False0001688568AshburnVirginia2014700016885682024-05-162024-05-160001688568us-gaap:CommonStockMember2024-05-162024-05-160001688568dxc:SeniorNotesDue2026Member2024-05-162024-05-16
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________________________
FORM 8-K
_____________________________________________________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 16, 2024
______________________________________________________________________________
DXC TECHNOLOGY COMPANY
(Exact name of registrant as specified in its charter)
______________________________________________________________________________
| | | | | | | | | | | | | | |
| | | | |
| Nevada | | 001-38033 | | 61-1800317 |
(State or Other Jurisdiction
of Incorporation) | | (Commission
File Number) | | (I.R.S. Employer
Identification No.) |
| | | | | | | | | | | | | | |
| | | | |
| 20408 Bashan Drive, Suite 231 |
Ashburn, Virginia 20147 |
| (Address of Principal Executive Offices and Zip Code) |
Registrant’s telephone number, including area code: (703) 972-7000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
_____________________________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| | | | | |
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| | | | | |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| | | | | |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| | | | | |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, $0.01 par value per share | DXC | The New York Stock Exchange |
| 1.750% Senior Notes Due 2026 | DXC 26 | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On May 16, 2024, DXC Technology Company (the “Company”) issued a press release reporting its financial results for the fourth quarter and full year of fiscal 2024 ended March 31, 2024. The press release is attached hereto as Exhibit 99.1. The Company will also hold a conference call at 5:00 PM EDT, on May 16, 2024, to discuss this matter.
The information contained in this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| | | | | |
| Exhibit No. | Description |
| 99.1 | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | DXC TECHNOLOGY COMPANY
|
| | | |
| Dated: | May 16, 2024 | By: | /s/ Rob Del Bene |
| | Name: | Rob Del Bene |
| | Title: | Executive Vice President and Chief Financial Officer |
DXC Technology Reports Fourth Quarter and Full Fiscal Year 2024 Results
•Revenues of $3.39 billion for Q4 FY24, down 5.7% as compared to prior year, and down 4.9% on an organic basis
•Q4 FY24 Diluted earnings per share was $(1.10) vs. $(3.38) in the prior year quarter. Q4 FY24 Non-GAAP diluted earnings per share was $0.97 vs. $1.02 in the prior year quarter
•Q4 FY24 operating cash flow of $280 million, less capital expenditures of $125 million, results in $155 million of free cash flow. For the full year, we delivered $756 million of free cash flow, the third consecutive year of free cash flow over $700 million
•Q4 FY24 Book-to-bill ratio of 0.94x and trailing twelve-month book-to-bill of 0.91x
ASHBURN, VA, May 16, 2024 – DXC Technology (NYSE: DXC) today reported results for the fourth quarter of fiscal year 2024.
Raul Fernandez, Chief Executive Officer commented: “My first months as CEO have strengthened my view of the incredible talent of our employees and the value we bring to our customers every day. DXC is trusted with providing mission critical services to leading companies around the world, helping customers modernize their business processes, and generating value by providing process knowledge, world class engineering talent, and AI capabilities to a wide range of Industries. With our track record of service delivery excellence, our skilled employees and recent management additions I have great confidence in our future."
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Financial Highlights(1) | | Q4 FY24 | | Q4 FY23 | | FY24 | | FY23 |
| Revenue | | $ | 3,386 | | | $ | 3,591 | | | $ | 13,667 | | | $ | 14,430 | |
| YoY Revenue Growth | | (5.7) | % | | (10.4) | % | | (5.3) | % | | (11.3) | % |
YoY Organic Revenue Growth(2) | | (4.9) | % | | (2.9) | % | | (4.1) | % | | (2.7) | % |
| | | | | | | | |
| Net Income | | $ | (195) | | | $ | (758) | | | $ | 86 | | | $ | (566) | |
| Net Income as a % of Sales | | (5.8) | % | | (21.1) | % | | 0.6 | % | | (3.9) | % |
| | | | | | | | |
EBIT(2) | | $ | (289) | | | $ | (1,146) | | | $ | 193 | | | $ | (820) | |
EBIT Margin %(2) | | (8.5) | % | | (31.9) | % | | 1.4 | % | | (5.7) | % |
| | | | | | | | |
Adjusted EBIT(2) | | $ | 283 | | | $ | 320 | | | $ | 1,016 | | | $ | 1,157 | |
Adjusted EBIT Margin %(2) | | 8.4 | % | | 8.9 | % | | 7.4 | % | | 8.0 | % |
| | | | | | | | |
| Earnings Per Share (Diluted) | | $ | (1.10) | | | $ | (3.38) | | | $ | 0.46 | | | $ | (2.48) | |
Non-GAAP EPS (Diluted)(2) | | $ | 0.97 | | | $ | 1.02 | | | $ | 3.13 | | | $ | 3.47 | |
| | | | | | | | |
| Book-to-Bill | | 0.94x | | 1.04x | | 0.91x | | 1.02x |
(1) In millions, except per-share amounts and numbers presented as percentages and ratios.
(2) Reconciliation of GAAP to Non-GAAP measures provided in Non-GAAP Results.
Financial Highlights - Fourth Quarter of Fiscal Year 2024
Revenue was $3.39 billion, down 5.7% as compared to prior year period, and down 4.9% on an organic basis. The revenue performance was primarily driven by declines in Modern Workplace and Cloud and ITO. Organic revenue growth came in above DXC's guidance range.
Net income was $(195) million, or (5.8)% of sales, compared to $(758) million, or (21.1)% of sales, in the prior year quarter. Net income was higher due to lower adjustment in the mark to market of the pensions. EBIT was $(289) million or (8.5)% of sales. Net income and EBIT included the following items: amortization of acquired intangible assets of $88 million, restructuring costs of $20 million, net losses on dispositions of $17 million, and a $445 million mark to market pension adjustment. Excluding these items, adjusted EBIT was $283 million and adjusted EBIT margin was 8.4%, above the Company’s guidance range. Adjusted EBIT was $37 million below the prior year quarter, mainly driven by $20 million lower non-cash pension income, and lower gains on asset sales of $19 million.
Diluted earnings per share was $(1.10) and non-GAAP diluted earnings per share was $0.97, above the guidance range.
During the fourth quarter of fiscal year 2024, the Company repurchased 6.2 million shares of common stock for a total of $138 million. DXC has retired about 32% of its shares outstanding since the start of fiscal year 2022.
Financial Information by Segment - Fourth Quarter of Fiscal Year 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Global Business Services ("GBS")(1) | | Q4 FY24 | | Q4 FY23 | | FY24 | | FY23 |
| Revenue | | $ | 1,712 | | $ | 1,751 | | $ | 6,820 | | $ | 6,960 |
| YoY Revenue Growth | | (2.2)% | | (7.5)% | | (2.0)% | | (8.4)% |
YoY Organic Revenue Growth(2) | | (0.3)% | | 3.3% | | 1.4% | | 2.4% |
| | | | | | | | |
| Segment Profit | | $ | 228 | | $ | 240 | | $ | 835 | | $ | 912 |
| Segment Profit Margin | | 13.3% | | 13.7% | | 12.2% | | 13.1% |
| | | | | | | | |
| Book-to-Bill | | 0.99x | | 1.04x | | 0.96x | | 1.05x |
(1) In millions, except per-share amounts and numbers presented as percentages and ratios.
(2) Reconciliation of GAAP to Non-GAAP measures provided in Non-GAAP Results.
GBS segment revenue was $1,712 million, down 2.2% compared to the prior year period and down 0.3% on an organic basis. GBS growth was impacted by lower levels of Analytics and Engineering and Applications revenues, partially offset by the continued growth in Insurance. GBS segment profit was $228 million and segment profit margin was 13.3%, down 40 bps compared to prior year. GBS bookings were $1.7 billion for a book-to-bill of 0.99x, and 0.96x on a trailing twelve months basis.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Global Infrastructure Services ("GIS")(1) | | Q4 FY24 | | Q4 FY23 | | FY24 | | FY23 |
| Revenue | | $ | 1,674 | | $ | 1,840 | | $ | 6,847 | | $ | 7,470 |
| YoY Revenue Growth | | (9.0)% | | (13.0)% | | (8.3)% | | (13.8)% |
YoY Organic Revenue Growth(2) | | (9.3)% | | (8.5)% | | (9.3)% | | (7.2)% |
| | | | | | | | |
| Segment Profit | | $ | 124 | | $ | 143 | | $ | 437 | | $ | 507 |
| Segment Profit Margin | | 7.4% | | 7.8% | | 6.4% | | 6.8% |
| | | | | | | | |
| Book-to-Bill | | 0.89x | | 1.03x | | 0.86x | | 0.99x |
(1) In millions, except per-share amounts and numbers presented as percentages and ratios.
(2) Reconciliation of GAAP to Non-GAAP measures provided in Non-GAAP Results.
GIS segment revenue was $1,674 million, down 9.0% compared to the prior year period, and down 9.3% on an organic basis. GIS segment revenue performance was impacted by continued organic revenue declines in Modern Workplace and Cloud Infrastructure & ITO. GIS segment profit was $124 million with a segment profit margin of 7.4%, down 40 bps as compared to prior year. GIS bookings were $1.4 billion for a book-to-bill of 0.89x, and 0.86x on a trailing twelve months basis.
Offering Highlights
The results for our six offerings are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Offerings Revenues | | Q4 FY24 | | Q3 FY24 | | Q2 FY24 | | Q1 FY24 | | Q4 FY23 |
| Analytics and Engineering | | $ | 552 | | $ | 555 | | $ | 561 | | $ | 546 | | $ | 558 |
| Applications | | 769 | | 759 | | 762 | | 770 | | 780 |
| Insurance Software & BPS | | 391 | | 382 | | 386 | | 382 | | 390 |
| Security | | 104 | | 109 | | 109 | | 111 | | 113 |
| Cloud Infrastructure & ITO | | 1,186 | | 1,168 | | 1,209 | | 1,209 | | 1,270 |
| Modern Workplace | | 384 | | 426 | | 409 | | 423 | | 457 |
| Subtotal | | 3,386 | | 3,399 | | 3,436 | | 3,441 | | 3,568 |
| M&A and Divestitures | | | | | | | | | | |
| Revenues | | — | | — | | — | | 5 | | 23 |
| Total Revenues | | $ | 3,386 | | $ | 3,399 | | $ | 3,436 | | $ | 3,446 | | $ | 3,591 |
Cash Flow
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Flow | | Q4 FY24 | | Q4 FY23 | | FY24 | | FY23 |
| Cash Flow from Operations | | $ | 280 | | $ | 415 | | $ | 1,361 | | $ | 1,415 |
| Less Capital Expenditures: | | | | | | | | |
Purchase of Property and Equipment | | (38) | | (55) | | (182) | | (267) |
Transition and Transformation Contract Costs | | (39) | | (57) | | (198) | | (223) |
Software Purchased or Developed | | (48) | | (34) | | (225) | | (188) |
| Free Cash Flow | | $ | 155 | | $ | 269 | | $ | 756 | | $ | 737 |
Cash flow from operations was $280 million in the fourth quarter of fiscal year 2024, as compared to $415 million in the fourth quarter of fiscal year 2023, and capital expenditures were $125 million in the fourth quarter of fiscal year 2024, as compared to $146 million in the fourth quarter of fiscal year 2023. Free cash flow (cash flow from operations, less capital expenditures) was $155 million in the fourth quarter of fiscal year 2024, as compared to $269 million in the fourth quarter of fiscal year 2023. For the full year, free cash flow increased from $737 million in fiscal year 2023 to $756 million in fiscal year 2024.
Guidance
The Company's guidance for the first quarter and full fiscal year 2025 is presented in the table below.
| | | | | | | | | | | | | | | | | | | | |
| Key Metrics | | Q1 FY25 Guidance | | FY25 Guidance |
| Lower End | Higher End | | Lower End | Higher End |
| Organic Revenue Growth % | | (8.0)% | (7.0)% | | (6.0)% | (4.0)% |
| Adjusted EBIT Margin | | 5.5% | 6.0% | | 6.0% | 7.0% |
| Non-GAAP Diluted EPS | | $0.55 | $0.60 | | $2.50 | $3.00 |
| Free Cash Flow | | | | ~$400 |
| Revenue | | | | |
| Revenue $ | | $3,100 | $3,150 | | $12,670 | $12,950 |
| Acquisition & Divestitures Revenues % | | (0.1)% | | —% |
| Foreign Exchange Impact on Revenues % | | (1.7)% | | (1.2)% |
| Others | | | | |
| Pension Income Benefit* | | ~$22 | | ~$90 |
| Net Interest Expense | | ~$21 | | ~$95 |
| Non-GAAP Tax Rate | | ~30% | | ~30% |
| Weighted Average Diluted Shares Outstanding | | ~182 | | ~184 |
| Restructuring & TSI Expense | | | | ~$375 |
Capital Lease / Asset Financing Payments | | | | ~$275 |
| Foreign Exchange Assumptions | | Current Estimate | | Current Estimate |
$/Euro Exchange Rate | | $1.06 | | $1.06 |
$/GBP Exchange Rate | | $1.25 | | $1.25 |
$/AUD Exchange Rate | | $0.65 | | $0.65 |
*Pension benefit is split between Cost Of Sales (COS) & Other Income:
Fiscal year 2025: Net pension benefit of $90 million; $45 million service cost in COS, $135 million pension benefit in Other income
Fiscal year 2024: Net pension benefit of $92 million; $53 million service cost in COS, $145 million pension benefit in Other income
DXC does not provide a reconciliation of non-GAAP measures that it discusses as part of its guidance because certain significant information required for such reconciliation is not available without unreasonable efforts or at all, including, most notably, the impact of significant non-recurring items. Without this information, DXC does not believe that a reconciliation would be meaningful.
Earnings Conference Call and Webcast
DXC Technology senior management will host a conference call and webcast to discuss these results on May 16, 2024, at 5:00 p.m. EST. The dial-in number for domestic callers is +1 (888) 330-2455. Callers who reside outside of the United States should dial +1 (240) 789-2717. The passcode for all participants is 4164760. The webcast audio and any presentation slides will be available on DXC Technology’s Investor Relations website.
A replay of the conference call will be available from approximately two hours after the conclusion of the call until May 23, 2024. The phone number for the replay is +1 (800) 770-2030 or +1 (647) 362-9199. The replay passcode is 4164760.
About DXC Technology
DXC Technology (NYSE: DXC) helps global companies run their mission critical systems and operations while modernizing IT, optimizing data architectures, and ensuring security and scalability across public, private and hybrid clouds. The world’s largest companies and public sector organizations trust DXC to deploy services to drive new levels of performance, competitiveness, and customer experience across their IT estates. Learn more about how we deliver excellence for our customers and colleagues at DXC.com.
Forward-Looking Statements
All statements in this press release that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” Forward-looking statements often include words such as “anticipates,” “believes,” “estimates,” “expects,” “forecast,” “goal,” “intends,” “objective,” “plans,” “projects,” “strategy,” “target,” and “will” and words and terms of similar substance in discussions of future operating or financial performance. Forward-looking statements include, among other things, statements with respect to our future financial condition, results of operations, cash flows, business strategies, operating efficiencies or synergies, divestitures, competitive position, growth opportunities, share repurchases, dividend payments, plans and objectives of management and other matters. These statements represent current expectations and beliefs, and no assurance can be given that the results described in such statements will be achieved. Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of our control. Important factors that could cause actual results to differ materially from those described in forward-looking statements include, but are not limited to: our inability to succeed in our strategic objectives; the risk of liability, reputational damages or adverse impact to business due to service interruptions, from security breaches, cyber-attacks, other security incidents or disclosure of confidential information or personal data; compliance, or failure to comply, with obligations arising under new or existing laws, regulations, and customer contracts relating to the privacy, security and handling of personal data; our product and service quality issues; our inability to develop and expand our service offerings to address emerging business demands and technological trends, including our inability to sell differentiated services amongst our offerings; our inability to compete in certain markets and expand our capacity in certain offshore locations and risks associated with such offshore locations, such as the on-going conflict between Russia and Ukraine; failure to maintain our credit rating and ability to manage working capital, refinance and raise additional capital for future needs; difficulty in understanding the changes to our business model by financial or industry analysts or our failure to meet our publicly announced financial guidance; public health crises such as the COVID-19 pandemic; our indebtedness and potential material adverse effect on our financial condition and results of operations; the competitive pressures faced by our business; our inability to accurately estimate the cost of services, and the completion timeline of contracts; failure by us or third party partners to deliver on commitments or otherwise breach obligations to our customers; the risks associated with climate change and natural disasters; increased scrutiny of, and evolving expectations for, sustainability and environmental, social, and governance initiatives; our inability to attract and retain key personnel and maintain relationships with key partners; the risks associated with prolonged periods of inflation or current macroeconomic conditions, including the current decline in economic growth rates in the United States and in other countries, the possibility of reduced spending by customers in the areas we serve, the uncertainty related to our cost-takeout efforts, continuing unfavorable foreign exchange rate movements, and our ability to close new deals in the event of an economic slowdown; the risks associated with our international operations, such as risks related to currency exchange rates; our inability to comply with existing and new laws and regulations, including social and environmental responsibility regulations, policies and provisions, as well as customer and investor demands; our inability to achieve the expected benefits of our restructuring plans; our inadvertent infringement of third-party intellectual property rights or infringement of our intellectual property rights by third parties; our inability to procure third-party licenses required for the operation of our products and service offerings; risks associated with disruption of our supply chain; our inability to maintain effective disclosure controls and internal control over financial reporting; potential losses due to asset impairment charges; our inability to pay dividends or repurchase shares of our common stock; pending investigations, claims and disputes and any adverse impact on our profitability and liquidity; disruptions in the credit markets, including disruptions that reduce our customers’ access to credit and increase the costs to our customers of obtaining credit; counterparty default risk in our hedging program; our failure to bid on projects effectively; financial difficulties of our customers and our inability to collect receivables; our inability to maintain and grow our customer relationships over time and to comply with customer contracts or government contracting regulations or requirements; our inability to succeed in our strategic transactions; changes in tax rates, tax laws, and the timing and outcome of tax examinations; risks following the merger of Computer Sciences Corporation (“CSC”) and Enterprise Services business of Hewlett Packard Enterprise Company’s (“HPES”) businesses, including anticipated tax treatment, unforeseen liabilities, and future capital expenditures; risks following the spin-off of our former U.S. Public Sector business (the “USPS”) and its related mergers with Vencore Holding Corp. and KeyPoint Government Solutions in June 2018 to form Perspecta Inc. (including its successors and permitted assigns, “Perspecta”); volatility of the price of our securities, which is subject to market and other conditions. For a written description of these factors, see the section titled “Risk Factors” in DXC’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023, and any updating information in subsequent SEC filings, including DXC’s upcoming Annual Report on Form 10-K for the year ended March 31, 2024.
No assurance can be given that any goal or plan set forth in any forward-looking statement can or will be achieved, and readers are cautioned not to place undue reliance on such statements which speak only as of the date they are made. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events except as required by law.
About Non-GAAP Measures
In an effort to provide investors with supplemental financial information, in addition to the preliminary and unaudited financial information presented on a GAAP basis, we have also disclosed in this press release preliminary non-GAAP information including: earnings before interest and taxes ("EBIT"), EBIT margin, adjusted EBIT, adjusted EBIT margin, non-GAAP diluted EPS, organic revenues, organic revenue growth, free cash flow, and non-GAAP tax rate.
We believe EBIT, EBIT margin, adjusted EBIT, adjusted EBIT margin, and non-GAAP diluted EPS provide investors with useful supplemental information about our operating performance after excluding certain categories of expenses.
One category of expenses excluded from adjusted EBIT, adjusted EBIT margin, and non-GAAP diluted EPS, incremental amortization of intangible assets acquired through business combinations, which, if included, may result in a significant difference in period over period amortization expense on a GAAP basis. We exclude amortization of certain acquired intangible assets as these non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Although DXC management excludes amortization of acquired intangible assets primarily customer-related intangible assets from its non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and support revenue generation. Any future transactions may result in a change to the acquired intangible asset balances and associated amortization expense.
Another category of expenses excluded from adjusted EBIT, adjusted EBIT margin, and non-GAAP diluted EPS, is impairment losses, which, if included, may result in a significant difference in period-over-period expense on a GAAP basis. We exclude impairment losses as these non-cash amounts, reflect generally an acceleration of what would be multiple periods of expense and are not expected to occur frequently. Further assets such as goodwill may be significantly impacted by market conditions outside of management’s control.
We believe organic revenue growth provides investors with useful supplemental information about our revenues after excluding the effect of currency exchange rate fluctuations for currencies other than U.S. dollars and the effects of acquisitions and divestitures in the periods presented. See below for a description of the methodology we use to present organic revenues.
Selected references are made to revenue growth on an “organic basis” so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates and without the impacts of acquisitions and divestitures, thereby providing comparisons of operating performance from period to period of the business that we have owned during all periods presented. Organic revenue growth is calculated by dividing the year-over-year change in GAAP revenues attributed to organic growth by the GAAP revenues reported in the prior comparable period. Organic revenue is calculated as constant currency revenue excluding the impact of mergers, acquisitions or similar transactions until the one-year anniversary of the transaction and excluding revenues of divestitures during the reporting period. This approach is used for all results where the functional currency is not the U.S. dollar.
Free cash flow represents cash flow from operations, less capital expenditures. Free cash flow is utilized by our management, investors, and analysts to evaluate cash available to pay debt, repurchase shares, and provide further investment in the business.
There are limitations to the use of the non-GAAP financial measures presented in this press release. One of the limitations is that they do not reflect complete financial results. We compensate for this limitation by providing a reconciliation between our non-GAAP financial measures and the respective most directly comparable financial measure calculated and presented in accordance with GAAP. Additionally, other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes between companies.
# # #
Contact:
John Sweeney, CFA, VP of Investor Relations, +1-980-315-3665, john.sweeney@dxc.com
Sean B. Pasternak, Corporate Media Relations, +1-647-975-7326, sean.pasternak@dxc.com
Condensed Consolidated Statements of Operations
(preliminary and unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Twelve Months Ended |
| (in millions, except per-share amounts) | | March 31, 2024 | | March 31, 2023 | | March 31, 2024 | | March 31, 2023 |
| | | | | | | | |
| Revenues | | $ | 3,386 | | | $ | 3,591 | | | $ | 13,667 | | | $ | 14,430 | |
| | | | | | | | |
| Costs of services | | 2,588 | | | 2,742 | | | 10,576 | | | 11,246 | |
| Selling, general and administrative | | 295 | | | 387 | | | 1,244 | | | 1,375 | |
| Depreciation and amortization | | 349 | | | 375 | | | 1,404 | | | 1,519 | |
| Restructuring costs | | 20 | | | 81 | | | 111 | | | 216 | |
| Interest expense | | 76 | | | 63 | | | 298 | | | 200 | |
| Interest income | | (56) | | | (46) | | | (214) | | | (135) | |
Loss (gain) on disposition of businesses | | 17 | | | (202) | | | (79) | | | (190) | |
Other expense, net | | 406 | | | 1,354 | | | 218 | | | 1,084 | |
| Total costs and expenses | | 3,695 | | | 4,754 | | | 13,558 | | | 15,315 | |
| | | | | | | | |
(Loss) income before income taxes | | (309) | | | (1,163) | | | 109 | | | (885) | |
Income tax (benefit) expense | | (114) | | | (405) | | | 23 | | | (319) | |
Net (loss) income | | (195) | | | (758) | | | 86 | | | (566) | |
Less: net income (loss) attributable to non-controlling interest, net of tax | | 5 | | | (2) | | | (5) | | | 2 | |
Net (loss) income attributable to DXC common stockholders | | $ | (200) | | | $ | (756) | | | $ | 91 | | | $ | (568) | |
| | | | | | | | |
(Loss) income per common share: | | | | | | | | |
| Basic | | $ | (1.10) | | | $ | (3.38) | | | $ | 0.46 | | | $ | (2.48) | |
| Diluted | | $ | (1.10) | | | $ | (3.38) | | | $ | 0.46 | | | $ | (2.48) | |
| | | | | | | | |
| Weighted average common shares outstanding for: | | | | | | | | |
| Basic EPS | | 181.06 | | | 223.92 | | | 195.80 | | | 228.99 | |
| Diluted EPS | | 181.06 | | | 223.92 | | | 198.78 | | | 228.99 | |
Selected Condensed Consolidated Balance Sheet Data
(preliminary and unaudited)
| | | | | | | | | | | | | | |
| | As of |
| (in millions) | | March 31, 2024 | | March 31, 2023 |
| Assets | | | | |
| Cash and cash equivalents | | $ | 1,224 | | | $ | 1,858 | |
| Receivables, net | | 3,253 | | | 3,441 | |
| Prepaid expenses | | 512 | | | 565 | |
| Other current assets | | 146 | | | 255 | |
| Assets held for sale | | — | | | 5 | |
| Total current assets | | 5,135 | | | 6,124 | |
| | | | |
| Intangible assets, net | | 2,130 | | | 2,569 | |
| Operating right-of-use assets, net | | 731 | | | 909 | |
| Goodwill | | 532 | | | 539 | |
| Deferred income taxes, net | | 804 | | | 460 | |
| Property and equipment, net | | 1,671 | | | 1,979 | |
| Other assets | | 2,857 | | | 3,247 | |
| Assets held for sale - non-current | | 11 | | | 18 | |
| Total Assets | | $ | 13,871 | | | $ | 15,845 | |
| | | | |
| Liabilities | | | | |
| Short-term debt and current maturities of long-term debt | | $ | 271 | | | $ | 500 | |
| Accounts payable | | 846 | | | 782 | |
| Accrued payroll and related costs | | 558 | | | 569 | |
| Current operating lease liabilities | | 282 | | | 317 | |
| Accrued expenses and other current liabilities | | 1,437 | | | 1,836 | |
| Deferred revenue and advance contract payments | | 866 | | | 1,054 | |
| Income taxes payable | | 134 | | | 120 | |
| Liabilities related to assets held for sale | | — | | | 9 | |
| Total current liabilities | | 4,394 | | | 5,187 | |
| | | | |
| Long-term debt, net of current maturities | | 3,818 | | | 3,900 | |
| Non-current deferred revenue | | 671 | | | 788 | |
| Non-current income tax liabilities and deferred tax liabilities | | 556 | | | 587 | |
| Non-current operating lease liabilities | | 497 | | | 648 | |
| Non-current pension obligations | | 423 | | | 463 | |
| Other long-term liabilities | | 446 | | | 449 | |
| Liabilities related to assets held for sale - non-current | | — | | | 3 | |
| Total Liabilities | | 10,805 | | | 12,025 | |
| | | | |
| Total Equity | | 3,066 | | | 3,820 | |
| | | | |
| Total Liabilities and Equity | | $ | 13,871 | | | $ | 15,845 | |
Condensed Consolidated Statements of Cash Flows
(preliminary and unaudited)
| | | | | | | | | | | | | | | | | |
| | Twelve Months Ended | | | |
| (in millions) | | March 31, 2024 | | March 31, 2023 | | | |
| Cash flows from operating activities: | | | | | | | |
| Net income (loss) | | $ | 86 | | | $ | (566) | | | | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | |
| Depreciation and amortization | | 1,433 | | | 1,551 | | | | |
| Operating right-of-use expense | | 353 | | | 404 | | | | |
| Pension & other post-employment benefits, actuarial & settlement losses (gains) | | 445 | | | 1,431 | | | | |
| Share-based compensation | | 109 | | | 108 | | | | |
| Deferred taxes | | (416) | | | (609) | | | | |
| Gain on dispositions | | (131) | | | (260) | | | | |
| Provision for losses on accounts receivable | | — | | | (1) | | | | |
| Unrealized foreign currency exchange (gains) losses | | (7) | | | 8 | | | | |
| Impairment losses and contract write-offs | | 18 | | | 47 | | | | |
| Amortization of debt issuance costs and discount | | 5 | | | 4 | | | | |
| Cash surrender value in excess of premiums paid | | (14) | | | (17) | | | | |
| Other non-cash charges, net | | 9 | | | 4 | | | | |
| Changes in assets and liabilities, net of effects of acquisitions and dispositions: | | | | | | | |
| Decrease in receivables | | 176 | | | 412 | | | | |
| Decrease (Increase) in prepaid expenses and other current assets | | 211 | | | (119) | | | | |
| Decrease in accounts payable and accruals | | (278) | | | (424) | | | | |
| Increase (Decrease) in income taxes payable and income tax liability | | 13 | | | (161) | | | | |
| Decrease in operating lease liability | | (353) | | | (404) | | | | |
| (Decrease) Increase in advance contract payments and deferred revenue | | (290) | | | 11 | | | | |
| Other operating activities, net | | (8) | | | (4) | | | | |
| Net cash provided by operating activities | | 1,361 | | | 1,415 | | | | |
| | | | | | | |
| Cash flows from investing activities: | | | | | | | |
| Purchases of property and equipment | | (182) | | | (267) | | | | |
| Payments for transition and transformation contract costs | | (198) | | | (223) | | | | |
| Software purchased and developed | | (225) | | | (188) | | | | |
| Business dispositions | | 26 | | | (147) | | | | |
| Proceeds from sale of assets | | 75 | | | 171 | | | | |
| Other investing activities, net | | 13 | | | 19 | | | | |
| Net cash used in investing activities | | (491) | | | (635) | | | | |
| | | | | | | |
| Cash flows from financing activities: | | | | | | | |
| Borrowings of commercial paper | | 1,784 | | | 1,514 | | | | |
| Repayments of commercial paper | | (1,887) | | | (1,757) | | | | |
| Principal payments on long-term debt | | — | | | (63) | | | | |
| Payments on finance leases and borrowings for asset financing | | (430) | | | (511) | | | | |
| Proceeds from stock options and other common stock transactions | | — | | | 2 | | | | |
| Taxes paid related to net share settlements of share-based compensation awards | | (35) | | | (17) | | | | |
| Repurchase of common stock | | (898) | | | (669) | | | | |
| Other financing activities, net | | (21) | | | (6) | | | | |
| Net cash used in financing activities | | (1,487) | | | (1,507) | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | (17) | | | (97) | | | | |
| Net decrease in cash and cash equivalents including cash classified within current assets held for sale | | (634) | | | (824) | | | | |
| Cash classified within current assets held for sale | | — | | | 10 | | | | |
| Net decrease in cash and cash equivalents | | (634) | | | (814) | | | | |
| Cash and cash equivalents at beginning of year | | 1,858 | | | 2,672 | | | | |
| Cash and cash equivalents at end of year | | $ | 1,224 | | | $ | 1,858 | | | | |
Segment Profit
We define segment profit as segment revenues 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 and the related economic hedges). The Company does not allocate to its segments certain operating expenses managed at the corporate level. These unallocated costs generally include certain corporate function costs, stock-based compensation expense, pension and other post-retirement benefits (“OPEB”) actuarial and settlement gains and losses, restructuring costs, transaction, separation and integration-related costs, and amortization of acquired intangible assets.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Twelve Months Ended |
| (in millions) | | March 31, 2024 | | March 31, 2023 | | March 31, 2024 | | March 31, 2023 |
| GBS profit | | $ | 228 | | | $ | 240 | | | $ | 835 | | | $ | 912 | |
| GIS profit | | 124 | | | 143 | | | 437 | | | 507 | |
| All other loss | | (69) | | | (63) | | | (256) | | | (262) | |
| Subtotal | | $ | 283 | | | $ | 320 | | | $ | 1,016 | | | $ | 1,157 | |
| Interest income | | 56 | | | 46 | | | 214 | | | 135 | |
| Interest expense | | (76) | | | (63) | | | (298) | | | (200) | |
| Restructuring costs | | (20) | | | (81) | | | (111) | | | (216) | |
| Transaction, separation and integration-related costs | | (1) | | | (4) | | | (7) | | | (16) | |
| Amortization of acquired intangibles | | (88) | | | (97) | | | (354) | | | (402) | |
| Merger related indemnification | | (1) | | | (25) | | | (16) | | | (46) | |
| SEC matter | | — | | | — | | | — | | | (8) | |
| Gains on dispositions | | (17) | | | 202 | | | 115 | | | 190 | |
| Arbitration loss | | — | | | (20) | | | — | | | (29) | |
| Impairment losses | | — | | | (11) | | | (5) | | | (19) | |
Pension and OPEB actuarial and settlement losses | | (445) | | | (1,430) | | | (445) | | | (1,431) | |
(Loss) income before income taxes | | $ | (309) | | | $ | (1,163) | | | $ | 109 | | | $ | (885) | |
| | | | | | | | |
| Segment profit margins | | | | | | | | |
| GBS | | 13.3 | % | | 13.7 | % | | 12.2 | % | | 13.1 | % |
| GIS | | 7.4 | % | | 7.8 | % | | 6.4 | % | | 6.8 | % |
Reconciliation of Non-GAAP Financial Measures
Our non-GAAP adjustments include:
•Restructuring costs – includes costs, net of reversals, related to workforce and real estate optimization and other similar charges.
•Transaction, separation and integration-related (“TSI”) costs – includes costs related to integration, separation, planning, financing and advisory fees and other similar charges associated with mergers, acquisitions, strategic investments, joint ventures, and dispositions and other similar transactions incurred within one year of such transactions closing, except for costs associated with related disputes, which may arise more than one year after closing.
•Amortization of acquired intangible assets – includes amortization of intangible assets acquired through business combinations.
•Pension and OPEB actuarial and settlement gains and losses – pension and OPEB actuarial mark to market adjustments and settlement gains and losses.
•Merger related indemnification - in fiscal 2024, primarily represents the Company’s current estimate of potential liability to HPE for tax related indemnifications; and in fiscal 2023, represents the Company’s then current estimate of potential liability to HPE for tax related indemnifications; indemnification on the Forsyth v. HP Inc. and HPE litigation; and the Company’s final liability to HPE on the Oracle v. HPE litigation. These obligations are related to the HPES merger.
•SEC Matter - represents the Company’s liability related to a previously disclosed investigation into its historical determination and disclosure of certain “transaction, separation, and integration-related costs” as part of the Company’s non-GAAP adjustments.
•Gains and losses on dispositions – gains and losses related to dispositions of businesses, strategic assets and interests in less than wholly-owned entities.(1)
•Arbitration loss - reflects losses arising from arbitration decisions in the third and fourth quarters of fiscal 2023.
•Impairment losses – non-cash charges associated with the permanent reduction in the value of the Company’s assets (e.g., impairment of goodwill and other long-term assets including fixed assets and impairments to deferred tax assets for discrete changes in valuation allowances). Future discrete reversals of valuation allowances are likewise excluded.(2)
•Tax adjustments – discrete tax adjustments to impair or recognize certain deferred tax assets, adjustments for changes in tax legislation, and adjustments to transition tax. Income tax expense (benefit) from the impact of merger and divestitures is separately computed based on the underlying transaction. Income tax expense of all other (non-discrete) non-GAAP adjustments is computed by applying the jurisdictional tax rate to the pre-tax adjustments on a jurisdictional basis.(3)
(1) During fiscal 2024, the Company sold insignificant businesses and a strategic investment and made adjustments to estimated amounts from prior years’ dispositions that resulted in a net gain of $115 million. During fiscal 2023, the Company had a net gain of $190 million from the disposition of certain businesses, including a pre-tax gain of $215 million from the sale of its FDB business partially offset by a loss of $25 million from the sale of certain insignificant businesses.
(2) Impairment losses on dispositions for fiscal 2024 include $5 million of charges associated with certain strategic investments accounted for within Other income, net. Impairment losses on dispositions for fiscal 2024 included $4 million of Net income attributable to non-controlling interest, net of tax. Impairment losses for fiscal 2023 include an $8 million impairment charge for customer related intangible assets and an $11 million impairment charge associated with a strategic investment.
(3) Tax adjustments for fiscal 2024 include $(92) million of changes in valuation allowances on deferred tax assets, $(7) million of adjustments to transition tax, and $2 million of revaluation of deferred taxes resulting from changes in non-U.S. jurisdiction tax rates. Tax adjustments for fiscal 2023 include $(5) million changes in valuation allowances on deferred tax assets, $(28) million of adjustments to transition tax, and $(87) million of revaluation of deferred taxes resulting from changes in non-U.S. jurisdiction tax rates.
Non-GAAP Results
A reconciliation of reported results to non-GAAP results is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2024 |
| (in millions, except per-share amounts) | | As
Reported | | Restructuring
Costs | | Transaction,
Separation and
Integration-Related Costs | | Amortization
of Acquired
Intangible
Assets | | Merger related Indemnification | | Gains and
Losses on
Dispositions | | Pension and
OPEB Actuarial
and Settlement
Gains and
Losses | | Tax Adjustment | | Non-GAAP
Results |
(Loss) income before income taxes | | $ | (309) | | | $ | 20 | | | $ | 1 | | | $ | 88 | | | $ | 1 | | | $ | 17 | | | $ | 445 | | | $ | — | | | $ | 263 | |
Income tax (benefit) expense | | (114) | | | 5 | | | — | | | 22 | | | 2 | | | (6) | | | 109 | | | 60 | | | 78 | |
Net (loss) income | | (195) | | | 15 | | | 1 | | | 66 | | | (1) | | | 23 | | | 336 | | | (60) | | | 185 | |
Less: net income attributable to non-controlling interest, net of tax | | 5 | | | — | | | — | | | — | | | — | | | — | | | 2 | | | — | | | 7 | |
Net (loss) income attributable to DXC common stockholders | | $ | (200) | | | $ | 15 | | | $ | 1 | | | $ | 66 | | | $ | (1) | | | $ | 23 | | | $ | 334 | | | $ | (60) | | | $ | 178 | |
| | | | | | | | | | | | | | | | | | |
| Effective Tax Rate | | 36.9 | % | | | | | | | | | | | | | | | | 29.7 | % |
| | | | | | | | | | | | | | | | | | |
| Basic EPS | | $ | (1.10) | | | $ | 0.08 | | | $ | 0.01 | | | $ | 0.36 | | | $ | (0.01) | | | $ | 0.13 | | | $ | 1.84 | | | $ | (0.33) | | | $ | 0.98 | |
| Diluted EPS | | $ | (1.10) | | | $ | 0.08 | | | $ | 0.01 | | | $ | 0.36 | | | $ | (0.01) | | | $ | 0.13 | | | $ | 1.82 | | | $ | (0.33) | | | $ | 0.97 | |
| | | | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding for: | | | | | | | | | | | | | | | | | | |
| Basic EPS | | 181.06 | | | 181.06 | | | 181.06 | | | 181.06 | | | 181.06 | | | 181.06 | | | 181.06 | | | 181.06 | | | 181.06 | |
| Diluted EPS | | 181.06 | | | 183.47 | | | 183.47 | | | 183.47 | | | 183.47 | | | 183.47 | | | 183.47 | | | 183.47 | | | 183.47 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Twelve Months Ended March 31, 2024 |
| (in millions, except per-share amounts) | | As
Reported | | Restructuring
Costs | | Transaction,
Separation and
Integration-Related Costs | | Amortization
of Acquired
Intangible
Assets | | Merger Related Indemnification | | Gains and
Losses on
Dispositions | | Impairment
Losses | | Pension and
OPEB Actuarial
and Settlement
Gains and
Losses | | Tax Adjustment | | Non-GAAP Results |
| Income before income taxes | | $ | 109 | | | $ | 111 | | | $ | 7 | | | $ | 354 | | | $ | 16 | | | $ | (115) | | | $ | 5 | | | $ | 445 | | | $ | — | | | $ | 932 | |
| Income tax expense | | 23 | | | 23 | | | 1 | | | 75 | | | 14 | | | (26) | | | 1 | | | 109 | | | 97 | | | 317 | |
| Net income | | 86 | | | 88 | | | 6 | | | 279 | | | 2 | | | (89) | | | 4 | | | 336 | | | (97) | | | 615 | |
| Less: net loss attributable to non-controlling interest, net of tax | | (5) | | | — | | | — | | | — | | | — | | | — | | | (4) | | | 2 | | | — | | | (7) | |
| Net income attributable to DXC common stockholders | | $ | 91 | | | $ | 88 | | | $ | 6 | | | $ | 279 | | | $ | 2 | | | $ | (89) | | | $ | 8 | | | $ | 334 | | | $ | (97) | | | $ | 622 | |
| | | | | | | | | | | | | | | | | | | | |
| Effective Tax Rate | | 21.1 | % | | | | | | | | | | | | | | | | | | 34.0 | % |
| | | | | | | | | | | | | | | | | | | | |
| Basic EPS | | $ | 0.46 | | | $ | 0.45 | | | $ | 0.03 | | | $ | 1.42 | | | $ | 0.01 | | | $ | (0.45) | | | $ | 0.04 | | | $ | 1.71 | | | $ | (0.50) | | | $ | 3.18 | |
| Diluted EPS | | $ | 0.46 | | | $ | 0.44 | | | $ | 0.03 | | | $ | 1.40 | | | $ | 0.01 | | | $ | (0.45) | | | $ | 0.04 | | | $ | 1.68 | | | $ | (0.49) | | | $ | 3.13 | |
| | | | | | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding for: | | | | | | | | | | | | | | | | | | | | |
| Basic EPS | | 195.80 | | | 195.80 | | | 195.80 | | | 195.80 | | | 195.80 | | | 195.80 | | | 195.80 | | | 195.80 | | | 195.80 | | | 195.80 | |
| Diluted EPS | | 198.78 | | | 198.78 | | | 198.78 | | | 198.78 | | | 198.78 | | | 198.78 | | | 198.78 | | | 198.78 | | | 198.78 | | | 198.78 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2023 |
| (in millions, except per-share amounts) | | As Reported | | Restructuring
Costs | | Transaction,
Separation and
Integration-Related Costs | | Amortization of
Acquired Intangible Assets | | Merger Related Indemnification
and Arbitration Loss | | Gains and
Losses on
Dispositions | | Pension and
OPEB Actuarial
and Settlement
Gains and Losses | | Impairment
Losses | | Tax Adjustment | | Non-GAAP Results |
| (Loss) income from continuing operations, before taxes | | $ | (1,163) | | | $ | 81 | | | $ | 4 | | | $ | 97 | | | $ | 45 | | | $ | (202) | | | $ | 1,430 | | | $ | 11 | | | $ | — | | | $ | 303 | |
| Income tax (benefit) expense | | (405) | | | 16 | | | 1 | | | 19 | | | 24 | | | 1 | | | 291 | | | 3 | | | 120 | | | 70 | |
| Net (loss) income | | (758) | | | 65 | | | 3 | | | 78 | | | 21 | | | (203) | | | 1,139 | | | 8 | | | (120) | | | 233 | |
| Less: net loss attributable to non-controlling interest, net of tax | | (2) | | | — | | | — | | | — | | | — | | | — | | | 2 | | | — | | | — | | | — | |
| Net (loss) income attributable to DXC common stockholders | | $ | (756) | | | $ | 65 | | | $ | 3 | | | $ | 78 | | | $ | 21 | | | $ | (203) | | | $ | 1,137 | | | $ | 8 | | | $ | (120) | | | $ | 233 | |
| | | | | | | | | | | | | | | | | | | | |
| Effective Tax Rate | | 34.8 | % | | | | | | | | | | | | | | | | | | 23.1 | % |
| | | | | | | | | | | | | | | | | | | | |
| Basic EPS | | $ | (3.38) | | | $ | 0.29 | | | $ | 0.01 | | | $ | 0.35 | | | $ | 0.09 | | | $ | (0.91) | | | $ | 5.08 | | | $ | 0.04 | | | $ | (0.54) | | | $ | 1.04 | |
| Diluted EPS | | $ | (3.38) | | | $ | 0.29 | | | $ | 0.01 | | | $ | 0.34 | | | $ | 0.09 | | | $ | (0.89) | | | $ | 5.00 | | | $ | 0.04 | | | $ | (0.53) | | | $ | 1.02 | |
| | | | | | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding for: | | | | | | | | | | | | | | | | | | | | |
| Basic EPS | | 223.92 | | | 223.92 | | | 223.92 | | | 223.92 | | | 223.92 | | | 223.92 | | | 223.92 | | | 223.92 | | | 223.92 | | | 223.92 | |
| Diluted EPS | | 223.92 | | | 227.58 | | | 227.58 | | | 227.58 | | | 227.58 | | | 227.58 | | | 227.58 | | | 227.58 | | | 227.58 | | | 227.58 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Year Ended March 31, 2023 |
| (in millions, except per-share amounts) | | As
Reported | | Restructuring
Costs | | Transaction,
Separation and
Integration-
Related Costs | | Amortization
of Acquired
Intangible Assets | | Merger Related Indemnification,
Arbitration Loss, and SEC Matter | | Gains and
Losses on
Dispositions | | Impairment Losses | | Pension and
OPEB Actuarial
and Settlement
Gains and
Losses | | Tax
Adjustment | | Non-GAAP
Results |
| (Loss) income before income taxes | | $ | (885) | | | $ | 216 | | | $ | 16 | | | $ | 402 | | | $ | 83 | | | $ | (190) | | | $ | 19 | | | $ | 1,431 | | | $ | — | | | $ | 1,092 | |
| Income tax (benefit) expense | | (319) | | | 44 | | | 3 | | | 81 | | | 31 | | | 25 | | | 4 | | | 291 | | | 120 | | | 280 | |
| Net (loss) income | | (566) | | | 172 | | | 13 | | | 321 | | | 52 | | | (215) | | | 15 | | | 1,140 | | | (120) | | | 812 | |
| Less: net income attributable to non-controlling interest, net of tax | | 2 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2 | | | — | | | 4 | |
| Net (loss) income attributable to DXC common stockholders | | $ | (568) | | | $ | 172 | | | $ | 13 | | | $ | 321 | | | $ | 52 | | | $ | (215) | | | $ | 15 | | | $ | 1,138 | | | $ | (120) | | | $ | 808 | |
| | | | | | | | | | | | | | | | | | | | |
| Effective Tax Rate | | 36.0 | % | | | | | | | | | | | | | | | | | | 25.6 | % |
| | | | | | | | | | | | | | | | | | | | |
| Basic EPS | | $ | (2.48) | | | $ | 0.75 | | | $ | 0.06 | | | $ | 1.40 | | | $ | 0.23 | | | $ | (0.94) | | | $ | 0.07 | | | $ | 4.97 | | | $ | (0.52) | | | $ | 3.53 | |
| Diluted EPS | | $ | (2.48) | | | $ | 0.74 | | | $ | 0.06 | | | $ | 1.38 | | | $ | 0.22 | | | $ | (0.92) | | | $ | 0.06 | | | $ | 4.89 | | | $ | (0.52) | | | $ | 3.47 | |
| | | | | | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding for: | | | | | | | | | | | | | | | | | | | | |
| Basic EPS | | 228.99 | | | 228.99 | | | 228.99 | | | 228.99 | | | 228.99 | | | 228.99 | | | 228.99 | | | 228.99 | | | 228.99 | | | 228.99 | |
| Diluted EPS | | 228.99 | | | 232.62 | | | 232.62 | | | 232.62 | | | 232.62 | | | 232.62 | | | 232.62 | | | 232.62 | | | 232.62 | | | 232.62 | |
The above tables serve to reconcile the non-GAAP financial measures to the most directly comparable GAAP measures. Please refer to the “About Non-GAAP Measures” section of the press release for further information on the use of these non-GAAP measures.
Year-over-Year Organic Revenue Growth
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Year 2024 |
| (in millions) | | Q1 FY24 | | Q2 FY24 | | Q3 FY24 | | Q4 FY24 | | FY24 |
| Total revenue growth | | (7.0) | % | | (3.6) | % | | (4.7) | % | | (5.7) | % | | (5.3) | % |
| Foreign currency | | 0.7 | % | | (2.0) | % | | (1.7) | % | | 0.2 | % | | (0.7) | % |
| Acquisition and divestitures | | 2.7 | % | | 2.0 | % | | 1.9 | % | | 0.6 | % | | 1.9 | % |
| Organic revenue growth | | (3.6) | % | | (3.6) | % | | (4.5) | % | | (4.9) | % | | (4.1) | % |
| | | | | | | | | | |
| GBS revenue growth | | (3.1) | % | | (0.2) | % | | (2.4) | % | | (2.2) | % | | (2.0) | % |
| Foreign currency | | 0.8 | % | | (1.6) | % | | (1.4) | % | | 0.6 | % | | (0.4) | % |
| Acquisition and divestitures | | 5.6 | % | | 4.2 | % | | 4.1 | % | | 1.3 | % | | 3.8 | % |
| GBS organic revenue growth | | 3.3 | % | | 2.4 | % | | 0.3 | % | | (0.3) | % | | 1.4 | % |
| | | | | | | | | | |
| GIS revenue growth | | (10.6) | % | | (6.8) | % | | (6.8) | % | | (9.0) | % | | (8.3) | % |
| Foreign currency | | 0.7 | % | | (2.3) | % | | (2.1) | % | | (0.3) | % | | (1.0) | % |
| Acquisition and divestitures | | — | % | | — | % | | — | % | | — | % | | — | % |
| GIS organic revenue growth | | (9.9) | % | | (9.1) | % | | (8.9) | % | | (9.3) | % | | (9.3) | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Year 2023 |
| (in millions) | | Q1 FY23 | | Q2 FY23 | | Q3 FY23 | | Q4 FY23 | | FY23 |
| Total revenue growth | | (10.5) | % | | (11.4) | % | | (12.8) | % | | (10.4) | % | | (11.3) | % |
| Foreign currency | | 5.8 | % | | 7.4 | % | | 6.6 | % | | 3.9 | % | | 6.0 | % |
| Acquisition and divestitures | | 2.1 | % | | 2.5 | % | | 2.4 | % | | 3.6 | % | | 2.6 | % |
| Organic revenue growth | | (2.6) | % | | (1.5) | % | | (3.8) | % | | (2.9) | % | | (2.7) | % |
| | | | | | | | | | |
| GBS revenue growth | | (6.8) | % | | (8.5) | % | | (10.7) | % | | (7.5) | % | | (8.4) | % |
| Foreign currency | | 5.9 | % | | 7.4 | % | | 6.4 | % | | 3.8 | % | | 5.9 | % |
| Acquisition and divestitures | | 3.7 | % | | 4.5 | % | | 4.5 | % | | 7.0 | % | | 4.9 | % |
| GBS organic revenue growth | | 2.8 | % | | 3.4 | % | | 0.2 | % | | 3.3 | % | | 2.4 | % |
| | | | | | | | | | |
| GIS revenue growth | | (13.5) | % | | (14.0) | % | | (14.7) | % | | (13.0) | % | | (13.8) | % |
| Foreign currency | | 5.8 | % | | 7.5 | % | | 6.7 | % | | 4.0 | % | | 6.0 | % |
| Acquisition and divestitures | | 0.5 | % | | 0.7 | % | | 0.6 | % | | 0.5 | % | | 0.6 | % |
| GIS organic revenue growth | | (7.2) | % | | (5.8) | % | | (7.4) | % | | (8.5) | % | | (7.2) | % |
EBIT and Adjusted EBIT
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Year 2024 |
| (in millions) | | Q1 FY24 | | Q2 FY24 | | Q3 FY24 | | Q4 FY24 | | FY24 |
Net income (loss) | | $ | 42 | | | $ | 99 | | | $ | 140 | | | $ | (195) | | | $ | 86 | |
Income tax expense (benefit) | | 36 | | | 29 | | | 72 | | | (114) | | | 23 | |
| Interest income | | (49) | | | (53) | | | (56) | | | (56) | | | (214) | |
| Interest expense | | 66 | | | 78 | | | 78 | | | 76 | | | 298 | |
| EBIT | | 95 | | | 153 | | | 234 | | | (289) | | | 193 | |
| Restructuring costs | | 20 | | | 35 | | | 36 | | | 20 | | | 111 | |
| Transaction, separation and integration-related costs | | 1 | | | 3 | | | 2 | | | 1 | | | 7 | |
| Amortization of acquired intangible assets | | 89 | | | 89 | | | 88 | | | 88 | | | 354 | |
| Merger-related indemnification | | 11 | | | 2 | | | 2 | | | 1 | | | 16 | |
| Gains and losses on disposition of businesses | | 5 | | | (33) | | | (104) | | | 17 | | | (115) | |
| Impairment losses | | 3 | | | 2 | | | — | | | — | | | 5 | |
| Pension and OPEB actuarial and settlement losses | | — | | | — | | | — | | | 445 | | | 445 | |
| Adjusted EBIT | | $ | 224 | | | $ | 251 | | | $ | 258 | | | $ | 283 | | | $ | 1,016 | |
| | | | | | | | | | |
| EBIT margin | | 2.8 | % | | 4.5 | % | | 6.9 | % | | (8.5) | % | | 1.4 | % |
| Adjusted EBIT margin | | 6.5 | % | | 7.3 | % | | 7.6 | % | | 8.4 | % | | 7.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Year 2023 |
| (in millions) | | Q1 FY23 | | Q2 FY23 | | Q3 FY23 | | Q4 FY23 | | FY23 |
Net income (loss) | | $ | 103 | | | $ | 28 | | | $ | 61 | | | $ | (758) | | | $ | (566) | |
Income tax expense (benefit) | | 19 | | | 26 | | | 41 | | | (405) | | | (319) | |
| Interest income | | (20) | | | (28) | | | (41) | | | (46) | | | (135) | |
| Interest expense | | 37 | | | 44 | | | 56 | | | 63 | | | 200 | |
| EBIT | | 139 | | | 70 | | | 117 | | | (1,146) | | | (820) | |
| Restructuring costs | | 33 | | | 53 | | | 49 | | | 81 | | | 216 | |
| Transaction, separation, and integration-related costs | | 2 | | | 4 | | | 6 | | | 4 | | | 16 | |
| Amortization of acquired intangible assets | | 104 | | | 101 | | | 100 | | | 97 | | | 402 | |
| Merger related indemnification | | 10 | | | — | | | 11 | | | 25 | | | 46 | |
| SEC matter | | — | | | 8 | | | — | | | — | | | 8 | |
| Gains and losses on disposition of businesses | | (29) | | | 32 | | | 9 | | | (202) | | | (190) | |
| Arbitration loss | | — | | | — | | | 9 | | | 20 | | | 29 | |
| Pension and OPEB actuarial and settlement losses | | — | | | 1 | | | — | | | 1,430 | | | 1,431 | |
| Impairment losses | | — | | | — | | | 8 | | | 11 | | | 19 | |
| Adjusted EBIT | | $ | 259 | | | $ | 269 | | | $ | 309 | | | $ | 320 | | | $ | 1,157 | |
| | | | | | | | | | |
| EBIT margin | | 3.7 | % | | 2.0 | % | | 3.3 | % | | (31.9) | % | | (5.7) | % |
| Adjusted EBIT margin | | 7.0 | % | | 7.5 | % | | 8.7 | % | | 8.9 | % | | 8.0 | % |
Source: DXC Technology
Category: Investor Relations
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DXC Technology (NYSE:DXC)
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