Xerox Delivers EPS Growth and Margin Expansion, Raises 2019 EPS Guidance

Xerox earnings are out and according to the release, the venerable imaging company delivered EPS growth and margin expansion. That makes for a nice headline, but after months of major cuts and massive changes, the new Xerox still needs to stop the bleeding. Here are a few bullets I pulled from the release that you can see in the materials below:
Q1 numbers (Jan. 1 – March 31, 2019)
  • Equipment Sales down 10.2%
  • Post Sales Revenue down 9.2%
  • Total Revenue down 9.2%
  • Mid Range revenue down 9.6%
  • High-end revenue down 3.3%
  • Entry Level Color MFP placements up 10%
  • Entry Level B/W MFP placements down 2%
  • Mid Range Color MFP placements down 7%
  • Mid Range B/W MFP placements down 19%
  • High-End Color MFP placements down 14%
  • High-End B/W MFP placements down 12%
On the upside, high-end revenue may be leveling out, at least when looking at these earnings and entry level color MFP placements were up, another positive report.
Xerox explained the overall poor numbers as a direct result from lower sales in the Americas, caused by the disruption of the Project Own It transformation they’re undergoing. This includes dissolving Global Imaging and folding that group into Xerox under the XBS brand.
The bottom line is, Xerox had been mismanaged for years and the current regime is trying to fix that. Will the changes work? Who knows, but at least they’re doing something.
While there has been a massive exodus of talent from Xerox, there is a new core there that’s trying to turn this thing around. The few people I still know over there are encouraged with the changes and new directions. Although the numbers weren’t good, they deserve a pass this last quarter as the GIS integration has been and continues to be incredibly disruptive to Xerox. Once this smooths out, we’ll see if the new Xerox can gain some traction.
Here’s the Xerox post on the earnings (below):

First-Quarter 2019 Financial Highlights:

  • GAAP earnings per share (EPS) of $0.55, up $0.47 year-over-year, and adjusted EPS of $0.91, up $0.23 year-over-year
  • $226 million of operating cash flow, up $10 million year-over-year, and $211 million of free cash flow, up $13 million year-over-year
  • Adjusted operating margin of 11.3%, up 140 basis points year-over-year
  • $2.2 billion of revenue in the quarter, a decrease of 9.4% year-over-year or 7% percent in constant currency
  • Raising 2019 guidance for GAAP EPS to $2.90 to $3.05 and adjusted EPS to $3.80 to $3.95. Prior guidance was $2.60 to $2.70 and $3.70 to $3.80, respectively.
News Release Related Earnings Documents Webcast and Multimedia
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