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Xerox (XRX) Earnings Miss Estimates in Q1, Revenues Beat
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Xerox Corporation (XRX - Free Report) reported mixed first-quarter 2018 results, wherein the company’s bottom line lagged the Zacks Consensus Estimate but the top line surpassed the same.
Adjusted earnings per share of 68 cents were up by a penny from the year-ago quarter but lagged the Zacks Consensus Estimate by 2 cents.
In January 2018, Xerox and FUJIFILM inked a definitive deal worth $6.1 billion to combine the FujiXerox joint venture with Xerox. Per the deal, Fujifilm will own 50.1% of the combined company.
Xerox is expected to declare a special one-time cash dividend of $2.5 billion or around $9.80 per share (based on the shares of Xerox common stock outstanding as of Mar 31, 2018). The special dividend will be paid before the closing and funded by a new borrowing as discussed under “Bridge Facility".
Fujifilm will not be a shareholder of Xerox as of the record date for the special dividend and will not receive any payment.
We observe that shares of Xerox have gained a mere 0.1% in the past six months compared with the industry’s rally of 5.3%.
Revenues
Total revenues of $2.43 billion however beat the Zacks Consensus Estimate of $2.38 billion. The figure was down 0.8% year over year and 4.6% on a constant currency basis.
Equipment sales of $499 million were down 2.7% year over year or 6.4% on a constant currency basis.
Post sale revenues of $1.93 billion were down 0.3% year over year or 4.1% on a constant currency basis.
Gross profit was $970 million compared with $975 million in the prior-year quarter. Total gross margin was 39.8% compared with 39.7% in the prior-year quarter.
Gross margin for Equipment was 32.3% compared with 30.7% in the prior-year quarter. Gross margin for Post sale was 41.8% compared with 42.1% in the prior-year quarter.
Adjusted operating profit was $253 million compared with $270 million in the year-ago quarter. Adjusted operating margin was 10.4% compared with 11.0% in the prior-year quarter.
Total selling, general and administrative expenses declined to $628 million from $634 million in the year-ago quarter. Research, development and engineering expenses declined $11 million from the prior-year quarter to $100 million.
Balance Sheet and Cash Flow
Xerox exited first-quarter 2018 with cash and cash equivalents of $1,398 million compared with $1,293 million at the end of December 2017. As of Mar 31, 2018, long-term debt was $4,811 million compared with $5,235 million as of Dec 31, 2017.
The company generated $216 million of cash from operating activities in the reported quarter compared with $52 million in the year-ago quarter. Free cash flow was $198 million in the reported quarter compared with $160 million in the year-ago quarter.
During the reported quarter, the company returned $67 million in dividends to shareholders.
Investors interested in the broader Business Services sector are keenly awaiting earnings reports from key players like Gartner, Inc. (IT - Free Report) , The Dun & Bradstreet Corp. (DNB - Free Report) and Broadridge Financial Solutions Inc. (BR - Free Report) . While Garter and Dun & Bradstreet will release first-quarter 2018 results on May 8 and May 9, respectively, Broadridge will report third-quarter fiscal 2018 numbers on May 8.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Xerox (XRX) Earnings Miss Estimates in Q1, Revenues Beat
Xerox Corporation (XRX - Free Report) reported mixed first-quarter 2018 results, wherein the company’s bottom line lagged the Zacks Consensus Estimate but the top line surpassed the same.
Adjusted earnings per share of 68 cents were up by a penny from the year-ago quarter but lagged the Zacks Consensus Estimate by 2 cents.
In January 2018, Xerox and FUJIFILM inked a definitive deal worth $6.1 billion to combine the FujiXerox joint venture with Xerox. Per the deal, Fujifilm will own 50.1% of the combined company.
Xerox is expected to declare a special one-time cash dividend of $2.5 billion or around $9.80 per share (based on the shares of Xerox common stock outstanding as of Mar 31, 2018). The special dividend will be paid before the closing and funded by a new borrowing as discussed under “Bridge Facility".
Fujifilm will not be a shareholder of Xerox as of the record date for the special dividend and will not receive any payment.
We observe that shares of Xerox have gained a mere 0.1% in the past six months compared with the industry’s rally of 5.3%.
Revenues
Total revenues of $2.43 billion however beat the Zacks Consensus Estimate of $2.38 billion. The figure was down 0.8% year over year and 4.6% on a constant currency basis.
Equipment sales of $499 million were down 2.7% year over year or 6.4% on a constant currency basis.
Post sale revenues of $1.93 billion were down 0.3% year over year or 4.1% on a constant currency basis.
Xerox Corporation Revenue (TTM)
Xerox Corporation Revenue (TTM) | Xerox Corporation Quote
Operating Results
Gross profit was $970 million compared with $975 million in the prior-year quarter. Total gross margin was 39.8% compared with 39.7% in the prior-year quarter.
Gross margin for Equipment was 32.3% compared with 30.7% in the prior-year quarter. Gross margin for Post sale was 41.8% compared with 42.1% in the prior-year quarter.
Adjusted operating profit was $253 million compared with $270 million in the year-ago quarter. Adjusted operating margin was 10.4% compared with 11.0% in the prior-year quarter.
Total selling, general and administrative expenses declined to $628 million from $634 million in the year-ago quarter. Research, development and engineering expenses declined $11 million from the prior-year quarter to $100 million.
Balance Sheet and Cash Flow
Xerox exited first-quarter 2018 with cash and cash equivalents of $1,398 million compared with $1,293 million at the end of December 2017. As of Mar 31, 2018, long-term debt was $4,811 million compared with $5,235 million as of Dec 31, 2017.
The company generated $216 million of cash from operating activities in the reported quarter compared with $52 million in the year-ago quarter. Free cash flow was $198 million in the reported quarter compared with $160 million in the year-ago quarter.
During the reported quarter, the company returned $67 million in dividends to shareholders.
Zacks Rank & Upcoming Releases
Xerox currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Business Services sector are keenly awaiting earnings reports from key players like Gartner, Inc. (IT - Free Report) , The Dun & Bradstreet Corp. (DNB - Free Report) and Broadridge Financial Solutions Inc. (BR - Free Report) . While Garter and Dun & Bradstreet will release first-quarter 2018 results on May 8 and May 9, respectively, Broadridge will report third-quarter fiscal 2018 numbers on May 8.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>