Fiscal 2021 first quarter outlook:
Hewlett Packard Enterprise estimates GAAP diluted net EPS to be in the range of $0.02 to $0.06 and non-GAAP diluted net EPS to be in the range of $0.40 to $0.44. Fiscal 2021 first quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.38 per diluted share, primarily related to transformation costs, stock-based compensation and the amortization of intangible assets.
Fiscal 2021 outlook:
Hewlett Packard Enterprise raises GAAP diluted net earnings per share outlook to $0.38 to $0.56 from $0.34 to $0.54 and non-GAAP diluted net earnings per share outlook to $1.60 to $1.78 from $1.56 to $1.76. Fiscal 2021 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $1.22 per diluted share, primarily related to transformation costs, stock-based compensation and the amortization of intangible assets.
Reiterates free cash flow1 guidance range of $0.9 to $1.1 billion.
1Hewlett Packard Enterprise provides certain guidance on a non-GAAP basis, as the company cannot predict some elements that are included in reported GAAP results. Refer to the discussion of non-GAAP financial measures below for more information.
About Hewlett Packard Enterprise
Hewlett Packard Enterprise is the global edge-to-cloud platform-as-a-service company that helps organizations accelerate outcomes by unlocking value from all of their data, everywhere. Built on decades of reimagining the future and innovating to advance the way we live and work, HPE delivers unique, open and intelligent technology solutions, with a consistent experience across all clouds and edges, to help customers develop new business models, engage in new ways, and increase operational performance. For more information, visit: www.hpe.com.
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 as well as non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating profit (non-GAAP earnings from operations), non-GAAP operating profit margin, non-GAAP income tax rate, non-GAAP net earnings, non-GAAP diluted net earnings per share, gross cash, free cash flow, 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, gross profit, gross profit margin, operating profit (earnings from operations), operating profit margin, net earnings, diluted net earnings per share, cash, cash equivalents and restricted cash, 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 within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of Hewlett Packard Enterprise and its consolidated subsidiaries may differ materially from those expressed or implied by such forward-looking statements and assumptions. The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “aim,” “will,” “should” and similar expressions are intended to identify such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to the scope and duration of the novel coronavirus pandemic (“COVID-19”) and its impact on our business, operations, liquidity and capital resources, employees, customers, partners, supply chain, financial results and the world economy; any projections of revenue, margins, expenses, effective tax rates, the impact of the U.S. Tax Cuts and Jobs Act of 2017, net earnings, net earnings per share, cash flows, backlog, 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, restructuring charges, or other transformation actions; any statements of the plans, strategies and objectives of management for future operations, as well as the execution of corporate transactions or contemplated acquisitions, transformation and restructuring plans and any resulting benefit, cost savings or restructuring charges, 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 or 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 (including pandemics and public health problems, such as the COVID-19 pandemic); 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, including any impact thereon resulting from events such as the COVID-19 pandemic; the hiring and retention of key employees; execution, integration and other risks associated with business combination and investment transactions; the execution, timing and results of any transformation or restructuring plans, including estimates and assumptions related to the costs and anticipated benefits of implementing 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 other filings with the Securities and Exchange Commission, including but not limited to the risks described in Hewlett Packard Enterprise’s Annual Report on Form 10-K for the fiscal year ended October 31, 2019, Hewlett Packard Enterprise’s Quarterly Reports on Form 10-Q for the fiscal quarters ended January 31, 2020, April 30, 2020, and July 31, 2020, Current Reports on Form 8-K, and in other filings made by Hewlett Packard Enterprise from time to time with the Securities and Exchange Commission.
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, 2020. Hewlett Packard Enterprise assumes no obligation and does not intend to update these forward-looking statements.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
|
||||||||||||
|
|
|||||||||||
|
Three months ended |
|||||||||||
|
October 31,
|
|
July 31,
|
|
October 31,
|
|||||||
Net revenue |
$ |
7,208 |
|
|
$ |
6,816 |
|
|
$ |
7,215 |
|
|
Costs and expenses: |
|
|
|
|
|
|||||||
Cost of sales |
5,002 |
|
|
4,749 |
|
|
4,822 |
|
||||
Research and development |
484 |
|
|
455 |
|
|
438 |
|
||||
Selling, general and administrative |
1,166 |
|
|
1,131 |
|
|
1,229 |
|
||||
Amortization of intangible assets |
80 |
|
|
95 |
|
|
68 |
|
||||
Transformation costs |
304 |
|
|
357 |
|
|
151 |
|
||||
Disaster charges (a) |
2 |
|
|
2 |
|
|
— |
|
||||
Acquisition, disposition and other related charges |
25 |
|
|
15 |
|
|
47 |
|
||||
Total costs and expenses |
7,063 |
|
|
6,804 |
|
|
6,755 |
|
||||
Earnings from operations |
145 |
|
|
12 |
|
|
460 |
|
||||
Interest and other, net |
(57 |
) |
|
(71 |
) |
|
(38 |
) |
||||
Tax indemnification adjustments |
(15 |
) |
|
(30 |
) |
|
288 |
|
||||
Non-service net periodic benefit credit |
35 |
|
|
28 |
|
|
14 |
|
||||
Earnings (loss) from equity interests |
17 |
|
|
27 |
|
|
(1) |
|
||||
Earnings (loss) before taxes |
125 |
|
|
(34 |
) |
|
723 |
|
||||
(Provision) benefit from taxes |
32 |
|
|
43 |
|
|
(243 |
) |
||||
Net earnings |
$ |
157 |
|
|
$ |
9 |
|
|
$ |
480 |
|
|
Net earnings per share: |
|
|
|
|
|
|||||||
Basic |
$ |
0.12 |
|
|
$ |
0.01 |
|
|
$ |
0.37 |
|
|
Diluted (b) |
$ |
0.12 |
|
|
$ |
0.01 |
|
|
$ |
0.36 |
|
|
Cash dividends declared per share |
$ |
0.1200 |
|
|
$ |
— |
|
|
$ |
0.1200 |
|
|
Weighted-average shares used to compute net earnings per share: |
|
|
|
|
|
|||||||
Basic |
1,293 |
|
|
1,292 |
|
|
1,308 |
|
||||
Diluted (b) |
1,306 |
|
|
1,300 |
|
|
1,323 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
|
||||||||
|
|
|||||||
|
Twelve months ended October 31, |
|||||||
|
2020 |
|
2019 |
|||||
Net revenue |
$ |
26,982 |
|
|
$ |
29,135 |
|
|
Costs and expenses: |
|
|
|
|||||
Cost of sales |
18,513 |
|
|
19,642 |
|
|||
Research and development |
1,874 |
|
|
1,842 |
|
|||
Selling, general and administrative |
4,624 |
|
|
4,907 |
|
|||
Amortization of intangible assets |
379 |
|
|
267 |
|
|||
Impairment of goodwill (c) |
865 |
|
|
— |
|
|||
Transformation costs |
950 |
|
|
453 |
|
|||
Disaster charges (recovery) (a) |
26 |
|
|
(7 |
) |
|||
Acquisition, disposition and other related charges |
80 |
|
|
757 |
|
|||
Total costs and expenses |
27,311 |
|
|
27,861 |
|
|||
Earnings (loss) from operations |
(329 |
) |
|
1,274 |
|
|||
Interest and other, net |
(215 |
) |
|
(177 |
) |
|||
Tax indemnification adjustments |
(101 |
) |
|
377 |
|
|||
Non-service net periodic benefit credit |
136 |
|
|
59 |
|
|||
Earnings from equity interests |
67 |
|
|
20 |
|
|||
Earnings (loss) before taxes |
(442 |
) |
|
1,553 |
|
|||
(Provision) benefit for taxes |
120 |
|
|
(504 |
) |
|||
Net earnings (loss) |
$ |
(322 |
) |
|
$ |
1,049 |
|
|
Net earnings (loss) per share: |
|
|
|
|||||
Basic |
$ |
(0.25 |
) |
|
$ |
0.78 |
|
|
Diluted (b) |
$ |
(0.25 |
) |
|
$ |
0.77 |
|
|
Cash dividends declared per share |
$ |
0.3600 |
|
|
$ |
0.4575 |
|
|
Weighted-average shares used to compute net earnings (loss) per share: |
|
|
|
|||||
Basic |
1,294 |
|
|
1,353 |
|
|||
Diluted (b) |
1,294 |
|
|
1,366 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Three months
|
|
Diluted net
|
|
Three months
|
|
Diluted net
|
|
Three months
|
|
Diluted net
|
|||||||||||||
GAAP net earnings |
$ |
157 |
|
|
$ |
0.12 |
|
|
$ |
9 |
|
|
$ |
0.01 |
|
|
$ |
480 |
|
|
$ |
0.36 |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Amortization of initial direct costs |
1 |
|
|
— |
|
|
3 |
|
|
— |
|
|
— |
|
|
— |
|
|||||||
Amortization of intangible assets |
80 |
|
|
0.06 |
|
|
95 |
|
|
0.07 |
|
|
68 |
|
|
0.05 |
|
|||||||
Transformation costs |
304 |
|
|
0.23 |
|
|
357 |
|
|
0.27 |
|
|
151 |
|
|
0.11 |
|
|||||||
Disaster charges (a) |
2 |
|
|
— |
|
|
2 |
|
|
— |
|
|
— |
|
|
— |
|
|||||||
Acquisition, disposition and other related charges |
25 |
|
|
0.02 |
|
|
15 |
|
|
0.01 |
|
|
54 |
|
|
0.04 |
|
|||||||
Tax indemnification adjustments |
15 |
|
|
0.02 |
|
|
30 |
|
|
0.03 |
|
|
(288 |
) |
|
(0.22 |
) |
|||||||
Non-service net periodic benefit credit |
(35 |
) |
|
(0.03 |
) |
|
(28 |
) |
|
(0.02 |
) |
|
(14 |
) |
|
(0.01 |
) |
|||||||
Earnings from equity interests (d) |
35 |
|
|
0.03 |
|
|
36 |
|
|
0.03 |
|
|
38 |
|
|
0.03 |
|
|||||||
Adjustments for taxes |
$ |
(98 |
) |
|
(0.08 |
) |
|
$ |
(100 |
) |
|
(0.08 |
) |
|
$ |
155 |
|
|
0.13 |
|
||||
Non-GAAP net earnings |
$ |
486 |
|
|
$ |
0.37 |
|
|
$ |
419 |
|
|
$ |
0.32 |
|
|
$ |
644 |
|
|
$ |
0.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
GAAP earnings from operations |
$ |
145 |
|
|
|
|
$ |
12 |
|
|
|
|
$ |
460 |
|
|
|
|||||||
Non-GAAP adjustments |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Amortization of initial direct costs |
1 |
|
|
|
|
3 |
|
|
|
|
— |
|
|
|
||||||||||
Amortization of intangible assets |
80 |
|
|
|
|
95 |
|
|
|
|
68 |
|
|
|
||||||||||
Transformation costs |
304 |
|
|
|
|
357 |
|
|
|
|
151 |
|
|
|
||||||||||
Disaster charges (a) |
2 |
|
|
|
|
2 |
|
|
|
|
— |
|
|
|
||||||||||
Acquisition, disposition and other related charges |
25 |
|
|
|
|
15 |
|
|
|
|
54 |
|
|
|
||||||||||
Non-GAAP earnings from operations |
$ |
557 |
|
|
|
|
$ |
484 |
|
|
|
|
$ |
733 |
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
GAAP operating profit margin |
2.0 |
% |
|
|
|
0.2 |
% |
|
|
|
6.4 |
% |
|
|
||||||||||
Non-GAAP adjustments |
5.7 |
% |
|
|
|
6.9 |
% |
|
|
|
3.8 |
% |
|
|
||||||||||
Non-GAAP operating profit margin |
7.7 |
% |
|
|
|
7.1 |
% |
|
|
|
10.2 |
% |
|
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
|
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
Three months ended
|
|
Three months ended
|
|
Three months ended
|
||||||
GAAP net revenue |
|
$ |
7,208 |
|
|
$ |
6,816 |
|
|
$ |
7,215 |
|
GAAP cost of sales |
|
5,002 |
|
|
4,749 |
|
|
4,822 |
|
|||
GAAP gross profit |
|
$ |
2,206 |
|
|
$ |
2,067 |
|
|
$ |
2,393 |
|
|
|
|
|
|
|
|
||||||
Non-GAAP adjustments |
|
|
|
|
|
|
||||||
Amortization of initial direct costs |
|
$ |
1 |
|
|
$ |
3 |
|
|
$ |
— |
|
Acquisition, disposition and other related charges (e) |
|
— |
|
|
— |
|
|
7 |
|
|||
Non-GAAP gross profit |
|
$ |
2,207 |
|
|
$ |
2,070 |
|
|
$ |
2,400 |
|
|
|
|
|
|
|
|
||||||
GAAP gross profit margin |
|
30.6 |
% |
|
30.3 |
% |
|
33.2 |
% |
|||
Non-GAAP adjustments |
|
— |
% |
|
0.1 |
% |
|
0.1 |
% |
|||
Non-GAAP gross profit margin |
|
30.6 |
% |
|
30.4 |
% |
|
33.3 |
% |
|||
|
|
|
|
|
|
|
||||||
Net cash provided by operating activities |
|
$ |
747 |
|
|
$ |
1,472 |
|
|
$ |
1,432 |
|
Investment in property, plant and equipment |
|
(604 |
) |
|
(620 |
) |
|
(703 |
) |
|||
Proceeds from sale of property, plant and equipment |
|
80 |
|
|
72 |
|
|
149 |
|
|||
Free cash flow |
|
$ |
223 |
|
|
$ |
924 |
|
|
$ |
878 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
|
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
|
Twelve months
|
|
Diluted net
|
|
Twelve months
|
|
Diluted net
|
|||||||||
GAAP net earnings (loss) |
$ |
(322 |
) |
|
$ |
(0.25 |
) |
|
$ |
1,049 |
|
|
$ |
0.77 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|||||||||
Amortization of initial direct costs |
10 |
|
|
0.01 |
|
|
— |
|
|
— |
|
|||||
Amortization of intangible assets |
379 |
|
|
0.29 |
|
|
267 |
|
|
0.20 |
|
|||||
Impairment of goodwill (c) |
865 |
|
|
0.67 |
|
|
— |
|
|
— |
|
|||||
Transformation costs |
950 |
|
|
0.74 |
|
|
453 |
|
|
0.33 |
|
|||||
Disaster charges (recovery) (a) |
26 |
|
|
0.02 |
|
|
(7 |
) |
|
(0.01 |
) |
|||||
Acquisition, disposition and other related charges |
107 |
|
|
0.08 |
|
|
764 |
|
|
0.56 |
|
|||||
Tax indemnification adjustments |
101 |
|
|
0.08 |
|
|
(377 |
) |
|
(0.28) |
|
|||||
Non-service net periodic benefit credit |
(136 |
) |
|
(0.11 |
) |
|
(59 |
) |
|
(0.04 |
) |
|||||
Earnings from equity interests (d) |
145 |
|
|
0.11 |
|
|
152 |
|
|
0.11 |
|
|||||
Adjustments for taxes |
$ |
(360 |
) |
|
(0.29 |
) |
|
$ |
174 |
|
|
0.13 |
|
|||
Non-GAAP net earnings |
$ |
1,765 |
|
|
$ |
1.35 |
|
|
$ |
2,416 |
|
|
$ |
1.77 |
|
|
|
|
|
|
|
|
|
|
|||||||||
GAAP (loss) earnings from operations |
$ |
(329 |
) |
|
|
|
$ |
1,274 |
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Non-GAAP adjustments |
|
|
|
|
|
|
|
|||||||||
Amortization of initial direct costs |
10 |
|
|
|
|
— |
|
|
|
|||||||
Amortization of intangible assets |
379 |
|
|
|
|
267 |
|
|
|
|||||||
Impairment of goodwill (c) |
865 |
|
|
|
|
— |
|
|
|
|||||||
Transformation costs |
950 |
|
|
|
|
453 |
|
|
|
|||||||
Disaster charges (recovery) (a) |
26 |
|
|
|
|
(7 |
) |
|
|
|||||||
Acquisition, disposition and other related charges |
107 |
|
|
|
|
764 |
|
|
|
|||||||
Non-GAAP earnings from operations |
$ |
2,008 |
|
|
|
|
$ |
2,751 |
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
GAAP operating profit margin |
(1.2 |
%) |
|
|
|
4.4 |
% |
|
|
|||||||
Non-GAAP adjustments |
8.6 |
% |
|
|
|
5.0 |
% |
|
|
|||||||
Non-GAAP operating profit margin |
7.4 |
% |
|
|
|
9.4 |
% |
|
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
|
||||||||
|
|
|
|
|
||||
|
|
Twelve months ended
|
|
Twelve months ended
|
||||
GAAP net revenue |
|
$ |
26,982 |
|
|
$ |
29,135 |
|
GAAP cost of sales |
|
18,513 |
|
|
19,642 |
|
||
GAAP gross profit |
|
$ |
8,469 |
|
|
$ |
9,493 |
|
|
|
|
|
|
||||
Non-GAAP adjustments |
|
|
|
|
||||
Amortization of initial direct costs |
|
$ |
10 |
|
|
$ |
— |
|
Acquisition, disposition and other related charges (e) |
|
27 |
|
|
7 |
|
||
Non-GAAP gross profit |
|
$ |
8,506 |
|
|
$ |
9,500 |
|
|
|
|
|
|
||||
GAAP gross profit margin |
|
31.4 |
% |
|
32.6 |
% |
||
Non-GAAP adjustments |
|
0.1 |
% |
|
— |
% |
||
Non-GAAP gross profit margin |
|
31.5 |
% |
|
32.6 |
% |
||
|
|
|
|
|
||||
Net cash provided by operating activities |
|
$ |
2,240 |
|
|
$ |
3,997 |
|
Investment in property, plant and equipment |
|
(2,383 |
) |
|
(2,856 |
) |
||
Proceeds from sale of property, plant and equipment |
|
703 |
|
|
597 |
|
||
Free cash flow |
|
$ |
560 |
|
|
$ |
1,738 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
|
||||||||
|
|
|||||||
|
As of |
|||||||
|
October 31, 2020 |
|
October 31, 2019 |
|||||
ASSETS |
|
|
|
|||||
Current assets: |
|
|
|
|||||
Cash and cash equivalents |
$ |
4,233 |
|
|
$ |
3,753 |
|
|
Accounts receivable, net of allowance for doubtful accounts |
3,386 |
|
|
2,957 |
|
|||
Financing receivables, net of allowance for doubtful accounts |
3,794 |
|
|
3,572 |
|
|||
Inventory |
2,674 |
|
|
2,387 |
|
|||
Assets held for sale |
77 |
|
|
46 |
|
|||
Other current assets |
2,392 |
|
|
2,428 |
|
|||
Total current assets |
16,556 |
|
|
15,143 |
|
|||
Property, plant and equipment |
5,625 |
|
|
6,054 |
|
|||
Long-term financing receivables and other assets (f) |
10,544 |
|
|
8,918 |
|
|||
Investments in equity interests |
2,170 |
|
|
2,254 |
|
|||
Goodwill and intangible assets |
19,120 |
|
|
19,434 |
|
|||
Total assets |
$ |
54,015 |
|
|
$ |
51,803 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|||||
Current liabilities: |
|
|
|
|||||
Notes payable and short-term borrowings |
$ |
3,755 |
|
|
$ |
4,425 |
|
|
Accounts payable |
5,383 |
|
|
5,595 |
|
|||
Employee compensation and benefits |
1,391 |
|
|
1,522 |
|
|||
Taxes on earnings |
148 |
|
|
186 |
|
|||
Deferred revenue |
3,430 |
|
|
3,234 |
|
|||
Accrued restructuring |
366 |
|
|
195 |
|
|||
Other accrued liabilities (f) |
4,265 |
|
|
4,002 |
|
|||
Total current liabilities |
18,738 |
|
|
19,159 |
|
|||
Long-term debt |
12,186 |
|
|
9,395 |
|
|||
Other non-current liabilities (f) |
6,995 |
|
|
6,100 |
|
|||
Stockholders’ equity |
|
|
|
|||||
HPE stockholders’ equity: |
|
|
|
|||||
Preferred stock, $0.01 par value (300 shares authorized; none issued) |
— |
|
|
— |
|
|||
Common stock, $0.01 par value (9,600 shares authorized; 1,287 and 1,294 issued and outstanding at October 31, 2020 and October 31, 2019, respectively) |
13 |
|
|
13 |
|
|||
Additional paid-in capital |
28,350 |
|
|
28,444 |
|
|||
Accumulated deficit (g) |
(8,375 |
) |
|
(7,632 |
) |
|||
Accumulated other comprehensive loss (g) |
(3,939 |
) |
|
(3,727 |
) |
|||
Total HPE stockholders’ equity |
16,049 |
|
|
17,098 |
|
|||
Non-controlling interests |
47 |
|
|
51 |
|
|||
Total stockholders’ equity |
16,096 |
|
|
17,149 |
|
|||
Total liabilities and stockholders’ equity |
$ |
54,015 |
|
|
$ |
51,803 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
|
||||||||
|
|
|
|
|||||
|
Three months ended
|
|
Twelve months ended
|
|||||
Cash flows from operating activities: |
|
|
|
|||||
Net earnings (loss) |
$ |
157 |
|
|
$ |
(322 |
) |
|
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: |
|
|
|
|||||
Depreciation and amortization |
652 |
|
|
2,625 |
|
|||
Impairment of goodwill |
— |
|
|
865 |
|
|||
Stock-based compensation expense |
59 |
|
|
274 |
|
|||
Provision for doubtful accounts and inventory |
100 |
|
|
308 |
|
|||
Restructuring charges |
216 |
|
|
769 |
|
|||
Deferred taxes on earnings |
(80 |
) |
|
(294 |
) |
|||
Earnings from equity interests |
(17 |
) |
|
(67 |
) |
|||
Dividends received from equity investees |
130 |
|
|
165 |
|
|||
Other, net |
48 |
|
|
163 |
|
|||
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|||||
Accounts receivable |
(530 |
) |
|
(461 |
) | |||
Financing receivables |
(76 |
) |
|
(487 |
) |
|||
Inventory |
726 |
|
|
(527 |
) |
|||
Accounts payable |
(656 |
) |
|
(225 |
) |
|||
Taxes on earnings |
(37 |
) |
|
(122 |
) |
|||
Restructuring |
(128 |
) |
|
(478 |
) |
|||
Other assets and liabilities |
183 |
|
|
54 |
|
|||
Net cash provided by operating activities |
747 |
|
|
2,240 |
|
|||
Cash flows from investing activities: |
|
|
|
|||||
Investment in property, plant and equipment |
(604 |
) |
|
(2,383 |
) |
|||
Proceeds from sale of property, plant and equipment |
80 |
|
|
703 |
|
|||
Purchases of available-for-sale securities and other investments |
(23 |
) |
|
(101 |
) |
|||
Maturities and sales of available-for-sale securities and other investments |
19 |
|
|
48 |
|
|||
Financial collateral posted |
(71 |
) |
|
(644 |
) |
|||
Financial collateral received |
28 |
|
|
665 |
|
|||
Payments made in connection with business acquisitions, net of cash acquired |
(853 |
) |
|
(866 |
) |
|||
Net cash used in investing activities |
(1,424 |
) |
|
(2,578 |
) |
|||
Cash flows from financing activities: |
|
|
|
|||||
Short-term borrowings with original maturities less than 90 days, net |
(45 |
) |
|
(9 |
) |
|||
Proceeds from debt, net of issuance costs |
262 |
|
|
7,007 |
|
|||
Payment of debt |
(3,700 |
) |
|
(5,099 |
) |
|||
Net payments related to stock-based award activities |
(2 |
) |
|
(36 |
) |
|||
Repurchase of common stock |
— |
|
|
(355 |
) |
|||
Cash dividends paid to non-controlling interests, net of contributions |
— |
|
|
(7 |
) |
|||
Cash dividends paid |
(154 |
) |
|
(618 |
) |
|||
Net cash provided by (used in) financing activities |
(3,639 |
) |
|
883 |
|
|||
Increase (decrease) in cash, cash equivalents and restricted cash |
(4,316 |
) |
|
545 |
|
|||
Cash, cash equivalents and restricted cash at beginning of period |
8,937 |
|
|
4,076 |
|
|||
Cash, cash equivalents and restricted cash at end of period |
$ |
4,621 |
|
|
$ |
4,621 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
|
||||||||||||
|
|
|
||||||||||
|
|
Three months ended |
||||||||||
|
|
October 31,
|
|
July 31,
|
|
October 31,
|
||||||
Net revenue: (h) |
|
|
|
|
|
|
||||||
Compute |
|
$ |
3,175 |
|
|
$ |
3,389 |
|
|
$ |
3,349 |
|
HPC & MCS |
|
975 |
|
|
649 |
|
|
777 |
|
|||
Storage |
|
1,217 |
|
|
1,128 |
|
|
1,256 |
|
|||
A & PS |
|
245 |
|
|
226 |
|
|
269 |
|
|||
Intelligent Edge |
|
786 |
|
|
684 |
|
|
742 |
|
|||
Financial Services |
|
849 |
|
|
811 |
|
|
878 |
|
|||
Corporate Investments |
|
126 |
|
|
119 |
|
|
134 |
|
|||
Total segment net revenue |
|
7,373 |
|
|
7,006 |
|
|
7,405 |
|
|||
Elimination of intersegment net revenue |
|
(165 |
) |
|
(190 |
) |
|
(190 |
) |
|||
Total Hewlett Packard Enterprise consolidated net revenue |
|
$ |
7,208 |
|
|
$ |
6,816 |
|
|
$ |
7,215 |
|
|
|
|
|
|
|
|
||||||
Earnings before taxes: (h) |
|
|
|
|
|
|
||||||
Compute |
|
$ |
194 |
|
|
$ |
288 |
|
|
$ |
464 |
|
HPC & MCS |
|
119 |
|
|
36 |
|
|
79 |
|
|||
Storage |
|
203 |
|
|
145 |
|
|
219 |
|
|||
A & PS |
|
(1 |
) |
|
(4 |
) |
|
1 |
|
|||
Intelligent Edge |
|
79 |
|
|
59 |
|
|
46 |
|
|||
Financial Services |
|
65 |
|
|
65 |
|
|
74 |
|
|||
Corporate Investments |
|
(18 |
) |
|
(27 |
) |
|
(26 |
) |
|||
Total segment earnings from operations |
|
641 |
|
|
562 |
|
|
857 |
|
|||
|
|
|
|
|
|
|
||||||
Unallocated corporate costs and eliminations |
|
(73 |
) |
|
(65 |
) |
|
(107 |
) |
|||
Unallocated stock-based compensation expense |
|
(11 |
) |
|
(13 |
) |
|
(17 |
) |
|||
Amortization of initial direct costs |
|
(1 |
) |
|
(3 |
) |
|
— |
|
|||
Amortization of intangible assets |
|
(80 |
) |
|
(95 |
) |
|
(68 |
) |
|||
Transformation costs |
|
(304 |
) |
|
(357 |
) |
|
(151 |
) |
|||
Disaster charges (a) |
|
(2 |
) |
|
(2 |
) |
|
— |
|
|||
Acquisition, disposition and other related charges |
|
(25 |
) |
|
(15 |
) |
|
(54 |
) |
|||
Interest and other, net |
|
(57 |
) |
|
(71 |
) |
|
(38 |
) |
|||
Tax indemnification adjustments |
|
(15 |
) |
|
(30 |
) |
|
288 |
|
|||
Non-service net periodic benefit credit |
|
35 |
|
|
28 |
|
|
14 |
|
|||
Earnings (loss) from equity interests |
|
17 |
|
|
27 |
|
|
(1 |
) |
|||
Total Hewlett Packard Enterprise consolidated earnings (loss) before taxes |
|
$ |
125 |
|
|
$ |
(34 |
) |
|
$ |
723 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
|
||||||||
|
|
|
||||||
|
|
Twelve months ended October 31, |
||||||
|
|
2020 |
|
2019 |
||||
Net revenue: (h) |
|
|
|
|
||||
Compute |
|
$ |
12,215 |
|
|
$ |
13,642 |
|
HPC & MCS |
|
3,036 |
|
|
2,910 |
|
||
Storage |
|
4,681 |
|
|
5,185 |
|
||
A & PS |
|
951 |
|
|
1,012 |
|
||
Intelligent Edge |
|
2,855 |
|
|
2,913 |
|
||
Financial Services |
|
3,352 |
|
|
3,581 |
|
||
Corporate Investments |
|
490 |
|
|
507 |
|
||
Total segment net revenue |
|
27,580 |
|
|
29,750 |
|
||
Elimination of intersegment net revenue |
|
(598 |
) |
|
(615 |
) |
||
Total Hewlett Packard Enterprise consolidated net revenue |
|
$ |
26,982 |
|
|
$ |
29,135 |
|
|
|
|
|
|
||||
Earnings before taxes: (h) |
|
|
|
|
||||
Compute |
|
$ |
893 |
|
|
$ |
1,550 |
|
HPC & MCS |
|
237 |
|
|
320 |
|
||
Storage |
|
719 |
|
|
924 |
|
||
A & PS |
|
(5 |
) |
|
(54 |
) |
||
Intelligent Edge |
|
281 |
|
|
159 |
|
||
Financial Services |
|
278 |
|
|
305 |
|
||
Corporate Investments |
|
(100 |
) |
|
(108 |
) |
||
Total segment earnings from operations |
|
2,303 |
|
|
3,096 |
|
||
|
|
|
|
|
||||
Unallocated corporate costs and eliminations |
|
(238 |
) |
|
(286 |
) |
||
Unallocated stock-based compensation expense |
|
(57 |
) |
|
(59 |
) |
||
Amortization of initial direct costs |
|
(10 |
) |
|
— |
|
||
Amortization of intangible assets |
|
(379 |
) |
|
(267 |
) |
||
Impairment of goodwill (c) |
|
(865 |
) |
|
— |
|
||
Transformation costs |
|
(950 |
) |
|
(453 |
) |
||
Disaster (charges) recoveries (a) |
|
(26 |
) |
|
7 |
|
||
Acquisition, disposition and other related charges |
|
(107 |
) |
|
(764 |
) |
||
Interest and other, net |
|
(215 |
) |
|
(177 |
) |
||
Tax indemnification adjustments |
|
(101 |
) |
|
377 |
|
||
Non-service net periodic benefit credit |
|
136 |
|
|
59 |
|
||
Earnings from equity interests |
|
67 |
|
|
20 |
|
||
Total Hewlett Packard Enterprise consolidated earnings (loss) before taxes |
|
$ |
(442 |
) |
|
$ |
1,553 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
|
||||||||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||
|
Three months ended |
|
Change (%) |
|||||||||||||||||||||||||||
|
October 31,
|
|
July 31
|
|
October 31,
|
|
Q/Q |
|
Y/Y |
|||||||||||||||||||||
Net revenue: (h) |
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Compute |
$ |
3,175 |
|
|
$ |
3,389 |
|
|
$ |
3,349 |
|
|
(6 |
%) |
|
(5 |
%) |
|||||||||||||
HPC & MCS |
975 |
|
|
649 |
|
|
777 |
|
|
50 |
% |
|
25 |
% |
||||||||||||||||
Storage |
1,217 |
|
|
1,128 |
|
|
1,256 |
|
|
8 |
% |
|
(3 |
%) |
||||||||||||||||
A & PS |
245 |
|
|
226 |
|
|
269 |
|
|
8 |
% |
|
(9 |
%) |
||||||||||||||||
Intelligent Edge |
786 |
|
|
684 |
|
|
742 |
|
|
15 |
% |
|
6 |
% |
||||||||||||||||
Financial Services |
849 |
|
|
811 |
|
|
878 |
|
|
5 |
% |
|
(3 |
%) |
||||||||||||||||
Corporate Investments |
126 |
|
|
119 |
|
|
134 |
|
|
6 |
% |
|
(6 |
%) |
||||||||||||||||
Total segment net revenue |
7,373 |
|
|
7,006 |
|
|
7,405 |
|
|
5 |
% |
|
— |
% |
||||||||||||||||
Elimination of intersegment net revenue and other |
(165 |
) |
|
(190 |
) |
|
(190 |
) |
|
(13 |
%) |
|
(13 |
%) |
||||||||||||||||
Total Hewlett Packard Enterprise consolidated net revenue |
$ |
7,208 |
|
|
$ |
6,816 |
|
|
$ |
7,215 |
|
|
6 |
% |
|
— |
% |
|||||||||||||
|
Twelve months ended October 31, |
|||||||||||||||||||||||||||||
|
2020 |
|
2019 |
|
Y/Y |
|||||||||||||||||||||||||
Net revenue: (h) |
|
|
|
|
|
|||||||||||||||||||||||||
Compute |
$ |
12,215 |
|
|
$ |
13,642 |
|
|
(10 |
%) |
||||||||||||||||||||
HPC & MCS |
3,036 |
|
|
2,910 |
|
|
4 |
% |
||||||||||||||||||||||
Storage |
4,681 |
|
|
5,185 |
|
|
(10 |
%) |
||||||||||||||||||||||
A & PS |
951 |
|
|
1,012 |
|
|
(6 |
%) |
||||||||||||||||||||||
Intelligent Edge |
2,855 |
|
|
2,913 |
|
|
(2 |
%) |
||||||||||||||||||||||
Financial Services |
3,352 |
|
|
3,581 |
|
|
(6 |
%) |
||||||||||||||||||||||
Corporate Investments |
490 |
|
|
507 |
|
|
(3 |
%) |
||||||||||||||||||||||
Total segment net revenue |
27,580 |
|
|
29,750 |
|
|
(7 |
%) |
||||||||||||||||||||||
Elimination of intersegment net revenue and other |
(598 |
) |
|
(615 |
) |
|
(3 |
%) |
||||||||||||||||||||||
Total Hewlett Packard Enterprise consolidated net revenue |
$ |
26,982 |
|
|
$ |
29,135 |
|
|
(7 |
%) |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
|
|||||||
|
|
|
|
|
|||
|
|
Three months ended |
|
Change in Operating
|
|||
|
|
October 31, 2020 |
|
Q/Q |
|
Y/Y |
|
Segment operating margin: (h) |
|
|
|
|
|
|
|
Compute |
|
6.1 |
% |
|
-2.4 |
|
-7.8 |
HPC & MCS |
|
12.2 |
% |
|
6.7 |
|
2.0 |
Storage |
|
16.7 |
% |
|
3.8 |
|
-0.7 |
A & PS |
|
(0.4 |
%) |
|
1.4 |
|
-0.8 |
Intelligent Edge |
|
10.1 |
% |
|
1.5 |
|
3.9 |
Financial Services |
|
7.7 |
% |
|
-0.3 |
|
-0.7 |
Corporate Investments |
|
(14.3 |
%) |
|
8.4 |
|
5.1 |
Total segment operating margin |
|
8.7 |
% |
|
0.7 |
|
-2.9 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
|
||||||||||||
|
|
|||||||||||
|
Three months ended |
|||||||||||
|
October 31,
|
|
July 31,
|
|
October 31,
|
|||||||
Numerator: |
|
|
|
|
|
|||||||
GAAP net earnings |
$ |
157 |
|
|
$ |
9 |
|
|
$ |
480 |
|
|
Non-GAAP net earnings |
$ |
486 |
|
|
$ |
419 |
|
|
$ |
644 |
|
|
|
|
|
|
|
|
|||||||
Denominator: |
|
|
|
|
|
|||||||
Weighted-average shares used to compute basic net earnings per share |
1,293 |
|
|
1,292 |
|
|
1,308 |
|
||||
Dilutive effect of employee stock plans (b) |
13 |
|
|
8 |
|
|
15 |
|
||||
Weighted-average shares used to compute diluted net earnings per share |
1,306 |
|
|
1,300 |
|
|
1,323 |
|
||||
|
|
|
|
|
|
|||||||
GAAP net earnings per share |
|
|
|
|
|
|||||||
Basic |
$ |
0.12 |
|
|
$ |
0.01 |
|
|
$ |
0.37 |
|
|
Diluted (b) |
$ |
0.12 |
|
|
$ |
0.01 |
|
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|||||||
Non-GAAP net earnings per share |
|
|
|
|
|
|||||||
Basic |
$ |
0.38 |
|
|
$ |
0.32 |
|
|
$ |
0.49 |
|
|
Diluted (b) |
$ |
0.37 |
|
|
$ |
0.32 |
|
|
$ |
0.49 |
|
|
Twelve months ended October 31, |
|||||||
|
2020 |
|
2019 |
|||||
Numerator: |
|
|
|
|||||
GAAP net earnings (loss) |
$ |
(322 |
) |
|
$ |
1,049 |
|
|
Non-GAAP net earnings |
$ |
1,765 |
|
|
$ |
2,416 |
|
|
|
|
|
|
|||||
Denominator: |
|
|
|
|||||
Weighted-average shares used to compute basic net earnings (loss) per share and diluted net loss per share |
1,294 |
|
|
1,353 |
|
|||
Dilutive effect of employee stock plans (b) |
11 |
|
|
13 |
|
|||
Weighted-average shares used to compute diluted net earnings per share |
1,305 |
|
|
1,366 |
|
|||
|
|
|
|
|||||
GAAP net earnings (loss) per share |
|
|
|
|||||
Basic |
$ |
(0.25 |
) |
|
$ |
0.78 |
|
|
Diluted (b) |
$ |
(0.25 |
) | $ |
0.77 |
|||
|
|
|
|
|||||
Non-GAAP net earnings per share |
|
|
|
|||||
Basic |
$ |
1.36 |
|
|
$ |
1.79 |
|
|
Diluted (b) |
$ |
1.35 |
|
|
$ |
1.77 |
|
(a) |
Disaster charges (recovery) for fiscal 2020 include direct costs resulting from COVID-19. For fiscal 2019, represents insurance recoveries in relation to damage to our facilities in Houston, Texas due to Hurricane Harvey in fiscal 2017. |
(b) |
Diluted net earnings per share reflects any dilutive effect of restricted stock awards, stock options and performance-based awards, but the effect is excluded when calculating GAAP diluted net (loss) per share because it would be anti-dilutive. |
(c) |
The Company recorded $865 million of partial goodwill impairment charge in the second quarter of fiscal 2020 as it was determined that the fair value of the HPC & MCS reporting unit was below the carrying value of its net assets. |
(d) |
Represents the amortization of basis difference adjustments related to the H3C divestiture. |
(e) |
For the periods presented, amounts represent Acquisition, disposition and other related charges related to a non-cash inventory fair value adjustment in connection with the acquisition of Cray, Inc., which was included in Cost of sales. |
(f) |
The Company adopted the new accounting standard for leases in the first quarter of fiscal 2020 which requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset for the lease term. The Company elected the modified retrospective transition method whereby prior comparative periods are not restated. Adoption of the new lease standard resulted in the recognition of $1.0 billion of ROU assets and $1.1 billion of lease liabilities on the Company’s Condensed Consolidated Balance Sheet at November 1, 2019. |
(g) |
The Company adopted an accounting standard update in the first quarter of fiscal 2020 that allowed it to reclassify $43 million of stranded tax effects resulting from U.S. tax reform from accumulated other comprehensive loss into accumulated deficit. |
(h) |
Effective at the beginning of the first quarter of fiscal 2020, Hewlett Packard Enterprise Company ("HPE") implemented certain organizational changes to align its segment financial reporting more closely with its current business structure. As a result of these organizational changes, HPE replaced the Hybrid IT reportable segment (and the Compute, Storage and HPE Pointnext business units within it) with four new financial reporting segments: Compute, High Performance Compute & Mission-Critical Systems ("HPC & MCS"), Storage, and Advisory and Professional Services ("A & PS"). |
|
In addition, the Intelligent Edge segment now includes the Data Center Networking ("DC Networking") operational services business that was previously a part of the Hybrid IT Segment. The DC Networking business, other than operational services, had been transferred to the Intelligent Edge segment in a prior realignment. |
|
The Company reflected these changes to its segment information retrospectively to the earliest period presented, which primarily resulted in the transfer of net revenue and operating profit for each of the businesses as described above. These changes had no impact on Hewlett Packard Enterprise’s previously reported consolidated net revenue, net earnings or net earnings per share ("EPS"). |