HP Inc. Reports Fiscal 2022 Third Quarter Results

PALO ALTO, Calif., Aug. 30, 2022 (GLOBE NEWSWIRE) — HP (NYSE: HPQ)

• Third quarter GAAP diluted net earnings per share (“EPS”) of $1.08, above the previously provided outlook of $0.91 to $0.96 per share
• Third quarter non-GAAP diluted net EPS of $1.04, within the previously provided outlook of $1.03 to $1.08 per share
• Third quarter net revenue of $14.7 billion, down 4.1% from the prior-year period
• Third quarter net cash provided by operating activities of $0.4 billion, free cash flow of $0.3 billion
• Third quarter returned $1.3 billion to shareholders in the form of share repurchases and dividends

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. (HPQ) and its subsidiaries (“HP”) announced fiscal 2022 third quarter net revenue of $14.7 billion, down 4.1% (down 1.9% in constant currency) from the prior-year period.

“Disciplined pricing and cost management, combined with continued momentum in our key growth businesses, enabled us to deliver solid non-GAAP EPS growth while returning $1.3 billion to shareholders in Q3,” said Enrique Lores, HP President and CEO. “We are taking clear actions to mitigate near-term market headwinds and further strengthen our business for the future. I’m confident in our ability to execute against our priorities to drive long-term sustainable growth and value creation.”

Third quarter GAAP diluted net EPS was $1.08, up from $0.92 in the prior-year period and above the previously provided outlook of $0.91 to $0.96. Third quarter non-GAAP diluted net EPS was $1.04, up from $1.00 in the prior-year period and within the previously provided outlook of $1.03 to $1.08. Third quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $40 million, or $0.04 per diluted share, related to restructuring and other charges, acquisition-related charges, amortization of intangible assets, Russia exit charges, non-operating retirement-related (credits)/charges, and tax adjustments.

Asset management

HP’s net cash provided by operating activities in the third quarter of fiscal 2022 was $0.4 billion. Accounts receivable ended the quarter at $4.4 billion, down 2 days quarter over quarter to 27 days. Inventory ended the quarter at $8.2 billion, up 2 days quarter over quarter to 63 days. Accounts payable ended the quarter at $15.5 billion, up 3 days quarter over quarter to 119 days.

HP generated $0.3 billion of free cash flow in the third quarter. Free cash flow includes net cash provided by operating activities of $0.4 billion adjusted for net investments in leases of $53 million and net investments in property, plant and equipment of $170 million.

HP’s dividend payment of $0.25 per share in the third quarter resulted in cash usage of $0.3 billion. HP also utilized $1.0 billion of cash during the quarter to repurchase approximately 29.3 million shares of common stock in the open market. As a result, HP returned 464% of its third quarter free cash flow to shareholders. HP exited the quarter with $5.4 billion in gross cash, which includes cash and cash equivalents and short-term investments of $5 million.

Fiscal 2022 third quarter segment results

• Personal Systems net revenue was $10.1 billion, down 3% year over year (flat in constant currency) with a 6.9% operating margin. Consumer net revenue decreased 20% and Commercial net revenue increased 7%. Total units were down 25% with Notebooks units down 32% and Desktops units up 1%.
• Printing net revenue was $4.6 billion, down 6% year over year (down 5% in constant currency) with a 19.9% operating margin. Consumer net revenue was up 1% and Commercial net revenue was down 3%. Supplies net revenue was down 9% (down 9% in constant currency).   Total hardware units were down 3% with Consumer units down 1% and Commercial units down 15%.

Outlook
For the fiscal 2022 fourth quarter, HP estimates GAAP diluted net EPS to be in the range of $0.44 to $0.54, which includes a GAAP-only charge of approximately $0.27 towards acquisition-related charges for Poly, and non-GAAP diluted net EPS to be in the range of $0.79 to $0.89, which includes an incremental approximate $0.05 headwind driven by Poly’s debt-related expenses and other deal-related costs. Fiscal 2022 fourth quarter non-GAAP diluted net EPS estimates exclude $0.35 per diluted share, primarily related to restructuring and other charges, acquisition-related charges including charges related to Poly noted above, amortization of intangible assets, non-operating retirement-related (credits)/charges, tax adjustments and the related tax impact on these items.

For the fiscal year 2022, HP estimates GAAP diluted net EPS to be in the range of $3.46 to $3.56, which includes a GAAP-only charge of approximately $0.27 towards acquisition-related charges for Poly, and non-GAAP diluted net EPS to be in the range of $4.02 to $4.12, which includes an incremental approximate $0.05 headwind driven by Poly’s debt-related expenses and other deal-related costs. Fiscal 2022 non-GAAP diluted net EPS estimates exclude $0.56 per diluted share, primarily related to restructuring and other charges, acquisition-related charges including charges related to Poly noted above, Russia exit 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 in the range of $3.2 billion to $3.7 billion, inclusive of an approximately $0.3 billion headwind related to Poly acquisition costs.

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.