•Total revenue of $3.24 billion, down 6% (4% on an organic basis)(1)

•Diluted earnings per share was $0.14 vs. $0.17 in the prior year quarter; Non-GAAP diluted earnings per share(2) was $0.74, up 17%

•Operating cash flow of $238 million, up 87%; Free Cash Flow of $45 million(3)

•Increased the low end of the full year adjusted EBIT(4) margin outlook range by 50 basis points to 6.5% - 7.0%

•Increased the low-end of the full-year non-GAAP diluted EPS(2) outlook range by $0.25 to $2.75 - $3.00

•Increased full year free cash flow(3) outlook by $50 million to approximately $450 million

ASHBURN, VA, August 8, 2024 – DXC Technology (NYSE: DXC) today reported results for the first quarter of fiscal year 2025.

"I am pleased with our first quarter results that came in ahead of our expectations on top line, adjusted EBIT margin and adjusted diluted EPS." said DXC Technology President and Chief Executive Officer, Raul Fernandez "Our performance is an early testament to the improved execution by our teams along many fronts. Our teams are focused on designing and implementing solutions that embed engineering skills, AI and industry expertise to capture opportunities in an expanding addressable market. As our enhanced operating model gains traction, we believe it positions us well to deliver greater value for our customers, improve financial performance and drive long-term shareholder value.”

•Total revenue was $3.24 billion, down 6% year-over-year (4% on an organic basis).(1)

•Net income of $25 million, down 40% year-over-year, with a corresponding margin of 0.8%, compared to net income of $42 million in the first quarter of fiscal 2024, or 1.2% of sales.

•EBIT was $89 million, down 6% year-over-year with a corresponding margin of 2.8%. Adjusted EBIT(4) was $222 million, down 1% year-over-year, with a corresponding margin of 6.9%.

•Diluted earnings per share was $0.14, down 18% year-over-year. Non-GAAP diluted earnings per share(2) was $0.74, up 17% year-over-year.

•Cash generated from operations was $238 million, up 87% year-over-year. Free cash flow(3) was $45 million in the first quarter of fiscal year 2025, as compared to using $75 million in the first quarter of fiscal year 2024.

•Book to Bill ratio was 0.77x, compared to 0.89x in the first quarter of fiscal year 2024.

•Revenue was $1.67 billion, down 2% year-over-year (up 1% on an organic basis)(1)

•Segment profit was $181 million, down 6% year-over-year, with a corresponding margin of 10.8%

•Book to Bill ratio of 0.83x, compared to 0.84x during the first quarter of fiscal 2024

•Revenue from GIS was $1.56 billion, down 10% year-over-year (down 9% on an organic basis)(1)

•Segment profit was $114 million, up 25% year-over-year, with a corresponding margin of 7.3%

•Book to Bill ratio of 0.70x, compared to 0.94x during the first quarter of fiscal 2024

•Total revenue in the range of $12.74 billion and $13.02 billion, compared to the prior outlook of $12.67 billion to $12.95 billion, a decline of 6% to 4% on an organic basis(1)

•Adjusted EBIT margin(4) between 6.5% to 7.0%, compared to the prior outlook of 6.0% to 7.0%

•Non-GAAP diluted EPS(2) in the range of $2.75 to $3.00, compared to the prior outlook of $2.50 to $3.00

•Free Cash Flow(3) of approximately $450 million, up from the prior outlook of approximately $400 million

•Total revenue in the range of $3.19 billion and $3.22 billion, a decline of 6.5% to 5.5% year-over-year on an organic basis(1)

•Adjusted EBIT margin(4) between 6.5% to 7.0%

•Non-GAAP Diluted EPS(2) in the range of $0.70 to $0.75

*Pension benefit is split between Cost Of Sales (COS) & Other Income:

Fiscal year 2025: Net pension benefit of $105 million; $50 million service cost in COS, $155 million pension benefit in Other income

Fiscal year 2024: Net pension benefit of $92 million; $53 million service cost in COS, $145 million pension benefit in Other income

DXC does not provide a reconciliation of non-GAAP measures that it discusses as part of its guidance because certain significant information required for such reconciliation is not available without unreasonable efforts or at all, including, most notably, the impact of significant non-recurring items. Without this information, DXC does not believe that a reconciliation would be meaningful.

DXC Technology senior management will host a conference call and webcast to discuss results at 5:00 p.m. EDT August 8, 2024. The dial-in number for domestic callers is 888-330-2455. Callers who reside outside of the United States should dial +1-240-789-2717. The passcode for all participants is 4164760#. The webcast audio and any presentation slides will be available through a link posted on DXC Technology’s Investor Relations website.

A replay of the conference call will be available approximately two hours after the conclusion of the call until 11:59 PM EDT on August 15, 2024, at 800-770-2030 for domestic callers and at +1-647-362-9199 for international callers. The replay passcode is 4164760. A transcript of the conference call will be posted on DXC Technology’s Investor Relations website.

DXC Technology (NYSE: DXC) helps global companies run their mission critical systems and operations while modernizing IT, optimizing data architectures, and ensuring security and scalability across public, private and hybrid clouds. The world’s largest companies and public sector organizations trust DXC to deploy services to drive new levels of performance, competitiveness, and customer experience across their IT estates. Learn more about how we deliver excellence for our customers and colleagues at DXC.com.

All statements in this press release that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” Forward-looking statements often include words such as “anticipates,” “believes,” “estimates,” “expects,” “forecast,” “goal,” “intends,” “objective,” “plans,” “projects,” “strategy,” “target,” and “will” and words and terms of similar substance in discussions of future operating or financial performance. Forward-looking statements include, among other things, statements with respect to our future financial condition, results of operations, cash flows, business strategies, operating efficiencies or synergies, divestitures, competitive position, growth opportunities, share repurchases, dividend payments, plans and objectives of management and other matters. These statements represent current expectations and beliefs, and no assurance can be given that the results described in such statements will be achieved. Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of our control. Important factors that could cause actual results to differ materially from those described in forward-looking statements include, but are not limited to: our inability to succeed in our strategic objectives; the risk of liability, reputational damages or adverse impact to business due to service interruptions, from security breaches, cyber-attacks, other security incidents or disclosure of confidential information or personal data; compliance, or failure to comply, with obligations arising under new or existing laws, regulations, and customer contracts relating to the privacy, security and handling of personal data; our product and service quality issues; our inability to develop and expand our service offerings to address emerging business demands and technological trends, including our inability to sell differentiated services amongst our offerings; our inability to compete in certain markets and expand our capacity in certain offshore locations and risks associated with such offshore locations, such as the on-going conflict between Russia and Ukraine; failure to maintain our credit rating and ability to manage working capital, refinance and raise additional capital for future needs; difficulty in understanding the changes to our business model by financial or industry analysts or our failure to meet our publicly announced financial guidance; public health crises such as the COVID-19 pandemic; our indebtedness and potential material adverse effect on our financial condition and results of operations; the competitive pressures faced by our business; our inability to accurately estimate the cost of services, and the completion timeline of contracts; failure by us or third party partners to deliver on commitments or otherwise breach obligations to our customers; the risks associated with climate change and natural disasters; increased scrutiny of, and evolving expectations for, sustainability and environmental, social, and governance initiatives; our inability to attract and retain key personnel and maintain relationships with key partners; the risks associated with prolonged periods of inflation or current macroeconomic conditions, including the current decline in economic growth rates in the United States and in other countries, the possibility of reduced spending by customers in the areas we serve, the uncertainty related to our cost-takeout efforts, continuing unfavorable foreign exchange rate movements, and our ability to close new deals in the event of an economic slowdown; the risks associated with our international operations, such as risks related to currency exchange rates; our inability to comply with existing and new laws and regulations, including social and environmental responsibility regulations, policies and provisions, as well as customer and investor demands; our inability to achieve the expected benefits of our restructuring plans; our inadvertent infringement of third-party intellectual property rights or infringement of our intellectual property rights by third parties; our inability to procure third-party licenses required for the operation of our products and service offerings; risks associated with disruption of our supply chain; our inability to maintain effective disclosure controls and internal control over financial reporting; potential losses due to asset impairment charges; our inability to pay dividends or repurchase shares of our common stock; pending investigations, claims and disputes and any adverse impact on our profitability and liquidity; disruptions in the credit markets, including disruptions that reduce our customers’ access to credit and increase the costs to our customers of obtaining credit; counterparty default risk in our hedging program; our failure to bid on projects effectively; financial difficulties of our customers and our inability to collect receivables; our inability to maintain and grow our customer relationships over time and to comply with customer contracts or government contracting regulations or requirements; our inability to succeed in our strategic transactions; changes in tax rates, tax laws, and the timing and outcome of tax examinations; risks following the merger of Computer Sciences Corporation (“CSC”) and Enterprise Services business of Hewlett Packard Enterprise Company’s (“HPES”) businesses, including anticipated tax treatment, unforeseen liabilities, and future capital expenditures; risks following the spin-off of our former U.S. Public Sector business (the “USPS”) and its related mergers with Vencore Holding Corp. and KeyPoint Government Solutions in June 2018 to form Perspecta Inc. (including its successors and permitted assigns, “Perspecta”); volatility of the price of our securities, which is subject to market and other conditions. For a written description of these factors, see the section titled “Risk Factors” in DXC’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024, and any updating information in subsequent SEC filings.

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Roger Sachs, CFA, VP of Investor Relations, +1-201-259-0801, roger.sachs@dxc.com

Sean B. Pasternak, Corporate Media Relations, +1-647-975-7326, sean.pasternak@dxc.com

                                

We define segment profit as segment revenues less costs of services, segment selling, general and administrative, depreciation and amortization, and other income (excluding the movement in foreign currency exchange rates on our foreign currency denominated assets and liabilities and the related economic hedges). The Company does not allocate to its segments certain operating expenses managed at the corporate level. These unallocated costs generally include certain corporate function costs, stock-based compensation expense, pension and other post-retirement benefits (“OPEB”) actuarial and settlement gains and losses, restructuring costs, transaction, separation and integration-related costs, and amortization of acquired intangible assets.

Our non-GAAP adjustments include:

•Restructuring costs – includes costs, net of reversals, related to workforce and real estate optimization and other similar charges.

•Transaction, separation and integration-related (“TSI”) costs – includes third party costs related to integration, separation, planning, financing and advisory fees and other similar charges associated with mergers, acquisitions, strategic investments, joint ventures, and dispositions and other similar transactions incurred within one year of such transactions closing, except for costs associated with related disputes, which may arise more than one year after closing.

•Amortization of acquired intangible assets – includes amortization of intangible assets acquired through business combinations.

•Merger related indemnification - in fiscal 2024, represents the Company’s then current estimate of potential liability to HPE for a tax related indemnification.

•Gains and losses on dispositions – gains and losses related to dispositions of businesses, strategic assets and interests in less than wholly-owned entities.

•Impairment losses – non-cash charges associated with the permanent reduction in the value of the Company’s assets (e.g., impairment of goodwill and other long-term assets including fixed assets and impairments to deferred tax assets for discrete changes in valuation allowances). Future discrete reversals of valuation allowances are likewise excluded.

•Tax adjustments – discrete tax adjustments to impair or recognize certain deferred tax assets, adjustments for changes in tax legislation and the impact of merger and divestitures. Income tax expense of all other (non-discrete) non-GAAP adjustments is based on the difference in the GAAP annual effective tax rate (AETR) and overall non-GAAP provision (consistent with the GAAP methodology).

A reconciliation of reported results to non-GAAP results is as follows:

The above tables serve to reconcile the non-GAAP financial measures to the most directly comparable GAAP measures. Please refer to the “About Non-GAAP Measures” section of the press release for further information on the use of these non-GAAP measures.

Source: DXC Technology

Category: Investor Relations