0.20 $10 $0.10 $14.6 $15.4 $14.7 $14.0 $14.6 $15.4 $14.6 $12.5 $14.3 $8 $0.00 3Q18 4Q18 1Q19 2Q19 3Q19
Slide 8: Revenue growth
Revenue growth y/y growth (%) 15% 11.7% 10.3% 10% 8.8% 9.4% 5% 2.0% 2.3% 2.1% 1.8% 0.5% (0.2)% 0% 1.3% 0.2% 0.1% 0.3% (0.6)% (2.1)% (5%) (10.1)% (10%) (11.2)% (15%) 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Revenue growth in constant currency 1 Revenue growth as reported 1. Adjusted to exclude th
Slide 9: Regional revenue trends
Regional revenue trends y/y revenue growth % y/y revenue growth in constant currency%1 Americas $7 15% $7 15% United (including U.S.) 10% 10% States $6 5% $6 5% 0% 0% $5 (5%) $5 (5%) (10%) (10%) $4 (15%) $4 (15%) billions 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 % growth billions 3Q18 4Q18 1Q19
Slide 10: Personal Systems
Personal Systems Q3 FY20 Revenue Operating profit • PC is essential - work from home and distance learning drove strong demand in notebooks $10.4 billion $570 million Key • Delivered strong revenue growth and profit driven by consumer messages • Innovation: New commercial HP EliteBook series; and La
Slide 11: Printing
Printing Q3 FY20 • Strong momentum in Consumer, including Instant Ink, benefitting Revenue Operating profit from working from home $3.9 $480 Key • Office and Graphics usage improved through the quarter though revenue declined due to impacts of COVID-19 billion million messages • Innovation: Launched
Slide 12: Non-GAAP financial information
Non-GAAP1 financial information $ in millions, except Q3 FY20 Q2 FY20 Q3 FY19 per share amounts Revenue $14,294 $12,469 $14,603 Cost of revenue 11,901 83.3% 9,976 80.0% 11,698 80.1% Total OpEx 1,515 10.6% 1,554 12.5% 1,789 12.3% Operating profit $878 6.1% $939 7.5% $1,116 7.6% Interest and other, ne
Slide 13: Q3 FY20 GAAP to non-GAAP bridge
Q3 FY20 GAAP to non-GAAP bridge Non-operating Amortization $ in millions, except Restructuring Debt retirement of Acquisition- Tax tax rate and per GAAP and other extinguishment related Non-GAAP intangible related charges adjustments share amounts charges costs (credits) / assets charges Revenue $14
Slide 14: Select cash and debt balances
Select cash and debt balances $ Billions Net cash (debt)1 $8.0 $6.0 $4.0 $2.0 $ Billions 3Q19 4Q19 1Q20 2Q20 3Q20 $0.0 Gross cash2 4.9 4.5 4.5 4.1 4.9 ($2.0) Gross debt 5.1 5.2 4.9 5.5 6.3 ($4.0) Net cash (debt)1,3 (0.2) (0.6) (0.4) (1.4) (1.4) ($6.0) ($8.0) 3Q19 4Q19 1Q20 2Q20 3Q20 Gross cash 2 Gro
Slide 15: Cash flow
Cash flow $ Millions $5,000 $4,654 $3,983 $4,000 $3,000 $2,442 $2,343 $2,093 $2,171 $2,000 $1,667 $1,577 $1,000 $- FY19 YTD FY20 Q319 Q320 1 Net cash provided by operations Free cash flow 1. Free cash flow = Net cash provided by operations adjusted for net investment in leases and net investment in
Slide 16: Shareholder return
Shareholder return $ Millions $4,000 $3.4 billion $3,000 $2.5 billion 2,405 $2,000 1,767 $1.2 billion $1,000 $0.8 billion 953 970 533 759 $0 240 251 FY19 FY20 YTD Q319 Q320 Shares repurchased 117.7 million 95.4 million 26.5 million 56.0 million Dividend per share $0.6408 $0.5286 $0.1602 $0.1762 Divi
Slide 17: Outlook
Outlook Q4 FY20 net EPS guidance GAAP diluted net EPS $0.32 – $0.36 Non-GAAP diluted net EPS1 $0.50– $0.54 FY20 net EPS guidance GAAP diluted net EPS $1.83 – $1.87 Non-GAAP diluted net EPS2 $2.16 – $2.20 FY20 Free Cash Flow guidance Free Cash Flow3 $2.5-$3.0 billion 1. Fourth quarter fiscal 2020 non
Slide 18: Supplemental slides
Slide 19: Inventory and accounts receivable
Inventory and accounts receivable Inventory Accounts receivable In Billions In Billions $7.0 16.0% $7.0 16.0% $6.4 $6.1 $5.9 $6.0 $6.0 $5.6 $5.7 $5.7 14.0% 14.0% $6.0 $5.4 $5.4 $5.3 $5.3 $4.9 12.0% $5.1 $5.1 $5.1 $5.0 $4.9 12.0% $5.0 % of revenue1 % of revenue1 11.1% 10.0% 10.4% 10.4% 10.0% $4.0 9.7
Slide 20: PP&E and accounts payable
PP&E and accounts payable PP&E Accounts payable In Billions In Billions $3.0 $2.8 6.0% $16.0 $2.8 $2.7 $2.7 $14.8 $14.6 $14.6 $14.8 $14.2 $14.3 $13.8 $2.4 $2.5 $14.0 $2.3 5.0% $12.8 $2.4 $2.2 4.7% 4.8% 4.7% $12.0 4.8% % of revenue1 4.2% 4.0% $1.8 4.1% $10.0 3.9% 3.8% 3.0% $8.0 $1.2 $6.0 2.0% $4.0 $0
Slide 21: Working capital metrics
Working capital metrics 140 120 100 80 60 40 20 0 -20 -40 Oct18 Jan19 Apr19 Jul19 Oct19 Jan20 Apr20 Jul20 Days receivables 30 31 35 33 35 30 37 33 Days inventory 43 42 43 44 41 38 57 45 Days payable 105 108 110 113 107 98 128 108 1 Cash conversion cycle -32 -35 -32 -36 -31 -30 -34 -30 1. Cash conver
Slide 22: Q2 FY20 GAAP to non-GAAP bridge
Q2 FY20 GAAP to non-GAAP bridge Non-operating $ in millions, except Amortization Restructuring and Acquisition-related Tax retirement related tax rate and per GAAP of Non-GAAP other charges charges adjustments (credits) / share amounts intangible assets charges Revenue $12,469 $12,469 Cost of revenu
Slide 23: Q1 FY20 GAAP to non-GAAP bridge
Q1 FY20 GAAP to non-GAAP bridge Non-operating $ in millions, except Amortization Restructuring and Acquisition-related Tax retirement related tax rate and per GAAP of Non-GAAP other charges charges adjustments (credits) / share amounts intangible assets charges Revenue $14,618 $14,618 Cost of revenu
Slide 24: FY19 GAAP to non-GAAP bridge
FY19 GAAP to non-GAAP bridge Non-operating $ in millions, except Amortization retirement Restructuring and Acquisition- tax rate and per GAAP of other charges related charges Tax adjustments related (credits) Non-GAAP share amounts intangible assets / charges Revenue $58,756 $58,756 Cost of revenue
Slide 25: Q4 FY19 GAAP to non-GAAP bridge
Q4 FY19 GAAP to non-GAAP bridge Non-operating $ in millions, except Amortization Restructuring and Acquisition-related Tax retirement related tax rate and per GAAP of Non-GAAP other charges charges adjustments (credits) / share amounts intangible assets charges Revenue $15,407 $15,407 Cost of revenu
Slide 26: Q3 FY19 GAAP to non-GAAP bridge
Q3 FY19 GAAP to non-GAAP bridge Non-operating Amortization $ in millions, except Restructuring Acquisition- Defined benefit retirement of Tax tax rate and per GAAP and other related credits plan settlement related Non-GAAP intangible adjustments share amounts charges (charges) charges (credits) / as
Slide 27: Q2 FY19 GAAP to non-GAAP bridge
Q2 FY19 GAAP to non-GAAP bridge $ in millions, except Non-operating Amortization Restructuring and Acquisition- retirement related tax rate and per GAAP of other charges related charges Tax adjustments (credits) / Non-GAAP share amounts intangible assets charges Revenue $14,036 $14,036 Cost of reven
Slide 28: Q1 FY19 GAAP to non-GAAP bridge
Q1 FY19 GAAP to non-GAAP bridge Non-operating $ in millions, except Amortization Restructuring and Acquisition-related Tax retirement related tax rate and per GAAP of Non-GAAP other charges charges adjustments (credits) / share amounts intangible assets charges Revenue $14,710 $14,710 Cost of revenu
Slide 29: FY18 GAAP to non-GAAP bridge
FY18 GAAP to non-GAAP bridge Non-operating Amortization Defined $ in millions, except Restructuring Acquisition- Debt retirement of benefit plan Tax tax rate and per GAAP and other related extinguishment related Non-GAAP intangible settlement adjustments share amounts charges charges costs (credits)
Slide 30: Q4 FY18 GAAP to non-GAAP bridge
Q4 FY18 GAAP to non-GAAP bridge Non-operating Amortization Defined $ in millions, except Restructuring Acquisition- Debt retirement of benefit plan Tax tax rate and per GAAP and other related extinguishment related Non-GAAP intangible settlement adjustments share amounts charges charges costs (credi
Slide 31: Q3 FY18 GAAP to non-GAAP bridge
Q3 FY18 GAAP to non-GAAP bridge Non-operating Amortization Defined $ in millions, except Restructuring Acquisition- Debt retirement of benefit plan Tax tax rate and per GAAP and other related extinguishment related Non-GAAP intangible settlement adjustments share amounts charges charges costs (credi
Slide 32: Thank you