- Revenues of $3.40 billion, down 4.7% as compared to prior year,
and down 4.5% on an organic basis
- Diluted earnings per share was $0.81 vs. $0.25 in the prior
year quarter. Non-GAAP diluted earnings per share was $0.87 vs.
$0.95 in the prior year quarter
- Q3 FY24 operating cash flow of $706 million, less capital
expenditures of $121 million, results in $585 million of free cash
flow
- Book-to-bill ratio of 0.99x and trailing twelve-month
book-to-bill of 0.93x
- Returned $252 million to shareholders through share buyback in
Q3 FY24, reducing DXC shares outstanding by 5.8%. In the past three
years, DXC has repurchased over 30% of its outstanding shares
DXC Technology (NYSE: DXC) today reported results for the third
quarter of fiscal year 2024.
Raul Fernandez, Chief Executive Officer commented: “I am pleased
to report that DXC delivered strong performance in the third
quarter of fiscal '24. We achieved or exceeded our third quarter
organic revenue, adjusted EBIT and non-GAAP EPS guidance and
delivered $585 million of free cash flow in the quarter. The team
is focused on building on this progress as we evolve the operating
model to strengthen our go-to-market presence across the offerings.
We are committed to continuing the strategy and capital allocation
program that we have previously outlined. DXC has an abundance of
world class mission critical and digital solutions, deployed and
operating every day around the world. I am fully convinced that
this rich combination of talent and capabilities will enable DXC to
compete and win in the marketplace, and drive significant value for
our colleagues, customers and shareholders."
Financial Highlights(1)
Q3 FY24
Q3 FY23
Revenue
$
3,399
$
3,566
YoY Revenue Growth
(4.7
)%
(12.8
)%
YoY Organic Revenue Growth(2)
(4.5
)%
(3.8
)%
Net Income
$
140
$
61
Net Income as a % of Sales
4.1
%
1.7
%
EBIT(2)
$
234
$
117
EBIT Margin %(2)
6.9
%
3.3
%
Adjusted EBIT(2)
$
258
$
309
Adjusted EBIT Margin %(2)
7.6
%
8.7
%
Earnings Per Share (Diluted)
$
0.81
$
0.25
Non-GAAP EPS (Diluted)(2)
$
0.87
$
0.95
Book-to-Bill (TTM)
0.93x
1.06x
Book-to-Bill
0.99x
1.34x
(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 - Third Quarter of Fiscal Year
2024
Revenue was $3.40 billion for the third quarter of fiscal year
2024, down 4.7% as compared to prior year period, and down 4.5% on
an organic basis. Third quarter organic revenue growth came in at
the midpoint of DXC's guidance range.
Net income was $140 million, or 4.1% of sales for the third
quarter of fiscal year 2024, compared to $61 million, or 1.7% of
sales, in the prior year quarter. Net income was higher due to
increased gains on the sale of businesses, lower depreciation and
amortization and lower restructuring costs. EBIT was $234 million
or 6.9% of sales. Net income and EBIT in the quarter included the
following items: amortization of acquired intangible assets of $88
million, restructuring costs of $36 million, net gains on
dispositions of $104 million, merger related indemnification
charges of $2 million, and transaction, separation, and integration
costs of $2 million. Excluding these items, adjusted EBIT was $258
million and adjusted EBIT margin was 7.6% in the third quarter of
fiscal year 2024, above the Company’s guidance range. Adjusted EBIT
was $51 million below the prior year quarter, mainly driven by $18
million lower non-cash pension income, $9 million expense related
to executive separation costs, and lower gains on asset sales of
$14 million ($14 million gain on asset sales in Q3 FY24 vs. $28
million in Q3 FY23).
Diluted earnings per share was $0.81 and non-GAAP diluted
earnings per share was $0.87 for the third quarter of fiscal year
2024.
During the third quarter of fiscal year 2024, the Company
repurchased 11 million shares of common stock for a total of $252
million. DXC has retired over 30% of its shares outstanding since
the start of fiscal year 2022.
Financial Information by Segment
Global Business Services
("GBS")(1)
Q3 FY24
Q3 FY23
Revenue
$
1,696
$
1,738
YoY Revenue Growth
(2.4
)%
(10.7
)%
YoY Organic Revenue Growth(2)
0.3
%
0.2
%
Segment Profit
$
202
$
244
Segment Profit Margin
11.9
%
14.0
%
Book-to-Bill (TTM)
0.97x
1.16x
Book-to-Bill
1.26x
1.21x
(1)
In millions
(2)
Reconciliation of GAAP to Non-GAAP
measures provided in Non-GAAP Results.
GBS segment revenue was $1,696 million in the third quarter of
fiscal year 2024, down 2.4% compared to the prior year period and
up 0.3% on an organic basis. The GBS organic growth was driven by
continued growth in the Analytics & Engineering and Insurance
offerings. GBS segment profit was $202 million and segment profit
margin was 11.9%, down 210 bps compared to prior year. GBS bookings
for the quarter were $2.1 billion for a book-to-bill of 1.26x, and
0.97x on a trailing twelve months basis.
Global Infrastructure Services
("GIS")(1)
Q3 FY24
Q3 FY23
Revenue
$
1,703
$
1,828
YoY Revenue Growth
(6.8
)%
(14.7
)%
YoY Organic Revenue Growth(2)
(8.9
)%
(7.4
)%
Segment Profit
$
121
$
123
Segment Profit Margin
7.1
%
6.7
%
Book-to-Bill (TTM)
0.90x
0.97x
Book-to-Bill
0.73x
1.46x
(1)
In millions
(2)
Reconciliation of GAAP to Non-GAAP
measures provided in Non-GAAP Results.
GIS segment revenue was $1,703 million in the third quarter of
fiscal year 2024, down 6.8% compared to the prior year period, and
down 8.9% on an organic basis. GIS segment revenue performance was
impacted by organic revenue declines in Cloud Infrastructure &
ITO, and in Modern Workplace. GIS segment profit was $121 million
with a segment profit margin of 7.1%, up 40 bps as compared to
prior year. GIS bookings were $1.3 billion in the quarter for a
book-to-bill of 0.73x, and 0.90x on a trailing twelve months
basis.
Offering Highlights
The results for our six offerings are as follows:
Offerings Revenues
Q3 FY24
Q2 FY24
Q1 FY24
Q4 FY23
Q3 FY23
Analytics and Engineering
$
555
$
561
$
546
$
558
$
535
Applications
759
762
770
780
762
Insurance Software & BPS
382
386
382
390
371
Security
109
109
111
113
112
Cloud Infrastructure & ITO
1,168
1,209
1,209
1,270
1,283
Modern Workplace
426
409
423
457
433
Subtotal
3,399
3,436
3,441
3,568
3,496
M&A and Divestitures
Revenues
—
—
5
23
70
Total Revenues
$
3,399
$
3,436
$
3,446
$
3,591
$
3,566
Cash Flow
Cash Flow
Q3 FY24
Q3 FY23
Cash Flow from Operations
$
706
$
625
Less Capital Expenditures:
Purchase of Property and Equipment
(36
)
(66
)
Transition and Transformation Contract
Costs
(49
)
(52
)
Software Purchased or Developed
(36
)
(44
)
Free Cash Flow
$
585
$
463
Cash flow from operations was $706 million in the third quarter
of fiscal year 2024, as compared to $625 million in the third
quarter of fiscal year 2023, and capital expenditures were $121
million in the third quarter of fiscal year 2024, as compared to
$162 million in the third quarter of fiscal year 2023. Free cash
flow (cash flow from operations, less capital expenditures) was
$585 million in the third quarter of fiscal year 2024, as compared
to $463 million in the third quarter of fiscal year 2023. During
the quarter, DXC also realized $36 million in cash from the sale of
assets and businesses.
Guidance
The Company's guidance for the fourth quarter and full fiscal
year 2024 is presented in the table below. The full year guidance
has been reduced, for organic revenue growth to a range of (4.5)% -
(4.3)%, adjusted EBIT margin to 7.1% - 7.2%, and non-GAAP diluted
EPS to $3.00 to $3.05. We are maintaining FY24 free cash flow
guidance of $800 million.
Key Metrics
Q4 FY24 Guidance
FY24 Guidance
Lower End
Higher End
Lower End
Higher End
Organic Revenue Growth %
(6.5)%
(5.5)%
(4.5)%
(4.3)%
Adjusted EBIT Margin
7.0%
7.5%
7.1%
7.2%
Non-GAAP Diluted EPS
$0.80
$0.85
$3.00
$3.05
Free Cash Flow
$800
Revenue
Revenue $
$3,350
$3,390
$13,630
$13,670
Acquisition & Divestitures Revenues
%
(0.7)%
(1.8)%
Foreign Exchange Impact on Revenues %
0.5%
0.9%
Others
Pension Income Benefit*
~$20
~$87
Net Interest Expense
~$26
~$90
Non-GAAP Tax Rate
~30%
~34%
Weighted Average Diluted Shares
Outstanding
180
183
~197
Restructuring & TSI Expense
~$125
Capital Lease / Asset Financing
Payments
~$440
Foreign Exchange Assumptions
Current Estimate
Current Estimate
$/Euro Exchange Rate
$1.09
$1.09
$/GBP Exchange Rate
$1.27
$1.26
$/AUD Exchange Rate
$0.67
$0.66
*Pension benefit is split between Cost Of Sales (COS) & Other
Income:
Fiscal year 2024: Net pension
benefit of $80 million; $65 million service cost in COS, $145
million pension benefit in Other income
Fiscal year 2023: Net pension
benefit of $178 million; $73 million service cost in COS, $251
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 February 1, 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
February 8, 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. Furthermore,
many of these risks and uncertainties are currently amplified by
and may continue to be amplified by or may, in the future, be
amplified by, the on-going coronavirus disease 2019 (“COVID-19”)
pandemic and the impact of varying private and governmental
responses that affect our customers, employees, vendors and the
economies and communities where they operate. 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 or damage to our reputation resulting from
security incidents, including breaches, and cyber-attacks to our
systems and networks and those of our business partners, insider
threats, disclosure of sensitive data or failure to comply with
data protection laws and regulations in a rapidly evolving
regulatory environment; in each case, whether deliberate or
accidental; 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 and the conflict between Israel
and Hamas; failure to maintain our credit rating and ability to
manage working capital, refinance and raise additional capital for
future needs; public health crises such as the COVID-19 pandemic;
our indebtedness; the competitive pressures faced by our business;
our inability to accurately estimate the cost of services, and the
completion timeline of contracts; execution risks by us and our
suppliers, customers, and partners; 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 retain and
hire 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 success of 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; inadvertent infringement of third-party
intellectual property rights or our inability to protect our own
intellectual property assets; 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”), which was acquired by Peraton in
May 2021 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
Quarterly Report on Form 10-Q for the quarterly period ended
December 31, 2023.
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, 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, impairment losses,
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.
Condensed Consolidated Statements of
Operations
(preliminary and unaudited)
Three Months Ended
Nine Months Ended
(in millions, except per-share
amounts)
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Revenues
$
3,399
$
3,566
$
10,281
$
10,839
Costs of services
2,636
2,799
7,988
8,504
Selling, general and administrative
294
315
949
988
Depreciation and amortization
350
375
1,055
1,144
Restructuring costs
36
49
91
135
Interest expense
78
56
222
137
Interest income
(56
)
(41
)
(158
)
(89
)
(Gain) loss on disposition of
businesses
(103
)
9
(96
)
12
Other income, net
(48
)
(98
)
(188
)
(270
)
Total costs and expenses
3,187
3,464
9,863
10,561
Income before income taxes
212
102
418
278
Income tax expense
72
41
137
86
Net income
140
61
281
192
Less: net (loss) income attributable to
non-controlling interest, net of tax
(16
)
2
(10
)
4
Net income attributable to DXC common
stockholders
$
156
$
59
$
291
$
188
Income per common share:
Basic
$
0.82
$
0.26
$
1.45
$
0.82
Diluted
$
0.81
$
0.25
$
1.43
$
0.80
Weighted average common shares outstanding
for:
Basic EPS
190.31
229.54
200.68
230.65
Diluted EPS
191.93
233.00
203.55
234.38
Selected Condensed Consolidated Balance
Sheet Data
(preliminary and unaudited)
As of
(in millions)
December 31, 2023
March 31, 2023
Assets
Cash and cash equivalents
1,691
$
1,858
Receivables, net
3,132
3,441
Prepaid expenses
555
565
Other current assets
153
255
Assets held for sale
—
5
Total current assets
5,531
6,124
Intangible assets, net
2,314
2,569
Operating right-of-use assets, net
784
909
Goodwill
541
539
Deferred income taxes, net
622
460
Property and equipment, net
1,780
1,979
Other assets
3,318
3,247
Assets held for sale - non-current
2
18
Total Assets
$
14,892
$
15,845
Liabilities
Short-term debt and current maturities of
long-term debt
$
661
$
500
Accounts payable
870
782
Accrued payroll and related costs
552
569
Current operating lease liabilities
295
317
Accrued expenses and other current
liabilities
1,596
1,836
Deferred revenue and advance contract
payments
846
1,054
Income taxes payable
141
120
Liabilities related to assets held for
sale
—
9
Total current liabilities
4,961
5,187
Long-term debt, net of current
maturities
3,880
3,900
Non-current deferred revenue
698
788
Non-current operating lease
liabilities
542
648
Non-current income tax liabilities and
deferred tax liabilities
564
587
Other long-term liabilities
881
912
Liabilities related to assets held for
sale - non-current
—
3
Total Liabilities
11,526
12,025
Total Equity
3,366
3,820
Total Liabilities and Equity
$
14,892
$
15,845
Condensed Consolidated Statements of
Cash Flows
(preliminary and unaudited)
Nine Months Ended
(in millions)
December 31, 2023
December 31, 2022
Cash flows from operating activities:
Net income
$
281
$
192
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
1,076
1,169
Operating right-of-use expense
269
311
Share-based compensation
75
81
Deferred taxes
(159
)
(170
)
Gain on dispositions
(153
)
(43
)
Unrealized foreign currency exchange
loss
48
80
Impairment losses and contract
write-offs
17
31
Other non-cash charges, net
3
(3
)
Changes in assets and liabilities, net of
effects of acquisitions and dispositions:
Decrease in assets
431
84
Decrease in operating lease liability
(269
)
(311
)
Decrease in other liabilities
(538
)
(421
)
Net cash provided by operating
activities
1,081
1,000
Cash flows from investing activities:
Purchases of property and equipment
(144
)
(212
)
Payments for transition and transformation
contract costs
(159
)
(166
)
Software purchased and developed
(177
)
(154
)
Business dispositions
31
52
Proceeds from sale of assets
70
165
Other investing activities, net
12
16
Net cash used in investing activities
(367
)
(299
)
Cash flows from financing activities:
Borrowings of commercial paper
1,536
1,363
Repayments of commercial paper
(1,281
)
(1,312
)
Payments on finance leases and borrowings
for asset financing
(333
)
(399
)
Proceeds from stock options and other
common stock transactions
—
1
Taxes paid related to net share
settlements of share-based compensation awards
(34
)
(15
)
Repurchase of common stock
(755
)
(325
)
Other financing activities, net
(10
)
(6
)
Net cash used in financing activities
(877
)
(693
)
Effect of exchange rate changes on cash
and cash equivalents
(4
)
(95
)
Net decrease in cash and cash equivalents
including cash classified within current assets held for sale
(167
)
(87
)
Cash classified within current assets held
for sale
—
(494
)
Net decrease in cash and cash
equivalents
(167
)
(581
)
Cash and cash equivalents at beginning of
year
1,858
2,672
Cash and cash equivalents at end of
period
$
1,691
$
2,091
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
Nine Months Ended
(in millions)
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
GBS profit
$
202
$
244
$
607
$
672
GIS profit
121
123
313
364
All other loss
(65
)
(58
)
(187
)
(199
)
Subtotal
$
258
$
309
$
733
$
837
Interest income
56
41
158
89
Interest expense
(78
)
(56
)
(222
)
(137
)
Restructuring costs
(36
)
(49
)
(91
)
(135
)
Transaction, separation and
integration-related costs
(2
)
(6
)
(6
)
(12
)
Amortization of acquired intangible
assets
(88
)
(100
)
(266
)
(305
)
Merger related indemnification
(2
)
(11
)
(15
)
(21
)
SEC Matter
—
—
—
(8
)
Gains (losses) on dispositions
104
(9
)
132
(12
)
Arbitration loss
—
(9
)
—
(9
)
Impairment losses
—
(8
)
(5
)
(8
)
Pension and OPEB actuarial and settlement
losses
—
—
—
(1
)
Income before income taxes
$
212
$
102
$
418
$
278
Segment profit margins
GBS
11.9
%
14.0
%
11.9
%
12.9
%
GIS
7.1
%
6.7
%
6.1
%
6.5
%
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 a tax related indemnification; and in fiscal 2023,
represents the Company’s then current estimate of potential
liability to HPE for 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 a loss arising from an arbitration
decision in the third quarter 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 the impact of merger and divestitures. Income
tax expense of all other (non-discrete) non-GAAP adjustments is
based on the difference in the GAAP annual effective tax rate
(AETR) and overall non-GAAP provision (consistent with the GAAP
methodology).
(1)
During the first nine months of 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 $132 million.
During the first nine months of fiscal 2023, the Company sold
insignificant businesses that resulted in a net loss of $12
million.
(2)
Impairment losses on dispositions for the
first nine months of fiscal 2024 include $5 million of charges
associated with certain strategic investments accounted for within
Other income, net. Impairment losses on dispositions for the first
nine months of fiscal 2024 included $4 million of Net income
attributable to non-controlling interest, net of tax.
Non-GAAP
Results
A reconciliation of reported results to
non-GAAP results is as follows:
Three Months Ended December
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
Gains and Losses on
Dispositions
Tax Adjustment
Non-GAAP
Results
Income before income taxes
$
212
$
36
$
2
$
88
$
2
$
(104
)
$
—
$
236
Income tax expense
72
5
—
13
—
(10
)
5
85
Net income
140
31
2
75
2
(94
)
(5
)
151
Less: net loss attributable to
non-controlling interest, net of tax
(16
)
—
—
—
—
—
—
(16
)
Net income attributable to DXC common
stockholders
$
156
$
31
$
2
$
75
$
2
$
(94
)
$
(5
)
$
167
Effective Tax Rate
34.0
%
36.0
%
Basic EPS
$
0.82
$
0.16
$
0.01
$
0.39
$
0.01
$
(0.49
)
$
(0.03
)
$
0.88
Diluted EPS
$
0.81
$
0.16
$
0.01
$
0.39
$
0.01
$
(0.49
)
$
(0.03
)
$
0.87
Weighted average common shares outstanding
for:
Basic EPS
190.31
190.31
190.31
190.31
190.31
190.31
190.31
190.31
Diluted EPS
191.93
191.93
191.93
191.93
191.93
191.93
191.93
191.93
Nine Months Ended December 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
Gains and Losses on
Dispositions
Impairment Losses
Tax Adjustment
Non-GAAP
Results
Income before income taxes
$
418
$
91
$
6
$
266
$
15
$
(132
)
$
5
$
—
$
669
Income tax expense
137
18
1
53
12
(20
)
1
37
239
Net income
281
73
5
213
3
(112
)
4
(37
)
430
Less: net loss attributable to
non-controlling interest, net of tax
(10
)
—
—
—
—
—
(4
)
—
(14
)
Net income attributable to DXC common
stockholders
$
291
$
73
$
5
$
213
$
3
$
(112
)
$
8
$
(37
)
$
444
Effective Tax Rate
32.8
%
35.7
%
Basic EPS
$
1.45
$
0.36
$
0.02
$
1.06
$
0.01
$
(0.56
)
$
0.04
$
(0.18
)
$
2.21
Diluted EPS
$
1.43
$
0.36
$
0.02
$
1.05
$
0.01
$
(0.55
)
$
0.04
$
(0.18
)
$
2.18
Weighted average common shares outstanding
for:
Basic EPS
200.68
200.68
200.68
200.68
200.68
200.68
200.68
200.68
200.68
Diluted EPS
203.55
203.55
203.55
203.55
203.55
203.55
203.55
203.55
203.55
Three Months Ended December
31, 2022
(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
Impairment Losses
Non-GAAP
Results
Income before income taxes
$
102
$
49
$
6
$
100
$
20
$
9
$
8
$
294
Income tax expense
41
10
1
20
4
(7
)
1
70
Net income
61
39
5
80
16
16
7
224
Less: net income attributable to
non-controlling interest, net of tax
2
—
—
—
—
—
—
2
Net income attributable to DXC common
stockholders
$
59
$
39
$
5
$
80
$
16
$
16
$
7
$
222
Effective Tax Rate
40.2
%
23.8
%
Basic EPS
$
0.26
$
0.17
$
0.02
$
0.35
$
0.07
$
0.07
$
0.03
$
0.97
Diluted EPS
$
0.25
$
0.17
$
0.02
$
0.34
$
0.07
$
0.07
$
0.03
$
0.95
Weighted average common shares outstanding
for:
Basic EPS
229.54
229.54
229.54
229.54
229.54
229.54
229.54
229.54
Diluted EPS
233.00
233.00
233.00
233.00
233.00
233.00
233.00
233.00
Nine Months Ended December 31,
2022
(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
Non-GAAP
Results
Income before income taxes
$
278
$
135
$
12
$
305
$
38
$
12
$
8
$
1
$
789
Income tax expense
86
28
2
62
7
24
1
—
210
Net income
192
107
10
243
31
(12
)
7
1
579
Less: net income attributable to
non-controlling interest, net of tax
4
—
—
—
—
—
—
—
4
Net income attributable to DXC common
stockholders
$
188
$
107
$
10
$
243
$
31
$
(12
)
$
7
$
1
$
575
Effective Tax Rate
30.9
%
26.6
%
Basic EPS
$
0.82
$
0.46
$
0.04
$
1.05
$
0.13
$
(0.05
)
$
0.03
$
0.00
$
2.49
Diluted EPS
$
0.80
$
0.46
$
0.04
$
1.04
$
0.13
$
(0.05
)
$
0.03
$
0.00
$
2.45
Weighted average common shares outstanding
for:
Basic EPS
230.65
230.65
230.65
230.65
230.65
230.65
230.65
230.65
230.65
Diluted EPS
234.38
234.38
234.38
234.38
234.38
234.38
234.38
234.38
234.38
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
Three Months Ended
Nine Months Ended
(in millions)
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Total revenue growth
(4.7
)%
(12.8
)%
(5.1
)%
(11.6
)%
Foreign currency
(1.7
)%
6.6
%
(1.0
)%
6.6
%
Acquisition and divestitures
1.9
%
2.4
%
2.2
%
2.4
%
Organic revenue growth
(4.5
)%
(3.8
)%
(3.9
)%
(2.6
)%
GBS revenue growth
(2.4
)%
(10.7
)%
(1.9
)%
(8.7
)%
Foreign currency
(1.4
)%
6.4
%
(0.7
)%
6.6
%
Acquisition and divestitures
4.1
%
4.5
%
4.6
%
4.2
%
GBS organic revenue growth
0.3
%
0.2
%
2.0
%
2.1
%
GIS revenue growth
(6.8
)%
(14.7
)%
(8.1
)%
(14.1
)%
Foreign currency
(2.1
)%
6.7
%
(1.2
)%
6.7
%
Acquisition and divestitures
—
%
0.6
%
—
%
0.6
%
GIS organic revenue growth
(8.9
)%
(7.4
)%
(9.3
)%
(6.8
)%
EBIT and Adjusted
EBIT
Three Months Ended
Nine Months Ended
(in millions)
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 022
Net income
$
140
$
61
$
281
$
192
Income tax expense
72
41
137
86
Interest income
(56
)
(41
)
(158
)
(89
)
Interest expense
78
56
222
137
EBIT
234
117
482
326
Restructuring costs
36
49
91
135
Transaction, separation and
integration-related costs
2
6
6
12
Amortization of acquired intangible
assets
88
100
266
305
Merger related indemnification
2
11
15
21
SEC Matter
—
—
—
8
(Gains) losses on dispositions
(104
)
9
(132
)
12
Arbitration loss
—
9
—
9
Impairment losses
—
8
5
8
Pension and OPEB actuarial and settlement
losses
—
—
—
1
Adjusted EBIT
$
258
$
309
$
733
$
837
EBIT margin
6.9
%
3.3
%
4.7
%
3.0
%
Adjusted EBIT margin
7.6
%
8.7
%
7.1
%
7.7
%
Source: DXC Technology Category: Investor Relations
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240201055894/en/
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
DXC Technology (NYSE:DXC)
過去 株価チャート
から 4 2024 まで 5 2024
DXC Technology (NYSE:DXC)
過去 株価チャート
から 5 2023 まで 5 2024