Hp Inc. · NYSE:HPQ
Hp — Investor Day (October 2018)
19 slides from Hp's investor day presentation, Oct 3, 2018
Slide 1: Steve Fieler, Chief Financial Officer
STEVE FIELER I CHIEF FINANCIAL OFFICER 1 © Copyright 2018 HP Development Company, L.P. The information contained herein is subject to change without notice.
Slide 2: 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 from those expressed or im
Slide 3: Non-GAAP financial measures
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 directly comparable GAAP financial me
Slide 4: © Copyright 2018 HP Development Company, L.P. The information contained herein is subject to
4 © Copyright 2018 HP Development Company, L.P. The information contained herein is subject to change without notice.
Slide 5: FY18 guidance at Q3 earnings
FY18 GUIDANCE At least Likely to $2.00–$2.03 AT Q3 EARNINGS $3.7 billion exceed 75% Towards the FY18 SAM At least $3 $1.74–$1.84 higher end of GUIDANCE billion 50%–75% 1. Free cash flow = cash flow from operations less the net of investments in and proceeds from sales of property, plant, and equipme
Slide 6: Revenue, non-GAAP EPS, free cash flow and shareholder return
Revenue Non-GAAP diluted net $ billions Free Cash Flow2 Shareholder Return2 ( $ billions) EPS1 18 0.60 5 Revenue Non-GAAP diluted net EPS AT LEAST $0.52 16 4 $3.7 LIKELY TO $0.48 $0.48 $0.48 0.50 $3.3 EXCEED $0.43 $0.44 $2.8 75% 14 $0.41 3 69% $0.36 $0.36 $0.38 $0.40 0.40 72% 12 2 0.30 1 10 $3.3 $2.
Slide 7: Changes to cash conversion cycle
$ billions 10 Profitable 9 recurring revenue Earnings 8 7 First quarter of double digit 6 revenue growth 5 Negative cash Changes to cash 4 3 conversion cycle conversion cycle 2 CCC improvement of 1 9 days 0 Low capital Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 -1 requirements Volume Non
Slide 8: By key segment and business unit
By key segment and business unit1 By key segment3 Workstations and Other Desktops Personal Systems 6% Print – Supplies 24% $4.7 Billion 20% Printing 16.1% $57.0 Print – Comm. HW4 70% of total OP margin Billion 8% Americas EMEA APJ 44% 35% 21% Notebooks Print – Personal Systems 3.7% U.S.: 35% 38% Con
Slide 9: $2.5B+ in productivity improvements
Headcount $2.5B+ Operations in productivity improvements since separation Product Supply chain quality 9 © Copyright 2018 HP Development Company, L.P. The information contained herein is subject to change without notice.
Slide 10: Investment grade credit rating and strong liquidity
$ billions Investment grade credit rating 10 ($1.1B) $0.2B ($0.2B) 8 Access to debt capital markets 6 $8.0 $7.1 4 $5.6 Strong liquidity and balanced maturity profile 2 0 (2) (4) (6) ($6.7) ($7.2) ($7.8) (8) Sufficient cash for daily operations (10) 3Q16 3Q17 3Q18 Flexibility over the business cycle
Slide 11: Capital allocation: return 50-75% of free cash flow
• Develop earnings and FCF • OPEX and CAPEX needs to sustain • Dividends targets to maximize shareholder core and support growth • Share repurchases value over the long-term • Organic growth investments (e.g., • M&A • Maintain investment grade A3, Graphics, 3D Printing and DaaS) credit rating LONG-T
Slide 12: Disciplined returns-based framework drives shareholder value
DISCIPLINED RETURNS-BASED FRAMEWORK DRIVES SHAREHOLDER VALUE APPROXIMATELY 75% +15% SHARE REPURCHASES return of capital Y/Y increase ~$4B outstanding to shareholders in FY19 dividend authorization for share repurchases Note: FY19 quarterly dividends are subject to final approval by the HP Inc. Board
Slide 13: FY19 outlook
GAAP DILUTED REVENUE CURRENCY Continue to gain Flat to negative 1% Y/Y NET EPS profitable share impact to revenue $2.04–$2.14 TAX RATE OI&E NON-GAAP DILUTED Non-GAAP: 16% ($0.2B) NET EPS $2.12–$2.22 SHARE COUNT GAAP ONLY Slight decline from CHARGES current 1.6B $0.2B Note: A reconciliation of specif
Slide 14: Personal Systems FY19 EPS bridge
$0.05 – $2.12 – $0.08 $2.22 $0.05 – PERSONAL $0.12 SYSTEMS $2.00 – $2.03 REVENUE TAILWINDS HEADWINDS • Competitive market • Volume/mix/rate • FX conditions • Productivity • Investments • Gain profitable improvements in contractual share • Tariffs FY18 Non- Business Share FY19 Non- • Component cost a
Slide 15: Printing FY19 EPS bridge
$0.05 – $2.12 – $0.08 $2.22 $0.05 – $0.12 PRINTING $2.00 – $2.03 REVENUE TAILWINDS HEADWINDS • Competitive market • Productivity • Volume/mix/rate conditions improvements • Investments in • Supplies flat to • Volume/mix/rate contractual and 3D slightly up • FX • Placement of FY18 Non- Business Share
Slide 16: At least $3.7B free cash flow
FREE CASH FLOW CASH CONVERSION CYCLE $3.7B Approximately minus 32 days At least RESTRUCTURING PAYMENTS $0.2B CAPITAL EXPENDITURES $0.6B CASH TAX RATE 16% +/- 2 POINTS 16 © Copyright 2018 HP Development Company, L.P. The information contained herein is subject to change without notice.
Slide 17: Revenue and operating margin targets
REVENUE MARGIN PERSONAL Outgrow the markets 3%–5% SYSTEMS and gain profitable Operating margin share Outgrow the markets At least 16% PRINTING and gain profitable Operating margin share GROW REVENUE FASTER THAN MARKETS, INCREASE OP DOLLARS, AND GROW NON-GAAP EPS FASTER THAN OP 17 © Copyright 2018 HP
Slide 18: Track record of delivering on our commitments
• Recurring revenue Predictable cash flow Leadership in CORE • Efficient operating models Return of capital • Accelerate in growth Sustainable growth Accelerate in GROWTH • Opportunity to lead in opportunities over time large markets • Investing in future Capture the FUTURE disruptive categories Lon
Slide 19: Thank you
THANK YOU SECURITIES ANALYST MEETING 2018 19 © Copyright 2018 HP Development Company, L.P. The information contained herein is subject to change without notice.