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%
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.
www.hp.com
