HP Inc.

Q4 2021 Earnings Conference Call


spk_0: the day everyone and welcome to the fourth quarter two thousand and twenty one hp ain't earnings conference call my name is gary and i'll be your converts moderator for today's call at this time our participants will be any listen only metal we will be facilitating a question and answer session toward the end of the conference should you need assistance during the call please civil a conference specialists by pressing the starkey power by zero as a reminder this conference is being recorded for replay purposes i would never to turn the car over to or read keenan they on head of of investor relations please go ahead
spk_1: good afternoon everyone and welcome to h it's for quarter twenty twenty one a conference call we make a day or enrique it hp president and chief executive officer and murray myers h the chief financial officer before handing the call overthrow enrique let remind you that this call him being whipped cats a replay of this webcast would be made available on a website shortly after the call for approximately one year we've talked to their earnings the really and the accompanying slide presentation on our investor relations web page at investor dot h b dot com and always elements of the presentation are forward looking and are based on our best view of the world and our businesses as we see them today for more detail information please see disclaimers in their earnings the material relating to forward looking statements that involved risks uncertainties an assumption for discussion of some of the thrift uncertainties and assumption please refer to hb the fcc report including our most recent form than case if we assume no obligation and does not intend to update any such forward looking statements we also note that the financial information discuss them with call reflects estimates based on information available now and could differ materially from the a month or chemically reported in hp form ten k for the fiscal year ended oct ready for twenty twenty one and hp the other as a thief i mean during this worker unless otherwise specifically noted oh comparisons are yogi your comparison with the corresponding year ago period to financial information that has been expressed on a non gaap bases we've included reconciliation to the comparable gap information please refer to the tables and slide presentation accompanying sedate earning relief for those reconciliation with that i'd now like that turn to call over to enrique
spk_2: thanks or it i think you all are joining two days on of our security or an early meeting lacma we shared our plan to continue building or stronger hp one that the lever for favorite new operating profit he appeared africa no girl these corporate results reflect our continue for men to a game plan and they gave a great confidence in our future
spk_3: let me tell you that a date
spk_2: thank you for revenue grew made for him to seek same point seven billion dollar non gaap a peer group fifty two prepped and to remain pay for him and we generated more than nine hundred million dollars of free cash flow are returning to billion dollars to shareholders or share reporter for a vivid and our cue for we go but are great finish throw an exception of year
spk_4: or the third year
spk_2: we grew revenue to open and perfect for three point five billion dollar are generated one point seven billion dollar of think i'm into non gaap operating profit non got a grew quickly pick for them read mean that we are created our value creation plan target or non gaap operating profit and libya a four year ahead of plan and we return a record seven point two billion dollars to shareholder were continuing to invest in the did it go opportunity for that pavement our cue for a whole year performer shows that company on a throne food unhappiness it long term secular from a hybrid play for competitive thing our need a few across our market and they navigation agenda that we're driving are enabling it to turn them into tell when we are making organic and inorganic investment to drive perfect they won't go are we are accelerating that work for information building new digital capabilities while also reducing actual cause i'm driving efficiency they probably were making a game our priority is creating a more growth oriented portfolio of our early they i heard that we expect our five key go earlier to go double digits on generate over ten billion dollars in revenue if he's got twenty two will be referred collectively grew to prevent these quarter beeping grew more than thirty percent growth for our than inc bateman at will have more than twenty percent growth for our in bethel graphics are poorly we see our to go earlier becoming a bigger part of overall revenue and profit me moving forward we're driving these go even as we continue to navigate are complex and dynamic operation of in vitamin that can include about the man i'm perfect and poop like of thing the accurate we have been taken to mitigate industry whitehead we are pain up that is no quick fix bug where thinking our operation electrocution on making continued progress quarterback quarter and i just want to say how brother am of a way our team are stepping up because not been easy but the challenge we have faith have not deterred from driving our big move forward and the fact that we deliver noble big revenue and profit go for the year deeper country them as we enter two thousand twenty two let me know talk about this thing we see each of our government union impersonal keep people were continues to be very strong be man you have revenue and operating profit it grew double digits in into for and i were basically mcewen and pricing strategy or logo for effectively manage go and component head headwind a big part of our taxes he they improve make we are very been given our leadership in the commercial pc market lot no obvious every open when they are shaped the were weaned those both commercial products are we so there's don't get the month and fire profitability we continue to be a significantly elevated order backlog but i shared luckman we expect component shortages particularly in a to pursue in lived there a cup of twenty two the operation of actual real line in our duty called are generating positive resolved we continue to increase our data engagement with the or to on pure food supply you we have expanded long term agreements to take your capacity and i like digital transformation initiative are enabling greater realtime visibility talk to my our speed agility and make with work remain a baby priority and we expect our trajectory to continue to improve will also creating a open innovation and we design photo theme hype it with include a new lineup a window you live eleven devices that enable premium computing experiences or work and home all for expanding into valuable education both quarter we interviewed hp person they world's most advanced video conferencing system if alert opportunity that will continue to grow our digital and physical world convert bevin out of them company are already invested in technology that improve hybrid work experience or that and for you hp person combine our hardware shop for a month remember it had our capability to create a more immersive experience so that the would it be can totally feel they are in the same room even if they are now you will feel compelled to innovate and expand our presence in the go in private collaboration pay we also the lever another quarter or double digit device a third of your revenue growth to included the launch of new digital services to help commercial from a family for i the complexity of hybrid ip and vitamin photo in the clothes or how i could i do check with asian we learn our lineup of new reba huge be thirty three and nv the only with subscription offer to enable high performance remote collaboration berman to print we grew revenue one person in the quarter it was primarily driven by your discipline pricing strategy but we'll have our continued growth in thirty fifth and subscription which offered expect the volume decline even by limited supply like other thing the industry we continue to operate apply constrained and vitamin driven by kirby do like a diversion from brother did the issues the game feedback know the man put our print hardware supplies remain calm the fuck if we had more hardware order that we can fulfill into quarter and i we could last month we expected to impact green glow if you've got the twenty two i'd be enough filipina from advancing our top priority we continue to go i wouldn't be plucked portfolio globally including rollout taller and in five seven thousand feet that he resign for families work in learning and create a new memory of home importantly it is build we could a really be mine and made from over forty five percent recycled plastic content we'll also growing our digital fair refer to enable hybrid of you're printing our group example is is quoted learned of hp moment cream flavor a new clothes for mps subscription plan or hybrid work environment thank you for we'd go nobody digit girl of mps revenue on top on contact funny and they feel or our work for solution momentum but increasingly integrating about offering ico print on personnel shoot them to meet new gotham of me on a log new go opportunity our recently launched hp work from home server got a great example of probably have leverage in our diverse portfolio to winning the hybrid hockey like i mentioned earlier we have auto driving in bethel graphic on three the printing go the industrial graphic we go double digit revenue growth in the author on help build a healthy bug look of industrial griffin please continue that both the recovery from from prior quarter we also continue to see a makeshift bow or more productive industrial prefer we significant growth in label them packaging i knew who the our focus on high value employ the application is baby with a way for entirely new go deeper than our wounded that fiber footwear on a public initiatives are on track our program against our strategy priority you so for driving drunk us arsenal on we continue to be disciplined to worth of capital we have a robot returns based approach that we are applying to every aspect of our capital allocation we will continue to invest in areas where do we should go opportunity while continuing to return copy the polar shareholder we believe our shirts remain under of are we are committed progress report your level of lives or billion dollars in fees cause you're twenty two we also expect a money will continue to play an important role that typically we plan to go to deal that accelerate our topic is on dry profitable girl and we are making ongoing progress against our to spend they will impact the agenda yeah he he thought driver of long per value creation for all stakeholders are we continue to pursue an ambitious agenda they make us example if i wanted pundit partnership with won't lie like fun we are working to restore perfect and improve their management of nearly one million acre of it lumpkin we support our focus on making every page print the photo party to sum up our portfolio if innovative hundred feeling our forbid you is driving for same revenue operating profit rubio and free cash flow grill we're returning highly attractive level of capital to shareholders are we are confident in their food cardio twenty to guide them that we shared of our analysis we are entering the new year from a position of big thing and i look forward to continuing to share our problem let me know target call over to my own take you through the details of a quarter an hour food co q one outlook murray over to you
spk_1: thanks enrique and hello everyone it's good to be back together and it was great to connect with don't many of you polio a day i want to stop by building on something and regain that a movie to go cute pool with a strong finish to a very strong year it builds on our proven track record of meeting or exceeding the goals we thought and underscore schools are confident in our f y twenty two and long term financial outlook let me begin by providing for additional collar on a result
spk_5: starting with the full year
spk_1: revenue was sixty three point five billion dollars up top event non gap operating profit with five point eight billion dollars up forty two percent
spk_6: we grew non get apia even coughed up up fifty six percent to three dollars and seventy nine cent
spk_1: this continue that trend of growing don't get a beer if we used separation of four point two billion dollars a free cash flow with consistent without cool do you garden at adjusting to the nyt article litigation pussy and we returned to record seven point two billion dollars to shareholders that a hundred seventy two defend a free cash flow what confession important to note if how well beloved a performance you were growing up top and bottom line we're returning capital to shareholders and in the thing is a business we are accelerating you got businesses and driving efficiency this reflects the company geared towards both short and long term value creation as we enter a new period of growth for heat p did is supported by our pupil numbers
spk_6: revenue with sixteen point seven billion dollars in the corner up nine percent nominally and seven percent in constant currency regionally in compton county american declined four percent he me a increased fifteen percent in a pj increased eighteen percent as enrique mention
spk_5: and supply chain constraints continue to impact boot print and political systems revenue and this was particularly impactful to i could have will result quarter that said demand remain calm as hybrid work create sustained tailwind
spk_1: gross margin with nineteen point six percent of the quarter of two point you are new the increase was primarily driven by continued favorable pricing including county partially offset by higher costs non gap operating expenses were one point nine billion dollars or eleven point five percent of revenue the increase in operating expenses with primarily driven by increase investment in go to market and innovation don't gap operating profit with one point three billion dollars of twenty eight percent of non gap that away the expense with sixty four million dollars for the quarter non gap deluded that earnings per share increase thirty two thirds of fifty two preferred to naughty boy thing with a deluded should count of approximately one point
spk_6: one billion shares no get diluted net earnings per share exclude are cool litigation game defined benefit plan settlement game
spk_1: not operating retirement related credit partially offset by restructuring and other charges advertise they of intangible acquisition related charges other tax which often as a result to poor gap deluded that earnings per share with two dollars and seventy one thing
spk_7: now let's turn to figment proponents
spk_1: in queue for possible systems revenue with eleven point eight billion dollars up thirteen percent year on year total units were down nine percent given the expected supply chain challenges and lower chronic the fact we do go revenue double digit for this environment reflected the strength of demand and positive impact about big shift towards mainstream and premium commercial drilling into the details consumer revenue with down three percent a commercial with up twenty five percent by product category revenue with up thirteen to fit the notebook eleven to that the desktop and thirty nine percent but workstation will also continue to drive double digit growth across peripheral and services
spk_5: no precedent delivered seven hundred and sixty four million dollars and operating profit with operating margins of six point five it
spk_1: majid improved one point four points primarily due to continued favorable pricing product mix and currency partially offset by higher costs including commodity cause an investment and innovation and go to market
spk_6: imprint our thoughts reflected continued focus on execution and a strict about portfolio as we navigated the supply chain environment
spk_1: two for total prick revenue with the point nine billion dollars up want event driven by favorable pricing and hardware and growth and services partially offset by a decline and supplies total hardware units decline twenty six percent due to consumer replenishment love doing coup for an increase manufacturing and component country
spk_5: we expect these chris hardwick and strength to extend at least into the both top of twenty twenty two
spk_1: by cost of a segment consumer revenue with them fixed the fence with units dubbed twenty eight percent commercial revenue grew nineteen percent with you to down top isn't consumer demand with main sold however revenue across the whole middle of it with constrained by the code supply
spk_6: by a factory environment
spk_1: the commercial recovery should go the progress with double digit hardware revenue growth with the triple digit increases in the actual printing hardware we expect to see your continued gradual and dog even recovery and commercial extending into if y twenty two reply it's revenue with three point one billion dollars declining to percent you on year driven primarily by prior you trouble in the dream punishment
spk_5: we also thought that a mobilization of ink and totally partially offset by favorable pricing we thought continued my bedroom that are contractual business as we discussed the that analyst day this is the key part of our border services strategy
spk_6: in the think delivered double digit increases in both cumulative subscriber growth in revenue
spk_5: we all heard drug group in managed services revenue and total contract value with drink it both renewal and new tpp booking
spk_6: print operating profit increased a hundred and seventy million dollars to eight hundred and thirty million dollars an operating margins with seventeen percent
spk_1: operating margin good two point two points driven primarily by a war pricing and improve performance industrial including graphic from three day pass the upset by unfavorable mix and higher costs including commodity called an investment that innovation and go to market
spk_6: now let me turn to a translation of it
spk_1: as we completed the second year of a cost saving the program we have now deluded more than eighty percent of our one point two billion dollar gross run great structural cost reduction plan and we continue to look at new cost savings opportunities transformation if not only about how fading but about a third creating new capabilities and long term value creation
spk_5: one example i'd like to highlight is our ongoing digital transformation
spk_1: by leveraging our new digital platforms we are him think our capabilities and transforming the way we operate to deliberate new solutions to our comfortable with his capability we recently launched me pro security a new subscription service that enable comfortable to digitally manage their software on an annual subscription basis
spk_5: the structural cost savings without conservation efforts are enabling us to and best of these types of to teach good drivers and we think many more opportunities like to drug business and movement through additional software services and solutions offering
spk_1: let me now move to cash flow and capital allocation
spk_5: to for cash flow from operations with two point eight billion dollars and free cash flow with zero point nine billion dollars up to the additional adjustment for the nyt article litigation perceive of one point eight billion
spk_1: the cash conversion cycle with mild twenty five days in the quarter this deteriorated four days the critchley have lower days payable outstanding and hired a failed upsetting with only partially offset by the decrease in david inventory
spk_6: put a quarter we returned a total of two billion dollars to shareholders which represented two hundred and ten percent of free cash flow this included one point seven five billion dollars and share repurchases and two hundred and nineteen million dollars in cash dividend
spk_1: for it by twenty one we return to record seven point two billion dollar to shareholders or a hundred and seventy two percent of free cash flow looking ahead to if y twenty two weeks back to continue aggressively buying back share that elevated levels of at least four billion dollars i'll share repurchase program combined with our recently increased annual dividend of a dollar per share have a contract to exceed of sixteen billion dollar return of capital target that in a value creation plan looking forward to cure one and if y twenty two we continue to navigate supply availability logistics constraints pricing dynamics and the pace of the economic recovery in particular keep the full in mind related to a q one and overall to school twenty twenty two financial outlook
spk_6: postal system we continue to see strong demand for pcs particular in commercial as well as favorable pricing
spk_1: we expect thought p of revenue going to continue into physical put to with the ship the higher good categories including commercial premium a peripheral we expect pf margins to be toward the high end about five to seven the fed long term range
spk_8: in print
spk_1: weeks that followed demanded consumer a continued normalization and mix of commercial gradually improve through twenty two a two and disciplined cost management week but print margin to be towards the higher end about sixteen to eighteen percent long term range the purpose of them to expect the component shortages as well as manufacturing poured and transit that disruptions will continue to constrain revenue due to the ongoing pandemic in many parts of the world
spk_5: in print weeks back similar but more acute charges particularly with regard to factor disruption and component shortages
spk_1: we expect these children the crook pearson print to the says that lived through the first part of twenty twenty two
spk_6: furthermore normal sequential physicality doesn't apply for if y twenty two a we expect our revenue performance to be more video but quarter particularly driven by pierre
spk_5: in addition we expect of flight headwind your new approximately twenty million per quarter from corporate investment the dollar
spk_6: picking these considerations into account we are providing the following up
spk_1: we expect growth quarter been kept looted that earnings per share to be in the range of ninety nine cents to one dollar and five cents
spk_5: at birth quarter gap deluded net earnings per share to be in the range of ninety two cents to ninety eight said
spk_1: we expect bolivia don't get diluted net earnings per share to be in the range of or dollars and seven them to two dollars and twenty seventh and and if y twenty two gap deluded that earnings per share to be in the range of three dollars and eighty six and two poodles and six cents but if y twenty two we expect free cash flow to be at least eight point five billion dollars overall i feel very good about our performance and our outlook i am confident in our ability to deliver consistent long term sustainable growth and we look forward to taking your questions the let me headed back to the operator
spk_0: thank you and we will now begin the question and answer session to ask a question you may present star than one on your touchstone phone if you're using a speakerphone please pick up your handset before pressing the keys to withdraw your question please press star then to we also as you please limit yourself to one question at a single federal up the first question is from a meat dairy authority whatever core please go ahead
spk_9: the bad things like good afternoon dog rachaman nice quad earlier on your a guess my first question really is on the pcs are on the person systems like the a very impressive at the reversal on the great profile lab was the last one ago a it will be forget heavily driven by ear piece of my mouth is right maybe a speeds up close to twenty percent love to understand when i'd look at the f b up lip how much about of just make because you perhaps less crime both worse is just apples to apples price increases and then how should we do about the durability that he is being created you go forward into the next fiscal year
spk_10: the new parliament thank you for the quick and a new target the money will provide more didn't fool proof of and we have you heard we are very pleased with it before month for a b c b movies quarter if you really are going for going for the film demand that we continue to see both for growth consumer but specially in commercial i'm on the way we can be manner the both i'm writing or you were thing we we have been very effectively manage in both driving the component that we have two or three categories where we saw the guy good value for their company with in general the commercial categories and the hype and of comment of the country i'm afraid and because we really been driving the performance or do so
spk_1: so i normally would comment on on bryson shauna good afternoon of it though we're the catapulted to give you some context around a peeve are directly up twenty four percent year on year and and seventy percent que en que and what's driving that is really a combination of capable pricing including some currency but as you said that baby boom mic into higher commercial as well as even a mix shipped inside commercial to both premium and mainstream that we've got left a low end and that they will mix ship with in consumer it in terms of year on year consumers up eleven prevent driven predominately by pricing and commercials up thirty one point seven which is combination of both nixon pricing and as we've said earlier and and i think and in it out security our meeting we do expect to see some of that favorable makeshift to continue into into them into the following year as well
spk_9: perfect and if could follow up on your enrique i think everyone is how to use it thinking as supply revenues go down our print might be under pressure of in philly it think what you see right now which a guiding for more been in fiscal twenty do would say even if supplies start to decline margins should in pulled up in that you know said tdp person gonna read a lot bigger get to get your perspective one of the two or three big pigs are in your vector that investors you'd think about that it's enabling print margins expand even as supplies revenues might be a little bit more down next year
spk_10: with you on with if you really can feed them to vote we gotta do that we started to attribute two years ago when we are driving the between to profitability from both from supply more into hard work on are we sure did in on our knees meeting we have read making very good progress driving back thirty we thought curry the the mix or product that includes to play when customers by them what we call profit up from product we have also increase the percentage or and to improve them to we go now hp blood and we have also been driving other efficient the order to accept scripture and service oriented be with her that is also contribute been very positive positively from up profitability perspective so would you feel happen in the world with her two years ago we were going to drive without be making good progress and these make that confident in the guy that we provided for fiscal year twenty two in a way i'm a little i remember the guy that we have provided to the forty one
spk_11: also just to keep in mind that i'm sure you know that that or will lapping the top compare so what we're really focused on his driving incremental opie dollars over time and and driving more opie dollars outside of supply that's exactly what a we gave said the really shifting the business model
spk_0: the next question is from another baruah with loop capital please go ahead
spk_12: a a good at the you guys have a stake in the question and can grab the on strong result of yeah just to look good every gay india in the any new and a good me that clearly to gain failed at that positive on demand as you did five weeks ago the analysts day but but any new cards that with your got over the last five weeks with regards to our to what you're seeing customer conversation
spk_10: no conversion illegally like that and to get the last five weeks would be super helpful and at all because our world would we have been a i'm thirty two the copper and you read very confusing to work with his car female at an early bird will continue to feed the hungry man specially from commercial got them out or we shared there are of a company called reopening or peter griffin and bring it back to work thirty and improve very embarrassing to improve expedient hope on before that improving broken mpp been embroiled in a notebook on the folks we also have been film consumer demand you are the holiday feast on we are in demand betrayed him the master plan so know the the ocean for what we did got a few weeks ago
spk_5: we had a great ended with backlog to there are a backlog still remains elevated
spk_12: yeah think hillary for that and then i used the bottle of is on the commercial side any distinction to make what you're saying between your true enterprise while media business lobby that isabella a good chunk you business where for a while and so any any distinction to make their between the header of the man he chooses
spk_10: you know i would make a new big the fisher and wifi go across the board both or large enterprises on for it can be we have already from being with in both earlier phone with a remind him into to in the to come from a segment so know my your the views and on them
spk_0: thank you
spk_13: the next question is from tony certain that he would bernstein please go ahead ah yes thank you for taking the question i was wondering if you could maybe get provide a little more detail on your backlog i think last quarter you said that your backlog and pcs was about thirteen weeks can you provide an update on that and you mention that hardware was probably the most supply constraints so perhaps you can dimension the backlog and and how much it
spk_10: may have changed in the quarter and then ever follow a place
spk_14: and then so be feedback loop if you mean another the elevated for on a very can be largely when we were not worth a little lonely you're trying to continue to be similar to to would you to it by dog
spk_10: don't leave me that we have to do florida and then going to bring your correct green card where did where we have been to a major public your limitations mostly because it's hard to the lockdown in many focuses your country with you toward we sure it'll in the last week so no news here
spk_15: on top of the he told her the bull but the lower than what we call on pc
spk_16: okay
spk_13: the and then just to follow up you talked about the strength in in pricing prices are up seventeen percent sequentially and pp yet you're operating margins and see where the lowest they were all year i know there were some incremental supply chain cause that kind of price luggage why did you not be a greater operating profit leverage and then somewhat related to that you know you were i think murray you be basically said we should and ignore tuition fees now the kind of think a flattish grow throughout the year but if you're actually going to make any progress and drawing down your backlog and demand remain strong your feet now the actually should be up above normal feet ld
spk_1: good demand convenient the same rate but you're getting a pale when for backlog ultimately if you're able to draw that down so maybe you could just help provide some color and both of those things pm potentially consistency and seventy state thank you yeah no worries party and a good afternoon so what i took truth about seasonality and you know i'd say that first out that we've seen that strengthen the quarter and pf and we do expect that to continue into twenty two so as a result in a we do expect revenue linear already in the year to be more money year across the court of the and and that more third telling them what we've seen in the last few years so at the quintal when you grow and twenty two people going to be more consistent quarter to quarter and i are just reiterate like i did i think get at the same meeting that we don't expect normal seasonality and then with respect to the ps
spk_0: operating margins in the quarter at pf was actually the rape was actually down slightly quarter on quarter that was is really do to you might recall the material change change in estimate that we had back in que three and also you know you thought of the strength of the business that we actually had so it we did take the opportunity to make some one time
spk_17: investments that we we don't expect that they are probably going to repeat in in twenty two
spk_10: the next question is from shared across with cross research please go ahead thank you very much like a it could you talk a bit about your peripherals initiative and you know how what what we should look for in terms of of proof points and and you know what you've done internally to to try to improve that business so that it can contribute in fiscal twenty twenty two
spk_2: a follow up thank you for it's return on so are we heard you know what i'm anything pretty fair and feed one of their five girl earlier of company and we we thing that really is gonna be contributing to the sustained growth that we expect to see in person or feed them we we have been a lot of to injured in burma little my
spk_10: it didn't better we the in party you remember we were calling colony thought that on when you call up in the cupboard you don't put their birth engineered you don't put their embarrassment other business requires and you don't have the organization and focus on we have turned on that we have a dedicated organization puberty for that we have put some of us don't get me the company to drive that initiative we are in griffin internally bergman we are moving homophobic engineered to the group or we have also invested in inorganic the not quickly jumped out of the acquisition we did we kiper next to reinforce our petition and from specific area like indicates a hypodermic seem very thrilled for gaming
spk_17: would you will ya doing in the future to continue to invest in the stay with me with of a great opportunity to continue to go and going forward and will will be providing regular updates over progress that we're gonna be in that category going forward i get to close record that we have double digit guilty in this category to we're really pleased with with a girl improve her
spk_10: okay thank you and then i would give us an update on three printing
spk_4: you know what kind of contribution your seen i know you're not going to give a specific numbers but
spk_10: you know what were that products going coming out of the pandemic and and where you're saying strong demand thank you thank you for many covered with the printing from two angles for it after the pandemic we are seem very film grow in what i would go the traditional through the printing basically selling improve their feelings for
spk_4: dr i'm fairly and thirty third around those ready to go we are theme really applicable of the month
spk_10: but also we shared between our investor they died we have complimented that part to the be met with the investment in three specific into a and we call it obligations are be with her when we would have the opportunity of captured in more value because we're not selling their prepared we are designing the bar
spk_0: work on in some cases we are also in their part to their consumers are to the induces on we shared in our in vitro day that we were working on that fiber unsustainable parker them on are not voted on on footwear three area where of be my third hundred eight to twelve billion dollars where we can really do
spk_18: i don't develop your own good within three to bring the me really going to help back to go on to advance for those industries so great progress we are on track this was where did it go a few weeks ago and in two thousand twenty google would continue to provide updates on where we could it be going the next question is i'm katie hubert with morgan stanley please go ahead
spk_19: yes thank you good afternoon there's a pretty wide dispersion in revenue growth across the region quarter with america's down four percent and double digit positive growth that a me and asia pacific oh what explains that good stars and some of it is you're on your coms but that's not nearly all of it
spk_10: the are traces passing through in in in different rate rates across the region has their differences in how the distribution channels are rebuilding inventory coming out of coming out of the downturn just any context around that the pretty wide dispersion and in geographic route i never have a follow up
spk_18: a hindu the dispersion who really driven by would have we been pro your know where we can grow if you think about a year ago we feel that he from grow fonder consumer be movie north america on we captured we are now derby know were beaten with moto what are your premium go mostly in commercial and therefore the health implications
spk_11: on the yo jacobo because really what what is driving the delta region
spk_10: okay and then as of follow followup maybe for murray inventory was the use of cash over the past year it did come down and the fourth quarter should we assume that your balance sheet of and tory gradually normalizes as you as you move through physical twenty two yeah no we expect basically prime between level to remain somewhat elevated while we through the supply chain constrained environment however you know we do expect to to moderate or components depending on the supply and demand that we see around the components but certainly as we look forward into the top twenty two you know with the
spk_0: life expectancy those level somewhat elevated what would you go to the like court we will you with you it will oh god components were availability hockey improved we don't need to maintain the level of even thirty on that we therefore we are correct in the but that money or fame we have big to continue to be enough apply good thing about
spk_20: woman or leave through the her even that he will free up high level the next question is from some a category with jp morgan please go ahead
spk_12: i this of angelica of thought of charity just had one question was a big and a little and to the barge here of i think someone mentioned earlier that he had seventeen percent pay increase and pp on and sell just thinking about moving forward assuming you have a while piping and tell because you're twenty two on and
spk_21: of the pie situation
spk_1: starter seems to be stabilizing or maybe even a bet she'll we expected a large margin front of the main at that elevated level even beyond your first quarter guide and
spk_2: yeah sure and good afternoon so we are a very much on track to would the high end doorbell long term sam range which we gave it to analysts day for ps they're going to we continue to see that strong demand for easy particularly in commercial and we expect to see that favorable pricing as well and and
spk_0: you know how we we think about our guide ricky what would the data to get a mention tony that we were down slightly que en que and it was really driven by the material change anything that we have lot quarter that going forward we up here expect our pm to continue to be up the high end of our long term range and dirt probably reminder we agree however
spk_22: monkey brains are few weeks ago who would work anywhere other than the other how you have been new going to that we get provided
spk_12: thank you
spk_23: the next question is from sydney whole with deutsche bank please go ahead
spk_4: hi thanks for thinking that question like a few questions first one it
spk_2: eventually a backlog is being an elevated level now that you have another quarter observing this dynamic de tocqueville how how you manage to make sure that orders a real and how confident are you that one supply constraints start to ease you don't feel sharp decline in a sharp increase in translation rate or decline in in dish backlog the
spk_10: now vote
spk_2: thank you so we got from the birth vp really comfy that we be a lot of attention to on we constantly monitor or the order how do we get the quality of the order and would constellation for carbon on a week or two before the percentage of conclusion is very very low be very very small
spk_12: so we're not seen any consolation also as we look at their competition will the bark look on my duty the other backlog know it's coming from commercial customers given that this is the where we continue to see the get the month who usually very fun and you thirty many cases a different and due to associated with a backlog for it mean for the probability of google bucchino constellations even lower but
spk_11: we refresh your because some people with money to the on a we will don't feel any good solutions know of course our goal is to over going to redo them uncle buck looked we have because we have to go to a guy will get my life within the next worker who will be reducing the amount of backlog that we have
spk_1: great that's helpful maybe by follow up question is on the free cash flow for fiscal twenty two or more than four point five billion dollars will how can we think about the profile of that going going to look like us we go through the year typical you see below three casual in fiscal second quarter and high sister took their quarter but this year could be different but any other factors we should be thinking about and kinda related that how me got change the amount of share buyback as we go through to you thanks
spk_5: you have some a girl help flow they will go to the buyback the principal we will guide cash flow on an annual basis and as we mentioned it them in a we're we're confident in our guide of at least four point five a couple things to bear in mind you know obviously cashflows driven by revenue and operating profit growth and
spk_0: secondly you know i think we did comment that we did expect to see some favorable working capital as we start to see those inventory levels potentially moderate in the second half so that how work with with thinking about we built that all into out into a guide basically intend for free cash flow with respect to our buyback we remain committed to
spk_24: to repurchase at least four billion about share that and at you as you you probably recently so and are analysts reports and love meeting as well you know we're expecting to pay out a didn't have a of a dollar per shit so i think you don't really a meaningful planned day with respect to out or buybacks starting maternal capital to a shareholder
spk_12: the next question is some dated vote with you yes please go ahead
spk_24: great thank you for taking my question i have one question it's more the financial philosophical question and and trying to think through your long term financial framework that sort of underpins the high single digit p s script that you laid out a fan of and you know i just take sort of your framework at face value as operating profit grows and you're giving grows or
spk_5: along with a profit and or earnings
spk_1: what sort of the parameters that you're using to think about the by back in terms of how much you want to use because you know as the stock appreciate the much say the multiple expands you no longer on a coat undervalued or maybe even much value i would imagine that you might ratchet down and maybe pull back on the buyback of and that seems to be a pretty important part of the long term you yes
spk_10: that you laid out a pamphlet try to get up bit understand how you're thinking about it a little longer term thanks yeah maybe i'll give up my commenting personally that out if y twenty two guidance is is a combination of both operational go through and the results of share buyback now at addressing your questions specifically about how with sitting thinking about your philosophical question run the buybacks look i would you say that were absolutely committed to
spk_24: to the capital allocation strategy that we've outlined it sam and at those ingredients nothing's changed their and a big part of that is return of capital to shareholders so you know we're on track to continue to to buy back shares an elevated level that lethal beauty in and in fact i think we're going to support the to what we said we do back it up value planet at least sixteen so that's how we're thinking about did and a commitment really haven't changed ready dude to compliment believe in would murray with whom would we have committed be that we will be written on i'm talking about the long term a hundred percent of we go slow or live the better opportunities are right and we have also committed to increase our leverage ratio to two point
spk_25: on the we would be doing this over overtime for both will be cautious of god that will be your thing to return probably go to shareholders or potentially to money he we even money were being better return
spk_0: great maybe just as a quick follow up and retaken to that imply that the dividend effectively sort of
spk_26: a tourist marching in law a lock up with sorting earnings growth and then the flexible use of cash flow between emanate will be in the kettle be between day and by that's a little longer term i'd lose why we believe that they showed her undervalued on it clearly that you to a shown today for this is what you should expect us to do became a little while we were with you other than the next question is from one female on with bank of america please go ahead
spk_10: i thank you and your prepare commentary every game and kinda the m and that you'd also called out em and as an important lower and i was curious just given it a strong cash flow africa or that you'd be generating plus the payment from oracle you how a sizable a war chest for am in a so any sizing parameters a they let you can share with thousand and what you're looking should we expect similar to what you've done here in the recent past or or something larger yeah through the new kind of remind woodward we have been to got into the last ludwig the we have here that a money if an important part of our plan because we have identified five he girl area toward the company where we think your money could help us to go brophy beverley
spk_26: the fact that we hundred we're cutting opportunities to to do that i became guy we have also true that we're going to be very regular sort of capito got any opportunity week you to to the thirty versus the operational ability god we need to her to the leave it on the financial good and then of course we need to how attractive returned river to return my age him that buyback you would you to afraid make hydrate will be given that we believe that you are undervalued in terms of a specific hide i don't feel we have any any we haven't made any comedian on commitments windex be they really need to believe still financial records on base and that be alone with a tragedy but we have not gonna do anything different because of the oh you're cool cars that we got we're going to continue to manage kopitar we the framework that we have been cutting them be no and with a temporary work okay thanks eric ever if i the follow up
spk_4: a few people are last about the the under sustainability and and clearly you talk about strong demand backlog and and affairs be strength to to sustain fiscal twenty two but if i could i could maybe a little definitely hot how much of this sp increase would you attribute to the tightness in the market which is driving favorable uprising
spk_10: worse as potentially as as you know supply and pros or the course of the next few quarters
spk_5: do you do still anticipate the mexican drive the sort of elevated levels of a grow thank you
spk_0: yeah i think they the keeping really good is going to be there goes my team that we would be very very know the operating profit margin and admire your team we include our guide on a few weeks ago or we expect to continue to be are they you know the rain go too far from twenty to word wifi will companies events or
spk_13: the they prefer vulnerability will reduce voters will include but are going to who would include we were to see additional gave me to one will compensate the other so we would pay with him or they are you have a range through to thousand company to and i did that you know we are still than that it's it's a bit like the laws of economics while you're in a supply can stay
spk_10: environment you get favorable pricing really pisses but in addition demand strong so together that really contribute to what we've seen in tenth of the stable pricing dynamic which we do expect will continue to twenty two but you know we do expect some normalization as the you go on as well the as question is from air and rakers with wells fargo please go ahead
spk_13: i'd have such jake on for air and grab some you're a quarter i'm just where the quake i was wondering if you could talk a little that more about what you're seeing and graphics market and then cameras hi you're thinking about that business heading into twenty twenty two
spk_4: yeah so we are tina don't recovery of the over the graphics movement
spk_10: luckily room for them by the more industrial fight within by label on packaging we have been night go you for and we expect to see very nice growth in two thousand twenty two so really good pilger and really contributed of go for the company in two thousand and twenty two and just as kind of a follow up on the that it is that a market you guys would be targeting bremen a with just how fragmented it is is that something you're focused on
spk_27: when we we we have a very thumper polio in that category got a combination of both internal below me up a money that we have done over the year we we have them thibodeau liquidations you that baseball game printing technology and also info for and we have identified the third one of the key five go
spk_10: pdf of a company and as i said it money part of our plan we have to to continue to do that in two thousand twenty two and a way on for sure we have room to do that while at the same time would return or gave you a copy got to shareholders through both share repurchases on dividends and i think i said before over time will will be increasing number ratio to one point five to do which will be also another shot sort of copy them great thank you
spk_0: and a thing is now time to to grow up so let me blow the gold by saying that we really funny thing about a quarter that we have you got great proof point of the ability that we have to deliver value though our shareholder i shows the film women film that we have anybody in fiscal year twenty two and if it were

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