Dxc Technology Company · NYSE:DXC
Dxc Technology — Q1 2021 Earnings Presentation
27 slides from Dxc Technology's earnings presentation, Aug 6, 2020
Slide 1: 1st Quarter FY 2021 Earnings Presentation
1st Quarter FY 2021 Earnings Presentation August 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 constant currency, earnings before interest and taxes (“EBIT”), adjusted EBIT, adj
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 Q1 FY21 Results 2 Update on Our Transformation Journey 3 Q1 FY21 Financial Results and Q2 Guidance 4 Closing Remarks 1st Quarter FY 2021 Earnings Presentation August 6, 2020 4
Slide 5: Strong Start to FY21
Strong Start to FY21 Q1 FY21 – Key Metrics and Drivers Revenues $4.5B Resilient business during COVID-19 Margins (Adj. EBIT %) 4.2% Effective program to optimize costs Book-to-Bill 1.2x Successfully bringing the “new DXC” to the market 1st Quarter FY 2021 Earnings Presentation August 6, 2020 5
Slide 6: Transformation Journey: Focus on Customers
Transformation Journey Proof points: • Higher than expected revenue in Q1 Focus on Customers • Expect revenue stabilization in Q2 • Capturing mindshare of existing customers – Sabre • Rapid containment and remediation of ransomware attack • People are engaged and delivering for our customers 1st Qua
Slide 7: Transformation Journey: Optimize Costs
Transformation Journey Proof points: • Achieved better than expected margins in Q1 Optimize Costs • Simplifying management layers • Right-sizing cost structure • On track to achieve ~$550 million of cost reduction targets • Expect to continue expanding margins in Q2 sequentially 1st Quarter FY 2021
Slide 8: Transformation Journey: Seize the Market Opportunity
Transformation Journey Proof points: • Focused on cross-sell Seize the Market Opportunity • Book-to-bill of 1.2x in Q1 • Winning new work – cross-sell and work from new customers • Renewals – solid evidence that we are delivering for existing customers • Expect to deliver a book-to-bill of 1x for Q2
Slide 9: Q1 Financial Results
Q1 Financial Results • Q1 results – ahead of plan ‒ Solid progress on transformation journey ‒ Business resiliency in COVID-19 environment ‒ Offerings relevant to customers • Lag effects in financial results from prior terminations, pricedowns and runoffs • On track to close the sale of U.S. state a
Slide 10: Reconciliation of Non-GAAP Results
Reconciliation of Non-GAAP Results Q1 FY21 Transaction, Amortization of Pension and OPEB Restructuring Separation and Non-GAAP (in millions except EPS) GAAP Acquired Actuarial and Costs Integration-Related Results Intangible Assets Settlement Losses Costs (Loss) income before income taxes (225) 72 1
Slide 11: 1st Quarter Results
1st Quarter Results Q1 FY21 Q1 FY20 Revenue ($M) $ 4,502 $ 4,890 – YoY Growth – GAAP (7.9%) – YoY Growth – cc (5.9%) – QtQ Growth – GAAP (6.5%) – QtQ Growth – cc (5.7%) Adjusted EBIT ($M) 190 652 Adjusted EBIT Margin (%) 4.2% 13.3% (1) Adjusted Income ($M) 59 472 (1) Non-GAAP Diluted EPS $ 0.21 $ 1.
Slide 12: Global Business Services (GBS)
Global Business Services (GBS) Q1 FY21 Q1 FY20 Revenue ($M) $ 2,174 $ 2,159 – YoY Growth – GAAP 0.7% – YoY Growth – cc 2.5% – QtQ Growth – GAAP (5.8%) – QtQ growth – cc (5.2%) GBS Profit ($M) 215 366 GBS Profit Margin (%) 9.9% 17.0% Bookings ($B) $ 3.5 $ 2.4 Book-to-Bill 1.6x 1.1x Revenue ($M) GBS P
Slide 13: Global Infrastructure Services (GIS)
Global Infrastructure Services (GIS) Q1 FY21 Q1 FY20 Revenue ($M) $ 2,328 $ 2,731 – YoY Growth – GAAP (14.8%) – YoY Growth – cc (12.4%) – QtQ Growth – GAAP (7.1%) – QtQ growth – cc (6.1%) GIS Profit ($M) 23 340 GIS Profit Margin (%) 1.0% 12.4% Bookings ($B) $ 1.8 $ 1.8 Book-to-Bill 0.8x 0.7x Revenue
Slide 14: Enterprise Technology Stack – Q1 FY21 Performance
Enterprise Technology Stack – Q1 FY21 Performance QtQ Growth YoY Growth Book-to-Bill (2.0%) 52.1% 1.3x (8.7%) (7.5%) 1.5x (11.1%) (6.0%) 1.0x (5.2%) (18.7%) 0.6x (7.0%) (7.4%) 1.1x Strategic Alternatives – Q1 FY21 (1.9%) QtQ and (1.4%) YoY U.S. S&L HHS Healthcare Software Horizontal BPS Workplace &
Slide 15: Financial Highlights
Financial Highlights Q1 FY21 Cash Flow • Adjusted Free Cash Flow $(28)M Performance • Cap Ex — Including Payments on Capital Leases $382M • Cap Ex as a % of Revenue 8.5% Q1 FY21 Capital to Capital to • Cash Dividends $53M Shareholders Shareholders • Share Repurchases — Q1 FY21 Capital • Cash and Cas
Slide 16: Q2 FY21 Outlook
Q2 FY21 Outlook Revenue $4.4B – $4.45B Adjusted EBIT Margin % 5.0% – 5.5% Non-GAAP EPS $0.30 – $0.35 Note: Q2 outlook for margins and EPS excludes restructuring costs, transaction, separation and integration-related costs, and amortization of acquired intangible assets Note: EPS is based on a 35% ta
Slide 17: Closing Remarks
Closing Remarks Positive Momentum • Fixed challenged accounts and issues are behind us • Our people are engaged, and their efforts are being recognized by customers • Clear progress on our $550M FY21 cost optimization target • Number of levers to further expand our margins • Uniquely positioned to c
Slide 18: Supplemental Information
1st Quarter FY 2021 Supplemental Information 1st Quarter FY 2021 Earnings Presentation August 6, 2020 18
Slide 19: Consolidated Statements of Operations
Consolidated Statements of Operations (preliminary and unaudited) in millions, except per-share amounts Q1 FY21 Q1 FY20 Revenue $ 4,502 $ 4,890 Costs of services 3,629 3,622 Selling, general and administrative 539 507 Depreciation and amortization 492 470 Restructuring costs 72 142 Interest expense
Slide 20: Bookings
Bookings(1) $B FY20 FY21 $5.3 $5.3 $4.2 $4.4 $3.8 $1.8 $2.8 $1.8 $2.2 $1.9 $3.5 $2.4 $2.5 $2.2 $1.9 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 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 roundin
Slide 21: Non-GAAP Reconciliations
Non-GAAP Reconciliations EBIT and Adjusted EBIT (in millions) Q1 FY21 Q1 FY20 Net (loss) income $ (199) $ 168 Income tax (benefit) expense (26) 38 Interest income (23) (30) Interest expense 106 91 EBIT (142) 267 Restructuring costs 72 142 Transaction, separation and integration-related costs 110 105
Slide 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment profit (in millions) Q1 FY21 Q1 FY20 GBS profit $ 215 $ 366 GIS profit 23 340 All other loss (48) (54) Interest income 23 30 Interest expense (106) (91) Restructuring costs (72) (142) Transaction, separation and integration-related costs (110) (105) Amortization of a
Slide 23: Q1 FY21 Non-GAAP Results
Q1 FY21 Non-GAAP Results Transaction, Pension and Amortization of Restructuring Separation and OPEB Actuarial Non-GAAP (in millions except EPS) GAAP Acquired Costs Integration- and Settlement Results Intangible Assets Related Costs Losses Cost of services (excludes depreciation and amortization and
Slide 24: Q1 FY20 Non-GAAP Results
Q1 FY20 Non-GAAP Results Transaction, Amortization of Restructuring Separation and Non-GAAP (in millions except EPS) GAAP Acquired Costs Integration- Results Intangible Assets Related Costs Cost of services (excludes depreciation and amortization and restructuring costs) $ 3,622 $ - $ - $ - $ 3,622
Slide 25: Adjusted Free Cash Flow
Adjusted Free Cash Flow (in millions) Q1 FY21 Net cash provided by operating activities $ 119 (1) Net cash used in investing activities (61) Acquisitions, net of cash acquired 10 Payments on capital leases and other long-term asset financings (245) Payments on transaction, separation and integration
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, depreciation and amortization, and other income, excluding the movement in foreign currency exchange rates on our foreign currency denominated assets and liabilities an
Slide 27: DXC Technology
Bx¢ DXC.technology
DXC Technology Company — Q1 2021 Earnings Presentation on 6ix