HPQ - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the HP Inc Fourth Quarter 2020 Earnings. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Beth Howe, Head of Investor Relations. Please go ahead.

Beth Howe

welcome fourth and conference XXXX everyone call. afternoon, to quarter HP's earnings Good are President Officer. Lores, Officer; me Enrique With today HP's Myers, Acting and HP's and Chief Financial Marie Executive Chief

let on the Before call one call presentation call being accompanying our Investor be A handing webcast. for website earnings year. webpage the at will you of slide webcast available over Enrique, approximately is the the replay release made Relations that and me our to shortly this posted remind We on the after investor.hp.com.

on are them As and of best of our this always, world today. elements forward-looking presentation and the see are based our businesses, we as view

and in more earnings that to materials assumptions. information, relating uncertainties statements see For detailed disclaimers the forward-looking risks, please involve

of and uncertainties refer risks, to discussion not For XX-K and including most some obligation a HP's update to such Form statements. recent of no does please and assumes our Form reports, SEC forward-looking intend any HP assumptions XX-Q. these

financial amounts We the estimates, ended XXXX and other from also materially the note that XX-K HP's could differ for filings. available and information discussed on Form XX, information based SEC year this reported now in reflects ultimately October call on HP's the

comparisons specifically all otherwise unless webcast, this During corresponding comparisons with are year-ago noted, year-over-year the period.

those been For slide now and And tables we've included earnings Financial presentation GAAP Enrique. over non-GAAP reconciliations. on refer it accompanying has information the for to reconciliations release information. that basis, expressed I'll to Please to the today's turn comparable

Enrique Lores

world. you your our and I QX advanced, Beth. against today. year transform our across the will time and safe so the progress call It hope healthy. results. And remains I for and the difficult you, recap significant thank And for will and joining are financial disrupt Today, strong Thank strategies. discuss a many full families everyone you I

we third profit, quarter EPS and QX, relative in the flow. start drove of cash non-GAAP where me Let operating revenue, with improvement strength to the

improvement of we in a environment. signs to navigate the micro by encouraged dynamic continue But our are We business.

in For the And non-GAAP quarter, of we EPS of deliver revenue we year-over-year up $X.X cash billion. year-over-year. of $X.XX, generated free flow billion constant currency, flat $XX.X X%

For delivered Day cash year. on non-GAAP gave we outlook and at year, that EPS flow fiscal Analysts we the XXXX, the our despite pandemic, full

delivered For fiscal of billion of $XX.X the full year, $X.XX. we non-GAAP revenue EPS and

In addition, we shareholders flow $X.X to and returned billion through dividends, generated of while share strong repurchases and investments appropriate free billion cash making the $X.X business. in we

and execution print more Underpinning performance, leadership are environment. business And agility driven strategy personal our built discipline cost secondly, and Looking it two across in both chain differentiated systems. help our portfolio that across supply consistent commercial at navigate consumer values. out themes makes and cycles. market our broad and corporate strong stand company on reductions, across a a HP's operational us culture all and pricing, very is including our purpose dynamic resilient

used that our customers business, proud. our are world. company, is we could a the consistently advantage founders up idea do stepping This and lived time. say I who And worst our more teams up the this tremendously a be around right to have the to and to right is not thing Our the doing communities through year, at difficult for our greatest things the as competitive

me against made plan let strategy. we business our Now to have turn progress the review our

market and expanding We profitable are reach advancing our leadership adjacencies. our in into our core

infrastructure structure. way transforming our and while capabilities technologies develop building a create with new to digital IP our And we out company to with we businesses our focus and significant our are markets ourselves the positioning opportunities scale cost a reducing across operate over time. are on new We and presents cloud

expected $XX with in We million supply computing revenue are XX% be of with range with to of was daily more our consumer strong. progress launched core than another XX% the the Chromebook personnel with up, others on quarter our revenue is an professional meet consumer which We of quarter and and unit an than strong consumer last essential The XXXX. growth PC shortages, categories doubled. first constrain shipped. more new up our It innovation operate mobile of unveiled systems to units. needs that Our premium continue remains exited business component to new XX% the workstations. require EliteBook our creators Folio performance, units displays elevated We for quarter. through accessory record To grew and products can we before, and of our each for $XX.X life seen compute revenue backlog ever mobile and half a in uncompromising demand billion

frequency We and a spacer The HP new including HP vector client Spectre OMEN to on PC XXX. in we OMEN range in adjacencies, mobile expanded lineup wireless And gaming focused peripherals keyboard. Chromebooks also momentum announced services. an accessories, our Probook, our continues broader and mouse, wireless our This accessories and important a popularity, reflect including we gaming portfolios. headset, OMEN of reviewed OMEN of wireless in And and innovative surge new

from and And During experience, on capability. number businesses. reduce services increased offerings, low to designed the our displays expanded small including light to year, specifically a second service and bundle, device strain we a with we eye touch life half a medium this of including as for new a of to simplify work blue new monitors home improve introduced always

the installed peripherals of growth to growth, as expect we for by XXXX, of base and ecosystem opportunities will continued grow drive We well our profitable see broadening in create to value additional services. our which unit lifetime anticipate as us

and anticipate generated the billion, demand unit results. ongoing pleased $XXX million relative delivered COVID both growth and we in with of Turning QX, our stock market replenish pricing hardware printing in supplies $X.X with supply at perspective, print. a the have disciplined our continued the dollars. shipments. profit I'm and positioned impact strong quarter effects From outperforming and well hardware on demand to declines we profit, partners, revenue, HP its We sequential our fiscal supply uniquely both supplies constraint the consumers' commercial commercial peers on conditions. operating to related to to print. an for is a perspective, leadership years. Printing, of consumer supplies some And began offset very combined business In given the and revenue and across a consumer's continued from substantially printing demand remains while supply

is the Our to business us clear printing. for school momentum home work advantage in and strong shift consumer create remote continues to a and

we commercial schools print market. commercial in by in we recovery offices recovery countries. overall of expect the when saw some also strength driven of may reopen. and and print cases home some pace the that gradual more expect progress recovery, We in the a in will subside COVID-XX uneven, The economic resurgence And the given SMB be gradually the sector; very

print to drive continue towards business of hardware rebalance and and a with evolve supply. models our services We our profitability between

subscription Ink growth continues X double see target up Instant subscribers to our of digit, rapid with million surpassing Our business enrollees.

hardware rebalancing We are on between making business and supplies. progress the model

Inc. SES We XX% Big growth on unit are profit with expanding upfront or

anticipated our platform reducing month, across of system in end-to-end year-over-year innovations differentiated and we to through have consumer number loyal roll a much home product new office of small the our HP developed end-to-end SAM We customers. for that Together, selective this last provides plan by value discounts. to markets, strategy extend most of discussed our new increases, out our lower and we earlier And began the will Plus We business HP products. hardware the Plus, at expect these rollout optimize price improved us AIU and customers. proposition actions portfolio we year. unprofitable we help

technology to to long-term We drive against value are also plans to solutions IP and creation. our medium making industry with progress disrupt our

focus growth both XD strategic saw While due businesses, maker the significant EPAC square be and businesses impacted to as business packaging, double by the example, continue at our improvement box lower markets. some and and solutions flexible year-over-year. to industrial we've of corrugated shift higher as more sequential had well for we impressions graphics our value to we pandemic, new Enabled In boxes, to increased XD, meters in systems digit and packaging activity applications. in for continue end-to-end wins and for

we solution Molded fiber the food for covers products goods, household fiber packaging thousands ranging consumer sector. to of develop this and to packaging For from quarter, molded electronics. tooling example, new a packaging and launched beverage containers,

We entirely up for sector, in the this new possibilities. potential opens are excited innovative disruptive as technology our

leaner, way and more digitally We work are company. these doing a become while transforming all enabled unlock of to the we value

ahead the on foundational savings are we we delivered targets year. well of our have milestones And outlined previously. this We cost that

early in And a of days go a indicative area savings of fiscal we to cost opportunities have the transformation the XXXX and growth. and see will enables and year made we organization enhanced this for still and we beyond. in our are fiscal reduced position the remain more the in structural We The digitization. into big is drive we to transformation. productivity across XXXX business minutes. continue efficiency in few detail progress significantly of Marie will driven focus These

of Let sum the enter strength me reiterating fiscal up position by our XXXX. as we

driving Our forward. our execution and business of powerful innovation is blend

our value strong model and the diverse to a investing are allocation. for remain attractive program robust creating repurchase opportunities, the generating dividend investment. taking future. This our growth transform appropriately inorganic resilient to core We in share organic have business includes and leading necessary and We capital and in flow steps market, and to committed and discipline, cash

support values start to a and world, change. will and business lead efforts growing to threat including are climate of of inclusion, making the in These diversity, commitment. stepped where reduce our We have unwavering impact sustainable we imperatives our equity and environmental up will footprint the but deep with mitigate to continue a

Transformation delivered leading been pass leadership a really integral let the HP. Chief grateful turning details finance And of cost HP earlier she it including Prior the as background. I'm CFO controller. to Officer now Officer, through is I'll has this her transition. over number past Before our our have the this the leadership our savings held Chief Transformation have to the to positions acting at over CFO. of year. call She to share company, veteran financial. year, returning to on her both UiPath. review is her a to for Marie, Marie Having to was some as Marie and we me

Marie Myers

of said, kind strong great company's introduction. the the with levers, our tough It's XXXX a QX solid backdrop. Enrique, With Thank performance finish resiliency. against all to today. a for multiple be and profit you you, reflected execution was that

EPS We further X% We me XXX% quickly of grew continues cash We in currency. every year. revenue separation. $X.X year delivered $X.X $XX.X of constant growing diving which FYXX billion for non-GAAP full cash Before of the full since returned generated into our recap QX, X%, billion, let or down to free of guidance. our EPS year we non-GAAP above free flow billion And shareholders. trend flow

Importantly, global in efficiency these future and the results business investing while pandemic. our we’ve delivered for growth during

and Our strong, to for is have our including our balance sheet, we create multiple value foundation shareholders. levers

as transformation the $X.XX with approximately increased million quarter. Non-GAAP a as costs. efforts, share $XX efficiency Non-GAAP in OI&E was a look per down X.X expenses of flat well or at million. driven as increased diluted year-on-year X% X% diluted decreased decline count cost discretionary points The a share part net Non-GAAP reduction was expenses QX expense our down operating were to to our for commercial of due program within net the $XXX X.X X%. quarter. and in let’s EMEA operating currency, in lower intangible in per shares. charges, expense constant and consumer offset print million one-time combination ongoing of tax by share Now settlement of net other diluted restructuring defined mix APJ year-on-year. to $XX.X non-operating Non-GAAP and by Gross a X%, constant totaling margin systems charges, and of decline billion, benefit Americas down billion, the a decreased net was rate billion both credits assets, X% Regionally, adjustments. earnings details related higher XX.X%, fourth in retirement-related hardware excludes and personal $X.X revenue currency. plan and The other $XXX was partially net print. amortization was earnings

result, As a diluted share per net QX were GAAP earnings $X.XX.

from segment Turning revenue from X% systems or in reported In QX, billion, $XX.X constant related performance. currency. to learning solid personal benefited with and up flat working demand of home, to as

workstations. XX%, constrained due notebooks, supply for industry-wide details, home of Drilling delivered segment, shortages results at revenue different CPUs was customer in in panels. product learning down and our consumer profit revenue demand for from Personal with the while Chromebooks, X.X% range into working the down operating By XX%. Our top with continued. saw for remained change our category, X.X%, million X.X%. by $XXX operating end up mainly we revenue commercial the and XX% XX% in to as was high The XX% reflected personal for up and systems line of desktops which to of notebooks, line total in systems mix strong that and represented and XX% in units, long-term of outlook down margins

our mix team’s which partially Our cost print, to results reflected the a rate, print see were of higher Within agility, due SMB. by see pandemic. portfolio we In the some commercial the home within improvement in office commercial lower print, offset execution driven and office strong demand consumer reflected impact as reductions. results we continued our segment and trade-off a to and between did by

home up the and both and navigate customer X revenue uncertain revenue to up XX% XX%, we units these was in by positioned units. X% Importantly, and OpEx hardware was shipments, times. The a total, reduction remained rate our as QX operating a nominally across of to segment, a print resiliency strong separate company. as units, and $X.X revenue billion printing disciplined below were down with currency. channel with and Supplies X% replenishment quarter, in was market flat profit In units was million operating offset levels consumer were due HP million Print availability hardware XX.X supplies to and channel XX% stock as uniquely from in demand strong leader In total reductions. was by By constant learn partners $XXX was currency. partially offset became up depth and XX% hardware XX.X%. consumer print ceiling. margins since to billion, office, lower record on the was XX% hardware due being down a portfolio at improved. constant remains lower inventory $X.X commercial decline Tier the revenue product home commercial pricing well performance print and by work year-over-year and in well consumer hardware fourth commercial

cost ahead rate the Now three-year finished is FYXX plan. our XX% let cost billion first target, and reduction tier cost our efforts. which run to transformation of me reduction turn of structural We savings $X.X gross

more During of throughout the QX this we’ve revenue temporary are as expense we much as nature. possible discretionary To illustrate, environment, they also OpEx in significant as cost seen at reducing with dynamic non-GAAP though percentage operating XX.X%. reductions even are a year,

focused efforts. are our to dive on We continuing into deeper transformational

with over As an example real in to FYXX, we have taken site optimization mobility estate actions by align XX strategy. exiting and location our sites

in In addition, increase driven by XXX% resulted interactions and continued support, efficiency over in we second an in digital, and have the shift of year-over-year to half which agent our seen service improvement our XXXX. customer virtual

portfolio. the enhanced on program make progress last Finally, our partners amplify, the provide we and new to and announced which across partner to with to continued quarter enable in we capitalize required opportunities capabilities, analytics data insights tools

billion into bottom flow we at was digital enables cash driven and QX further because believe we billion, and Shifting flow it higher flow working flow This free line by $X.X head are cash we to operations enablement allocation. top lean strong and from a earnings cost capital driving stronger-than-expected FYXX, and and and cash capital. cash structure, for contributions As on respectively. growth. focused was $X.X

QX, dividends be to XX shareholders QX. repurchases by conversion free softer cash and million in days cash days sales expect line of through was was outstanding days We patterns. cycle than we and purchasing with outstanding. billion offset cash days. flow $XXX in decreases QX, share the flat in returned via typical seasonal normalized in Sequentially, drove For to minus as In sales payable cycle decreases the QX cash inventory conversion $X.X and

cash For total increase we our $X.X that we the represented announced and year, of are Today, a which have free returned billion, XX%. a by of year-over-year increasing we of XXX% dividend XX%. flow

at in shares coming billion least buying financial quarter following QX, to continue overall our the to expect forward, mind into we related in keep quarters. Heading levels outlook. Looking of at back per elevated $X the

more of uncertain COVID-XX conditions be pandemic macroeconomic as the expect to continues evolve. to impact We the

personal to systems Turning specific assumptions.

higher remains growth. to especially quarter, meet constraints top we will which to elevated and expect notebooks, backlog our demand, the panel and continue ability than line previous semiconductor but to negatively Our CPU constrain for impact industry-wide

continued demand commercial, We expect pressure strong and and in workstations. consumer and education particularly desktops

offset We to QX similar cost margin the QX. perspective, operating as perspective similar pricing economic of we printing a see demand competitive printing, expect QX on to to more printing, pandemic, the In basket continue demand from a the pressure as expect be the in overall levels. And to margins commodities be home by positive expect continued printing. to from commercial to for we due from to well home

replenishing supply well continue demand. to our to expect a with focus positioned constraints stocks, on satisfy that are navigate the We so appropriately partners to

the our account, operating get guidance into the following for expect Taking We for we to providing margin long-term QX. QX are of XX%. considerations XX% these to range into

We expect the for range and first the per net the open operator your in like range to to to $X.XX, GAAP diluted be back of share to hand now, questions. earnings and quarter quarter non-GAAP in to it call And net I earnings diluted of would be per $X.XX. the $X.XX first to $X.XX share

Operator

Katy [Operator Huberty Instructions] with Our first today question Morgan from comes Stanley.

KatyHuberty

particularly back Thank And constant margin supplies in your XX% operating year-over-year recovery with the the But XX% range to afternoon printing revenue, especially and you. the flat congrats getting about Good operating getting was revenue range. that in on you're first talking below to to was The impressive, quarter. back quarter. currency. long-term in

what a up? operating going sequentially into allowing margins quarter? you the to factors back in then I first are held And what follow margins quarter the have curious So just expand fourth the

MarieMyers

good you, Kay thank and So afternoon.

color rate with you some provide me the let print around in So op QX.

in of coupled margins such and Plus, cost, mix across first volumes And the in costs there higher higher I'd XD, some hardware supply portfolio. of front the the as mix in we softness logistics the had our has set commercial placements, business graphics resulted consumer negative all, those costs unit we we such volatility some been with which lower thing strong absorbing have with a as additional also So out combined our a chain, in quarter. which had -- we're up is that of experienced parts where in shipments. air and areas

expect op volume and And offset what So was and we pricing partially some of related costs we using summary, decline one air. look lower by into supply a rate In rate have be tailwinds cost. QX, do will in on the QX. higher discipline. that do as mix stronger also of there time we to COVID going in logistics the costs supplies the some sort some, will chain we're we forward that be that's particularly a headwinds But there are expect that drove print quarter, in

KatyHuberty

we and those think heading guide quarter, then Okay, what and PC first the print But look you appreciate you the about relative revenue will think do the fiscal seasonality? if into first to historical trends great, don't quarter revenue. like

EnriqueLores

the Thank for Katy. you question. you. Thank Hi,

to we We expect in most QX. that of saw continue the during trends QX

we we on strong the at you If comments strong consumer demand of demand the and notebooks. remarks, made systems, both look personal the print prepared seen side or have very during

to this continue. expect We

to at the a stay, kind year. we the limitations from through While that chain key the of availability the expect least components first things supply are of side. have half of of the These some revenue because perspective, we from of also next

Operator

Sacconaghi Toni Bernstein. next comes Our from with question

ToniSacconaghi

Yes. Thank you.

printing. elaborate like of restock You've It down. can what couple whereas look kind hardware print commercial I'm accelerated what US or about wondering its Europe where, was? rate quarter, were does supplies the of and to consumer times a on and versus specifically parts uniquely you the that of growth commented in a in if magnitude flat And Asia

centered supply up, follow in have rebuild the And US. this I for a partners, channel was largely please. So in

MarieMyers

Hi, Tony. question. thanks for Good afternoon. your And

specifically the piece, around chain unpack supply me inventory. Let

the So quarter. going there's things few on in a drivers. few there And are a different

me So here. some context you let give

was context, our to know in partners some in the we you expect of it earlier pandemic, supply first in of there been lower due So help better pandemic. And in that the driven in some from that this at do by customers. to And printing. QX But discipline was doing work whole from commercial it in we in experienced were channel in consumer well. addition, is disruptions the had pricing all, put our being demand, significant. And as we've as that of quarter of that offset home stock to some chain meet see COVID replenishment QX we to demand by

And finally, give in I'll to below closing, in in ceiling to maybe Enrique be being like -- where ideally just turn are channel we'd below to supplies about context of we So our some terms on it over inventory.

EnriqueLores

Yes.

both and address driven me on printing more PC was supplies, Let Toni, by when at quarter because geographies, our about mostly look -- by comment your supply we demand. than this performance chain hardware and both

by our, for in limited a -- from that how we printers world. chain the for supply for the categories strong very that front regions consumer not for performance products of are PCs by of by where from, perspective differences the show some you you demand not consumer and driven We are were at every demand saw when we in many of coming located on was and still -- geography these had

ToniSacconaghi

bit Okay, high first my essentially flat for from rate The to I prior am seems little thank growth minus a teens quarters like that. up extraordinary follow it feels on in down you supplies use push to channel my you and true inventory. question. almost going going to

this quarter is and what about And replenished going supply investors that have you So you how is exacerbated supplies normalized all because didn't growth poor care was it. availability, forward.

year? the speak when growth specifically realistic helpful be So improved rate this you your for supplies how it growth restocking supplies quarter. And could much if to really what look XXXX, is the rate we would to

EnriqueLores

Toni. you. you Thank for question, Thank the

let some are guiding But anymore more I to give help understand will Marie you in depth not that on think we color As explaining supplies. you what was me before. know, you

supply QX, reduce a that tailwind the on demand has been we to side, for in of QX to consumer us QX, this some key be have business. replenished And has chain many to This strong resellers resellers. our During the demand their shortages and supply definitely continued and during very experienced stock. our ability

We for the to expect happening. reasons see we by of because our we demand this what is expect a demand is continue we side going strong of from This the few for still very a is home, think to continue continue this discipline from to drove. supplies. one expecting really people performance this part of finally, home early to in guide which quarters, on continue was quarter stronger consumer consumer because working pricing which driven we the a of element see XXXX why was was another in in QX And and learning kids that market to supply also than

few of world happening it availability have have had again, noticed continue with positive the should disciplined HP And continue, that these with very supplies. promotions removed on some given to the combined very on a across revenue supplies this quarter. we there we QX. impact expect has we probably also revenue in with You promotions, are pricing And

Operator

with Evercore. from Our Amit Daryanani comes next question

AmitDaryanani

have the of us much what on of than I Congratulations guess first performance in question. most quarter, you here, nice taking one certainly Thanks guys. I from modeled. better think my for cash my October print flow is on literally quite free a

guys flow So part pull to your the I'd was love fiscal there out? cash levers any the would I any the quantitatively stacked understand behind next how free from how year cash I about think or the the helped when cash to guess I love of should expectations. flow? understand quarter flow, up underlying and XXXXfree And about cash strength on qualitatively flow that in behind free leverage think early about sort versus you of October So sense free we

MarieMyers

really XXXX, QX our afternoon, off, strength flow know, saw the here. stronger And in billion benefits quarters, flow and frankly, free saying, quarter the due results QX the inventory AP. a start we cash we're $X.X flow saw look, is mind actually Sure, and was single And earnings. lower as typically, first FYXX. we really up that at Amit. a than $X.X Good since at in what higher you I'll in record that, drove with in cash in cash I in it that working by seasonality. pleased so we split, expected in billion just, keep to And, look of you given capital, And was usually particularly as forward normal look

EnriqueLores

all of the flow, we we QX, the of meeting to with before. a of the saying, Mary delivered and the easily personal our full key, from that strong year of we ago. results year was benefit as that but flow many pleased free very by the commented And the where they were cash pandemic investor had. cash cash with the QX expected For drivers cases not have are we results working that the driven in key really free the And with you see strength that before of we in only in the business have earnings capital our flow assistance that share we

AmitDaryanani

and are would SMB even then if might Because and amount skew they understand, a there just consumer a to side, what more And share love think it. be for I supply the peers Got talked ink up performance than not. bigger dynamic heavy, seeing. fair versus I which better game dynamic? or you've HP your margin tend about mix better a better or is the I could follow I'd much you're what seeing mean, obviously, But I on industry is the much to

about forward. So perhaps just supplies the giving could sustainability we that's there. is get sense go and better you over I'd you just mix as maybe love better talk for shifting

EnriqueLores

demand strong dynamics have this and having pandemic from kids in that our for position demand that, getting is expectations pages. we some started. in too home of higher a share for home, above is people of from print stronger a And On this a seen in the consumer working our of learning competitive before is had businesses home is the printing, in relatively explain our of when print, higher supplies. we've commercial the from has we side, benefits positive top me of clearly share let lot impact the supplies, and strong that share higher and Yes, Usage the have driven printers and consumer we business. business side,

that. So home, get consumer to from to and to more going clearly as benefit goes a demand we

pandemic, On to a the where some improvement. of quarter, continue the were have and before pandemic still be the negative we on side, they commercial continue side, volumes impact. commercial the printing we But clearly pandemic; is significantly seen the the to impact having below the strong the see through

Operator

question Our Suva, Jim from Citigroup. with comes next

JimSuva

Thank used in congratulations have years. you just question. the results. pretty you I a be PC, answer one just printers, four I it average life to very But on of can you any And the much of around believe, and it and also manner want. consistent, kind

think PC? at in in it thoughts longer Because and different from work about at forward? or shorter? we school, school that as school average and work locations? should at home you're time be the go using a splitting how life that of Or Now and and of it a at Will two we're Coronavirus work we Any world home. about

EnriqueLores

driving changing the PCs of demand learning in significant that for of to become Let are on for is this people for demand the seeing PC, essential; have person trend communicating. what PCs than own in increase me print. have are is for PCs, and for and really of see the the gaming, PC PCs. we what that we is case both, needed side. an we such both In And the for PC more significant every answer is their life for seeing for working entertaining,

On supplies to that people the been need printer is kids because life them. and is a are not are printers, the But from seeing printers working additional buying they while print for of using have them. as they used for And they taking for are seen people of learning extension or also we printers; happening demand and are have what home an side, we're home. this both

could course impact having allow in position invest this as buying positive mean a which without printer. is to, a to an the you us, to life the new them people So because people for printers, of enable in very we extension print of

JimSuva

home, the or Right So at those a of has PC essential any everyone kind longer? after on passed think be at once still work, a my thoughts the life shorter that of PC or same made length has you that the is, the this purchases question after and PC

EnriqueLores

each of countries that we I where from every business. we a position, access we far from PC still are everybody Jim, having the in are think do far to in

for you So we for need much we, as going confident seeing are quarter. demand refurbished, so intermediate is is saying strong PCs is same the the At very PCs are why that are next we are or PCs remain PCs time this than being there the to during are used. being

demand, effect is way and an what demand could the a position a extension really of is is person own have every to this there more their as driving short-term we long in us the life it PC. for So to go as a see But PCs.

Operator

Shannon Cross Cross with question comes from Research. Our next

ShannonCross

I very wanted much. printing to ask XD about you your Thank and graphics business.

a the about you from from What mentioned you. capital you one XD was on have terms which How maybe take an that their think capital to are rebound weak, remaining it or this impacts make And was perhaps the printing in customers then business willingness follow in of are quarter. purchases you I update general? operating a I of on up. margin the and call business Thank there? equipment equipment your printing in thinking hearing

EnriqueLores

remarks shared graphics negatively pandemic. prepared we printing by yes, the that and in continue overall be So, impacted industrial to XD our printing both and the

value in where industrial packaging or down long-term future, are continue with in have for for see And printers in our in would long-term companies value, solution both we in is I that that we the that to by strategic overall will seen applications. many flexible confirmation business leaders those need of example ink be things and introduction printing year-over-year, has not have impacted us packaging short the XD printers applications even customers, allow and us and equipment in for impacted companies capital in investment growth, the been a because equipment What being corrugated ownership is the some term, complement are will the tooling do quarter, of to the in past which the But in do make in investment. by were create investment growing we impacted starting fiber, we past. feet, to say business And for businesses. with negatively the We to labels moderate we similar see to very slowing that the move digit reducing pages, direction, is to in though, more we we as our with that growth this areas for the these to double the has prepared in have capture or the we businesses, seeing able have mentioned opportunity. both square and And remarks, in which packaging, end-to-end that seen this significant if opportunity, are defined pandemic. our both said that it's important let's launch and comments XD; of supplies great and high of possible a a significant

ShannonCross

you. Thank

curious are to curious started Plus But how seen tell conversations HP Okay. is early. weeks. can you And my print Any with you've the realize your But just call regard question the couple new there a us. anyone. with I'm And What you. Thank you've think out, second had you which for roll I is what initial next of brand, as Staples? -- a to I'm it's on our in hp.com? with conversations going model, week I to

EnriqueLores

Yes.

start is a Let a this there me that Since that. where know topic interest. from is we of lot

progress We countries across that it have during portfolio made to the the highlights roll we me year. session organized go a a detail, lot plans Jon and the you team, give where out and they now. with But will let have both model, of in we have special a the next few different about the and across the

opportunities this solution Staples. is We couple one ink starting First printers, this going We be create. a we loyal about we value in as two of model weeks to printers, very brings continued -- and said, all, ago to that laser are launched show printer to launched of new excited customers. business three to we where this that you the the incremental

to we and need will goes. responses, see early to we very how the it's be initial the the is reaction say far we about this by But to are So but excited continue wait create. it what encouraged what value

Operator

comes David Our next question from UBS. Vogt with

DavidVogt

your that update a Maybe first little bit guys. your different roughly I XX% gross a savings. and year exceeded program, mentioned you you cost a topic. reduction us on then mean year a that target for Thanks give of the timing call and think What of perspective does Can magnitude up. follow perspective? structural of on quick you had I from an a two year the And have three

MarieMyers

and Sure. good Thanks afternoon.

is pleased and program So, very as would I my very know just much say, the the other that's actually progress, track. and we're on with role you look,

we're the of higher that plan highlighted. FYXXXX, In XX% we and originally cost had reduction terms ahead of than actually schedule

like you've both year cetera, we've reductions in OpEx would temporary that note areas the like been this just of that et I the seen reduction COVID. to of combination because where opportunistic were and travel, structural events So

XX% hitting do goal achieve we the in at expect So of to and committed staying we plans, our to are on $X.X FYXXXX. least billion track and

DavidVogt

your up, as dynamics there or you process follow And That's just is sheet, there change of any your terms remarks, think cash leverage is or of dividend as then of target flow balance your been other capital maybe balanced know gross in whether about any sort the deploying you it's from your would I you. in your changes a sort helpful. perspective? by thought ratio you talked raised macro-uncertainty Great. terms about a prepared quick and in that allocation in how maybe potential thought change just your in -- Thank in of

EnriqueLores

Thank you.

the We in to true we continued value remain principles the to plan. outlined that

the X. Let everybody We page. same is -- make me then our to to target sure our ratio remind increased we everybody and leverage X.X leverage, between on

billion cash buy increased on share. investment of that our of this return the we In show bought to XXX% a long opportunity short the to committed term, have key flow and forecasted plan free do continue we unless amount every to over higher of have the this what we the in quarter. up; We $X.X future. We return is term, shares quarter

to least that at to every plan we -- announced billion the $X buy following quarter have We of quarters. during continue shares we continue to

time, have right or in quarters. in to thing be last next the thing dividend in the by uncertainty what is we see increased the prudent we three We given remain this still additionally the -- we the three think going work, given and two decided at we could have because future that that the it's the side leverage things evolve the foreseeable -- XX%, of for this the many in to are lower two ratio, also at in or world

Operator

Our next question Sachs. Hall comes from with Goldman Rod

RodHall

Enrique, some little a I a that's about bit, and effect you that's to of had talk if you on mentioned supplies how talk that I to follow And basis. a come see, have you promotions pricing a the wanted could ask year-over-year Yes. chance to question. I back up wonder and if positive Thanks for then removed a pricing much could effect. to had that. you've

EnriqueLores

we good of meeting pricing, performance the as And and differences, ago. talking from would some year. you also, QX the expected Yes. We we been months details. we are the I the improvement supplies. the we geographical specific are don't QX. we to and And saw few good early tell perspective, can driving effects, the And said Marie if of of happen results before, announced in the of continue key we had drivers shared higher are disclose a I as share I revenue and perspective, one-time progress are to that also share see in one the part a from in that uses, we of say -- that goals next put that aside our was before, this combination a meeting

RodHall

were equation, was unit that they other to similar than I to follow-up supplies. side in my you the of could about then, were whether declines And if lower talk you. Thank QX. Okay. or wonder QX the those that

EnriqueLores

the pages guess, of commercial? I number you mean in

RodHall

Yes.

EnriqueLores

color--. some me give So let you

RodHall

supply want -- to units, total commercial, yes, Not however total you quantify that.

EnriqueLores

Yes.

let So some seen. we you have what give me on color

to stable month of, improvement if QX look look between of QX. three the evolution months QX there the but an fairly the had of and what at similar compared end of we QX, been at saw usage at the the if printed, month-by-month, number to QX, we and QX, during is pages During we QX

QX. So improvement but the of much improvement not quarter-over-quarter end since

built gain, a commercial weeks during cases the number already our a have and slow built this course, fact, down we few and In comment, pages the have the of growing we and in have last pandemic growing in customers, QX in of something is in is the printed number made. of guide into is with a that, countries, projections this and seen the more seen we what many

Operator

Matt Credit from comes today question Suisse. last our with And Cabral

MattCabral

me for in. Thanks Yes. squeezing

on You PC side exiting the some mentioned the seeing that quarter. elevated you're backlog

that think Just how going do quarter? and then, constraints you supply was it wondering there you to from supply forward? on of will And on quantify where about the about how any if that balance talk could big biggest just you're thinking to demand reach the the a take here, is seeing comment long and way drag if bottlenecks,

EnriqueLores

Sure.

few record, limitations and Let have a me sound because to probably facing been supply take I going been we because during like talking last broken the I'm that the the calls, question, availability. have about of

have ever have at we is you, The backlog we biggest me faced quarter, of Let we QX significant the end that this tell the had. impact.

it's least is year half at reduced. difference this But Demand driven being actually the of first to demand. has increased. is driving and that the fiscal all supply by been expect grow. through demand of really And continues So it's situation between will we our XXXX. It continue and increases that not

at and a stay So for it's here happening, it's to quarters. least of couple

MattCabral

And into heading a lot XXXX. on pieces it. sticking margins it around seems moving then of Got there's like PC,

and And going we like Just wondering in component and the and impact side? puts impact talk the PC beyond could forward? of mix QX about the the should on the versus things on takes how Chromebooks cost you if of about desktops think

MarieMyers

Marie. your It's I'll take Matt. question. Hi, Maybe

So some QX around the let give outlook. you color PS me

to in around X.X% the will think be our to those notebooks X.X% normal and will to a remain and going do we couple to definitely elevated. into learn are continue expect to work trends slightly back similar those I to But range. backlog margins all, we first be from that that continue, it mix perspective, the So products. about, that But points, of will offset QX revenue and like somewhat ASP lower-end drive we then of be and, home particularly, by talked below to seasonality to given discipline. from expect pricing the And a that constraints continue supply

ability some supply our CPUs, to that impact So chains there and demand constraints but panels meet for normalized, may this are I and notebooks. around finally think

Enrique Lores

you everybody for the today. Thank call joining

you portfolio wish us What really allowed these the strength during in pandemic to have great you the the U.S., me have the and QX leading portfolio results in that in last both you thoughts. were to very have we the let and consumer a we few of for of close saw fact with that those and commercial living quarters. I during the Thanksgiving a Before navigate deliver a a way strong

those this difficult to value have from the teams terms lot really the opportunities. the ability could that company time, favor of the We a opportunities, in and have and credit showed they we identify drive deserve that of also executed in maximum

shareholders that We Fiscal still we the how next pandemic, where year very we are during provided XXXX create we Thank that given continue we a guide that for have will but to we this today. we uncertainty, of lot -- to the and QX about though know and confident year. value you. are and navigate situation our know confident in are will

Operator

for conference Thank attending has presentation. you now The concluded. today's

now disconnect. You may

Beth Howe	Head of Investor Relations
Enrique Lores	President and Chief Executive Officer
Marie Myers	Acting Chief Financial Officer & Chief Transformation Officer
Katy Huberty	Morgan Stanley
Toni Sacconaghi	Bernstein
Amit Daryanani	Evercore
Jim Suva	Citigroup
Shannon Cross	Cross Research
David Vogt	UBS
Rod Hall	Goldman Sachs
Matt Cabral	Credit Suisse

HP (HPQ) 24 Nov 202020 Q4 Earnings call transcript