HP Inc. Reports Fiscal 2022 First 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. and its subsidiaries (“HP”) announced fiscal 2022 first quarter net revenue of $17.0 billion, up 8.8% (up 8.2% in constant currency) from the prior-year period.

“We once again delivered strong top and bottom-line results with record revenue driven by strong demand and our leadership in hybrid,” said Enrique Lores, HP President and CEO. “Our Q1 performance was particularly strong across our key growth areas that collectively grew double digits including gaming, peripherals, workforce solutions, consumer subscriptions, and industrial graphics and 3D. Our performance reflects progress against our strategy to build a stronger HP.”

First quarter GAAP diluted net EPS was $0.99, up from $0.83 in the prior-year period and above the previously provided outlook of $0.92 to $0.98. First quarter non-GAAP diluted net EPS was $1.10, up from $0.92 in the prior-year period and above the previously provided outlook of $0.99 to $1.05. First quarter non-GAAP net earnings and non-GAAP diluted net EPS excludes after-tax adjustments of $117 million, or $0.11 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.

Asset management

HP’s net cash provided by operating activities in the first quarter of fiscal 2022 was $1.7 billion. Accounts receivable ended the quarter at $5.2 billion, down 3 days quarter over quarter to 27 days. Inventory ended the quarter at $9.0 billion, up 6 days quarter over quarter to 59 days. Accounts payable ended the quarter at $18.1 billion, up 11 days quarter over quarter to 119 days.

HP generated $1.4 billion of free cash flow in the first quarter. Free cash flow includes net cash provided by operating activities of $1.7 billion adjusted for net investments in leases of $20 million and net investments in property, plant and equipment of $273 million.

HP’s dividend payment of $0.25 per share in the first quarter resulted in cash usage of $0.3 billion. HP also utilized $1.5 billion of cash during the quarter to repurchase approximately 42.6 million shares of common stock in the open market. As a result, HP returned 127% of its first quarter free cash flow to shareholders. HP exited the quarter with $3.4 billion in gross cash, which includes cash and cash equivalents, and short-term investments of $5 million.

Fiscal 2022 first quarter segment results

• Personal Systems net revenue was $12.2 billion, up 15% year over year (up 14% in constant currency) with a 7.8% operating margin. Consumer net revenue decreased 1% and Commercial net revenue increased 26%. Total units were down 6% with Notebooks units down 9% and Desktops units up 3%.
• Printing net revenue was $4.8 billion, down 4% year over year (down 5% in constant currency) with a 18.2% operating margin. Consumer net revenue was down 23% and Commercial net revenue was up 9%. Supplies net revenue was down 2% (down 3% in constant currency). Total hardware units were down 28% overall, with Consumer units down 31% and Commercial units down 3%.

Outlook
For the fiscal 2022 second quarter, HP estimates GAAP diluted net EPS to be in the range of $0.95 to $1.01 and non-GAAP diluted net EPS to be in the range of $1.02 to $1.08. Fiscal 2022 second quarter non-GAAP diluted net EPS estimates exclude $0.07 per diluted share, primarily related to restructuring and other charges, acquisition-related charges, amortization of intangible assets, non-operating retirement-related (credits)/charges, tax adjustments and the related tax impact on these items.

For fiscal 2022, HP is updating its estimate of GAAP diluted net EPS to be in the range of $3.87 to $4.07 and raising its previous estimate of non-GAAP diluted net EPS to be in the range of $4.18 to $4.38. Fiscal 2022 non-GAAP diluted net EPS estimates exclude $0.31 per diluted share, primarily related to restructuring and other charges, acquisition-related charges, amortization of intangible assets, non-operating retirement-related (credits)/charges, tax adjustments and the related tax impact on these items. For fiscal 2022, HP anticipates generating free cash flow of at least $4.5 billion.

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

HP’s FY22 Q1 earnings conference call is accessible via audio webcast at www.hp.com/investor/2022Q1Webcast.