Business News

Xerox Reports First-Quarter 2013 Earnings

Thursday 25. July 2013 - Q1 GAAP earnings per share of 23 cents; adjusted EPS of 27 cents Revenue of $5.4 billion down 3 percent Reiterated 2013 full-year earnings expectations

Xerox (NYSE: XRX) announced today first- quarter 2013 adjusted earnings per share of 27 cents, which includes a 2-cent benefit from a reserve reduction related to recent litigation developments. Adjusted EPS excludes 4 cents related to amortization of intangibles, resulting in GAAP EPS of 23 cents.
In the first quarter, total revenue of $5.4 billion was down 3 percent. Revenue from the company’s services business was up 4 percent and represents 55 percent of total revenue.
“We delivered solid revenue growth in our services business along with a stable segment margin and a 64 percent increase in the total contract value of signings to $3.7 billion,” said Ursula Burns, Xerox chairman and chief executive officer.
“While results in our services business align with our growth strategy and our expectations, challenges in our document technology business continued during the first quarter,” she added. Revenue from the company’s document technology business, representing 40 percent of total revenue, was down 9 percent, which had an adverse impact on segment margin as market conditions and the timing of a recent product platform launch put pressure on the sale of document systems, supplies and related services. In February, Xerox announced ConnectKeyTM, a software system embedded in 16 new Xerox multifunction printers, many of which began shipping in the second quarter.
“We’re continuing to shift our business model to adapt to market trends by expanding indirect distribution and streamlining our supply chain and product portfolio,” said Burns. “These changes, along with implementing broader operational improvements across the company, will result in increased margins that will help us scale profitable revenue in services while maintaining strong market share in document technology.”
First-quarter operating margin declined 1.1 points to 7.4 percent. Gross margin was 30 percent, and selling, administrative and general expenses were 19.7 percent of revenue.
The company used $87 million in operating cash during the first quarter, in line with cash flow seasonality and reflecting an increase in inventory related to new product launches.
For second-quarter 2013, Xerox expects GAAP earnings of 19 to 21 cents per share and adjusted EPS of 23 to 25 cents per share. The company plans a higher level of restructuring activities in the second quarter, and has included 2 cents of restructuring in its guidance.
Expected first-half results will keep Xerox on track to meet its full-year 2013 guidance for GAAP earnings per share in the range of 94 cents to $1.00, and adjusted EPS of $1.09 to $1.15. The company also reiterated expectations to generate operating cash flow of $2.1 billion to $2.4 billion in 2013.