HP Inc. Reports Third Quarter Fiscal 2016 Results

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

Third quarter GAAP diluted net earnings per share from continuing operations of $0.49 -- above the previously provided outlook of $0.40 to $0.43 per share
Third quarter non-GAAP diluted net earnings per share from continuing operations of $0.48 -- above the previously provided outlook of $0.43 to $0.46 per share
Third quarter net revenue of $11.9 billion, down 4% (down 1% in constant currency) from the prior-year period
Third quarter net cash provided by operating activities of $1.1 billion
Third quarter returned $269 million to shareholders in the form of share repurchases and dividends

HP Inc.'s fiscal 2016 third quarter financial performance

                                                                            
                                                   Q3 FY16  Q3 FY15    Y/Y  
GAAP net revenue ($B)                                $11.9    $12.4     (4%)
GAAP operating margin from continuing operations      9.4%     8.1%  1.3 pts
GAAP net earnings from continuing operations ($B)     $0.8     $0.7      20%
GAAP diluted net earnings per share from                                    
 continuing operations                               $0.49    $0.39      26%
Non-GAAP operating margin from continuing                                   
 operations                                           9.4%     7.4%  2.0 pts
Non-GAAP net earnings from continuing operations                            
 ($B)                                                 $0.8     $0.6      28%
Non-GAAP diluted net earnings per share from                                
 continuing operations                               $0.48    $0.35      37%
Net cash provided by operating activities ($B)(1)                           
                                                      $1.1     $1.7    (36%)

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

(1)  The consolidated condensed statement of cash flows for the three months
     ended July 31, 2015 represents the combined cash flows of Hewlett-     
     Packard Company prior to the separation of Hewlett Packard Enterprise  
     Company (the "Separation"), as previously filed, and has not been      
     adjusted to reflect the effect of the Separation.

Revenue and EPS results
HP Inc. ("HP") announced third quarter net revenue of $11.9 billion, down 4% (down 1% in constant currency) from the prior-year period.

Third quarter GAAP diluted net earnings per share (EPS) from continuing operations was $0.49, up from $0.39 in the prior-year period and above the previously provided outlook of $0.40 to $0.43. Third quarter non-GAAP diluted net EPS from continuing operations was $0.48, up from $0.35 in the prior-year period and above its previously provided outlook of $0.43 to $0.46. Third quarter non-GAAP net earnings from continuing operations and non-GAAP diluted net EPS from continuing operations exclude after-tax adjustments of $17 million, or $0.01 per share, related to restructuring and other charges, amortization of intangible assets, tax indemnifications, and non-operating retirement-related credits / (charges).

"In Q3, we delivered on our financial commitments and continued to make solid progress in executing against our core, growth and future strategic framework," said Dion Weisler, President and CEO, HP Inc. "Although the markets remain challenged, we have the innovation and executional rigor needed to continue to take profitable share and invest in the right opportunities to drive long-term success for the company."

Asset management
HP's net cash provided by operating activities in the third quarter was $1.1 billion. Accounts receivable ended the quarter at $4.0 billion, unchanged quarter over quarter at 30 days. Inventory ended the quarter at $4.0 billion, up 3 days quarter over quarter to 37 days. Accounts payable ended the quarter at $10.4 billion, up 8 days quarter over quarter to 96 days. HP's dividend payment of $0.124 per share in the third quarter resulted in cash usage of $0.2 billion. HP also utilized $0.1 billion of cash during the quarter to repurchase approximately 4.5 million shares of common stock in the open market. HP exited the quarter with $5.6 billion in gross cash, which includes cash and cash equivalents, short-term investments, and certain liquid long-term investments.

Fiscal 2016 third quarter segment results

Personal Systems net revenue was flat year over year (up 2% in constant currency) with a 4.4% operating margin. Commercial net revenue decreased 3% and Consumer net revenue increased 8%. Total units were up 4% with Notebooks units up 12% and Desktops units down 6%.
Printing net revenue was down 14% year over year (down 10% in constant currency) with a 20.4% operating margin. Total hardware units were down 10% with Commercial hardware units down 2% and Consumer hardware units down 14%. Supplies revenue was down 18% (down 13% in constant currency).

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