Xerox Releases Third-Quarter Results, Raises 2019 Guidance

NORWALK, Conn., Oct. 29, 2019 – Today Xerox Holdings Corporation (NYSE: XRX) announced its third quarter 2019 financial results and said it would raise 2019 guidance for EPS and cash flow.

“Our strategy and execution delivered a strong third quarter despite industry headwinds. We increased cash flow, earnings per share and adjusted operating margin while we improved the revenue trend. These results give us confidence to raise our earnings and cash flow guidance for the year as we position Xerox for long-term growth,” said Xerox Vice Chairman and CEO John Visentin.

Earnings Summary

  • $356 million of operating cash flow, up $82 million year-over-year, and $339 million of free cash flow, up $88 million year-over-year
  • GAAP earnings per share (EPS) of $0.96, up $0.62 year-over-year, and adjusted EPS of $1.08, up $0.23 year-over-year (YOY)
  • $2.2 billion of revenue in the quarter, a decrease of 6.5 percent in actual currency, or 5.3 percent in constant currency, year-over-year
  • Increasing 2019 guidance for GAAP EPS to $3.10 – $3.20, adjusted EPS to $4.00 – $4.10, operating cash flow to $1.2 – $1.3 billion and free cash flow to $1.1 – $1.2 billion
  • Completed $368 million of share repurchases through the third quarter, expecting at least $600 million in total for the year

Key Financial Results:

 

(in millions, except per share data)

 

Q3 2019

 

Q3 2018

B/(W) YOY % Change YOY
Revenue $2,200 $2,352 $(152) (6.5)% AC

(5.3)% CC1

Gross Margin 40.0% 40.1% (10) bps
RD&E % 4.5% 4.3% (20) bps
SAG % 23.3% 24.8% 150 bps
Pre-Tax Income $230 $192 $38 19.8%
Pre-Tax Income Margin 10.5% 8.2% 230 bps
Operating Income – Adjusted1 $267 $257 $10 3.9%
Operating Margin – Adjusted1 12.1% 10.9% 120 bps
GAAP EPS $0.96 $0.34 $0.62 nm
EPS – Adjusted1 $1.08 $0.85 $0.23 27.1%

 

(1) Refer to the “Non-GAAP Financial Measures” section of this release for a discussion of these non-GAAP measures and their reconciliation to the reported GAAP measures.

Key Business Highlights:

  • On track to drive 2019 gross savings of at least $640 million under Project Own It, Xerox’s enterprise- wide initiative to simplify operations, drive continuous improvement and free up capital to reinvest in the business
  • Added and renewed several contracts with Fortune 500 and public sector clients such as AstraZeneca, Leonardo S.p.A., Cardiff Council, and Prince George’s County Public Schools
  • Launched new products and enhancements such as the Xerox PrimeLink™ C9065/C9070 and the iGen® 5 XLS to capture incremental production volume

Xerox also announced today that it has completed its evaluation of its customer financing business and will not pursue a sale of the business at this time. The company received and reviewed bids from multiple potential counterparties that were interested in purchasing the business at an attractive premium but ultimately determined that retaining and optimizing the business through Project Own It will generate the greatest return for shareholders.

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