Revenue down 15% in HP 2023 results

Snapshot:

• Fiscal 2023 GAAP diluted net earnings per share ("EPS") of $3.26, above the previously provided outlook of $2.95 to $3.07 per share
• Fiscal 2023 non-GAAP diluted net EPS of $3.28, within the previously provided outlook of $3.23 to $3.35 per share
• Fiscal 2023 net revenue of $53.7 billion, down 14.6% from the prior-year period
• Fiscal 2023 net cash provided by operating activities of $3.6 billion, free cash flow of $3.1 billion
• Fiscal 2023 returned $1.1 billion to shareholders in the form of dividends and share repurchases
• Fiscal 2023 retired $1.6 billion in long-term debt
• Fourth quarter GAAP diluted net EPS was $0.97, above the previously provided outlook of $0.65 to $0.77 per share
• Fourth quarter non-GAAP diluted net EPS of $0.90, within the previously provided outlook of $0.85 to $0.97 per share
• Fourth quarter net revenue of $13.8 billion, down 6.5% from the prior-year period
• Fourth quarter net cash provided by operating activities of $2.0 billion, free cash flow of $1.9 billion
• Fourth quarter returned $0.3 billion to shareholders in the form of dividends

Net revenue and EPS results

HP has announced fiscal 2023 net revenue of $53.7 billion, down 15% (down 12% in constant currency) from the prior-year period.

Fiscal 2023 GAAP diluted net EPS was $3.26, up from $2.98 in the prior-year period and above the previously provided outlook of $2.95 to $3.07. Fiscal 2023 non-GAAP diluted net EPS was $3.28, down from $3.98 in the prior-year period and within the previously provided outlook of $3.23 to $3.35. Fiscal 2023 non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $14 million, or $0.02 per diluted share, related to restructuring and other charges, acquisition and divestiture charges, amortisation of intangible assets, debt extinguishment benefit, non-operating retirement-related credits and tax adjustments.

Fourth quarter net revenue was $13.8 billion, down 6% (down 5% in constant currency) from the prior-year period.

Fourth quarter GAAP diluted net EPS was $0.97, up from $(0.02) in the prior-year period and above the previously provided outlook of $0.65 to $0.77. Fourth quarter non-GAAP diluted net EPS was $0.90, up from $0.82 in the prior-year period and within the previously provided outlook of $0.85 to $0.97. Fourth quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $72 million, or $0.07 per diluted share, related to restructuring and other charges, acquisition and divestiture charges, amortisation of intangible assets, non-operating retirement-related credits, and tax adjustments.

“2023 was a year of steady progress. We executed well in a tough market and innovated in our key growth areas to finish the year with good momentum,” said Enrique Lores, HP President and CEO. “Our Future Ready plan is positioning us well to capitalise on attractive opportunities across our portfolio and deliver long-term sustainable growth.”

“Q4 was a solid quarter of sequential growth and strong free cash flow as we continued to improve the performance of the company,” said Marie Myers, HP CFO. “We are entering FY24 with a relentless focus on driving profitable growth, reducing our structural costs and returning 100% of our free cash flow to shareholders."

Asset management

HP generated $3.6 billion in net cash provided by operating activities and $3.1 billion of free cash flow in fiscal 2023. Free cash flow includes net cash provided by operating activities of $3.6 billion adjusted for net investments in leases of $110 million and net investments in property, plant and equipment of $593 million. HP utilised $100 million of cash during fiscal 2023 to repurchase approximately 3.6 million shares of common stock in the open market. When combined with the $1.0 billion of cash used to pay dividends, HP returned 37% of its free cash flow to shareholders in fiscal 2023.

HP’s net cash provided by operating activities in the fourth quarter of fiscal 2023 was $2.0 billion. Accounts receivable ended the quarter at $4.2 billion, down two days quarter over quarter to 28 days. Inventory ended the quarter at $6.9 billion, down five days quarter over quarter to 57 days. Accounts payable ended the quarter at $14.0 billion, down six days quarter over quarter to 117 days.

HP generated $1.9 billion of free cash flow in the fourth quarter. Free cash flow includes net cash provided by operating activities of $2.0 billion adjusted for net investments in leases of $28 million and net investments in property, plant and equipment of $134 million.

HP’s dividend payment of $0.2625 per share in the fourth quarter resulted in cash usage of $0.3 billion. HP returned 14% of its fourth quarter free cash flow to shareholders. HP exited the quarter with $3.2 billion in gross cash, which includes cash, cash equivalents and restricted cash and short-term investments of $3 million included in other current assets.  Cash, cash equivalents, and restricted cash includes $125 million of restricted cash related to amounts collected and held on behalf of a third party for trade receivables previously sold.

The HP board of directors has declared a quarterly cash dividend of $0.2756 per share on the company’s common stock, payable on January 4, 2024.  This is an increase of 5% from the prior dividend.

Fiscal 2023 fourth quarter segment results

• Personal Systems net revenue was $9.4 billion, down 8% year over year (down 7% in constant currency) with a 6.7% operating margin. Consumer PS net revenue was down 1%, and Commercial PS net revenue was down 11%. Total units were flat, with Consumer PS units up 9% and Commercial PS units down 6%.
• Printing net revenue was $4.4 billion, down 3% year over year (down 2% in constant currency), with a 18.9% operating margin. Consumer Printing net revenue was down 21%, and Commercial Printing net revenue was down 4%. Supplies net revenue was up 3% (up 4% in constant currency). Total hardware units were down 19%, with Consumer Printing units down 18% and Commercial Printing units down 24%.