Slide 1: 3rd Quarter FY 2018 Earnings Presentation
3rd Quarter FY 2018 Earnings Presentation February 8, 2018
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 nine months ended December 31, 2017 (“pro forma combined company” information)
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 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 5: 3rd Quarter FY 2018 - Mike Lawrie, CEO
3rd Quarter FY 2018 Earnings Presentation Mike Lawrie Chairman, President and Chief Executive Officer
Slide 6: Key messages
Key messages Q3 FY18 non-GAAP EPS of $2.15 (1) Revenue down 4%(2) YoY and up 0.6%(2) sequentially; book-to-bill of 1.0x Digital revenue up 13%(2) YoY Achieving key merger-integration and separation milestones Raising FY18 non-GAAP EPS(1) target to $7.50 – $8.00 1 Excludes restructuring costs, pensio
Slide 7: 3rd Quarter FY 2018 - Paul Saleh, CFO
3rd Quarter FY 2018 Earnings Presentation Paul Saleh Executive Vice President and Chief Financial Officer
Slide 8: Financial presentation
Financial presentation • Pro forma results conform with the methodology used in the Form S-4 Fiscal 2017 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter CSC July 1, 2016 September 30, 2016 December 30, 2016 March 31, 2017 HPES April 30, 2016 July 31, 2016 October 31, 2016 January 31, 2017 • Prior ye
Slide 9: Reconciliation of non-GAAP results
Reconciliation of non-GAAP results Q3 FY18 Pension and Transaction and Amortization of Restructuring OPEB actuarial Tax Non-GAAP (in millions except EPS) GAAP costs integration- acquired and settlement adjustment results related costs intangible assets gains Income before income taxes 438 213 94 149
Slide 10: 3rd quarter results
3rd quarter results Q3 YTD Pro forma Pro forma combined combined FY18 FY18 company company FY17 FY17 Revenue ($M) $ 6,186 $ 6,585 $ 18,262 $ 19,358 – YoY Growth - GAAP (6.1%) (5.7%) – YoY Growth - adjusted (1) (4.0%) (4.2%) – YoY Growth - cc, adjusted (1) (5.9%) (4.5%) – QtQ Growth - GAAP 0.4% — – Y
Slide 11: Global Business Services (GBS)
Global Business Services (GBS) Pro forma Pro forma combined combined Q3 FY18 YTD FY18 company company Q3 FY17 YTD FY17 Revenue ($M) $ 2,315 $ 2,432 $ 6,893 $ 7,245 – YoY growth - GAAP (4.8%) (4.9%) (1) – YoY growth - adjusted (4.6%) (4.4%) – YoY growth - cc, adjusted (1) (6.6%) (4.9%) – QtQ growth -
Slide 12: Global Infrastructure Services (GIS)
Global Infrastructure Services (GIS) Pro forma Pro forma combined combined Q3 FY18 YTD FY18 company company Q3 FY17 YTD FY17 Revenue ($M) $ 3,145 $ 3,327 $ 9,256 $ 9,906 – YoY growth - GAAP (5.5%) (6.6%) (1) – YoY growth - adjusted (4.7%) (5.2%) – YoY growth - cc, adjusted (1) (6.8%) (5.4%) – QtQ gr
Slide 13: U.S. Public Sector (USPS)
U.S. Public Sector (USPS) Pro forma Pro forma combined combined Q3 FY18 YTD FY18 company company Q3 FY17 YTD FY17 Revenue ($M) $ 726 $ 826 $ 2,113 $ 2,207 – YoY growth - GAAP (12.1%) (4.3%) (1) – YoY growth - adjusted 0.9% 0.9% – QtQ growth - GAAP 2.3% — (1) – QtQ growth - adjusted 2.3% — USPS Profi
Slide 14: Financial highlights
Financial highlights Q3 FY18 YTD FY18 Cash Flow ► Adjusted Free Cash Flow $686M $1,870M Performance ► Cap Ex — Including Capital Leases $481M $1,289M ► Cap Ex as a % of Revenue 7.8% 7.1% Q3 FY18 YTD FY18 Capital to Capital to ► Cash Dividends $51M $123M Shareholders Shareholders $66M ► Share Repurch
Slide 15: FY 2018 targets
FY 2018 targets Revenue $24.0B – $24.5B Non-GAAP EPS(1) $7.50 – $8.00 Adjusted Free Cash Flow 90% of Adj. Net Income(1) 1 Excludes restructuring costs, pension and OPEB actuarial and settlement gains, transaction and integration-related costs, amortization of acquired intangible assets, and tax adju
Slide 16: Bookings
Bookings(1) FY17 FY18 $B 7.0 $6.7 $6.3 $5.9 $5.9 $6.0 6.0 $2.2 5.0 $2.4 $2.2 $2.5 $3.3 4.0 3.0 $3.6 $2.6 2.0 $3.7 $2.8 $2.2 1.0 $0.9 $1.1 $0.2 $0.6 $0.5 0.0 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 GBS Global Business Services GIS Global Infrastructure Services USPS U.S. Public Sector 1 The summation
Slide 17: Supplemental Information
3rd Quarter FY 2018 Earnings Presentation Supplemental Information
Slide 18: Q2 FY18 segment profitability adjustment
Q2 FY18 segment profitability adjustment • Q2 FY18 segment profitability as reported included the cumulative benefit from the reclassification of HPES operating leases to capitalized leases and the corresponding adjustment of the related assets to fair value • The table below adjusts Q2 FY18 segment
Slide 19: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted EBIT Pro forma Pro forma combined combined (in millions) Q3 FY18 YTD FY18 company company Q3 FY17 YTD FY17 (1) Net income (loss) $ 779 $ (166) $ 1,217 $ (570) Income tax (benefit) expense (341) 277 (207) 128 Interest income (27) (18) (59) (59) Interest expense 77 55
Slide 20: Non-GAAP reconciliations
Non-GAAP reconciliations Segment profit Pro forma Pro forma combined combined (in millions) Q3 FY18 YTD FY18 company company Q3 FY17 YTD FY17 GBS profit $ 431 $ 338 $ 1,093 $ 889 GIS profit 463 317 1,222 540 USPS profit 110 96 296 245 All other loss (77) (144) (129) (465) Interest income 27 18 59 59
Slide 21: Q3 FY18 non-GAAP results
Q3 FY18 non-GAAP results Amortization of Pension and Transaction Restructuring acquired OPEB actuarial Tax Non-GAAP (in millions except EPS) GAAP and integration- costs intangible and settlement adjustment results related costs assets gains Cost of services (excludes depreciation and amortization an
Slide 22: YTD FY18 non-GAAP results
YTD FY18 non-GAAP results Amortization of Pension and Transaction Restructuring acquired OPEB actuarial Tax Non-GAAP (in millions except EPS) GAAP and integration- costs intangible and settlement adjustment results related costs assets gains Cost of services (excludes depreciation and amortization a
Slide 23: Q3 FY17 non-GAAP results
Q3 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 Cost of servi
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 Cost of serv
Slide 25: Adjusted free cash flow
Adjusted free cash flow (in millions) Q3 FY18 YTD FY18 Net cash provided by operating activities $ 999 $ 2,542 Net cash used in investing activities(1) (217) 220 Acquisitions, net of cash acquired 41 (781) Payments on capital leases and other long-term asset financings (289) (732) Payments on transa
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 befor
Slide 27: DXC.technology
v DXC.technology BD,