DXC Technology Reports First Quarter Results with Strong Digital Revenue and Pipeline Growth
- Q1 earnings per share from continuing operations was $0.61, including the cumulative impact of certain items of $(1.13) per share, reflecting restructuring costs, transaction, separation and integration-related costs, and amortization of acquired intangible assets
- Q1 non-GAAP earnings per share was $1.74
- Q1 income from continuing operations was $168 million, including the cumulative impact of certain items of $(304) million, reflecting restructuring costs, transaction, separation and integration-related costs, and amortization of acquired intangible assets
- Q1 non-GAAP income from continuing operations was $472 million
- Q1 EBIT of $267 million, adjusted for certain items is $652 million and adjusted EBIT margin was 13.3%, compared with 15.2% in the prior year
- Q1 net cash used in operating activities was $66 million
- Q1 adjusted free cash flow was $72 million
TYSONS, Va., August 8, 2019 - DXC Technology (NYSE: DXC) today reported results for the first quarter of fiscal year 2020, representing the period from April 1 through June 30, 2019.
“In the first quarter of fiscal 2020, DXC Technology continued to build momentum in our Digital business with Digital revenue growth of 35% and Digital pipeline growth of 80%,” said Mike Lawrie, chairman, president and CEO. “We continue to invest in Digital talent, capabilities, and offerings, and we are seeing strong demand for these solutions. During the quarter, we also completed the acquisition of Luxoft, which brings differentiated offerings and platforms, deep vertical expertise, and world-class talent to strengthen DXC’s unique value proposition as a leading end-to-end IT services provider.”
Financial Highlights - First Quarter Fiscal 2020
- Diluted earnings per share from continuing operations was $0.61 in the first quarter, including $(0.42) per share of restructuring costs, $(0.31) per share of transaction, separation and integration-related costs, and $(0.40) per share of amortization of acquired intangible assets. This compares with $0.78 in the year ago period.
- Non-GAAP diluted earnings per share from continuing operations was $1.74. This compares with $1.93 in the year ago period.
- Revenue in the first quarter was $4,890 million. Revenue decreased 7.4% compared with $5,282 million in the prior year.
- Income from continuing operations before income taxes was $206 million in the first quarter, including $(142) million of restructuring costs, $(105) million of transaction, separation and integration-related costs, and $(138) million of amortization of acquired intangibles. This compares with $360 million in the year ago period.
- Non-GAAP income from continuing operations before income taxes was $591 million compared with $750 million in the year ago period.
- Net income was $168 million for the first quarter, including $(114) million of restructuring costs, $(83) million of transaction, separation and integration-related costs and $(107) million of amortization of acquired intangibles. This compares with $266 million in the prior year period.
- Non-GAAP net income was $472 million.
- Adjusted EBIT was $652 million in the first quarter compared with $803 million in the prior year. Adjusted EBIT margin was 13.3% compared with 15.2% in the year ago quarter.
- Net cash used in operating activities was $66 million in the first quarter, compared with net cash provided by operating activities of $369 million in the year ago period.
- Adjusted free cash flow was $72 million in the first quarter.
Global Business Services (GBS)
GBS revenue was $2,159 million in the quarter compared with $2,213 million for the prior year. GBS revenue decreased 2.4% year-over-year, including an unfavorable foreign currency exchange rate impact of 2.9%. GBS revenues increased 0.5% year-over-year at constant currency as a result of continued growth in our Enterprise and Cloud applications business and contributions from acquisitions. This was offset by continued headwinds in our traditional application maintenance and management business. GBS profit margin in the quarter was 17.0%, down from 18.2% in the prior year, reflecting investments to support Digital hiring and capabilities. New business awards for GBS were $2.4 billion in the first quarter.
Global Infrastructure Services (GIS)
GIS revenue was $2,731 million in the quarter compared with $3,069 million for the prior year. GIS revenues decreased 11.0% year-over-year, including an unfavorable foreign currency exchange rate impact of 3.4%. GIS revenues decreased 7.6% year-over-year at constant currency as a result of the acceleration of client savings on several large contracts as well as continued decline in our IT outsourcing services business as clients shift to cloud environments. GIS profit margin in the quarter was 12.4%, down from 15.4% in the prior year, reflecting investments in the business and less impact from cost improvement actions. New business awards for GIS were $1.8 billion in the first quarter.
Returning Capital to Shareholders
During the first quarter, DXC Technology returned $451 million to shareholders, consisting of $51 million in common stock dividends and $400 million in share repurchases.
Earnings Conference Call and Webcast
DXC Technology senior management will host a conference call and webcast to discuss these results today at 5 p.m. EDT. The dial-in number for domestic callers is 800-367-2403. Callers who reside outside of the United States should dial +1-334-777-6978. The passcode for all participants is 6653201. 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 August 15, 2019. The replay dial-in number is 888-203-1112 for domestic callers and +1-719-457-0820 for callers who reside outside of the United States. The replay passcode is also 6653201. A replay of this webcast will also be available on DXC Technology’s Investor Relations website.
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: constant currency, earnings before interest and taxes ("EBIT"), adjusted EBIT, adjusted EBIT margin, adjusted free cash flow, and non-GAAP results including non-GAAP income from continuing operations before taxes, non-GAAP income from continuing operations and non-GAAP EPS from continuing operations.
About DXC Technology
DXC Technology, the world's leading independent, end-to-end IT services company, manages and modernizes mission-critical systems, integrating them with new digital solutions to produce better business outcomes. The company’s global reach and talent, innovation platforms, technology independence and extensive partner network enable more than 6,000 private and public-sector clients in 70 countries to thrive on change. For more information, visit dxc.technology.
All statements in this press release that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” 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. 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, 2019, and any updating information in subsequent SEC filings including DXC's upcoming Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019. 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.
