Xerox earnings came out today.  Here are some key highlights I noted:

  • Equipment revenue up 1% for the quarter
  • Annuity revenue up 1% for the quarter
  • Financing revenue declined 20% (from sale of finance receivables)
  • Equipment sales up 1% for the quarter

It’s been years since I remember a quarter in which Xerox’s equipment sales were up!  Congrats to them!    Here is the full press release:

  • GAAP EPS from continuing operations of 23 cents
  • Adjusted EPS of 27 cents
  • Revenue of $5.4 billion, up 1 percent; revenue including discontinued operations of $5.5 billion*
  • Services revenue up 5 percent, representing 55 percent of total revenue
  • Operating cash flow of $533 million

NORWALK, Conn., July 25, 2013 – Xerox (NYSE: XRX) announced today second-quarter 2013 adjusted EPS of 27 cents, which excludes 4 cents related to the amortization of intangibles. GAAP EPS from continuing operations was 23 cents. Revenue was $5.4 billion, up 1 percent.

Revenue from the company’s services business was up 5 percent, which includes 4 percent growth from business process outsourcing, 6 percent growth in document outsourcing and 13 percent growth from IT outsourcing. Services revenue represents 55 percent of Xerox’s total revenue.

“Through the breadth of our outsourcing services and innovative technology, today’s Xerox simplifies the way work gets done for organizations around the world,” said Ursula Burns, Xerox chairman and chief executive officer. “Our clients are increasingly expanding their partnerships with us to improve the effectiveness of their operations. As a result, the total contract value of services signings was up 40 percent in the second quarter, our pipeline grew 10 percent and our BPO and ITO contract renewal rate was 95 percent – strong indicators of a sound strategy that fuels the success of our business for the long term.”

Revenue from the company’s document technology business was down 5 percent year over year and improved sequentially from the first quarter of this year. The company benefitted from the full rollout of its ConnectKeyTM platform of printers and multifunction devices, expanded distribution through channel partners and increased demand for its digital production presses. During the quarter, Xerox signed and began installing its largest order ever for high-speed color presses, strengthening the company’s market leadership. Document technology revenue represents 42 percent of total revenue.

Second-quarter operating margin of 9.4 percent was up 2.0 points sequentially, down 0.5 points year over year. Gross margin was 31.4 percent. Selling, administrative and general expenses were 19.3 percent of revenue.

The company generated $533 million in operating cash flow, and remains on track to generate $2.1 billion to $2.4 billion in full-year operating cash flow.

Added Burns, “Steady progress in growing revenue combined with a disciplined focus on operational improvements resulted in strong earnings and cash generation, positioning us well to deliver on our expectations for the full year.”

For third-quarter 2013, Xerox expects GAAP earnings from continuing operations of 20 to 22 cents per share and adjusted EPS of 24 to 26 cents per share.

The company continues to expect full-year 2013 GAAP earnings per share from continuing operations in the range of 94 cents to $1.00, and adjusted EPS of $1.09 to $1.15.

* Xerox recently completed the sale of its North American paper business to Domtar Corporation and entered into an agreement to sell its European paper business to Antalis. Beginning with the second quarter 2013, the company is reporting results from these businesses as discontinued operations. Prior period results have been restated to reflect this change.

The following table summarizes the effects from Xerox’s discontinued operations in the second-quarter 2013:

Screen Shot 2013-07-25 at 11.29.31 AM

Click here to view the financial charts and the PDF of the above release

About Xerox

Since the invention of Xerography 75 years ago, the people of Xerox (NYSE: XRX) 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., more than 140,000 Xerox employees serve clients in 160 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:
  • Total revenue including discontinued operations for the second-quarter 2013.
  • Adjusted EPS (earnings per share) for the second-quarter 2013 as well as for the third-quarter and full-year 2013 guidance that excludes certain items.
  • Operating margin for the second-quarter 2013 that excludes certain expenses.

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; 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 multi-year contracts with governmental entities could be terminated prior to the end of the contract term; 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; interest rates, cost of borrowing and access to credit markets; reliance on third parties 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, 2013 and our 2012 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.

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Media Contact:

Karen Arena, Xerox, +1-203-849-5521, karen.arena@xerox.com Investor Contact:

Jennifer Horsley, Xerox, +1-203-849-2656, jennifer.horsley@xerox.com

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