HP today released the company's financial report for the third quarter of the fiscal year 2022. According to the report, HP’s third-quarter net revenue was $14.7 billion, down 4.1% from $15.3 billion in the same period last year, excluding the impact of exchange rate changes, down 1.9% year-on-year; net profit was $1.1 billion, compared with $1.1 billion. $1.1 billion in the same period last year increased by 1%; non-GAAP adjusted net income was $1.1 billion, down 10% from $1.2 billion in the same period last year.
HP's third-quarter adjusted earnings per share met analysts' expectations, but revenue missed expectations, and the company's fourth-quarter and full-year earnings forecasts fell short of Wall Street's previous expectations, leading to its failure to meet expectations. Shares fell sharply by nearly 4% after hours.
Summary of fiscal third-quarter results:
In the quarter that ended July 31, HP's net income was $1.1 billion, up 1% from $1.1 billion a year earlier; diluted earnings per share were $1.08, compared with $0.92 a year earlier up 17%.
Excluding one-time items (not in accordance with GAAP), HP's third-quarter adjusted net income was $1.1 billion, down 10% from $1.2 billion in the same period last year; adjusted earnings per diluted share were $1.04 USD, up 4% from $1.00 in the same period last year, which was in line with analysts' expectations. According to data provided by Yahoo Finance Channel, 13 analysts on average expect HP's third-quarter earnings per share will reach 1.04 US dollars.
HP's fiscal third-quarter net income and earnings per share (non-GAAP) exclude after-tax adjustments of $40 million and $0.04 per share, respectively, which are related to restructuring and other expenses, merger-related expenses, intangible Asset amortization expenses, exit charges from the Russian market, non-operating retirement-related credits or expenses, and tax adjustments.
HP's third-quarter net revenue was $14.7 billion, down 4.1% from $15.3 billion in the same period last year; excluding the impact of currency changes, HP's third-quarter net revenue fell 1.9% compared with the same period last year. The results were lower than analysts had expected. According to data provided by Yahoo Finance, 11 analysts on average expected HP's third-quarter net revenue to reach $15.74 billion.
HP's operating margin in the fiscal third quarter was 8.7%, down 0.3 percentage points from 9.0% a year earlier. Excluding one-time items (not in accordance with GAAP), HP's adjusted operating margin for the fiscal third quarter was 9.5%, down 0.3 percentage points from 9.8% a year earlier.
Third-quarter results by division:
Divided by business unit, HP Personal Systems Group’s third-quarter revenue was $10.089 billion, down 3% from $10.406 billion in the same period last year, and was flat year-on-year excluding the impact of exchange rate changes; Personal Systems Group’s third-quarter revenue The quarterly operating margin was 6.9%. Among them, the commercial segment's net revenue increased by 7% year on year, and the personal consumer segment's net revenue decreased by 20% year on year. In terms of shipment data, in the third fiscal quarter, desktop shipments increased by 1% year-on-year, notebook shipments fell by 32% year-on-year, and total shipments fell by 25% year-on-year.
HP Printing Group's third-quarter revenue was $4.575 billion, down 6 percent from $4.882 billion in the same period last year, or 5 percent excluding the impact of currency changes; the operating profit margin was 19.9 percent. Among them, the net revenue of the personal consumer segment increased by 1% year on year, and the net revenue of the commercial segment decreased by 3% year on year. In terms of shipment data, in the third quarter, commercial hardware shipments fell by 15% year-on-year, personal hardware shipments fell by 1% year-on-year, and total hardware shipments fell by 3% year-on-year.
- HP's third-quarter corporate investment was zero, compared to zero a year earlier; pretax losses from corporate investments were $58 million, compared with $20 million a year earlier.
- HP's third-quarter net material revenue fell 9% year-on-year, excluding the impact of currency changes, which was also down 9% year-on-year.
Additional financial information for the fiscal third quarter:
HP's total costs and expenses in the fiscal third quarter were $13.392 billion, compared with $13.908 billion in the same period last year. Among them, the cost of revenue was $11.764 billion, compared with $11.901 billion in the same period last year; research and development expenses were $368 million, compared with $477 million in the same period last year; sales, general and administrative expenses were $1.143 billion, Comparable to $1,408 million in the same period last year; restructuring and other expenses of $13 million, compared to $56 million in the same period last year; M&A-related charges of $31 million, compared to $24 million in the same period last year; Amortization of intangible assets was $50 million, compared with $42 million in the same period last year; and exit-related charges from the Russian market were $23 million, compared with no such charge in the same period last year.
Net cash provided by HP's business operating activities in the fiscal third quarter was $400 million. At the end of the fiscal third quarter, HP's total accounts receivable was $4.4 billion and accounts receivable turnover days were 27 days, a decrease of 2 days compared to the previous quarter.
- At the end of the fiscal third quarter, HP's total inventory value was $8.2 billion, and the number of days in inventory was 63 days, an increase of 2 days compared to the previous fiscal quarter.
- At the end of the fiscal third quarter, HP's total accounts payable was $15.5 billion and accounts payable days were 119 days, an increase of 3 days compared to the previous quarter.
HP's fiscal third-quarter free cash flow was $300 million, including $400 million in net cash provided by operating activities, after a $53 million net investment in leases and in property, plant, and equipment. Adjustment for a net investment of $170 million.
HP paid a quarterly dividend of $0.25 per share in the fiscal third quarter, using $300 million of cash for the dividend. In addition, HP used $1 billion in cash to repurchase approximately 29.3 million shares of its common stock on the open market during the fiscal third quarter. As a result, HP returned 464% of free cash flow to shareholders in the fiscal third quarter.
At the end of the fiscal third quarter, HP had total gross cash of $5.4 billion, including $5 million in cash and cash equivalents and short-term investments included in other current assets.
Performance Outlook:
Fourth-quarter earnings outlook:
HP expects GAAP fourth-quarter fiscal 2022 earnings per diluted share to be between $0.44 and $0.54; non-GAAP adjusted fourth-quarter earnings per diluted share Earnings were expected to be in the range of $0.79 to $0.89, with an average of $0.84, a forecast that missed analysts' expectations. Non-GAAP, HP's estimate of fourth-quarter fiscal 2022 diluted earnings per share from continuing operations excludes an after-tax charge of $0.35 per share, which is primarily related to restructuring and other Expenses, acquisition-related expenses (including those related to the acquisition of audio and video products maker Poly), intangible asset amortization expenses, non-operating retirement-related credits or expenses, tax adjustments, and the related tax implications of these items.
According to data provided by Yahoo Finance Channel, 13 analysts on average expected HP's fourth-quarter earnings per share to reach $1.06.
Annual performance outlook:
HP expects GAAP full-year fiscal 2022 earnings per diluted share to be between $3.46 and $3.56; non-GAAP adjusted earnings per diluted share for fiscal 2022 are expected to be Between $4.02 and $4.12, with an average of $4.07, this performance outlook also failed to meet analyst expectations. Not in accordance with GAAP, HP's full-year fiscal 2022 estimate of diluted earnings per share from continuing operations excludes an after-tax charge of $0.56 per share, which is primarily related to restructuring and other charges, M&A-related expenses (including those related to the acquisition of audio and video products maker Poly), expenses related to exiting the Russian market, amortization expenses of intangible assets, non-operating retirement-related credits or expenses, debt settlement costs, tax adjustments, and related tax implications.
According to data provided by Yahoo Finance, 15 analysts on average expect HP's earnings per share in fiscal 2022 to reach $4.3.
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