DXC Technology reported results for the second quarter of fiscal year 2024.
Mike Salvino, DXC Chairman, President and Chief Executive Officer commented: "We are pleased with our Q2 financial performance, where we began to demonstrate the benefits of our new operating model as we move the company from stability to sustained financial improvement. We now have the right model and the right leaders in place to consistently deliver on our financial goals, and are focused intently on making sure this continues. Adding three impactful new senior leaders over the past five months to an already talented team will allow us to more effectively deliver for our customers and on our goal to consistently grow revenue and expand margins, EPS, and free cash flow. Quarter on quarter, we made positive progress in each of those categories in Q2 and we expect this execution will continue."
Financial Highlights - Second Quarter of Fiscal Year 2024
Revenue was $3.44 billion for the second quarter of fiscal year 2024, down 3.6% as compared to prior year period, and down 3.6% on an organic basis. Second quarter organic revenue growth came in above the high end of DXC's guidance range, with continued growth in GBS segment revenues, and a moderation of the rate of decline in our GIS segment revenues.
Net income was $99 million, or 2.9% of sales for the second quarter of fiscal year 2024, compared to $28 million, or 0.8% of sales, in the prior year quarter. Net income was higher due to lower depreciation and amortization and lower restructuring costs. EBIT was $153 million or 4.5% of sales. Net income and EBIT in the quarter included the following items: amortization of acquired intangible assets of $89 million, restructuring costs of $35 million, net gains on dispositions of $33 million, merger related indemnification charges of $2 million, impairment charges of $2 million, and transaction, separation, and integration costs of $3 million. Excluding these items, Adjusted EBIT margin was 7.3% in the second quarter, a reduction of 20 bps as compared to the prior year. Adjusted EBIT margin was below prior year due to a lower level of pension income, which declined $22 million year over year.
Diluted earnings per share was $0.49 and Non-GAAP diluted earnings per share was $0.70 for the second quarter of fiscal year 2024.
On a trailing twelve months basis, the company delivered a book to bill of 1.02x.
During the second quarter of fiscal year 2024, the Company repurchased 10 million shares of common stock for a total of $214 million. DXC has retired over 25% of its shares outstanding since the start of fiscal year 2022.
Financial Information by Segment
GBS segment revenue was $1,709 million in the second quarter of fiscal year 2024, down 0.2% compared to the prior year period and up 2.4% on an organic basis. The GBS organic growth performance was driven by continued growth in the Analytics & Engineering and Insurance offerings. GBS segment profit was $213 million and segment profit margin was 12.5%, down 20 bps compared to prior year as a result of lower pension segment income. GBS bookings for the quarter were $1.3 billion for a book-to-bill of 0.76x, and 0.96x on a trailing twelve months basis.
IS segment revenue was $1,727 million in the second quarter of fiscal year 2024, down 6.8% compared to the prior year period, and down 9.1% on an organic basis. GIS segment revenue performance was impacted by organic revenue declines in Cloud Infrastructure & ITO, and in Modern Workplace. GIS segment profit was $101 million with a segment profit margin of 5.8%, down 40 bps as compared to prior year. GIS segment profit declined due to a lower level of pension income, which declined $22 million as compared to prior year. GIS bookings were $1.5 billion in the quarter for a book-to-bill of 0.87x, and 1.08x on a trailing twelve months basis.
Earnings Conference Call and Webcast
DXC Technology senior management will host a conference call and webcast to discuss these results on November 1, 2023, at 5:00 p.m. EDT. The dial-in number for domestic callers is +1 (888) 330-2455. Callers who reside outside of the United States should dial +1 (240) 789-2717. The passcode for all participants is 4164760. The webcast audio and any presentation slides will be available on DXC Technology’s Investor Relations website.
A replay of the conference call will be available from approximately two hours after the conclusion of the call until November 8, 2023. The phone number for the replay is +1 (800) 770-2030 or +1 (647) 362-9199. The replay passcode is 4164760.
