HP guides FY17 adj. EPS in-line; raises dividend 7%; adds $3 bln to buyback; announces restructuring with 3-4K expected layoffs
- Co sees FY17 adj. EPS EPS $1.55-1.65 vs $1.60 Capital IQ Consensus Estimate. Based on the current environment, HP anticipates generating cash flow from operations of ~$2.8 to $3.1 billion in fiscal 2017. With about $0.5 billion in net capital expenditures, free cash flow outlook is in the range of $2.3 to $2.6 billion for fiscal 2017.
- HP expects to return 50%-75% of annual free cash flow to shareholders through a combination of a robust dividend and regular share buy backs.
- In fiscal 2017, the company indicated that it expects to be at the higher end of that range, with a 7% increase in the planned quarterly dividend amount, and the balance returned to shareholders through share repurchases.
- HP also announced an increase in its share repurchase program of $3 billion.
- The Board of Directors approved a restructuring plan that it expects will be implemented through fiscal 2019 and is expected to generate gross annual run rate savings of ~$200 million to $300 million beginning in fiscal 2020.
- As part of the plan, HP expects ~3,000 to 4,000 employees to exit between fiscal 2017 and fiscal 2019.
- In connection with the plan, HP anticipates incurring ~$350 million to $500 million in restructuring and other charges due to both labor and non-labor actions. Of these amounts, HP expects to incur ~$200 million in labor costs related to workforce reductions.
- "Although our markets remain very challenged, we are committed to innovating in the core and continue to see long-term growth opportunities in commercial mobility and services, the disruption of the A3 copier market, and the digitization of graphics and manufacturing through our leading 3D printing solutions."