BusinessWire

HPE Reports Q2 Results

Q2 2020 Financial Highlights:


  • Revenue: $6.0 billion with momentum in our strategy to pivot to as a service
  • Annualized revenue run-rate (ARR): $520 million, up 17% from the prior-year period
  • Gross profit margin: GAAP of 31.9%, down 30 basis points from the prior-year period and Non-GAAP of 32.0%, down 20 basis points from the prior-year period
  • Diluted net earnings per share:
    • GAAP of ($0.64), compared to $0.30 from the prior-year period, includes non-cash write-down of legacy goodwill
    • Non-GAAP of $0.22, compared to $0.42 from the prior-year period

HPE Board of Directors approved a Cost Optimization and Prioritization Plan to prioritize investments and realign resources to areas of growth:

  • Three year plan, to be implemented through fiscal year 2022
  • Estimated gross savings of at least $1.0 billion and annualized net run-rate savings of at least $800 million
  • Expected cash funding payments of $1.0 billion to $1.3 billion 

SAN JOSE, Calif.--(BUSINESS WIRE)--Hewlett Packard Enterprise (NYSE: HPE) today announced financial results for its fiscal 2020 second quarter, ended April 30, 2020.

“The global economic lockdowns since February significantly impacted our fiscal Q2 financial performance,” said Antonio Neri, president and CEO of HPE. “We exited Q2 with $1.5 billion dollars in orders across the portfolio, representing two times the average historical backlog1.”

“Despite challenging circumstances, HPE GreenLake, our as-a-service offering, gained traction with 17% ARR growth and our Intelligent Edge business grew 12% in North America outperforming the market while expanding margins,” added Neri.

“We are taking decisive steps to navigate the near term uncertainty, while ensuring we align resources to priority growth areas so that we are well positioned to accelerate our edge-to-cloud strategy and address the needs of our customers in a post-COVID-19 world,” Neri said.

Second Quarter Fiscal Year 2020 Results

Net revenue of $6.0 billion, down 16% from the prior-year period and 15% from the prior-year period when adjusted for currency, driven primarily by supply chain constraints and delays in customer acceptance, which resulted in significantly higher levels of backlog, particularly in Compute, HPC & MCS, and Storage.

Annualized revenue run-rate (ARR) of $520 million, up 17% from the prior-year period. We are reiterating our 2019 Securities Analyst Meeting ARR guidance of 30-40% Compounded Annual Growth Rate from fiscal year 2019 to fiscal year 2022.

GAAP gross profit margin of 31.9%, compared to 32.2% from the prior-year period and Non-GAAP gross profit margin of 32.0%, compared to 32.2% from the prior-year period.

GAAP operating profit margin of (13.9%), compared to 6.1% from the prior-year period and Non-GAAP operating profit margin of 6.1%, compared to 8.9% from the prior-year period.

GAAP diluted net earnings per share (“EPS”) was ($0.64), compared to $0.30 in the prior-year period, includes non-cash write-down of legacy goodwill impacting GAAP EPS by $0.67.

Non-GAAP diluted net EPS was $0.22, compared to $0.42 in the prior-year period. Second quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $1.1 billion and $0.86 per diluted earnings per share, respectively, primarily related to impairment of goodwill, transformation costs and amortization of purchased intangible assets.

Cash flow from operations of $100 million, compared to $987 million in the prior-year period.

Free cash flow of ($402) million, compared to $402 million in the prior-year period.

Segment Results

Intelligent Edge revenue was $665 million, down 2% year over year when adjusted for currency, with 11.0% operating profit margin, compared to 5.3% from the prior-year period. Enhancements to North America sales leadership and go-to-market segmentation are paying off with 12% year over year growth in North America. Despite the challenging business environment, we are gaining market share in both campus switching and WLAN markets, while significantly improving profit margins.

Compute revenue was $2.6 billion, down 19% year over year when adjusted for currency, with 4.7% operating profit margin, compared to 9.3% from the prior-year period. Revenue in the quarter was pressured primarily by component shortages and supply chain disruptions related to the COVID-19 pandemic that impacted our ability to fulfill customer demand.

High Performance Compute & Mission Critical Systems (HPC & MCS) revenue was $589 million, down 18% year over year when adjusted for currency, with 5.6% operating profit margin, compared to 12.8% from the prior-year period. Revenue was impacted by COVID-19-related delays in installations and customer acceptance resulting in elevated backlog that should flow into the second half of the year. Our HPC business has been actively involved in COVID-19-related research activity and is providing COVID-19 researchers worldwide with access to the world’s most powerful HPC resources to advance the pace of scientific discovery in the fight to stop the virus.

Storage revenue was $1.1 billion, down 16% year over year when adjusted for currency, with 13.4% operating profit margin, compared to 18.5% from the prior-year period. Revenue in the quarter was pressured primarily by component shortages and supply chain disruptions related to the COVID-19 pandemic that impacted our ability to fulfill customer demand. Big Data showed continued momentum, up 61% year over year when adjusted for currency and Nimble Services revenue grew 20% year over year with services intensity at record highs as customers added high-margin value-added services.

Advisory & Professional Services (A&PS) revenue was $237 million, down 8% year over year when adjusted for currency, with 0.8% operating profit margin, compared to (5.4%) from the prior-year period. A&PS is a strategic business that pulls through significant infrastructure and operational services sales.

Financial Services revenue was $833 million, down 5% year over year when adjusted for currency, with 9.0% operating profit margin, compared to 8.6% from the prior-year period. Net portfolio assets were up 4% year over year when adjusted for currency, and financing volume was up 10% year over year when adjusted for currency, despite the impact of COVID-19. The business delivered return on equity of 15.3%, down 30 basis points from the prior-year period.

Immediate Actions to Reduce Operating Expenses

In response to the impact and uncertainty caused by the COVID-19 pandemic, on May 19, 2020, the Board of Directors of HPE approved certain base salary adjustments for the period beginning on July 1, 2020 through the remainder of fiscal year 2020, as follows: the base salaries of the Chief Executive Officer, and of each executive officer at the Executive Vice President level, will be reduced by 25%, and the base salary of each executive officer at the Senior Vice President level will be reduced by 20%. The Board also agreed to reduce by 25% the portion of the annual $100,000 cash retainer to which each director is entitled for the period beginning on July 1, 2020 through the remainder of fiscal 2020.

Cost Optimization and Prioritization Plan

On May 19, 2020, the Board of Directors also approved a cost optimization and prioritization plan in order to focus HPE’s investments and realign the workforce to areas of growth, including measures to simplify and evolve its product portfolio strategy, go-to-market configurations, supply chain structures, digital customer support model and marketing experiences, and real estate strategies. HPE expects that the plan will be implemented through fiscal year 2022 and estimates it will include gross savings as a result of changes to the company’s workforce, real estate model and business process improvements of at least $1.0 billion, with the plan expected to deliver annualized net run-rate savings of at least $800 million by fiscal year 2022-end, in both cases relative to HPE’s fiscal year 2019 exit.

In order to achieve this level of cost savings, HPE estimates cash funding payments between $1.0 billion to $1.3 billion over the next three years.

Fiscal Year 2020 Outlook

On April 6, 2020, HPE filed an 8K to withdraw fiscal year 2020 guidance due to increased level of uncertainty in which the global COVID-19 pandemic may adversely impact business operations, financial performance and results of operations. Consistent with that filing, HPE will not be providing fiscal year 2020 third quarter or full year guidance.

1Backlog represents the price of firm orders related to fiscal 2020 second quarter and prior quarters for which work has not been performed or goods have not been delivered as of April, 30 2020.

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 margin, non-GAAP operating expense, 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 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, 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 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 the scope and duration of the novel coronavirus (“COVID-19”) pandemic and its impact on our business operations, liquidity and capital resources, employees, customers, 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 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; execution, 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; 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, 2019, subsequent Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, as applicable.

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 second quarter ended April 30, 2020. Hewlett Packard Enterprise assumes no obligation and does not intend to update these forward-looking statements.

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(In millions, except per share amounts)

 

 

 

Three months ended

 

April 30,
2020

 

January 31,
2020

 

April 30,
2019

Net revenue

$

6,009

 

 

$

6,949

 

 

$

7,150

 

Costs and expenses:

 

 

 

 

 

Cost of sales

 

4,095

 

 

 

4,667

 

 

 

4,845

 

Research and development

 

450

 

 

 

485

 

 

 

457

 

Selling, general and administrative

 

1,109

 

 

 

1,218

 

 

 

1,214

 

Amortization of intangible assets

 

84

 

 

 

120

 

 

 

69

 

Impairment of goodwill(a)

 

865

 

 

 

 

 

Transformation costs

 

200

 

 

 

89

 

 

 

54

 

Disaster charges (recovery)(b)

 

22

 

 

 

 

 

(7

)

Acquisition, disposition and other related charges

 

18

 

 

 

22

 

 

 

84

 

Total costs and expenses

 

6,843

 

 

 

6,601

 

 

 

6,716

 

(Loss) earnings from operations

 

(834

)

 

 

348

 

 

 

434

 

Interest and other, net

 

(68

)

 

 

(19

)

 

 

(18

)

Tax indemnification adjustments

 

(35

)

 

 

(21

)

 

 

4

 

Non-service net periodic benefit credit

 

36

 

 

 

37

 

 

 

17

 

(Loss) earnings from equity interests

 

(10

)

 

 

33

 

 

 

3

 

(Loss) earnings before taxes

 

(911

)

 

 

378

 

 

 

440

 

Benefit (provision) for taxes

 

90

 

 

 

(45

)

 

 

(21

)

Net (loss) earnings

$

(821

)

 

$

333

 

 

$

419

 

Net (loss) earnings per share:

 

 

 

 

 

Basic

$

(0.64

)

 

$

0.26

 

 

$

0.31

 

Diluted(h)

$

(0.64

)

 

$

0.25

 

 

$

0.30

 

Cash dividends declared per share

$

0.1200

 

 

$

0.1200

 

 

$

0.1125

 

Weighted-average shares used to compute net (loss) earnings per share:

 

 

 

 

 

Basic

 

1,291

 

 

 

1,300

 

 

 

1,367

 

Diluted(h)

 

1,291

 

 

 

1,315

 

 

 

1,382

 

 

 

 

 

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(In millions, except per share amounts)

 

 

 

Six months ended April 30,

 

2020

 

2019

Net revenue

$

12,958

 

 

$

14,703

 

Costs and expenses:

 

 

 

Cost of sales

 

8,762

 

 

 

10,052

 

Research and development

 

935

 

 

 

923

 

Selling, general and administrative

 

2,327

 

 

 

2,425

 

Amortization of intangible assets

 

204

 

 

 

141

 

Impairment of goodwill(a)

 

865

 

 

 

Transformation costs

 

289

 

 

 

132

 

Disaster charges (recovery)(b)

 

22

 

 

 

(7

)

Acquisition, disposition and other related charges

 

40

 

 

 

147

 

Total costs and expenses

 

13,444

 

 

 

13,813

 

(Loss) earnings from operations

 

(486

)

 

 

890

 

Interest and other, net

 

(87

)

 

 

(69

)

Tax indemnification adjustments

 

(56

)

 

 

223

 

Non-service net periodic benefit credit

 

73

 

 

 

33

 

Earnings from equity interests

 

23

 

 

 

18

 

(Loss) earnings before taxes

 

(533

)

 

 

1,095

 

Benefit (provision) for taxes

 

45

 

 

 

(499

)

Net (loss) earnings

$

(488

)

 

$

596

 

Net (loss) earnings per share:

 

 

 

Basic

$

(0.38

)

 

$

0.43

 

Diluted(h)

$

(0.38

)

 

$

0.43

 

Cash dividends declared per share

$

0.2400

 

 

$

0.2250

 

Weighted-average shares used to compute net (loss) earnings per share:

 

 

 

Basic

 

1,295

 

 

 

1,384

 

Diluted(h)

 

1,295

 

 

 

1,397

 

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 April 30,
2020

 

Diluted net
earnings
per share

 

Three months
ended

January 31,
2020

 

Diluted net
earnings
per share

 

Three months
ended April 30,
2019

 

Diluted net
earnings
per share

GAAP net (loss) earnings

$

(821

)

 

$

(0.64

)

 

 

333

 

 

$

0.25

 

 

$

419

 

 

$

0.30

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

Amortization of initial direct costs

 

3

 

 

 

 

 

3

 

 

 

 

 

 

 

Amortization of intangible assets

 

84

 

 

 

0.07

 

 

 

120

 

 

 

0.09

 

 

 

69

 

 

 

0.05

 

Impairment of goodwill(a)

 

865

 

 

 

0.67

 

 

 

 

 

 

 

 

 

Transformation costs

 

200

 

 

 

0.15

 

 

 

89

 

 

 

0.07

 

 

 

54

 

 

 

0.04

 

Disaster charges (recovery)(b)

 

22

 

 

 

0.02

 

 

 

 

 

 

 

(7

)

 

 

(0.01

)

Acquisition, disposition and other related charges

 

25

 

 

 

0.02

 

 

 

42

 

 

 

0.03

 

 

 

84

 

 

 

0.06

 

Tax indemnification adjustments

 

35

 

 

 

0.03

 

 

 

21

 

 

 

0.02

 

 

 

(4

)

 

 

Non-service net periodic benefit credit

 

(36

)

 

 

(0.03

)

 

 

(37

)

 

 

(0.03

)

 

 

(17

)

 

 

(0.01

)

Loss from equity interests(c)

 

37

 

 

 

0.03

 

 

 

37

 

 

 

0.03

 

 

 

38

 

 

 

0.03

 

Adjustments for taxes

$

(129

)

 

 

(0.10

)

 

 

(33

)

 

 

(0.02

)

 

 

(57

)

 

 

(0.04

)

Non-GAAP net earnings

$

285

 

 

$

0.22

 

 

$

575

 

 

$

0.44

 

 

$

579

 

 

$

0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP (loss) earnings from operations

$

(834

)

 

 

 

$

348

 

 

 

 

$

434

 

 

 

Non-GAAP adjustments

 

 

 

 

 

 

 

 

 

 

 

Amortization of initial direct costs

 

3

 

 

 

 

 

3

 

 

 

 

 

 

 

Amortization of intangible assets

 

84

 

 

 

 

 

120

 

 

 

 

 

69

 

 

 

Impairment of goodwill(a)

 

865

 

 

 

 

 

 

 

 

 

 

 

Transformation costs

 

200

 

 

 

 

 

89

 

 

 

 

 

54

 

 

 

Disaster charges (recovery)(b)

 

22

 

 

 

 

 

 

 

 

 

(7

)

 

 

Acquisition, disposition and other related charges

 

25

 

 

 

 

 

42

 

 

 

 

 

84

 

 

 

Non-GAAP earnings from operations

$

365

 

 

 

 

$

602

 

 

 

 

$

634

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating profit margin

 

(13.9

)%

 

 

 

 

5.0

%

 

 

 

 

6.1

%

 

 

Non-GAAP adjustments

 

20.0

%

 

 

 

 

3.7

%

 

 

 

 

2.8

%

 

 

Non-GAAP operating profit margin

 

6.1

%

 

 

 

 

8.7

%

 

 

 

 

8.9

%

 

 

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
April 30, 2020

 

Three months ended
January 31, 2020

 

Three months ended
April 30, 2019

GAAP net revenue

$

 

6,009

 

 

$

 

6,949

 

 

$

 

7,150

 

GAAP cost of sales

 

4,095

 

 

 

4,667

 

 

 

4,845

 

GAAP gross profit

$

 

1,914

 

 

$

 

2,282

 

 

$

 

2,305

 

 

 

 

 

 

 

Non-GAAP adjustments

 

 

 

 

 

Amortization of initial direct costs

$

 

3

 

 

$

 

3

 

 

$

 

 

Acquisition, disposition and other related charges(d)

 

7

 

 

 

20

 

 

 

Non-GAAP gross profit

$

 

1,924

 

 

$

 

2,305

 

 

$

 

2,305

 

 

 

 

 

 

 

GAAP gross profit margin

 

31.9

%

 

 

32.8

%

 

 

32.2

%

Non-GAAP adjustments

 

0.1

%

 

 

0.4

%

 

%

Non-GAAP gross profit margin

 

32.0

%

 

 

33.2

%

 

 

32.2

%

 

 

 

 

 

 

Net cash provided (used in) by operating activities

$

 

100

 

 

$

 

(79

)

 

$

 

987

 

Investment in property, plant and equipment

 

(591

)

 

 

(568

)

 

 

(799

)

Proceeds from sale of property, plant and equipment

 

89

 

 

 

462

 

 

 

214

 

Free cash flow

$

 

(402

)

 

$

 

(185

)

 

$

 

402

 

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Unaudited)

(In millions, except percentages and per share amounts)

 

 

Six months
ended April 30,
2020

 

Diluted net
earnings per
share

 

Six months
ended April 30,
2019

 

Diluted net
earnings per
share

GAAP net (loss) earnings

$

(488

)

 

$

(0.38

)

 

$

596

 

 

$

0.43

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Amortization of initial direct costs

 

6

 

 

 

 

 

 

 

Amortization of intangible assets

 

204

 

 

 

0.17

 

 

 

141

 

 

 

0.11

 

Impairment of goodwill(a)

 

865

 

 

 

0.67

 

 

 

 

 

Transformation costs

 

289

 

 

 

0.22

 

 

 

132

 

 

 

0.09

 

Disaster charges (recovery)(b)

 

22

 

 

 

0.02

 

 

 

(7

)

 

 

(0.01

)

Acquisition, disposition and other related charges

 

67

 

 

 

0.05

 

 

 

147

 

 

 

0.11

 

Tax indemnification adjustments

 

56

 

 

 

0.04

 

 

 

(223

)

 

 

(0.16

)

Non-service net periodic benefit credit

 

(73

)

 

 

(0.06

)

 

 

(33

)

 

 

(0.02

)

Loss from equity interests(c)

 

74

 

 

 

0.06

 

 

 

76

 

 

 

0.05

 

Adjustments for taxes

 

(162

)

 

 

(0.13

)

 

 

340

 

 

 

0.24

 

Non-GAAP net earnings

$

860

 

 

$

0.66

 

 

$

1,169

 

 

$

0.84

 

 

 

 

 

 

 

 

 

GAAP (loss) earnings from operations

$

(486

)

 

 

 

$

890

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments

 

 

 

 

 

 

 

Amortization of initial direct costs

 

6

 

 

 

 

 

 

 

Amortization of intangible assets

 

204

 

 

 

 

 

141

 

 

 

Impairment of goodwill(a)

 

865

 

 

 

 

 

 

 

Transformation costs

 

289

 

 

 

 

 

132

 

 

 

Disaster charges (recovery)(b)

 

22

 

 

 

 

 

(7

)

 

 

Acquisition, disposition and other related charges

 

67

 

 

 

 

 

147

 

 

 

Non-GAAP earnings from operations

$

967

 

 

 

 

$

1,303

 

 

 

 

 

 

 

 

 

 

 

GAAP operating profit margin

 

(3.8

)%

 

 

 

 

6.1

%

 

 

Non-GAAP adjustments

 

11.3

%

 

 

 

 

2.8

%

 

 

Non-GAAP operating profit margin

 

7.5

%

 

 

 

 

8.9

%

 

 

HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Unaudited)

(In millions, except percentages and per share amounts)

 

 

 

 

 

Six months ended April
30, 2020

 

Six months ended April
30, 2019

GAAP net revenue

$

12,958

 

 

$

14,703

 

GAAP cost of sales

 

8,762

 

 

 

10,052

 

GAAP gross profit

$

4,196

 

 

$

4,651

 

 

 

 

 

Non-GAAP adjustments

 

 

 

Amortization of initial direct costs

$

6

 

 

$

 

Acquisition, disposition and other related charges(d)

 

27

 

 

 

Non-GAAP gross profit

$

4,229

 

 

$

4,651

 

 

 

 

 

GAAP gross profit margin

 

32.4

%

 

 

31.6

%

Non-GAAP adjustments

 

0.2

%

 

%

Non-GAAP gross profit margin

 

32.6

%

 

 

31.6

%

 

 

 

 

Net cash provided by operating activities

$

21

 

 

$

1,369

 

Investment in property, plant and equipment

 

(1,159

)

 

 

(1,528

)

Proceeds from sale of property, plant and equipment

 

551

 

 

 

371

 

Free cash flow

$

(587

)

 

$

212

 


Contacts

Editorial contact
Stefanie Notaney
stefanie.notaney@hpe.com

Investor contact
Sonalee Parekh
investor.relations@hpe.com


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