NORWALK, Conn., July 25, 2014 – Xerox (NYSE: XRX) announced today second-quarter 2014 adjusted earnings per share of 27 cents. Adjusted EPS excludes 5 cents related to amortization of intangibles, resulting in GAAP EPS from continuing operations of 22 cents.
In the second quarter, total revenue of $5.3 billion was down 2 percent or 3 percent in constant currency. Revenue from the company’s Services business, which represented 57 percent of total revenue, was $3.0 billion, up 2 percent year-over-year or 1 percent in constant currency. Revenue from the company’s Document Technology business, which represented 40 percent of total revenue, was $2.1 billion, down 6 percent or 7 percent in constant currency.
“The second quarter demonstrates progress in executing on our strategy. In our Services business, revenue growth and margin are trending well in commercial services, document outsourcing and internationally. Services segment margin improvement was muted by continued pressure in our government healthcare business including unplanned impairment charges. Our Document Technology business continues to deliver strong profitability through a disciplined and effective approach to operations,” said Ursula Burns, Xerox chairman and chief executive officer. “As we enter the second half of the year, we are focused on improving on our progress and capitalizing on opportunities that will shape the success of our business.”
Second-quarter operating margin of 9.7 percent improved 0.3 points year- over-year and resulted in operating profit of $514 million, up 1 percent. Gross margin was 30.8 percent, and selling, administrative and general expenses were 18.4 percent of revenue.
The company generated $325 million in cash flow from operations during the second quarter and $611 million for the first half of 2014. In the second quarter, Xerox repurchased $204 million in stock and $479 million in the first half of the year. Additionally, Xerox spent $227 million on acquisitions in the quarter and $281 million in the first half of the year, strengthening our Services portfolio. “Our business continues to deliver strong cash flow that gives us the flexibility to invest in growth, build shareholder value now and in the future, and positions us well to deliver on our expectations,” added Burns.
For the third-quarter 2014, Xerox expects GAAP earnings per share to be 21 to 23 cents per share. Third-quarter adjusted EPS is expected to be 25 to 27 cents.
The company expects full-year 2014 GAAP earnings per share of 92 to 96 cents and full-year adjusted EPS of $1.09 to $1.13.
About Xerox
Since the invention of Xerography more than 75 years ago, the people of Xerox have helped businesses simplify the way work gets done. Today, we are the global leader in business process and document management, helping organizations of any size be more efficient so they can focus on their real business. Headquartered in Norwalk, Conn., we have more than 140,000 Xerox employees and do business in more than 180 countries, providing business services, printing equipment and software for commercial and government organizations. Learn more at www.xerox.com.
Non- GAAP Measures
This release refers to the following non-GAAP financial measures:
- Adjusted EPS (earnings per share) for the second-quarter 2014 as well as for the third-quarter and full-year 2014 guidance that excludes certain items.
- Operating profit and margin for the second-quarter 2014 that excludes certain expenses.
- Constant Currency revenue growth for the second quarter 2014 which excludes the effects of currency translation.
- 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 measure.
Forward-Looking Statements
This release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. These statements reflect management’s current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially. These factors include but are not limited to: changes in economic conditions, political conditions, trade protection measures, licensing requirements and tax matters in the United States and in the foreign countries in which we do business; changes in foreign currency exchange rates; actions of competitors; our ability to obtain adequate pricing for our products and services and to maintain and improve cost efficiency of operations, including savings from restructuring actions and the relocation of our service delivery centers; the risk that multi-year contracts with governmental entities could be terminated prior to the end of the contract term; the risk in the hiring and retention of qualified personnel; the risk that unexpected costs will be incurred; the risk that subcontractors, software vendors and utility and network providers will not perform in a timely, quality manner; our ability to recover capital investments; the risk that our Services business could be adversely affected if we are unsuccessful in managing the ramp-up of new contracts; development of new products and services; our ability to protect our intellectual property rights; our ability to expand equipment placements; the risk that individually identifiable information of customers, clients and employees could be inadvertently disclosed or disclosed as a result of a breach of our security; service interruptions; interest rates, cost of borrowing and access to credit
markets; reliance on third parties, including subcontractors, for manufacturing of products and provision of services; our ability to drive the expanded use of color in printing and copying; the outcome of litigation and regulatory proceedings to which we may be a party; and other factors that are set forth in the “Risk Factors” section, the “Legal Proceedings” section, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other sections of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 and our 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission. The Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments, except as required by law.
Media Contact:
Ken Ericson, Xerox, +1-202-520-2388, kenneth.ericson@xerox.com
Investor Contacts:
Jennifer Horsley, Xerox, +1-203-849-2656, jennifer.horsley@xerox.com Troy Anderson, Xerox, +1-203-849- 2672, troy.anderson@xerox.com
Note: To receive RSS news feeds, visit http://news.xerox.com/rss. For open commentary, industry perspectives and views visit http://www.linkedin.com/company/xerox, http://twitter.com/xeroxcorp, http://simplifywork.blogs.xerox.com, http://www.facebook.com/XeroxCorp, http://www.youtube.com/XeroxCorp.
Xerox® and Xerox and Design® are trademarks of Xerox in the United States and/or other countries.