HP Q2 Earnings Beat - Revenues Miss
May 28, 2020
HP reported fiscal 2020 second quarter net revenue of $12.5 billion, down 11.2% (down 10.1% in constant currency) from the prior-year period.
Second quarter GAAP diluted net EPS was $0.53, up from $0.51 in the prior-year period and above the previously provided outlook of $0.46 to $0.50. Second quarter non-GAAP diluted net EPS was $0.51, down from $0.53 in the prior-year period and within the previously provided outlook of $0.49 to $0.53. Second quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $23 million, or $0.02 per diluted share, related to restructuring and other charges, acquisition-related charges (credits), amortization of intangible assets, non-operating retirement-related (credits)/charges, and tax adjustments.
Investor expectations were set at 44 cents of earnings per share on $12.93 billion in revenue.
“The strength of HP’s diversified portfolio, go-to-market capabilities and balance sheet position us well to navigate macroeconomic challenges and drive long-term value creation,” said Enrique Lores, HP’s President and CEO. “We are seeing strong demand from our customers in notebook PC orders and Instant Ink subscriptions, as well as growing interest in 3D printing and digital manufacturing in key verticals such as healthcare. The current environment will be a catalyst for transformation and innovation across HP.”
HP generated $(0.6) billion of free cash flow in the second quarter. Free cash flow includes net cash used in operating activities of $(0.5) billion adjusted for net investment in leases of $51 million and net investment in property, plant & equipment of $146 million.
HP’s dividend payment of $0.1762 per share in the second quarter resulted in cash usage of $0.3 billion. HP also utilized $0.1 billion of cash during the quarter to repurchase approximately 5.6 million shares of common stock in the open market. HP exited the quarter with $4.1 billion in gross cash, which includes cash and cash equivalents.
Fiscal 2020 second quarter segment results
For fiscal 2020, given the level of uncertainty around the duration of the pandemic, the timing and pace of economic recovery and the potential impact of a resurgence in cases, HP anticipates a much wider range of outcomes for the year. As a result, HP will not be providing an outlook for the fiscal year 2020.