DXC Technology Reports Third Quarter Fiscal 2020 Results

• Q3 earnings per share from continuing operations was $0.32, including the cumulative impact of certain items of $(0.93) per share, reflecting restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets, and a tax adjustment
• Q3 non-GAAP earnings per share was $1.25
• Q3 income from continuing operations was $90 million, including the cumulative impact of certain items of $(238) million, reflecting restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets, and a tax adjustment
• Q3 non-GAAP income from continuing operations was $328 million
• Q3 EBIT of $187 million, adjusted for certain items is $528 million and adjusted EBIT margin was 10.5%, compared with 16.2% in the prior year
• Q3 net cash provided by operating activities was $477 million
• Q3 adjusted free cash flow was $397 million
   

TYSONS, Va., February 6, 2020 – DXC Technology (NYSE: DXC) today reported results for the third quarter of fiscal year 2020, representing the period from October 1 through December 31, 2019. 

"We delivered third quarter results that are in-line with our plan. I am pleased with the initial progress we have made on our two key priorities, running the business and unlocking value,” said Mike Salvino, president and CEO. “We are executing on our focused strategy centered on the enterprise technology stack. Our third quarter performance is a positive first step in positioning DXC for long-term success."
 

Financial Highlights - Third Quarter Fiscal 2020

• Diluted earnings per share from continuing operations was $0.32 in the third quarter, including $(0.25) per share of restructuring costs, $(0.20) per share of transaction, separation and integration-related costs, $(0.44) per share of amortization of acquired intangible assets, and $(0.04) per share of tax adjustment. This compares with $1.66 in the year ago period.
• Non-GAAP diluted earnings per share from continuing operations was $1.25. This compares with $2.23 in the year ago period.
• Revenue in the third quarter was $5,021 million. Revenue decreased 3.0% compared with $5,178 million in the prior year.
• Income from continuing operations before income taxes was $127 million in the third quarter, including $(53) million of goodwill impairment, $(74) million of restructuring costs, $(68) million of transaction, separation and integration-related costs, and $(146) million of amortization of acquired intangibles. This compares with $469 million in the year ago period.
• Non-GAAP income from continuing operations before income taxes was $468 million compared with $786 million in the year ago period.
• Net income was $90 million for the third quarter, including $(64) million of restructuring costs, $(52) million of transaction, separation and integration-related costs, $(112) million of amortization of acquired intangibles, and $(10) million of tax adjustment. This compares with $466 million in the prior year period.
• Non-GAAP net income was $328 million.
• Adjusted EBIT was $528 million in the third quarter compared with $840 million in the prior year. Adjusted EBIT margin was 10.5% compared with 16.2% in the year ago quarter.
• Net cash provided by operating activities was $477 million in the third quarter, compared with $186 million in the year ago period.
• Adjusted free cash flow was $397 million in the third quarter.

Global Business Services (GBS)

GBS revenue was $2,359 million in the quarter compared with $2,169 million for the prior year. GBS revenue increased 8.8% year-over-year, including an unfavorable foreign currency exchange rate impact of 1.1%. GBS revenues increased 9.9% year-over-year at constant currency including the acquisition of Luxoft. GBS profit margin in the quarter was 15.0%, compared with 18.2% in the prior year, reflecting investments we are making in digital hiring as well as the slower pace of cost takeout. New business awards for GBS were $2.5 billion in the third quarter.
 

Global Infrastructure Services (GIS)

GIS revenue was $2,662 million in the quarter compared with $3,009 million for the prior year. GIS revenues decreased 11.5% year-over-year, including an unfavorable foreign currency exchange rate impact of 0.9%. GIS revenues decreased 10.6% year-over-year at constant currency, reflecting declines in our infrastructure businesses due to run-off from a few accounts. GIS profit margin in the quarter was 8.7%, compared with 17.5% in the prior year, reflecting a slowdown in delivery cost take-out actions and the investments we are making in select customer accounts. New business awards for GIS were $2.8 billion in the third quarter.
 

Returning Capital to Shareholders

During the third quarter, DXC Technology returned $140 million to shareholders, consisting of $54 million in common stock dividends and $86 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 6955326. 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 February 13, 2020. 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 6955326. 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) helps global companies run their mission critical systems and operations while modernizing IT, optimizing data architectures, and ensuring security and scalability across public, private and hybrid clouds. With decades of driving innovation, the world’s largest companies trust DXC to deploy our enterprise technology stack to deliver new levels of performance, competitiveness and customer experiences. Learn more about the DXC story and our focus on people, customers and operational execution at 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 December 31, 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.

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