Thank you, Steve.
Our Q1 results show our company with an incredibly strong foundation. And the three year value creation plan we are announcing today demonstrates the significant opportunity ahead.
We have multiple levers to drive value for our shareholders and a clear set of guiding principles.
Specifically, we will intensify our transformation focused in taking cost out, manage our Personal Systems and Print businesses to advance they're leading their market and drive a more aggressive balance sheet and capital allocation approach.
Our new financial outlook is expected to deliver $325 to $365 of non-GAAP EPS in fiscal year '22. This is underpinned by a rigorous operational plan. This management team has a proven ability to take costs out of the business while maintaining a disciplined investment approach today and for the future.
We have also proven that this is a company with a team that delivers on its commitment. This is our culture. The strong earnings announced today are yet another proof point.
You have every reason to share our confidence in the company and the opportunities ahead.
Additionally, against this backdrop of strong performance, we believe additional value can be created through consolidation.
In fact, instead of talking about being a first mover, we have been a first mover.
Our acquisition of Samsung's printer business in 2017 is an important example.
However, anything we consider and anything we do must first and foremost make sense for HP shareholders.
Before I go into more detail on our three year plan, let me address the Xerox proposal and why we firmly believe that this is not in the best interest of HP shareholders.
The Xerox proposal meaningfully undervalues HP. It creates significant risk and it compromises the future of HP and the value of HP share. Simply put, their proposal has a number of fundamental problems.
The first is a float value exchange. The Xerox proposal does not reflect the value of our company or the plan that we announce today. The value exchange simply does not work.
The second is that the proposal creates a highly leveraged and irresponsible capital structure. Considering the nature of our business, which operates with a negative cash conversion cycle as well as a micro economic cycle, this level of debt creates significant unnecessary risk is resulting debt to EBITDA ratio would be the highest in S&P hardware index. A debt leader, as Xerox his proposing would visually extinguish the capital returns that have been an important driver for value creation for HP.
The third is a transfer of value from HP shareholders to Xerox shareholders. Their overstated synergies include many of the initiatives and cost saving activities we are already doing. It is important to keep in mind that there is no overlap between Xerox another 90% of HPs business.
In addition, the Xerox proposal uses our balance sheet strength to acquire our company, creating value for Xerox shareholders, but not for HPs.
Beyond these problems, we are looking at two very different companies. HP is a global leader in both Personal Systems and Print. Xerox has no presence in Personal Systems. Xerox position in print is not nearly as robust as HP.
We are a technology leader, and with Xerox exit from the Fuji-Xerox joint venture, Xerox has no long-term technology or supply roadmap. HP has grown by 10.5 billion over the last few years. This revenue growth is meaningfully more than Xerox total company revenue. HP does not need a Xerox combination to create significant value for shareholders.
Now I'm excited to get to the most important news we're sharing today. The plan we're announcing shows the standalone value our shareholders can expect from us. Most specifically, we expect to grow operating profit by approximately $650 million with realistic market assumption and rapidly flat revenue. We generate 10.7 to 11.7 billion of free cash flow and to return 16 billion of capital to shareholders. This represents approximately 50% of HP is covering market cap and at least 8 billion to be returned in the first 12 months.
Altogether, these plans would deliver non-GAAP EPS of $3.25 to $3.65 in fiscal year '22, compared to the $2.24 we delivered just last year.
Our significant earnings per share growth will be driven by the principles I outlined at the beginning, aggressive structural cost reductions and ongoing productivity savings, disciplined management of our Personnel Systems and Print businesses to lead in their market and a more aggressive balance sheet and capital allocation approach.
Now, I want to spend some time talking about each of these EPS drivers. I will start with one of the core elements of our value plan, which is to transform our company with our relentless focus on cost.
As we outlined at our Investor Day, we are driving efficiencies to generate structural cost savings.
We have taken and are taking important actions that are driving measurable benefits.
We expect our current cost reduction program to increase from the $1 billion announced in October 2019 to a revised plan of $1.2 billion of growth annualized run rate structural cost savings.
We're also announcing today that approximately 650 million of these structural cost savings are expected to flow through to operating profit.
As a result of these actions, as previously announced, we are removing 7,000 to 9,000 positions, or 13% to 16% of our total workforce, and our restructuring dollars remain unchanged. Complementing these structural savings, we will continue to drive productivity actions across the company. We treat this as a separate bucket that we do each and every year to maintain our competitive position in the market.
These include vendor management, material cost reduction, logistic efficiencies and more. Structural and productivity savings combined can generate more than $2 billion of savings as a standalone company.
We have clear line of sight to deliver on this savings.
We have defined projects across the organization to support our targets with clear onus and timeline.
Let me share some specific examples.
I mentioned before the change that we're making in our sales organization.
We have also consolidated marketing activities under one central global team. This is driving improved marketing spend efficiency and effectiveness. We're also creating efficiency in our business units and operations.
We are changing our development processes, creating R&D Centers of Excellence, and simplifying our hardware, software and thermal platform.
We have also embarked on our process to optimize the location of our factory and distribution network.
We are reducing the cost of our service delivery by reducing the number of call centers, building tools to enable remote support and aggressively improving our product quality.
We will be driving down real estate costs by reducing the number of locations and increasing the mobility of our workforce. And finally, we are redefining and digitizing process to improve efficiency of our back office work and at the same time, this creates better experiences for our customers, partners and employees. We anticipate that we will be achieving 40% of the annualized savings in fiscal year '20, 75% in fiscal year '21, and we will reach 100% of the savings during fiscal year '22. Reducing cost is a never ending task, and we will continue to look for opportunities to drive efficiency.
Let me talk now about our business segments.
Let's start with Personal Systems where we are creating amazing new experiences for customers while driving profitable growth. Personal Systems represent approximately two thirds of our revenue.
As we discussed we continue to grow the market grow revenue and drive profit. This is a large and growing business that has further expansion opportunity with the next generation of customers and exciting new computer models.
We have a winning strategy that's anchored in premium design, security and innovation to continue gaining share in higher value categories.
That's exactly what we have done the past three years. And we are still under indexed in higher margin segments. We're also growing the lifetime value of our installed base by building in our ecosystem of displays and accessories and accelerating in services. And we have demonstrated meaningful progress in driving cost advantage across our platforms and our end-to-end delivery system.
Looking forward, we expect to grow Personal Systems revenue at or better than market while expanding our long-term operating margin target to 3.5% to 5.5%. We feel great about the trajectory of this business and our team's ability to execute.
Turning to print, we have an incredible business in the large 200 billion plus print market.
We are the market leader in size, scale, profit and innovation across office, home and graphics painting. And in a mature industry, everyone wants to be a leader. At the same time, we are still under indexed in attractive categories by contextual office printing. And as we drive a more consistent customer experience across our full print portfolio, we are confident that we will achieve significant cost savings and productivity gains.
We continue to execute on our strategy to increase supplies share and to evolve our business models over time by growing contextual sales and optimizing system profitability with improved hardware margins.
In addition, as I previously mentioned, we will also expand our solutions in graphics, 3D printing and digital manufacturing. This plays an important role in our long-term plans. And HPs decades of environment has created a leading portfolio of technology and intellectual property that we are monetizing to create new sources of value beyond hardware occurs key industrial market. Across our print segment, we're executing a strategy that will advance our leadership to erupt industries and transform our business to improve our profitability.
As a result, we are setting a long-term operating margin target for print at 16% to 18%.
Let me now hand the call over to Steve, who will go into more details on the financial plan, starting with optimizing the balance sheet.