PALO ALTO, CA -(Marketwired) -August 23, 2017 -HP (NYSE: HPQ)

• Third quarter net revenue of $13.1 billion, up 10% as reported and up 11% in constant currency from the prior-year period
• Third quarter GAAP diluted net earnings per share from continuing operations of $0.41, above the previously provided outlook of $0.36 to $0.40 per share
• Third quarter non-GAAP diluted net earnings per share of $0.43, within the previously provided outlook of $0.40 to $0.43 per share  
• Third quarter cash provided by operating activities of $1.8 billion
• Third quarter returned $524 million to shareholders in the form of share repurchases and dividends

HP Inc.'s fiscal 2017 third quarter financial performance

	Q3 FY17	Q3 FY16	Y/Y
GAAP net revenue ($B)	$13.1	$11.9	10%
GAAP operating margin from continuing operations	7.3%	9.4%	(2.1 pts)
GAAP net earnings from continuing operations ($B)	$0.7	$0.8	(17%)
GAAP diluted net earnings per share from continuing operations	$0.41	$0.49	(16%)
Non-GAAP operating margin	7.7%	9.4%	(1.7 pts)
Non-GAAP net earnings ($B)	$0.7	$0.8	(11%)
Non-GAAP diluted net earnings per share	$0.43	$0.48	(10%)
Cash provided by operating activities ($B)	$1.8	$1.1	66%

Notes to table
Information about HP Inc.'s use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below.

Net revenue and EPS results
HP Inc. ("HP") announced third quarter net revenue of $13.1 billion, up 10% as reported and up 11% in constant currency from the prior-year period.

Third quarter GAAP diluted net earnings per share ("EPS") from continuing operations was $0.41, down from $0.49 in the prior-year period and above the previously provided outlook of $0.36 to $0.40. Third quarter non-GAAP diluted net EPS was $0.43, down from $0.48 in the prior-year period and within the previously provided outlook of $0.40 to $0.43. Third quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax adjustments of $39 million, or $0.02 per share, related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related credits/(charges) and net tax indemnifications.

"Q3 was another outstanding quarter of successfully executing our reinvention strategy," said Dion Weisler, President and CEO, HP Inc.  "We stabilized supplies revenue a quarter earlier than expected, posted double-digit revenue growth, delivered non-GAAP earnings per share at the high end of our previously provided outlook range and generated approximately $1.7 billion in free cash flow."

Asset management
HP's cash provided by operating activities in the third quarter was $1.8 billion. Accounts receivable ended the quarter at $4.2 billion, up 2 days quarter over quarter to 29 days. Inventory ended the quarter at $5.2 billion, up 1 day quarter over quarter to 44 days. Accounts payable ended the quarter at $12.8 billion, up 8 days quarter over quarter to 108 days. HP's dividend payment of $0.1327 per share in the third quarter resulted in cash usage of $0.2 billion. HP also utilized $0.3 billion of cash during the quarter to repurchase approximately 16.2 million shares of common stock in the open market. HP exited the quarter with $8.0 billion in gross cash, which includes cash and cash equivalents and short-term investments of $1.0 billion included in other current assets.

Fiscal 2017 third quarter segment results

• Personal Systems net revenue was up 12% year over year (up 13% in constant currency) with a 3.7% operating margin. Commercial net revenue increased 11% and Consumer net revenue increased 14%. Total units were up 7% with Notebooks units up 12% and Desktops units down 3%.
• Printing net revenue was up 6% year over year (up 7% in constant currency) with a 17.3% operating margin. Total hardware units were up 1% with Commercial hardware units flat and Consumer hardware units up 1%. Supplies net revenue was up 10% (up 10% in constant currency).

Outlook
For the fiscal 2017 fourth quarter, HP estimates GAAP diluted net EPS from continuing operations to be in the range of $0.37 to $0.41 and non-GAAP diluted net EPS to be in the range of $0.42 to $0.45. Fiscal 2017 fourth quarter non-GAAP diluted net EPS estimates exclude $0.04 to $0.05 per diluted share, primarily related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related credits/(charges), net tax indemnifications, net valuation allowances and discontinued operations.

For fiscal 2017, HP raises the midpoint of GAAP diluted net EPS from continuing operations and non-GAAP diluted net EPS. HP estimates GAAP diluted net EPS from continuing operations to be in the range of $1.46 to $1.50 and non-GAAP diluted net EPS to be in the range of $1.63 to $1.66. Fiscal 2017 non-GAAP diluted net EPS estimates exclude $0.16 to $0.17 per diluted share, primarily related to restructuring and other charges, acquisition-related charges, defined benefit plan settlement charges, amortization of intangible assets, non-operating retirement-related credits/(charges), net tax indemnifications, net valuation allowances and discontinued operations.

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

HP's FY17 Q3 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2017Q3Webcast.

About HP Inc.
HP Inc. creates technology that makes life better for everyone, everywhere. Through our portfolio of printers, PCs, mobile devices, solutions, and services, we engineer experiences that amaze. More information about HP Inc. (NYSE: HPQ) is available at http://www.hp.com.

Use of non-GAAP financial information
To supplement HP's consolidated condensed financial statements presented on a generally accepted accounting principles ("GAAP") basis, HP provides net revenue on a constant currency basis, non-GAAP operating margin, non-GAAP tax rate, non-GAAP net earnings, non-GAAP diluted net EPS and gross cash financial measures. HP also provides forecasts of non-GAAP diluted net EPS. A reconciliation of the adjustments to GAAP results 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 HP's management uses these non-GAAP measures to evaluate its business, the substance behind HP's decision to use these non-GAAP measures, the material limitations associated with the use of these non-GAAP measures, the manner in which HP's management compensates for those limitations, and the substantive reasons why HP's management believes that these non-GAAP measures provide useful information to investors is included under "Use of non-GAAP financial measures" after the tables below. This additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for net revenue, operating profit from continuing operations, operating margin from continuing operations, net earnings from continuing operations, diluted net EPS from continuing operations or cash and cash equivalents prepared in accordance with GAAP.

Forward-looking statements
This news 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 HP 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 any projections of net revenue, margins, expenses, effective tax rates, net earnings, net EPS, cash flows, benefit plan funding, deferred taxes, share repurchases, foreign currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring and other charges; any statements of the plans, strategies and objectives of management for future operations, including the execution of the restructuring plans and any resulting cost savings, net 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 HP and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief, including with respect to the timing and expected benefits of acquisitions and other business combination and investment transactions; and any statements of assumptions underlying any of the foregoing.

Risks, uncertainties and assumptions include the need to address the many challenges facing HP's businesses; the competitive pressures faced by HP's businesses; risks associated with executing HP's strategy; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of HP's products and the delivery of HP's services effectively; the protection of HP's intellectual property assets, including intellectual property licensed from third parties; risks associated with HP's international operations; 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 HP and its suppliers, customers, clients and partners; the hiring and retention of key employees; integration and other risks associated with business combination and investment transactions; the results of the restructuring plans, including estimates and assumptions related to the cost (including any possible disruption of HP's business) and the anticipated benefits of the restructuring plans; the resolution of pending investigations, claims and disputes; and other risks that are described in HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2016, and HP's other filings with the Securities and Exchange Commission.

As in prior periods, the financial information set forth in this release, including any tax-related items, reflects estimates based on information available at this time. While HP believes these estimates to be reasonable, these amounts could differ materially from reported amounts in HP's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2017 and HP's other filings with the Securities and Exchange Commission. HP assumes no obligation and does not intend to update these forward-looking statements. HP's Investor Relations website at www.hp.com/investor/home contains a significant amount of information about HP, including financial and other information for investors. HP encourages investors to visit its website from time to time, as information is updated and new information is posted.

HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (In millions, except per share amounts)

Three months ended
	July 31, 2017		April 30, 2017		July 31, 2016
Net revenue	$13,060		$12,385		$11,892
Costs and expenses:
Cost of revenue	10,633		10,002		9,720
Research and development	289		314		298
Selling, general and administrative	1,096		1,087		719
Restructuring and other charges	46		140		36
Acquisition-related charges	40		20		-
Amortization of intangible assets	-		1		2
Defined benefit plan settlement charges	1		3		-
Total costs and expenses	12,105		11,567		10,775
Earnings from continuing operations	955		818		1,117
Interest and other, net	(56)		(64)		(36)
Earnings from continuing operations before taxes	899		754		1,081
Provision for taxes	(203)		(195)		(238)
Net earnings from continuing operations	696		559		843
Net loss from discontinued operations, net of taxes	-		-		(60)
Net earnings	696		559		783
Net earnings (loss) per share:
Basic
Continuing operations	0.41		0.33		0.49
Discontinued operations	-		-		(0.03)
Total basic net earnings per share	$0.41		0.33		0.46
Diluted
Continuing operations	0.41		0.33		0.49
Discontinued operations	-		-		(0.04)
Total diluted net earnings per share	0.41		0.33		0.45
Cash dividends declared per share	0.26		-		0.25
Weighted-average shares used to compute net earnings (loss) per share:
Basic	1,681		1,688		1,711
Diluted	1,695		1,709		1,725

 

HP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (In millions, except per share amounts)

	Nine months ended July 31
	2017	2016
Net revenue	$ 38,129	$ 35,726
Costs and expenses:
Cost of revenue	31,071	29,019
Research and development	899	891
Selling, general and administrative	3,200	2,758
Restructuring and other charges	249	156
Acquisition-related charges	76	-
Amortization of intangible assets	1	16
Defined benefit plan settlement charges	4	-
Total costs and expenses	35,500	32,840
Earnings from continuing operations	2,629	2,886
Interest and other, net	(201)	(135)
Earnings from continuing operations before taxes	2,428	2,751
Provision for taxes	(562)	(598)
Net earnings from continuing operations	1,866	2,153
Net loss from discontinued operations, net of taxes	-	(149)
Net earnings	$ 1,866	$ 2,004
Net earnings (loss) per share:
Basic
Continuing operations	$ 1.10	$ 1.24
Discontinued operations	-	(0.08)
Total basic net earnings per share	$ 1.10	$ 1.16
Diluted
Continuing operations	$ 1.09	$ 1.23
Discontinued operations	-	(0.08)
Total diluted net earnings per share	$ 1.09	$ 1.15
Cash dividends declared per share	$ 0.53	$ 0.50
Weighted-average shares used to compute net earnings (loss) per share:
Basic	1,694	1,735
Diluted	1,705	1,747

HP INC. AND SUBSIDIARIES ADJUSTMENTS TO GAAP NET EARNINGS, EARNINGS FROM OPERATIONS, OPERATING MARGIN AND DILUTED NET EARNINGS PER SHARE (Unaudited) (In millions, except per share amounts)

	Three months ended July 31, 2017		Diluted net earnings per share		Three months ended April 30, 2017		Diluted net earnings per share		Three months ended  July 31, 2016		Diluted net earnings per share
GAAP net earnings from continuing operations	$ 696		$ 0.41		$ 559		$ 0.33		$ 843		$ 0.49
Non-GAAP adjustments:
Restructuring and other charges	46		0.03		140		0.08		36		0.02
Acquisition-related charges	40		0.02		20		0.01		-		-
Amortization of intangible assets	-		-		1		-		2		-
Non-operating retirement-related credits	(34)		(0.02)		(35)		(0.02)		(38)		(0.02)
Defined benefit plan settlement charges	1		-		3		-		-		-
Tax indemnification credits	(10)		(0.01)		(5)		-		(29)		(0.02)
Adjustments for taxes	(4)		-		2		-		12		0.01
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