Outlook
For the fiscal 2019 first quarter, Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.19 to $0.23 and non-GAAP diluted net EPS to be in the range of $0.33 to $0.37. Fiscal 2019 first quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.14 per diluted share, primarily related to transformation costs and the amortization of intangible assets.
For fiscal 2019 full-year, Hewlett Packard Enterprise maintains the GAAP diluted net EPS range of $0.73 to $0.83 and the non-GAAP diluted net EPS range of $1.51 to $1.61. Fiscal 2019 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.78 per diluted share, primarily related to transformation costs, the amortization of intangible assets, and an adjustment to earnings from equity interests.
Fourth Quarter Fiscal Year 2018 Segment Results
- Intelligent Edge revenue was $814 million, up 17% year over year and up 15% when adjusted for currency, with 10.1% operating margin. HPE Aruba Product revenue was up 17%, up 15% when adjusted for currency, and HPE Aruba Services revenue was up 16%, up 16% when adjusted for currency.
- Hybrid IT revenue was $6.4 billion, up 5% year over year and up 4% when adjusted for currency, with 11.9% operating margin. Compute revenue was up 9%, up 7% when adjusted for currency, Storage revenue was up 6%, up 4% when adjusted for currency, DC Networking revenue was up 2%, down 1% when adjusted for currency, and HPE Pointnext revenue was down 3%, down 3% when adjusted for currency.
- Financial Services revenue was $939 million, down 7% year over year and down 5% when adjusted for currency, net portfolio assets were flat year over year, and financing volume was up 8% year over year. The business delivered an operating margin of 7.8%.
About Hewlett Packard Enterprise
Hewlett Packard Enterprise is a global technology leader focused on developing intelligent solutions that allow customers to capture, analyze and act upon data seamlessly from edge to cloud. HPE enables customers to accelerate business outcomes by driving new business models, creating new customer and employee experiences, and increasing operational efficiency today and into the future.
Use of non-GAAP financial information
To supplement Hewlett Packard Enterprise’s condensed consolidated financial statement information presented on a generally accepted accounting principles (GAAP) basis, Hewlett Packard Enterprise provides revenue on a constant currency basis and revenue adjusted for divestitures and currency, as well as non-GAAP operating expense, non-GAAP operating profit, non-GAAP operating margin, non-GAAP income tax rate, non-GAAP net earnings from continuing operations, non-GAAP net earnings from discontinued operations, non-GAAP diluted net earnings per share from continuing operations, adjusted non-GAAP diluted net earnings per share, non-GAAP diluted net earnings per share from discontinued operations, gross cash, free cash flow, net capital expenditures, net debt, net cash, operating company net debt and operating company net cash financial measures. Hewlett Packard Enterprise also provides forecasts of non-GAAP diluted net earnings per share and free cash flow. A reconciliation of adjustments to GAAP financial measures for this quarter and prior periods is included in the tables below or elsewhere in the materials accompanying this news release. In addition, an explanation of the ways in which Hewlett Packard Enterprise’s management uses these non-GAAP measures to evaluate its business, the substance behind Hewlett Packard Enterprise’s decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which Hewlett Packard Enterprise’s management compensates for those limitations, and the substantive reasons why Hewlett Packard Enterprise’s management believes that these non-GAAP measures provide useful information to investors is included under “Use of non-GAAP financial measures” further below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for revenue, operating profit, operating margin, net earnings from continuing operations, net earnings from discontinued operations, diluted net earnings per share from continuing operations, diluted net earnings per share from discontinued operations, cash and cash equivalents, cash flow from operations, investments in property, plant and equipment, or total company debt prepared in accordance with GAAP.
Forward-looking statements
This press release contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of Hewlett Packard Enterprise may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses, effective tax rates, the impact of the U.S. Tax Cuts and Job Act of 2017, including the effect on deferred tax assets and the one-time transition tax on unremitted foreign earnings, net earnings, net earnings per share, cash flows, benefit plan funding, deferred tax assets, share repurchases, currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring charges; any statements of the plans, strategies and objectives of management for future operations, as well as the execution of transformation and restructuring plans and any resulting cost savings, revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on Hewlett Packard Enterprise and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing.
Risks, uncertainties and assumptions include the need to address the many challenges facing Hewlett Packard Enterprise’s businesses; the competitive pressures faced by Hewlett Packard Enterprise’s businesses; risks associated with executing Hewlett Packard Enterprise’s strategy; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of Hewlett Packard Enterprise’s products and the delivery of Hewlett Packard Enterprise’s services effectively; the protection of Hewlett Packard Enterprise’s intellectual property assets, including intellectual property licensed from third parties and intellectual property shared with its former Parent; risks associated with Hewlett Packard Enterprise’s international operations; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by Hewlett Packard Enterprise and its suppliers, customers, clients and partners; the hiring and retention of key employees; integration and other risks associated with business combination and investment transactions; and the execution, timing and results of any transformation or restructuring plans, including estimates and assumptions related to the cost (including any possible disruption of Hewlett Packard Enterprise's business) and the anticipated benefits of the transformation and restructuring plans; the effects of the U.S. Tax Cuts and Jobs Act and related guidance and regulations that may be implemented; the resolution of pending investigations, claims and disputes; and other risks that are described in Hewlett Packard Enterprise’s Annual Report on Form 10-K for the fiscal year ended October 31, 2017 and subsequent Quarterly Reports on Form 10-Q.
As in prior periods, the financial information set forth in this press release, including tax-related items, reflects estimates based on information available at this time. While Hewlett Packard Enterprise believes these estimates to be reasonable, these amounts could differ materially from reported amounts in the Hewlett Packard Enterprise Annual Report on Form 10-K for the fiscal year ended October 31, 2018. Hewlett Packard Enterprise assumes no obligation and does not intend to update these forward-looking statements.
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HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In millions, except per share amounts) | |||||||||||
| Three months ended | |||||||||||
|
October 31,
2018 |
July 31,
2018 |
October 31,
2017 | |||||||||
| Net revenue | $ | 7,946 | $ | 7,764 | $ | 7,660 | |||||
| Costs and expenses: | |||||||||||
| Cost of sales | 5,489 | 5,384 | 5,383 | ||||||||
| Research and development | 439 | 434 | 364 | ||||||||
| Selling, general and administrative | 1,219 | 1,203 | 1,288 | ||||||||
| Amortization of intangible assets | 72 | 72 | 86 | ||||||||
| Impairment of goodwill | 88 | — | — | ||||||||
| Restructuring charges | 5 | 2 | 113 | ||||||||
| Transformation costs | (74 | ) | 131 | 328 | |||||||
| Disaster Charges | — | — | 93 | ||||||||
| Acquisition and other related charges | 12 | 24 | 53 | ||||||||
| Separation costs | 12 | (2 | ) | 202 | |||||||
| Defined benefit plan settlement charges and remeasurement (benefit) | — | — | (26 | ) | |||||||
| Total costs and expenses | 7,262 | 7,248 | 7,884 | ||||||||
| Earnings (loss) from continuing operations | 684 | 516 | (224 | ) | |||||||
| Interest and other, net | (111 | ) | (64 | ) | (76 | ) | |||||
| Tax indemnification adjustments (a) | (12 | ) | 2 | (2 | ) | ||||||
| Earnings from equity interests | 15 | 11 | 1 | ||||||||
| Earnings (loss) from continuing operations before taxes | 576 | 465 | (301 | ) | |||||||
| (Provision) benefit for taxes (b) | (1,348 | ) | (13 | ) | 679 | ||||||
| Net (loss) earnings from continuing operations | (772 | ) | 452 | 378 | |||||||
| Net earnings (loss) from discontinued operations | 15 | (1 | ) | 146 | |||||||
| Net (loss) earnings | $ | (757 | ) | $ | 451 | $ | 524 | ||||
| Net (loss) earnings per share: | |||||||||||
| Basic | |||||||||||
| Continuing operations | $ | (0.53 | ) | $ | 0.30 | $ | 0.23 | ||||
| Discontinued operations | 0.01 | — | 0.09 | ||||||||
| Total basic net (loss) earnings per share | $ | (0.52 | ) | $ | 0.30 | $ | 0.32 | ||||
| Diluted | |||||||||||
| Continuing operations | $ | (0.53 | ) | $ | 0.29 | $ | 0.23 | ||||
| Discontinued operations | 0.01 | — | 0.09 | ||||||||
| Total diluted net (loss) earnings per share | $ | (0.52 | ) | $ | 0.29 | $ | 0.32 | ||||
| Cash dividends declared per share | $ | 0.1125 | $ | 0.1125 | $ | — | |||||
| Weighted-average shares used to compute net (loss) earnings per share: | |||||||||||
| Basic | 1,459 | 1,513 | 1,618 | ||||||||
| Diluted | 1,459 | 1,531 | 1,647 | ||||||||
