Hewlett Packard Enterprise Company · NYSE:HPE
Hewlett Packard Enterprise — IR Summit @ Discover 2016
27 slides from Hewlett Packard Enterprise's conference presentation, Jun 8, 2016
Slide 1: IR Summit @ Discover 2016 Meg Whitman, CEO
IR Summit @ Discover 2016 Meg Whitman, CEO June 7, 2016
Slide 2: Forward-looking statements
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 Hewlett Packard Enterprise Company, and its consolidated subsidiaries
Slide 3: Executive Summary
Executive Summary In FY11, we faced significant challenges across a number of dimensions: portfolio positioning, evaporating profit pools, cost structure & balance sheet challenges, and overall execution issues We launched a 5-year turnaround program in FY12 to accelerate value creation for sharehol
Slide 4: In FY11, at the beginning of the turnaround, we faced significant challenges
In FY11, at the beginning of the turnaround, we faced significant challenges Declining Revenue and Profit Pools Significant Execution Challenges High Cost Structure and Weakened Balance sheet Uneven Earnings Performance Industry Disruptions Across all Major LOBs Tectonic shifts across all major line
Slide 5: We have made tremendous progress over the past years
We have made tremendous progress over the past 5 years Marketing & GTM Portfolio mix Cost structure Free Cash Flow Reignited innovation agenda, with increased R&D spend and new offerings (e.g., Flash, HAVEn, Helion, Apollo, Synergy, NFV) Industry Analyst views on capabilities (e.g., Cloud, Big Data,
Slide 6: Momentum continues in FY16 and we will deliver per SAM guidance
Momentum continues in FY16 and we will deliver per SAM guidance Revenue & EPS Cash flow Share repurchase Revenue growth in CC1 Y/Y increase in Op. Profit Non-GAAP diluted net EPS1 of $1.85 - $1.95 $5.0 - $5.2 billion in Op. CF $2.0 - $2.2 billion in FCF1 At least 50% of free cash flow in fiscal 2016
Slide 7: The recently announced CSC-ES transaction will unlock significant value
The recently announced CSC-ES transaction will unlock significant value Strategic Approx. $33 billion2 company with focus on hybrid infrastructure and cloud markets Key value proposition of enabling customers via software, technology services and financial services Sharpened focus on higher growth,
Slide 8: Spin-merge of ES with CSC is an important evolution of our portfolio
Spin-merge of ES with CSC is an important evolution of our portfolio
Slide 9: HPE (ex-ES) strategy focused on three primary pillars
HPE (ex-ES) strategy focused on three primary pillars with technology services and financial services as key enablers Cloud / Data Center Infra. Server Private Cloud Multi-Cloud Mgmt. Converged Infra. SDDC HPC NFV / CMS Extend our leadership in core data center portfolio Aggressively target growth o
Slide 10: Estimated pro forma financials of HPE (ex-ES) expected to improve post deal
Estimated pro forma financials of HPE (ex-ES) expected to improve post deal 1. FY16 Pro forma for in-flight divestitures of MphasiS, H3C and TippingPoint 2. FY16 Pro forma for ES spin-merge and other in-flight divestitures of MphasiS, H3C and Tipping Point 3. Services revenues include ES, (where app
Slide 11: HPE (ex-ES) investment thesis
HPE (ex-ES) investment thesis Technology leader delivering unrivaled hybrid infrastructure and cloud solutions Global GDP-like revenue growth Strong focus on innovation and customer solutions New upcoming products, increased R&D, new business models Financial strength foundational to the broader bus
Slide 12: investors.hpe.com
investors.hpe.com
Slide 13: IR Summit @ Discover 2016 Tim Stonesifer, CFO
IR Summit @ Discover 2016 Tim Stonesifer, CFO June 7, 2016
Slide 14: Forward-looking statements
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 Hewlett Packard Enterprise Company, and its consolidated subsidiaries
Slide 15: Common discussion topics post Q216 earnings announcement
Common discussion topics post Q216 earnings announcement 1 2 3 Value of ES/CSC transaction to HPE and its shareholders Enterprise Group operating margin trends One-time cash payments – separation and restructuring 4 Operating company net cash balances
Slide 16: What is the value of the ES/CSC transaction to HPE and its shareholders?
What is the value of the ES/CSC transaction to HPE and its shareholders? TRANSACTION STRUCTURE Transfer of EDS notes $0.3B Retirement of HPE debt $1.6B Transfer of net pension liability1 $0.6B Cash dividend to HPE $1.5B Stock consideration to HPE shareholders2 $4.5B Enterprise Services Transaction V
Slide 17: What is pressuring EG operating margins and will they stabilize or expand?
What is pressuring EG operating margins and will they stabilize or expand? Near-term considerations Foreign exchange translation and hedging has been a significant headwind but expected to moderate Strength of Tier 1 servers in Q216 had unfavorable margin rate impact that is expected to improve Rece
Slide 18: How do your one-time cash payments trend over the next few years?
How do your one-time cash payments trend over the next few years? FY16 FY17 FY18 HPE/HPI separation payments $0.6B - - ES separation payments $0.3B $0.6B - Restructuring payments1 $1.2B ~$0.5B ~$0.2B Total one-time cash payments $2.1B ~$1.1B ~$0.2B One-time cash payments reduce significantly in each
Slide 19: How much operating company net cash will you have at the end of FY16?
How much operating company net cash will you have at the end of FY16? $3.7B $6.5-7.0B Approx. $0.7B Approx. $2.1B Approx. ($0.2B) Approx. ($1.5B) Approx. $2B Operating Company Net Cash1 Cash balances increase significantly through free cash flow generation and divestitures A reconciliation of specif
Slide 20: investors.hpe.com
investors.hpe.com
Slide 21: Supplemental GAAP to non-GAAP reconciliations
IR Summit @ Discover 2016 Supplemental GAAP to non-GAAP reconciliations June 7, 2016
Slide 22: Forward-looking statements
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 Hewlett Packard Enterprise Company, and its consolidated subsidiaries
Slide 23: Use of non-GAAP and adjusted financial information
Use of non-GAAP and adjusted financial information Hewlett Packard Enterprise (HPE) has included non-GAAP financial measures in this presentation to supplement HPE’s condensed, consolidated and combined financial statements presented on a GAAP basis. Definitions of these non-GAAP financial measures
Slide 24: Cash flow: FY16 cash flow outlook
Cash flow $ in billions 2015 SAM Guidance for FY16 Updated FY16 Guidance 1Q FY16 Actuals 2Q FY16 Actuals Operating cash flow $5.0 – $5.2 $4.7 - $4.9 $(0.1) $1.1 Net capital expenditures $3.0 $3.0 $0.7 $0.6 Free cash flow1 $2.0 – $2.2 $1.7 - $1.9 $(0.8) $0.5 FY16 Cash flow outlook Free cash flow = ca
Slide 25: FY16 Revenue outlook
2015 SAM guidance for FY16 Q1 FY16 Actuals Q2 FY16 Actuals Revenue growth Y/Y, as reported Growth in local currency (3%) 1% Currency impact 3% 7% 4% Revenue growth Y/Y, constant currency1 -- 4% 5% FY16 Revenue outlook Adjusted to eliminate the effects of currency
Slide 26: FY16 Diluted net EPS outlook
2015 SAM guidance for FY16 Updated FY16 Guidance Q1 FY16 Actuals Q2 FY16 Actuals GAAP diluted net EPS $0.75 - $0.85 $1.68 – $1.78 $0.15 $0.18 Non-GAAP adjustments $1.101 $0.172 $0.263 $0.244 Non-GAAP diluted net EPS $1.85 - $1.95 $1.85 - $1.95 $0.41 $0.42 FY16 Diluted net EPS outlook 2015 SAM guidan
Slide 27: 2Q FY16 Operating company net cash
2Q FY16 Operating company net cash Gross cash includes cash and cash equivalents, short-term investments, and certain liquid long-term investments Net cash (debt) is defined as gross cash less gross debt including the effect of hedging FS gross debt includes primarily intercompany equity that is tre
Hewlett Packard Enterprise — IR Summit @ Discover 2016 on 6ix