DXC Technology Delivers Strong Fourth Quarter Results with Sequential Growth in Revenue, Bookings, and Cash Flow

• Q4 earnings per share from continuing operations was $1.01, including the cumulative impact of certain items of $(1.18) per share, reflecting restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets, and pension and OPEB actuarial and settlement losses
• Q4 non-GAAP earnings per share was $2.19
• FY19 earnings per share from continuing operations was $4.35, including the cumulative impact of certain items of $(3.99)
• FY19 non-GAAP earnings per share from continuing operations was $8.34
• Q4 net cash from operating activities was $748 million and FY19 net cash from operating activities was $1,783 million
• Q4 adjusted free cash flow was $917 million and FY19 adjusted free cash flow was $2,105 million
• FY19 capital returned to shareholders was $210 million in dividends and $1,339 million in share repurchases
   

TYSONS, Va., May 23, 2019 - DXC Technology (NYSE: DXC) today reported results for the three and twelve months ended March 31, 2019. 

“DXC Technology closed out our fourth quarter, and our fiscal year, by delivering strong digital performance and sequential growth in revenue, bookings, and cash flow,” said Mike Lawrie, chairman, president and CEO. “We continued to enhance our portfolio of digital offerings, and we are re-skilling current employees to equip them with new digital capabilities and certifications. We have also hired thousands of new employees with advanced digital skills, and added more through acquisitions, to further scale our digital workforce. Our acquisition of Luxoft is expected to be completed as planned by the end of June, and this will further strengthen DXC’s ability to design and deploy transformative digital solutions for clients at scale.”
 

Financial Highlights - Fourth Quarter Fiscal 2019

• Diluted earnings per share from continuing operations was $1.01 in the fourth quarter, including $(0.13) per share of restructuring costs, $(0.24) per share of transaction, separation and integration-related costs, $(0.37) per share of amortization of acquired intangible assets, and $(0.43) per share of pension and OPEB actuarial and settlement losses. This compares with $1.80 in the year ago period.
• Non-GAAP diluted earnings per share from continuing operations was $2.19.
• Revenue in the fourth quarter was $5,280 million compared with $5,584 million in the year ago period.
• Income from continuing operations before income taxes was $354 million for the fourth quarter, including $(47) million of restructuring costs, $(96) million of transaction, separation and integration-related costs, $(138) million of amortization of acquired intangibles, and $(143) million of pension and OPEB actuarial and settlement losses. This compares with $588 million in the year ago period.
• Non-GAAP income from continuing operations before income taxes was $778 million compared with $812 million in the year ago period.
• Net income was $271 million for the fourth quarter, including $(35) million of restructuring costs, $(66) million of transaction, separation and integration-related costs, $(101) million of amortization of acquired intangibles, and $(116) million of pension and OPEB actuarial and settlement losses. This compares with $565 million in the prior year period.
• Non-GAAP net income was $589 million.
• Adjusted EBIT was $827 million in the fourth quarter compared with $882 million in the prior year. Adjusted EBIT margin was 15.7% compared with 15.8% in the year ago quarter.
• Net cash provided by operating activities was $748 million in the fourth quarter, compared with $557 million in the year ago period.
• Adjusted free cash flow was $917 million in the fourth quarter.
   

Financial Highlights - Fiscal 2019

• Diluted earnings per share from continuing operations was $4.35 in fiscal 2019, including $(1.25) per share of restructuring costs, $(1.06) per share of transaction, separation and integration-related costs, $(1.42) per share of amortization of acquired intangible assets, $(0.41) per share of pension and OPEB actuarial and settlement losses, and $0.16 per share of tax adjustment related to U.S. tax reform. This compares with $5.23 in the year ago period.
• Non-GAAP diluted earnings per share from continuing operations was $8.34.
• Revenue in fiscal 2019 was $20,753 million compared with $21,733 million in the year ago period.
• Income from continuing operations before income taxes was $1,515 million for fiscal 2019, including $(465) million of restructuring costs, $(401) million of transaction, separation and integration-related costs, $(539) million of amortization of acquired intangibles, and $(143) million of pension and OPEB actuarial and settlement losses. This compares with $1,304 million in the year ago period.
• Non-GAAP income from continuing operations before income taxes was $3,063 million compared with $2,758 million in the prior year.
• Net income was $1,262 million for fiscal 2019, including $(353) million of restructuring costs, $(299) million of transaction, separation and integration-related costs, $(401) million of amortization of acquired intangibles, $(116) million of pension and OPEB actuarial and settlement losses, and $44 million of tax adjustment related to U.S. tax reform. This compares with $1,782 million in the prior year period.
• Non-GAAP net income was $2,387 million.
• Adjusted EBIT was $3,269 million in fiscal 2019 compared with $2,989 million in the prior year. Adjusted EBIT margin was 15.8% compared with 13.8% in the prior year.
• Net cash provided by operating activities was $1,783 million in fiscal 2019, compared with $2,567 million in the prior year.
• Adjusted free cash flow was $2,105 million in fiscal 2019. 

Global Business Services (GBS)

GBS revenue was $2,191 million in the quarter compared to $2,361 million for the prior year. GBS revenues decreased 7.2% year-over-year, reflecting headwinds in the traditional applications business, including the impact of accelerated cloud adoption. GBS profit margin in the quarter was 20.4%, up from 19.4% in the prior year, reflecting ongoing workforce optimization. New business awards for GBS were $2,857 million in the fourth quarter.

Global Infrastructure Services (GIS)

GIS revenue was $3,089 million in the quarter compared to $3,223 million for the prior year. GIS revenues decreased 4.2% year-over-year. The GIS revenue reflects the ongoing migration out of legacy infrastructure environments, offset by growth in cloud infrastructure and digital workplace. GIS profit margin in the quarter was 14.1%, down from 14.6% in the prior year, reflecting investments in digital capabilities and assets. New business awards for GIS were $2,968 million in the fourth quarter.

Returning Capital to Shareholders

During the fourth quarter, DXC Technology returned $142 million to shareholders, consisting of $51 million of common stock dividends and $91 million in share repurchases.

Earnings Conference Call and Webcast
DXC Technology senior management will host a conference call and webcast today at 5 p.m. EDT. The dial-in number for domestic callers is (888) 394-8218. Callers who reside outside of the United States should dial +1 (323) 794-2588. The passcode for all participants is 9706900. 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 30, 2019. The replay passcode is also 9706900.

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 and pro forma basis, we have also disclosed in this press release preliminary non-GAAP information including: constant currency, earnings before interest and taxes ("EBIT"), EBIT margin, adjusted EBIT, adjusted EBIT margin, non-GAAP income before income taxes, non-GAAP net income, non-GAAP EPS and adjusted free cash flow. Reconciliations of the preliminary non-GAAP measures to the respective most directly comparable measures calculated on a GAAP or pro forma basis, as well as the rationale for management’s use of non-GAAP measures, are included below.
 

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 Quarterly Reports on Form 10-Q for the quarters ended June 30, 2018, September 30, 2018, December 31, 2018 and any updating information in subsequent SEC filings, including DXC's upcoming Form 10-K for the fiscal year ended March 31, 2019. 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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