Raises free cash flow1 guidance range to $1.5 to $1.7 billion from $1.2 to $1.5 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 people 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 and key performance metrics
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, 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.
In addition to the supplemental non-GAAP financial information, Hewlett Packard Enterprise also presents annualized revenue run-rate ("ARR") and as-a-Service ("AAS") orders as performance metrics. ARR is a financial metric used to assess the growth of the Consumption Services ("CS") offerings. ARR represents the annualized value of all recurring net GreenLake services revenue, related financial services revenue (which includes rental income for operating leases and interest income for capital leases), and Software-as-a-Service ("SaaS"), subscription, and other as-a-Service offerings recognized during a quarter and multiplied by four. AAS orders are an overlay across all business segments contributing to HPE's consumption based services (both recurring and non-recurring revenues), and includes hardware, as well as GreenLake as-a-Service, Aruba SaaS, CMS SaaS, and other Software assets. ARR & AAS orders should be viewed independently of net revenue and deferred revenue and are not intended to be combined with any of these items.
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 Company and its consolidated subsidiaries ("Hewlett Packard Enterprise") 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, investments, effective tax rates, interest rates, the impact of the U.S. Tax Cuts and Jobs Act of 2017 and related guidance or regulations, net earnings, net earnings per share, cash flows, liquidity and capital resources, inventory, goodwill, impairment charges, hedges and derivatives and related offsets, order backlog, benefit plan funding, deferred tax assets, share repurchases, currency exchange rates, repayments of debts including our asset-backed debt securities, or other financial items; any projections of the amount, execution, timing and results of any transformation or impact of cost savings, restructuring plans, including estimates and assumptions related to the anticipated benefits, cost savings, or charges of implementing transformation and restructuring plans; any statements of the plans, strategies and objectives of management for future operations, as well as the execution of corporate transactions or contemplated acquisitions, research and development expenditures, and any resulting benefit, cost savings, charges, or 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, 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 outbreak of COVID-19); 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; the execution, integration, and other risks associated with business combination and investment transactions; the impact of changes to environmental, global trade, and other governmental regulations; changes in our product, lease, intellectual property or real estate portfolio; the payment or non-payment of a dividend for any period; the efficacy of using non-GAAP, rather than GAAP, financial measures in business projections and planning; the judgments required in connection with determining revenue recognition; impact of company policies and related compliance; utility of segment realignments; allowances for recovery of receivables and warranty obligations; provisions for, and resolution of, pending investigations, claims and disputes; and other risks that are described herein, 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, 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 Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2021. Hewlett Packard Enterprise assumes no obligation and does not intend to update these forward-looking statements, except as required by applicable law.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS |
||||||||||||
(Unaudited) |
||||||||||||
(In millions, except per share amounts) |
||||||||||||
|
|
|||||||||||
|
Three months ended |
|||||||||||
|
July 31,
|
April 30,
|
July 31,
|
|||||||||
Net revenue |
$ |
6,897 |
|
$ |
6,700 |
|
$ |
6,816 |
|
|||
Costs and expenses: |
|
|
|
|||||||||
Cost of sales |
|
4,515 |
|
|
4,413 |
|
|
4,749 |
|
|||
Research and development |
|
506 |
|
|
503 |
|
|
455 |
|
|||
Selling, general and administrative |
|
1,291 |
|
|
1,199 |
|
|
1,131 |
|
|||
Amortization of intangible assets |
|
82 |
|
|
84 |
|
|
95 |
|
|||
Transformation costs |
|
213 |
|
|
209 |
|
|
357 |
|
|||
Disaster charges |
|
5 |
|
|
1 |
|
|
2 |
|
|||
Acquisition, disposition and other related charges |
|
3 |
|
|
13 |
|
|
15 |
|
|||
Total costs and expenses |
|
6,615 |
|
|
6,422 |
|
|
6,804 |
|
|||
Earnings from operations |
|
282 |
|
|
278 |
|
|
12 |
|
|||
Interest and other, net |
|
(50 |
) |
|
(11 |
) |
|
(71 |
) |
|||
Tax indemnification and related adjustments |
|
76 |
|
|
— |
|
|
(30 |
) |
|||
Non-service net periodic benefit credit |
|
19 |
|
|
17 |
|
|
28 |
|
|||
Earnings from equity interests |
|
79 |
|
|
4 |
|
|
27 |
|
|||
Earnings (loss) before taxes |
|
406 |
|
|
288 |
|
|
(34 |
) |
|||
(Provision) benefit from taxes |
|
(14 |
) |
|
(29 |
) |
|
43 |
|
|||
Net earnings |
$ |
392 |
|
$ |
259 |
|
$ |
9 |
|
|||
Net earnings per share: |
|
|
|
|||||||||
Basic |
$ |
0.30 |
|
$ |
0.20 |
|
$ |
0.01 |
|
|||
Diluted |
$ |
0.29 |
|
$ |
0.19 |
|
$ |
0.01 |
|
|||
Cash dividends declared per share |
$ |
0.12 |
|
$ |
0.12 |
|
$ |
— |
|
|||
Weighted-average shares used to compute net earnings per share: |
|
|
|
|||||||||
Basic |
|
1,314 |
|
|
1,309 |
|
|
1,292 |
|
|||
Diluted |
|
1,338 |
|
|
1,331 |
|
|
1,300 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS |
||||||||
(Unaudited) |
||||||||
(In millions, except per share amounts) |
||||||||
|
|
|||||||
|
Nine months ended July 31, |
|||||||
|
2021 |
2020 |
||||||
Net revenue |
$ |
20,430 |
|
$ |
19,774 |
|
||
Costs and expenses: |
|
|
||||||
Cost of sales |
|
13,473 |
|
|
13,511 |
|
||
Research and development |
|
1,477 |
|
|
1,390 |
|
||
Selling, general and administrative |
|
3,649 |
|
|
3,458 |
|
||
Amortization of intangible assets |
|
276 |
|
|
299 |
|
||
Impairment of goodwill |
|
— |
|
|
865 |
|
||
Transformation costs |
|
733 |
|
|
646 |
|
||
Disaster charges |
|
6 |
|
|
24 |
|
||
Acquisition, disposition and other related charges |
|
34 |
|
|
55 |
|
||
Total costs and expenses |
|
19,648 |
|
|
20,248 |
|
||
Earnings (loss) from operations |
|
782 |
|
|
(474 |
) |
||
Interest and other, net |
|
(105 |
) |
|
(158 |
) |
||
Tax indemnification and related adjustments |
|
60 |
|
|
(86 |
) |
||
Non-service net periodic benefit credit |
|
53 |
|
|
101 |
|
||
Earnings from equity interests |
|
109 |
|
|
50 |
|
||
Earnings (loss) before taxes |
|
899 |
|
|
(567 |
) |
||
(Provision) benefit from taxes |
|
(25 |
) |
|
88 |
|
||
Net earnings (loss) |
$ |
874 |
|
$ |
(479 |
) |
||
Net earnings (loss) per share: |
|
|
||||||
Basic |
$ |
0.67 |
|
$ |
(0.37 |
) |
||
Diluted |
$ |
0.66 |
|
$ |
(0.37 |
) |
||
Cash dividends declared per share |
$ |
0.36 |
|
$ |
0.24 |
|
||
Weighted-average shares used to compute net earnings (loss) per share: |
|
|
||||||
Basic |
|
1,308 |
|
|
1,294 |
|
||
Diluted |
|
1,328 |
|
|
1,294 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||
(In millions, except percentages and per share amounts) |
||||||||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||
|
Three months
|
Diluted
|
Three months
|
Diluted
|
Three months
|
Diluted
|
||||||||||||||||||
GAAP net earnings |
$ |
392 |
|
$ |
0.29 |
|
$ |
259 |
|
$ |
0.19 |
|
$ |
9 |
|
$ |
0.01 |
|
||||||
Non-GAAP adjustments: |
|
|
|
|
|
|
||||||||||||||||||
Amortization of initial direct costs |
|
2 |
|
|
— |
|
|
2 |
|
|
— |
|
|
3 |
|
|
— |
|
||||||
Amortization of intangible assets |
|
82 |
|
|
0.06 |
|
|
84 |
|
|
0.06 |
|
|
95 |
|
|
0.07 |
|
||||||
Transformation costs |
|
213 |
|
|
0.16 |
|
|
209 |
|
|
0.15 |
|
|
357 |
|
|
0.27 |
|
||||||
Disaster charges |
|
5 |
|
|
— |
|
|
1 |
|
|
— |
|
|
2 |
|
|
— |
|
||||||
Stock-based compensation expense (a) |
|
86 |
|
|
0.06 |
|
|
98 |
|
|
0.08 |
|
|
55 |
|
|
0.04 |
|
||||||
Acquisition, disposition and other related charges |
|
3 |
|
|
— |
|
|
13 |
|
|
0.01 |
|
|
15 |
|
|
0.01 |
|
||||||
Tax indemnification and related adjustments |
|
(76 |
) |
|
(0.05 |
) |
|
— |
|
|
— |
|
|
30 |
|
|
0.03 |
|
||||||
Non-service net periodic benefit credit |
|
(19 |
) |
|
(0.01 |
) |
|
(17 |
) |
|
(0.01 |
) |
|
(28 |
) |
|
(0.02 |
) |
||||||
Earnings from equity interests (b) |
|
23 |
|
|
0.02 |
|
|
34 |
|
|
0.03 |
|
|
36 |
|
|
0.03 |
|
||||||
Adjustments for taxes |
|
(88 |
) |
|
(0.06 |
) |
|
(71 |
) |
|
(0.05 |
) |
|
(107 |
) |
|
(0.08 |
) |
||||||
Non-GAAP net earnings |
$ |
623 |
|
$ |
0.47 |
|
$ |
612 |
|
$ |
0.46 |
|
$ |
467 |
|
$ |
0.36 |
|
||||||
|
|
|
|
|
|
|
||||||||||||||||||
GAAP earnings from operations |
$ |
282 |
|
|
$ |
278 |
|
|
$ |
12 |
|
|
||||||||||||
Non-GAAP adjustments |
|
|
|
|
|
|
||||||||||||||||||
Amortization of initial direct costs |
|
2 |
|
|
|
2 |
|
|
|
3 |
|
|
||||||||||||
Amortization of intangible assets |
|
82 |
|
|
|
84 |
|
|
|
95 |
|
|
||||||||||||
Transformation costs |
|
213 |
|
|
|
209 |
|
|
|
357 |
|
|
||||||||||||
Disaster charges |
|
5 |
|
|
|
1 |
|
|
|
2 |
|
|
||||||||||||
Stock-based compensation expense (a) |
|
86 |
|
|
|
98 |
|
|
|
55 |
|
|
||||||||||||
Acquisition, disposition and other related charges |
|
3 |
|
|
|
13 |
|
|
|
15 |
|
|
||||||||||||
Non-GAAP earnings from operations |
$ |
673 |
|
|
$ |
685 |
|
|
$ |
539 |
|
|
||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||
GAAP operating profit margin |
|
4.1 |
% |
|
|
4.1 |
% |
|
|
0.2 |
% |
|
||||||||||||
Non-GAAP adjustments |
|
5.7 |
% |
|
|
6.1 |
% |
|
|
7.7 |
% |
|
||||||||||||
Non-GAAP operating profit margin |
|
9.8 |
% |
|
|
10.2 |
% |
|
|
7.9 |
% |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
||||||||||||
(Unaudited) |
||||||||||||
(In millions, except percentages and per share amounts) |
||||||||||||
|
|
|
|
|||||||||
|
Three months ended |
|||||||||||
|
July 31, 2021 |
April 30, 2021 |
July 31, 2020 |
|||||||||
GAAP net revenue |
$ |
6,897 |
|
$ |
6,700 |
|
$ |
6,816 |
|
|||
GAAP cost of sales |
|
4,515 |
|
|
4,413 |
|
|
4,749 |
|
|||
GAAP gross profit |
$ |
2,382 |
|
$ |
2,287 |
|
$ |
2,067 |
|
|||
|
|
|
|
|||||||||
Non-GAAP adjustments |
|
|
|
|||||||||
Amortization of initial direct costs |
$ |
2 |
|
$ |
2 |
|
$ |
3 |
|
|||
Stock-based compensation expense (a) |
|
9 |
|
|
11 |
|
|
8 |
|
|||
Non-GAAP gross profit |
$ |
2,393 |
|
$ |
2,300 |
|
$ |
2,078 |
|
|||
|
|
|
|
|||||||||
GAAP gross profit margin |
|
34.5 |
% |
|
34.1 |
% |
|
30.3 |
% |
|||
Non-GAAP adjustments |
|
0.2 |
% |
|
0.2 |
% |
|
0.2 |
% |
|||
Non-GAAP gross profit margin |
|
34.7 |
% |
|
34.3 |
% |
|
30.5 |
% |
|||
|
|
|
|
|||||||||
Net cash provided by operating activities |
$ |
1,130 |
|
$ |
822 |
|
$ |
1,472 |
|
|||
Investment in property, plant and equipment |
|
(684 |
) |
|
(535 |
) |
|
(620 |
) |
|||
Proceeds from sale of property, plant and equipment |
|
80 |
|
|
81 |
|
|
72 |
|
|||
Free cash flow |
$ |
526 |
|
$ |
368 |
|
$ |
924 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
||||||||||||||||
(Unaudited) |
||||||||||||||||
(In millions, except percentages and per share amounts) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
Nine months
|
Diluted
|
Nine months
|
Diluted
|
||||||||||||
GAAP net earnings (loss) |
$ |
874 |
|
$ |
0.66 |
|
$ |
(479 |
) |
$ |
(0.37 |
) |
||||
Non-GAAP adjustments: |
|
|
|
|
||||||||||||
Amortization of initial direct costs |
|
6 |
|
|
— |
|
|
9 |
|
|
— |
|
||||
Amortization of intangible assets |
|
276 |
|
|
0.21 |
|
|
299 |
|
|
0.23 |
|
||||
Impairment of goodwill |
|
— |
|
|
— |
|
|
865 |
|
|
0.67 |
|
||||
Transformation costs |
|
733 |
|
|
0.56 |
|
|
646 |
|
|
0.49 |
|
||||
Disaster charges |
|
6 |
|
|
0.01 |
|
|
24 |
|
|
0.02 |
|
||||
Stock-based compensation expense (a) |
|
294 |
|
|
0.22 |
|
|
215 |
|
|
0.18 |
|
||||
Acquisition, disposition and other related charges |
|
34 |
|
|
0.02 |
|
|
82 |
|
|
0.06 |
|
||||
Tax indemnification and related adjustments |
|
(60 |
) |
|
(0.05 |
) |
|
86 |
|
|
0.07 |
|
||||
Non-service net periodic benefit credit |
|
(53 |
) |
|
(0.04 |
) |
|
(101 |
) |
|
(0.08 |
) |
||||
Earnings from equity interests (b) |
|
91 |
|
|
0.07 |
|
|
110 |
|
|
0.09 |
|
||||
Adjustments for taxes |
|
(287 |
) |
|
(0.22 |
) |
|
(288 |
) |
|
(0.23 |
) |
||||
Non-GAAP net earnings |
$ |
1,914 |
|
$ |
1.44 |
|
$ |
1,468 |
|
$ |
1.13 |
|
||||
|
|
|
|
|
||||||||||||
GAAP earnings (loss) from operations |
$ |
782 |
|
|
$ |
(474 |
) |
|
||||||||
|
|
|
|
|
||||||||||||
Non-GAAP adjustments |
|
|
|
|
||||||||||||
Amortization of initial direct costs |
|
6 |
|
|
|
9 |
|
|
||||||||
Amortization of intangible assets |
|
276 |
|
|
|
299 |
|
|
||||||||
Impairment of goodwill |
|
— |
|
|
|
865 |
|
|
||||||||
Transformation costs |
|
733 |
|
|
|
646 |
|
|
||||||||
Disaster charges |
|
6 |
|
|
|
24 |
|
|
||||||||
Stock-based compensation expense (a) |
|
294 |
|
|
|
215 |
|
|
||||||||
Acquisition, disposition and other related charges |
|
34 |
|
|
|
82 |
|
|
||||||||
Non-GAAP earnings from operations |
$ |
2,131 |
|
|
$ |
1,666 |
|
|
||||||||
|
|
|
|
|
||||||||||||
GAAP operating profit margin |
|
3.8 |
% |
|
|
(2.4 |
)% |
|
||||||||
Non-GAAP adjustments |
|
6.6 |
% |
|
|
10.8 |
% |
|
||||||||
Non-GAAP operating profit margin |
|
10.4 |
% |
|
|
8.4 |
% |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
||||||||
(Unaudited) |
||||||||
(In millions, except percentages and per share amounts) |
||||||||
|
|
|
||||||
|
Nine months ended July 31, |
|||||||
|
2021 |
2020 |
||||||
GAAP net revenue |
$ |
20,430 |
|
$ |
19,774 |
|
||
GAAP cost of sales |
|
13,473 |
|
|
13,511 |
|
||
GAAP gross profit |
$ |
6,957 |
|
$ |
6,263 |
|
||
|
|
|
||||||
Non-GAAP adjustments |
|
|
||||||
Amortization of initial direct costs |
$ |
6 |
|
$ |
9 |
|
||
Acquisition, disposition and other related charges (c) |
|
— |
|
|
27 |
|
||
Stock-based compensation expense (a) |
|
33 |
|
|
30 |
|
||
Non-GAAP gross profit |
$ |
6,996 |
|
$ |
6,329 |
|
||
|
|
|
||||||
GAAP gross profit margin |
|
34.1 |
% |
|
31.7 |
% |
||
Non-GAAP adjustments |
|
0.1 |
% |
|
0.3 |
% |
||
Non-GAAP gross profit margin |
|
34.2 |
% |
|
32.0 |
% |
||
|
|
|
||||||
Net cash provided by operating activities |
$ |
2,915 |
|
$ |
1,493 |
|
||
Investment in property, plant and equipment |
|
(1,732 |
) |
|
(1,779 |
) |
||
Proceeds from sale of property, plant and equipment |
|
274 |
|
|
623 |
|
||
Free cash flow |
$ |
1,457 |
|
$ |
337 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(Unaudited) |
||||||||
(In millions, except par value) |
||||||||
|
|
|||||||
|
As of |
|||||||
|
July 31, 2021 |
October 31, 2020 |
||||||
ASSETS |
|
|
||||||
Current assets: |
|
|
||||||
Cash and cash equivalents |
$ |
5,293 |
|
$ |
4,233 |
|
||
Accounts receivable, net of allowances |
|
3,297 |
|
|
3,386 |
|
||
Financing receivables, net of allowances |
|
3,814 |
|
|
3,794 |
|
||
Inventory |
|
3,942 |
|
|
2,674 |
|
||
Assets held for sale |
|
1 |
|
|
77 |
|
||
Other current assets |
|
2,398 |
|
|
2,392 |
|
||
Total current assets |
|
18,745 |
|
|
16,556 |
|
||
Property, plant and equipment |
|
5,510 |
|
|
5,625 |
|
||
Long-term financing receivables and other assets |
|
10,912 |
|
|
10,544 |
|
||
Investments in equity interests |
|
2,286 |
|
|
2,170 |
|
||
Goodwill and intangible assets |
|
18,984 |
|
|
19,120 |
|
||
Total assets |
$ |
56,437 |
|
$ |
54,015 |
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
||||||
Current liabilities: |
|
|
||||||
Notes payable and short-term borrowings |
$ |
3,736 |
|
$ |
3,755 |
|
||
Accounts payable |
|
6,526 |
|
|
5,383 |
|
||
Employee compensation and benefits |
|
1,585 |
|
|
1,391 |
|
||
Taxes on earnings |
|
152 |
|
|
148 |
|
||
Deferred revenue |
|
3,434 |
|
|
3,430 |
|
||
Accrued restructuring |
|
267 |
|
|
366 |
|
||
Other accrued liabilities |
|
3,941 |
|
|
4,265 |
|
||
Total current liabilities |
|
19,641 |
|
|
18,738 |
|
||
Long-term debt |
|
12,489 |
|
|
12,186 |
|
||
Other non-current liabilities |
|
7,234 |
|
|
6,995 |
|
||
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; 1,307 and 1,287 shares issued and outstanding at July 31, 2021 and October 31, 2020, respectively) |
|
13 |
|
|
13 |
|
||
Additional paid-in capital |
|
28,632 |
|
|
28,350 |
|
||
Accumulated deficit |
|
(7,994 |
) |
|
(8,375 |
) |
||
Accumulated other comprehensive loss |
|
(3,631 |
) |
|
(3,939 |
) |
||
Total HPE stockholders’ equity |
|
17,020 |
|
|
16,049 |
|
||
Non-controlling interests |
|
53 |
|
|
47 |
|
||
Total stockholders’ equity |
|
17,073 |
|
|
16,096 |
|
||
Total liabilities and stockholders’ equity |
$ |
56,437 |
|
$ |
54,015 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(Unaudited) |
||||||||
(In millions) |
||||||||
|
Three months
|
Nine months
|
||||||
Cash flows from operating activities: |
|
|
||||||
Net earnings |
$ |
392 |
|
$ |
874 |
|
||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
||||||
Depreciation and amortization |
|
643 |
|
|
1,956 |
|
||
Stock-based compensation expense |
|
86 |
|
|
304 |
|
||
Provision for doubtful accounts and inventory |
|
51 |
|
|
149 |
|
||
Restructuring charges |
|
126 |
|
|
492 |
|
||
Deferred taxes on earnings |
|
(61 |
) |
|
(156 |
) |
||
Earnings from equity interests |
|
(79 |
) |
|
(109 |
) |
||
Dividends received from equity investees |
|
38 |
|
|
38 |
|
||
Other, net |
|
55 |
|
|
117 |
|
||
Changes in operating assets and liabilities, net of acquisitions: |
|
|
||||||
Accounts receivable |
|
(371 |
) |
|
61 |
|
||
Financing receivables |
|
130 |
|
|
26 |
|
||
Inventory |
|
(855 |
) |
|
(1,352 |
) |
||
Accounts payable |
|
986 |
|
|
1,150 |
|
||
Taxes on earnings |
|
24 |
|
|
(6 |
) |
||
Restructuring |
|
(102 |
) |
|
(426 |
) |
||
Other assets and liabilities |
|
67 |
|
|
(203 |
) |
||
Net cash provided by operating activities |
|
1,130 |
|
|
2,915 |
|
||
Cash flows from investing activities: |
|
|
||||||
Investment in property, plant and equipment |
|
(684 |
) |
|
(1,732 |
) |
||
Proceeds from sale of property, plant and equipment |
|
80 |
|
|
274 |
|
||
Purchases of available-for-sale securities and other investments |
|
(25 |
) |
|
(44 |
) |
||
Maturities and sales of available-for-sale securities and other investments |
|
1 |
|
|
11 |
|
||
Financial collateral posted |
|
(242 |
) |
|
(873 |
) |
||
Financial collateral received |
|
483 |
|
|
780 |
|
||
Payments made in connection with business acquisitions, net of cash acquired |
|
(99 |
) |
|
(133 |
) |
||
Net cash used in investing activities |
|
(486 |
) |
|
(1,717 |
) |
||
Cash flows from financing activities: |
|
|
||||||
Short-term borrowings with original maturities less than 90 days, net |
|
(69 |
) |
|
(30 |
) |
||
Proceeds from debt, net of issuance costs |
|
1,066 |
|
|
2,698 |
|
||
Payment of debt |
|
(597 |
) |
|
(2,341 |
) |
||
Net proceeds (payments) related to stock-based award activities |
|
9 |
|
|
(18 |
) |
||
Cash dividends paid to non-controlling interests |
|
— |
|
|
(8 |
) |
||
Cash dividends paid to shareholders |
|
(157 |
) |
|
(468 |
) |
||
Net cash provided by (used in) financing activities |
|
252 |
|
|
(167 |
) |
||
Increase in cash, cash equivalents and restricted cash |
|
896 |
|
|
1,031 |
|
||
Cash, cash equivalents and restricted cash at beginning of period |
|
4,756 |
|
|
4,621 |
|
||
Cash, cash equivalents and restricted cash at end of period |
$ |
5,652 |
|
$ |
5,652 |
|
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||||||
SEGMENT INFORMATION |
||||||||||||
(Unaudited) |
||||||||||||
(In millions) |
||||||||||||
|
|
|||||||||||
|
Three months ended |
|||||||||||
|
July 31,
|
April 30,
|
July 31,
|
|||||||||
Net revenue: (d) |
|
|
|
|||||||||
Compute |
$ |
3,104 |
|
$ |
2,976 |
|
$ |
3,409 |
|
|||
HPC & MCS |
|
741 |
|
|
685 |
|
|
667 |
|
|||
Storage |
|
1,176 |
|
|
1,137 |
|
|
1,132 |
|
|||
Intelligent Edge |
|
867 |
|
|
799 |
|
|
684 |
|
|||
Financial Services |
|
844 |
|
|
839 |
|
|
811 |
|
|||
Corporate Investments and Other |
|
332 |
|
|
350 |
|
|
303 |
|
|||
Total segment net revenue |
|
7,064 |
|
|
6,786 |
|
|
7,006 |
|
|||
Elimination of intersegment net revenue |
|
(167 |
) |
|
(86 |
) |
|
(190 |
) |
|||
Total Hewlett Packard Enterprise consolidated net revenue |
$ |
6,897 |
|
$ |
6,700 |
|
$ |
6,816 |
|
|||
|
|
|
|
|||||||||
Earnings before taxes: (a)(d) |
|
|
|
|||||||||
Compute |
$ |
347 |
|
$ |
335 |
|
$ |
318 |
|
|||
HPC & MCS |
|
29 |
|
|
19 |
|
|
47 |
|
|||
Storage |
|
178 |
|
|
191 |
|
|
170 |
|
|||
Intelligent Edge |
|
137 |
|
|
124 |
|
|
71 |
|
|||
Financial Services |
|
94 |
|
|
91 |
|
|
66 |
|
|||
Corporate Investments and Other |
|
(28 |
) |
|
(25 |
) |
|
(68 |
) |
|||
Total segment earnings from operations |
|
757 |
|
|
735 |
|
|
604 |
|
|||
|
|
|
|
|||||||||
Unallocated corporate costs and eliminations |
|
(84 |
) |
|
(50 |
) |
|
(65 |
) |
|||
Stock-based compensation expense (a) |
|
(86 |
) |
|
(98 |
) |
|
(55 |
) |
|||
Amortization of initial direct costs |
|
(2 |
) |
|
(2 |
) |
|
(3 |
) |
|||
Amortization of intangible assets |
|
(82 |
) |
|
(84 |
) |
|
(95 |
) |
|||
Transformation costs |
|
(213 |
) |
|
(209 |
) |
|
(357 |
) |
|||
Disaster charges |
|
(5 |
) |
|
(1 |
) |
|
(2 |
) |
|||
Acquisition, disposition and other related charges |
|
(3 |
) |
|
(13 |
) |
|
(15 |
) |
|||
Interest and other, net |
|
(50 |
) |
|
(11 |
) |
|
(71 |
) |
|||
Tax indemnification and related adjustments |
|
76 |
|
|
— |
|
|
(30 |
) |
|||
Non-service net periodic benefit credit |
|
19 |
|
|
17 |
|
|
28 |
|
|||
Earnings from equity interests |
|
79 |
|
|
4 |
|
|
27 |
|
|||
Total Hewlett Packard Enterprise consolidated earnings (loss) before taxes |
$ |
406 |
|
$ |
288 |
|
$ |
(34 |
) |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||
SEGMENT INFORMATION |
||||||||
(Unaudited) |
||||||||
(In millions) |
||||||||
|
|
|||||||
|
Nine months ended July 31, |
|||||||
|
2021 |
2020 |
||||||
Net revenue: (d) |
|
|
||||||
Compute |
$ |
9,066 |
|
$ |
9,094 |
|
||
HPC & MCS |
|
2,188 |
|
|
2,113 |
|
||
Storage |
|
3,506 |
|
|
3,470 |
|
||
Intelligent Edge |
|
2,472 |
|
|
2,069 |
|
||
Financial Services |
|
2,543 |
|
|
2,503 |
|
||
Corporate Investments and Other |
|
1,003 |
|
|
958 |
|
||
Total segment net revenue |
|
20,778 |
|
|
20,207 |
|
||
Elimination of intersegment net revenue |
|
(348 |
) |
|
(433 |
) |
||
Total Hewlett Packard Enterprise consolidated net revenue |
$ |
20,430 |
|
$ |
19,774 |
|
||
|
|
|
||||||
Earnings before taxes: (a)(d) |
|
|
||||||
Compute |
$ |
1,024 |
|
$ |
797 |
|
||
HPC & MCS |
|
91 |
|
|
156 |
|
||
Storage |
|
604 |
|
|
592 |
|
||
Intelligent Edge |
|
413 |
|
|
240 |
|
||
Financial Services |
|
269 |
|
|
218 |
|
||
Corporate Investments and Other |
|
(84 |
) |
|
(172 |
) |
||
Total segment earnings from operations |
|
2,317 |
|
|
1,831 |
|
||
|
|
|
||||||
Unallocated corporate costs and eliminations |
|
(186 |
) |
|
(165 |
) |
||
Stock-based compensation expense (a) |
|
(294 |
) |
|
(215 |
) |
||
Amortization of initial direct costs |
|
(6 |
) |
|
(9 |
) |
||
Amortization of intangible assets |
|
(276 |
) |
|
(299 |
) |
||
Impairment of goodwill |
|
— |
|
|
(865 |
) |
||
Transformation costs |
|
(733 |
) |
|
(646 |
) |
||
Disaster charges |
|
(6 |
) |
|
(24 |
) |
||
Acquisition, disposition and other related charges |
|
(34 |
) |
|
(82 |
) |
||
Interest and other, net |
|
(105 |
) |
|
(158 |
) |
||
Tax indemnification and related adjustments |
|
60 |
|
|
(86 |
) |
||
Non-service net periodic benefit credit |
|
53 |
|
|
101 |
|
||
Earnings from equity interests |
|
109 |
|
|
50 |
|
||
Total Hewlett Packard Enterprise consolidated earnings (loss) before taxes |
$ |
899 |
|
$ |
(567 |
) |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||||||||||||
SEGMENT INFORMATION |
||||||||||||||||||
(Unaudited) |
||||||||||||||||||
(In millions, except percentages) |
||||||||||||||||||
|
|
|
||||||||||||||||
|
Three months ended |
Change (%) |
||||||||||||||||
|
July 31,
|
April 30,
|
July 31,
|
Q/Q |
Y/Y |
|||||||||||||
Net revenue: (d) |
|
|
|
|
|
|||||||||||||
Compute |
$ |
3,104 |
|
$ |
2,976 |
|
$ |
3,409 |
|
4 |
% |
(9 |
%) |
|||||
HPC & MCS |
|
741 |
|
|
685 |
|
|
667 |
|
8 |
% |
11 |
% |
|||||
Storage |
|
1,176 |
|
|
1,137 |
|
|
1,132 |
|
3 |
% |
4 |
% |
|||||
Intelligent Edge |
|
867 |
|
|
799 |
|
|
684 |
|
9 |
% |
27 |
% |
|||||
Financial Services |
|
844 |
|
|
839 |
|
|
811 |
|
1 |
% |
4 |
% |
|||||
Corporate Investments and Other |
|
332 |
|
|
350 |
|
|
303 |
|
(5 |
%) |
10 |
% |
|||||
Total segment net revenue |
|
7,064 |
|
|
6,786 |
|
|
7,006 |
|
4 |
% |
1 |
% |
|||||
Elimination of intersegment net revenue |
|
(167 |
) |
|
(86 |
) |
|
(190 |
) |
94 |
% |
(12 |
%) |
|||||
Total Hewlett Packard Enterprise consolidated net revenue |
$ |
6,897 |
|
$ |
6,700 |
|
$ |
6,816 |
|
3 |
% |
1 |
% |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
|||||||||||
SEGMENT INFORMATION |
|||||||||||
(Unaudited) |
|||||||||||
(In millions, except percentages) |
|||||||||||
|
|
||||||||||
|
Nine months ended July 31, |
||||||||||
|
2021 |
2020 |
Y/Y |
||||||||
Net revenue: (d) |
|
|
|
||||||||
Compute |
$ |
9,066 |
|
$ |
9,094 |
|
— |
% |
|||
HPC & MCS |
|
2,188 |
|
|
2,113 |
|
4 |
% |
|||
Storage |
|
3,506 |
|
|
3,470 |
|
1 |
% |
|||
Intelligent Edge |
|
2,472 |
|
|
2,069 |
|
19 |
% |
|||
Financial Services |
|
2,543 |
|
|
2,503 |
|
2 |
% |
|||
Corporate Investments |
|
1,003 |
|
|
958 |
|
5 |
% |
|||
Total segment net revenue |
|
20,778 |
|
|
20,207 |
|
3 |
% |
|||
Elimination of intersegment net revenue |
|
(348 |
) |
|
(433 |
) |
(20 |
%) |
|||
Total Hewlett Packard Enterprise consolidated net revenue |
$ |
20,430 |
|
$ |
19,774 |
|
3 |
% |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
|||||||
SEGMENT OPERATING MARGIN SUMMARY DATA |
|||||||
(Unaudited) |
|||||||
|
|
|
|
|
|||
|
|
Three months ended |
|
Change in Operating Profit
|
|||
|
|
July 31, 2021 |
|
Q/Q |
|
Y/Y |
|
Segment operating profit margin: (a)(d) |
|
|
|
|
|
|
|
Compute |
|
11.2 |
% |
|
-0.1 |
|
1.9 |
HPC & MCS |
|
3.9 |
% |
|
1.1 |
|
-3.1 |
Storage |
|
15.1 |
% |
|
-1.7 |
|
0.1 |
Intelligent Edge |
|
15.8 |
% |
|
0.3 |
|
5.4 |
Financial Services |
|
11.1 |
% |
|
0.3 |
|
3.0 |
Corporate Investments and Other |
|
(8.4 |
%) |
|
-1.3 |
|
14.0 |
Total segment operating profit margin |
|
10.7 |
% |
|
-0.1 |
|
2.1 |
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES |
||||||||||||
CALCULATION OF DILUTED NET EARNINGS (LOSS) PER SHARE |
||||||||||||
(Unaudited) |
||||||||||||
(In millions, except per share amounts) |
||||||||||||
|
|
|||||||||||
|
Three months ended |
|||||||||||
|
July 31,
|
April 30,
|
July 31,
|
|||||||||
Numerator: |
|
|
|
|||||||||
GAAP net earnings |
$ |
392 |
|
$ |
259 |
|
$ |
9 |
|
|||
Non-GAAP net earnings |
$ |
623 |
|
$ |
612 |
|
$ |
467 |
|
|||
|
|
|
|
|||||||||
Denominator: |
|
|
|
|||||||||
Weighted-average shares used to compute basic net earnings per share |
|
1,314 |
|
|
1,309 |
|
|
1,292 |
|
|||
Dilutive effect of employee stock plans |
|
24 |
|
22 |
|
8 |
||||||
Weighted-average shares used to compute diluted net earnings per share |
|
1,338 |
|
|
1,331 |
|
|
1,300 |
|
|||
|
|
|
|
|||||||||
GAAP net earnings per share |
|
|
|
|||||||||
Basic |
$ |
0.30 |
|
$ |
0.20 |
|
$ |
0.01 |
|
|||
Diluted |
$ |
0.29 |
|
$ |
0.19 |
|
$ |
0.01 |
|
|||
|
|
|
|
|||||||||
Non-GAAP net earnings per share |
|
|
|
|||||||||
Basic |
$ |
0.47 |
|
$ |
0.47 |
|
$ |
0.36 |
|
|||
Diluted |
$ |
0.47 |
|
$ |
0.46 |
|
$ |
0.36 |
|
|
Nine months ended July 31, |
|||||||
|
2021 |
2020 |
||||||
Numerator: |
|
|
||||||
GAAP net earnings (loss) |
$ |
874 |
|
$ |
(479 |
) |
||
Non-GAAP net earnings |
$ |
1,914 |
|
$ |
1,468 |
|
||
|
|
|
||||||
Denominator: |
|
|
||||||
Weighted-average shares used to compute basic net earnings (loss) per share and diluted net loss per share |
|
1,308 |
|
|
1,294 |
|
||
Dilutive effect of employee stock plans |
|
20 |
|
10 |
|
|||
Weighted-average shares used to compute diluted net earnings per share |
|
1,328 |
|
|
1,304 |
|
||
|
|
|
||||||
GAAP net earnings (loss) per share |
|
|
||||||
Basic |
$ |
0.67 |
|
$ |
(0.37 |
) |
||
Diluted |
$ |
0.66 |
|
$ |
(0.37 |
) |
||
|
|
|
||||||
Non-GAAP net earnings per share |
|
|
||||||
Basic |
$ |
1.46 |
|
$ |
1.13 |
|
||
Diluted |
$ |
1.44 |
|
$ |
1.13 |
|
(a) |
Effective at the beginning of the first quarter of fiscal 2021, Hewlett Packard Enterprise Company ("the Company") excluded stock-based compensation expense ("Non-GAAP Stock-Based Compensation Adjustment") from its segment earnings from operations and excluded stock-based compensation expense from consolidated non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP earnings from operations, non-GAAP operating profit margin, non-GAAP net earnings and non-GAAP net earnings per share. The Company reflected the Non-GAAP Stock-Based Compensation Adjustment to the earliest period presented. This change had no impact on the Company's previously reported consolidated GAAP results. |
|
|
|
|
(b) |
Represents the amortization of basis difference adjustments related to the H3C divestiture. |
|
|
|
|
(c) |
Acquisition, disposition and other related charges for the three and nine months ended July 31, 2020 related to a non-cash inventory fair value adjustment in connection with the acquisition of Cray, Inc., which was included in Cost of sales. |
|
|
|
|
(d) |
Effective at the beginning of the first quarter of fiscal 2021, the Company implemented certain organizational changes to align its segment financial reporting more closely with its current business structure. These organizational changes are: (i) the transfer of the lifecycle event services business, previously reported within the Advisory and Professional Services ("A & PS") reportable segment to Compute, Storage and HPC & MCS reportable segments; (ii) the transfer of certain software and related services business, previously reported within the Compute, Storage and A & PS reportable segments, to the Corporate Investments and Other reportable segment, to form a new Software operating segment; and (iii) the transfer of the remaining A & PS operating segment, previously reported as a separate reportable segment, to the Corporate Investments and Other reportable segment. As a result of these changes, the Corporate Investments and Other Segment now includes the A & PS operating segment, the Communications and Media Solutions operating segment, the Software operating segment, and Hewlett Packard Enterprise Labs which is responsible for research and development. |
|
|
|
|
|
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 the Company's previously reported consolidated results. |