HP Inc. Reports First Quarter 2016 Results

PALO ALTO, CA -- (Marketwired) -- Feb 24, 2016 -- HP (NYSE: HPQ)

First quarter net revenue of $12.2 billion, down 12% from the prior-year period and down 5% in constant currency
First quarter non-GAAP diluted net earnings per share from continuing operations of $0.36 - within the previously provided outlook of $0.33 to $0.38 per share
First quarter GAAP diluted net earnings per share from continuing operations of $0.36 - above the previously provided outlook of $0.27 to $0.32 per share
First quarter returned more than $1.0 billion to shareholders in the form of share repurchases and dividends
First quarter net cash used in operating activities was ($108) million

HP Inc.'s fiscal 2016 first quarter financial performance

                                                  Q1 FY16 Q1 FY15        Y/Y
GAAP net revenue ($B)                               $12.2   $13.9      (12%)
GAAP operating margin from continuing operations     7.6%    8.1% (0.5 pts.)
GAAP net earnings from continuing operations ($B)    $0.7    $0.8      (16%)
GAAP diluted net earnings per share from                                    
 continuing operations                              $0.36   $0.41      (12%)
Non-GAAP operating margin from continuing                                   
 operations                                          7.5%    7.9% (0.4 pts.)
Non-GAAP net earnings from continuing operations                            
 ($B)                                                $0.6    $0.8      (16%)
Non-GAAP diluted net earnings per share from                                
 continuing operations                              $0.36   $0.41      (12%)
Net Cash (used in) / provided by operating                                  
 activities ($M)(1)                                $(108)    $744        N/M

Notes to table

(1)  The consolidated condensed statement of cash flows for the three months
     ended January 31, 2015 represents the combined cash flows of HP prior  
     to separation, as previously filed, and has not been adjusted to       
     reflect the effect of the separation of Hewlett Packard Enterprise     
     Company.                                                               
N/M  Not meaningful

Information about HP Inc.'s use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below.

HP Inc. (HP) announced first quarter net revenue of $12.2 billion, down 12% from the prior-year period and down 5% in constant currency.

First quarter GAAP diluted net earnings per share (EPS) from continuing operations was $0.36, down from $0.41 in the prior-year period and above the previously provided outlook of $0.27 to $0.32. First quarter non-GAAP diluted net EPS from continuing operations was $0.36, down from $0.41 in the prior-year period and within its previously provided outlook of $0.33 to $0.38. First quarter non-GAAP net earnings from continuing operations and non-GAAP diluted net EPS from continuing operations exclude after-tax costs of $5 million, rounding to $0.00 per diluted share, respectively, related to non-operating retirement-related credits, restructuring charges, and the amortization of intangible assets.

"We have a clear strategy that leverages our strengths, and we are focused on execution, taking cost out of the business and delivering innovations that will amaze our customers and partners," said Dion Weisler, HP's President and CEO. "Although we have some tough quarters ahead, I am confident in the future."

Asset management
HP's net cash used in operating activities in the first quarter was $108 million. Inventory ended the quarter at $4.1 billion, down 2 days quarter over quarter to 37 days. Accounts receivable ended the quarter at $4.1 billion, down 5 days quarter over quarter to 30 days. Accounts payable ended the quarter at $9.0 billion, down 11 days quarter over quarter to 82 days. HP's dividend payment of $0.124 per share in the first quarter resulted in cash usage of $0.2 billion. HP also utilized $0.8 billion of cash during the quarter to repurchase approximately 67.0 million shares of common stock in the open market. HP exited the quarter with $3.7 billion in gross cash.

Fiscal 2016 first quarter segment results

Personal Systems net revenue was down 13% year over year (down 6% in constant currency) with a 3.1% operating margin. Commercial net revenue decreased 11% and Consumer net revenue decreased 16%. Total units were down 13% with Notebooks units down 8% and Desktops units down 13%.
Printing net revenue was down 17% year over year (down 11% in constant currency) with a 17.0% operating margin. Total hardware units were down 20% with Commercial hardware units down 15% and Consumer hardware units down 23%. Supplies revenue was down 14% (down 8% in constant currency).

Outlook
For the fiscal 2016 second quarter, HP estimates non-GAAP diluted net EPS from continuing operations to be in the range of $0.35 to $0.40 and GAAP diluted net EPS from continuing operations to be in the range of $0.33 to $0.38. Fiscal 2016 second quarter non-GAAP diluted net EPS from continuing operations estimates exclude $0.02 per diluted share, respectively related to non-operating retirement-related credits, restructuring charges, and the amortization of intangible assets.

For fiscal 2016, HP estimates non-GAAP diluted net EPS from continuing operations to be in the range of $1.59 to $1.69 and GAAP diluted net EPS from continuing operations to be in the range of $1.52 to $1.62. Fiscal 2016 non-GAAP diluted net EPS from continuing operations estimates exclude $0.07 per diluted share, respectively, related to non-operating retirement-related credits, restructuring charges, and the amortization of intangible assets.

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