DXC Technology Delivers Sequential Growth in Revenue, Bookings, EBIT and Earnings per Share

• Q3 earnings per share from continuing operations was $1.66, including the cumulative impact of certain items of $(0.57) per share, reflecting restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets, and a tax adjustment related to the U.S. tax reform
• Q3 non-GAAP earnings per share was $2.23
• Q3 income from continuing operations was $466 million, including the cumulative impact of certain items of $(160) million, reflecting restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets, and a tax adjustment related to the U.S. tax reform
• Q3 non-GAAP income from continuing operations was $626 million
• Q3 EBIT of $523 million, adjusted for certain items is $840 million and adjusted EBIT margin was 16.2%, compared with 14.6% in the prior year
• Q3 net cash from operating activities was $186 million
• Q3 adjusted free cash flow was $503 million
• Q3 capital returned to shareholders included $54 million in dividends and $797 million in share repurchases

TYSONS, Va. February 7, 2019 - DXC Technology (NYSE: DXC) today reported results for the third quarter of fiscal year 2019, representing the period from October 1 through December 31, 2018.

“In the third quarter, DXC Technology delivered sequential growth in revenue, bookings, EBIT and earnings per share,” said Mike Lawrie, chairman, president and CEO. “We are executing on the accelerated hiring plans we discussed last quarter, and our third-quarter revenue reflects the strong digital bookings from the first half of the year.  We continue to invest in growth businesses, including the recently announced acquisition of Luxoft, a global, at-scale digital innovator.  During the quarter, we also completed the acquisition of Molina Medicaid Solutions to expand our healthcare position in the Americas, and we acquired BusinessNow and TESM to increase our global reach in ServiceNow.”
 

Financial Highlights - Third Quarter Fiscal 2019

• Diluted earnings per share from continuing operations was $1.66 in the third quarter, including $(0.21) per share of restructuring costs, $(0.29) per share of transaction, separation and integration-related costs, $(0.35) per share of amortization of acquired intangible assets, and $0.28 per share of tax adjustment related to U.S. tax reform. This compares with $2.43 in the year ago period.
• Non-GAAP diluted earnings per share from continuing operations was $2.23. This compares with $1.86 in the year ago period.
• Revenue in the third quarter was $5,178 million. Revenue decreased 5.2% compared with $5,460 million in the prior year, and increased 3.3% compared with $5,013 million in the prior quarter.
• Income from continuing operations before income taxes was $469 million in the third quarter, including $(76) million of restructuring costs, $(107) million of transaction, separation and integration-related costs, and $(134) million of amortization of acquired intangibles. This compares with $341 million in the year ago period.
• Non-GAAP income from continuing operations before income taxes was $786 million compared with $751 million in the year ago period.
• Income from continuing operations was $466 million in the third quarter, including $(58) million of restructuring costs, $(81) million of transaction, separation and integration-related costs, $(98) million of amortization of acquired intangibles, and $77 million of tax adjustment related to U.S. tax reform. This compares with $706 million in the year ago period.
• Non-GAAP income from continuing operations was $626 million compared with $541 million in the year ago period.
• Adjusted EBIT was $840 million in the third quarter compared with $797 million in the prior year. Adjusted EBIT margin was 16.2% compared with 14.6% in the year ago quarter.
• Net cash provided by operating activities was $186 million in the third quarter, compared with $910 million in the year ago period.
• Adjusted free cash flow was $503 million in the third quarter.
   

Global Business Services (GBS)

GBS revenue was $2,169 million in the quarter compared with $2,315 million for the prior year. GBS revenue decreased 6.3% year-over-year, driven by the ongoing headwinds in the traditional Applications Services business. GBS profit margin in the quarter was 18.2%, which was roughly flat year-over-year, reflecting the investments DXC is making to drive Digital growth. New business awards for GBS were $2.3 billion in the third quarter.
 

Global Infrastructure Services (GIS)

GIS revenue was $3,009 million in the quarter compared to $3,145 million for the prior year. GIS revenues decreased 4.3% year-over-year, reflecting the completion of several large transformation projects and the ongoing decline in legacy infrastructure services. GIS profit margin in the quarter was 17.5%, up from 14.3% in the prior year, reflecting actions DXC has taken to drive greater operating efficiencies, including our Bionix™ automation program, labor pyramid improvements, supply chain actions, and delivery center rationalization. It also reflects the benefit of final milestone achievement on several contracts. New business awards for GIS were $3.4 billion in the third quarter.
 

Returning Capital to Shareholders

During the third quarter, DXC Technology returned $851 million to shareholders, consisting of $54 million in common stock dividends and $797 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 888-254-3590. Callers who reside outside of the United States should dial +1-323-994-2093. The passcode for all participants is 6249774. 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 February 14, 2019. 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 6249774. A replay of this webcast will also be available on DXC Technology’s Investor Relations website.
 

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: 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

As the world's leading independent, end-to-end IT services company, DXC Technology (NYSE: DXC) leads digital transformations for clients by modernizing and integrating their mainstream IT, and by deploying digital solutions at scale to produce better business outcomes. The company’s technology independence, global talent, and extensive partner network enable 6,000 private and public-sector clients in 70 countries to thrive on change. DXC is a recognized leader in corporate responsibility. For more information, visit dxc.technology and explore THRIVE, DXC’s digital destination for changemakers and innovators.

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 DXC's Form 10-Q for the quarterly periods ended June 30 and September 30, 2018 and any updating information in subsequent SEC filings, including DXC's upcoming Form 10-Q for the quarter ended December 31, 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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