Dxc Technology Company · NYSE:DXC
Dxc Technology — Q3 2021 Earnings Presentation
33 slides from Dxc Technology's earnings presentation, Feb 4, 2021
Slide 1: 3rd Quarter FY 2021 Earnings Presentation
3rd Quarter FY 2021 Earnings Presentation February 4, 2021
Slide 2: 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 of DXC. These non- GAAP financial measures include revenues in constant currency, organic revenues, earnings before interest and taxe
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
Slide 4: Agenda for Today
Agenda for Today 1 Overview of Q3 FY21 Results 2 Progress on Our Transformation Journey 3 Q3 FY21 Financial Results and Q4 Guidance 4 Closing Remarks 3rd Quarter FY 2021 Earnings Presentation February 4, 2021 4
Slide 5: Continued Strong Performance in Q3
Continued Strong Performance in Q3 Q3 FY21 – Key Metrics and Drivers Revenues $4.29B Strong progress delivering quarter-on-quarter revenue stabilization Adjusted EBIT Margin (1) 7.0% Sequential improvement driven by effective cost optimization Book-to-Bill 1.13x Continued success in bringing the “ne
Slide 6: Transformation Journey: Focus on Customers
Transformation Journey Proof points: • Focus on customers continues to pay off Focus on Customers • Stabilizing revenues sequentially • Delivering for customers, leading to more work from them • Customer success stories giving us confidence in revenue stabilization 3rd Quarter FY 2021 Earnings Prese
Slide 7: Transformation Journey: Optimize Costs
Transformation Journey Proof points: • Continued progress on cost optimization program Optimize Costs • On track to achieve ~$550 million of cost savings in FY21 • Cost optimization program was driver of Q3 adjusted EBIT margin (1) of 7.0% • Expect to continue expanding margins in Q4 sequentially (1
Slide 8: Transformation Journey: Seize the Market Opportunity
Transformation Journey Proof points: • Cross-selling to existing accounts and winning work with new customers Seize the Market Opportunity • Book-to-bill of 1.13x in Q3 – third quarter in a row with >1x book-to-bill • 55% of Q3 bookings were new work and 45% were renewals • Encouraged by customer su
Slide 9: Finance Focus Areas
Finance Focus Areas • Focus on free cash flow Demonstrate True • Reducing spend in areas such as restructuring, CapEx, excess facilities and overhead Earnings Power • Started providing organic revenue this quarter Disciplined Capital • Maximize the value creation of our free cash flow engine Deploym
Slide 10: Quarterly Results
Quarterly Results Commentary U.S. State & Local HHS $4.5B $4.6B $4.3B • Exceeded top end of revenue guidance $4.3B $0.4B $0.4B • Excluding the impact of the HHS sale, revenue increased 3.1% on Revenue a sequential basis, up 1.7% in constant currency $4.1B $4.2B • Organic (1) revenues declined 10.5%
Slide 11: Global Business Services (GBS)
Global Business Services (GBS) Commentary U.S. State & Local HHS $2.2B $2.2B • Excluding U.S. State & Local HHS sale, revenue increased 3.4% $0.4B $0.4B $1.9B on a sequential basis, up 2.2% in constant currency Revenue $1.9B • Organic (1) revenues declined 7.0% year-over-year $1.8B • Growth driven b
Slide 12: Global Infrastructure Services (GIS)
Global Infrastructure Services (GIS) Commentary $2.3B $2.4B • Excluding HHS sale, revenue increased 2.8% on a sequential $2.3B basis in Q3, up 1.3% in constant currency Revenue • Organic (2) revenues declined 13.2% year-over-year • Growth driven by strength in Cloud and Security (1) (1) Q1 FY21 Q2 F
Slide 13: Enterprise Technology Stack – Q3 FY21 Performance
Enterprise Technology Stack – Q3 FY21 Performance Q1 FY21 Q2 FY21 Q3 FY21 QtQ Book-to- QtQ Book-to- QtQ Book-to- Growth Bill Growth Bill Growth Bill (2.0%) 1.33x 4.0% 1.39x 4.6% 1.20x (8.7%) 1.50x (2.6%) 0.85x 2.6% 1.46x Transformation Journey (11.1%) 1.02x 2.8% 0.98x 4.7% 1.02x IN PROGRESS (5.2%) 0
Slide 14: Adjusted Free Cash Flow
Adjusted Free Cash Flow (in millions) Q3 FY21 YTD FY21 Net cash (used in) provided by operating activities $ (187) $ 404 (1) Net cash provided by investing activities 4,734 4,500 Acquisitions, net of cash acquired — 10 Business dispositions (4,942) (4,942) Payments on capital leases and other long-t
Slide 15: Strengthening the Balance Sheet
Strengthening the Balance Sheet • Completed sale of U.S. State & Local HHS Q3 FY21 Debt Walk • $5.0B in gross proceeds $9.7B $3.5B ‒ $3.5B in net proceeds used to pay down debt $6.2B • $4.0B undrawn credit facility as of 12/31/2020 Debt as of 9/30 Debt Repayment Debt as of 12/31 – Full capacity avai
Slide 16: Q4 FY21 Outlook
Q4 FY21 Outlook Revenue $4.25B – $4.3B Adjusted EBIT Margin 7.0% – 7.4% Non-GAAP Diluted EPS $0.65 – $0.70 Notes: • Q4 outlook for adjusted EBIT margin and non-GAAP diluted EPS excludes restructuring costs, transaction, separation and integration-related costs, and amortization of acquired intangibl
Slide 17: Closing Remarks
Closing Remarks Continued Positive Momentum • Substantial progress in bringing the “new DXC” to the market • Sequential revenue stabilization and margin expansion, book-to-bill of 1x • On track to complete the sale of our Healthcare Provider Software business with expected net proceeds of ~$450 mill
Slide 18: Supplemental Information
3rd Quarter FY 2021 Supplemental Information 3rd Quarter FY 2021 Earnings Presentation February 4, 2021 18
Slide 19: 3rd Quarter Results
3rd Quarter Results Q3 FY20 Q3 FY21 YTD FY20 YTD FY21 Revenue ($M) $ 5,021 $ 4,288 $ 14,762 $ 13,344 – YoY Growth – GAAP (14.6%) (9.6%) – YoY Growth – cc (1) (16.9%) (10.2%) – YoY Growth – organic (1) (10.5%) (10.5%) – QtQ Growth – GAAP (5.8%) n.a. – YoY Growth – cc (1) (7.1%) n.a. – YoY Growth – cc
Slide 20: Global Business Services (GBS)
Global Business Services (GBS) Q3 FY20 Q3 FY21 YTD FY20 YTD FY21 Revenue ($M) $ 2,359 $ 1,921 $ 6,803 $ 6,337 – YoY Growth – GAAP (18.6%) (6.8%) – YoY Growth – cc (1) (20.8%) (7.6%) – YoY Growth – organic (1) (7.0%) (7.4%) – QtQ Growth – GAAP (14.3%) n.a. – YoY Growth – cc (1) (15.4%) n.a. – YoY Gro
Slide 21: Global Infrastructure Services (GIS)
Global Infrastructure Services (GIS) Q3 FY20 Q3 FY21 YTD FY20 YTD FY21 Revenue ($M) $ 2,662 $ 2,367 $ 7,959 $ 7,007 – YoY Growth – GAAP (11.1%) (12.0%) – YoY Growth – cc (1) (13.5%) (12.5%) – YoY Growth – organic (1) (13.2%) (12.6%) – QtQ Growth – GAAP 2.4% n.a. – YoY Growth – cc (1) 0.9% n.a. – YoY
Slide 22: Consolidated Statements of Operations
Consolidated Statements of Operations (preliminary and unaudited) in millions, except per-share amounts Q3 FY20 Q3 FY21 YTD FY20 YTD FY21 Revenue $ 5,021 $ 4,288 $ 14,762 $ 13,344 Costs of services 3,827 3,333 11,128 10,525 Selling, general and administrative 518 517 1,514 1,595 Depreciation and amo
Slide 23: Organic Revenue Non-GAAP Reconciliation
Organic Revenue Non-GAAP Reconciliation 3 Mos. Ended 12/31/2019 3 Mos. Ended 12/31/2020 YoY Growth (%) (in millions) GBS GIS Total GBS GIS Total GBS GIS Total Revenues 2,359 2,662 5,021 1,921 2,367 4,288 (18.6)% (11.1)% (14.6)% Impact of foreign currency — — — (53) (65) (118) (2.2)% (2.4)% (2.3)% (1
Slide 24: Reconciliation of Non-GAAP Results
Reconciliation of Non-GAAP Results Q3 FY21 Transaction, Pension and Amortization of Gain on Restructuring Separation and OPEB Actuarial Non-GAAP (in millions except EPS) GAAP Costs Integration- Acquired Disposition of and Settlement Tax Adjustment Results (2) Intangible Assets Businesses Related Cos
Slide 25: Bookings
Bookings (1) FY20 FY21 GBS Global Business Services GIS Global Infrastructure Services (1) The summation of the quarter bookings number may not equal the full-year number due to rounding 3rd Quarter FY 2021 Earnings Presentation February 4, 2021 25
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations EBIT and Adjusted EBIT (in millions) Q3 FY20 Q3 FY21 YTD FY20 YTD FY21 Net income (loss) $ 90 $ 1,103 $ (1,857) $ 658 Income tax expense 37 875 191 789 Interest income (33) (28) (130) (76) Interest expense 93 82 288 284 EBIT 187 2,032 (1,508) 1,655 Restructuring costs 74 104
Slide 27: Reconciliation of Segment Profit to Income Before Taxes
Reconciliation of Segment Profit to Income Before Taxes (in millions) Q3 FY20 Q3 FY21 YTD FY20 YTD FY21 GBS profit $ 353 $ 273 $ 1,078 $ 805 GIS profit 232 88 815 147 All other loss (57) (61) (184) (179) Interest income 33 28 130 76 Interest expense (93) (82) (288) (284) Restructuring costs (74) (10
Slide 28: Q3 FY21 Non-GAAP Results
Q3 FY21 Non-GAAP Results Transaction, Amortization of Gain on Restructuring Separation and Non-GAAP (in millions except EPS) GAAP Acquired Disposition of Costs Integration- Results (2) Intangible Assets Businesses Related Costs Cost of services (excludes depreciation and amortization and restructuri
Slide 29: YTD FY21 Non-GAAP Results
YTD FY21 Non-GAAP Results Transaction, Amortization of Pension and Gain on Restructuring Separation and Acquired OPEB Actuarial Tax Non-GAAP (in millions except EPS) GAAP Disposition of Costs Integration- Intangible and Settlement Adjustment Results (2) Businesses Related Costs Assets Losses Cost of
Slide 30: Q3 FY20 Non-GAAP Results
Q3 FY20 Non-GAAP Results Transaction, Amortization of Goodwill Restructuring Separation and Tax Non-GAAP (in millions except EPS) GAAP Acquired Impairment Costs Integration- Adjustment Results (2) Intangible Assets Losses Related Costs Cost of services (excludes depreciation and amortization and res
Slide 31: YTD FY20 Non-GAAP Results
YTD FY20 Non-GAAP Results Transaction, Amortization of Goodwill Restructuring Separation and Gain on Tax Non-GAAP (in millions except EPS) GAAP Acquired Impairment Costs Integration- Arbitration Award Adjustment Results (2) Intangible Assets Losses Related Costs Cost of services (excludes depreciati
Slide 32: 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
Slide 33: DXC.technology
Bx¢ DXC.technology
DXC Technology Company — Q3 2021 Earnings Presentation on 6ix