Hp Inc 10-Q for FY2024 Q2

Hp Inc (HPQ)

10-Q 2024-05-30 For: 2024-04-30

Added on April 09, 2026

About this 10-Q

Hp Inc filed this 10-Q on May 30, 2024, covering the quarter ended April 30, 2024 (FY2024 Q2).

Headline figures

Quarter ended April 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $12.8B; down 0.8% from $12.91B a year earlier
Net income: $607M; down 42.4% from net income of $1.05B a year earlier
Diluted EPS: $0.61; down 42.5% from $1.06 a year earlier

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(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
April 30, 2024
Or
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
1-4423


Delaware		94-1081436
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)
1501 Page Mill Road		94304
Palo Alto,	California	(Zip code)
(Address of principal executive offices)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	HPQ	New York Stock Exchange


		Page
Forward-Looking Statements		3
Part I. Financial Information
Item 1.	Financial Statements and Supplementary Data	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4.	Controls and Procedures	53
Part II. Other Information
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	55

Exhibit Index		56
Signature		58


			Page
Consolidated Condensed Statements of Earnings for the three and six months ended April 30, 2024 and 2023 (Unaudited)			6
Consolidated Condensed Statements of Comprehensive Income for the three and six months ended April 30, 2024 and 2023 (Unaudited)			7
Consolidated Condensed Balance Sheets as of April 30, 2024 and October 31, 2023 (Unaudited)			8
Consolidated Condensed Statements of Cash Flows for the six months ended April 30, 2024 and 2023 (Unaudited)			9
Consolidated Condensed Statements of Stockholders’ Deficit (Unaudited)			10
Notes to Consolidated Condensed Financial Statements (Unaudited)			11
Note 1: Basis of Presentation			11
Note 2: Segment Information			12
Note 3: Restructuring and Other Charges			14
Note 4: Retirement and Post-Retirement Benefit Plans			15
Note 5: Taxes on Earnings			17
Note 6: Supplementary Financial Information			18
Note 7: Fair Value			22
Note 8: Financial Instruments			24
Note 9: Borrowings			29
Note 10: Stockholders’ Deficit			31
Note 11: Earnings Per Share			33
Note 12: Litigation and Contingencies			33
Note 13: Guarantees, Indemnifications and Warranties			38


	Three months ended April 30				Six months ended April 30
	2024		2023		2024		2023
	In millions, except per share amounts
Net revenue:
Products	$	12,043	$	12,149	$	24,462	$	25,193
Services	757		758		1,523		1,512
Total net revenue	12,800		12,907		25,985		26,705
Cost of net revenue:
Products	9,324		9,557		19,195		20,146
Services	453		436		879		858
Total cost of net revenue	9,777		9,993		20,074		21,004
Gross margin	3,023		2,914		5,911		5,701
Research and development	436		410		835		813
Selling, general and administrative	1,462		1,397		2,845		2,728
Restructuring and other charges	71		200		134		341
Acquisition and divestiture charges	22		74		49		158
Amortization of intangible assets	80		86		161		171
Total operating expenses	2,071		2,167		4,024		4,211
Earnings from operations	952		747		1,887		1,490
Interest and other, net	(155)		(160)		(297)		(341)
Earnings before taxes	797		587		1,590		1,149
(Provision for) benefit from taxes	(190)		467		(361)		374
Net earnings	$	607	$	1,054	$	1,229	$	1,523

Net earnings per share:
Basic	$	0.62	$	1.06	$	1.24	$	1.54
Diluted	$	0.61	$	1.06	$	1.23	$	1.53

Weighted-average shares used to compute net earnings per share:
Basic	984		991		990		990
Diluted	990		998		996		997


	As of
	April 30, 2024		October 31, 2023
	In millions, except par value
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	2,517	$	3,232
Accounts receivable, net of allowance for credit losses of $84 and $93, respectively	4,319		4,237
Inventory	7,512		6,862
Other current assets	4,245		3,646
Total current assets	18,593		17,977
Property, plant and equipment, net	2,794		2,827
Goodwill	8,590		8,591
Other non-current assets	7,456		7,609
Total assets	$	37,433	$	37,004
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Notes payable and short-term borrowings	$	265	$	230
Accounts payable	14,362		14,046
Other current liabilities	10,212		10,212
Total current liabilities	24,839		24,488
Long-term debt	9,327		9,254
Other non-current liabilities	4,183		4,331
Stockholders’ deficit:
Preferred stock, $0.01 par value (300 shares authorized; none issued)	—		—
Common stock, $0.01 par value (9,600 shares authorized; 978 and 989 shares issued and outstanding at April 30, 2024 and October 31, 2023, respectively)	10		10
Additional paid-in capital	1,663		1,505
Accumulated deficit	(2,257)		(2,361)
Accumulated other comprehensive loss	(332)		(223)
Total stockholders’ deficit	(916)		(1,069)
Total liabilities and stockholders’ deficit	$	37,433	$	37,004


	Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Loss		Total Stockholders’ Deficit
	Number of Shares	Par Value				Accumulated Deficit
	In millions, except number of shares in thousands
Balance at October 31, 2023	988,782	$	10	$	1,505	$	(2,361)	$	(223)	$	(1,069)
Net earnings	—	—		—		622		—		622
Other comprehensive loss, net of taxes	—	—		—		—		(235)		(235)
Comprehensive income	—	—		—		—		—		387
Issuance of common stock in connection with employee stock plans and other	8,677	—		(76)		—		—		(76)
Repurchases of common stock (Note 10)	(17,062)	—		(27)		(487)		—		(514)
Cash dividends ($0.55 per common share)	—	—		—		(545)		—		(545)
Stock-based compensation expense	—	—		177		—		—		177

Balance at January 31, 2024	980,397	$	10	$	1,579	$	(2,771)	$	(458)	$	(1,640)
Net earnings	—	—		—		607		—		607
Other comprehensive income, net of taxes	—	—		—		—		126		126
Comprehensive income	—	—		—		—		—		733
Issuance of common stock in connection with employee stock plans and other	584	—		(4)		—		—		(4)
Repurchases of common stock (Note 10)	(3,474)	—		(6)		(93)		—		(99)

Stock-based compensation expense	—	—		94		—		—		94

Balance at April 30, 2024	977,507	$	10	$	1,663	$	(2,257)	$	(332)	$	(916)


	Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Deficit
	Number of Shares	Par Value				Accumulated Deficit
	In millions, except number of shares in thousands
Balance at October 31, 2022	979,869	$	10	$	1,172	$	(4,492)	$	285	$	(3,025)
Net earnings	—	—		—		469		—		469
Other comprehensive loss, net of taxes	—	—		—		—		(741)		(741)
Comprehensive loss	—	—		—		—		—		(272)
Issuance of common stock in connection with employee stock plans and other	8,844	—		(79)		—		—		(79)
Repurchases of common stock (Note 10)	(3,624)	—		(4)		(96)		—		(100)
Cash dividends ($0.53 per common share)	—	—		—		(518)		—		(518)
Stock-based compensation expense	—	—		167		—		—		167

Balance at January 31, 2023	985,089	$	10	$	1,256	$	(4,637)	$	(456)	$	(3,827)
Net earnings	—	—		—		1,054		—		1,054
Other comprehensive income, net of taxes	—	—		—		—		88		88
Comprehensive income	—	—		—		—		—		1,142
Issuance of common stock in connection with employee stock plans and other	787	—		(7)		—		—		(7)

Cash dividends	—	—		—		4		—		4
Stock-based compensation expense	—	—		95		—		—		95


Balance at April 30, 2023	985,876	$	10	$	1,344	$	(3,579)	$	(368)	$	(2,593)


	Fiscal 2023 Plan
	Severance and EER			Non-labor		Other prior-year plans(1)		Total
	In millions
Accrued balance as of October 31, 2023	$	88		$	18	$	2	$	108
Charges	93			6		3		102
Cash payments	(100)			(9)		(3)		(112)
Non-cash and other adjustments	2			(2)		(2)		(2)
Accrued balance as of April 30, 2024	$	83		$	13	$	—	$	96
Total costs incurred to date as of April 30, 2024	$	495		$	47	$	869	$	1,411

Reflected in Consolidated Condensed Balance Sheets
Other current liabilities	$	83		$	3	$	—	$	86
Other non-current liabilities	$	—		$	10	$	—	$	10


Accrued balance as of October 31, 2022	$	—		$	—	$	32	$	32
Charges	294			13		2		309
Cash payments	(92)			(8)		(35)		(135)
Non-cash and other adjustments	(141)		(2)	(5)		3		(143)
Accrued balance as of April 30, 2023	$	61		$	—	$	2	$	63


	Three months ended April 30
	U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans				Post-Retirement Benefit Plans
	2024		2023		2024		2023		2024		2023
	In millions
Service cost	$	—	$	—	$	9	$	11	$	—	$	—
Interest cost	57		55		11		10		4		3
Expected return on plan assets	(62)		(64)		(13)		(13)		(4)		(3)
Amortization and deferrals:
Actuarial loss (gain)	7		4		—		1		(4)		(4)
Prior service cost (credit)	—		—		1		2		(2)		(3)
Net periodic benefit (credit) cost	2		(5)		8		11		(6)		(7)

Settlement gain (loss)	—		—		1		(1)		—		—
Special termination benefit cost	—		105		—		—		—		34
Total periodic benefit (credit) cost	$	2	$	100	$	9	$	10	$	(6)	$	27

	Six months ended April 30
	U.S. Defined Benefit Plans				Non-U.S. Defined Benefit Plans				Post- Retirement Benefit Plans
	2024		2023		2024		2023		2024		2023
	In millions
Service cost	$	—	$	—	$	18	$	20	$	—	$	—
Interest cost	114		109		23		20		8		7
Expected return on plan assets	(123)		(129)		(26)		(26)		(8)		(6)
Amortization and deferrals:
Actuarial loss (gain)	14		9		—		2		(8)		(8)
Prior service cost (credit)	—		—		3		3		(5)		(6)
Net periodic benefit (credit) cost	5		(11)		18		19		(13)		(13)

Settlement loss	—		—		1		—		—		—
Special termination benefit cost	—		105		—		—		—		34
Total periodic benefit (credit) cost	$	5	$	94	$	19	$	19	$	(13)	$	21


	Six months ended April 30, 2024
	In millions
Balance at beginning of period	$	93
Benefit of allowance for credit losses	(3)
Deductions, net of recoveries	(6)
Balance at end of period	$	84


	As of April 30, 2024								As of October 31, 2023
	Fair Value Measured Using								Fair Value Measured Using
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	In millions
Assets:
Cash Equivalents:
Corporate debt	$	—	$	797	$	—	$	797	$	—	$	589	$	—	$	589

Government debt(1)	818		—		—		818		1,900		—		—		1,900
Available-for-Sale Investments:

Financial institution instruments	—		3		—		3		—		3		—		3

Marketable securities and mutual funds(2)	36		131		—		167		33		45		—		78

Derivative Instruments:

Foreign currency contracts	—		314		—		314		—		489		—		489

Total assets	$	854	$	1,245	$	—	$	2,099	$	1,933	$	1,126	$	—	$	3,059
Liabilities:
Derivative Instruments:
Interest rate contracts	$	—	$	43	$	—	$	43	$	—	$	58	$	—	$	58
Foreign currency contracts	—		202		—		202		—		212		—		212
Other derivatives	—		4		—		4		—		2		—		2
Total liabilities	$	—	$	249	$	—	$	249	$	—	$	272	$	—	$	272


	As of April 30, 2024								As of October 31, 2023
	Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value		Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	In millions
Cash Equivalents:
Corporate debt	$	797	$	—	$	—	$	797	$	589	$	—	$	—	$	589

Government debt	818		—		—		818		1,900		—		—		1,900
Total cash equivalents	1,615		—		—		1,615		2,489		—		—		2,489
Available-for-Sale Investments:

Financial institution instruments	3		—		—		3		3		—		—		3

Marketable securities and mutual funds(1)	122		45		—		167		40		38		—		78

Total available-for-sale investments	125		45		—		170		43		38		—		81
Total cash equivalents and available-for-sale investments	$	1,740	$	45	$	—	$	1,785	$	2,532	$	38	$	—	$	2,570


	As of April 30, 2024
	Amortized Cost		Fair Value
	In millions
Due in one year	$	19	$	19
Due in one to five years	66		66
	$	85	$	85


	Three months ended April 30				Six months ended April 30
	2024		2023		2024		2023
	In millions
Net revenue:
Commercial PS	$	6,242	$	5,916	$	12,287	$	12,298
Consumer PS	2,184		2,253		4,948		5,056
Personal Systems	8,426		8,169		17,235		17,354
Supplies	2,864		3,006		5,727		5,863
Commercial Printing	1,205		1,373		2,432		2,761
Consumer Printing	299		357		584		724
Printing	4,368		4,736		8,743		9,348
Corporate Investments	5		3		7		4
Total segment net revenue	12,799		12,908		25,985		26,706
Other	1		(1)		—		(1)
Total net revenue	$	12,800	$	12,907	$	25,985	$	26,705

Earnings before taxes:
Personal Systems	$	508	$	431	$	1,045	$	906
Printing	829		899		1,701		1,769
Corporate Investments	(30)		(38)		(67)		(71)
Total segment earnings from operations	1,307		1,292		2,679		2,604
Corporate and unallocated costs and other	(88)		(90)		(177)		(182)
Stock-based compensation expense	(94)		(95)		(271)		(262)
Restructuring and other charges	(71)		(200)		(134)		(341)
Acquisition and divestiture charges	(22)		(74)		(49)		(158)
Amortization of intangible assets	(80)		(86)		(161)		(171)

Interest and other, net	(155)		(160)		(297)		(341)
Total earnings before taxes	$	797	$	587	$	1,590	$	1,149


	As of
	April 30, 2024		October 31, 2023
	In millions
Finished goods	$	3,919	$	3,930
Purchased parts and fabricated assemblies	3,593		2,932
	$	7,512	$	6,862


	As of
	April 30, 2024		October 31, 2023
	In millions
Land, buildings and leasehold improvements	$	2,380	$	2,332
Machinery and equipment, including equipment held for lease	5,454		5,384
	7,834		7,716
Accumulated depreciation	(5,040)		(4,889)
	$	2,794	$	2,827


	As of
	April 30, 2024		October 31, 2023
	In millions
Deferred tax assets	$	3,180	$	3,155
Intangible assets	1,437		1,593
Right-of-use assets	1,143		1,188
Deposits and prepaid	366		427
Prepaid pension and post-retirement benefit assets	344		393
Other	986		853
	$	7,456	$	7,609


	As of April 30, 2024										As of October 31, 2023
	Outstanding Gross Notional		Other Current Assets		Other Non-Current Assets		Other Current Liabilities		Other Non-Current Liabilities		Outstanding Gross Notional		Other Current Assets		Other Non-Current Assets		Other Current Liabilities		Other Non-Current Liabilities
	In millions
Derivatives designated as hedging instruments
Fair value hedges:
Interest rate contracts	$	750	$	—	$	—	$	—	$	43	$	750	$	—	$	—	$	—	$	58
Cash flow hedges:
Foreign currency contracts	15,286		264		38		142		54		15,278		410		70		147		52

Total derivatives designated as hedging instruments	16,036		264		38		142		97		16,028		410		70		147		110
Derivatives not designated as hedging instruments
Foreign currency contracts	3,544		12		—		6		—		4,446		9		—		13		—
Other derivatives	138		—		—		4		—		125		—		—		2		—
Total derivatives not designated as hedging instruments	3,682		12		—		10		—		4,571		9		—		15		—
Total derivatives	$	19,718	$	276	$	38	$	152	$	97	$	20,599	$	419	$	70	$	162	$	110


	In the Consolidated Condensed Balance Sheets
	(i)		(ii)		(iii) = (i)–(ii)		(iv)		(v)			(vi) = (iii)–(iv)–(v)
							Gross Amounts Not Offset
	Gross Amount Recognized		Gross Amount Offset		Net Amount Presented		Derivatives		Financial Collateral			Net Amount
	In millions
As of April 30, 2024
Derivative assets	$	314	$	—	$	314	$	144	$	128	(1)	$	42
Derivative liabilities	$	249	$	—	$	249	$	144	$	105	(2)	$	—
As of October 31, 2023
Derivative assets	$	489	$	—	$	489	$	178	$	291	(1)	$	20
Derivative liabilities	$	272	$	—	$	272	$	178	$	89	(2)	$	5


Derivative Instrument	Hedged Item	Location	Year	Total amounts of income/(expense) line items in the statement of financial performance in which the effects of fair value hedges are recorded		Gain/(loss) recognized in earnings on derivative instruments		Gain/(loss) recognized in earnings on hedged item
				In millions
Three months ended April 30
Interest rate contract	Fixed-rate debt	Interest and other, net	2024	$	(155)	$	—	$	—
			2023	$	(160)	$	7	$	(7)
Six months ended April 30
Interest rate contract	Fixed-rate debt	Interest and other, net	2024	$	(297)	$	15	$	(15)
			2023	$	(341)	$	21	$	(21)


	Total amounts of income/(expense) line items in the statement of financial performance in which the effects of cash flow hedges are recorded								Gain/(loss) reclassified from Accumulated other comprehensive (loss) income into earnings
	Three months ended April 30				Six months ended April 30				Three months ended April 30				Six months ended April 30
	2024		2023		2024		2023		2024		2023		2024		2023
	In millions
Net revenue	$	12,800	$	12,907	$	25,985	$	26,705	$	39	$	(109)	$	238	$	277
Cost of revenue	(9,777)		(9,993)		(20,074)		(21,004)		(36)		(55)		(76)		(109)
Operating expenses	(2,071)		(2,167)		(4,024)		(4,211)		(1)		(1)		(4)		(2)
Interest and other, net	(155)		(160)		(297)		(341)		3		3		6		6
Total									$	5	$	(162)	$	164	$	172


	As of April 30, 2024				As of October 31, 2023
	Amount Outstanding		Weighted-Average Interest Rate		Amount Outstanding		Weighted-Average Interest Rate
	In millions

Current portion of long-term debt	$	199	6.3	%	$	179	6.0	%
Notes payable to banks, lines of credit and other	66		1.3	%	51		1.0	%
Total notes payable and short-term borrowings	$	265			$	230


	Six months ended April 30, 2024
	Net unrealized gains (losses) on available-for-sale debt securities		Net unrealized gains (losses) on cash flow hedges		Unrealized components of defined benefit plans		Change in cumulative translation adjustment		Accumulated other comprehensive loss
	In millions
Balance at beginning of period	$	7	$	230	$	(437)	$	(23)	$	(223)
Other comprehensive gains (losses) before reclassifications	4		(7)		10		14		21
Reclassifications of gain into earnings	—		(134)		4		—		(130)

Balance at end of period	$	11	$	89	$	(423)	$	(9)	$	(332)


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs
	In thousands, except per share amounts
February 2024	3,174	$	28.64	3,174	$	1,443,656
March 2024	318	$	28.61	318	$	1,434,564
April 2024	—	$	—	—	$	1,434,564
Total	3,492			3,492


			HP INC.
			/s/ TIMOTHY BROWN
			Timothy Brown Interim Chief Financial Officer (Principal Financial Officer and Authorized Signatory)


						/s/ ENRIQUE LORES
						Enrique Lores President and Chief Executive Officer


						/s/ TIMOTHY J. BROWN
						Timothy J. Brown Interim Chief Financial Officer (Principal Financial Officer)