Dxc Technology Company · NYSE:DXC
Dxc Technology — Q4 2024 Earnings Presentation
45 slides from Dxc Technology's earnings presentation, May 16, 2024
Slide 1: 4th Quarter FY 2024 Earnings Presentation
4th Quarter FY 2024 Earnings Presentation May 16, 2024
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 EBIT excluding pension income, a
Slide 3: Forward-Looking Statements
Forward-Looking Statements All statements and assumptions contained in this earnings 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,” “e
Slide 4: Agenda for Today
Agenda for Today 1 Introduction 2 Update on Business Performance 3 Our Offerings 4 Q4 FY24 Financial Results and Guidance 5 Closing Remarks and Questions 4
Slide 5: Q4 FY24 Financial Performance
Q4 FY24 Financial Performance Q4 FY24 – Key Metrics and Drivers Year-over-year organic revenue growth* of (4.9%), driven Revenue $3.39B by continued declines in C&ITO/MW** Adjusted Margin down 50 bps YoY, due to lower pension income in EBIT Margin* 8.4% Q4 FY24 and higher gains on sale of assets in
Slide 6: Quarterly Financial Performance
Financial Update Quarterly Financial Performance Organic Revenue Growth Trends (YoY) Adjusted EBIT Margin Adj. EBIT ex. Pension FY23 Q1 Q2 Q3 Q4 FY24 Q1 Q2 Q3 Q4 8.7% 8.9% 8.4% 7.5% 1.2% 7.3% 7.6% 7.0% 1.2% 6.5% 0.8% 0.6% 0.7% 1.2% 1.3% 0.6% (1.5%) 7.5% 7.7% 6.7% 6.9% 7.6% (2.6%) 5.7% 6.3% 5.9% (2.9
Slide 7: Q4 Key Financial Metrics
Q4 Key Financial Metrics (Non-GAAP at actual rates $M) Q4 FY24 Q4 FY23 Change Revenue 3,386 3,591 (5.7%) Gross Profit 798 849 (6.0%) As % of sales 23.6% 23.6% 0 bps SG&A Expenses (293) (338) (13.3%) As % of sales (8.7%) (9.4%) 70 bps Depreciation & Amortization (261) (278) (6.1%) As % of sales (7.7%
Slide 8: GBS/GIS Results
GBS/GIS Results GBS Organic Revenue Growth (YoY) GIS Organic Revenue Growth (YoY) FY23 Q1 Q2 Q3 Q4 FY24 Q1 Q2 Q3 Q4 2.8% 3.4% 3.3% 3.3% 2.4% 0.2% 0.3% (5.8%) (7.2%) (7.4%) (0.3%) (8.5%) (9.1%) (8.9%) (9.3%) FY23 Q1 Q2 Q3 Q4 FY24 Q1 Q2 Q3 Q4 (9.9%) GBS Segment Profit Margin GIS Segment Profit Margin
Slide 9: GBS/GIS Offerings
GBS/GIS Offerings Q4 FY24 Revenue YoY Organic Book-to-Bill ($M) Growth* Analytics & Engineering 552 (0.9%) 1.13x Applications 769 (0.7%) 1.00x GBS Insurance Software & BPS 391 1.4% 0.80x Mergers, Acquisitions & Divestitures - - - GBS Total 1,712 (0.3%) 0.99x Security 104 (8.5%) 0.96x Cloud Infrastru
Slide 10: Financial Foundation – Debt, Restructuring, Operating Leases
Financial Foundation – Debt, Restructuring, Operating Leases Total Debt ($M) Net Interest Expense ($M) 4,778 4,723 4,585 4,529 4,400 4,463 4,541 25 22 20 4,089 17 16 15 17 17 FY23 Q1 Q2 Q3 Q4 FY24 Q1 Q2 Q3 Q4 FY23 Q1 Q2 Q3 Q4 FY24 Q1 Q2 Q3 Q4 Restructuring/Transaction, Separation & Integration ($M)
Slide 11: Financial Foundation – Capital and Lease Commitments
Financial Foundation – Capital and Lease Commitments Capital Expenditures ($M) Finance Lease & Asset Financing Payments ($M) 195 202 159 175 162 131 146 157 115 125 112 102 121 125 100 97 FY23 Q1 Q2 Q3 Q4 FY24 Q1 Q2 Q3 Q4 FY23 Q1 Q2 Q3 Q4 FY24 Q1 Q2 Q3 Q4 Finance Lease & Asset Financing Originations
Slide 12: Capital Allocation – DXC Repurchased >18% of Shares in FY24
Capital Allocation – DXC Repurchased >18% of Shares in FY24 $1,200 50 Share Repurchases 45 $1,000 40 10.6% of Shares O/S* 35 $800 7.4% of Shares O/S* $679M 30 $634M $600 25 24.4M 20 5.2% of Shares O/S* $400 5.8% of Shares O/S* 18.8M $280M 4.9% of Shares O/S* 15 $252M 3.4% of Shares O/S* $214M 10 $20
Slide 13: FY25 Outlook
FY25 Outlook YoY Organic Adjusted Non-GAAP Free Cash Flow Revenue Growth EBIT Margin Diluted EPS (6.0%) – (4.0%) 6.0% – 7.0% $2.50 – $3.00 ~$400M 13
Slide 14: Q1 FY25 Outlook
Q1 FY25 Outlook YoY Organic Adjusted Non-GAAP Revenue Growth EBIT Margin Diluted EPS (8.0%) – (7.0%) 5.5% – 6.0% $0.55 – $0.60 14
Slide 15: DB) (a
DB) (a TECHNOLOGY
Slide 16: Supplemental Information
Supplemental Information Q4 FY24 Quarterly Result Details Non-GAAP Reconciliations Definitions 16
Slide 17: YoY Organic Revenue Growth and Backlog
YoY Organic Revenue Growth and Backlog GBS ($M) Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 GBS revenue 1,758 1,713 1,738 1,751 6,960 1,703 1,709 1,696 1,712 6,820 YoY GBS revenue growth (6.8%) (8.5%) (10.7%) (7.5%) (8.4%) (3.1%) (0.2%) (2.4%) (2.2%) (2.0%)
Slide 18: YoY Organic Revenue Growth and Book-to-Bill by Offering
YoY Organic Revenue Growth and Book-to-Bill by Offering Organic Revenue Growth (YoY) Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 GBS 2.8% 3.4% 0.2% 3.3% 2.4% 3.3% 2.4% 0.3% (0.3%) 1.4% Analytics & Engineering 15.7% 14.0% 11.7% 8.5% 12.3% 8.8% 5.3% 2.2% (0.9%
Slide 19: Sequential (QoQ) Organic Revenue Growth
Sequential (QoQ) Organic Revenue Growth GBS ($M) Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 GBS revenue 2,174 2,242 1,921 1,999 1,887 1,873 1,946 1,892 1,758 1,713 1,738 1,751 1,703 1,709 1,696 1,712 QoQ GBS revenue
Slide 20: Services and Resale Revenue by Offering
Services and Resale Revenue by Offering Services Revenue ($M) Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Analytics & Engineering 496 515 523 547 2,081 537 552 546 545 2,180 Applications 754 725 724 750 2,953 739 729 719 736 2,923 Insurance Software & BPS 36
Slide 21: DXC Insurance Key Metrics
DXC Insurance Key Metrics (in $M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Insurance Software Revenue 120 119 121 124 484 118 116 121 140 495 129 131 126 134 520 Insurance Business Process as a 147 146 146 149 58
Slide 22: Services and Resale Organic Revenue Growth
Services and Resale Organic Revenue Growth Revenue ($M) Total FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Service Revenue 16,693 3,772 3,757 3,694 3,614 14,837 3,414 3,261 3,262 3,282 13,219 3,198 3,187 3,125 3
Slide 23: Reconciliation of Segment Profit to Pretax Income
Reconciliation of Segment Profit to Pretax Income GBS ($M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Segment revenue 1,887 1,873 1,946 1,892 7,598 1,758 1,713 1,738 1,751 6,960 1,703 1,709 1,696 1,712 6,820 Segmen
Slide 24: Adjusted EBIT and Adjusted EBITDA Reconciliation
Adjusted EBIT and Adjusted EBITDA Reconciliation EBIT to Adjusted EBIT ($M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Net income (loss) 282 (187) 102 539 736 103 28 61 (758) (566) 42 99 140 (195) 86 Income tax exp
Slide 25: Non-GAAP Reconciliation – Income Statement Measures
Non-GAAP Reconciliation – Income Statement Measures COS, SG&A, D&A ($M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Cost of services 3,255 3,088 3,179 3,161 12,683 2,930 2,775 2,799 2,742 11,246 2,719 2,633 2,636 2,
Slide 26: Non-GAAP Reconciliation – Income Statement Measures
Non-GAAP Reconciliation – Income Statement Measures EBIT to EPS (in $M, except EPS) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Adjusted EBIT 332 346 355 342 1,375 259 269 309 320 1,157 224 251 258 283 1,016 Interes
Slide 27: Non-GAAP Reconciliation – EPS
Non-GAAP Reconciliation – EPS Non-GAAP EPS Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 GAAP EPS (diluted) $1.07 ($0.74) $0.38 $2.14 $2.81 $0.43 $0.12 $0.25 ($3.38) ($2.48) $0.17 $0.49 $0.81 ($1.10) 0.46 Restructurin
Slide 28: Income Statement Drivers – Headcount
Income Statement Drivers – Headcount Total Total Total DXC Employees Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 FY22 FY23 FY24 GBS 72,500 72,786 75,587 76,718 76,718 75,527 76,233 76,284 75,945 75,945 74,372 73,720 72,950 71,756 71,756 GIS 46,540
Slide 29: Income Statement Drivers – Other Income and Pension Income
Income Statement Drivers – Other Income and Pension Income Total Total Total Other Income ($M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 FY22 FY23 FY24 Non-service cost components of net (97) (96) (94) (95) (382) (67) (61) (60) (63) (251) (37) (3
Slide 30: Reconciliation – Adjusted EBIT Margin ex. Pension Income and (Gain)/Loss on Sale of Asset
Reconciliation – Adjusted EBIT Margin ex. Pension Income and (Gain)/Loss on Sale of Asset Total Total Total Total (in $M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 FY21 FY22 FY23 FY24 Revenue 17,729 4,141 4,027 4,089 4,008 16,265 3,707 3,566 3,56
Slide 31: DXC Historical Balance Sheet – Assets
DXC Historical Balance Sheet – Assets Assets (in $M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Cash and cash equivalents 2,460 2,699 2,919 2,672 2,672 2,209 2,260 2,091 1,858 1,858 1,576 1,412 1,691 1,224 1,224 Re
Slide 32: DXC Historical Balance Sheet – Liabilities and Equity
DXC Historical Balance Sheet – Liabilities and Equity Liabilities & Equity (in $M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Short term debt & current LT debt 817 745 706 900 900 904 834 873 500 500 694 672 661 27
Slide 33: Net Debt and Leverage Ratios
Net Debt and Leverage Ratios (in $M, except ratios) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Short term debt & current LT debt 817 745 706 900 900 904 834 873 500 500 694 672 661 271 271 LT debt, net of current m
Slide 34: DXC Working Capital Key Metrics
DXC Working Capital Key Metrics (in $M, except days) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Billed & unbilled accounts receivable 3,205 3,053 2,905 3,065 3,065 2,852 2,724 2,689 2,635 2,635 2,573 2,458 2,446 2,
Slide 35: DXC Cash Flows from Operating Activities
DXC Cash Flows from Operating Activities Cash Flows from Operating Activities Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 (in $M) Net Income 282 (187) 102 539 736 103 28 61 (758) (566) 42 99 140 (195) 86 Depreciatio
Slide 36: DXC Key Cash Flow Drivers
DXC Key Cash Flow Drivers (in $M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Payments on finance leases & borrowings (494) (177) (184) (135) (990) (159) (115) (125) (112) (511) (131) (100) (102) (97) (430) for asse
Slide 37: DXC Cash Flow Drivers
DXC Cash Flow Drivers (in $M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Cash paid for restructuring (115) (86) (78) (75) (354) (48) (63) (43) (52) (206) (43) (32) (32) (23) (130) Cash paid for TSI (9) (3) (11) (3)
Slide 38: DXC Free Cash Flow
DXC Free Cash Flow Free Cash Flow (in $M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Total FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Total FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Total FY24 Cash flows from operating activities (29) 563 696 271 1,501 163 212 625 415 1,415 127 248 706 280 1,361 Less capex Purchase of pr
Slide 39: Q4 FY24 Non-GAAP Reconciliation: Organic Revenue – Offerings
Q4 FY24 Non-GAAP Reconciliation: Organic Revenue – Offerings Insurance Software Analytics & Cloud Infrastructure Acquisitions & (in $M) Applications & Business Process Security Modern Workplace Total Engineering & IT Outsourcing Divestitures Services (BPS) Revenue 552 769 391 104 1,186 384 — 3,386 P
Slide 40: Currency Impact
Currency Impact Quarterly averages Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 YoY Spot FY25E (US$ per currency) FY23 FY23 FY23 FY23 FY24 FY24 FY24 FY24 Chg. 4/14/24 Euro 1.07 1.01 1.02 1.07 1.09 1.09 1.08 1.09 2% 1.06 (2%) Pound sterling 1.26 1.18 1.17 1.22 1.25 1.27 1.24 1.27 4% 1.25 (1%) Australian dollar 0.72 0.68
Slide 41: Q4 FY24 Adjusted EBITDA and Free Cash Flow
Q4 FY24 Adjusted EBITDA and Free Cash Flow All values are in millions. Capex compares to depreciation of $103M. “Working capital & other” includes the impact of non-cash pension income ($21M). “Cash taxes paid” are net of refunds. 41
Slide 42: FY24 Adjusted EBITDA and Free Cash Flow
FY24 Adjusted EBITDA and Free Cash Flow All values are in millions. Capex compares to depreciation of $433M. “Working capital & other” includes the impact of non-cash pension income ($21M). “Cash taxes paid” are net of refunds. 42
Slide 43: 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 44: 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, separat
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DB) (a TECHNOLOGY
DXC Technology Company — Q4 2024 Earnings Presentation on 6ix