Inkjet & Digital Printing

Xerox Reports Fourth-Quarter Earnings

Thursday 24. January 2013 - Q4 GAAP earnings per share of 26 cents; adjusted EPS of 30 cents

Revenue of $5.9 billion down 1 percent, flat constant currency
Operating margin of 10.3 percent
Operating cash flow of $1.8 billion; $2.6 billion for full-year 2012
Xerox (NYSE: XRX) announced today fourth-quarter 2012 results that include adjusted earnings per share of 30 cents. As planned, the company’s fourth-quarter earnings include 5 cents of restructuring. Adjusted EPS excludes 4 cents related to amortization of intangibles, resulting in GAAP EPS of 26 cents.
In the fourth quarter, total revenue of $5.9 billion was down 1 percent or flat in constant currency. Revenue from the company’s services business was up 7 percent and represented 52 percent of total revenue. Revenue from the company’s document technology business, which represents 42 percent of revenue, was down 8 percent as economic and market conditions continued to put pressure on sales of document systems, supplies and related service.
“Strong growth in services and the consistent profitability of our document technology business generated significant operating cash flow and contributed to fourth-quarter earnings that met our expectations,” said Ursula Burns, Xerox chairman and chief executive officer.
“Throughout 2012, we focused on scaling our services business and adjusting our business model to align with growth opportunities in the $600 billion market we serve,” she added. “Our fourth-quarter results reflect steady progress. We increased our services segment margin by 0.9 points while growing business process outsourcing revenue by 8 percent, IT outsourcing by 15 percent and document outsourcing by 2 percent. In document technology, our fourth-quarter segment margin of 12.3 percent improved, reflecting effective execution in reducing our cost base and maximizing profitability.”
Fourth-quarter operating margin was up 0.3 points to 10.3 percent. Gross margin was 31.5 percent, and selling, administrative and general expenses were 18.5 percent of revenue.
The company generated $1.8 billion in cash from operations during the fourth quarter, which includes $269 million of net cash from the sale of certain finance receivables.
For first-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 reiterated its full- year 2013 guidance of GAAP earnings per share in the range of 94 cents to $1.00, and adjusted EPS of $1.09 to $1.15. Xerox expects to generate operating cash flow of $2.1 billion to $2.4 billion in 2013.
Full-year 2012 results include:
• GAAP earnings per share of 88 cents per share; adjusted earnings per share of $1.03.
• Total revenue of $22.4 billion, down 1 percent or flat in constant currency from full-year 2011. Total services revenue of $11.5 billion, up 6 percent or up 7 percent in constant currency. Total document technology revenue of $9.5 billion, down 8 percent or down 6 percent in constant currency.
• Operating margin of 9.3 percent, down 0.5 points from full-year 2011.
• Operating cash flow of $2.6 billion, up $600 million from full-year 2011.
• Net income of $1.2 billion, adjusted net income of $1.4 billion, down 11 percent.
• Share repurchase of $1.05 billion.