HP Inc. Reports Fiscal 2018 Full Year and Fourth Quarter Results

PALO ALTO, CA – (GlobeNewswire) – November 29, 2018 – HP released its fiscal 2018 full year and fourth quarter results.

Notes to table Information about HP Inc.’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information”

Net revenue and EPS results

HP Inc. (“HP”) announced fiscal 2018 net revenue of $58.5 billion, up 12% (up 10% in constant currency) from the prior-year period.

Fiscal 2018 GAAP diluted net EPS was $3.26, up from $1.48 in the prior-year period and above the previously provided outlook of $2.82 to $2.85. Fiscal 2018 non-GAAP diluted net EPS was $2.02, up from $1.65 in the prior-year period and within the previously provided outlook of $2.00 to $2.03. Fiscal 2018 non-GAAP net earnings and non-GAAP diluted net EPS exclude after- tax adjustments of $2.0 billion, or $1.24 per diluted share, related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related credits/(charges), debt extinguishment costs, and tax adjustments.

Fourth quarter net revenue was $15.4 billion, up 10% (up 9% in constant currency) from the prior-year period.

Fourth quarter GAAP diluted net EPS was $0.91, up from $0.39 in the prior-year period and above the previously provided outlook of $0.48 to $0.51. Fourth quarter non-GAAP diluted net EPS was $0.54, up from $0.44 in the prior-year period and within the previously provided outlook of $0.52 to $0.55. Fourth quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $586 million, or $0.37 per diluted share, related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related credits/(charges), and tax adjustments.

“Our results once again demonstrate HP’s consistent performance with full year non-GAAP EPS growth of 22% year over year and free cash flow generation of $4.2 billion,” said Dion Weisler, President and CEO, HP Inc. “These results reflect our continued innovation across the portfolio and sharp execution across segments and regions as we position HP for continued long-term sustainable growth.”

Asset management

HP generated $4.5 billion in net cash provided by operating activities and $4.2 billion of free cash flow in fiscal 2018. Free cash flow includes net cash provided by operating activities and net investments in property, plant and equipment of $0.4 billion. HP utilized approximately $2.6 billion of cash during fiscal 2018 to repurchase approximately 112 million shares of common stock in the open market. When combined with the almost $0.9 billion of cash used to pay dividends, HP returned 83% of its free cash flow to shareholders in fiscal 2018.

HP’s net cash provided by operating activities in the fourth quarter of fiscal 2018 was $1.0 billion. Accounts receivable ended the quarter at $5.1 billion, up 2 days quarter over quarter to 30 days. Inventory ended the quarter at $6.1 billion, down 3 days quarter over quarter to 43 days. Accounts payable ended the quarter at $14.8 billion, down 3 days quarter over quarter to 105 days.

HP generated $0.8 million of free cash flow in the fourth quarter. Free cash flow includes net cash provided by operating activities and net investments in property, plant and equipment of $125 million.

HP’s dividend payment of $0.1393 per share in the fourth quarter resulted in cash usage of $0.2 billion. HP also utilized $0.6 billion of cash during the quarter to repurchase approximately 24.4 million shares of common stock in the open market. As a result, HP returned 97% of its fourth quarter free cash flow to shareholders. HP exited the quarter with $5.9 billion in gross cash, which includes cash and cash equivalents and short-term investments of $0.7 billion included in other current assets.

Fiscal 2018 fourth quarter segment results

• Personal Systems net revenue was up 11% year over year (up 10% in constant currency) with a 8% operating margin. Both Commercial and Consumer net revenue increased 11%. Total units were up 6% with Notebooks units up 8% and Desktops units up 2%.
• Printing net revenue was up 9% year over year (up 8% in constant currency) with a 1% operating margin. Total hardware units were up 11% with Commercial hardware units up 85% and Consumer hardware units up 3%. Supplies net revenue was up 7% (up 6% in constant currency).

Outlook

For the fiscal 2019 first quarter, HP estimates GAAP diluted net EPS to be in the range of $0.46 to $0.49 and non-GAAP diluted net EPS to be in the range of $0.50 to $0.53. Fiscal 2019 first quarter non-GAAP diluted net EPS estimates exclude $0.04 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.

For fiscal 2019, HP estimates GAAP diluted net EPS to be in the range of $2.04 to $2.14 and non-GAAP diluted net EPS to be in the range of $2.12 to $2.22. Fiscal 2019 non-GAAP diluted net EPS estimates exclude $0.08 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.

More information on HP’s earnings, including additional financial analysis and an earnings overview presentation, is available on HP’s Investor Relations website at www.hp.com/investor/home.

HP’s FY18 Q4 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2018Q4Webcast.