01—Abstract
Summary
Summary of the 10-K/A filed December 15, 2017. Cited figures are marked; the original filing is the authoritative source.
HP Inc. (formerly Hewlett-Packard Company) reported fiscal 2017 net revenue of $52.06 billiona, up from $48.24 billion in fiscal 2016, with the filing stating total net revenue increased 7.9% (8.7% on a constant currency basis).
Net earnings were $2.53 billionb, or $1.48 per diluted share, compared with $2.50 billion and $1.43 per diluted share in fiscal 2016. Gross margin declined to 18.4% from 18.7%, mainly due to higher commodity costs in Personal Systems, unfavorable foreign currency impacts and a higher mix of Personal Systems revenue. Earnings from continuing operations were $3.52 billion, and restructuring and other charges rose to $362 million from $205 million, largely tied to the October 2016 restructuring plan.
By segment, Personal Systems net revenue rose 11.3% to $33.37 billionc with segment earnings from operations of $1.21 billion, while Printing net revenue rose 3.0% to $18.80 billion with earnings from operations of $3.16 billion. Supplies revenue grew to $12.42 billion. Cash flow from operations was $3.68 billion, and total debt rose to $7.82 billion.
The company repurchased $1.41 billiond of stock in fiscal 2017 and paid $894 million in dividends, with about $2.5 billion remaining under its $3.0 billion repurchase authorization. Management highlights ongoing risks including commodity cost increases, competitive pricing pressure, macroeconomic weakness, and a $1.1 billion cash payment to Samsung for its printer business completed on November 1, 2017.
02—Key points
Key Highlights
- Net revenue grew 7.9% to $52.06 billion in fiscal 2017, with growth in Notebooks, Desktops and Supplies partly offset by unfavorable foreign currency impacts.
- Net earnings rose to $2.53 billion ($1.48 diluted EPS) from $2.50 billion ($1.43 diluted EPS) in fiscal 2016.
- Gross margin declined to 18.4% from 18.7%, driven by higher commodity costs in Personal Systems, foreign currency impacts and mix.
- Personal Systems net revenue increased 11.3% to $33.37 billion; Printing net revenue increased 3.0% to $18.80 billion, led by Supplies growth to $12.42 billion.
- Restructuring and other charges increased to $362 million from $205 million, primarily from the Fiscal 2017 Plan announced in October 2016.
- Operating cash flow was $3.68 billion; total debt was $7.82 billion, and the company returned cash through $1.41 billion of share repurchases and $894 million of dividends.
- A $1.1 billion cash payment to Samsung Electronics for its printer business was made on November 1, 2017, after fiscal year-end.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, HP kept $0.05.
- Revenue$52.06B100.0%
- Cost of revenue−$42.48B81.6%
- Gross profit$9.58B18.4%
- Operating costs−$6.21B11.9%
- Operating income$3.37B6.5%
- Interest, other & tax−$842.0M1.6%
- Net income$2.53B4.9%
Where FY2017 revenue went
$52.06B- Cost of revenue: $42.48B, 82% of revenue
- Net income: $2.53B, 4.9% of revenue
- R&D: $1.19B, 2.3% of revenue
- SG&A: $4.53B, 8.7% of revenue
- Other operating costs: $488.0M, 0.9% of revenue
- Interest, other & tax: $842.0M, 1.6% of revenue
Kept 4.9% as net incomeNet income $2.53B · 4.9%Other operating costs $488.0M · 0.9%Interest, other & tax $842.0M · 1.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2017filed December 15, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $52.06B$48.24B | +7.9% |
| Cost of Revenue | $42.48B$39.24B | +8.3% |
| Gross Profit | $9.58B$9.00B | +6.4% |
| R&D Expenses | $1.19B$1.21B | −1.6% |
| SG&A Expenses | $4.53B$3.83B | +18.2% |
| Operating Expenses | $48.69B$44.69B | +8.9% |
| Operating Income | $3.37B$3.55B | −5.1% |
| Interest Expense | $309.00M$273.00M | +13.2% |
| Net Income | $2.53B$2.50B | +1.2% |
| EPS (Basic) | $1.50$1.44 | +4.2% |
| EPS (Diluted) | $1.48$1.43 | +3.5% |
| Shares Outstanding (Basic) | 1.69B1.73B | −2.4% |
| Shares Outstanding (Diluted) | 1.70B1.74B | −2.4% |
05—Questions
Frequently Asked Questions
How did HP Inc. perform financially in fiscal 2017?
Net revenue was $52.06 billion, up from $48.24 billion in fiscal 2016, and net earnings were $2.53 billion, or $1.48 per diluted share, compared with $2.50 billion, or $1.43 per diluted share, the prior year. Gross margin was 18.4%, down from 18.7%.
Which segments drove revenue growth?
Personal Systems net revenue rose 11.3% to $33.37 billion, driven by Notebooks, Desktops and Workstations. Printing net revenue rose 3.0% to $18.80 billion, driven by a 4.6% increase in Supplies revenue to $12.42 billion.
What pressures on profitability does the filing identify?
The filing cites higher commodity costs, especially memory, in Personal Systems, unfavorable foreign currency impacts, competitive pricing pressure, and a higher mix of lower-margin Personal Systems revenue. Restructuring and other charges also rose to $362 million.
How much cash did HP generate and how did it use it?
Net cash provided by operating activities was $3.68 billion. The company repurchased $1.41 billion of common stock and paid $894 million in dividends, and it had about $2.5 billion remaining under its $3.0 billion repurchase authorization as of October 31, 2017.
What significant events occurred after fiscal year-end?
HP made a $1.1 billion cash payment to Samsung Electronics Co., Ltd. on November 1, 2017 in connection with the acquisition of its printer business. The company also increased its commercial paper program from $4.0 billion to $6.0 billion in November 2017 and entered into a $1.5 billion revolving credit facility in December 2017.
06—Continue