HP Inc. Announces Fiscal 2020 Financial Outlook & Restructuring Plan

News highlights:

  • Estimates GAAP diluted net earnings per share (“EPS”) for fiscal 2020 of $1.98 to $2.10

  • Estimates non-GAAP diluted net EPS for fiscal 2020 of $2.22 to $2.32

  • Estimates fiscal 2020 free cash flow of at least $3.0 billion

  • Estimates total costs in connection with the restructuring plan of $1.0 billion and estimated annualized gross run rate savings of about $1.0 billion by the end of fiscal 2022

  • HP Inc. (“HP”) announces dividend increase of 10%

PALO ALTO, Calif., Oct. 03, 2019 (GLOBE NEWSWIRE) -- Today at HP’s 2019 Securities Analyst Meeting (“SAM”), the company provided details on its strategy and opportunities for long-term growth, along with its financial outlook for fiscal 2020.

“We are taking bold and decisive actions as we embark on our next chapter,” said Enrique Lores, incoming President and Chief Executive Officer, HP Inc. “We see significant opportunities to create shareholder value and we will accomplish this by advancing our leadership, disrupting industries and aggressively transforming the way we work. We will become an even more customer-focused and digitally enabled company, that will lead with innovation and execute with purpose.”

"I’m proud of the progress we have made across our business with cutting edge innovation, disciplined execution and a purpose driven culture,“ said Dion Weisler, President and Chief Executive Officer, HP Inc. “I have no doubt our team will keep raising the bar under Enrique’s leadership.”

Fiscal 2020 outlook

For fiscal 2020, the company estimates GAAP diluted net EPS to be in the range of $1.98 to $2.10 and estimates non-GAAP diluted net EPS to be in the range of $2.22 to $2.32. Fiscal 2020 non-GAAP diluted net EPS estimates exclude $0.22 to $0.24 per diluted share, primarily related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related (credits)/charges, tax adjustments and the related tax impact on these items.

Based on the current environment, HP anticipates generating free cash flow of at least $3.0 billion for fiscal 2020.

In fiscal 2020, the company indicated that it expects to return at least 75% of free cash flow, with a 10% increase in the planned quarterly dividend amount, and the balance returned to shareholders through share repurchases.

“In FY19, we continue to deliver on our financial commitments, with consistent company-level performance, non-GAAP EPS, free cash flow and return of capital,” said Steve Fieler, Chief Financial Officer. “I’m confident in our ability to execute with the multiple levers we have to drive profit and create value in our businesses.”

Fiscal year 2020 restructuring plan

Today, HP Inc. announced a fiscal year 2020 restructuring plan to simplify its operating model and become a more digitally enabled company. The company expects to reduce gross global headcount by approximately 7,000-9,000 employees through a combination of employee exits and voluntary early retirement. The company estimates that it will incur total labor and non-labor costs of approximately $1.0 billion in connection with the restructuring and other charges, with approximately $100 million in fiscal Q4 of 2019, $500 million in fiscal 2020 and the rest split between fiscal 2021 and 2022. These actions are expected to be completed in fiscal 2022. The company estimates that these actions will result in annualized gross run rate savings of about $1.0 billion by the end of fiscal 2022.

Additional share repurchase authorization

On September 30th, 2019, the Board of Directors (the "Board") of HP authorized an additional $5.0 billion for future repurchases of its outstanding shares of common stock. HP intends to use the additional authorization to repurchase its shares from time to time to offset the dilution created by shares issued under employee stock plans and to repurchase shares opportunistically. As of September 30, 2019, HP had approximately $1.7 billion of share repurchase authorization remaining, prior to the Board’s approval of the increase.

Webcast details

A webcast of today’s event, along with management presentations and other materials, is available at  www.hp.com/investor/SAM2019. This news release contains only a summary of some of the information being presented at today’s event and should be read in conjunction with the management presentations and other materials made available on that website.

About HP Inc.

HP Inc. (NYSE: HPQ) creates technology that makes life better for everyone, everywhere. Through our product and service portfolio of personal systems, printers and 3D printing solutions, we engineer experiences that amaze. More information about HP Inc. is available at www.hp.com.

Forward-looking statements

This news 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 HP and its consolidated subsidiaries 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 net revenue, margins, expenses, effective tax rates, net earnings, net EPS, cash flows, benefit plan funding, deferred taxes, share repurchases, foreign currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring and other charges; any statements of the plans, strategies and objectives of management for future operations, including, but not limited to, our sustainability goals, our go-to-market strategy, the execution of restructuring plans and any resulting cost savings, net 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 HP and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief, including with respect to the timing and expected benefits of acquisitions and other business combination and investment transactions; and any statements of assumptions underlying any of the foregoing.

Risks, uncertainties and assumptions include the need to address the many challenges facing HP’s businesses; the competitive pressures faced by HP’s businesses; risks associated with executing HP’s strategy and business model changes; successfully innovating, developing and executing HP’s go-to-market strategy, including online, omnichannel and contractual sales, in an evolving distribution and reseller landscape; successfully competing and maintaining the value proposition of HP’s products, including supplies; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers, manage HP’s global, multi-tier distribution network, limit potential misuse of pricing programs by HP’s channel partners, adapt to new or changing marketplaces and effectively deliver HP’s services; challenges to HP’s ability to accurately forecast inventories, demand and pricing, which may be due to HP’s multi-tiered channel, sales of HP’s products to unauthorized resellers or unauthorized resale of HP’s products; the protection of HP’s intellectual property assets, including intellectual property licensed from third parties; risks associated with HP’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 HP and its suppliers, customers, clients and partners; the hiring and retention of key employees; integration and other risks associated with business combination and investment transactions; the results of the restructuring plans, including estimates and assumptions related to the cost (including any possible disruption of HP’s business) and the anticipated benefits of the restructuring plans; the impact of changes in tax laws, including uncertainties related to the interpretation and application of the Tax Cuts and Jobs Act of 2017 on HP's tax obligations and effective tax rate; the resolution of pending investigations, claims and disputes; and other risks that are described in HP’s Annual Report on Form 10-K for the fiscal year ended October 31, 2018, and HP’s other filings with the Securities and Exchange Commission.

As in prior periods, the financial information set forth in this release, including any tax-related items, reflects estimates based on information available at this time. While HP believes these estimates to be reasonable, these amounts could differ materially from reported amounts in HP’s Annual Reports on Form 10-K for the fiscal years ended October 31, 2019 and October 31, 2020 and HP’s other filings with the Securities and Exchange Commission. HP assumes no obligation and does not intend to update these forward-looking statements. HP’s Investor Relations website at investor.hp.com contains a significant amount of information about HP, including financial and other information for investors. HP encourages investors to visit its website from time to time, as information is updated, and new information is posted.

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