Shulou(Shulou.com)11/24 Report--

According to the news on the morning of March 3, Beijing time, HPE today released the company's financial results for the first quarter of fiscal 2023. According to the report, Huihe's first-quarter net income was $7.809 billion, up 12% from $6.961 billion in the same period last year, and 18% year-on-year, excluding exchange rate changes, setting a record for first-quarter revenue since 2016. net profit was $501 million, down 2% from $513 million a year earlier. Excluding certain one-time items (not in accordance with GAAP), Huihe's adjusted net profit for the first quarter was $828 million, compared with $697 million a year earlier.

HPE is an enterprise technology manufacturer, providing enterprise application management, operation and maintenance management, big data and enterprise security management and other products and solutions.

Huihe's adjusted earnings per share and revenue beat Wall Street analysts' expectations in the first quarter, as well as better-than-expected earnings forecasts for the second quarter and full year of fiscal 2023, driving its shares up more than 5 per cent in after-hours trading on Nasdaq.

Performance Summary:

For the quarter ended January 31, 2023, Huihe's net profit was $501 million, or 38 cents per diluted share, slightly lower than in the same period a year earlier. In the first quarter of fiscal 2022, Huihe's net profit was $513 million, or 39 cents per diluted share.

Excluding certain one-time items (not in accordance with GAAP), Huihe's adjusted net income for the first quarter was $828 million, compared with $697 million a year earlier, and adjusted diluted earnings per share were 63 cents, compared with 53 cents a year earlier. The performance exceeded analysts' expectations. On average, 16 analysts expected Huihe's adjusted earnings per share to reach 54 cents a share in the first quarter, according to data provided by Yahoo Finance.

Huihe's first-quarter net revenue was $7.809 billion, up 12% from $6.961 billion a year earlier, and up 18% year-on-year, excluding exchange rate changes, setting the highest first-quarter revenue record since 2016 and exceeding analysts' expectations. According to data provided by Yahoo Finance Channel, 14 analysts had expected average revenue of Huihe to reach $7.43 billion in the first quarter.

Huihe's first-quarter gross profit was $2.658 billion, compared with $2.344 billion in the same period last year, compared with $2.593 billion in the previous quarter. Excluding certain one-time items (not in accordance with GAAP), Huihe's adjusted gross profit for the first quarter was $2.674 billion, compared with $2.36 billion in the same period last year and $2.602 billion in the previous quarter.

Huihe's gross profit margin for the first quarter was 64.0%, up 30 basis points from the same period last year and 110 basis points from the previous quarter. Excluding some one-time items (not in accordance with US GAAP), Huihe's adjusted gross profit margin was 34.2% in the first quarter, up 30 basis points from the same period last year and 110 basis points from the previous quarter.

Performance of each department:

Huihe's computing business had net income of $3.456 billion in the first quarter, up 14 per cent from $3.044 billion a year earlier, up 19 per cent year-on-year, excluding exchange rate changes, and operating profit margin was 17.6 per cent, compared with 14.0 per cent a year earlier.

Huihe's HPC & MCS (high-performance computing and mission-critical systems) business had net revenue of $1.056 billion in the first quarter, the highest in the division's history, up 34 per cent from $790 million a year earlier, and 37 per cent year-on-year, excluding exchange rate changes; operating profit margin was 0.1 per cent, compared with-0.9 per cent in the same period last year.

Huihe's storage business had net income of $1.187 billion in the first quarter, up 5 per cent from $1.128 billion a year earlier, up 10 per cent year-on-year, excluding exchange rate changes, and operating profit margin was 12.0 per cent, compared with 13.9 per cent a year earlier.

Huihe's Intelligent Edge (smart edge) business had net revenue of $1.127 billion in the first quarter, the highest in the division's history, up 25 per cent from $901 million a year earlier, up 31 per cent year-on-year, excluding currency changes; operating profit margin was 21.9 per cent, compared with 17.4 per cent in the same period last year.

Huihe's financial services division had net income of $873 million in the first quarter, up 4 per cent from $842 million a year earlier, up 8 per cent year-on-year, excluding exchange rate changes, and operating profit margin was 9.4 per cent, compared with 12.4 per cent in the same period last year. Huihe's net portfolio assets in the first quarter were about $13.2 billion, up 2 per cent from a year earlier and 4 per cent year-on-year, excluding exchange rate changes. The financial services sector posted a return on equity of 16.7% in the first quarter, down 3.1 percentage points from a year earlier.

Huihe's investment and other businesses had net income of $293 million in the first quarter, compared with $325 million a year earlier, down 10 per cent from a year earlier. Operating profit margin was-18.8 per cent, compared with-3.4 per cent a year earlier.

Other financial information:

Huihe's total costs and expenses were $7.218 billion in the first quarter, compared with $6.513 billion in the same period last year. Of this total, Huihe's cost of sales in the first quarter was $5.151 billion, compared with $4.617 billion in the same period last year; R & D expenditure was $623 million, compared with $504 million in the same period last year; sales, general and administrative expenses were $1.257 billion, compared with $1.201 billion in the same period last year; amortization of intangible assets was $7300, unchanged from the same period last year Transformation costs were $102 million, compared with $111 million in the same period last year; disaster recovery costs were $1 million, compared with-$1 million in the same period last year; and mergers and acquisitions and other related expenses were $11 million, compared with $8 million in the same period last year.

Huihe's cash flow from business operations in the first quarter was about-$829 million, a decrease of $753 million compared with the same period last year, and free cash flow was-$1.3 billion, a decrease of $749 million compared with the same period last year.

In the first quarter, Huihe returned $229 million in cash to shareholders in the form of share buybacks and dividends.

Huihe's Board of Directors has announced that it will pay a regular cash dividend of $0.12 per share to the Company's common shareholders, which will be paid on April 14, 2023 to shareholders of record as of the close of business on March 17, 2023.

Performance outlook:

Performance outlook for the second quarter of fiscal year 2023

Huihe expects revenue of between $7.1 billion and $7.5 billion in the second quarter of fiscal 2023, an average outlook of $7.3 billion that exceeds analysts' expectations. On average, 13 analysts had expected revenue of $7.04 billion in the second quarter of fiscal 2023, according to data provided by Yahoo Finance.

Huihe also expects diluted earnings per share of between 27 cents and 35 cents per share in the second quarter of fiscal 2023, and between 44 cents and 52 cents per share, excluding GAAP, with a value of 48 cents, which also exceeded analysts' expectations. On average, 16 analysts had expected Huihe's adjusted earnings per share to reach 47 cents a share in the second quarter of fiscal 2023, according to data provided by Yahoo Finance.

Not in accordance with GAAP, Huihe's estimate of diluted earnings per share for fiscal 2023 did not include an after-tax cost of approximately $0.27 per share, which was mainly related to equity incentive expenses, transformation expenses and intangible amortization expenses.

Full-year performance outlook for fiscal year 2023

Huihe also expects diluted earnings per share for the full year 2023 to be between $1.40 and $1.48 per share, while diluted earnings per share other than GAAP will be between $2.02 and $2.10, with an average of $2.06, exceeding analysts' expectations. On average, 20 analysts had expected Huihe's adjusted earnings per share to reach $2.02 in fiscal 2023, according to data provided by Yahoo Finance.

Not in accordance with GAAP, Huihe's estimate of diluted earnings per share for fiscal 2023 did not include an after-tax cost of approximately $0.62 per share, which was mainly related to equity incentive expenses, transformation expenses and intangible amortization expenses.

Huihe also reiterated that the company is expected to have between $1.9 billion and $2.1 billion in free cash flow in fiscal 2023 and expects to return about 60 per cent of its free cash flow to shareholders in the form of dividends and share buybacks throughout 2023.

Stock price response:

Huihe shares fell $0.04, or 0.26%, to $15.50 in regular trading on the New York Stock Exchange. Huihe shares rose 78 cents, or 5.03 per cent, to $16.30 in after-hours trading as of 04:29 est on Tuesday (05:29 Beijing time on Wednesday). In the past 52 weeks, the highest price of Huihe is $17.66 and the lowest price is $11.90.

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