DXC Technology Reports Third Quarter Fiscal Year 2023 Results

Cash Flow

Cash Flow(1)

 

Q3 FY23

 

Q3 FY22

Cash Flow from Operations

 

$

625

 

 

$

696

 

Less Capital Expenditures:

 

 

 

 

Purchase of property and equipment

 

 

(66

)

 

 

(52

)

Transition and transformation contract costs

 

 

(52

)

 

 

(45

)

Software purchased or developed

 

 

(44

)

 

 

(49

)

Free Cash Flow

 

$

463

 

 

$

550

 

(1)In millions

Cash flow from operations was $625 million in the third quarter of fiscal year 2023, as compared to $696 million in the third quarter of fiscal year 2022, and capital expenditures were $162 million in the third quarter of fiscal year 2023, as compared to $146 million in the third quarter of fiscal year 2022. Free cash flow (cash flow from operations, less capital expenditures) was $463 million in the third quarter of fiscal year 2023, as compared to $550 million in the third quarter of fiscal year 2022. On a year to date basis, operating cash flow and free cash flow were impacted by lower deposits at the German Banks of approximately $70 million.

Guidance

The Company's guidance for the fourth quarter and full fiscal year 2023 is as follows:

Key Metrics(1)

 

Q4 FY23 Guidance

 

FY23 Guidance

 

Lower End

Higher End

Q4 FY22

 

Lower End

Higher End

FY22

Organic Revenue Growth %

 

(3.1)%

(2.6)%

(2.8)%

 

(2.7)%

(2.6)%

(2.6)%

Adjusted EBIT Margin

 

8.7%

9.2%

8.5%

 

8.0%

8.1%

8.5%

Non-GAAP Diluted EPS

 

$1.00

$1.05

$0.84

 

$3.45

$3.50

$3.50

Free Cash Flow (2)

 

 

$93

 

~$630

$743

Revenue

 

 

 

 

 

 

Revenue

 

$3,615

$3,635

$4,008

 

$14,460

$14,470

$16,265

Acquisition & Divestitures Impact on Revenues

 

(3.6)%

(2.8)%

 

(2.6)%

(6.5)%

Foreign Exchange Impact on Revenues

 

(3.1)%

(3.0)%

 

(5.8)%

0.8%

Others

 

 

 

 

 

 

Pension Income Benefit (3)

 

~$40

$80

 

~$180

$298

Net Interest Expense

 

~$20

$29

 

~$68

$139

Non-GAAP Tax Rate

 

~21%

31.9%

 

~25%

26.6%

Weighted Average Diluted Shares Outstanding

 

232

233

248

 

233

234

255

Restructuring & TSI Expense

 

 

 

 

$300

$344

Capital Lease / Asset Financing payments

 

 

 

 

~$500

$990

Foreign Exchange Assumptions

 

Current Estimate

Q4 FY22

 

Current Estimate

FY22

$/Euro exchange rate

 

$1.08

$1.12

 

$1.04

$1.16

$/GBP exchange rate

 

$1.24

$1.34

 

$1.21

$1.37

$/AUD exchange rate

 

$0.69

$0.72

 

$0.69

$0.74

(1) In millions except for ratios, rates and per share numbers

(2) Includes a $70 million adjustment for the reduction in German bank deposits, which directly reduced FY23 FCF, and was not contemplated in original guidance

(3) Pension benefit is split between Cost Of Sales (COS) & Other Income :

Fiscal year 2023: $75 million service cost in COS, $255 million pension benefit in Other income

Fiscal year 2022: $88 million service cost in COS, $386 million pension benefit in Other income


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