Slide 1: HP Inc. Q2 FY19
HP INC. Q2 FY19 May 23, 2019 http://investor.hp.com 1
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of HP Inc. and its consolidated subsidiaries (“HP”) may differ materially
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: Q2 FY19 highlights
Q2 FY19 highlights • Net revenue of $14.0 billion, up 0.2% from the prior-year period and up 2.3% in constant currency1 • Non-GAAP2 diluted net earnings per share of $0.53, within the previously provided outlook of $0.50 to $0.53 per share • GAAP diluted net earnings per share of $0.51, above the pr
Slide 5: Q2 FY19 results overview
Q2 FY19 results overview Non-GAAP Non-GAAP Non-GAAP Growth Growth Non-GAAP $ in millions Net revenue y/y% CC1 y/y% OP $ 3 OP 3 OP 3 OP 3 % of rev $ y/y % of rev y/y Printing $5,116 (2.4)% (1.7)% $839 16.4% $2 0.4 pts Personal Systems $8,921 1.8% 4.7% $385 4.3% $56 0.5 pts Corp investments / Other ($
Slide 6: Q2 FY19 mix by segment and region
Q2 FY19 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 24% Desktops 21% 7% $1.2 billion $14.0 Printing – Commercial Printing 69% of total 16.4% OP mar
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 Revenue $0.60 Non-GAAP diluted net EPS $0.54 $0.53 $0.52 1 $0.52 $16 $0.48 $0.48 $0.50 $0.43 $0.44 $14 $0.40 $0.40 $12 $0.30 $10 $12.4 $13.1 $13.9 $14.5 $14.0 $14.6 $15.4 $14.7 $14.0 $8 $0.20 2Q17 3Q1
Slide 8: Revenue growth
Revenue growth y/y growth (%) 15% 14.5% 13.1% 11.7% 11.7% 10.9% 12.8% 10.3% 10% 11.3% 7.2% 9.8% 9.9% 8.8% 9.4% 6.9% 5% 2.0% 2.3% 1.3% 0.2% 0% 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Revenue growth in constant currency 1 Revenue growth as reported 1. Adjusted to exclude the effect of foreign cur
Slide 9: Regional revenue trends
Regional revenue trends y/y revenue growth % y/y revenue growth in constant currency%1 Americas $8 15% $8 15% United (including U.S.) $7 10% $7 10% States 5% 5% $6 0% $6 0% (5%) (5%) $5 $5 (10%) (10%) $4 (15%) $4 (15%) billions 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 % growth billions 2Q17 3Q17
Slide 10: Personal Systems
Personal Systems Q2 FY19 Revenue Operating profit • Continued execution and profitable revenue growth driven by Commercial $8.9 $385 • Growth in strategic priorities including Premium and Attach Key • Innovation: Bringing premium features to mainstream customers with the HP billion million messages
Slide 11: Printing
Printing Q2 FY19 Revenue Operating profit • Continued revenue growth in contractual business , including Instant Ink $5.1 • 3D: in May, launched new Jet Fusion 5200, Digital Manufacturing Network billion $839 Key million messages • Innovation: New OfficeJet Pro series, designed for small businesses
Slide 12: Non-GAAP financial information
Non-GAAP financial information 1 $ in millions, except Q2 FY19 Q1 FY19 Q2 FY18 per share amounts Revenue $14,036 $14,710 $14,003 Cost of revenue 11,307 80.6% 12,098 82.2% 11,301 80.7% Total OpEx 1,692 12.0% 1,592 10.9% 1,674 12.0% Operating profit $1,037 7.4% $1,020 6.9% $1,028 7.3% Interest and oth
Slide 13: Q2 FY19 bridge
Q2 FY19 GAAP to non-GAAP bridge $ in millions, except Amortization Defined Non-operating Restructuring of Acquisition- benefit plan Tax retirement tax rate and per GAAP intangible and other related charges settlement adjustments related (credits) / Non-GAAP share amounts charges assets charges charg
Slide 14: Select cash and debt balances
Select cash and debt balances Net cash (debt)1 In billions $20.0 $ in billions 2Q18 3Q18 4Q18 1Q19 2Q19 $15.0 Gross cash2 5.3 7.1 5.9 3.8 3.6 $10.0 Gross debt 6.2 7.2 6.0 5.0 5.1 $5.0 Net cash (debt)1,3 (0.8) (0.2) (0.2) (1.2) (1.5) $0.0 ($5.0) 2 Gross cash Gross debt ($10.0) 2Q18 3Q18 4Q18 1Q19 2Q1
Slide 15: Cash flow
Cash flow $ millions 5,000 $4,528 $4,154 4,000 3,000 2,000 $1,723 $1,420 $1,050 $937 1,000 $861 $747 0 FY18 FY19 YTD Q218 Q219 Net cash provided by operations Free cash flow 1 1. Free cash flow = Net cash provided by operations less the net of investments in and proceeds from sales of property, plan
Slide 16: Shareholder return
Shareholder return $ millions 4,000 $3.5 billion 3,000 2,000 2,557 $1.9 billion 1,411 $1.0 billion $0.9 billion 1,000 801 691 899 494 227 245 0 FY18 FY19 YTD Q218 Q219 Shares repurchased 111.5 million 65.9 million 35.4 million 33.6 million Dividend per share $0.5572 $0.3204 $0.1393 $0.1602 Dividend
Slide 17: Outlook
Outlook Q3 FY19 net EPS guidance GAAP diluted net EPS $0.49 – $0.52 Non-GAAP diluted net EPS1 $0.53 – $0.56 Full year FY19 net EPS guidance GAAP diluted net EPS $2.04 – $2.11 Non-GAAP diluted net EPS2 $2.14 – $2.21 1. Third quarter fiscal 2019 non-GAAP diluted net EPS estimates exclude restructuring
Slide 18: Supplemental slides
SUPPLEMENTAL SLIDES 18
Slide 19: Inventory and accounts receivable
Inventory and accounts receivable Inventory Account receivable In billions In billions $7.0 16.0% $7.0 16.0% $6.1 $6.1 $6.0 $5.8 $5.7 $5.6 14.0% 14.0% $5.6 $6.0 $5.4 $5.4 $5.2 $5.1 $5.1 12.0% 12.0% $5.0 $5.0 $4.6 $4.6 $4.4 $4.4 11.1% $4.2 % of revenue1 % of revenue1 10.5% 10.7% 10.0% 10.0% 10.4% $4.
Slide 20: PP&E and accounts payable
PP&E and accounts payable PP&E Accounts payable In billions In billions $2.5 $2.4 6.0% $16.0 $2.3 $14.8 $14.6 $2.2 $14.2 $13.8 $2.1 $2.1 $14.0 $13.3 $13.1 $2.0 5.0% $12.8 $12.8 $2.0 $1.9 $1.7 $12.0 4.0% $10.0 % of revenue1 4.1% $1.5 3.8% 3.9% 3.7% 3.7% 3.8% 3.6% 3.0% $8.0 3.4% $1.0 $6.0 2.0% $4.0 $0
Slide 21: Working capital metrics
Working capital metrics 120 100 80 60 40 20 0 -20 -40 Jul17 Oct17 Jan18 Apr18 Jul18 Oct18 Jan19 Apr19 Days receivables 29 29 27 30 28 30 31 35 Days inventory 44 46 43 44 46 43 42 43 Days payable 108 105 97 104 108 105 108 110 Cash conversion cycle 1 -35 -30 -27 -30 -34 -32 -35 -32 1. Cash conversion
Slide 22: Q1 FY19 bridge
Q1 FY19 GAAP to non-GAAP bridge $ in millions, except Amortization Defined Non-operating Restructuring of Acquisition- benefit plan Tax retirement tax rate and per GAAP intangible and other related charges settlement adjustments related (credits) / Non-GAAP share amounts charges assets charges charg
Slide 23: FY18 bridge
FY18 GAAP to non-GAAP bridge $ in millions, except Amortization Defined Non-operating Restructuring Acquisition- Debt of benefit plan Tax retirement tax rate and per GAAP intangible and other related settlement extinguishment adjustments related (credits) / Non-GAAP share amounts charges charges cos
Slide 24: Q4 FY18 bridge
Q4 FY18 GAAP to non-GAAP bridge $ in millions, except Amortization Defined Non-operating Restructuring Acquisition- Debt of benefit plan Tax retirement Non- tax rate and per GAAP and other related extinguishment intangible charges charges settlement costs adjustments related (credits) / GAAP share a
Slide 25: Q3 FY18 bridge
Q3 FY18 GAAP to non-GAAP bridge $ in millions, except Amortization Defined Non-operating Restructuring Acquisition- Debt of benefit plan Tax retirement tax rate and per GAAP intangible and other related settlement extinguishment adjustments related (credits) / Non-GAAP share amounts charges charges
Slide 26: Q2 FY18 bridge
Q2 FY18 GAAP to non-GAAP bridge $ in millions, except Amortization Defined Non-operating Restructuring Acquisition- Debt of benefit plan Tax retirement tax rate and per GAAP intangible and other related settlement extinguishment adjustments related (credits) / Non-GAAP share amounts charges charges
Slide 27: Q1 FY18 bridge
Q1 FY18 GAAP to non-GAAP bridge $ in millions, except Amortization Defined Non-operating Restructuring Acquisition- US tax of benefit plan Tax retirement tax rate and per GAAP intangible and other related settlement indemnification reform related (credits) / Non-GAAP share amounts charges charges ad
Slide 28: FY17 bridge
FY17 GAAP to non-GAAP bridge Valuation $ in millions, except Amortization Non-operating Restructuring Acquisition- Defined benefit allowances, net of Tax retirement Discontinued tax rate and per GAAP intangible and other related plan settlement indemnification and separation related (credits) / oper
Slide 29: Q4 FY17 bridge
Q4 FY17 GAAP to non-GAAP bridge Valuation $ in millions, except Amortization Non-operating Restructuring Acquisition- Defined benefit allowances, net of Tax retirement Discontinued tax rate and per GAAP intangible and other related plan settlement indemnification and separation related (credits) / o
Slide 30: Q3 FY17 bridge
Q3 FY17 GAAP to non-GAAP bridge Valuation $ in millions, except Amortization Non-operating Restructuring Acquisition- Defined benefit allowances, net of Tax retirement Discontinued tax rate and per GAAP intangible and other related plan settlement indemnification and separation related (credits) / o
Slide 31: Q2 FY17 bridge
Q2 FY17 GAAP to non-GAAP bridge Valuation $ in millions, except Amortization Non-operating Restructuring Acquisition- Defined benefit allowances, net of Tax retirement Discontinued tax rate and per GAAP intangible and other related plan settlement indemnification and separation related (credits) / o
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