Combined 2020 Annual Report and 2021 Proxy Statement
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2020 HP Inc. Annual Report 2020 Annual Report & 2021 Proxy Statement & 2021 Proxy 2020 Annual Report 2021 Proxy Statement About Us 1 Annual Report Our vision is to create technology that makes life better for everyone, everywhere — every person, every organization, and every community around the globe. This motivates us — inspires us — to do what we do. To make what we make. To Proxy Statement invent, and to reinvent. To engineer experiences that amaze. 2 We won’t stop pushing ahead, because you won’t stop pushing ahead. You’re reinventing how you work. How you play. How you live. With our technology, you’ll reinvent your world. This is our calling. This is a new HP. 3 Form 10-K Keep reinventing. MESSAGE FROM OUR PRESIDENT AND CEO Delivering on our Reinvention Dear Shareholders, We will one day look back on 2020 as one of the of personal computing solutions tailored to the We implemented new systems and a new most difficult years of our lifetimes. The Covid-19 changing ways people live, work, learn and play. operating model in 2020, while exceeding our pandemic has caused pain and suffering for so And we leveraged our strength across home cost savings target for the year. And these remain many, and we have seen stark reminders of the and office printing to create new, cloud-enabled priority focus areas moving forward. serious social and environmental challenges value propositions like HP+. demanding our collective action. Making a Sustainable Impact The pandemic has also fundamentally changed Against this backdrop, I’m incredibly proud of customer behavior. People increasingly want But it’s not just what we’re doing that gives me the way our HP team stepped forward to meet to consume as a service. Many have adopted a confidence in HP’s future. It’s also how we’re doing it. the moment. digital-first mentality. And they’re looking for At a time when trust in institutions is lacking, our seamless omnichannel experiences spanning We showed remarkable agility and resilience – customers are looking for brands they can rely their digital and physical worlds. innovating to meet new customer needs and on to do the right things. That’s why Sustainable accelerating key elements of our strategy. We Here, too, we made major strides forward. We Impact remains at the heart of our strategy. stayed true to HP’s values by mobilizing to support significantly grew our subscription business, with Our success will no longer be defined solely by urgent needs in our communities. And we did it all Instant Ink surpassing 8 million subscribers. And the products we make, but also by the progress while delivering strong full-year financial results. we implemented new systems that are making us we make possible – from addressing systemic more digitally enabled and data driven. For FY20, we grew non-GAAP EPS to $2.28 on racism to protecting our planet for future revenue of $56.6 billion. And we returned As we modernize our core, we also continue to generations. The HP brand will stand for a new $4.1 billion to our shareholders while continuing build new businesses to drive long-term growth era of opportunity where climate change is to invest in long-term growth opportunities. in areas like 3D printing and industrial graphics. reversed, human rights are universally protected, We have a clear strategy to disrupt industries and the digital divide eliminated for all. Notably, we achieved the targets we set in by creating highly personalized solutions and the fall of 2019. Given the dynamic market In recent months, HP has been named “America’s accelerating the adoption of digital printing. conditions of the past year, that’s an impressive Most Responsible Company” by Newsweek for And the pandemic has shown the value of the accomplishment reflecting the power of our the second straight year, one of the top 10 “Best innovation we’re able to deliver. broad and differentiated portfolio, the strength Managed Companies of 2020” by the Wall Street of our executional muscle, and the continued For example, together with our partners, we Journal, and a member of the Barron’s list of “100 progress we’re making against our priorities. produced more than 5 million 3D-printed parts for Most Sustainable Companies.” hospitals using Multi Jet Fusion. That’s just a glimpse Well Positioned for a Changing World HP has always been home to those who dream of into what’s possible as we create customized end- creating a better future for everyone, everywhere We see many attractive opportunities ahead to-end solutions for vertical markets and enable – then work together to make it a reality. That’s to build on our success and drive long-term more flexible, resilient supply chains. the mindset that enabled us to deliver on our sustainable growth, fueled by trends that are And moving forward, we’re focused on creating commitments last year, and it’s what will lift our reshaping the world around us. entirely new businesses by leveraging our business to new heights in the years to come. For example, the pandemic has fundamentally vast intellectual property in microfluidics, Thank you for the confidence you have placed in changed the concept of work. As hybrid work which has many potential applications in areas HP with your investment. becomes the norm, many offices will become beyond printing – such as health and wellness. Sincerely, collaboration spaces while a lot of traditional office Our newly formed Strategy & Incubation work will be done remotely. This will drive the organization will lead this important work, with continued consumerization of corporate IT and a a focus on driving new sources of growth. new wave of innovation – from more versatile and Over time, we will build a broader portfolio of secure technology and peripherals, to services and businesses that drives near, medium and long- software that enhance the user experience. term value creation and meets a broader set of Enrique Lores President and CEO Our strategy is designed to capitalize on these customer needs. shifts by modernizing Personal Systems and And to enable all this, we continue to drive Print experiences and expanding into valuable an aggressive, multi-year transformation adjacencies – and we made good progress agenda focused on strengthening our digital throughout 2020. We launched a wide range capabilities and optimizing our cost structure. Annual Report i STRATEGY Strong and Getting Stronger Americas Asia Pacific EMEA Advance Disrupt Transform 43% of net revenue 22% of net revenue 35% of net revenue We continue to advance our leadership in We continue to leverage our technology and We continue to transform the way we work as a /3% y/y /5% y/y /3% y/y Personal Systems and Printing. intellectual property to disrupt industries. company to deliver on our priorities. /2% CC(1) /3% CC(1) /2% CC(1) We are creating the next generation of personal We have begun this disruption in areas such as This includes a new global operating model Non-US net revenue was 64% of total net revenue computing experiences by innovating across Graphics and 3D Printing, which together we refer that places our teams closer to customers, hardware, peripherals, services, software and to as our Industrial businesses that, collectively, and new digital capabilities that enhance our security to meet customer needs. present attractive long-term growth opportunities. effectiveness and optimize our cost structure. We are modernizing print experiences by We are creating highly personalized, end-to-end We are implementing a multi-year creating new, cloud-enabled value propositions solutions for specific industry verticals; accelerating transformation program that exceeded our cost and accelerating service-led business models. the adoption of digital printing; and creating new savings target for 2020 and will maintain an businesses using HP microfluidics technology. aggressive focus on creating value. Executing on our Strategy and Driving Financial Returns in Fiscal 2020 The HP of the Future HP’s full year fiscal 2020 financial results reflect the strength of our innovation From the very early days of HP, this company has pushed past conventional and execution and operation excellence as we make progress against creating notions of what’s possible. We have dreamed of creating a better future for multiple value creation engines across our company. Our results in fiscal 2020 everyone, everywhere – and then worked together to make that future a reality. also demonstrate our ability to deliver results while investing in our business for future growth and efficiency opportunities with an increased focus on Today, as we innovate to meet the needs of the changing world around us, returning capital to shareholders. Our foundation is strong, including our we enter a defining decade for our company. A decade full of opportunity to balance sheet, and we have multiple levers to create value for our stockholders. advance our leadership in Personal Systems and Print, to disrupt industries We are pleased with our full year results despite more challenging industry, with our technology and IP, and to transform HP for the future. macroeconomic and geopolitical dynamics. And we will do it in ways that are aligned with our values – continuing to build We generated $4.3 billion in net cash provided by operating activities and one of the world’s most trusted brands; investing in our culture and talent so $3.9 billion of free cash flow in fiscal 2020. Free cash flow includes net cash that HP remains a place where great leaders come to learn, lead and thrive; provided by operating activities, net investments for leases of $0.2 billion and and making a sustainable impact on the markets and communities we serve.