DXC Technology Company

Ladies and gentlemen, thank you for standing by and welcome to the DXC Technologies fourth quarter fiscal year 2022 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. John Sweeney, Vice President of Investor Relations, You may begin your conference.

Thank you, and good afternoon, everybody. I'm pleased that you're joining us for DXC Technologies' fourth quarter and full year 2022 earnings call. Our speakers on the call today will be Mike Salvino, our president and CEO, and Ken Sharp, our EVP and CFO. This call has been webcast at dxc.com Investor Relations, and the webcast includes slides that will accompany this discussion today. Today's presentation includes certain non-GAAP financial measures, which we believe provide useful information to our investors. In accordance with the SEC rules, we provide a reconciliation of these measures to the respective and most directly comparable GAAP measures. These reconciliations can be found in the tables included in today's earnings release and in the webcast slides. Certain comments we make on the call would be forward-looking. These statements are subject to known and uncertain risks and uncertainties, which could cause actual results to differ materially from those expressed on the call. A discussion of these risks and uncertainties is included in our annual report in Form 10-K and other SEC filings. I'd now like to remind our listeners that DXC Technology assumes no obligations to update the information presented on the call, except as required by law. And with that, I'd like to introduce DXC Technology's President and CEO, Mike Salvino. Mike?

Thanks, John. I appreciate everyone joining the call today, and I hope you and your families are doing well. Today's agenda will begin with an update on the progress we have made in driving our transformation journey. There is no doubt that DXE is in a better place. Next, I will update you on Ukraine and Russia. Ken will then discuss our Q4 results and FY23 guidance. And finally, I will make some closing remarks before opening the call up for questions. I am pleased at what we've accomplished in FY22. The next two slides show quantitatively and qualitatively the progress we have made that has put DXE in a dramatically better place. Beginning with the numbers, we narrowed the total organic revenue decline by 620 basis points. Our growth strategy has two parts, consistently grow GBS and shrink the negative declines in GIS. We have achieved the first part of our growth strategy by consistently growing GBS for four consecutive quarters in FY22. While we did shrink the organic revenue declines in GIS, we expected better results. which we plan to achieve in FY23. Concerning adjusted even margins, we delivered a 230 basis point increase, and our non-GAAP diluted EPS was up 44 cents. The highlight of the year was our free cash flow performance. We drove $743 million in free cash flow. This is a $1.4 billion improvement compared to FY21, and is a clear indication that we have built a team that can execute. Now let me turn to our qualitative results discussing each of the five steps of our transformation journey. The first step is to inspire and take care of our colleagues, which was highlighted by how well we've taken care of our people through COVID and now the conflict created by Russia's invasion of Ukraine. Concerning our customers, we continue to increase our NPS score, which is now at 31 and above the industry best practice range of 20 to 30. Optimized cost is the next step. We make good progress in portfolio shaping by divesting businesses that did not fit our strategy and we drove out costs across the organization. Our cost takeout activities will accelerate for the GIS business in FY23. The fourth step is seize the market, where our book-to-bill numbers continue to show that we can win in the IT industry. Our trailing 12-month book-to-bill of 1.1 is a great result. And finally, in terms of our financial foundation, Ken's team has done a great job executing three initiatives, improving our free cash flow, refinancing our debt, and remediating the material weaknesses. All three of these items have put DXC in a stronger financial position. We continue to stand with the people of Ukraine, and our thoughts are focused on a rapid resolution of the conflict. While Russia's invasion of Ukraine has been a tragedy, this has not and will not have a significant impact on our business. Let me take you through how we've delivered on the commitments we made on March 4th. First, we've done a great job caring for our people in the region. I would like to thank our DXC colleagues across the organization for coming together to deliver excellence for our customers and colleagues. Our transformation journey starts with our people, and we are honored by the commitment, dedication, and caring we have seen from our people in the region and throughout the company over the past few months. In terms of our 4,000 colleagues in the Ukraine, we have successfully moved many of them to Western Ukraine, Poland, and Romania. And I would like to highlight their productivity has been above 85% since the conflict began. By the end of June, we will also have successfully relocated our non-domestic and corporate Russian employees out of Russia. Our second commitment was to exit Russia. In April, we exited the Russian market and successfully took care of our customers and colleagues of that business. This action fulfilled DXC's commitment to exit the region and will reduce our revenues by approximately $140 million per year. Our solid execution of these commitments has enabled us to have strong customer retention, has made our business better, and positioned us to effectively deal with the conflict as it continues. As we move into FY23, our leadership team knows what we need to do within GBS and GIS. This clarity gives me confidence that the momentum created in FY22 will continue in FY23. GBS is a business that we've consistently grown and is comprised of a set of digital offerings that are high value for our customers and for DXC. This business is highlighted by our engineering offering. which enables DXE to help our customers grow. In fact, a number of our customers refer to us as their growth partner. We use deep engineering skills to create products, services, and experience that make our customers more relevant and vital to their customers. An example is our relationship with one of the world's largest automotive manufacturers. Car buyers want a digital experience that will help them minimize disruption to their vehicles. And we all know cars are full of sensors that produce all sorts of data. Our engineering teams use this data to provide diagnostics and preemptive failure analysis. Overall, this lowers maintenance, improves the car's performance, and leads to a better driver experience. The engineering offering is just one example, but you can see why we're excited about the future of GBS. It's a business that's differentiated, is high value for our customers in DXE, and now represents roughly 47% of the total revenues of DXE. GIS is comprised of a set of offerings where the work is mission critical, making this business high value for our customers. Based on the financial performance of this business, it is currently lower value for us. In FY23, our top priority is improving the financial performance of GIS. The focus of this attention will be on driving organic revenue growth in modern workplace and driving margin improvement for cloud infrastructure slash ITO. For modern workplace, we expect to see the fruits of last year's labor drive improved organic revenue in FY23. We anticipate the Q4 will be the low watermark in organic revenue declines, and by the end of FY23, modern workplace is expected to turn positive. For cloud infrastructure slash ITO, we are committed to taking out costs to increase margin, which will be done by fixing contracts, reducing contractor and real estate costs, and optimizing the assets of our data centers. Finally, we will continue to portfolio shape to run a company that is higher value to our customers and DXC. Now let me turn the call over to Ken. Thank you, Mike.