Dxc Technology Company · NYSE:DXC

Dxc Technology — Baird Global Consumer, Technology & Services Conference 2022

40 slides from Dxc Technology's conference presentation, Jun 6, 2022

  1. Slide 1: Baird Global Consumer, Technology, & Services Conference

    Baird Global Consumer, Technology, & Services Conference John Sweeney VP of Investor Relations June 2022 © 2021 DXC Technology Company. All rights reserved.

  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, adjusted earnings before interest, taxes,

  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.” Forward-looking statements often include words such as “anticipates,” “believes,” “estimates,” “expects,” “forecast,” “goal,” “inten

  4. Slide 4: DXC Overview

    DXC Overview $16.3B #207 FY22 revenue Fortune 500 Global Business Services 47% Global Information Services 53% 60+ 240+ years of innovation delivering customers in the Fortune 500 mission-critical systems for customers 130,000+ 70+ employees worldwide countries 4

  5. Slide 5: FY22 Performance on Our Transformation Journey

    Financial Update FY22 Performance on Our Transformation Journey Organic Revenue Growth Trends (YoY) Adjusted EBIT Margin FY21 FY22 8.5% 6.2% (2.6%) ~1.1% +230 bps +620 bps 5.1% (8.8%) FY21 FY22 Impact of Divestitures Non-GAAP Diluted EPS Free Cash Flow $3.50 $743M $2.43 +$1.4B +44% ($652M) FY21 FY22

  6. Slide 6: Transformation Journey Creating Value

    Transformation Journey Creating Value Inspire and Take Care Build Financial Focus on Customers Optimize Costs Seize the Market of Our Colleagues Foundation Improve Year-over-Year Goals Increase Employee Expand Adjusted Improve Solidify Fundamentals Organic Revenue Engagement EBIT Margin Book-to-Bill

  7. Slide 7: Transformation Journey Remains on Track

    Financial Update Transformation Journey Remains on Track Organic Revenue Growth Trends (YoY) Adjusted EBIT Margin FY21 Q1 Q2 Q3 Q4 FY22 Q1 Q2 Q3 Q4 8.0% 8.6% 8.7% 8.5% 7.5% 7.0% ~0.2% 6.2% ~0.2% (1.4%) (2.4%) (2.8%) 4.2% ~2.2% (3.7%) 7.3% ~2.2% 6.8% (6.5%) 4.0% 2.0% (9.1%) (10.1%) (9.7%) FY21 Q1 Q2

  8. Slide 8: GBS/GIS Results

    GBS/GIS Results GBS Organic Revenue Growth (YoY) GIS Organic Revenue Growth (YoY) FY21 Q1 Q2 Q3 Q4 FY22 Q1 Q2 Q3 Q4 FY21 Q1 Q2 Q3 Q4 FY22 Q1 Q2 Q3 Q4 7.0% 3.4% 3.4% 2.0% (8.0%) (8.3%) (8.0%) (9.3%) (9.1%) (3.4%) (11.8%) (12.6%) (13.0%) (6.9%) (6.0%) (5.9%) GBS Segment Profit Margin GIS Segment Profi

  9. Slide 9: Driving GIS Forward

    Driving GIS Forward Disciplined Focus on service Deal structure/not Price Commercial Quality Account revenue/not on leveraging the resale increases balance sheet oversight Revenues Management Cost Optimize Data Restructuring and Contractor and Margin Optimization real estate centers TSI reduction la

  10. Slide 10: Financial Foundation in a Better Place

    Financial Foundation in a Better Place 1 2 3 4 5 Financial Strengthen Cash Restructuring Capital Discipline Balance Sheet Generation & TSI Allocation • True earnings power • Maintain investment • Improve cash flow • Reduced expense by • Investing in our grade credit profile rating generation $565M f

  11. Slide 11: Evidence We Are Building Our Financial Foundation

    Financial Update Evidence We Are Building Our Financial Foundation Total Debt ($M) Net Interest Expense ($M) 83 12,016 71 9,668 54 55 42 45 6,239 5,512 4,933 5,108 4,942 4,965 29 23 FY21 Q1 Q2 Q3 Q4 FY22 Q1 Q2 Q3 Q4 FY21 Q1 Q2 Q3 Q4 FY22 Q1 Q2 Q3 Q4 Restructuring/Transaction, Separation & Integratio

  12. Slide 12: Evidence We Are Building Our Financial Foundation

    Financial Update Evidence We Are Building Our Financial Foundation Capital Expenditures ($M) Finance Lease & Asset Financing Payments ($M) 275 240 236 245 242 236 228 225 219 210 211 225 219 207 178 191 177 184 162 169 163 159 146 135 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

  13. Slide 13: Restructuring and TSI

    Restructuring and TSI $1,148M $866M $909M Avg: ~$900M $570M $344M $300M $100M FY18 FY19 FY20 FY21 FY22 FY23E FY24E Restructuring and TSI Expense Down From Average Annual Run Rate of ~$900M 13

  14. Slide 14: Trended Free Cash Flow

    Trended Free Cash Flow $550M $404M $303M $93M ($106M) ($304M) ($406M) ($443M) FY21 Q1 Q2 Q3 Q4 FY22 Q1 Q2 Q3 Q4 14

  15. Slide 15: Executing Our Disciplined Capital Allocation Plan

    Executing Our Disciplined Capital Allocation Plan Capital Deployment Highlights # Shares Repurchased in FY22 8.2M • $634M of capital returned to shareholders through buybacks in FY22 6.8M • 18.8M shares repurchased or over 7% of shares o/s in FY22 • $1B self-funded repurchase program announced Q3 FY

  16. Slide 16: Governance Checklist

    Governance Checklist Remediated the Legacy Material Weakness Executed 11-point plan to address deficiencies and enhanced our control environment  Incentive Metrics Revised Based on Shareholder Feedback Moving long-term incentive targets to free cash flow and relative total shareholder return  Movi

  17. Slide 17: FY23: Setting DXC Up for Success in FY24

    Financial Update FY23: Setting DXC Up for Success in FY24 Organic Revenue Growth Trends (YoY) Adjusted EBIT Margin 1% – 3% 10% – 11% 8.5% – 9.0% 8.5% (1%) – (2%) (2.6%) 6.2% ~1.1% (8.8%) 5.1% FY21 FY22 FY23E FY24E FY21 FY22 FY23E FY24E Impact of Divestitures Non-GAAP Diluted EPS Free Cash Flow $5.00

  18. Slide 18: DXC Is in a Better Place

    Financial Update 1 DXC Is in a Better Place Significant improvement in organic revenue growth, adjusted EBIT and free cash flow Russia’s Invasion of Ukraine 2 Despite the tragedy, our people have done a great job caring for our colleagues and delivering for our customers – do not anticipate a signif

  19. Slide 19: Supplemental Information

    Supplemental Information 19

  20. Slide 20: FY23 – GBS Actions

    FY23 – GBS Actions FY22 GBS Revenue • Have clarity on actions needed to be executed for GBS and GIS Analytics & Engineering ~2.1B • GBS has grown consistently for four quarters and is composed of digital offerings that are high value for our customers and DXC Applications & Cloud ~4.0B • Engineering

  21. Slide 21: FY23 – GIS Actions

    FY23 – GIS Actions FY22 GIS Revenue • GIS top priority: improve the financial performance Security ~0.5B • Modern Workplace: FY22 improvements drive organic revenue growth and expected to turn positive by end of FY23 Cloud Infrastructure & ITO ~5.9B • Cloud Infrastructure/ITO focus on: − Fixing poor

  22. Slide 22: GBS/GIS Offerings

    GBS/GIS Offerings Q4 FY22 YoY Organic TTM Revenue ($M) Book-to-Bill Growth Book-to-Bill Analytics and Engineering 554 19.7% 1.44x 1.30x Applications 1,224 (0.6%) 1.47x 1.26x GBS Business Process Services (BPS) 112 (12.8%) 1.42x 0.93x Mergers, Acquisitions, and Divestitures 2 GBS Total 1,892 3.4% 1.4

  23. Slide 23: Organic Revenue Growth

    Organic Revenue Growth GBS (in $M) Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Total FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 GBS revenue 2,174 2,242 1,921 1,999 8,336 1,887 1,873 1,946 1,892 7,598 YoY GBS revenue growth 0.7% (1.9%) (18.6%) (13.4%) (8.5%) (13.2%) (16.5%) 1.3% (5.4%) (8.9%) Foreign curren

  24. Slide 24: Reconciliation of Segment Profit to Pretax Income

    Reconciliation of Segment Profit to Pretax Income GBS (in $M) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Segment revenue 2,159 2,285 2,359 2,308 9,111 2,174 2,242 1,921 1,999 8,336 1,887 1,873 1,946 1,892 7,598 Segment profit 366 35

  25. Slide 25: Adjusted EBIT and Adjusted EBITDA Reconciliation

    Adjusted EBIT and Adjusted EBITDA Reconciliation EBIT to Adjusted EBIT (in $M) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Net income (loss) 168 (2,115) 90 (3,501) (5,358) (199) (246) 1,103 (804) (146) 282 (187) 102 539 736 Income ta

  26. Slide 26: Non-GAAP Reconciliation – Income Statement Measures

    Non-GAAP Reconciliation – Income Statement Measures COS, SG&A, D&A (in $M) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Cost of services 3,622 3,679 3,827 3,773 14,901 3,629 3,563 3,333 3,561 14,086 3,255 3,088 3,179 3,161 12,683 Less

  27. Slide 27: Non-GAAP Reconciliation – Income Statement Measures

    Non-GAAP Reconciliation – Income Statement Measures EBIT to EPS (in $M, except EPS) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Adjusted EBIT (1) 652 529 528 352 2,061 190 283 300 329 1,102 332 346 355 342 1,375 Interest expense 91 1

  28. Slide 28: Non-GAAP Reconciliation – EPS

    Non-GAAP Reconciliation – EPS Non-GAAP EPS (in $M, except EPS) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Net income (loss) attributable to DXC 163 (2,119) 82 (3,495) (5,369) (205) (244) 1,098 (798) (149) 278 (188) 98 530 718 Restru

  29. Slide 29: Non-GAAP Reconciliation – EPS

    Non-GAAP Reconciliation – EPS Non-GAAP EPS Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 GAAP EPS (diluted) $ 0.61 $ (8.19) $ 0.32 $ (13.79) $ (20.76) $ (0.81) $ (0.96) $ 4.29 $ (3.14) $ (0.59) $ 1.07 $ (0.74) $ 0.38 $ 2.14 $ 2.81 Rest

  30. Slide 30: DXC Historical Balance Sheet

    DXC Historical Balance Sheet Assets (in $M) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Cash and cash equivalents 1,868 2,880 2,560 3,679 3,679 5,509 3,079 3,919 2,968 2,968 2,460 2,699 2,919 2,672 2,672 Receivables, net 5,234 4,611

  31. Slide 31: DXC Historical Balance Sheet

    DXC Historical Balance Sheet Liabilities & Equity (in $M) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Short term debt & current LT debt 1,511 1,471 1,581 1,276 1,276 1,682 1,622 795 1,167 1,167 817 745 706 900 900 Accounts payable 1,

  32. Slide 32: DXC Working Capital Key Metrics

    DXC Working Capital Key Metrics (in $M, except days) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Billed & unbilled accounts receivable 3,883 3,859 3,696 3,513 3,513 3,428 3,363 3,203 3,222 3,222 3,205 3,053 2,905 3,065 3,065 Revenue

  33. Slide 33: DXC Cash Flows from Operating Activities

    DXC Cash Flows from Operating Activities Cash Flows from Operating Activities (in $M) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Net income 168 (2,115) 90 (3,501) (5,358) (199) (246) 1,103 (804) (146) 282 (187) 102 539 736 Depreciat

  34. Slide 34: DXC Key Cash Flow Drivers

    DXC Key Cash Flow Drivers (in $M) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Payments on finance leases & (210) (211) (225) (219) (865) (245) (242) (207) (236) (930) (494) (177) (184) (135) (990) borrowings for asset financing Less:

  35. Slide 35: DXC Key Cash Flow Drivers

    DXC Key Cash Flow Drivers (in $M) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Cash paid for restructuring (92) (105) (76) (61) (334) (61) (99) (149) (133) (442) (115) (86) (78) (75) (354) Cash paid for TSI (1) (94) (41) (68) (54) (25

  36. Slide 36: DXC Free Cash Flow

    DXC Free Cash Flow Free Cash Flow (in $M) Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 FY22 Cash flows from operating (66) 1,651 477 288 2,350 119 472 (187) (280) 124 (29) 563 696 271 1,501 activities Less capex Purchase of property & equi

  37. Slide 37: Q4 FY22 Non-GAAP Reconciliation: Organic Revenue – Enterprise Technology Stack

    Q4 FY22 Non-GAAP Reconciliation: Organic Revenue – Enterprise Technology Stack Analytics and Business Process Acquisitions and (in $M) Applications Cloud and Security IT Outsourcing Modern Workplace Total Engineering Services (BPS) Divestitures Revenue $ 554 $ 1,224 $ 112 $ 488 $ 1,115 $ 513 $ 2 $ 4

  38. Slide 38: 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

  39. Slide 39: Non-GAAP Adjustments

    Non-GAAP Adjustments Our Non-GAAP adjustments include: • Restructuring costs: Includes costs, net of reversals, related to workforce and real estate optimization and other similar charges. • Transaction, separation and integration-related (“TSI”) costs: Includes costs related to integration, plannin

  40. Slide 40: © 2021 DXC Technology Company. All rights reserved.

    © 2021 DXC Technology Company. All rights reserved.

DXC Technology Company — Baird Global Consumer, Technology & Services Conference 2022 on 6ix