Xerox’s second quarter earnings are out. I’d expect several more tough quarters ahead for Xerox until the split takes place.
Overall, the numbers were poor as has been the case for Xerox’s quarterly earnings since I can remember, but there are pockets of good news for Xerox. Mid and high range color products did very well with a 14% increase in high end color imaging systems leading the way.
Conversely, Xerox once again showed a significant loss in mid to high end black and white printing as competitors continue to take market share. There is no quick fix for this and this trend should continue into the foreseeable future.
Here are some key highlights (and “lowlights”) of Q2:
Entry Level Copiers/MFPs/Printers
- 9% decrease in color multifunction devices driven by declines in developing markets.
- 2% increase in black-and-white multifunction devices.
Mid Range Copiers/MFPs/Printers
- 6% increase in mid-range color installs including the benefit of recent product launches.
- 14% decrease in mid-range black-and-white reflecting continued declines in developing markets and atransition to color devices.
High-end/Production Copiers/Printers/Digital Presses
- 14% increase in high-end color systems, excluding Fuji Xerox digital front-end sales, as growth in Versant Color Press 80 products was partially offset by declines in other production color products.
- 21% decrease in high-end black-and-white systems consistent with overall market declines.
Here is the earnings press release
Delivers Year-over-Year EPS Growth and Margin Expansion
Xerox Corporation 45 Glover Avenue P.O. Box 4505 Norwalk, CT 06856-4505
- GAAP EPS of 15 cents and adjusted EPS of 30 cents; Adjusted EPS up 30 percent and above guidance range of 24 to 26 cents
- Operating margin of 9.3 percent, up 0.8 percentage points year-over-year
- Total revenue of $4.4 billion, down 4 percent year-over-year
- Services margin of 9.6 percent, up 2.4 percentage points year-over-year
- Positive Document Technology revenue and margin trends
- Re-affirms full-year 2016 guidance
- Significant progress during quarter on separation and strategic transformation
NORWALK, Conn., July 29, 2016 – Xerox (NYSE: XRX) announced today its second-quarter financial results and reiterated its full-year adjusted earnings guidance. The company reported significant progress on its plan to separate into two independent, Fortune 500-scale, publicly traded companies by year-end and on its strategic transformation program.
“We delivered strong second-quarter results reflecting significant progress across our 2016 priorities: delivering on our financial commitments, executing our separation and driving our strategic transformation,” said Ursula Burns, Xerox chairman and chief executive officer. “Our Services segment delivered substantial margin expansion and continued revenue growth in Document Outsourcing. Document Technology revenue declines moderated and margin improved driven by cost and productivity initiatives.”
Xerox delivered GAAP EPS from continuing operations of 15 cents in the second quarter of 2016. Adjusted EPS of 30 cents represented a 7 cent increase over the same period last year driven by a lower tax rate, fewer shares, and higher operating profits. Adjusted EPS excludes after-tax costs of $156 million or 15 cents per share related to the amortization of intangibles, restructuring and related costs, certain retirement related costs and separation costs.
Burns added, “We reached critical milestones in both the separation process and strategic transformation program during the second quarter. With each step forward, I become even more optimistic about the future of our businesses and more confident in our ability to meet our targets for the year while creating two companies with the strong strategic and financial foundations they will need to compete in their respective markets.”