Slide 1: 2nd Quarter FY 2018 Earnings Presentation
2nd Quarter FY 2018 Earnings Presentation November 7, 2017
Slide 2: Pro forma combined company financial information
Pro forma combined company financial information In an effort to provide investors with additional information, we are disclosing certain unaudited pro forma combined company financial information of DXC for the three and six months of fiscal 2017 (“pro forma combined company” information) as supple
Slide 3: Non-GAAP financial measures
Non-GAAP financial measures We present non-GAAP financial measures of performance which are derived from the unaudited condensed consolidated statements of operations and unaudited pro forma combined company statement of operations of DXC. These non-GAAP financial measures include earnings before in
Slide 4: Forward-looking statements
Forward-looking statements All statements and assumptions contained 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 result
Slide 5: 2nd Quarter FY 2018 - Mike Lawrie
2nd Quarter FY 2018 Earnings Presentation Mike Lawrie Chairman, President and Chief Executive Officer
Slide 6: Key messages
Key messages Q2 FY18 non-GAAP EPS of $1.93 (1) (2) Revenue down 3.5%(3) YoY in cc and flat sequentially; book-to-bill of 1.0x Strong digital momentum, with revenue up 23%(3) YoY Achieving key merger integration milestones Raising FY18 non-GAAP EPS(1) target to $7.25 – $7.75(2) 1 Excludes restructuri
Slide 7: 2nd Quarter FY 2018 - Paul Saleh
2nd Quarter FY 2018 Earnings Presentation Paul Saleh Executive Vice President and Chief Financial Officer
Slide 8: Financial presentation
Financial presentation • Pro forma results conform with the methodology used in the Form S-4 Fiscal 2017 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter CSC July 1, 2016 September 30, 2016 December 30, 2016 March 31, 2017 HPES April 30, 2016 July 31, 2016 October 31, 2016 January 31, 2017 • Prior ye
Slide 9: Reconciliation of non-GAAP results
Reconciliation of non-GAAP results Q2 FY18 Transaction and Amortization of Restructuring Non-GAAP (in millions except EPS) GAAP costs integration- acquired results related costs intangible assets Income before income taxes 387 192 66 169 814 Income tax expense 122 46 23 57 248 Net income 265 146 43
Slide 10: 2nd quarter results
2nd quarter results Q2 YTD Pro forma Pro forma combined combined FY18 FY18 company company FY17 FY17 Revenue ($M) $ 6,163 $ 6,355 $ 12,076 $ 12,773 – YoY Growth - GAAP (3.0%) (5.5%) – YoY Growth - adjusted for PPA (1) (2.7%) (4.4%) – YoY Growth - cc, adjusted for PPA (1) (3.5%) (3.9%) – QtQ Growth -
Slide 11: Global Business Services (GBS)
Global Business Services (GBS) Pro forma Pro forma combined combined Q2 FY18 YTD FY18 company company Q2 FY17 YTD FY17 Revenue ($M) $ 2,311 $ 2,392 $ 4,578 $ 4,813 – YoY growth - GAAP (3.4%) (4.9%) (1) – YoY growth - adjusted for PPA (3.2%) (4.3%) – YoY growth - cc, adjusted for PPA (1) (4.3%) (4.0%
Slide 12: Global Infrastructure Services (GIS)
Global Infrastructure Services (GIS) Pro forma Pro forma combined combined Q2 FY18 YTD FY18 company company Q2 FY17 YTD FY17 Revenue ($M) $ 3,142 $ 3,289 $ 6,111 $ 6,579 – YoY growth - GAAP (4.5%) (7.1%) (1) – YoY growth - adjusted for PPA (4.0%) (5.5%) – YoY growth - cc, adjusted for PPA (1) (4.8%)
Slide 13: U.S. Public Sector (USPS)
U.S. Public Sector (USPS) Pro forma Pro forma combined combined Q2 FY18 YTD FY18 company company Q2 FY17 YTD FY17 Revenue ($M) $ 710 $ 674 $ 1,387 $ 1,381 – YoY growth - GAAP 5.3% 0.4% (1) – YoY growth - adjusted for PPA 5.5% 0.9% – QtQ growth - GAAP 4.8% — (1) – QtQ growth - adjusted for PPA 4.2% —
Slide 14: Financial highlights
Financial highlights Q2 FY18 YTD FY18 Cash Flow ► Adjusted Free Cash Flow $589M $1,184M Performance ► Cap Ex — Including Capital Leases $553M $808M ► Cap Ex as a % of Revenue 9.0% 6.7% Q2 FY18 YTD FY18 Capital to Capital to ► Cash Dividends $51M $72M Shareholders Shareholders $47M $66M ► Share Repur
Slide 15: FY 2018 targets
FY 2018 targets Revenue $24.0B – $24.5B Non-GAAP EPS(1)(2) $7.25 – $7.75 Adjusted Free Cash Flow 90% of Adj. Net Income(1)(2) 1 Includes cumulative benefit from the reclassification of HPES operating leases to capitalized leases and the corresponding adjustment of the related assets to fair value 2
Slide 16: Bookings
Bookings* $B FY17 FY18 7.0 $6.7 $6.3 $5.9 $5.9 6.0 $5.5 $2.2 5.0 $2.4 $2.2 $2.5 4.0 $3.1 3.0 $3.6 $2.6 2.0 $3.7 $2.8 $2.1 1.0 $0.9 $1.1 $0.3 $0.2 $0.6 0.0 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 GBS Global Business Services GIS Global Infrastructure Services USPS U.S. Public Sector *The summation of
Slide 17: Supplemental Information
2nd Quarter FY 2018 Earnings Presentation Supplemental Information
Slide 18: Segment profitability impact of lease reclassifications
Segment profitability impact of lease reclassifications of HPES operating leases and corresponding adjustment of those assets to fair value Segment profitability Segment profitability (in millions) Lease reclassification impact excluding impact of lease (as reported) reclassifications GBS profit 380
Slide 19: Non-GAAP reconciliations: Adjusted EBIT
Non-GAAP reconciliations Adjusted EBIT Pro forma Pro forma combined combined (in millions) Q2 FY18 YTD FY18 company company Q2 FY17 YTD FY17 Net income (loss) $ 265 $ (123) $ 438 $ (404) Income tax expense (benefit) 122 (108) 134 (149) Interest income (16) (20) (32) (41) Interest expense 78 89 154 1
Slide 20: Non-GAAP reconciliations: Segment profit
Non-GAAP reconciliations Segment profit Pro forma Pro forma combined combined (in millions) Q2 FY18 YTD FY18 company company Q2 FY17 YTD FY17 Profit GBS profit $ 380 $ 265 $ 662 $ 551 GIS profit 469 156 759 223 USPS profit 109 68 186 149 All other profit (loss) (82) (160) (52) (321) Interest income
Slide 21: Q2 FY18 non-GAAP results
Q2 FY18 non-GAAP results Amortization of Transaction Restructuring acquired Non-GAAP (in millions except EPS) GAAP and integration- costs intangible results related costs assets Costs of services (excludes depreciation and amortization and restructuring costs) $ 4,312 $ - $ - $ - $ 4,312 Selling, ge
Slide 22: YTD FY18 non-GAAP results
YTD FY18 non-GAAP results Amortization of Transaction Restructuring acquired Non-GAAP (in millions except EPS) GAAP and integration- costs intangible results related costs assets Costs of services (excludes depreciation and amortization and restructuring costs) $ 9,100 $ - $ - $ - $ 9,100 Selling, g
Slide 23: Q2 FY17 non-GAAP results
Q2 FY17 non-GAAP results Amortization of Pro forma Transaction Certain Restructuring acquired Tax Non-GAAP (in millions except EPS) combined and integration- overhead costs intangible adjustment results company related costs costs assets Costs of services (excludes depreciation and amortization and
Slide 24: YTD FY17 non-GAAP results
YTD FY17 non-GAAP results Amortization of Pension and Pro forma Transaction Certain Restructuring acquired OPEB actuarial Tax Non-GAAP (in millions except EPS) combined and integration- overhead costs intangible and settlement adjustment results company related costs costs assets losses Costs of ser
Slide 25: Adjusted free cash flow
Adjusted free cash flow (in millions) Q2 FY18 YTD FY18 Net cash provided by operating activities $ 1,009 $ 1,543 Net cash used in investing activities (422) 437 Acquisitions, net of cash acquired 152 (822) Payments on capital leases and other long-term asset financings (318) (443) Payments on separa
Slide 26: Non-GAAP and other definitions
Non-GAAP and other definitions Segment profit: Segment revenue less costs of services, segment selling, general, and administrative, and depreciation and amortization (excluding amortization of acquired intangible assets) Segment profit margin: Segment profit as a percentage of revenue Earnings befo
Slide 27: DXC.technology
v DXC.technology BD,