In the early morning of June 1, Beijing time, HP today released the company's second quarter financial report for fiscal year 2022. The report shows that HP's net revenue in the second quarter was US $16.5 billion, an increase of 3.9% compared with us $15.9 billion in the same period last year, and a year-on-year increase of 4.9% excluding the impact of exchange rate changes; The net profit was US $1billion, down 19% from US $1.2 billion in the same period last year; The net profit not complying with us gaap was US $1.2 billion, down 1% from US $1.2 billion in the same period last year.
HP's revenue and earnings per share in the second fiscal quarter both exceeded the previous expectations of Wall Street analysts, and its earnings outlook for the third fiscal quarter and the whole year also exceeded the expectations, pushing its after hours share price up nearly 1%.
Summary of second quarter results:
In the fiscal quarter ended April 30, HP's net profit was $1billion, down 19% from $1.2 billion in the same period last year; Diluted earnings per share was $0.94, down 4% from $0.98 in the same period last year.
Excluding one-time items (not in accordance with U.S. GAAP), HP's adjusted net profit in the second quarter was $1.2 billion, down 1% from $1.2 billion in the same period last year; The adjusted diluted earnings per share was $1.08, up 16% from $0.93 in the same period last year, which exceeded analysts' previous expectations. According to the data provided by Yahoo Finance website, 14 analysts had expected HP's second quarter earnings per share to reach $1.05 on average.
After tax adjustments of $152million and $0.14 per share were excluded from HP's second quarter net profit and earnings per share (not in accordance with U.S. GAAP), which were related to restructuring and other expenses, M & a related expenses, amortization of intangible assets, non operating retirement related loans or expenses, and tax adjustments.
HP's net revenue in the second fiscal quarter was $16.5 billion, up 3.9% from $15.9 billion in the same period last year; Excluding the impact of exchange rate changes, HP's net revenue in the second fiscal quarter increased by 4.9% compared with the same period last year, which also exceeded analysts' previous expectations. According to the data provided by Yahoo Finance website, 12 analysts had expected HP's second quarter net revenue to reach $16.17 billion on average.
HP's operating profit in the second quarter was $1.278 billion, compared with $1.362 billion in the same period last year. Not in accordance with U.S. GAAP, HP's operating profit in the second quarter was $1444 million, compared with $1443 million in the same period last year.
HP's operating profit margin in the second quarter was 7.8%, down 0.8 percentage points from 8.6% in the same period last year. Not in accordance with U.S. GAAP, HP's operating profit margin in the second quarter was 8.8%, down 0.3 percentage points from 9.1% in the same period last year.
Performance of each department in the second fiscal quarter:
According to the division of business departments, the revenue of HP personal systems group in the second fiscal quarter was US $11.532 billion, an increase of 9% compared with us $10.555 billion in the same period last year, and an increase of 11% year-on-year excluding the impact of exchange rate changes; The operating profit margin of personal systems group in the second fiscal quarter was 6.9%. Among them, the revenue of the commercial sector increased by 18% year-on-year, and that of the individual consumer sector decreased by 6% year-on-year; Desktop computer shipments increased by 11% year-on-year, notebook shipments decreased by 23% year-on-year, and total shipments decreased by 17% year-on-year. HP personal systems' pre tax profit in the second quarter was $798million, compared with $710million in the same period last year.
HP printing group's revenue in the second fiscal quarter was US $4.963 billion, a decrease of 7% compared with us $5.323 billion in the same period last year, and a year-on-year decrease of 6% excluding the impact of exchange rate changes; The operating profit margin was 17.9%. Among them, the net revenue of the individual consumer Department decreased by 12% year-on-year, the net revenue of the commercial department decreased by 4% year-on-year, the net revenue of materials decreased by 6% year-on-year, and the same decreased by 6% year-on-year without taking into account the impact of exchange rate changes; The year-on-year drop in commercial hardware shipments was 17%, the year-on-year drop in personal hardware shipments was 24%, and the year-on-year drop in total hardware shipments was 23%. HP printing group's pre tax profit in the second quarter was $958million, compared with $951million in the same period last year.
HP's corporate investment in the second quarter was zero, compared with $1million in the same period last year. HP's pre tax loss from corporate investment in the second quarter was $52million, compared with a pre tax loss of $35million in the same period last year.
HP's other revenue in the second fiscal quarter was -5million US dollars, compared with zero in the previous quarter and -2million US dollars in the same period last year.
Other financial information:
HP's total costs and expenses in the second quarter were $15.212 billion, compared with $14.515 billion in the same period last year. Among them, the revenue cost was US $13.157 billion, compared with us $12.437 billion in the same period last year; R & D expenditure was US $425million, compared with us $514million in the same period last year; Sales, general and administrative expenses were $1.464 billion, compared with $1.483 billion in the same period last year; Restructuring and other expenses were $82million, compared with $39million in the same period last year; M & a related expenditure was US $32million, compared with us $10million in the same period last year; Intangible assets amortization expense was US $52million, compared with us $32million in the same period last year.
HP's net cash provided by business operations in the second quarter was $500million, compared with $1.4 billion in the same period last year. As of the end of the second fiscal quarter, HP's total accounts receivable was US $5.4 billion, and the turnover days of accounts receivable were 29 days, an increase of 2 days compared with the previous fiscal quarter. By the end of the second fiscal quarter, the total inventory value of HP was $8.9 billion, and the inventory days were 61 days, an increase of 2 days compared with the previous fiscal quarter. As of the end of the second fiscal quarter, HP's total accounts payable was $17billion, and the number of days of accounts payable turnover was 116, a decrease of 3 days compared with the previous fiscal quarter.
HP's free cash flow in the second quarter was $400million, compared with $1.3 billion in the same period last year. HP's free cash flow in the second quarter included $500million in net cash from business operations, adjusted by $21million in net investment in leases and $178million in net investment in property, plant and equipment.
HP paid a quarterly dividend of $0.25 per share in the second fiscal quarter, with a cash usage of $300million. In addition, HP also used $1billion in cash to repurchase about 27.4 million common shares on the open market in the second quarter. As a result, HP returned 362% of its free cash flow to shareholders in the second quarter. As of the end of the second fiscal quarter, the gross cash held by HP was US $4.5 billion, including cash and cash equivalents, and short-term investments of US $5million included in other current assets.
Performance Outlook:
HP estimates that, according to US GAAP, diluted earnings per share in the third quarter of fiscal 2022 will reach between us $0.91 and US $0.96; Not in accordance with U.S. GAAP, diluted earnings per share in the third fiscal quarter is expected to reach $1.03 to $1.08, with an average value of $1.055 exceeding analysts' expectations. Not in accordance with U.S. GAAP, HP's estimate of diluted earnings per share from continuing operations in the third quarter of fiscal year 2022 does not include an after tax expense of $0.12 per share, which is mainly related to restructuring and other expenses, M & a related expenses, Russian related expenses, intangible assets amortization, non operating retirement related credits or expenses, tax adjustment and the related tax impact of these items. According to the data provided by Yahoo Finance website, 14 analysts on average expected HP's adjusted earnings per share in the third fiscal quarter to reach $1.02.
HP also expects that, according to the U.S. GAAP, the diluted earnings per share in fiscal 2022 will reach between $3.79 and $3.93; Not in accordance with the U.S. GAAP, the diluted earnings per share in fiscal year 2022 is expected to reach between $4.24 and $4.38, and its average value (US $4.31) exceeds analysts' expectations. Not in accordance with U.S. GAAP, HP's estimate of diluted earnings per share from continuing operations in fiscal year 2022 did not include an after tax expense of $0.45 per share, which was mainly related to restructuring and other expenses, M & a related expenses, Russia related expenses, intangible assets amortization, non operating retirement related credits or expenses, tax adjustment and the related tax impact of these items. According to the data provided by Yahoo Finance website, 16 analysts on average expect HP's adjusted earnings per share in fiscal 2022 to reach $4.25.
Change in share price:
On the same day, HP shares rose $0.09, or 0.23%, to close at $38.84 in regular trading on the New York Stock Exchange. In the subsequent after hours trading up to 5:24 p.m. EDT on May 31 (5:24 a.m. Beijing time on June 1), HP's share price rose again by $0.32, or 0.82%, to $39.16. In the past 52 weeks, HP's highest price was $41.47 and its lowest price was $26.11.