DXC Technology Reports Second Quarter Fiscal 2020 Results

• Q2 earnings per share from continuing operations was $(8.19), including the cumulative impact of certain items of $(9.57) per share, reflecting goodwill impairment, restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets, gain on arbitration award, and a tax adjustment related to prior restructuring charges
• Q2 non-GAAP earnings per share was $1.38
• Q2 loss from continuing operations was $(2,115) million, including the cumulative impact of certain items of $(2,477) million, reflecting goodwill impairment, restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets, gain on arbitration award, and a tax adjustment related to prior restructuring charges
• Q2 non-GAAP income from continuing operations was $362 million
• Q2 EBIT of $(1,962) million, adjusted for certain items is $529 million and adjusted EBIT margin was 10.9%, compared with 15.9% in the prior year
• Q2 net cash provided by operating activities was $1,651 million
• Q2 adjusted free cash flow was $739 million
   

TYSONS, Va., November 11, 2019 - DXC Technology (NYSE: DXC) today reported results for the second quarter of fiscal year 2020, representing the period from July 1 through September 30, 2019.

"During my first two months as CEO, I have met with many of our largest customers and most of our people around the world,” said Mike Salvino, president and CEO. “I am very pleased with our global talent base, capabilities and the scale and scope of our offerings. DXC has a loyal, global customer base for whom we manage mission-critical operations. I am confident that by strengthening our focus on our people, customers and operational execution, we will deliver better financial results and be positioned to grow profitably while unlocking value for our shareholders."

Financial Highlights - Second Quarter Fiscal 2020

• Diluted earnings per share from continuing operations was $(8.19) in the second quarter, including $(11.10) per share of goodwill impairment, $(0.11) per share of restructuring costs, $(0.18) per share of transaction, separation and integration-related costs, $(0.45) per share of amortization of acquired intangible assets, $2.43 per share of gain on arbitration award, and $(0.11) per share of tax adjustment related to prior restructuring charges. This compares with $0.92 in the year ago period.
• Non-GAAP diluted earnings per share from continuing operations was $1.38. This compares with $2.02 in the year ago period.
• Revenue in the second quarter was $4,851 million. Revenue decreased 3.2% compared with $5,013 million in the prior year.
• Loss from continuing operations before income taxes was $(1,999) million in the second quarter, including $(2,887) million of goodwill impairment, $(32) million of restructuring costs, $(53) million of transaction, separation and integration-related costs, $(151) million of amortization of acquired intangibles, and $632 million of gain on arbitration award. This compares with $332 million in the year ago period.
• Non-GAAP income from continuing operations before income taxes was $492 million compared with $749 million in the year ago period.
• Net loss was $(2,115) million for the second quarter, including $(2,887) million of goodwill impairment, $(28) million of restructuring costs, $(48) million of transaction, separation and integration-related costs, $(117) million of amortization of acquired intangibles, $632 million of gain on arbitration award, and $(29) million of tax adjustment related to prior restructuring charges. This compares with $259 million in the prior year period.
• Non-GAAP net income was $362 million.
• Adjusted EBIT was $529 million in the second quarter compared with $799 million in the prior year. Adjusted EBIT margin was 10.9% compared with 15.9% in the year ago quarter.
• Net cash provided by operating activities was $1,651 million in the second quarter, compared with $480 million in the year ago period.
• Adjusted free cash flow was $739 million in the second quarter.

Global Business Services (GBS)

GBS revenue was $2,285 million in the quarter compared with $2,111 million for the prior year. GBS revenue increased 8.2% year-over-year, including an unfavorable foreign currency exchange rate impact of 2.3%. GBS revenues increased 10.5% year-over-year at constant currency reflecting contribution from acquisitions, including Luxoft. GBS profit margin in the quarter was 15.7%, compared with 18.9% in the prior year, reflecting investments to support Digital hiring and capabilities. New business awards for GBS were $1.9 billion in the second quarter.

Global Infrastructure Services (GIS)

GIS revenue was $2,566 million in the quarter compared with $2,902 million for the prior year. GIS revenues decreased 11.6% year-over-year, including an unfavorable foreign currency exchange rate impact of 2.5%. GIS revenues decreased 9.1% year-over-year at constant currency, reflecting declines in our traditional infrastructure businesses. GIS profit margin in the quarter was 9.5%, compared with 16.3% in the prior year, reflecting a slowdown in delivery cost take-out actions. New business awards for GIS were $1.9 billion in the second quarter. 

Returning Capital to Shareholders

During the second quarter, DXC Technology returned $306 million to shareholders, consisting of $56 million in common stock dividends and $250 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 4:45 p.m. EST. The dial-in number for domestic callers is 888-204-4368. Callers who reside outside of the United States should dial +1-929-477-0402. The passcode for all participants is 1570708. 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 November 18, 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 1570708. 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 (NYSE: DXC), 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 customers in 70 countries to thrive on change. For more information, visit www.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 September 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.

Download the PDF of DXC FY20 Q2 Charts (424Kb)