- Estimates FY20 non-GAAP diluted net earnings per share outlook
of $1.78-$1.94, up 7% year-over-year at the mid-point
- Estimates FY20 GAAP diluted net earnings per share outlook of
$1.01-$1.17, up 63% year-over-year at the mid-point
- Expects FY20 free cash flow of $1.9 billion to $2.1 billion as
announced at the 2018 Securities Analyst Meeting, an increase of
approximately 82% from FY18 at the mid-point
- Increases quarterly dividend to $0.12 per share
Hewlett Packard Enterprise (NYSE: HPE) today held its annual
Securities Analyst Meeting and provided strategy and financial
updates from president and CEO Antonio Neri and executive vice
president and chief financial officer Tarek Robbiati. The webcast
and presentations can be found on the HPE Investor Relations
Website: hpe.com/investor/SAM2019.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20191023005721/en/
HPE Securities Analyst Meeting
Infographic (Graphic: Business Wire)
HPE Strategy & Market Opportunity
Neri discussed HPE’s performance, as well as the company’s
vision, strategy and outlook.
“Over the past year, HPE has improved profitability across the
company and generated record levels of free cash flow by sharpening
our focus and strategically investing in higher value,
software-defined solutions,” said Neri. “This hard work has laid
the foundation for the next phase of our journey, which will be
marked by a strategic pivot to offering everything as-a-Service to
drive sustainable, profitable growth.”
The opportunity is edge to cloud as-a-Service
Today, apps and data live everywhere – in the cloud, on- and
off-premises, and increasingly at the edge. In this environment,
companies are accelerating digital transformation to create new and
compelling experiences for their customers and employees, but they
also face challenges including: an inconsistent experience between
the data center, private and public clouds; inflexible, expensive,
and proprietary stacks that prohibit choice; and limited in-house
IT skills, budgets, and options for financing.
Anticipating customer needs, HPE has taken very deliberate steps
to pivot its portfolio to innovative software-defined solutions and
services and is uniquely positioned to address the full scope of
customers’ needs from edge to cloud. Moreover, building on over a
decade of leadership in delivering IT as-a-Service through HPE
GreenLake, HPE committed at its annual Discover 2019 conference to
offer its entire HPE portfolio as-a-Service by fiscal year 2022,
giving customers full flexibility and choice in how they consume
IT.
“HPE is a focused company with incredible talent and great
momentum. I am more confident than ever in our ability to deliver a
very differentiated experience for our customers, which we believe
will drive long-term profitable growth over the next three years
and provide strong returns for our shareholders,” concluded
Neri.
Financial Update
Tarek Robbiati, executive vice president and CFO, provided a
financial update, including an outlook for FY20.
“HPE has a unique portfolio of assets and is well-positioned to
redefine the edge-to-cloud experience and industry model,” said
Robbiati. “We are capitalizing on customer demand for
consumption-based IT solutions by committing to offer our entire
portfolio as-a-Service by fiscal year 2022, which will help us
drive sustainable profitable growth.”
FY19 Expectations
As previously disclosed in HPE’s third quarter earnings call,
non-GAAP diluted net EPS is expected to be approximately $1.72 to
$1.76, and GAAP diluted net EPS is expected to be approximately
$0.65 to $0.69.
FY20 Outlook
HPE provided its outlook for FY20. The company expects net
revenue growth when adjusted for currency fluctuations.
HPE expects its non-GAAP operating profit growth to be
approximately 4-6% year-over-year, Other Income & Expense of
approximately $100 million of an expense, a non-GAAP tax rate of
12% and a share count of approximately 1.3 billion shares
outstanding.
HPE expects non-GAAP diluted net EPS of $1.78 to $1.94, up 7%
year-over-year at the mid-point and GAAP diluted net EPS to be
approximately $1.01 to $1.17, up 63% year-over-year at the
mid-point.
Free cash flow is expected to be $1.9 billion to $2.1 billion as
announced at the 2018 Securities Analyst Meeting, an increase of
approximately 82% from FY18 at the mid-point.
Given HPE’s strong balance sheet today and the underlying
strength of its free cash flow engine, HPE is committed to
returning 50-75% of free cash flow to shareholders in FY20,
consisting of share repurchases and dividends.
Dividend Increase
HPE announced it is increasing its quarterly dividend to $0.12
per share.
Long-Term Financial Profile
HPE provided its long-term financial model for FY19-FY22. The
company expects compounded annual revenue growth rate of 1-3%
adjusted for currency driven by Edge, Storage, High Performance
Compute & Mission Critical Systems and related services.
The company expects continued improvements in gross margins
through structural efficiencies and favorable product mix. The
company expects compounded annual non-GAAP operating profit growth
rate of 5-7% driven by investments in key growth areas and
optimized operating model.
Non-GAAP diluted net EPS is expected to grow at a higher
compounded annual growth rate of 7-9% with long-term free cash flow
to track earnings.
The company expects capital distributions to shareholders to be
between 50-75% of free cash flow over the long-term, with
valuation-based share repurchases and balanced annual dividend
distributions.
Webcast details
A webcast of today’s event, along with management presentations
and other materials, are available on the Investor Relations
website at investors.hpe.com.
This press release contains only a summary of some of the
information presented at today’s event and should be read in
conjunction with the management presentations and other materials
made available on that website.
About Hewlett Packard Enterprise
Hewlett Packard Enterprise is a global technology leader focused
on developing intelligent solutions that allow customers to
capture, analyze, and act upon data seamlessly from edge to cloud.
HPE enables customers to accelerate business outcomes by driving
new business models, creating new customer and employee
experiences, and increasing operational efficiency today and into
the future.
Use of non-GAAP financial information
To supplement Hewlett Packard Enterprise’s financial information
presented on a generally accepted accounting principles (GAAP)
basis, Hewlett Packard Enterprise provides forecasts of revenue
adjusted for currency, as well as non-GAAP operating profit,
non-GAAP operating margin, non-GAAP measure of earnings/loss from
equity interests, non-GAAP income tax rate, non-GAAP diluted net
earnings per share, free cash flow financial measures.
Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures, where available, are
included in the slides presented at the 2019 Securities Analyst
Meeting, which will be available for a period of one year
thereafter at http://hpe.com/investor/sam2019. Hewlett Packard
Enterprise provides certain guidance on a non-GAAP basis, as the
company cannot predict some elements that are included in reported
GAAP results. Refer to the discussion of non-GAAP financial
measures below for more information. In addition, an explanation of
the ways in which Hewlett Packard Enterprise’s management uses
these non-GAAP measures to evaluate its business, the substance
behind Hewlett Packard Enterprise’s decision to use these non-GAAP
measures, the material limitations associated with the use of these
non-GAAP measures, the manner in which Hewlett Packard Enterprise’s
management compensates for those limitations, and the substantive
reasons why Hewlett Packard Enterprise’s management believes that
these non-GAAP measures provide useful information to investors is
included under “Use and economic substance of non-GAAP financial
measures used by Hewlett Packard Enterprise” below. This additional
non-GAAP financial information is not meant to be considered in
isolation or as a substitute for revenue, operating margin, diluted
net earnings per share, cash flow from operations in accordance
with GAAP.
Use and economic substance of non-GAAP financial measures
used by Hewlett Packard Enterprise
Hewlett Packard Enterprise’s management uses these non-GAAP
financial measures for purposes of evaluating Hewlett Packard
Enterprise’s historical and prospective financial performance, as
well as Hewlett Packard Enterprise’s performance relative to its
competitors. Hewlett Packard Enterprise’s management also uses
these non-GAAP measures to further its own understanding of Hewlett
Packard Enterprise’s segment operating performance. Hewlett Packard
Enterprise believes that excluding the items mentioned above from
these non-GAAP financial measures allows Hewlett Packard
Enterprise’s management to better understand Hewlett Packard
Enterprise’s consolidated financial performance in relation to the
operating results of Hewlett Packard Enterprise’s segments, as
Hewlett Packard Enterprise’s management does not believe that the
excluded items are reflective of ongoing operating results.
Material limitations associated with use of non-GAAP
financial measures
These non-GAAP financial measures have limitations as analytical
tools, and these measures should not be considered in isolation or
as a substitute for analysis of Hewlett Packard Enterprise’s
results as reported under GAAP.
Compensation for limitations associated with use of non-GAAP
financial measures
Hewlett Packard Enterprise compensates for the limitations on
its use of non-GAAP financial measures by relying primarily on its
GAAP results and using non-GAAP financial measures only as
supplement. Hewlett Packard Enterprise also provides a
reconciliation of certain non-GAAP financial measures to its most
directly comparable GAAP measure in other written materials that
include these non-GAAP financial measures accompanying this news
release, and Hewlett Packard Enterprise encourages investors to
review carefully those reconciliations.
Usefulness of non-GAAP financial measures to
investors
Hewlett Packard Enterprise believes that providing forecasts of
revenue adjusted for currency, non-GAAP operating profit, non-GAAP
operating margin, non-GAAP measure of earnings/loss from equity
interests, non-GAAP income tax rate, non-GAAP diluted net earnings
per share, free cash flow financial measures to investors in
addition to certain related GAAP measures provides investors with
greater transparency to the information used by Hewlett Packard
Enterprise’s management in its financial and operational decision
making and allows investors to see Hewlett Packard Enterprise’s
results “through the eyes” of management. Hewlett Packard
Enterprise further believes that providing this information better
enables Hewlett Packard Enterprise’s investors to understand
Hewlett Packard Enterprise’s operating performance and to evaluate
the efficacy of the methodology and information used by Hewlett
Packard Enterprise’s management to evaluate and measure such
performance. Disclosure of these non-GAAP financial measures also
facilitates comparisons of Hewlett Packard Enterprise’s operating
performance with the performance of other companies in Hewlett
Packard Enterprise’s industry that supplement their GAAP results
with non-GAAP financial measures that may be calculated in a
similar manner.
Forward-looking statements
This press release 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 may differ materially
from those expressed or implied by such forward-looking statements
and assumptions. All statements other than statements of historical
fact are statements that could be deemed forward-looking
statements, including but not limited to any projections of
revenue, margins, expenses, effective tax rates, the impact of the
U.S. Tax Cuts and Jobs Act of 2017, net earnings, net earnings per
share, cash flows, benefit plan funding, deferred tax assets, share
repurchases, currency exchange rates or other financial items; any
projections of the amount, timing or impact of cost savings or
restructuring charges; any statements of the plans, strategies and
objectives of management for future operations, as well as the
execution of corporate transactions or contemplated acquisitions,
transformation and restructuring plans and any resulting benefit,
cost savings, revenue or profitability improvements; any statements
concerning the expected development, performance, market share or
competitive performance relating to products or services; any
statements regarding current or future macroeconomic trends or
events and the impact of those trends and events on Hewlett Packard
Enterprise and its financial performance; any statements regarding
pending investigations, claims or disputes; any statements of
expectation or belief; and any statements or assumptions underlying
any of the foregoing.
Risks, uncertainties and assumptions include the need to address
the many challenges facing Hewlett Packard Enterprise’s businesses;
the competitive pressures faced by Hewlett Packard Enterprise’s
businesses; risks associated with executing Hewlett Packard
Enterprise’s strategy; the impact of macroeconomic and geopolitical
trends and events; the need to manage third-party suppliers and the
distribution of Hewlett Packard Enterprise’s products and the
delivery of Hewlett Packard Enterprise’s services effectively; the
protection of Hewlett Packard Enterprise’s intellectual property
assets, including intellectual property licensed from third parties
and intellectual property shared with its former Parent; risks
associated with Hewlett Packard Enterprise’s international
operations; the development and transition of new products and
services and the enhancement of existing products and services to
meet customer needs and respond to emerging technological trends;
the execution and performance of contracts by Hewlett Packard
Enterprise and its suppliers, customers, clients and partners; the
hiring and retention of key employees; execution, integration and
other risks associated with business combination and investment
transactions; and the execution, timing and results of any
transformation or restructuring plans, including estimates and
assumptions related to the cost (including any possible disruption
of Hewlett Packard Enterprise's business) and the anticipated
benefits of implementing the transformation and restructuring
plans; the effects of the U.S. Tax Cuts and Jobs Act and related
guidance and regulations; the resolution of pending investigations,
claims and disputes; and other risks that are described in Hewlett
Packard Enterprise’s Annual Report on Form 10-K for the fiscal year
ended October 31, 2018 and subsequent quarterly reports on Form
10-Q.
As in prior periods, the financial information set forth in this
press release, including tax-related items, reflects estimates
based on information available at this time. While Hewlett Packard
Enterprise believes these estimates to be reasonable, these amounts
could differ materially from reported amounts in the Hewlett
Packard Enterprise Annual Report on Form 10-K for the fiscal year
ended October 31, 2019, as well as in future quarterly and annual
reports. Hewlett Packard Enterprise assumes no obligation and does
not intend to update these forward-looking statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191023005721/en/
Editorial contact:
Stefanie Notaney, HPE stefanie.notaney@hpe.com
Investor relations contact:
Andrew Simanek, HPE investor.relations@hpe.com
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