Inkjet & Digital Printing

Xerox Reports Second-Quarter 2012 Earnings

Friday 20. July 2012 - GAAP earnings per share of 22 cents

Adjusted EPS of 26 cents
Revenue of $5.5 billion down 1 percent, up 1 per cent constant currency
Services revenue up 5 percent, up 7 percent constant currency
Xerox (NYSE: XRX) announced today second- quarter 2012 adjusted earnings per share of 26 cents, which excludes 4 cents related to the amortization of intangibles, resulting in flat year-over-year GAAP earnings of 22 cents per share.
In the second quarter, total revenue of $5.5 billion was down 1 percent or up 1 percent in constant currency.
Revenue from the company’s services business was up 7 percent in constant currency. “With more than half our total revenue coming from services, accelerating growth in this segment of our business is a priority,” said Ursula Burns, Xerox chairman and chief executive officer. “Our second-quarter results reflect solid progress with 8 percent growth from business process outsourcing, 9 percent growth from IT outsourcing and 6 percent growth in document outsourcing, all at constant currency.”
The continued weak macro environment, especially in Europe, resulted in a 4 percent constant currency decline in the company’s technology revenue, which represents the sale of document systems, supplies, technical service and financing of products.
“Strong revenue from services – our growth driver today and in the future – gives us financial flexibility that helps minimize the impact from our slowing technology business,” added Burns. “While ramping services for long-term growth, we’re focused on maintaining market leadership in our technology segment and benefitting from its cash-generating business model.”
Operating margin of 9.7 percent was down 0.7 points from second-quarter 2011, and up 1.2 points from first quarter of this year, driven by a 1.3 point sequential improvement from the company’s services business. Second-quarter gross margin was 32 percent, and selling, administrative and general expenses were 19.4 percent of revenue.
The company generated $228 million in cash from operations, a year-over-year decline primarily due to the change in the quarterly timing of cash pension contributions. Xeroxcontinuestoexpectfull-yearoperatingcashflowof$2billionto $2.3 billion, and plans to repurchase $900 million to $1.1 billion in Xerox stock during the year.
Considering the economic uncertainty, Xerox now expects that revenue from its technology business will continue to be weak, and, as a result, revised its full-year earnings expectations, which are based on continued strong year-over-year revenue growth from services, lower revenue from technology, and the ongoing benefit from operational efficiencies.
Xerox Corporation 45 Glover Avenue P.O. Box 4505 Norwalk, CT 06856-4505
t +1-203-968-3000
Xerox expects third-quarter 2012 GAAP earnings of 20 cents to 22 cents per share. Third-quarter adjusted EPS is expected to be 24 cents to 26 cents per share.
The company expects full-year 2012 GAAP earnings per share of 92 cents to 97 cents and full-year adjusted earnings per share of $1.07 to $1.12.