NORWALK, Conn., May 2, 2018 - Xerox (NYSE: XRX) today announced its first-quarter 2018 financial results.
“In the first quarter of 2018, we grew adjusted operating profit year-over-year, excluding equity income, and continued to generate significant cash flow,” said Bill Osbourn, chief financial officer, Xerox. “The entire Xerox team is keenly focused on continuing to lead in our markets, serving our customers well, and generating strong shareholder returns.”
First Quarter 2018 Financial Results
- Earnings Per Share: GAAP earnings per share (EPS) from continuing operations of 8 cents, down 8 cents compared to the same period in 2017, primarily due to lower equity income (including the Xerox share of a Fuji Xerox restructuring charge) partially offset by higher pre-tax profit. Adjusted EPS of 68 cents, an increase of 1 cent year over year, reflects:
- a 3 cent increase from higher adjusted operating profits, excluding equity income; includes a negative impact from the early termination of a real estate lease
- a 10 cent increase from Other expenses, net, driven by a gain from a non-core asset sale and lower interest expense partially offset by:
- a 1 cent decrease from higher adjusted tax rate
- an 11 cent decrease from equity income from unconsolidated affiliates, adjusted to exclude our share of Fuji Xerox’s restructuring charge
- Total Revenue: $2,435 million, down 0.8 percent year-over-year or 4.6 percent in constant currency
- Equipment Sale Revenue: $499 million, down 2.7 percent or 6.4 percent in constant currency
- Post Sale Revenue: $1,936 million, down 0.3 percent or 4.1 percent in constant Post sale revenue was 80 percent of total revenue
- Adjusted Operating Margin: Adjusted operating margin of 10.4 percent, down 0.6 points year-over-year; operating margin, excluding equity income, was 9.9 percent, up 0.5 points year-over-year
- Cash Balance: $1,398 million at the end of the first quarter of 2018
- Cash Flow: Operating cash flow of $216 million; free cash flow of $198 million, up 24 percent year-over-year
- Dividend: Returned $67 million to shareholders through dividends
Xerox owns a noncontrolling 25 percent equity interest in Fuji Xerox, the company’s joint venture with Fujifilm. During the first quarter, Xerox’s equity income was a loss of $68 million, down $108 million from the prior year. This included a $28 million charge associated with its share of a Fuji Xerox charge (of JPY 12 billion) related to the correction of adjustments and misstatements identified in connection with the completion of audits of Fuji Xerox’s fiscal year-end financial statements for the years ended March 31, 2016 and 2017, as well as the review of Fuji Xerox’s unaudited interim financial statements for the nine months ended December 31, 2017 and 2016. These adjustments and misstatements are incremental to those identified by the independent investigation of Fuji Xerox’s accounting practices completed in the second quarter 2017.
Full Year 2018 Guidance
Xerox is not providing 2018 guidance due to the pending Director Appointment, Nomination and Settlement Agreement with Carl Icahn and Darwin Deason, among others. For additional information on the settlement, please refer to Financial Review - Recent Developments attached to this release.
In the normal course of business, absent recent events, the company would have reaffirmed its full-year guidance on revenue, adjusted operating margin, cash flow and adjusted EPS.
First Quarter 2018 Business Highlights
Xerox continues to execute on its strategy and deliver innovative technologies that help its customers and channel partners communicate and work better, and improve their business performance.
- Xerox’s managed document services will enable the S. Air Force to gain transparency, security and cost efficiency in its document environment. The company will optimize all aspects of the Air Force’s document infrastructure - including print, scan and fax - as well as provide a help desk and management of servers to deliver a comprehensive document infrastructure.
- The company continues to enable its graphic communications customers to grow their businesses by targeting new markets. Commercial printer i3logix will use the capabilities of Xerox’s Rialto® and Versant® presses to pursue new revenue streams to maintain their 20 to 25 percent annual growth
- Rhyme and Proven Business Systems, two multi-brand document technology dealers, joined the Xerox channel partner program to help address their customers’ office equipment needs. The partners cited the potential to expand their business by selling the full Xerox portfolio, including office and production technology, to existing and prospective
Additional First-Quarter Earnings Information
Xerox has shared an earnings presentation and remarks from Chief Financial Officer Bill Osbourn on its website. The company will not be hosting a first quarter earnings announcement conference call and live webcast.
Xerox Corporation is a technology leader that innovates the way the world communicates, connects and works. We understand what’s at the heart of sharing information - and all of the forms it can take. We embrace the integration of paper and digital, the increasing requirement for mobility, and the need for seamless integration between work and personal worlds. Every day, our innovative print technologies and intelligent work solutions help people communicate and work better. Discover more at www.xerox.com and follow us on Twitter at @Xerox.