DXC Technology Delivers Solid First Quarter with Growth in Revenue, Earnings per Share and Margins
Aug. 07, 2018
TYSONS, Va.--(BUSINESS WIRE)--Aug 7, 2018--DXC Technology (NYSE: DXC) today reported results for the first quarter of fiscal year 2019, representing the period from April 1 through June 30, 2018. All results from continuing operations and comparisons exclude the U.S. Public Sector business, which was combined with Vencore Holding Corp. and KeyPoint Government Solutions to form a new publicly-traded company, Perspecta.
“In the first quarter of fiscal 2019, DXC Technology delivered year-over-year growth in revenue, earnings per share, and margins,” said Mike Lawrie, DXC’s chairman, president and CEO. “We continue to build momentum in digital, with double-digit growth in each of our digital areas, and we also drove growth in our industry offerings, where we are seeing strong demand in financial services and healthcare. During the quarter, we completed the separation of our U.S. Public Sector business, and we also recently announced our intent to acquire Molina Medicaid Solutions from Molina Healthcare. This transaction will expand our state Medicaid business while enhancing the capabilities we provide these agencies. DXC is on track to deliver against its fiscal 2019 financial targets.”
Financial Highlights - First Quarter Fiscal 2019Diluted earnings per share from continuing operations was $0.78 in the first quarter, including $(0.50) per share of restructuring costs, $(0.19) per share of transaction, separation and integration-related costs, $(0.35) per share of amortization of acquired intangible assets, and $(0.11) per share or tax adjustment related to U.S. tax reform. This compares with $0.33 in the year ago period. Non-GAAP diluted earnings per share from continuing operations was $1.93. This compares with $1.23 in the year ago period. Revenue in the first quarter was $5,282 million. Revenue grew 0.9% compared with $5,236 million in the prior year. Income from continuing operations before income taxes was $360 million in the first quarter, including $(185) million of restructuring costs, $(70) million of transaction, separation and integration-related costs, and $(135) million of amortization of acquired intangibles. This compares with $91 million in the year ago period. Non-GAAP income from continuing operations before income taxes was $750 million compared with $512 million in the year ago period on a GAAP basis. Net income was $266 million for the first quarter, including $(144) million of restructuring costs, $(54) million of transaction, separation and integration-related costs, $(102) million of amortization of acquired intangibles and $(33) million of tax adjustment related to U.S. tax reform. This compares with $173 million in the prior year period. Non-GAAP net income was $599 million. Adjusted EBIT was $803 million in the first quarter compared with $570 million in the prior year. Adjusted EBIT margin was 15.2% compared with 10.9% in the year ago quarter. Net cash provided by operating activities was $473 million in the first quarter, compared with $519 million in the year ago period. Adjusted free cash flow was $321 million in the first quarter.
Global Business Services (GBS)
GBS revenue was $2,213 million in the quarter compared to $2,267 million for the prior year. GBS revenue decreased 2.4% year-over-year, reflecting the completion of several traditional application contracts. This was partially offset by strong growth in our Enterprise and Cloud Applications business. GBS profit margin in the quarter was 18.2%, up from 12.1% in the prior year, reflecting ongoing cost actions in the business. New business awards for GBS were $2.0 billion in the first quarter.
Global Infrastructure Services (GIS)
GIS revenue was $3,069 million in the quarter compared to $2,969 million for the prior year. GIS revenues grew 3.4% year-over-year, reflecting a continued moderation of the decline in our IT outsourcing services business as well as strong growth in Cloud and Platform Services, Security, and Workplace and Mobility. GIS profit margin in the quarter was 15.4%, up from 9.1% in the prior year, reflecting ongoing cost actions and process automation. New business awards for GIS were $2.6 billion in the first quarter.
Returning Capital to Shareholders
During the first quarter, DXC Technology returned $375 million to shareholders, consisting of $51 million in common stock dividends and $324 million in share repurchases.
Earnings Conference Call and Webcast
DXC Technology senior management will host a conference call and webcast to discuss these results today at 5 p.m. EDT. The dial-in number for domestic callers is 888-682-0995. Callers who reside outside of the United States should dial +1-334-323-0509. The passcode for all participants is 6328180. 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 August 14, 2018. The replay dial-in number is 888-203-1112 for domestic callers and +1-719-457-0820 for callers who reside outside of the United States. The replay passcode is also 6328180. A replay of this webcast will also be available on DXC Technology’s Investor Relations website.
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: constant currency, earnings before interest and taxes ("EBIT"), adjusted EBIT, adjusted EBIT margin, adjusted free cash flow, and non-GAAP results including non-GAAP income from continuing operations before taxes, non-GAAP income from continuing operations and non-GAAP EPS from continuing operations.
About DXC Technology
DXC Technology is the world's leading independent, end-to-end IT services company, serving nearly 6,000 private and public-sector clients from a diverse array of industries across 70 countries. The company's technology independence, global talent and extensive partner network deliver transformative digital offerings and solutions that help clients harness the power of innovation to thrive on change. DXC Technology is recognized among the best corporate citizens globally. For more information, visit dxc.technology.
All statements in this press release that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” 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. 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, 2018, and any updating information in subsequent SEC filings including DXC's upcoming Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018. 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.
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