Rob Del Bene
EVP and CFO at DXC Technology
Thank you, Raul, and good afternoon, everyone, and thanks for joining our call. Today, I'll review our fourth quarter financial results and then provide you with our outlook for the full year and for the first quarter of fiscal '25.
Total organic revenue growth declined 4.9% year-to-year, ahead of our fourth quarter guidance. GBS revenue was nearly flat while GIS top line declined 9.3%. Adjusted EBIT margin was 8.4%, above the top end of our guidance, representing an 80 basis point improvement sequentially, driven by our cost reduction initiatives. Margin was down 50 basis points year-to-year, primarily driven by lower noncash pension income and the impact of gains from asset sales booked in the fourth quarter of fiscal '23. Non-GAAP EPS was $0.97, down $0.05 from last year's fourth quarter. The year-to-year change was driven by a negative $0.13 adjusted EBIT impact, higher taxes of $0.08 and a noncontrolling interest impact of $0.03. These reductions were partially offset by a $0.19 benefit from our share repurchase program.
Free cash flow, defined as operating cash flow less capex for the quarter equaled $155 million compared to our expectation of about $200 million. The shortfall was due to a combination of a smaller benefit from working capital and higher-than-anticipated cash tax levels. For the year, our free cash flow totaled $756 million, which was the third straight year above $700 million, demonstrating consistency of cash generation performance.
And now I'll turn to our fourth quarter key financial metrics. Gross margin equaled 23.6%, flat year-to-year as we continued to drive workforce optimization and reduce our real estate footprint in the face of declining revenue. SG&A was 8.7% of revenue, down 70 basis points year-to-year, largely driven by ongoing spending management and a $10 million nonrecurring insurance reimbursement. Depreciation and amortization was flat year-to-year as a percent of revenue, down $17 million, reflecting continued capital discipline. Other income for the quarter was $39 million, a year-to-year reduction of $48 million, which is a 120 basis point impact to EBIT margin, driven by lower pension income of $26 million and lower gains on asset sales of $19 million.
Now turning to our segment results. For GBS, organic revenue performance was nearly flat year-to-year with the deceleration largely driven by the ongoing challenging market environment for Analytics & Engineering and Applications. GBS profit margin equaled 13.3%, down 40 basis points year-to-year but up 140 basis points sequentially, primarily driven by a more favorable mix of higher-margin services revenue. For GIS, organic revenue declined 9.3%, largely consistent with our performance throughout the year. We have taken a very disciplined financial approach with new deals and renewals, and this has been reflected in our bookings and revenue performance of both Cloud and ITO and Modern Workplace. GIS margins declined 40 basis points year-to-year with operational improvements more than offset by a lower level of pension income.
Let me now provide some detail on our individual offerings, first in GBS. Both Analytics & Engineering and Applications organic revenue declined 1% year-to-year as performance continues to be impacted by the current challenging market environment. While the revenue declined, the book-to-bill ratios for these 2 businesses were 1.0 or better with strong renewal activity that does not provide incremental short-term revenue but provides longer-term revenue stability.
Insurance organic revenue increased 1% year-to-year. Embedded in this performance is our insurance software and services business, which represents approximately 3/4 of the total, that continued its strong momentum, up 4.5% in the quarter. Normalizing for a significant large perpetual license sale in the fourth quarter of last year, the insurance software and services business grew approximately 9% year-to-year. The insurance book-to-bill was 0.8x. As a reminder, bookings in this business can vary significantly quarter-to-quarter based on the timing of large renewals. For example, last quarter, we had 2 significant renewals and our book-to-bill was 1.58.
Now moving to our GIS segment. Security declined 9% year-over-year on an organic basis with a book-to-bill ratio of 0.96. Cloud infrastructure and IT outsourcing organic revenue declined 7%, an improvement from double-digit declines we saw in the prior 3 quarters due to a significant resale transaction delivered in the quarter. The book-to-bill was 0.75x, a result of the ongoing challenging ITO market and our selective approach to new deals. Modern Workplace organic revenue declined year-to-year in the mid-teens impacted by resale revenue, which was down 30%. Book-to-bill performance this quarter was a strong 1.29x due to several large renewals.
Now turning to our financial foundation. We sequentially reduced our total debt levels by $450 million, and for the full year, our total debt levels have been reduced by $300 million. Net interest expense for the quarter was $20 million, up $3 million year-to-year, reflecting the higher interest rate environment on our short-term borrowings. Restructuring and TSI expense was $21 million and for the full year, it was $118 million, about half of the level spent in fiscal '23.
Operating lease payments of $84 million were down $9 million year-to-year due to the management of our real estate footprint. The fourth quarter capital expenditures were $125 million and lease originations were $21 million. Our finance lease and asset financing payments continue to trend down, and as a percentage of revenue, capital expenditures and lease originations declined to 4.3%, down more than 1 point year-over-year, representing a multiyear low.
Turning to capital deployment. As I mentioned, in the fourth quarter, we deployed approximately $450 million of cash to reduce our debt levels. We accomplished this by retiring our outstanding balance of commercial paper and continuing to decrease our lease portfolio. We returned $138 million of capital to shareholders, repurchasing 6.2 million shares at a weighted average price per share of $22.30. For the full year, we repurchased over 18% of our shares outstanding at a total cost of $883 million. Since the beginning of the fiscal year '22, we have reduced our share count by more than 30%.
As we enter a new fiscal year, I would like to provide clarity on our updated financial priorities. Our plan is to deploy our capital to accomplish 2 things: first, given our recent revenue performance, we will execute a restructuring program to address excess capacity largely concentrated in GIS and right size our infrastructure throughout the company to improve profitability. The second priority is to further reduce debt levels, including significantly minimizing finance lease originations.
Now turning to our full year '25 guidance. We expect our total organic revenue to decline 4% to 6%. In GBS, we expect our full year outlook to be slightly positive, with the first half performance in line with our fourth quarter of fiscal '24 and with a return to growth in the second half of the year. In GIS, given last year's bookings and the resulting impact to opening backlog combined with continued expected lower resale revenue and deal selectivity in fiscal '25, we anticipate full year organic revenue to decline in the low double-digit range. Our guidance for adjusted EBIT margin is 6% to 7%. This guidance primarily reflects the impact from lower year-to-year revenue and investments we're making in the business to drive productivity improvements. Additionally, we will be executing on the previously mentioned restructuring action to improve margins on a sustainable basis going forward, with the impact of the savings largely materializing in late fiscal '25 and into fiscal '26.
As I've mentioned on previous calls, we continue to rationalize our real estate portfolio. These potential sales will provide a cash inflow outside of free cash flow but will have a negative impact on our adjusted EBIT margin. The potential loss on these sales is not included in the guidance as the market remains difficult and the timing is uncertain. And with this expected adjusted EBIT margin levels, our full year non-GAAP diluted EPS guidance is $2.50 to $3 with an assumed non-GAAP effective tax rate of 30%.
Our free cash flow guidance for fiscal '25 is about $400 million. There are 2 main drivers contributing to the lower year-over-year level, and without these changes, free cash flow would be at levels consistent with fiscal '24 performance. As I previously mentioned, we will be reducing our debt levels in fiscal '25, and a component of our debt reduction strategy is significantly reducing finance lease originations, which were $185 million in fiscal '24. This change in funding approach will reduce our overall debt levels but will increase our capital expenditures impacting free cash flow. Also impacting free cash flow will be spending related to the increased level of restructuring, which will be an increase of approximately $250 million year-to-year. Our expectation is that the restructuring savings will put us on a sustainable path of free cash flow generation above fiscal '24 levels in fiscal '26. As a reminder, our Q1 free cash flow is seasonally lowest primarily due to the timing of bonus payouts and certain annual supplier payments. Consistent with prior years, cash flow generation will be strongest in the second half of the year.
And now our first quarter outlook. In GBS, we anticipate that revenue performance in A&E and Applications will continue to reflect the current challenging market environment. And in GIS, services revenue will decline in the mid- to high-single-digit range with resale taking the GIS decline to double digits. With these factors, we expect total company organic revenue to decline 7% to 8%. We anticipate adjusted EBIT margins in the range of 5.5% to 6%, a function of the lower revenue and first quarter seasonality, which has consistently impacted our results in prior years. And finally, non-GAAP diluted EPS of $0.55 to $0.60.
With that, let me turn the call back over to Raul for key takeaways.
