Dxc Technology Company · NYSE:DXC
Dxc Technology — Q3 2020 Earnings Presentation
30 slides from Dxc Technology's earnings presentation, Feb 6, 2020
Slide 1: 3rd Quarter FY 2020 Earnings Presentation
3rd Quarter FY 2020 Earnings Presentation February 6, 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 earnings before interest and taxes (“EBIT”), adjusted EBIT, non-GAAP income before
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. Progress against priorities outlined in Q2 earnings call 2. Review preliminary third quarter results and outlook for Q4 and full-year FY20 3. Closing remarks concerning what is next on our transformation journey 3rd Quarter FY 2020 Earnings Presentation February 6, 2020 4
Slide 5: Priorities
Priorities Running the Business Unlocking Value 1. Customers: 1. Execute go-forward strategy centered on: • Upgrade engagement and service at key accounts • Enterprise technology stack • Deliver against customer priorities • Selling industry solutions 2. People: • Focus on installed base of customer
Slide 6: Progress on running the business
Progress on running the business 1. Customers: • Trusted partner to customers for mission-critical operations • Upgrade engagement and service at key accounts • Deliver against customer priorities • Leveraging ITO business to grow DXC • Established a program focusing on 40 challenged accounts 2. Peo
Slide 7: Progress on running the business
Progress on running the business 1. Customers: • Completed global employee survey and acting on results: • Upgrade engagement and service at key accounts – Broader learning opportunities • Deliver against customer priorities – Career prospects 2. People: – Compensation • Invest in our people/employe
Slide 8: Progress on running the business
Progress on running the business 1. Customers: • Focusing on delivery execution • Upgrade engagement and service at key accounts – Examining delivery footprint, utilization and talent • Deliver against customer priorities – Prioritizing quality and speed of delivery 2. People: • Simplified regional
Slide 9: Progress on running the business
Progress on running the business 1. Customers: • Using the unique capabilities of Virtual Clarity to assess • Upgrade engagement and service at key accounts the ITO estate of top 200 accounts, and address cloud • Deliver against customer priorities migration and IT modernization roadmaps: 2. People:
Slide 10: Progress on unlocking value
Progress on unlocking value 1. Execute go-forward strategy centered on: • Focus on the enterprise technology stack • Enterprise technology stack – Opportunity to engage with customers on their digital • Selling industry solutions transformations • Focus on installed base of customers • Progressing a
Slide 11: Reconciliation of non-GAAP results
Reconciliation of non-GAAP results Q3 FY20 Transaction, Amortization of Restructuring Separation and Goodwill Gain on Arbitration Non-GAAP (in millions except EPS) GAAP Acquired Intangible Tax Adjustment Costs Integration-Related Impairment Losses Award Results Assets Costs Income from continuing op
Slide 12: 3rd quarter results
3rd quarter results Q3 YTD FY20 FY19 FY20 FY19 Revenue ($M) $ 5,021 $ 5,178 $ 14,762 $ 15,473 – YoY Growth – GAAP (3.0%) (4.6%) – YoY Growth – cc (2.0%) (2.4%) – QtQ Growth – GAAP 3.5% — – QtQ Growth – cc 3.0% — Adjusted EBIT ($M) 528 840 1,709 2,442 Adjusted EBIT Margin (%) 10.5% 16.2% 11.6% 15.8%
Slide 13: Global Business Services (GBS)
Global Business Services (GBS) Q3 FY20 Q3 FY19 YTD FY20 YTD FY19 Revenue ($M) $ 2,359 $ 2,169 $ 6,803 $ 6,493 – YoY Growth – GAAP 8.8% 4.8% – YoY Growth – cc 9.9% 6.9% – QtQ Growth – GAAP 3.2% — – QtQ growth – cc 3.0% — GBS Profit ($M) 353 395 1,078 1,198 GBS Profit Margin (%) 15.0% 18.2% 15.8% 18.5
Slide 14: Global Infrastructure Services (GIS)
Global Infrastructure Services (GIS) Q3 FY20 Q3 FY19 YTD FY20 YTD FY19 Revenue ($M) $ 2,662 $ 3,009 $ 7,959 $ 8,980 – YoY Growth – GAAP (11.5%) (11.4%) – YoY Growth – cc (10.6%) (9.1%) – QtQ Growth – GAAP 3.7% — – QtQ growth – cc 3.1% — GIS Profit ($M) 232 528 815 1,475 GIS Profit Margin (%) 8.7% 17
Slide 15: Enterprise technology stack – performance update
Enterprise technology stack – performance update QtQ Growth YoY Growth Book to Bill 4.6% (8.5%) 1.1x 3.5% 200%+ 1.5x 3.0% 0.4% 1.1x 1.9% 9.9% 1.5x 2.4% (16.1%) 0.9x Strategic Alternatives U.S. State & Local HHS Horizontal BPS Workplace and Mobility Up 3.9% QtQ; Down 7.2% YoY Note: Figures in the cha
Slide 16: Financial highlights
Financial highlights Q3 FY20 YTD FY20 Cash Flow ► Adjusted Free Cash Flow $397M $1,210M Performance ► Cap Ex — Including Payments on Capital Leases $310M $1,009M ► Cap Ex as a % of Revenue 6.2% 6.8% Q3 FY20 YTD FY20 Capital to Capital to ► Cash Dividends $54M $161M Shareholders Shareholders $86M $73
Slide 17: FY 2020 targets
FY 2020 targets Revenue $19.5B – $19.8B Non-GAAP EPS(1) $5.25 – $5.75 Adjusted Free Cash Flow 80%+ of Adj. Net Income(1) 1 Excludes restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets, goodwill impairment losses, gain on arbitration
Slide 18: Closing remarks
Closing remarks Q4 FY20 Priorities Customers: • Focus on 40 challenged accounts • Virtual Clarity IT estate assessment work for our top 200 accounts People: • Continue to address the results of our global employee survey • Implement employee value proposition • Attract high-quality talent Operationa
Slide 19: Supplemental Information
3rd Quarter FY 2020 Supplemental Information 3rd Quarter FY 2020 Earnings Presentation February 6, 2020
Slide 20: Consolidated statements of operations
Consolidated statements of operations (preliminary and unaudited) in millions, except per-share amounts Q3 FY20 Q3 FY19 YTD FY20 YTD FY19 Revenue $ 5,021 $ 5,178 $ 14,762 $ 15,473 Costs of services 3,827 3,725 11,128 11,110 Selling, general and administrative 518 491 1,514 1,500 Depreciation and amo
Slide 21: Bookings
(1) Bookings $B FY19 FY20 $5.7 $5.8 $5.3 $4.7 $2.3 $4.2 $2.9 $3.8 $2.5 $2.2 $2.4 $1.9 $3.4 $2.5 $2.9 $2.8 $1.8 $1.9 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 GBS Global Business Services GIS Global Infrastructure Services 1 The summation of the quarter bookings number may not equal the full-ye
Slide 22: Non-GAAP reconciliations
Non-GAAP reconciliations EBIT and Adjusted EBIT (in millions) Q3 FY20 Q3 FY19 YTD FY20 YTD FY19 Net income (loss) $ 90 $ 466 $ (1,857) $ 991 Income from discontinued operations, net of taxes - - - (35) Income tax expense 37 3 191 205 Interest income (33) (27) (130) (92) Interest expense 93 81 288 24
Slide 23: Non-GAAP reconciliations
Non-GAAP reconciliations Segment profit (in millions) Q3 FY20 Q3 FY19 YTD FY20 YTD FY19 GBS profit $ 353 $ 395 $ 1,078 $ 1,198 GIS profit 232 528 815 1,475 All other loss (57) (83) (184) (231) Interest income 33 27 130 92 Interest expense (93) (81) (288) (249) Restructuring costs (74) (76) (248) (41
Slide 24: Q3 FY20 non-GAAP results
Q3 FY20 non-GAAP results Transaction, Amortization of Goodwill Gain on Restructuring Separation and Non-GAAP (in millions except EPS) GAAP Acquired Impairment Arbitration Tax Adjustment Costs Integration-Related Results Intangible Assets Losses Award Costs Cost of services (excludes depreciation and
Slide 25: YTD FY20 non-GAAP results
YTD FY20 non-GAAP results Transaction, Amortization of Goodwill Gain on Restructuring Separation and Non-GAAP (in millions except EPS) GAAP Acquired Impairment Arbitration Tax Adjustment Costs Integration-Related Results Intangible Assets Losses Award Costs Cost of services (excludes depreciation an
Slide 26: Q3 FY19 non-GAAP results
Q3 FY19 non-GAAP results Transaction, Amortization of Restructuring Separation and Acquired Tax Non-GAAP (in millions except EPS) GAAP Costs Integration- Intangible Adjustment Results Related Costs Assets Cost of services (excludes depreciation and amortization and restructuring costs) $ 3,725 $ - $
Slide 27: YTD FY19 non-GAAP results
YTD FY19 non-GAAP results Transaction, Amortization of Restructuring Separation and Tax Non-GAAP (in millions except EPS) GAAP Acquired Costs Integration-Related Adjustment Results Intangible Assets Costs Cost of services (excludes depreciation and amortization and restructuring costs) $ 11,110 $ -
Slide 28: Adjusted free cash flow
Adjusted free cash flow (in millions) Q3 FY20 YTD FY20 Net cash provided by operating activities $ 477 $ 2,062 (1) Net cash provided by investing activities (75) (2,047) Acquisitions, net of cash acquired 76 1,997 Payments on capital leases and other long-term asset financings (225) (646) Payments o
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
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DXC Technology Company — Q3 2020 Earnings Presentation on 6ix