DXC Technology reported results for the second quarter of fiscal year 2020, representing the period from July 1 through September 30, 2019.
"During my first two months as CEO, I have met with many of our largest customers and most of our people around the world,” said Mike Salvino, president and CEO. “I am very pleased with our global talent base, capabilities and the scale and scope of our offerings. DXC has a loyal, global customer base for whom we manage mission-critical operations. I am confident that by strengthening our focus on our people, customers and operational execution, we will deliver better financial results and be positioned to grow profitably while unlocking value for our shareholders."
Financial Highlights - Second Quarter Fiscal 2020
Diluted earnings per share from continuing operations was $(8.19) in the second quarter, including $(11.10) per share of goodwill impairment, $(0.11) per share of restructuring costs, $(0.18) per share of transaction, separation and integration-related costs, $(0.45) per share of amortization of acquired intangible assets, $2.43 per share of gain on arbitration award, and $(0.11) per share of tax adjustment related to prior restructuring charges. This compares with $0.92 in the year ago period.
Non-GAAP diluted earnings per share from continuing operations was $1.38. This compares with $2.02 in the year ago period.
Revenue in the second quarter was $4,851 million. Revenue decreased 3.2% compared with $5,013 million in the prior year.
Loss from continuing operations before income taxes was $(1,999) million in the second quarter, including $(2,887) million of goodwill impairment, $(32) million of restructuring costs, $(53) million of transaction, separation and integration-related costs, $(151) million of amortization of acquired intangibles, and $632 million of gain on arbitration award. This compares with $332 million in the year ago period.
Non-GAAP income from continuing operations before income taxes was $492 million compared with $749 million in the year ago period.
Net loss was $(2,115) million for the second quarter, including $(2,887) million of goodwill impairment, $(28) million of restructuring costs, $(48) million of transaction, separation and integration-related costs, $(117) million of amortization of acquired intangibles, $632 million of gain on arbitration award, and $(29) million of tax adjustment related to prior restructuring charges. This compares with $259 million in the prior year period.
Non-GAAP net income was $362 million.
Adjusted EBIT was $529 million in the second quarter compared with $799 million in the prior year. Adjusted EBIT margin was 10.9% compared with 15.9% in the year ago quarter.
Net cash provided by operating activities was $1,651 million in the second quarter, compared with $480 million in the year ago period.
Adjusted free cash flow was $739 million in the second quarter.
Global Business Services (GBS)
GBS revenue was $2,285 million in the quarter compared with $2,111 million for the prior year. GBS revenue increased 8.2% year-over-year, including an unfavorable foreign currency exchange rate impact of 2.3%. GBS revenues increased 10.5% year-over-year at constant currency reflecting contribution from acquisitions, including Luxoft. GBS profit margin in the quarter was 15.7%, compared with 18.9% in the prior year, reflecting investments to support Digital hiring and capabilities. New business awards for GBS were $1.9 billion in the second quarter.
Global Infrastructure Services (GIS)
GIS revenue was $2,566 million in the quarter compared with $2,902 million for the prior year. GIS revenues decreased 11.6% year-over-year, including an unfavorable foreign currency exchange rate impact of 2.5%. GIS revenues decreased 9.1% year-over-year at constant currency, reflecting declines in our traditional infrastructure businesses. GIS profit margin in the quarter was 9.5%, compared with 16.3% in the prior year, reflecting a slowdown in delivery cost take-out actions. New business awards for GIS were $1.9 billion in the second quarter.
Returning Capital to Shareholders
During the second quarter, DXC Technology returned $306 million to shareholders, consisting of $56 million in common stock dividends and $250 million in share repurchases.
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