Dxc Technology Company · NYSE:DXC
Dxc Technology — Q2 2021 Earnings Presentation
30 slides from Dxc Technology's earnings presentation, Nov 5, 2020
Slide 1: 2nd Quarter FY 2021 Earnings Presentation
2nd Quarter FY 2021 Earnings Presentation November 5, 2020
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 constant currency, earnings before interest and taxes (“EBIT”), EBIT margin, adjus
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 Q2 FY21 Results 2 Progress on Our Transformation Journey 3 Update on Strategic Alternatives Initiative 4 Q2 FY21 Financial Results and Q3 Guidance 5 Closing Remarks 2nd Quarter FY 2021 Earnings Presentation November 5, 2020 4
Slide 5: Continued Strong Performance in Q2
Continued Strong Performance in Q2 Q2 FY21 – Key Metrics and Drivers Revenues $4.55B Strong progress towards quarter-on-quarter revenue stabilization Adjusted EBIT Margin (1) 6.2% Sequential improvement driven by effective cost optimization Book-to-Bill 1.1x Continued success in bringing the “new DX
Slide 6: Transformation Journey
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 sequential revenue stabilization 2nd Quarter FY 2021 Ear
Slide 7: Transformation Journey
Transformation Journey Proof points: • Continued progress on cost optimization program Optimize Costs • On track to achieve ~$550 million of cost reduction in FY21 • Cost optimization program driver of Q2 adjusted EBIT margin (1) of 6.2% • Expect to continue expanding margins in Q3 sequentially on a
Slide 8: Transformation Journey
Transformation Journey Proof points: • Cross-selling to existing accounts and winning work with new customers Seize the Market Opportunity • Book-to-bill of 1.1x in Q2 • Half of Q2 bookings were new work, with the balance being renewals • Encouraged by customer success stories • Expect another quart
Slide 9: Update on Strategic Alternatives Initiative
Update on Strategic Alternatives Initiative U.S. State & • Sale to Veritas Capital for $5 billion closed on October 1 Local HHS • Used net proceeds to pay down ~$3.5 billion of debt and strengthened our balance sheet Healthcare • Remain on track to close the sale to Dedalus by the end of this fiscal
Slide 10: Reconciliation of Non-GAAP Results
Reconciliation of Non-GAAP Results Q2 FY21 Transaction, Amortization of Pension and OPEB Restructuring Separation and Non-GAAP (in millions except EPS) GAAP Integration-Related Acquired Intangible Actuarial and Tax Adjustment Costs Results (2) Assets Settlement Losses Costs (Loss) income before inco
Slide 11: 2nd Quarter Results
2nd Quarter Results Q2 FY20 Q2 FY21 YTD FY20 YTD FY21 Revenue ($M) $ 4,851 $ 4,554 $ 9,741 $ 9,056 – YoY Growth – GAAP (6.1%) (7.0%) (1) – YoY Growth – cc (7.7%) (6.8%) – QtQ Growth – GAAP 1.2% n.a. (1) – YoY Growth – cc (1.9%) n.a. Adjusted EBIT ($M) 529 283 1,181 473 Adjusted EBIT Margin (%) 10.9%
Slide 12: Global Business Services (GBS)
Global Business Services (GBS) Q2 FY20 Q2 FY21 YTD FY20 YTD FY21 Revenue ($M) $ 2,285 $ 2,242 $ 4,444 $ 4,416 – YoY Growth – GAAP (1.9%) (0.6%) – YoY Growth – cc (1) (3.4%) (0.6%) – QtQ Growth – GAAP 3.1% n.a. (1) – YoY Growth – cc 0.5% n.a. GBS Profit ($M) 359 317 725 532 GBS Profit Margin (%) 15.7
Slide 13: Global Infrastructure Services (GIS)
Global Infrastructure Services (GIS) Q2 FY20 Q2 FY21 YTD FY20 YTD FY21 Revenue ($M) $ 2,566 $ 2,312 $ 5,297 $ 4,640 – YoY Growth – GAAP (9.9%) (12.4%) (1) – YoY Growth – cc (11.6%) (12.0%) – QtQ Growth – GAAP (0.7%) n.a. (1) – YoY Growth – cc (4.0%) n.a. GIS Profit ($M) 243 36 583 59 GIS Profit Marg
Slide 14: Enterprise Technology Stack – Q2 FY21 Performance
Enterprise Technology Stack – Q2 FY21 Performance Q1 FY21 Q2 FY21 QtQ Growth Book-to-Bill QtQ Growth Book-to-Bill (2.0%) 1.3x 4.0% 1.4x (8.7%) 1.5x (2.6%) 0.9x Transformation Journey (11.1%) 1.0x 2.8% 1.0x IN PROGRESS (5.2%) 0.6x (4.7%) 1.3x (7.0%) 1.1x (1.8%) 1.1x Workplace & Transformation Journey
Slide 15: Financial Highlights
Financial Highlights Q2 FY21 Cash Flow • Adjusted Free Cash Flow (1) $237M Performance • Cap Ex — Including Payments on Capital Leases $355M • Cap Ex as a % of Revenue 7.8% Q2 FY21 Capital to Capital to • Cash Dividends — Shareholders Shareholders • Share Repurchases — Q2 FY21 Capital • Cash and Cas
Slide 16: Strengthening the Balance Sheet
Strengthening the Balance Sheet • Completed sale of U.S. State & Local HHS on October 1 Adjusted Debt (for U.S. State & Local HHS Transaction) • $5.0B in gross proceeds $9.7B $3.5B $6.2B ‒ $3.5B in net proceeds ‒ ~$330M used to repurchase securitized receivables and Debt as of 9/30 Debt Repayment Ad
Slide 17: Q3 FY21 Outlook
Q3 FY21 Outlook Revenue $4.15B – $4.2B Adjusted EBIT Margin 6.0% – 6.5% Non-GAAP Diluted EPS $0.50 – $0.55 Notes: • Q3 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 18: 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 • Strong balance sheet with net debt of $3.1B • Keeping Workplace & Mobility and Horizontal BPS businesses – Will app
Slide 19: Supplemental Information
2nd Quarter FY 2021 Supplemental Information 2nd Quarter FY 2021 Earnings Presentation November 5, 2020 19
Slide 20: Consolidated Statements of Operations
Consolidated Statements of Operations (preliminary and unaudited) in millions, except per-share amounts Q2 FY20 Q2 FY21 YTD FY20 YTD FY21 Revenue $ 4,851 $ 4,554 $ 9,741 $ 9,056 Costs of services 3,679 3,563 7,301 7,192 Selling, general and administrative 489 539 996 1,078 Depreciation and amortizat
Slide 21: 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 2nd Quarter FY 2021 Earnings Presentation November 5, 2020 21
Slide 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations EBIT and Adjusted EBIT (in millions) Q2 FY20 Q2 FY21 YTD FY20 YTD FY21 Net loss $ (2,115) $ (246) $ (1,947) $ (445) Income tax (benefit) expense 116 (60) 154 (86) Interest income (67) (25) (97) (48) Interest expense 104 96 195 202 EBIT (1,962) (235) (1,695) (377) Restructuri
Slide 23: Reconciliation of Segment Profit to Loss Before Taxes
Reconciliation of Segment Profit to Loss Before Taxes (in millions) Q2 FY20 Q2 FY21 YTD FY20 YTD FY21 GBS profit $ 359 $ 317 $ 725 $ 532 GIS profit 243 36 583 59 All other loss (73) (70) (127) (118) Interest income 67 25 97 48 Interest expense (104) (96) (195) (202) Restructuring costs (32) (265) (1
Slide 24: Q2 FY21 Non-GAAP Results
Q2 FY21 Non-GAAP Results Transaction, Amortization of Restructuring Separation and (in millions except EPS) GAAP Acquired Tax Adjustment Non-GAAP Results Costs Integration-Related (2) Intangible Assets Costs Cost of services (excludes depreciation and amortization and restructuring costs) $ 3,563 $
Slide 25: YTD FY21 Non-GAAP Results
YTD FY21 Non-GAAP Results Transaction, Amortization of Pension and Restructuring Separation and Acquired OPEB Actuarial Non-GAAP (in millions except EPS) GAAP Tax Adjustment Costs Integration- Intangible and Settlement Results (2) Related Costs Assets Losses Cost of services (excludes depreciation a
Slide 26: Q2 FY20 Non-GAAP Results
Q2 FY20 Non-GAAP Results Transaction, Amortization of Restructuring Separation and Goodwill Gain on Arbitration Tax (in millions except EPS) GAAP Acquired Non-GAAP Results Costs Integration-Related Impairment Losses Award Adjustment (2) Intangible Assets Costs Cost of services (excludes depreciation
Slide 27: YTD FY20 Non-GAAP Results
YTD FY20 Non-GAAP Results Transaction, Amortization of Restructuring Separation and Goodwill Gain on Arbitration Tax (in millions except EPS) GAAP Acquired Non-GAAP Results Costs Integration-Related Impairment Losses Award Adjustment (2) Intangible Assets Costs Cost of services (excludes depreciatio
Slide 28: Adjusted Free Cash Flow
Adjusted Free Cash Flow (in millions) Q2 FY21 YTD FY21 Net cash provided by operating activities $ 472 $ 591 (1) Net cash used in investing activities (173) (234) Acquisitions, net of cash acquired - 10 Payments on capital leases and other long-term asset financings (242) (487) Payments on transacti
Slide 29: 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 30: DXC.technology
Bx¢ DXC.technology
DXC Technology Company — Q2 2021 Earnings Presentation on 6ix