HP Inc. Reports Fiscal 2019 First Quarter Results

PALO ALTO, Calif., Feb. 27, 2019 (GLOBE NEWSWIRE) -- HP (NYSE: HPQ)

  • First quarter GAAP diluted net earnings per share ("EPS") of $0.51, above the previously provided outlook of $0.46 to $0.49 per share
  • First quarter non-GAAP diluted net EPS of $0.52, within the previously provided outlook of $0.50 to $0.53 per share
  • First quarter net revenue of $14.7 billion, up 1% from the prior-year period
  • First quarter net cash provided by operating activities of $0.9 billion, free cash flow of $0.7 billion
  • First quarter returned $1.0 billion to shareholders in the form of share repurchases and dividends
HP Inc. fiscal 2019 first quarter financial performance
 Q1 FY19 Q1 FY18 Y/Y
GAAP net revenue ($B)$14.7  $14.5  1%
GAAP operating margin6.3% 6.3%  
GAAP net earnings ($B)$0.8  $1.9  (59)%
GAAP diluted net EPS$0.51  $1.16  (56)%
Non-GAAP operating margin6.9% 6.9%  
Non-GAAP net earnings ($B)$0.8  $0.8  1%
Non-GAAP diluted net EPS$0.52  $0.48  8%
Net cash provided by operating activities ($B)$0.9  $1.0  (13)%
Free cash flow ($B)$0.7  $1.0  (31)%

Notes to table
Information about HP Inc.'s use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below.

Net revenue and EPS results
HP Inc. (“HP”) announced fiscal 2019 first quarter net revenue of $14.7 billion, up 1% (up 2% in constant currency) from the prior-year period.

First quarter GAAP diluted net EPS was $0.51, down from $1.16 in the prior-year period and above the previously provided outlook of $0.46 to $0.49. First quarter non-GAAP diluted net EPS was $0.52, up from $0.48 in the prior-year period and within the previously provided outlook of $0.50 to $0.53. First quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $6 million, or $0.01 per diluted share, related to restructuring and other charges, acquisition-related charges, amortization of intangible assets, non-operating retirement-related credits/(charges), and tax adjustments.

“We continued to drive top and bottom line growth in Q1 and are reaffirming our non-GAAP EPS and free cash flow financial outlook for the year,” said Dion Weisler, HP’s President and CEO. “We are benefitting from our market-leading portfolio and accelerating our transformation with momentum in services, solutions and 3D printing as we reinvent HP and position the business for long-term sustainable growth.”

Asset management
HP’s net cash provided by operating activities in the first quarter of fiscal 2019 was $0.9 billion. Accounts receivable ended the quarter at $5.1 billion, up 1-day quarter over quarter to 31 days. Inventory ended the quarter at $5.6 billion, down 1-day quarter over quarter to 42 days. Accounts payable ended the quarter at $14.6 billion, up 3 days quarter over quarter to 108 days.

HP generated $0.7 billion of free cash flow in the first quarter. Free cash flow includes net cash provided by operating activities of $862 million less net investments in and proceeds from the sale of property, plant and equipment of $189 million.

HP’s dividend payment of $0.1602 per share in the first quarter resulted in cash usage of $0.2 billion. HP also utilized $0.7 billion of cash during the quarter to repurchase approximately 32.4 million shares of common stock in the open market.  As a result, HP returned 144% of its first quarter free cash flow to shareholders. HP exited the quarter with $3.8 billion in gross cash, which includes cash and cash equivalents and short-term investments of $0.4 billion included in other current assets.

Fiscal 2019 first quarter segment results

  • Personal Systems net revenue was up 2% year over year (up 3% in constant currency) with a 4.2% operating margin. Commercial net revenue increased 3% and Consumer net revenue increased 1%. Total units were down 3% with Notebooks units down 1% and Desktops units down 8%.
  • Printing net revenue was mostly flat year over year (down 0.7% in constant currency) with a 16.2% operating margin. Total hardware units were up 3% with Commercial hardware units up 4% and Consumer hardware units up 2%. Supplies net revenue was down 3% (down 3% in constant currency).

Outlook
For the fiscal 2019 second quarter, HP estimates GAAP diluted net EPS to be in the range of $0.45 to $0.48 and non-GAAP diluted net EPS to be in the range of $0.50 to $0.53. Fiscal 2019 second quarter non-GAAP diluted net EPS estimates exclude $0.05 per diluted share, primarily related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related credits/(charges), tax adjustments and the related tax impact on these items.

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