HP Announces Fiscal 2016 Financial Outlook for HP Inc.SAN JOSE, CA--(Marketwired - Sep 15, 2015) - HP (NYSE: HPQ)
Estimates non-GAAP diluted EPS outlook for fiscal 2016 of $1.67 to $1.77 and GAAP diluted EPS for fiscal 2016 of $1.55 to $1.65
Estimates fiscal 2016 free cash flow of $2.5 to $2.8 billion
Expects to return up to 75% of fiscal 2016 annual free cash flow to shareholders through dividends and share repurchases
Today at HPs (NYSE: HPQ) 2015 Securities Analysts Meeting, the future HP Inc. leadership team provided details on the strategy for the company and opportunities for long-term growth, coupled with the financial outlook for the new company.
Dion Weisler, who will become President and CEO for HP Inc., noted, I am honored to be leading this company at an exciting time. Were building a company with the heart and energy of a startup and the brains and muscle of a Fortune 100 corporation.
Weisler laid out the strategy for how HP Inc. will maintain its leading position in Printing and Personal Systems, and outlined the factors that make the new company a compelling investment opportunity. In particular, HP Inc. has:
A focus on growing profitable share;
Recurring profit streams and strong cash flows;
Meticulous focus on cost and operating efficiencies;
Prudent capital allocation and commitment to shareholder returns;
And, commitment to investing for the future.
Executing on our strategy will produce reliable returns and cash flows while also having the opportunity for long-term growth, Weisler continued. The separation enables us to focus our company assets and financial resources on our core businesses, growth opportunities and future while also being very disciplined about delivering long-term, shareholder value.
Weisler then went on to acknowledge the challenging market environment and currency headwinds, but emphasized that HP Inc. business fundamentals are strong, and the team has a proven track record of execution. He outlined pockets of growth and new markets that HP Inc. will pursue to drive growth, including graphics, the A3 copier market, commercial mobility, and 3D printing.
Fiscal 2016 outlook
Cathie Lesjak, who will become the Chief Financial Officer of HP Inc., provided the financial outlook for the new company in fiscal 2016. Lesjak acknowledged that markets are likely to remain tough for the next several quarters with continued competitive pricing in printing and soft demand in PCs. To offset these challenges, HP Inc.s strategy will be to protect the core while focusing on accelerating in key areas, including: business printing, graphics, commercial mobility, and services.
For fiscal 2016, the new company estimates non-GAAP diluted EPS to be in the range of $1.67 to $1.77 and estimates GAAP diluted EPS to be in the range of $1.55 to $1.65. Fiscal 2016 non-GAAP diluted EPS estimates exclude after-tax costs primarily related to restructuring and separation.
Based on the current environment, HP Inc. anticipates generating cash flow from operations of approximately $3.0 to $3.3 billion in fiscal 2016. With about $0.5 billion in net capital expenditures, free cash flow outlook is in the range of $2.5 to $2.8 billion for fiscal 2016.
HP Inc. expects to return 50%-75% of annual free cash flow to shareholders through a combination of a robust dividend and regular share buy backs. In fiscal 2016, the company indicated that it expects to be at the higher end of that range, with approximately $865 million returned through dividends, and the balance returned to shareholders through share repurchases.
HP Inc. will trade under the ticker symbol HPQ on the New York Stock Exchange.
Business segment strategies
Over the course of the day, the future HP Inc. management team laid out the strategy for the companys individual business segments, including:
Printing Business
Enrique Lores, who will become President of the Printing Business, provided details on the strategy that will ensure HP maintains its role as the worlds leader in printing. Acknowledging market and competitive headwinds, Lores emphasized that printing remains a massive market, currently $234 billion and growing. Echoing Weislers earlier comments, Lores is optimistic that as a separate company, the Printing Business in particular will successfully drive all-important supplies revenue.
Lores emphasized that the objective of the printing strategy is to drive value for customers by engineering the best printing experience. Lores highlighted several initiatives, including:
Ink in the Office -- one of the fastest growing web based services;
Expansion into the A3 copier market where HP Inc. has an opportunity to significantly grow its market share;
Graphics, which has been a leading growth business for HP overall; and
Managed Print Services, where the shift in customer behavior from transactional to contractual presents HP with an opportunity to increase penetration in supplies.
Stephen Nigro, who will lead the 3D Printing Business, outlined the opportunity the company sees in 3D printing with its MultiJet Fusion technology. The company plans to launch its first product in the market during 2016 focused on addressing customer challenges around speed, quality and cost. Nigro outlined how the company plans to leverage its existing PageWide technology to disrupt the traditional manufacturing market.
Personal Systems
Ron Coughlin, who will be President of the Personal Systems Business, gave an overview of how Personal Systems plans to deliver profitable growth moving forward. Leveraging HPs leading market position, powerful pipeline of innovation and ability to execute regardless of the market environment, the new HP Inc. will focus on the commercial PC market and attractive segments of consumer.
The addressable market for Personal Systems is approximately $340 billion, and while
