Business News

HP Inc. Reports Fiscal 2016 Full-Year and Fourth Quarter Results

Wednesday 23. November 2016 - Fiscal 2016 GAAP diluted net earnings per share from continuing operations of $1.53, above the previously provided outlook of $1.46 to $1.49 per share

Fiscal 2016 non-GAAP diluted net earnings per share of $1.60, within the previously provided outlook of $1.59 to $1.62 per share
Fiscal 2016 net revenue of $48.2 billion, down 6% (down 2% in constant currency) from the prior-year period
Fiscal 2016 net cash provided by operating activities of $3.2 billion
Fiscal 2016 returned $2.0 billion to shareholders in the form of share repurchases and dividends
Fourth quarter GAAP diluted net earnings per share from continuing operations of $0.30, above the previously provided outlook of $0.22 to $0.25 per share
Fourth quarter non-GAAP diluted net earnings per share of $0.36, within the previously provided outlook of $0.34 to $0.37 per share
Fourth quarter net revenue of $12.5 billion, up 2% (up 4% in constant currency) from the prior-year period
Fourth quarter net cash provided by operating activities of $0.7 billion
Fourth quarter returned $214 million to shareholders in the form of share repurchases and dividends

Net revenue and EPS results
HP Inc. (“HP”) announced fiscal 2016 net revenue of $48.2 billion, down 6% (down 2% in constant currency) from the prior-year period.

Fiscal 2016 GAAP diluted net earnings per share (“EPS”) from continuing operations was $1.53, down from $2.02 in the prior-year period and above the previously provided outlook of $1.46 to $1.49. Fiscal 2016 non-GAAP diluted net EPS was $1.60, up from $1.46 in the prior-year period and within the previously provided outlook of $1.59 to $1.62. Fiscal 2016 non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $121 million, or $0.07 per share, related to restructuring and other charges, acquisition and other related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related charges/(credits) and net tax indemnification amounts.

Fourth quarter net revenue was $12.5 billion, up 2% (up 4% in constant currency) from the prior-year period.

Fourth quarter GAAP diluted net EPS from continuing operations was $0.30, down from $0.83 in the prior-year period and above the previously provided outlook of $0.22 to $0.25. Fourth quarter non-GAAP diluted net EPS was $0.36, up from $0.30 in the prior-year period and within the previously provided outlook of $0.34 to $0.37. Fourth quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $101 million, or $0.06 per share, related to defined benefit plan settlement charges, acquisition and other related charges, restructuring and other charges, non-operating retirement-related charges/(credits) and net tax indemnification amounts.

“We delivered on our full year financial commitments and executed well on our strategy to protect our core, drive growth and invest in our future all while taking cost out of the business,” said Dion Weisler, President and CEO, HP Inc. “As we’ve proved quarter over quarter, we are confident in our abilities to execute and deliver, while making business decisions focused on the long-term success for the company.”

Asset management
HP’s net cash provided by operating activities in the fourth quarter was $0.7 billion. Accounts receivable ended the quarter at $4.1 billion, unchanged quarter over quarter at 30 days. Inventory ended the quarter at $4.5 billion, up 2 days quarter over quarter to 39 days. Accounts payable ended the quarter at $11.1 billion, up 2 days quarter over quarter to 98 days.

HP’s dividend payment of $0.124 per share in the fourth quarter resulted in cash usage of $0.2 billion. HP also utilized $2 million of cash during the quarter to settle the repurchase of approximately 0.2 million shares of common stock in the open market. HP exited the quarter with $6.3 billion in gross cash, which includes cash and cash equivalents, short-term investments, and certain liquid long-term investments.

HP generated $3.2 billion in net cash provided by operating activities and $2.8 billion of free cash flow in fiscal 2016. Free cash flow includes net cash provided by operating activities and net investments in property, plant and equipment of $0.4 billion. HP utilized almost $1.2 billion of cash during fiscal 2016 to repurchase approximately 100 million shares of common stock in the open market. When combined with the almost $0.9 billion of cash used to pay dividends in fiscal 2016, HP returned 72% of its free cash flow to shareholders in fiscal 2016.

Fiscal 2016 fourth quarter segment results

Personal Systems net revenue was up 4% year over year (up 5% in constant currency) with a 4.3% operating margin. Commercial net revenue increased 3% and Consumer net revenue increased 7%. Total units were up 5% with Notebooks units up 9% and Desktops units up 1%.
Printing net revenue was down 8% year over year (down 6% in constant currency) with a 14.0% operating margin. Total hardware units were up 1% from the prior-year period, with Commercial hardware units up 10% and Consumer hardware units down 3%. Supplies net revenue was down 12% (down 10% in constant currency).
Outlook
For the fiscal 2017 first quarter, HP estimates GAAP diluted net EPS from continuing operations to be in the range of $0.33 to $0.36 and non-GAAP diluted net EPS to be in the range of $0.35 to $0.38. Fiscal 2017 first quarter non-GAAP diluted net EPS estimates exclude $0.02 per diluted share, primarily related to items such as restructuring and other charges, defined benefit plan settlement charges/(credits), non-operating retirement-related charges/(credits), net tax indemnification amounts, net valuation allowances and separation taxes and adjustments, acquisition and other related charges and amortization of intangible assets.

For fiscal 2017, HP estimates GAAP diluted net EPS from continuing operations to be in the range of $1.47 to $1.57 and non-GAAP diluted net EPS to be in the range of $1.55 to $1.65. Fiscal 2017 non-GAAP diluted net EPS estimates exclude $0.08 per diluted share, primarily related to items such as restructuring and other charges, defined benefit plan settlement charges/(credits), non-operating retirement-related charges/(credits), net tax indemnification amounts, net valuation allowances and separation taxes and adjustments, acquisition and other related charges and amortization of intangible assets.