Ken Sharp
Executive Vice President and Chief Financial Officer at DXC Technology
Thank you, Mike. Let me provide you a quick rundown of our Q4 performance. Q4 organic revenue declined 2.9%, adjusted EBIT margin 8.9%, and non-GAAP EPS of $1.2. Both are at the highest-level in the last three years. Free-cash flow of $269 million in the quarter. As you can see, the team continues to make great progress on cash generation. Moving to our key financial metrics fourth-quarter gross margin was up 250 basis-points due to lower payroll and contractor expense resulting from our cost optimization efforts, positive impact from divestitures, and lower retail.
SG&A as a percent of sales increased by 160 basis-points. Depreciation was lower by 10 basis-points. Other income decreased 60 basis-points, primarily due to lower pension income. As a result adjusted EBIT margin was up 40 basis-points. Non-GAAP earnings per share was up $0.18 compared to the prior year due to $0.11[phonetic] from a lower tax-rate, $0.08 from a lower share count, $0.04 from expanded margin, $0.03 from lower interest expense. These benefits were partially offset by $0.08 from lower revenue volume and other factors.
Now turning to our segment results, our business mix continues to improve, as a percent of total revenue GBS is now at 48.8% up 10 basis-points sequentially. GBS grew 3.3% organically our eighth consecutive quarter of growth. The GBS profit margin declined 80 basis-points Year-over-Year. Turning to GIS. Organic revenue declined 8.5%. GIS profit margin increased 190 basis-points Year-over-Year and was up by 110 basis-points sequentially, benefiting from the cost optimization initiatives and lower levels of resale revenue. Resale revenue is at a lower margin, so lower resale revenue improved the quality of revenue.
Turning to our offerings. Analytics and engineering continued with solid growth up 8.5%. Applications declined 0.5%, a significant improvement from last quarter's decline of 6.8%. Insurance Software and BPS is up 5.9%. We continue to see good momentum in our Insurance Software business. Our Insurance Software business benefited in the quarter by approximately 300 basis-points due to restructuring and existing customer contract into a perpetual IP license with upfront revenue recognition. Security was down 0.4%. Cloud infrastructure and IT outsourcing declined 10.5%, largely driven by a decrease in resale revenue of $84 million or approximately 600 basis points.
Modern workplace was down 5.3% as you will note this is a significant improvement from our prior performance that we expect will continue to narrow in the upcoming year. Revenues on a sequential constant-currency basis, excluding divestitures continued with only a modest decline from Q3. This momentum that Mike and team created will be key to our success to deliver our organic revenue improvement. Turning to our financial foundation. We achieved our target debt level of $4.5 billion. We continue to tightly manage restructuring and TSI expense. Our restructuring and TSI expense, was $232 million for the year, $68 million lower than our guide.
We have been focused on improving the quality of earnings and limiting this kind of non-GAAP adjustments. Going-forward, we will utilize restructuring only to accomplish our facilities, rightsizing efforts as they are non-operational. This labor restructuring started when DXC was formed and has gone on far too long. Operating lease payments and the related expenses were down approximately $80 million for the full-year, resulting from our successful efforts to reduce our facilities footprint. Capital expenditures and capital lease originations as a percentage of revenue were 6.3% for the full-year down 70 basis-points from FY '22.
We continue to believe our capital intensity, presents a long-term opportunity to improve free cash flow as we pursue an infrastructure light model. DXC has a strong and stable debt position with manageable debt maturities in a low-interest rate. Almost all of our debt is fixed-rate. With an effective interest rate of 1.5%. Our debt is denominated approximately 60% Euros and other currencies and 40% US dollars to better match our operations. As a result, we have a high degree of financial flexibility and maintain access to significant liquidity. Our net-debt to adjusted EBITDA ratio of 1.1, demonstrates our strong commitment to an investment-grade credit profile.
Turning to Chart 19, let me touch on how our noncash pension income has impacted our adjusted EBIT margin. As you can see, our adjusted EBIT margin excluding noncash pension income has expanded from 6.6% to 6.8% in FY '23 and we are now expecting a further 95 basis-point margin improvement in FY '24. We view pension income as non-operational as it is non-cash earnings. As pension income comes down, the quality of our margin improves. In the fourth-quarter of FY 23 as part of our efforts to improve our financial foundation we executed on a pension plan buyout for one of our larger plans.
The buyout removes the funding risks from DXCs balance sheet and should allow approximately $180 million of the surplus to fund other plans in the same country. These plans are expected to have future funding requirements. The buyout resulted in a loss of $361 million. In addition, the annual pension mark-to-market loss of $1.1 billion was primarily due to the returns on the plan assets for investments and our UK plants. Both of these non-cash items are excluded from the company's non-GAAP results. In aggregate, our pension plans remain overfunded by $699[phonetic] million. The team continues to make great progress on cash generation and as a result, we have delivered two consecutive years of positive free-cash flow over $700 million, a $1.4 billion improvement from FY 21.
As you recall, our FY 23, free-cash flow was negatively impacted by $70 million due to lower bank customer deposits at the German banks we divested. So excluding the impact of the lower bank customer deposits our free-cash flow would have been over $800 million. As you think about our asset sales, they have generated significant deployable cash and reshaped our portfolio to be more focused on our core business and yield a positive margin impact. Over the past fiscal year proceeds from the sale of non-core assets contributed more than $500 million of capital for deployment.
As we previously discussed, we are targeting an incremental $250 million asset sales principally datacenters. Our robust capital deployment has reduced DXC shares significantly. We repurchased 46.7 million shares for approximately 18% of the outstanding stock since the beginning of FY '22. By improving our free-cash flow and reducing our outstanding shares we have significantly increased our free-cash flow per share and expect to continue that trajectory in FY '24. Turning to our capital allocation, we completed our prior commitment to repurchase $1 billion of our common stock. Our Board increased our outstanding share repurchase authorization by $1 billion to 1.4 billion.
We are targeting a new incremental one billion share repurchase. Ultimately, we expect our share repurchase to be funded by excess cash from free-cash flow and asset sales. Due to the quarterly progression of cash flows and the episodic nature of asset sales, we expect temporary fluctuations in debt above our target debt level. We continue to believe DXC presents an attractive valuation. Assuming the current share price our incremental one billion, share repurchase would equate to about 19% of the current outstanding shares. Our Q1 guidance is as follows. We expect Q1 organic revenues to decline minus 2% to minus 1%.
We expect higher project revenues, specifically in GBS and narrowing declined an IPO and modern workplace. Ultimately improving organic revenue performance throughout FY 24. Adjusted EBIT margin of 7.5% to 8%, we expect to expand adjusted EBIT margin during the year as our margin optimization efforts take hold and offset the lower pension income that is negatively impacting our margin by 70 basis points. Non-GAAP diluted earnings per share of $0.80 to $0.85. Turning to our FY 24 guidance. Organic revenue growth of negative 0.5% to positive 0.5% adjusted EBIT margin of 8% to 8.5%, incorporating a 70 basis-point pension income headwind. Non-GAAP diluted earnings per share of $3.80 to $4.05, our non-GAAP earnings per share guidance reflect a tax-rate of 29% and our expectations for the timing of our new one billion share repurchase.
Free-cash flow of $900 million our historical pattern, is that we generate strong free-cash flow post Q1 throughout the remainder of the year like we achieved in FY '22 and FY '23 due to the timing of receipts and disbursements we expect Q1 FY '24 free-cash flow to be negative. Let me touch on the announcement today. As I reflect on my 2.5 years at DXC I appreciate the opportunity to work closely with Mike, his leadership team, and the finance team. Together, we've built a solid financial foundation and faced many of the challenges at DXC. This has clearly been a team effort across DXC, while I will not be on the next phase of the journey for personal reasons. I look-forward to the great things yet to come and wish Mike and the whole DXC team all the best in the future.
I will be transitioning my responsibilities to Rob who you will meet in the summer and, of course I will be available to help make sure it is a seamless transition. With that let me turn the call back to Mike.
