HP Inc. (NYSE:HPQ) Q1 2023 Earnings Call Transcript

Marie Myers: Yes. So maybe I’ll just answer your question on supplies. So yes, you’re right. We did actually see supplies performed better in Q1 and our guidance that, I think the guidance we gave in our prepared remarks is that we expect it to decline by only high single digits in Q2. As we sort of think about the year, we do expect supplies revenue growth to be back to what we said at our Analyst Day, so back in that sort of low to mid-single digit. Some of the sort of drivers of that, firstly, are really the strength that we’re seeing around consumer usage and share trends. Plus I think I commented earlier, just around the pricing resiliency that we’re seeing in print and specifically in supplies. And then finally, I’ll just add because I know many of you asked this question, is just around the channel inventory. And if you look across our entire sort of multi-tiered ecosystem, supplies channel inventory is in very good shape.

Enrique Lores: And let me add one comment. And we have said that when results were below the expectations we had. And I will say now it also when we are above, looking at quarter-on-quarter comparison one year, is really not the best way to look at the health of the business. This is why Marie was saying, we continue to €“ we maintain the guide that we had for the year for supplies. Year-on-year comparisons are much better. Small changes one quarter could have a big impact on the quarter-on-quarter compared, so is really not the right way to look at the health of the business.

Sidney Ho: Great. That’s helpful. A quick follow-up here is that if I look at the full-year EPS guide being unchanged, obviously, but there is a lot of different moving parts. Partly, on the goods on the positive side, you’ve got foreign exchange being better, margins seems to be better. It sounds like on the negative side, there’s some PC demand weaker than you expected. Just maybe if you can help us bridge the various components that gets you back to the original guidance, that would be helpful? Thanks.

Marie Myers: Yes. Look, maybe I’ll start out and say, look, the outlook, as you know, we’ve got a pretty broad range there. So it does contemplate multiple scenarios. And obviously, it’s prudent. And as always, I think you see that from us. If we can do better, we absolutely will. So €“ but a couple of drivers there. I’ll just walk you through to kind of get you through the puts and takes on the guide. First and foremost, we’ve talked a bit about our cost actions today for Future Ready. We do expect that they’re going to continue to yield quite positive results in the back half of the year. And as I said earlier with Toni, we’re working that funnel to pull even more savings into FY2023. So that will be a contributor. We’ve talked about channel inventory contribution in terms of Personal Systems.

Plus, we did get a chance to hit on today, just the continued improvement in supply chain. I think that’s a very important point we didn’t get much time to talk about. And then finally, just remember, at the midpoint, we don’t expect a macro, but we’re working multiple scenarios. So that’s why we’ve got the range that we have on the guide this time. Thank you.

Operator: We’ll take our next question from Amit Daryanani with Evercore.

Unidentified Analyst: Hi. This is Lauren on for Amit. I just wanted to double-click into your views on the PC TAM beyond 2023. What kind of gives you the confidence in a structurally larger PC TAM versus some of the comments that IDC has made and some of the revisions they’ve made to their long-term forecast? Thanks.