HP Inc. Reports Fiscal 2022 Full Year and Fourth Quarter Results

PALO ALTO, Calif., Nov. 22, 2022 (GLOBE NEWSWIRE) — HP (NYSE: HPQ)

• Fiscal 2022 GAAP diluted net earnings per share (“EPS”) of $3.05, below the previously provided outlook of $3.46 to $3.56 per share
• Fiscal 2022 non-GAAP diluted net EPS of $4.08, within the previously provided outlook of $4.02 to $4.12 per share
• Fiscal 2022 net revenue of $63.0 billion, down 0.8% from the prior-year period
• Fiscal 2022 net cash provided by operating activities of $4.5 billion, free cash flow of $3.9 billion
• Fiscal 2022 returned $5.3 billion to shareholders in the form of share repurchases and dividends
• Fourth quarter GAAP diluted net EPS was negligible, below the previously provided outlook of $0.44 to $0.54 per share, due to one-time non-cash tax adjustments
• Fourth quarter non-GAAP diluted net EPS of $0.85, within the previously provided outlook of $0.79 to $0.89 per share
• Fourth quarter net revenue of $14.8 billion, down 11.2% from the prior-year period
• Fourth quarter net cash provided by operating activities of $1.9 billion, free cash flow of $1.8 billion
• Fourth quarter returned $1.0 billion to shareholders in the form of share repurchases and dividends
• HP Inc. (HPQ) announces dividend increase of 5%
• HP Inc. announces Future Ready Transformation Plan, estimates annualized gross run rate cost savings of at least $1.4 billion by the end of fiscal 2025, and restructuring and other charges of approximately $1.0 billion

HP Inc.’s fiscal 2022 full-year and fourth quarter financial performance

Notes

1. For the three and twelve months ended October 31, 2021, GAAP net earnings and Net cash provided by operating activities included a net impact of $1,771 million for one-time Oracle Corporation (“Oracle”) litigation proceeds, which resulted in an impact of $1.55 and $1.45 on the GAAP diluted net earnings per share, respectively.
2. 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. and its subsidiaries (“HP”) announced fiscal 2022 net revenue of $63.0 billion, down 0.8% (up 0.7% in constant currency) from the prior-year period.

Fiscal 2022 GAAP diluted net EPS was $3.05, down from $5.33 in the prior-year period and below the previously provided outlook of $3.46 to $3.56. Fiscal 2022 non-GAAP diluted net EPS was $4.08, up from $3.79 in the prior-year period and within the previously provided outlook of $4.02 to $4.12. Fiscal 2022 non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $1.1 billion, or $1.03 per diluted share, related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, Russia exit charges, non-operating retirement-related (credits)/charges, and tax adjustments.

Fourth quarter net revenue was $14.8 billion, down 11.2% (down 8.0% in constant currency) from the prior-year period.

Fourth quarter GAAP diluted net EPS was negligible, down from $2.71 in the prior-year period and below the previously provided outlook of $0.44 to $0.54, due to one-time non-cash tax adjustments. Fourth quarter non-GAAP diluted net EPS was $0.85, down from $0.94 in the prior-year period and within the previously provided outlook of $0.79 to $0.89. Fourth quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $857 million, or $0.85 per diluted share, related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, Russia exit charges, non-operating retirement-related (credits)/charges, and tax adjustments.

“We had a solid end to our fiscal year despite navigating a volatile macro-environment and softening demand in the second half. In Q4 we delivered on our non-GAAP EPS target, while also completing our three-year value creation plan and exceeding our key metrics,” said Enrique Lores, HP President and CEO. “Looking forward, the new Future Ready strategy we introduced this quarter will enable us to better serve our customers and drive long-term value creation by reducing our costs and reinvesting in key growth initiatives to position our business for the future.”

Asset management
HP generated $4.5 billion in net cash provided by operating activities and $3.9 billion of free cash flow in fiscal 2022. Free cash flow includes net cash provided by operating activities of $4.5 billion adjusted for net investments in leases of $155 million and net investments in property, plant and equipment of $765 million. HP utilized $4.3 billion of cash during fiscal 2022 to repurchase approximately 126 million shares of common stock in the open market. When combined with the $1.0 billion of cash used to pay dividends, HP returned 138% of its free cash flow to shareholders in fiscal 2022.

HP’s net cash provided by operating activities in the fourth quarter of fiscal 2022 was $1.9 billion. Accounts receivable ended the quarter at $4.5 billion, up 1 day quarter over quarter to 28 days. Inventory ended the quarter at $7.6 billion, down 6 days quarter over quarter to 57 days. Accounts payable ended the quarter at $15.3 billion, down 5 days quarter over quarter to 114 days.

HP generated $1.8 billion of free cash flow in the fourth quarter. Free cash flow includes net cash provided by operating activities of $1.9 billion adjusted for net investments in leases of $61 million and net investments in property, plant and equipment of $144 million.

HP’s dividend payment of $0.25 per share in the fourth quarter resulted in cash usage of $0.2 billion. HP utilized $0.8 billion of cash during the quarter to repurchase approximately 26.6 million shares of common stock in the open market. As a result, HP returned 55% of its fourth quarter free cash flow to shareholders. HP exited the quarter with $3.2 billion in gross cash, which includes cash and cash equivalents and short-term investments of $17 million.

The HP board of directors has declared a quarterly cash dividend of $0.2625 per share on the company’s common stock, payable on January 4, 2023. This is an increase of 5% from the prior dividend.

Fiscal 2022 fourth quarter segment results 

• Personal Systems net revenue was $10.3 billion, down 13% year over year (down 9% in constant currency) with a 4.5% operating margin. Consumer net revenue decreased 25% and Commercial net revenue decreased 6%. Total units were down 21% with Notebooks units down 26% and Desktops units down 3%.
• Printing net revenue was $4.5 billion, down 7% year over year (down 6% in constant currency) with a 19.9% operating margin. Total hardware units were down 3% with Consumer units down 4% and Commercial units up 5%. Consumer net revenue was down 7% and Commercial net revenue was up 1%. Supplies net revenue was down 10% (down 10% in constant currency).

Outlook
For the fiscal 2023 first quarter, HP estimates GAAP diluted net EPS to be in the range of $0.47 to $0.57 and non-GAAP diluted net EPS to be in the range of $0.70 to $0.80. Fiscal 2023 first quarter non-GAAP diluted net EPS estimates exclude $0.23 per diluted share, primarily related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, non-operating retirement-related (credits)/charges, tax adjustments and the related tax impact on these items.

For fiscal 2023, HP estimates GAAP diluted net EPS to be in the range of $2.22 to $2.62 and non-GAAP diluted net EPS to be in the range of $3.20 to $3.60. Fiscal 2023 non-GAAP diluted net EPS estimates exclude $0.98 per diluted share, primarily related to restructuring and other charges, acquisition and divestiture charges, amortization of intangible assets, non-operating retirement-related (credits)/charges, tax adjustments and the related tax impact on these items. For fiscal 2023, HP anticipates generating free cash flow in the range of $3.0 to $3.5 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.