HPE Delivers Q3 Results
Q3 2019 Financial Highlights:
- Revenue: $7.2 billion
- Gross Margins: 33.9%, up 340 basis points from the prior-year period
-
Diluted Net Earnings Per Share:
- GAAP ($0.02), includes ($0.42) adjustment for a one-time arbitration award to DXC, compared to the previously provided outlook of $0.29 to $0.33 per share
- Non-GAAP $0.45, up 7% from the prior-year period EPS and above the previously provided outlook of $0.40 to $0.44 per share
- Cash Flow from Operations: $1.2 billion, and $2.6 billion year-to-date, up $927 million from the prior-year-to-date period
- Free Cash Flow: $648 million, and $860 million year-to-date, up $790 million from the prior-year-to-date period
FY 2019 Outlook:
- Earnings Per Share: Adjusting GAAP diluted net earnings per share outlook to $0.65 to $0.69 due to a one-time arbitration award to DXC and raising non-GAAP diluted net earnings per share outlook to $1.72 to $1.76
- Free Cash Flow: Reiterating free cash flow guidance of $1.4 to $1.6 billion
SAN JOSE, Calif.–(BUSINESS WIRE)–Hewlett Packard Enterprise (NYSE: HPE) today announced financial results for its fiscal 2019 third quarter, ended July 31, 2019.
“In Q3, we improved both gross and operating margins, delivered strong non-GAAP earnings, and generated a record level of year-to-date free cash flow,” said Antonio Neri, president and CEO of Hewlett Packard Enterprise. “We also invested in important innovation for our customers and announced strategic acquisitions, including Cray, which we now expect to close by the end of fiscal year 2019, earlier than originally planned.”
“Our strong operational performance reflects continued disciplined execution as we deliberately shift and enhance our portfolio to provide customers with higher-value, software-defined offerings, delivered as a Service,” added Neri. “I remain confident in our ability to drive profitable growth as we execute our strategy.”
Third Quarter Fiscal Year 2019
|
HPE fiscal 2019 third quarter continuing operations financial |
||||||
|
performance |
||||||
|
|
Q3 FY19 |
Q3 FY18 |
Y/Y |
|||
|
GAAP net revenue ($B) |
$7.2 |
|
$7.8 |
|
(7.0%) |
|
|
GAAP operating margin |
(1.1%) |
|
6.3% |
|
(7.4 pts.) |
|
|
GAAP net earnings ($B) |
($0.0) |
|
$0.5 |
|
(106%) |
|
|
GAAP diluted net earnings per share |
($0.02) |
|
$0.29 |
|
(107%) |
|
|
Non-GAAP operating margin |
9.9% |
|
9.1% |
|
0.8 pts. |
|
|
Non-GAAP net earnings ($B) |
$0.6 |
|
$0.6 |
|
(5.6%) |
|
|
Non-GAAP diluted net earnings per share |
$0.45 |
|
$0.42 |
|
7.1% |
|
|
Cash flow from operations ($B) |
$1.2 |
|
$1.2 |
|
(4.2%) |
|
Information about HPE’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information” below.
Financial Summary
Third quarter net revenue of $7.2 billion, down 7% from the prior-year period, and down 3% from the prior-year period, excluding Tier 1 server sales and adjusted for currency.
Third quarter gross margins of 33.9%, up 340 basis points from the prior-year period.
Third quarter GAAP diluted net earnings per share (“EPS”) from continuing operations was ($0.02), includes ($0.42) adjustment for a one-time arbitration award to DXC, compared to GAAP diluted net EPS from continuing operations of $0.29 in the prior-year period.
Third quarter non-GAAP diluted net EPS $0.45, up from non-GAAP diluted net EPS of $0.42 in the prior-year period. Third quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $630 million and $0.47 per diluted share, respectively, primarily related to the impact of acquisition, disposition and other related charges, transformation costs, tax indemnification adjustments, and adjustments for taxes.
Third quarter cash flow from operations of $1.2 billion, and $2.6 billion year-to-date, up $927 million from the prior-year-to-date period.
Free cash flow of $648 million, and $860 million year-to-date, up $790 million from the prior-year-to-date period.
Segment Results
- Intelligent Edge revenue was $762 million, with 4.9% operating margin. HPE Aruba product revenue was down 4% year over year when adjusted for currency and HPE Aruba Services revenue was up 16% year over year when adjusted for currency.
- Hybrid IT revenue was $5.5 billion, with 12.7% operating margin, up 250 bps year over year. Mix-shift continues towards HPE’s higher-margin value products with revenue from High-Performance Compute up 2% year over year when adjusted for currency, Composable Cloud up 28% year over year when adjusted for currency, and Hyperconverged Infrastructure showing continued momentum, up 4% year over year when adjusted for currency. HPE Nimble Storage was up 21% year over year when adjusted for currency. HPE Pointnext operational services orders and Nimble services orders were up 3% year over year when adjusted for currency.
- Financial Services revenue was $888 million, with 8.7% operating margin, up 90 bps year over year. Net portfolio assets were up 2% year over year when adjusted for currency, and financing volume was up 5% year over year when adjusted for currency. The business delivered return on equity of 15.8%, up 350 bps from the prior-year period.
FY2019 GAAP Outlook
For the fiscal 2019 fourth quarter, Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.24 to $0.28. For fiscal 2019 full-year Hewlett Packard Enterprise now estimates GAAP diluted net EPS to be in the range of $0.65 to $0.69 due to a one-time arbitration award to DXC.
Raised FY2019 Non-GAAP Outlook
For the fiscal 2019 fourth quarter, Hewlett Packard Enterprise estimates non-GAAP diluted net EPS to be in the range of $0.43 to $0.47. Fiscal 2019 fourth quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.19 per diluted share, primarily related to transformation costs and the amortization of intangible assets.
For fiscal 2019 full-year, Hewlett Packard Enterprise now estimates non-GAAP diluted net EPS to be in the range of $1.72 to $1.76. Fiscal 2019 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $1.07 per diluted share, primarily related to acquisition, disposition, and other related charges, transformation costs, an adjustment to earnings from equity interest, and the amortization of intangible assets.
FY2019 Free Cash Flow Outlook
For fiscal 2019 full-year, Hewlett Packard Enterprise reiterates free cash flow guidance range of $1.4 to $1.6 billion, up over 35% at the mid-point from the prior year.
Hewlett Packard Enterprise provides certain guidance on a non-GAAP basis, as the company cannot predict some elements that are included in reported GAAP results. Refer to the discussion of non-GAAP financial measures below for more information.
About Hewlett Packard Enterprise
Hewlett Packard Enterprise is a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze and act upon data seamlessly from edge to cloud. HPE enables customers to accelerate business outcomes by driving new business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future.
Use of non-GAAP financial information
To supplement Hewlett Packard Enterprise’s condensed consolidated financial statement information presented on a generally accepted accounting principles (GAAP) basis, Hewlett Packard Enterprise provides revenue on a constant currency basis as well as non-GAAP operating expense, non-GAAP operating profit, non-GAAP operating margin, non-GAAP income tax rate, non-GAAP net earnings from continuing operations, non-GAAP net earnings from discontinued operations, non-GAAP diluted net earnings per share from continuing operations, non-GAAP diluted net earnings per share from discontinued operations, gross cash, free cash flow, net capital expenditures, net debt, net cash, operating company net debt and operating company net cash financial measures. Hewlett Packard Enterprise also provides forecasts of non-GAAP diluted net earnings per share and free cash flow. A reconciliation of adjustments to GAAP financial measures for this quarter and prior periods is included in the tables below or elsewhere in the materials accompanying this news release. In addition, an explanation of the ways in which Hewlett Packard Enterprise’s management uses these non-GAAP measures to evaluate its business, the substance behind Hewlett Packard Enterprise’s decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which Hewlett Packard Enterprise’s management compensates for those limitations, and the substantive reasons why Hewlett Packard Enterprise’s management believes that these non-GAAP measures provide useful information to investors is included under “Use of non-GAAP financial measures” further below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for revenue, operating profit, operating margin, net earnings from continuing operations, net earnings from discontinued operations, diluted net earnings per share from continuing operations, diluted net earnings per share from discontinued operations, cash, cash equivalents and restricted cash, cash flow from operations, investments in property, plant and equipment, or total company debt prepared in accordance with GAAP.
Forward-looking statements
This press release contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of Hewlett Packard Enterprise may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses, effective tax rates, the impact of the U.S. Tax Cuts and Jobs Act of 2017, net earnings, net earnings per share, cash flows, benefit plan funding, deferred tax assets, share repurchases, currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring charges; any statements of the plans, strategies and objectives of management for future operations, as well as the execution of corporate transactions or contemplated acquisitions, transformation and restructuring plans and any resulting benefit, cost savings, revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on Hewlett Packard Enterprise and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements or assumptions underlying any of the foregoing.
Risks, uncertainties and assumptions include the need to address the many challenges facing Hewlett Packard Enterprise’s businesses; the competitive pressures faced by Hewlett Packard Enterprise’s businesses; risks associated with executing Hewlett Packard Enterprise’s strategy; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of Hewlett Packard Enterprise’s products and the delivery of Hewlett Packard Enterprise’s services effectively; the protection of Hewlett Packard Enterprise’s intellectual property assets, including intellectual property licensed from third parties and intellectual property shared with its former Parent; risks associated with Hewlett Packard Enterprise’s international operations; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by Hewlett Packard Enterprise and its suppliers, customers, clients and partners; the hiring and retention of key employees; execution, integration and other risks associated with business combination and investment transactions; and the execution, timing and results of any transformation or restructuring plans, including estimates and assumptions related to the cost (including any possible disruption of Hewlett Packard Enterprise’s business) and the anticipated benefits of the transformation and restructuring plans; the effects of the U.S. Tax Cuts and Jobs Act and related guidance and regulations; the resolution of pending investigations, claims and disputes; and other risks that are described in Hewlett Packard Enterprise’s Annual Report on Form 10-K for the fiscal year ended October 31, 2018.
As in prior periods, the financial information set forth in this press release, including tax-related items, reflects estimates based on information available at this time. While Hewlett Packard Enterprise believes these estimates to be reasonable, these amounts could differ materially from reported amounts in the Hewlett Packard Enterprise Quarterly Report on Form 10-Q for the third quarter ended July 31, 2019. Hewlett Packard Enterprise assumes no obligation and does not intend to update these forward-looking statements.
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS |
||||||||||||
|
(Unaudited) |
||||||||||||
|
(In millions, except per share amounts) |
||||||||||||
|
|
|
|||||||||||
|
|
Three months ended |
|||||||||||
|
|
July 31, |
|
April 30, |
|
July 31, |
|||||||
|
Net revenue(a) |
$ |
7,217 |
|
|
$ |
7,150 |
|
|
$ |
7,764 |
|
|
|
Costs and expenses: |
|
|
|
|
|
|||||||
|
Cost of sales |
4,768 |
|
|
4,845 |
|
|
5,399 |
|
||||
|
Research and development |
481 |
|
|
457 |
|
|
435 |
|
||||
|
Selling, general and administrative |
1,253 |
|
|
1,214 |
|
|
1,221 |
|
||||
|
Amortization of intangible assets |
58 |
|
|
69 |
|
|
72 |
|
||||
|
Restructuring charges |
— |
|
|
— |
|
|
(1 |
) |
||||
|
Transformation costs |
170 |
|
|
54 |
|
|
126 |
|
||||
|
Disaster charges |
— |
|
|
(7 |
) |
|
— |
|
||||
|
Acquisition, disposition and other related charges(b) |
563 |
|
|
84 |
|
|
24 |
|
||||
|
Separation costs |
— |
|
|
— |
|
|
(2 |
) |
||||
|
Total costs and expenses |
7,293 |
|
|
6,716 |
|
|
7,274 |
|
||||
|
(Loss) earnings from continuing operations |
(76 |
) |
|
434 |
|
|
490 |
|
||||
|
Interest and other, net |
(70 |
) |
|
(18 |
) |
|
(64 |
) |
||||
|
Tax indemnification adjustments(c) |
(134 |
) |
|
4 |
|
|
2 |
|
||||
|
Non-service net periodic benefit credit(d) |
12 |
|
|
17 |
|
|
26 |
|
||||
|
Earnings from equity interests |
3 |
|
|
3 |
|
|
11 |
|
||||
|
(Loss) earnings from continuing operations before taxes |
(265 |
) |
|
440 |
|
|
465 |
|
||||
|
Benefit (provision) for taxes(e) |
238 |
|
|
(21 |
) |
|
(13 |
) |
||||
|
Net (loss) earnings from continuing operations |
(27 |
) |
|
419 |
|
|
452 |
|
||||
|
Net loss from discontinued operations |
— |
|
|
— |
|
|
(1 |
) |
||||
|
Net (loss) earnings |
$ |
(27 |
) |
|
$ |
419 |
|
|
$ |
451 |
|
|
|
Net (loss) earnings per share: |
|
|
|
|
|
|||||||
|
Basic |
|
|
|
|
|
|||||||
|
Continuing operations |
$ |
(0.02 |
) |
|
$ |
0.31 |
|
|
$ |
0.30 |
|
|
|
Discontinued operations |
— |
|
|
— |
|
|
— |
|
||||
|
Total basic net (loss) earnings per share |
$ |
(0.02 |
) |
|
$ |
0.31 |
|
|
$ |
0.30 |
|
|
|
Diluted |
|
|
|
|
|
|||||||
|
Continuing operations |
$ |
(0.02 |
) |
|
$ |
0.30 |
|
|
$ |
0.29 |
|
|
|
Discontinued operations |
— |
|
|
— |
|
|
— |
|
||||
|
Total diluted net (loss) earnings per share |
$ |
(0.02 |
) |
|
$ |
0.30 |
|
|
$ |
0.29 |
|
|
|
Cash dividends declared per share |
$ |
0.1125 |
|
|
$ |
0.1125 |
|
|
$ |
0.1125 |
|
|
|
Weighted-average shares used to compute net earnings per share: |
|
|
|
|
|
|||||||
|
Basic |
1,334 |
|
|
1,367 |
|
|
1,513 |
|
||||
|
Diluted |
1,334 |
|
|
1,382 |
|
|
1,531 |
|
||||
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS |
||||||||
|
(Unaudited) |
||||||||
|
(In millions, except per share amounts) |
||||||||
|
|
|
|||||||
|
|
Nine months ended July 31, |
|||||||
|
|
2019 |
|
2018 |
|||||
|
Net revenue(a) |
$ |
21,920 |
|
|
$ |
22,906 |
|
|
|
Costs and expenses: |
|
|
|
|||||
|
Cost of sales |
14,820 |
|
|
16,114 |
|
|||
|
Research and development |
1,404 |
|
|
1,227 |
|
|||
|
Selling, general and administrative |
3,678 |
|
|
3,684 |
|
|||
|
Amortization of intangible assets |
199 |
|
|
222 |
|
|||
|
Restructuring charges |
— |
|
|
14 |
|
|||
|
Transformation costs |
302 |
|
|
491 |
|
|||
|
Disaster charges |
(7 |
) |
|
— |
|
|||
|
Acquisition, disposition and other related charges(b) |
710 |
|
|
70 |
|
|||
|
Total costs and expenses |
21,106 |
|
|
21,822 |
|
|||
|
Earnings from continuing operations |
814 |
|
|
1,084 |
|
|||
|
Interest and other, net |
(139 |
) |
|
(163 |
) |
|||
|
Tax indemnification adjustments(c) |
89 |
|
|
(1,342 |
) |
|||
|
Non-service net periodic benefit credit(d) |
45 |
|
|
90 |
|
|||
|
Earnings from equity interests |
21 |
|
|
23 |
|
|||
|
Earnings (loss) from continuing operations before taxes |
830 |
|
|
(308 |
) |
|||
|
(Provision) benefit for taxes(e) |
(261 |
) |
|
3,092 |
|
|||
|
Net earnings from continuing operations |
569 |
|
|
2,784 |
|
|||
|
Net loss from discontinued operations |
— |
|
|
(119 |
) |
|||
|
Net earnings |
$ |
569 |
|
|
$ |
2,665 |
|
|
|
Net earnings (loss) per share: |
|
|
|
|||||
|
Basic |
|
|
|
|||||
|
Continuing operations |
$ |
0.42 |
|
|
$ |
1.79 |
|
|
|
Discontinued operations |
— |
|
|
(0.07 |
) |
|||
|
Total basic net earnings per share |
$ |
0.42 |
|
|
$ |
1.72 |
|
|
|
Diluted |
|
|
|
|||||
|
Continuing operations |
$ |
0.41 |
|
|
$ |
1.76 |
|
|
|
Discontinued operations |
— |
|
|
(0.07 |
) |
|||
|
Total diluted net earnings per share |
$ |
0.41 |
|
|
$ |
1.69 |
|
|
|
Cash dividends declared per share |
$ |
0.3375 |
|
|
$ |
0.3750 |
|
|
|
Weighted-average shares used to compute net earnings per share: |
|
|
|
|||||
|
Basic |
1,367 |
|
|
1,552 |
|
|||
|
Diluted |
1,380 |
|
|
1,578 |
|
|||
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||||||||||||||||||
|
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS, |
||||||||||||||||||||||||
|
OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE |
||||||||||||||||||||||||
|
(Unaudited) |
||||||||||||||||||||||||
|
(In millions, except percentages and per share amounts) |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Three months |
|
Diluted net |
|
Three months |
|
Diluted net |
|
Three months |
|
Diluted net |
|||||||||||||
|
GAAP net (loss) earnings from continuing operations |
$ |
(27 |
) |
|
$ |
(0.02 |
) |
|
$ |
419 |
|
|
$ |
0.30 |
|
|
$ |
452 |
|
|
$ |
0.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Amortization of intangible assets |
58 |
|
|
0.04 |
|
|
69 |
|
|
0.05 |
|
|
72 |
|
|
0.05 |
|
|||||||
|
Restructuring charges(d) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1 |
) |
|
— |
|
|||||||
|
Transformation costs(d) |
170 |
|
|
0.13 |
|
|
54 |
|
|
0.04 |
|
|
126 |
|
|
0.08 |
|
|||||||
|
Disaster charges |
— |
|
|
— |
|
|
(7 |
) |
|
(0.01 |
) |
|
— |
|
|
— |
|
|||||||
|
Acquisition, disposition and other related charges(b) |
563 |
|
|
0.42 |
|
|
84 |
|
|
0.06 |
|
|
24 |
|
|
0.02 |
|
|||||||
|
Separation costs(d) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2 |
) |
|
— |
|
|||||||
|
Tax indemnification adjustments(c) |
134 |
|
|
0.10 |
|
|
(4 |
) |
|
— |
|
|
(2 |
) |
|
— |
|
|||||||
|
Non-service net periodic benefit credit(d) |
(12 |
) |
|
(0.01 |
) |
|
(17 |
) |
|
(0.01 |
) |
|
(26 |
) |
|
(0.02 |
) |
|||||||
|
Loss from equity interests(f) |
38 |
|
|
0.03 |
|
|
38 |
|
|
0.03 |
|
|
38 |
|
|
0.02 |
|
|||||||
|
Adjustments for taxes(e)(g) |
(321 |
) |
|
(0.24 |
) |
|
(57 |
) |
|
(0.04 |
) |
|
(42 |
) |
|
(0.02 |
) |
|||||||
|
Non-GAAP net earnings from continuing operations |
$ |
603 |
|
|
$ |
0.45 |
|
|
$ |
579 |
|
|
$ |
0.42 |
|
|
$ |
639 |
|
|
$ |
0.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
GAAP (loss) earnings from continuing operations |
$ |
(76 |
) |
|
|
|
$ |
434 |
|
|
|
|
$ |
490 |
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Non-GAAP adjustments related to continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Amortization of intangible assets |
58 |
|
|
|
|
69 |
|
|
|
|
72 |
|
|
|
||||||||||
|
Restructuring charges(d) |
— |
|
|
|
|
— |
|
|
|
|
(1 |
) |
|
|
||||||||||
|
Transformation costs(d) |
170 |
|
|
|
|
54 |
|
|
|
|
126 |
|
|
|
||||||||||
|
Disaster charges |
— |
|
|
|
|
(7 |
) |
|
|
|
— |
|
|
|
||||||||||
|
Acquisition, disposition and other related charges(b) |
563 |
|
|
|
|
84 |
|
|
|
|
24 |
|
|
|
||||||||||
|
Separation costs(d) |
— |
|
|
|
|
— |
|
|
|
|
(2 |
) |
|
|
||||||||||
|
Non-GAAP earnings from continuing operations |
$ |
715 |
|
|
|
|
$ |
634 |
|
|
|
|
$ |
709 |
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
GAAP operating margin from continuing operations |
(1 |
)% |
|
|
|
6 |
% |
|
|
|
6 |
% |
|
|
||||||||||
|
Non-GAAP adjustments from continuing operations |
11 |
% |
|
|
|
3 |
% |
|
|
|
3 |
% |
|
|
||||||||||
|
Non-GAAP operating margin from continuing operations |
10 |
% |
|
|
|
9 |
% |
|
|
|
9 |
% |
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
GAAP net loss from discontinued operations |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(1 |
) |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Non-GAAP adjustments related to discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Adjustments for taxes |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
— |
|
|||||||
|
Non-GAAP net earnings from discontinued operations |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Total GAAP net (loss) earnings |
$ |
(27 |
) |
|
$ |
(0.02 |
) |
|
$ |
419 |
|
|
$ |
0.30 |
|
|
$ |
451 |
|
|
$ |
0.29 |
|
|
|
Total Non-GAAP net earnings |
$ |
603 |
|
|
$ |
0.45 |
|
|
$ |
579 |
|
|
$ |
0.42 |
|
|
$ |
639 |
|
|
$ |
0.42 |
|
|
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||||||||||
|
ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS, |
||||||||||||||||
|
OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
|
(In millions, except percentages and per share amounts) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Nine months |
|
Diluted net |
|
Nine months |
|
Diluted net |
|||||||||
|
GAAP net earnings from continuing operations |
$ |
569 |
|
|
$ |
0.41 |
|
|
$ |
2,784 |
|
|
$ |
1.76 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|||||||||
|
Amortization of intangible assets |
199 |
|
|
0.14 |
|
|
222 |
|
|
0.14 |
|
|||||
|
Restructuring charges(d) |
— |
|
|
— |
|
|
14 |
|
|
0.01 |
|
|||||
|
Transformation costs(d) |
302 |
|
|
0.22 |
|
|
491 |
|
|
0.31 |
|
|||||
|
Disaster charges |
(7 |
) |
|
(0.01 |
) |
|
— |
|
|
— |
|
|||||
|
Acquisition, disposition and other related charges(b) |
710 |
|
|
0.51 |
|
|
70 |
|
|
0.04 |
|
|||||
|
Tax indemnification adjustments(c) |
(89 |
) |
|
(0.06 |
) |
|
1,342 |
|
|
0.86 |
|
|||||
|
Non-service net periodic benefit credit(d) |
(45 |
) |
|
(0.03 |
) |
|
(90 |
) |
|
(0.06 |
) |
|||||
|
Loss from equity interests(f) |
114 |
|
|
0.08 |
|
|
113 |
|
|
0.07 |
|
|||||
|
Adjustments for taxes(e)(g) |
19 |
|
|
0.02 |
|
|
(3,281 |
) |
|
(2.07 |
) |
|||||
|
Non-GAAP net earnings from continuing operations |
$ |
1,772 |
|
|
$ |
1.28 |
|
|
$ |
1,665 |
|
|
$ |
1.06 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
GAAP earnings from continuing operations |
$ |
814 |
|
|
|
|
$ |
1,084 |
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Non-GAAP adjustments related to continuing operations: |
|
|
|
|
|
|
|
|||||||||
|
Amortization of intangible assets |
199 |
|
|
|
|
222 |
|
|
|
|||||||
|
Restructuring charges(d) |
— |
|
|
|
|
14 |
|
|
|
|||||||
|
Transformation costs(d) |
302 |
|
|
|
|
491 |
|
|
|
|||||||
|
Disaster charges |
(7 |
) |
|
|
|
— |
|
|
|
|||||||
|
Acquisition, disposition and other related charges(b) |
710 |
|
|
|
|
70 |
|
|
|
|||||||
|
Non-GAAP earnings from continuing operations |
$ |
2,018 |
|
|
|
|
$ |
1,881 |
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
GAAP operating margin from continuing operations |
4 |
% |
|
|
|
5 |
% |
|
|
|||||||
|
Non-GAAP adjustments from continuing operations |
5 |
% |
|
|
|
3 |
% |
|
|
|||||||
|
Non-GAAP operating margin from continuing operations |
9 |
% |
|
|
|
8 |
% |
|
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
GAAP net loss from discontinued operations |
$ |
— |
|
|
$ |
— |
|
|
$ |
(119 |
) |
|
$ |
(0.07 |
) |
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Non-GAAP adjustments related to discontinued operations: |
|
|
|
|
|
|
|
|||||||||
|
Separation costs |
— |
|
|
— |
|
|
51 |
|
|
0.03 |
|
|||||
|
Tax indemnification adjustments(c) |
— |
|
|
— |
|
|
68 |
|
|
0.04 |
|
|||||
|
Non-GAAP net earnings from discontinued operations |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Total GAAP net earnings |
$ |
569 |
|
|
$ |
0.41 |
|
|
$ |
2,665 |
|
|
$ |
1.69 |
|
|
|
Total Non-GAAP net earnings |
$ |
1,772 |
|
|
$ |
1.28 |
|
|
$ |
1,665 |
|
|
$ |
1.06 |
|
|
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
|
(Unaudited) |
||||||||
|
(In millions, except par value) |
||||||||
|
|
|
|||||||
|
|
As of |
|||||||
|
|
July 31, 2019 |
|
October 31, 2018 |
|||||
|
ASSETS |
|
|
|
|||||
|
Current assets: |
|
|
|
|||||
|
Cash and cash equivalents |
$ |
3,693 |
|
|
$ |
4,880 |
|
|
|
Accounts receivable |
2,965 |
|
|
3,263 |
|
|||
|
Financing receivables |
3,567 |
|
|
3,396 |
|
|||
|
Inventory |
2,216 |
|
|
2,447 |
|
|||
|
Assets held for sale |
52 |
|
|
6 |
|
|||
|
Other current assets(h) |
2,624 |
|
|
3,280 |
|
|||
|
Total current assets |
15,117 |
|
|
17,272 |
|
|||
|
Property, plant and equipment |
6,000 |
|
|
6,138 |
|
|||
|
Long-term financing receivables and other assets |
9,092 |
|
|
11,359 |
|
|||
|
Investments in equity interests |
2,346 |
|
|
2,398 |
|
|||
|
Goodwill and intangible assets |
18,205 |
|
|
18,326 |
|
|||
|
Total assets |
$ |
50,760 |
|
|
$ |
55,493 |
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|||||
|
Current liabilities: |
|
|
|
|||||
|
Notes payable and short-term borrowings |
$ |
2,207 |
|
|
$ |
2,005 |
|
|
|
Accounts payable |
5,203 |
|
|
6,092 |
|
|||
|
Employee compensation and benefits |
1,454 |
|
|
1,412 |
|
|||
|
Taxes on earnings |
160 |
|
|
378 |
|
|||
|
Deferred revenue |
3,225 |
|
|
3,177 |
|
|||
|
Accrued restructuring |
223 |
|
|
294 |
|
|||
|
Other accrued liabilities |
4,686 |
|
|
3,840 |
|
|||
|
Total current liabilities |
17,158 |
|
|
17,198 |
|
|||
|
Long-term debt |
10,453 |
|
|
10,136 |
|
|||
|
Other non-current liabilities |
5,569 |
|
|
6,885 |
|
|||
|
Stockholders’ equity |
|
|
|
|||||
|
HPE stockholders’ equity: |
|
|
|
|||||
|
Preferred stock, $0.01 par value (300 shares authorized; none issued and outstanding at July 31, 2019) |
— |
|
|
— |
|
|||
|
Common stock, $0.01 par value (9,600 shares authorized; 1,310 and 1,423 shares issued and outstanding at July 31, 2019 and October 31, 2018, respectively) |
13 |
|
|
14 |
|
|||
|
Additional paid-in capital |
28,629 |
|
|
30,342 |
|
|||
|
Accumulated deficit(j) |
(7,959 |
) |
|
(5,899 |
) |
|||
|
Accumulated other comprehensive loss |
(3,150 |
) |
|
(3,218 |
) |
|||
|
Total HPE stockholders’ equity |
17,533 |
|
|
21,239 |
|
|||
|
Non-controlling interests |
47 |
|
|
35 |
|
|||
|
Total stockholders’ equity |
17,580 |
|
|
21,274 |
|
|||
|
Total liabilities and stockholders’ equity |
$ |
50,760 |
|
|
$ |
55,493 |
|
|
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
|
(Unaudited) |
||||||||
|
(In millions) |
||||||||
|
|
Three months ended |
|
Nine months ended |
|||||
|
Cash flows from operating activities: |
|
|
|
|||||
|
Net earnings |
$ |
(27 |
) |
|
$ |
569 |
|
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|||||
|
Depreciation and amortization |
632 |
|
|
1,919 |
|
|||
|
Stock-based compensation expense |
58 |
|
|
207 |
|
|||
|
Provision for doubtful accounts and inventory |
63 |
|
|
181 |
|
|||
|
Restructuring charges |
94 |
|
|
146 |
|
|||
|
Deferred taxes on earnings |
541 |
|
|
885 |
|
|||
|
Earnings from equity interests |
(3 |
) |
|
(21 |
) |
|||
|
Dividends received from equity investees |
71 |
|
|
71 |
|
|||
|
Other, net |
89 |
|
|
134 |
|
|||
|
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|||||
|
Accounts receivable |
172 |
|
|
315 |
|
|||
|
Financing receivables |
(293 |
) |
|
(325 |
) |
|||
|
Inventory |
(87 |
) |
|
66 |
|
|||
|
Accounts payable |
(261 |
) |
|
(826 |
) |
|||
|
Taxes on earnings |
(936 |
) |
|
(1,121 |
) |
|||
|
Restructuring |
(63 |
) |
|
(261 |
) |
|||
|
Other assets and liabilities |
1,146 |
|
|
626 |
|
|||
|
Net cash provided by operating activities |
1,196 |
|
|
2,565 |
|
|||
|
Cash flows from investing activities: |
|
|
|
|||||
|
Investment in property, plant and equipment |
(625 |
) |
|
(2,153 |
) |
|||
|
Proceeds from sale of property, plant and equipment |
77 |
|
|
448 |
|
|||
|
Purchases of available-for-sale securities and other investments |
(8 |
) |
|
(33 |
) |
|||
|
Maturities and sales of available-for-sale securities and other investments |
10 |
|
|
12 |
|
|||
|
Financial collateral posted |
(17 |
) |
|
(332 |
) |
|||
|
Financial collateral returned |
233 |
|
|
740 |
|
|||
|
Payments made in connection with business acquisitions, net of cash acquired |
(5 |
) |
|
(81 |
) |
|||
|
Net cash used in investing activities |
(335 |
) |
|
(1,399 |
) |
|||
|
Cash flows from financing activities: |
|
|
|
|||||
|
Short-term borrowings with original maturities less than 90 days, net |
— |
|
|
25 |
|
|||
|
Proceeds from debt, net of issuance costs |
385 |
|
|
1,010 |
|
|||
|
Payment of debt |
(312 |
) |
|
(872 |
) |
|||
|
Net proceeds related to stock-based award activities |
15 |
|
|
24 |
|
|||
|
Repurchase of common stock |
(577 |
) |
|
(1,965 |
) |
|||
|
Cash dividends paid |
(150 |
) |
|
(461 |
) |
|||
|
Net cash used in financing activities |
(639 |
) |
|
(2,239 |
) |
|||
|
Increase (decrease) in cash, cash equivalents and restricted cash |
222 |
|
|
(1,073 |
) |
|||
|
Cash, cash equivalents and restricted cash at beginning of period |
3,789 |
|
|
5,084 |
|
|||
|
Cash, cash equivalents and restricted cash at end of period(h) |
$ |
4,011 |
|
|
$ |
4,011 |
|
|
Contacts
Stefanie Notaney
[email protected]
Andrew Simanek
[email protected]
Read full story here This article published with permission from Business Wire
