Xerox Releases Third-Quarter Results
Xerox (XRX) reported Q3 2024 revenue of $1.53 billion, down 7.5% year-over-year. The company posted a GAAP net loss of $1.2 billion, or $9.71 per share, including a $1.0 billion goodwill impairment charge and a $161 million tax valuation allowance. Adjusted net income was $34 million ($0.25 per share), down from $77 million ($0.46 per share) year-over-year.
The company lowered its 2024 guidance, now expecting revenue to decline around 10% in constant currency, with adjusted operating margin around 5.0% and free cash flow between $450-500 million. Despite equipment revenue falling short, adjusted operating margin improved 110 basis points to 5.2%.
Xerox (XRX) ha riportato per il terzo trimestre del 2024 un fatturato di 1,53 miliardi di dollari, in diminuzione del 7,5% rispetto all'anno precedente. L'azienda ha registrato una perdita netta secondo i principi contabili GAAP di 1,2 miliardi di dollari, ovvero 9,71 dollari per azione, inclusi un'imministrazione di goodwill di 1,0 miliardi di dollari e una riserva fiscale di valutazione di 161 milioni di dollari. L'utile netto rettificato è stato di 34 milioni di dollari (0,25 dollari per azione), in calo rispetto ai 77 milioni di dollari (0,46 dollari per azione) dell'anno precedente.
L'azienda ha abbassato le previsioni per il 2024, ora prevedendo un calo del fatturato di circa il 10% a valuta costante, con un margine operativo rettificato attorno al 5,0% e un flusso di cassa libero compreso tra 450 e 500 milioni di dollari. Nonostante i ricavi delle attrezzature siano risultati inferiori, il margine operativo rettificato è migliorato di 110 punti base, raggiungendo il 5,2%.
Xerox (XRX) reportó ingresos de 1.53 mil millones de dólares en el tercer trimestre de 2024, una disminución del 7.5% en comparación con el año anterior. La compañía reportó una pérdida neta GAAP de 1.2 mil millones de dólares, o 9.71 dólares por acción, incluyendo un cargo por deterioro de la buena voluntad de 1.0 mil millones de dólares y una provisión fiscal de 161 millones de dólares. La utilidad neta ajustada fue de 34 millones de dólares (0.25 dólares por acción), en comparación con 77 millones de dólares (0.46 dólares por acción) del año anterior.
La compañía redujo sus expectativas para 2024, ahora esperando que los ingresos disminuyan alrededor del 10% en moneda constante, con un margen operativo ajustado alrededor del 5.0% y un flujo de caja libre entre 450 y 500 millones de dólares. A pesar de que los ingresos por equipos fueron inferiores, el margen operativo ajustado mejoró 110 puntos básicos al 5.2%.
제록스 (XRX)는 2024년 3분기 매출이 15억 3천만 달러로 전년 대비 7.5% 감소했다고 보고했습니다. 회사는 12억 달러의 GAAP 순손실, 즉 주당 9.71달러를 기록했으며, 여기에는 10억 달러의 goodwill 손상 차감과 1억 6100만 달러의 세금 평가 충당금이 포함되어 있습니다. 조정된 순이익은 3400만 달러(주당 0.25달러)로, 전년의 7700만 달러(주당 0.46달러)에서 감소했습니다.
회사는 2024년 가이던스를 하향 조정하여, 현재 수익이 상수통화로 약 10% 감소할 것으로 예상하고 있으며, 조정 운영 마진은 약 5.0%, 자유 현금 흐름은 4억 5천만에서 5억 달러 사이로 예상하고 있습니다. 장비 수익이 기대에 미치지 못했음에도 불구하고, 조정된 운영 마진은 110베이시스 포인트 개선되어 5.2%에 도달했습니다.
Xerox (XRX) a annoncé un chiffre d'affaires de 1,53 milliard de dollars pour le troisième trimestre de 2024, en baisse de 7,5 % par rapport à l'année précédente. L'entreprise a affiché une perte nette GAAP de 1,2 milliard de dollars, soit 9,71 dollars par action, y compris une charge de dépréciation de goodwill de 1,0 milliard de dollars et une provision fiscale de 161 millions de dollars. Le résultat net ajusté était de 34 millions de dollars (0,25 dollar par action), en baisse par rapport à 77 millions de dollars (0,46 dollar par action) l'année précédente.
L'entreprise a abaissé ses prévisions pour 2024, s'attendant désormais à un recul du chiffre d'affaires d'environ 10 % à taux de change constant, avec une marge opérationnelle ajustée d'environ 5,0 % et un flux de trésorerie disponible compris entre 450 et 500 millions de dollars. Malgré une baisse des revenus liés aux équipements, la marge opérationnelle ajustée a progressé de 110 points de base pour atteindre 5,2 %.
Xerox (XRX) hat im dritten Quartal 2024 einen Umsatz von 1,53 Milliarden Dollar gemeldet, was einem Rückgang von 7,5% im Vergleich zum Vorjahr entspricht. Das Unternehmen verzeichnete einen GAAP-Nettoverlust von 1,2 Milliarden Dollar, oder 9,71 Dollar pro Aktie, einschließlich einer Abschreibung von 1,0 Milliarden Dollar auf das Firmenwert und einer Steuerbewertungserstattung von 161 Millionen Dollar. Das bereinigte Nettoergebnis betrug 34 Millionen Dollar (0,25 Dollar pro Aktie), ein Rückgang von 77 Millionen Dollar (0,46 Dollar pro Aktie) im Vorjahresvergleich.
Das Unternehmen hat die Prognosen für 2024 gesenkt und erwartet nun einen Rückgang des Umsatzes um etwa 10% in konstanter Währung, mit einer bereinigten Betriebsgewinnmarge von etwa 5,0% und einem freien Cashflow zwischen 450 und 500 Millionen Dollar. Trotz eines Rückgangs der Ausrüstungsumsätze verbesserte sich die bereinigte Betriebsgewinnmarge um 110 Basispunkte auf 5,2%.
- Adjusted operating margin increased 110 basis points to 5.2%
- Operating cash flow reached $116 million
- Free cash flow of $107 million maintained
- XFS segment profit increased 225% to $13 million
- Revenue declined 7.5% to $1.53 billion
- GAAP net loss of $1.2 billion ($9.71 per share)
- $1.0 billion goodwill impairment charge
- Adjusted EPS decreased 45.7% to $0.25
- Lowered 2024 revenue guidance to -10%
- Reduced 2024 operating margin guidance from 6.5% to 5.0%
- Decreased free cash flow guidance to $450-500 million from $550 million
Insights
The Q3 results reveal significant challenges at Xerox, with revenue declining
The downward revision of 2024 guidance is particularly troubling, with revenue now expected to decline
Reinvention drives increased profitability despite a challenging quarter for equipment sales; pending acquisition of ITsavvy to improve revenue mix from higher growth businesses
Financial Summary
Q3 2024
-
Revenue of
, down 7.5 percent, or 7.3 percent in constant currency.$1.53 billion
-
GAAP net (loss) of
, or$(1.2) billion per share, a decrease of$(9.71) or$1.3 billion per share, year-over-year, respectively. This quarter includes an after-tax non-cash goodwill impairment charge of$9.99 , or$1.0 billion per share and a charge to tax expense related to the establishment of a valuation allowance of$8.16 , or$161 million per share.$1.29
-
Adjusted net income of
, or$34 million per share, down$0.25 or$43 million per share, year-over-year, respectively.$0.21
- Adjusted operating margin of 5.2 percent, up 110 basis points year-over-year.
-
Operating cash flow of
, down$116 million year-over-year.$8 million
-
Free cash flow of
, down$107 million year-over-year.$5 million
-
Lowered 2024 revenue guidance to a decline of around
10% in constant currency, adjusted operating margin guidance to around5.0% , and free cash flow guidance to a range of to$450 .$500 million
"While equipment revenue fell short of expectations, we continue to see steady progress from Reinvention initiatives taken to date. Adjusted operating income and margin grew year-over-year, and the pending acquisition of ITsavvy will improve Xerox's value proposition with clients, as well as the mix of revenue from growing businesses,” said Steve Bandrowczak, chief executive officer at Xerox. “Q3 results demonstrate no single quarter or performance metric in isolation defines our Reinvention. Operational improvements and enterprise-wide efficiencies are driving services signings momentum, improved decision-making and a sustainably lower cost base. These gains give us confidence Reinvention will enable long-term profitable growth as we continue this multi-year journey."
Third-Quarter Key Financial Results
(in millions, except per share data) |
Q3 2024 |
|
Q3 2023 |
|
B/(W) YOY |
|
% Change B/(W) YOY |
Revenue |
|
|
|
|
|
|
(7.5)% AC (7.3)% CC1 |
Gross Margin |
|
|
|
|
— |
|
|
RD&E % |
|
|
|
|
20 bps |
|
|
SAG % |
|
|
|
|
100 bps |
|
|
Pre-Tax (Loss) Income2 |
|
|
|
|
|
|
NM |
Pre-Tax (Loss) Income Margin2 |
(71.1)% |
|
|
|
NM |
|
|
Operating Income - Adjusted1 |
|
|
|
|
|
|
|
Operating Income Margin - Adjusted1 |
|
|
|
|
110 bps |
|
|
GAAP Diluted (Loss) Earnings per Share2 |
|
|
|
|
|
|
NM |
Diluted Earnings Per Share - Adjusted1 |
|
|
|
|
|
|
(45.7)% |
Third-Quarter Segment Results
(in millions) |
Q3 2024 |
|
Q3 2023 |
|
B/(W)
|
|
% Change
|
Revenue |
|
|
|
|
|
|
|
Print and Other |
|
|
|
|
|
|
(7.5)% |
XFS |
88 |
|
98 |
|
(10) |
|
(10.2)% |
Intersegment Elimination3 |
(17) |
|
(21) |
|
4 |
|
(19.0)% |
Total Revenue |
|
|
|
|
|
|
(7.5)% |
Profit |
|
|
|
|
|
|
|
Print and Other |
|
|
|
|
|
|
|
XFS |
13 |
|
4 |
|
9 |
|
|
Total Profit |
|
|
|
|
|
|
|
_____________
- 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.
-
Third quarter 2024 Pre-Tax (Loss) and EPS include a pre-tax non-cash goodwill impairment charge of approximately
, and approximately$1.1 billion after-tax, respectively, or$1.0 billion per diluted share. EPS includes a tax expense charge of$8.16 , or$161 million per share, related to the establishment of a valuation allowance against certain deferred tax assets to reflect their realizability. This adjustment was excluded due to its unique nature and significant impact which is not considered part of our core operations.$1.29 - Reflects revenue, primarily commissions and other payments, made by the XFS segment to the Print and Other segment for the lease of Xerox equipment placements.
2024 Guidance Update
-
Revenue: from a decline of
5% to6% in constant currency1 to a decline of around10% in constant currency 1 -
Adjusted 1 Operating Margin: from at least
6.5% to around5.0% -
Free cash flow1: from at least
to a range of$550 million to$450 $500 million
2024 guidance excludes any impact from the pending acquisition of ITsavvy. Revenue guidance was lowered to reflect additional reductions in non-strategic revenue and lower-than-expected equipment sales. Adjusted 1 operating income margin guidance was lowered primarily to reflect the reduction in revenue guidance. Free cash flow1 guidance was lowered to reflect the after-tax impact of lower adjusted 1 operating income margin guidance.
Due to lower-than-expected revenue in 2024, we no longer expect to grow adjusted 1 operating income
Non-GAAP Measures
This release refers to the following non-GAAP financial measures:
- Adjusted1 EPS, which excludes the Goodwill impairment charge and a tax expense charge related to the establishment of a valuation allowance against certain deferred tax assets, as well as Restructuring and related costs, net, Amortization of intangible assets, non-service retirement-related costs, and other discrete adjustments from GAAP EPS, as applicable.
- Adjusted 1 operating income and margin, which exclude the EPS adjustments noted above, except the tax expense charge related to the establishment of a valuation allowance against certain deferred tax assets, as well as the remainder of Other expenses, net from pre-tax (loss) income and margin.
- Constant currency (CC) revenue change, which excludes the effects of currency translation.
- Free cash flow 1, which is operating cash flow less capital expenditures.
_____________
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.
Forward Looking Statements
This release and other written or oral statements made from time to time by management contain “forward looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “will”, “should”, “targeting”, “projecting”, “driving” and similar expressions, as they relate to us, our performance and/or our technology, 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. Such factors include but are not limited to: Global macroeconomic conditions, including inflation, slower growth or recession, delays or disruptions in the global supply chain, higher interest rates, and wars and other conflicts, including the current conflict between
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Xerox® is a trademark of Xerox in
XEROX HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||||
(in millions, except per-share data) |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Revenues |
|
|
|
|
|
|
|
|
||||||||
Sales |
|
$ |
588 |
|
|
$ |
644 |
|
|
$ |
1,722 |
|
|
$ |
1,999 |
|
Services, maintenance and rentals |
|
|
902 |
|
|
|
962 |
|
|
|
2,768 |
|
|
|
2,975 |
|
Financing |
|
|
38 |
|
|
|
46 |
|
|
|
118 |
|
|
|
147 |
|
Total Revenues |
|
|
1,528 |
|
|
|
1,652 |
|
|
|
4,608 |
|
|
|
5,121 |
|
Costs and Expenses |
|
|
|
|
|
|
|
|
||||||||
Cost of sales |
|
|
390 |
|
|
|
435 |
|
|
|
1,117 |
|
|
|
1,312 |
|
Cost of services, maintenance and rentals |
|
|
617 |
|
|
|
651 |
|
|
|
1,951 |
|
|
|
1,987 |
|
Cost of financing |
|
|
26 |
|
|
|
30 |
|
|
|
82 |
|
|
|
100 |
|
Research, development and engineering expenses |
|
|
45 |
|
|
|
52 |
|
|
|
144 |
|
|
|
173 |
|
Selling, administrative and general expenses |
|
|
370 |
|
|
|
416 |
|
|
|
1,160 |
|
|
|
1,256 |
|
Goodwill impairment |
|
|
1,058 |
|
|
|
— |
|
|
|
1,058 |
|
|
|
— |
|
Restructuring and related costs, net |
|
|
56 |
|
|
|
10 |
|
|
|
107 |
|
|
|
35 |
|
Amortization of intangible assets |
|
|
10 |
|
|
|
12 |
|
|
|
30 |
|
|
|
33 |
|
Divestitures |
|
|
— |
|
|
|
— |
|
|
|
51 |
|
|
|
— |
|
PARC Donation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
132 |
|
Other expenses, net |
|
|
43 |
|
|
|
(18 |
) |
|
|
120 |
|
|
|
33 |
|
Total Costs and Expenses |
|
|
2,615 |
|
|
|
1,588 |
|
|
|
5,820 |
|
|
|
5,061 |
|
(Loss) Income before Income Taxes(1) |
|
|
(1,087 |
) |
|
|
64 |
|
|
|
(1,212 |
) |
|
|
60 |
|
Income tax expense |
|
|
118 |
|
|
|
15 |
|
|
|
88 |
|
|
|
1 |
|
Net (Loss) Income |
|
|
(1,205 |
) |
|
|
49 |
|
|
|
(1,300 |
) |
|
|
59 |
|
Less: Preferred stock dividends, net |
|
|
(4 |
) |
|
|
(4 |
) |
|
|
(11 |
) |
|
|
(11 |
) |
Net (Loss) Income attributable to Common Shareholders |
|
$ |
(1,209 |
) |
|
$ |
45 |
|
|
$ |
(1,311 |
) |
|
$ |
48 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic (Loss) Earnings per Share |
|
$ |
(9.71 |
) |
|
$ |
0.29 |
|
|
$ |
(10.55 |
) |
|
$ |
0.31 |
|
Diluted (Loss) Earnings per Share |
|
$ |
(9.71 |
) |
|
$ |
0.28 |
|
|
$ |
(10.55 |
) |
|
$ |
0.30 |
|
___________________________
(1) Referred to as “Pre-tax (loss) income” throughout the remainder of this document.
XEROX HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|||||||||||
(in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
Net (Loss) Income |
|
$ |
(1,205 |
) |
|
$ |
49 |
|
|
$ |
(1,300 |
) |
|
$ |
59 |
|
|
|
|
|
|
|
|
|
|||||||
Other Comprehensive Income (Loss), Net |
|
|
|
|
|
|
|
|
|||||||
Translation adjustments, net |
|
|
192 |
|
|
|
(123 |
) |
|
|
140 |
|
|
|
19 |
Unrealized gains, net |
|
|
5 |
|
|
|
1 |
|
|
|
4 |
|
|
|
— |
Changes in defined benefit plans, net |
|
|
(24 |
) |
|
|
55 |
|
|
|
18 |
|
|
|
14 |
Other Comprehensive Income (Loss), Net |
|
|
173 |
|
|
|
(67 |
) |
|
|
162 |
|
|
|
33 |
|
|
|
|
|
|
|
|
|
|||||||
Comprehensive (Loss) Income, Net |
|
$ |
(1,032 |
) |
|
$ |
(18 |
) |
|
$ |
(1,138 |
) |
|
$ |
92 |
XEROX HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions, except share data in thousands) |
|
September 30, 2024 |
|
December 31, 2023 |
||||
Assets |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
521 |
|
|
$ |
519 |
|
Accounts receivable (net of allowance of |
|
|
821 |
|
|
|
850 |
|
Billed portion of finance receivables (net of allowance of |
|
|
50 |
|
|
|
71 |
|
Finance receivables, net |
|
|
664 |
|
|
|
842 |
|
Inventories |
|
|
732 |
|
|
|
661 |
|
Other current assets |
|
|
223 |
|
|
|
234 |
|
Total current assets |
|
|
3,011 |
|
|
|
3,177 |
|
Finance receivables due after one year (net of allowance of |
|
|
1,275 |
|
|
|
1,597 |
|
Equipment on operating leases, net |
|
|
255 |
|
|
|
265 |
|
Land, buildings and equipment, net |
|
|
225 |
|
|
|
266 |
|
Intangible assets, net |
|
|
149 |
|
|
|
177 |
|
Goodwill, net |
|
|
1,709 |
|
|
|
2,747 |
|
Deferred tax assets |
|
|
635 |
|
|
|
745 |
|
Other long-term assets |
|
|
1,063 |
|
|
|
1,034 |
|
Total Assets |
|
$ |
8,322 |
|
|
$ |
10,008 |
|
Liabilities and Equity |
|
|
|
|
||||
Short-term debt and current portion of long-term debt |
|
$ |
519 |
|
|
$ |
567 |
|
Accounts payable |
|
|
895 |
|
|
|
1,044 |
|
Accrued compensation and benefits costs |
|
|
227 |
|
|
|
306 |
|
Accrued expenses and other current liabilities |
|
|
752 |
|
|
|
862 |
|
Total current liabilities |
|
|
2,393 |
|
|
|
2,779 |
|
Long-term debt |
|
|
2,752 |
|
|
|
2,710 |
|
Pension and other benefit liabilities |
|
|
1,126 |
|
|
|
1,216 |
|
Post-retirement medical benefits |
|
|
166 |
|
|
|
171 |
|
Other long-term liabilities |
|
|
354 |
|
|
|
360 |
|
Total Liabilities |
|
|
6,791 |
|
|
|
7,236 |
|
|
|
|
|
|
||||
Noncontrolling Interests |
|
|
10 |
|
|
|
10 |
|
|
|
|
|
|
||||
Convertible Preferred Stock |
|
|
214 |
|
|
|
214 |
|
|
|
|
|
|
||||
Common stock |
|
|
124 |
|
|
|
123 |
|
Additional paid-in capital |
|
|
1,123 |
|
|
|
1,114 |
|
Retained earnings |
|
|
3,570 |
|
|
|
4,977 |
|
Accumulated other comprehensive loss |
|
|
(3,514 |
) |
|
|
(3,676 |
) |
Xerox Holdings shareholders’ equity |
|
|
1,303 |
|
|
|
2,538 |
|
Noncontrolling interests |
|
|
4 |
|
|
|
10 |
|
Total Equity |
|
|
1,307 |
|
|
|
2,548 |
|
Total Liabilities and Equity |
|
$ |
8,322 |
|
|
$ |
10,008 |
|
|
|
|
|
|
||||
Shares of Common Stock Issued and Outstanding |
|
|
124,363 |
|
|
|
123,144 |
|
XEROX HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||||
(in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
||||||||
Net (Loss) Income |
|
$ |
(1,205 |
) |
|
$ |
49 |
|
|
$ |
(1,300 |
) |
|
$ |
59 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjustments to reconcile Net (loss) income to Net cash provided by operating activities |
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
|
59 |
|
|
|
63 |
|
|
|
177 |
|
|
|
189 |
|
Provisions |
|
|
13 |
|
|
|
16 |
|
|
|
92 |
|
|
|
37 |
|
Net gain on sales of businesses and assets |
|
|
(2 |
) |
|
|
(35 |
) |
|
|
(3 |
) |
|
|
(37 |
) |
Divestitures |
|
|
— |
|
|
|
— |
|
|
|
51 |
|
|
|
— |
|
PARC Donation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
132 |
|
Stock-based compensation |
|
|
9 |
|
|
|
12 |
|
|
|
38 |
|
|
|
40 |
|
Goodwill impairment |
|
|
1,058 |
|
|
|
— |
|
|
|
1,058 |
|
|
|
— |
|
Restructuring and asset impairment charges |
|
|
46 |
|
|
|
11 |
|
|
|
80 |
|
|
|
25 |
|
Payments for restructurings |
|
|
(11 |
) |
|
|
(9 |
) |
|
|
(58 |
) |
|
|
(23 |
) |
Non-service retirement-related costs |
|
|
25 |
|
|
|
4 |
|
|
|
74 |
|
|
|
14 |
|
Contributions to retirement plans |
|
|
(56 |
) |
|
|
(43 |
) |
|
|
(114 |
) |
|
|
(75 |
) |
Decrease (increase) in accounts receivable and billed portion of finance receivables |
|
|
50 |
|
|
|
(11 |
) |
|
|
18 |
|
|
|
(47 |
) |
Decrease (increase) in inventories |
|
|
12 |
|
|
|
38 |
|
|
|
(136 |
) |
|
|
50 |
|
Increase in equipment on operating leases |
|
|
(28 |
) |
|
|
(32 |
) |
|
|
(78 |
) |
|
|
(109 |
) |
Decrease in finance receivables |
|
|
97 |
|
|
|
83 |
|
|
|
496 |
|
|
|
490 |
|
Decrease (increase) in other current and long-term assets |
|
|
2 |
|
|
|
(23 |
) |
|
|
16 |
|
|
|
(8 |
) |
Decrease in accounts payable |
|
|
(55 |
) |
|
|
— |
|
|
|
(143 |
) |
|
|
(290 |
) |
Increase (decrease) in accrued compensation |
|
|
15 |
|
|
|
23 |
|
|
|
(78 |
) |
|
|
16 |
|
Decrease in other current and long-term liabilities |
|
|
(31 |
) |
|
|
(20 |
) |
|
|
(83 |
) |
|
|
(159 |
) |
Net change in income tax assets and liabilities |
|
|
108 |
|
|
|
(7 |
) |
|
|
44 |
|
|
|
(24 |
) |
Net change in derivative assets and liabilities |
|
|
3 |
|
|
|
(6 |
) |
|
|
9 |
|
|
|
16 |
|
Other operating, net |
|
|
7 |
|
|
|
11 |
|
|
|
— |
|
|
|
1 |
|
Net cash provided by operating activities |
|
|
116 |
|
|
|
124 |
|
|
|
160 |
|
|
|
297 |
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
||||||||
Cost of additions to land, buildings, equipment and software |
|
|
(9 |
) |
|
|
(12 |
) |
|
|
(27 |
) |
|
|
(27 |
) |
Proceeds from sales of businesses and assets |
|
|
8 |
|
|
|
37 |
|
|
|
27 |
|
|
|
40 |
|
Acquisitions, net of cash acquired |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7 |
) |
Other investing, net |
|
|
(6 |
) |
|
|
— |
|
|
|
(26 |
) |
|
|
(3 |
) |
Net cash (used in) provided by investing activities |
|
|
(7 |
) |
|
|
25 |
|
|
|
(26 |
) |
|
|
3 |
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
||||||||
Net (payments) proceeds on debt |
|
|
(42 |
) |
|
|
495 |
|
|
|
(7 |
) |
|
|
(131 |
) |
Purchases of capped calls |
|
|
— |
|
|
|
— |
|
|
|
(23 |
) |
|
|
— |
|
Dividends |
|
|
(36 |
) |
|
|
(43 |
) |
|
|
(107 |
) |
|
|
(131 |
) |
Payments to acquire treasury stock, including fees |
|
|
— |
|
|
|
(544 |
) |
|
|
(3 |
) |
|
|
(544 |
) |
Other financing, net |
|
|
4 |
|
|
|
(2 |
) |
|
|
(9 |
) |
|
|
(13 |
) |
Net cash used in financing activities |
|
|
(74 |
) |
|
|
(94 |
) |
|
|
(149 |
) |
|
|
(819 |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
4 |
|
|
|
(7 |
) |
|
|
(12 |
) |
|
|
(3 |
) |
Increase (decrease) in cash, cash equivalents and restricted cash |
|
|
39 |
|
|
|
48 |
|
|
|
(27 |
) |
|
|
(522 |
) |
Cash, cash equivalents and restricted cash at beginning of period |
|
|
551 |
|
|
|
569 |
|
|
|
617 |
|
|
|
1,139 |
|
Cash, Cash Equivalents and Restricted Cash at End of Period |
|
$ |
590 |
|
|
$ |
617 |
|
|
$ |
590 |
|
|
$ |
617 |
|
Third Quarter 2024 Overview
In the third quarter of 2024, the benefits of Reinvention drove improved financial results, albeit at a slower pace than expected. Third quarter 2024 included a second consecutive period of moderating revenue declines, year over year improvements in adjusted1 operating income and income margin, and more than 100 percent free cash flow conversion from adjusted1 operating income. Further, the pending acquisition of ITsavvy is expected to improve our mix of revenue from complementary, value-added businesses with higher underlying rates of revenue growth.
Equipment sales of
Post-sale revenue of
Pre-tax loss of approximately
Adjusted1 operating income increased by
Revenue guidance was reduced from a decline of
The reduction in adjusted1 operating income guidance, from at least
Free cash flow1 guidance was reduced from at least
Due to lower-than-expected revenue in 2024, we no longer expect to grow adjusted1 operating income
__________
(1) |
Refer to the "Non-GAAP Financial Measures" section for an explanation of the non-GAAP financial measure. |
(2) |
Order backlog is measured as the value of unfulfilled sales orders, shipped and non-shipped, received from our customers waiting to be installed, including orders with future installation dates. It includes printing devices as well as IT hardware associated with our IT service offerings. |
Financial Review
Revenues
|
|
Three Months Ended September 30, |
|
|
|
|
|
% of Total Revenue |
||||||||||||
(in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
% Change |
|
CC % Change |
|
2024 |
|
|
2023 |
|
||
Equipment sales |
|
$ |
339 |
|
|
$ |
386 |
|
|
(12.2 |
)% |
|
(12.2 |
)% |
|
22 |
% |
|
23 |
% |
Post sale revenue |
|
|
1,189 |
|
|
|
1,266 |
|
|
(6.1 |
)% |
|
(5.7 |
)% |
|
78 |
% |
|
77 |
% |
Total Revenue |
|
$ |
1,528 |
|
|
$ |
1,652 |
|
|
(7.5 |
)% |
|
(7.3 |
)% |
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation to Condensed Consolidated Statements of (Loss) Income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales |
|
$ |
588 |
|
|
$ |
644 |
|
|
(8.7 |
)% |
|
(8.3 |
)% |
|
|
|
|
||
Less: Supplies, paper and other sales |
|
|
(249 |
) |
|
|
(258 |
) |
|
(3.5 |
)% |
|
(2.3 |
)% |
|
|
|
|
||
Equipment Sales |
|
$ |
339 |
|
|
$ |
386 |
|
|
(12.2 |
)% |
|
(12.2 |
)% |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Services, maintenance and rentals |
|
$ |
902 |
|
|
$ |
962 |
|
|
(6.2 |
)% |
|
(6.1 |
)% |
|
|
|
|
||
Add: Supplies, paper and other sales |
|
|
249 |
|
|
|
258 |
|
|
(3.5 |
)% |
|
(2.3 |
)% |
|
|
|
|
||
Add: Financing |
|
|
38 |
|
|
|
46 |
|
|
(17.4 |
)% |
|
(17.6 |
)% |
|
|
|
|
||
Post Sale Revenue |
|
$ |
1,189 |
|
|
$ |
1,266 |
|
|
(6.1 |
)% |
|
(5.7 |
)% |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Segments |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Print and Other |
|
$ |
1,457 |
|
|
$ |
1,575 |
|
|
(7.5 |
)% |
|
|
|
95 |
% |
|
95 |
% |
|
XFS |
|
|
88 |
|
|
|
98 |
|
|
(10.2 |
)% |
|
|
|
6 |
% |
|
6 |
% |
|
Intersegment elimination (1) |
|
|
(17 |
) |
|
|
(21 |
) |
|
(19.0 |
)% |
|
|
|
(1 |
)% |
|
(1 |
)% |
|
Total Revenue(2) |
|
$ |
1,528 |
|
|
$ |
1,652 |
|
|
(7.5 |
)% |
|
|
|
100 |
% |
|
100 |
% |
|
____________ |
||||||||||||||||||||
CC - See "Constant Currency" in the Non-GAAP Financial Measures section for a description of constant currency. |
||||||||||||||||||||
(1) Reflects revenue, primarily commissions and other payments made by the XFS segment, to the Print and Other segment for the lease of Xerox equipment placements.
|
Costs, Expenses and Other Income
Summary of Key Financial Ratios
The following is a summary of key financial ratios used to assess our performance:
|
|
Three Months Ended September 30, |
|||||||||||
(in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
B/(W) |
|
||
Gross Profit |
|
$ |
495 |
|
|
$ |
536 |
|
|
$ |
(41 |
) |
|
RD&E |
|
|
45 |
|
|
|
52 |
|
|
|
7 |
|
|
SAG |
|
|
370 |
|
|
|
416 |
|
|
|
46 |
|
|
|
|
|
|
|
|
|
|
||||||
Equipment Gross Margin |
|
|
28.5 |
% |
|
|
31.0 |
% |
|
|
(2.5 |
) |
pts. |
Post sale Gross Margin |
|
|
33.5 |
% |
|
|
32.9 |
% |
|
|
0.6 |
|
pts. |
Total Gross Margin |
|
|
32.4 |
% |
|
|
32.4 |
% |
|
|
— |
|
pts. |
RD&E as a % of Revenue |
|
|
2.9 |
% |
|
|
3.1 |
% |
|
|
0.2 |
|
pts. |
SAG as a % of Revenue |
|
|
24.2 |
% |
|
|
25.2 |
% |
|
|
1.0 |
|
pts. |
|
|
|
|
|
|
|
|
||||||
Pre-tax (Loss) Income |
|
$ |
(1,087 |
) |
|
$ |
64 |
|
|
$ |
(1,151 |
) |
|
Pre-tax (Loss) Income Margin |
|
|
(71.1 |
)% |
|
|
3.9 |
% |
|
|
(75.0 |
) |
pts. |
|
|
|
|
|
|
|
|
||||||
Adjusted(1) Operating Income |
|
$ |
80 |
|
|
$ |
68 |
|
|
$ |
12 |
|
|
Adjusted(1) Operating Income Margin |
|
|
5.2 |
% |
|
|
4.1 |
% |
|
|
1.1 |
|
pts. |
_____________ |
|||||||||||||
(1) Refer to the "Non-GAAP Financial Measures" section for an explanation of the non-GAAP financial measure. |
Other Expenses, Net
|
|
Three Months Ended September 30, |
||||||
(in millions) |
|
|
2024 |
|
|
|
2023 |
|
Non-financing interest expense |
|
$ |
31 |
|
|
$ |
14 |
|
Interest income |
|
|
(3 |
) |
|
|
(3 |
) |
Non-service retirement-related costs |
|
|
25 |
|
|
|
4 |
|
Gains on sales of business and assets |
|
|
(2 |
) |
|
|
(35 |
) |
Currency losses, net |
|
|
2 |
|
|
|
6 |
|
Tax Indemnification - Conduent |
|
|
— |
|
|
|
(7 |
) |
Transaction and related costs, net |
|
|
(15 |
) |
|
|
— |
|
All other expenses, net |
|
|
5 |
|
|
|
3 |
|
Other expenses, net |
|
$ |
43 |
|
|
$ |
(18 |
) |
Segment Review
|
|
Three Months Ended September 30, |
||||||||||||||||
(in millions) |
|
External Revenue |
|
Intersegment Revenue(1) |
|
Total Segment Revenue |
|
% of Total Revenue |
|
Segment Profit |
|
Segment Margin(2) |
||||||
2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Print and Other |
|
$ |
1,440 |
|
$ |
17 |
|
$ |
1,457 |
|
94 |
% |
|
$ |
67 |
|
4.7 |
% |
XFS |
|
|
88 |
|
|
— |
|
|
88 |
|
6 |
% |
|
|
13 |
|
14.8 |
% |
Total |
|
$ |
1,528 |
|
$ |
17 |
|
$ |
1,545 |
|
100 |
% |
|
$ |
80 |
|
5.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Print and Other |
|
$ |
1,554 |
|
$ |
21 |
|
$ |
1,575 |
|
94 |
% |
|
$ |
64 |
|
4.1 |
% |
XFS |
|
|
98 |
|
|
— |
|
|
98 |
|
6 |
% |
|
|
4 |
|
4.1 |
% |
Total |
|
$ |
1,652 |
|
$ |
21 |
|
$ |
1,673 |
|
100 |
% |
|
$ |
68 |
|
4.1 |
% |
_____________ |
||||||||||||||||||
(1) Reflects revenue, primarily commissions and other payments, made by the XFS segment to the Print and Other segment for the lease of Xerox equipment placements.
|
Print and Other
Print and Other includes the design, development and sale of document management systems, solutions and services as well as associated technology offerings including IT and software products and services.
Revenue
|
|
Three Months Ended September 30, |
|
|
|||||
(in millions) |
|
|
2024 |
|
|
2023 |
|
% Change |
|
Equipment sales |
|
$ |
335 |
|
$ |
381 |
|
(12.1 |
)% |
Post sale revenue |
|
|
1,105 |
|
|
1,173 |
|
(5.8 |
)% |
Intersegment revenue (1) |
|
|
17 |
|
|
21 |
|
(19.0 |
)% |
Total Print and Other Revenue |
|
$ |
1,457 |
|
$ |
1,575 |
|
(7.5 |
)% |
_____________ |
|||||||||
(1) Reflects revenue, primarily commissions and other payments, made by the XFS segment to the Print and Other segment for the lease of Xerox equipment placements. |
Detail by product group is shown below.
|
|
Three Months Ended September 30, |
|
|
|
|
|
% of Equipment Sales |
||||||||||
(in millions) |
|
|
2024 |
|
|
2023 |
|
% Change |
|
CC % Change |
|
2024 |
|
|
2023 |
|
||
Entry |
|
$ |
53 |
|
$ |
56 |
|
(5.4 |
)% |
|
(4.4 |
)% |
|
16 |
% |
|
15 |
% |
Mid-range |
|
|
224 |
|
|
260 |
|
(13.8 |
)% |
|
(13.4 |
)% |
|
66 |
% |
|
67 |
% |
High-end |
|
|
57 |
|
|
67 |
|
(14.9 |
)% |
|
(15.1 |
)% |
|
17 |
% |
|
17 |
% |
Other |
|
|
5 |
|
|
3 |
|
66.7 |
% |
|
66.7 |
% |
|
1 |
% |
|
1 |
% |
Equipment Sales (1),(2) |
|
$ |
339 |
|
$ |
386 |
|
(12.2 |
)% |
|
(12.2 |
)% |
|
100 |
% |
|
100 |
% |
_____________ |
||||||||||||||||||
CC - See "Constant Currency" in the Non-GAAP Financial Measures section for a description of constant currency. |
||||||||||||||||||
(1) Refer to Appendix II, Reportable Segments, for definitions.
|
Xerox Financial Services
Xerox Financial Services (XFS), represents a global financing solutions business, primarily enabling the sale of our equipment and services.
Revenue
|
|
Three Months Ended September 30, |
|
|
|||||
(in millions) |
|
|
2024 |
|
|
2023 |
|
% Change |
|
Equipment sales |
|
$ |
4 |
|
$ |
5 |
|
(20.0 |
)% |
Financing |
|
|
38 |
|
|
46 |
|
(17.4 |
)% |
Other Post sale revenue (1) |
|
|
46 |
|
|
47 |
|
(2.1 |
)% |
Total XFS Revenue |
|
$ |
88 |
|
$ |
98 |
|
(10.2 |
)% |
_____________ |
|||||||||
(1) Other Post sale revenue includes lease renewal and fee income as well as gains, commissions and servicing revenue associated with sold finance receivables. |
Forward-Looking Statements
This release and other written or oral statements made from time to time by management contain “forward looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “will”, “should”, “targeting”, “projecting”, “driving” and similar expressions, as they relate to us, our performance and/or our technology, 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. Such factors include but are not limited to: Global macroeconomic conditions, including inflation, slower growth or recession, delays or disruptions in the global supply chain, higher interest rates, and wars and other conflicts, including the current conflict between
Non-GAAP Financial Measures
We have reported our financial results in accordance with generally accepted accounting principles (GAAP). In addition, we have discussed our financial results using the non-GAAP measures described below. We believe these non-GAAP measures allow investors to better understand the trends in our business and to better understand and compare our results. Management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Accordingly, we believe it is necessary to adjust several reported amounts, determined in accordance with GAAP, to exclude the effects of certain items as well as their related income tax effects.
However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our Condensed Consolidated Financial Statements prepared in accordance with GAAP.
Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are set forth below, as well as in the third quarter 2024 presentation slides available at www.xerox.com/investor.
Adjusted Earnings Measures
- Adjusted Net Income and Earnings per share (Adjusted EPS)
- Adjusted Effective Tax Rate
The above measures were adjusted for the following items:
Restructuring and related costs, net: Restructuring and related costs, net include restructuring and asset impairment charges as well as costs associated with our transformation programs beyond those normally included in restructuring and asset impairment charges. Restructuring consists of costs primarily related to severance and benefits paid to employees pursuant to formal restructuring and workforce reduction plans. Asset impairment includes costs incurred for those assets sold, abandoned or made obsolete as a result of our restructuring actions, exiting from a business or other strategic business changes. Additional costs for our transformation programs are primarily related to the implementation of strategic actions and initiatives and include third-party professional service costs as well as one-time incremental costs. All of these costs can vary significantly in terms of amount and frequency based on the nature of the actions as well as the changing needs of the business. Accordingly, due to that significant variability, we will exclude these charges since we do not believe they provide meaningful insight into our current or past operating performance nor do we believe they are reflective of our expected future operating expenses as such charges are expected to yield future benefits and savings with respect to our operational performance.
Amortization of intangible assets: The amortization of intangible assets is driven by our acquisition activity which can vary in size, nature and timing as compared to other companies within our industry and from period to period. The use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods.
Non-service retirement-related costs: Our defined benefit pension and retiree health costs include several elements impacted by changes in plan assets and obligations that are primarily driven by changes in the debt and equity markets as well as those that are predominantly legacy in nature and related to employees who are no longer providing current service to the Company (e.g. retirees and ex-employees). These elements include (i) interest cost, (ii) expected return on plan assets, (iii) amortization of prior plan amendments, (iv) amortized actuarial gains/losses and (v) the impacts of any plan settlements/curtailments. Accordingly, we consider these elements of our periodic retirement plan costs to be outside the operational performance of the business or legacy costs and not necessarily indicative of current or future cash flow requirements. This approach is consistent with the classification of these costs as non-operating in Other expenses, net. Adjusted earnings will continue to include the service cost elements of our retirement costs, which is related to current employee service as well as the cost of our defined contribution plans.
Transaction and related costs, net: Transaction and related costs, net are costs and expenses primarily associated with certain major or significant strategic M&A projects. These costs are primarily for third-party legal, accounting, consulting and other similar type professional services as well as potential legal settlements that may arise in connection with those M&A transactions. These costs are considered incremental to our normal operating charges and were incurred or are expected to be incurred solely as a result of the planned transactions. Accordingly, we are excluding these expenses from our Adjusted Earnings Measures in order to evaluate our performance on a comparable basis.
Discrete, unusual or infrequent items: We exclude these item(s), when applicable, given their discrete, unusual or infrequent nature and their impact on the comparability of our results for the period to prior periods and future expected trends.
- Goodwill impairment
- Tax Indemnification - Conduent
- Deferred Tax Asset Valuation Allowance
Adjusted Operating Income and Margin
We calculate and utilize adjusted operating income and margin measures by adjusting our reported pre-tax (loss) income and margin amounts. In addition to the costs and expenses noted above as adjustments for our adjusted earnings measures, adjusted operating income and margin also exclude the remaining amounts included in Other expenses, net, which are primarily non-financing interest expense and certain other non-operating costs and expenses. We exclude these amounts in order to evaluate our current and past operating performance and to better understand the expected future trends in our business.
Adjusted Gross Profit and Margin
We calculate non-GAAP gross Profit and Margin by excluding the inventory impact related to the exit of certain Production Print manufacturing operations, included in Cost of services, maintenance and rentals.
Constant Currency (CC)
To better understand trends in our business, we believe that it is helpful to adjust revenue to exclude the impact of changes in the translation of foreign currencies into
Free Cash Flow
To better understand trends in our business, we believe that it is helpful to adjust operating cash flows by subtracting amounts related to capital expenditures. Management believes this measure gives investors an additional perspective on cash flow from operating activities in excess of amounts required for reinvestment. It provides a measure of our ability to fund acquisitions, dividends and share repurchase.
Adjusted Net Income and EPS reconciliation
|
|
Three Months Ended September 30, |
|||||||||||||
|
|
2024 |
|
2023 |
|||||||||||
(in millions, except per share amounts) |
|
Net
|
|
Diluted
|
|
Net
|
|
Diluted
|
|||||||
Reported(1) |
|
$ |
(1,205 |
) |
|
$ |
(9.71 |
) |
|
$ |
49 |
|
|
$ |
0.28 |
Adjustments: |
|
|
|
|
|
|
|
|
|||||||
Goodwill impairment |
|
|
1,058 |
|
|
|
|
|
— |
|
|
|
|||
Restructuring and related costs, net |
|
|
56 |
|
|
|
|
|
10 |
|
|
|
|||
Amortization of intangible assets |
|
|
10 |
|
|
|
|
|
12 |
|
|
|
|||
Non-service retirement-related costs |
|
|
25 |
|
|
|
|
|
4 |
|
|
|
|||
Transaction and related costs, net |
|
|
(15 |
) |
|
|
|
|
— |
|
|
|
|||
Tax Indemnification - Conduent |
|
|
— |
|
|
|
|
|
(7 |
) |
|
|
|||
Deferred tax asset valuation allowance |
|
|
161 |
|
|
|
|
|
|
|
|||||
Income tax (benefit) on Goodwill impairment |
|
|
(43 |
) |
|
|
|
|
— |
|
|
|
|||
Income tax on adjustments(2) |
|
|
(13 |
) |
|
|
|
|
9 |
|
|
|
|||
Adjusted |
|
$ |
34 |
|
|
$ |
0.25 |
|
|
$ |
77 |
|
|
$ |
0.46 |
|
|
|
|
|
|
|
|
|
|||||||
Dividends on preferred stock used in adjusted EPS calculation(3) |
|
|
|
$ |
4 |
|
|
|
|
$ |
4 |
||||
Weighted average shares for adjusted EPS(3) |
|
|
|
|
126 |
|
|
|
|
|
159 |
||||
Fully diluted shares at end of period(4) |
|
|
|
|
126 |
|
|
|
|
|
|||||
_____________ |
|||||||||||||||
(1) Net (Loss) Income and EPS. Third quarter 2024 Net (Loss) and EPS include an after-tax non-cash goodwill impairment charge of approximately |
Adjusted Effective Tax Rate reconciliation
|
|
Three Months Ended September 30, |
|||||||||||||||||||
|
|
2024 |
|
2023 |
|||||||||||||||||
(in millions) |
|
Pre-Tax (Loss) Income |
|
Income Tax Expense |
|
Effective Tax Rate |
|
Pre-Tax Income |
|
Income Tax Expense |
|
Effective Tax Rate |
|||||||||
Reported(1) |
|
$ |
(1,087 |
) |
|
$ |
118 |
|
|
(10.9 |
)% |
|
$ |
64 |
|
$ |
15 |
|
|
23.4 |
% |
Goodwill impairment |
|
|
1,058 |
|
|
|
43 |
|
|
|
|
|
— |
|
|
— |
|
|
|
||
Deferred tax asset valuation allowance(2) |
|
|
— |
|
|
|
(161 |
) |
|
|
|
|
— |
|
|
— |
|
|
|
||
Non-GAAP adjustments(3) |
|
|
76 |
|
|
|
13 |
|
|
|
|
|
19 |
|
|
(9 |
) |
|
|
||
Adjusted(4) |
|
$ |
47 |
|
|
$ |
13 |
|
|
27.7 |
% |
|
$ |
83 |
|
$ |
6 |
|
|
7.2 |
% |
_____________ |
|||||||||||||||||||||
(1) Pre-tax (loss) income and income tax expense. Third quarter 2024 Pre-Tax (Loss) includes a non-cash goodwill impairment charge of approximately
(2) Refer to Adjusted Net Income and EPS reconciliation for details.
(3) The tax impact on Adjusted Pre-Tax Income is calculated under the same accounting principles applied to the Reported Pre-Tax (Loss) Income under ASC 740, which employs an annual effective tax rate method to the results. |
Adjusted Operating Income and Margin reconciliation
|
|
Three Months Ended September 30, |
||||||||||||||||||
|
|
2024 |
|
2023 |
||||||||||||||||
(in millions) |
|
(Loss) Profit |
|
Revenue |
|
Margin |
|
Profit |
|
Revenue |
|
Margin |
||||||||
Reported(1) |
|
$ |
(1,205 |
) |
|
$ |
1,528 |
|
|
|
$ |
49 |
|
|
$ |
1,652 |
|
|
||
Income tax expense |
|
|
118 |
|
|
|
|
|
|
|
15 |
|
|
|
|
|
||||
Pre-tax (loss) income |
|
$ |
(1,087 |
) |
|
$ |
1,528 |
|
(71.1 |
)% |
|
$ |
64 |
|
|
$ |
1,652 |
|
3.9 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Goodwill impairment |
|
|
1,058 |
|
|
|
|
|
|
|
— |
|
|
|
|
|
||||
Restructuring and related costs, net |
|
|
56 |
|
|
|
|
|
|
|
10 |
|
|
|
|
|
||||
Amortization of intangible assets |
|
|
10 |
|
|
|
|
|
|
|
12 |
|
|
|
|
|
||||
Other expenses, net (2) |
|
|
43 |
|
|
|
|
|
|
|
(18 |
) |
|
|
|
|
||||
Adjusted |
|
$ |
80 |
|
|
$ |
1,528 |
|
5.2 |
% |
|
$ |
68 |
|
|
$ |
1,652 |
|
4.1 |
% |
_____________ |
||||||||||||||||||||
(1) Net (Loss) Income. Third quarter 2024 Net (Loss) includes an after-tax non-cash goodwill impairment charge of approximately |
||||||||||||||||||||
(2) Includes non-service retirement-related costs. |
Free Cash Flow reconciliation
|
|
Three Months Ended September 30, |
||||
(in millions) |
|
2024 |
|
2023 |
||
Reported(1) |
|
$ |
116 |
|
$ |
124 |
Less: capital expenditures |
|
|
9 |
|
|
12 |
Free Cash Flow |
|
$ |
107 |
|
$ |
112 |
_____________ |
||||||
(1) Net cash provided by operating activities. |
GUIDANCE
Adjusted Operating Income and Margin
|
|
FY 2024 |
||||
(in millions) |
|
Profit |
|
Revenue (CC)(2,3) |
|
Margin |
Estimated(1) |
|
~ |
|
~ |
|
~ (19.0)% |
Adjustments: |
|
|
|
|
|
|
Goodwill impairment |
|
1,058 |
|
|
|
|
Restructuring and related costs, net |
|
110 |
|
|
|
|
Amortization of intangible assets |
|
40 |
|
|
|
|
Other expenses, net |
|
272 |
|
|
|
|
Adjusted (4) |
|
~ |
|
~ |
|
~ |
_____________ |
||||||
(1) Pre-tax (loss) and Revenue
|
Free Cash Flow
(in millions) |
|
FY 2024 |
Operating Cash Flow (1) |
|
|
Less: capital expenditures |
|
40 |
Free Cash Flow |
|
|
_____________ |
||
(1) Net cash provided by operating activities. |
APPENDIX I
Xerox Holdings Corporation
(Loss) Earnings per Share
(in millions, except per-share data, shares in thousands) |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Basic (Loss) Earnings per Share: |
|
|
|
|
|
|
|
|
||||||||
Net (Loss) Income |
|
$ |
(1,205 |
) |
|
$ |
49 |
|
|
$ |
(1,300 |
) |
|
$ |
59 |
|
Accrued dividends on preferred stock |
|
|
(4 |
) |
|
|
(4 |
) |
|
|
(11 |
) |
|
|
(11 |
) |
Adjusted net (loss) income available to common shareholders |
|
$ |
(1,209 |
) |
|
$ |
45 |
|
|
$ |
(1,311 |
) |
|
$ |
48 |
|
Weighted average common shares outstanding |
|
|
124,344 |
|
|
|
157,132 |
|
|
|
124,149 |
|
|
|
156,914 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic (Loss) Earnings per Share |
|
$ |
(9.71 |
) |
|
$ |
0.29 |
|
|
$ |
(10.55 |
) |
|
$ |
0.31 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted (Loss) Earnings per Share: |
|
|
|
|
|
|
|
|
||||||||
Net (Loss) Income |
|
$ |
(1,205 |
) |
|
$ |
49 |
|
|
$ |
(1,300 |
) |
|
$ |
59 |
|
Accrued dividends on preferred stock |
|
|
(4 |
) |
|
|
(4 |
) |
|
|
(11 |
) |
|
|
(11 |
) |
Adjusted net (loss) income available to common shareholders |
|
$ |
(1,209 |
) |
|
$ |
45 |
|
|
$ |
(1,311 |
) |
|
$ |
48 |
|
Weighted average common shares outstanding |
|
|
124,344 |
|
|
|
157,132 |
|
|
|
124,149 |
|
|
|
156,914 |
|
Common shares issuable with respect to: |
|
|
|
|
|
|
|
|
||||||||
Stock Options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Restricted stock and performance shares |
|
|
— |
|
|
|
1,761 |
|
|
|
— |
|
|
|
1,305 |
|
Convertible preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted weighted average common shares outstanding |
|
|
124,344 |
|
|
|
158,893 |
|
|
|
124,149 |
|
|
|
158,219 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted (Loss) Earnings per Share |
|
$ |
(9.71 |
) |
|
$ |
0.28 |
|
|
$ |
(10.55 |
) |
|
$ |
0.30 |
|
|
|
|
|
|
|
|
|
|
||||||||
The following securities were not included in the computation of diluted (loss) earnings per share as they were either contingently issuable shares or shares that if included would have been anti-dilutive: |
||||||||||||||||
Stock options |
|
|
155 |
|
|
|
245 |
|
|
|
155 |
|
|
|
245 |
|
Restricted stock and performance shares |
|
|
7,973 |
|
|
|
5,233 |
|
|
|
7,973 |
|
|
|
5,688 |
|
Convertible preferred stock |
|
|
6,742 |
|
|
|
6,742 |
|
|
|
6,742 |
|
|
|
6,742 |
|
Convertible notes |
|
|
19,196 |
|
|
|
— |
|
|
|
19,196 |
|
|
|
— |
|
Total Anti-Dilutive Securities |
|
|
34,066 |
|
|
|
12,220 |
|
|
|
34,066 |
|
|
|
12,675 |
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends per Common Share |
|
$ |
0.25 |
|
|
$ |
0.25 |
|
|
$ |
0.75 |
|
|
$ |
0.75 |
|
APPENDIX II
Xerox Holdings Corporation
Reportable Segments
Our reportable segments are aligned with how we manage the business and view the markets we serve. We have two reportable segments - Print and Other, and Xerox Financial Services (XFS) (formerly FITTLE). Our two reportable segments are determined based on the information reviewed by the Chief Operating Decision Maker (CODM), our Chief Executive Officer (CEO), together with the Company’s management to evaluate performance of the business and allocate resources.
Our Print and Other segment includes the sale of document systems, supplies and technical services and managed services. The segment also includes the delivery of managed services that involve a continuum of solutions and services that help our customers optimize their print and communications infrastructure, apply automation and simplification to maximize productivity, and ensure the highest levels of security. This segment also includes Digital and IT services and software. The product groupings range from:
- “Entry”, which include A4 devices and desktop printers and multifunction devices that primarily serve small and medium workgroups/work teams.
- “Mid-Range”, which include A3 devices that generally serve large workgroup/work team environments as well as products in the Light Production product groups serving centralized print centers, print for pay and low volume production print establishments.
- “High-End”, which include production printing and publishing systems that generally serve the graphic communications marketplace and print centers in large enterprises.
Customers range from small and mid-sized businesses to large enterprises. Customers also include graphic communication enterprises as well as channel partners including distributors and resellers. Segment revenues also include commissions and other payments from our XFS segment for the exclusive right to provide lease financing for Xerox products. These revenues are reported as part of Intersegment Revenues, which are eliminated in consolidated revenues.
The XFS segment provides global leasing solutions and currently offers financing for direct channel customer purchases of Xerox equipment through bundled lease agreements and lease financing to end-user customers who purchase Xerox solutions through our indirect channels. Segment revenues primarily include financing income on sales-type leases (including month-to-month extensions) and leasing fees. Segment revenues also include gains/losses from the sale of finance receivables including commissions, fees on the sales of underlying equipment residuals, and servicing fees.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241029488988/en/
Media Contact:
Justin Capella, Xerox, +1-203-258-6535, Justin.Capella@xerox.com
Investor Contact:
David Beckel, Xerox, +1-203-849-2318, mailto:David.Beckel@xerox.com
Source: Xerox Holdings Corporation
FAQ
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