DXC Technology Company (NYSE:DXC) Q3 2023 Earnings Call Transcript

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Ken Sharp: Yes, sure. Yes, no, Rob, we’ve been €“ this goes back to our whole governance process. We’ve put a thoughtful approach around free cash flow, cash generation on deals. And as Mike said, it just takes time to work its way through the system. That’s probably the first part. And then, your comment about historically I think there wasn’t this cash culture and putting that in place and, part of the business came out of a hardware business. So, I think their desire to, refresh and not really kind of manage CapEx that like a, like we need to, we just need to keep working that, right? So, we’ve even put some tools in place, which are going live this quarter to better, forecast, manage, create accountability, tie back to, the commercial team that Mike’s been building out, which I think will be a big part, long-term.

I mean, our focus is absolutely support our customers, but we also need to make sure we’re getting a proper return on the business. And when you look at the capital intensity and the margins and the GIS space, you could easily argue we’re not getting the right return. So, we’ll keep sharpening the pencil there and drive our way down through it, but there’s certainly an opportunity to make headway there. And if you look at our peers, right? You kind of quickly get back to the GIS space ought to be somewhere around 5% of revenue, maybe 6% on a bad day. And the GBS space ought to be kind of a 1% to 2%. So, on that thesis, right there ought to be an opportunity to get the CapEx down the 3% to 4%, with a little bit of work. And that’s what we just need to do and we need to keep at it.

Mike Salvino: So Rod, let me leave you with these comments. When I look at that space in the three plus, three and a half years I’ve been here. We first talked about is there even a need for that business that work, that infrastructure work? And I gave you all data that said, hey, that stuff’s not going to go away. Not everything is going to go to the cloud because all of our competition is always talking about the cloud, the cloud, all right? Second is nobody liked that business because it was commodity. All right. So a lot of people could do it, and that meant a race to the bottom on price. Okay? So, now where are we today? All right. There’s definitely a need because not all of the mission critical stuff has gone to the cloud.

All right. Some of it has, some of it hasn’t. Second is the industry isn’t as commoditized as it once was, because we’ve got competition that’s fallen off, all right? So therefore us being there, right to take the business, to make sure that we can deliver on what we said we were going to do is huge to get better economics. Now the last thing I will say is, Ken was being very detailed, I would add to his detail by saying using our balance sheet to do deals is not something that we want to continue to do over and over again. And I’ll just leave it at that. So Rod, did you have a second question or should I wrap the call up?

Rod Bourgeois: I think it’s time to wrap. Thanks guys.

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