DXC Technology Reports Fourth Quarter and Full Fiscal Year 2024 Results

• Revenues of $3.39 billion for Q4 FY24, down 5.7% as compared to prior year, and down 4.9% on an organic basis

• Q4 FY24 Diluted earnings per share was $(1.10) vs. $(3.38) in the prior year quarter. Q4 FY24 Non-GAAP diluted earnings per share was $0.97 vs. $1.02 in the prior year quarter

• Q4 FY24 operating cash flow of $280 million, less capital expenditures of $125 million, results in $155 million of free cash flow. For the full year, we delivered $756 million of free cash flow, the third consecutive year of free cash flow over $700 million

• Q4 FY24 Book-to-bill ratio of 0.94x and trailing twelve-month book-to-bill of 0.91x

ASHBURN, Va.–(BUSINESS WIRE)–DXC Technology (NYSE: DXC) today reported results for the fourth quarter of fiscal year 2024.

Raul Fernandez, Chief Executive Officer commented: “My first months as CEO have strengthened my view of the incredible talent of our employees and the value we bring to our customers every day. DXC is trusted with providing mission critical services to leading companies around the world, helping customers modernize their business processes, and generating value by providing process knowledge, world class engineering talent, and AI capabilities to a wide range of Industries. With our track record of service delivery excellence, our skilled employees and recent management additions I have great confidence in our future.”

Financial Highlights – Fourth Quarter of Fiscal Year 2024

Revenue was $3.39 billion, down 5.7% as compared to prior year period, and down 4.9% on an organic basis. The revenue performance was primarily driven by declines in Modern Workplace and Cloud and ITO. Organic revenue growth came in above DXC’s guidance range.

Net income was $(195) million, or (5.8)% of sales, compared to $(758) million, or (21.1)% of sales, in the prior year quarter. Net income was higher due to lower adjustment in the mark to market of the pensions. EBIT was $(289) million or (8.5)% of sales. Net income and EBIT included the following items: amortization of acquired intangible assets of $88 million, restructuring costs of $20 million, net losses on dispositions of $17 million, and a $445 million mark to market pension adjustment. Excluding these items, adjusted EBIT was $283 million and adjusted EBIT margin was 8.4%, above the Company’s guidance range. Adjusted EBIT was $37 million below the prior year quarter, mainly driven by $20 million lower non-cash pension income, and lower gains on asset sales of $19 million.

Diluted earnings per share was $(1.10) and non-GAAP diluted earnings per share was $0.97, above the guidance range.

During the fourth quarter of fiscal year 2024, the Company repurchased 6.2 million shares of common stock for a total of $138 million. DXC has retired about 32% of its shares outstanding since the start of fiscal year 2022.

Financial Information by Segment – Fourth Quarter of Fiscal Year 2024

GBS segment revenue was $1,712 million, down 2.2% compared to the prior year period and down 0.3% on an organic basis. GBS growth was impacted by lower levels of Analytics and Engineering and Applications revenues, partially offset by the continued growth in Insurance. GBS segment profit was $228 million and segment profit margin was 13.3%, down 40 bps compared to prior year. GBS bookings were $1.7 billion for a book-to-bill of 0.99x, and 0.96x on a trailing twelve months basis.

GIS segment revenue was $1,674 million, down 9.0% compared to the prior year period, and down 9.3% on an organic basis. GIS segment revenue performance was impacted by continued organic revenue declines in Modern Workplace and Cloud Infrastructure & ITO. GIS segment profit was $124 million with a segment profit margin of 7.4%, down 40 bps as compared to prior year. GIS bookings were $1.4 billion for a book-to-bill of 0.89x, and 0.86x on a trailing twelve months basis.

Offering Highlights

The results for our six offerings are as follows:

Cash Flow

Cash flow from operations was $280 million in the fourth quarter of fiscal year 2024, as compared to $415 million in the fourth quarter of fiscal year 2023, and capital expenditures were $125 million in the fourth quarter of fiscal year 2024, as compared to $146 million in the fourth quarter of fiscal year 2023. Free cash flow (cash flow from operations, less capital expenditures) was $155 million in the fourth quarter of fiscal year 2024, as compared to $269 million in the fourth quarter of fiscal year 2023. For the full year, free cash flow increased from $737 million in fiscal year 2023 to $756 million in fiscal year 2024.

Guidance

The Company’s guidance for the first quarter and full fiscal year 2025 is presented in the table below.

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.

Earnings Conference Call and Webcast

DXC Technology senior management will host a conference call and webcast to discuss these results on May 16, 2024, at 5:00 p.m. EDT. The dial-in number for domestic callers is +1 (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 on DXC Technology’s Investor Relations website.

A replay of the conference call will be available from approximately two hours after the conclusion of the call until May 23, 2024. The phone number for the replay is +1 (800) 770-2030 or +1 (647) 362-9199. The replay passcode is 4164760.

About DXC Technology

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.

Forward-Looking Statements

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, 2023, and any updating information in subsequent SEC filings, including DXC’s upcoming Annual Report on Form 10-K for the year ended March 31, 2024.

No assurance can be given that any goal or plan set forth in any forward-looking statement can or will be achieved, and readers are cautioned not to place undue reliance on such statements which speak only as of the date they are made. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events except as required by law.

About Non-GAAP Measures

In an effort to provide investors with supplemental financial information, in addition to the preliminary and unaudited financial information presented on a GAAP basis, we have also disclosed in this press release preliminary non-GAAP information including: earnings before interest and taxes (“EBIT”), EBIT margin, adjusted EBIT, adjusted EBIT margin, non-GAAP diluted EPS, organic revenues, organic revenue growth, free cash flow, and non-GAAP tax rate.

We believe EBIT, EBIT margin, adjusted EBIT, adjusted EBIT margin, and non-GAAP diluted EPS provide investors with useful supplemental information about our operating performance after excluding certain categories of expenses.

One category of expenses excluded from adjusted EBIT, adjusted EBIT margin, and non-GAAP diluted EPS, incremental amortization of intangible assets acquired through business combinations, which, if included, may result in a significant difference in period over period amortization expense on a GAAP basis. We exclude amortization of certain acquired intangible assets as these non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Although DXC management excludes amortization of acquired intangible assets primarily customer-related intangible assets from its non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and support revenue generation. Any future transactions may result in a change to the acquired intangible asset balances and associated amortization expense.

Another category of expenses excluded from adjusted EBIT, adjusted EBIT margin, and non-GAAP diluted EPS, is impairment losses, which, if included, may result in a significant difference in period-over-period expense on a GAAP basis. We exclude impairment losses as these non-cash amounts, reflect generally an acceleration of what would be multiple periods of expense and are not expected to occur frequently. Further assets such as goodwill may be significantly impacted by market conditions outside of management’s control.

We believe organic revenue growth provides investors with useful supplemental information about our revenues after excluding the effect of currency exchange rate fluctuations for currencies other than U.S. dollars and the effects of acquisitions and divestitures in the periods presented. See below for a description of the methodology we use to present organic revenues.

Selected references are made to revenue growth on an “organic basis” so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates and without the impacts of acquisitions and divestitures, thereby providing comparisons of operating performance from period to period of the business that we have owned during all periods presented. Organic revenue growth is calculated by dividing the year-over-year change in GAAP revenues attributed to organic growth by the GAAP revenues reported in the prior comparable period. Organic revenue is calculated as constant currency revenue excluding the impact of mergers, acquisitions or similar transactions until the one-year anniversary of the transaction and excluding revenues of divestitures during the reporting period. This approach is used for all results where the functional currency is not the U.S. dollar.

Free cash flow represents cash flow from operations, less capital expenditures. Free cash flow is utilized by our management, investors, and analysts to evaluate cash available to pay debt, repurchase shares, and provide further investment in the business.

There are limitations to the use of the non-GAAP financial measures presented in this press release. One of the limitations is that they do not reflect complete financial results. We compensate for this limitation by providing a reconciliation between our non-GAAP financial measures and the respective most directly comparable financial measure calculated and presented in accordance with GAAP. Additionally, other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes between companies.

Contacts

John Sweeney, CFA, VP of Investor Relations, +1-980-315-3665, [email protected]

Sean B. Pasternak, Corporate Media Relations, +1-647-975-7326, [email protected]

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