Revenue Flat for HP Inc.’s First Quarter

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HP Inc. today reported lower sales and revenues for its first quarter of 2019, reporting net revenue of $14.7 billion, up 1 percent versus first-quarter 2018.

First-quarter earnings per share were $0.51, down from $1.16 in the prior-year period, but above HP’s previously provided outlook of $0.46 to $0.49. Net earnings were $0.8 billion, down 59 percent versus first-quarter 2018.

Sequentially, HP’s revenue of $0.52 billion for first-quarter 2019 was down $0.02 billion versus fourth-quarter 2018, but the same as third-quarter 2018.

HP Inc. President and CEO Dion Weisler commented: “We continued to drive top and bottom line growth in (the) first quarter and are reaffirming our non-GAAP EPS and free cash flow financial outlook for the year. We are benefiting from our market-leading portfolio and accelerating our transformation with momentum in services, solutions, and 3D printing as we reinvent HP and position the business for long-term sustainable growth.”

Weisler also cited increased economic uncertainties and price sensitivity among its customers for weakness in its printing business.

“All commercial customers are purchasing supplies online, and while we have leading share online, it’s at a lower percentage than our share with traditional commercial resellers and in-store retailers,” Weisler said in a post-earnings call with analysts.

First-Quarter Segment Results

  • Revenue for HP’s Printing group was mostly flat year-over-year at $5.06 billion. Operating profit was $821 million. Total hardware shipment units were up 3 percent, with Commercial hardware units up 4 percent, and Consumer hardware units up 2 percent. Supplies net revenue was down 3 percent.
  • Revenue for HP’s Personal Systems (PC) group was $9.7 billion, up 2 percent year-over-year, with a 4.2 percent operating margin. Operating profit was $410 million. Commercial net revenue increased 3 percent and Consumer net revenue increased 1 percent. Total units were down 3 percent, with Notebooks units down 1 percent, and Desktops units down 8 percent.

Printing Group First-Quarter Results

Taking a closer look at HP’s Printing group, HP noted:

• Continued hardware placement that drove solid unit growth.
• Continued 3D-printing momentum, including the HP Jet Fusion 500 Series color 3D printer
• In the office segment, HP expanded its A3 portfolio, while in the graphics-printer segment, HP  shipped new DesignJet PageWide XL printers with improved productivity.

During the first quarter, supplies revenue made up 65 percent of total revenue Printing group revenue, while Commercial hardware and Consumer hardware made up 21 and 14 percent of total revenue, respectively.

First Quarter Non-GAAP Results

First quarter non-GAAP (Generally Accepted Accounting Principles)  net EPS was $0.52, up from $0.48 in the prior-year period and within HP’s previously provided outlook of $0.50 to $0.53. First-quarter non-GAAP net earnings and non-GAAP net EPS exclude after-tax adjustments of $6 million, or $0.01 per diluted share, related to restructuring and other charges, acquisition-related charges, amortization of intangible assets, non-operating retirement-related credits/(charges), and tax adjustments.

Outlook

For the fiscal 2019 second quarter, HP estimates EPS to be in the range of $0.45 to $0.48.

For fiscal 2019, HP is updating its estimate of EPS to be in the range of $2.00 to $2.10. HP also reaffirmed its previous estimate for fiscal 2019 free cash flow of at least $3.7 billion.

More information on HP’s earnings, including additional financial analysis and an earnings overview presentation, is available on HP’s Investor Relations website at investor.hp.com.

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