On November 5, 2020 DXC Technology (NYSE: DXC) reported results for the second quarter of fiscal year 2021 (Press release, DynPort Vaccine Company, NOV 5, 2020, View Source [SID1234574201]). Revenue of $4.55 billion and non-GAAP diluted EPS of $0.64 exceeded the top end of our guidance.

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"We delivered strong second quarter results as the ‘new DXC’, exceeding our revenue and non-GAAP diluted EPS targets. We also improved margins sequentially, and achieved a book-to-bill of 1.1x. We are making good progress on the three key areas of our transformation journey, which are: focus on customers, optimize costs, and seize the market," said Mike Salvino, DXC president and chief executive officer.

"We recently closed the sale of our U.S. State and Local Health and Human Services business for $5.0 billion and paid down $3.5 billion of debt, strengthening our balance sheet. We are also on track to close the sale of our Healthcare Provider Software business to Dedalus by the end of this fiscal year. I want to thank our people for driving the momentum and helping us deliver our strong financial results this quarter and their commitment to delivering for our customers."

Financial Highlights – Second Quarter Fiscal 2021

Revenue in the second quarter was $4,554 million.
Net loss was $246 million for the second quarter including pre-tax special items of $265 million in restructuring costs, $101 million in transaction, separation, and integration-related costs, and $152 million in amortization of acquired intangibles.
Non-GAAP net income was $161 million, excluding those special items, net of tax.
Diluted earnings per share was $(0.96) in the second quarter; non-GAAP diluted earnings per share was $0.64.
Net cash provided by operating activities was $472 million in the second quarter.
Adjusted free cash flow was $237 million in the second quarter.
Financial Information by Segment

Global Business Services (GBS)

GBS bookings for the quarter totaled $2.4 billion for a book-to-bill ratio of 1.1x.
GBS revenue was $2,242 million in the quarter. GBS revenue decreased 1.9% year-over-year.
In constant currency, GBS revenues decreased 3.4% year-over-year and increased 0.5% sequentially.
GBS profit margin in the quarter was 14.1%, an increase of 4.2% vs. the prior quarter. Year-over-year, margins were down 1.6%, reflecting prior terminations and price-downs along with customer settlements that were actioned in the quarter, offset by the timing of cost take out initiatives.
Global Infrastructure Services (GIS)

GIS bookings for the quarter was $2.5 billion for a book-to-bill ratio of 1.1x.
GIS revenue was $2,312 million in the quarter. GIS revenues decreased 9.9% year-over-year.
In constant currency, GIS revenues decreased 11.6% year-over-year and decreased 4.0% sequentially.
GIS profit margin in the quarter was 1.6%, an increase of 0.6% vs. the prior quarter. Year-over-year, margins were down 7.9% due to the impact of prior terminations and price-downs along with customer settlements that were actioned in the quarter.
Earnings

EBIT and adjusted EBIT in the quarter were $(235) million and $283 million, respectively. EBIT and adjusted EBIT margins were (5.2)% and 6.2%, respectively. Adjusted EBIT margin in the quarter was better than anticipated, benefiting from our cost optimization initiatives.
Diluted EPS and non-GAAP diluted EPS were $(0.96) and $0.64, respectively, in the quarter. Diluted EPS and non-GAAP diluted EPS were impacted by a lower than expected tax rate of 24.1%.
Cash Flow

Net cash provided by operating activities was $472 million in the second quarter and adjusted free cash flow was $237 million. Operating cash flow and adjusted free cash flow benefited from working capital management. Adjusted free cash flow also benefited from lower capital expenditures during the quarter.
Earnings Conference Call and Webcast

DXC Technology senior management will host a conference call and webcast to discuss these results today at 4:45 p.m. EST. The dial-in number for domestic callers is 800-367-2403. Callers who reside outside of the United States should dial +1-334-777-6978. The passcode for all participants is 8144357. The webcast audio and any presentation slides will be available on DXC Technology’s Investor Relations website.

A replay of the conference call will be available from approximately two hours after the conclusion of the call until November 12, 2020. The replay passcode is 8144357.