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Xerox Corporation (XRX - Free Report) mixed first-quarter 2019 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
Adjusted earnings per share of 91 cents beat the consensus mark by 6 cents and increased 23 cents from the year-ago quarter’s tally. Total revenues of $2.21 billion missed the consensus mark by $115 million. The top line fell 9.4% year over year on a reported basis and 7% on a constant-currency (cc) basis.
Shares of Xerox have gained 70.5% year to date, outperforming the 38.1% rise of the industry it belongs to.
Let’s check out the numbers in detail.
Revenues by Segment
Equipment sales totaled $448 million, which declined 10.2% year over year on a reported basis and 7.6% on a constant-currency basis. The segment contributed 20% to total revenues.
Post sale revenues of $1.76 billion declined 9.2% year over year on a reported basis and 6.8% at cc. The segment contributed 80% to total revenues.
Revenues by Region
Revenues from Americas came in at $1.41 billion, down 8.1% year over year on a reported basis and 7.5% at cc. The region contributed 64% to total revenues.
EMEA revenues amounted to $712 million, down 10.4% year over year on a reported basis and 4.3% at cc. The region contributed 32% to total revenues.
Revenues from Other region totaled $84 million, down 20% year over year on a reported basis as well as at cc. The region contributed 4% to total revenues.
Gross profit of $889 million fell 8.4% from the prior-year quarter’s figure. Total gross margin of 40.3% declined 50 basis points (bps) year over year.
While equipment gross margin surged 310 bps year over year to 35.7%, post sale gross margin contracted 20 bps to 41.5%.
Adjusted operating profit of $249 million was up 2.9% year over year. Adjusted operating margin improved 140 bps year over year to 11.3%.
Selling, administrative and general expenses, as a percentage of revenues, declined to 24.8% from 25.8% in the year-ago quarter. Research, development and engineering expenses, as a percentage of revenues, increased to 4.2% from 4.1% in the prior-year quarter.
Balance Sheet and Cash Flow
Xerox exited the first quarter with cash, cash equivalents and restricted cash balance of $786 billion compared with $1.15 billion at the end of the previous quarter. Long-term debt was $4.27 billion, flat with the prior quarter tally.
The company generated $226 million of cash from operating activities and spent $15 million on capex in the quarter. Free cash flow was $211 million.
2019 Guidance
Xerox raised its 2019 adjusted EPS guidance. It now expects adjusted EPS in the range of $3.80 to $3.95 compared with the previous expectation of $3.70 to $3. 80. The Zacks Consensus Estimate is pegged at $3.76.
Revenues are expected to decline roughly 5% at cc. The company expects operating cash flow in the range of $1.15-$1.25 billion and free cash flow in the range of $1.0-$1.1 billion. Adjusted operating margin is anticipated between 12.6% and 13.1%.
Investors interested in the broader Zacks Business Services sector are awaiting first-quarter 2019 earnings reports of key players like Avis Budget (CAR - Free Report) , Clean Harbors (CLH - Free Report) and IQVIA Holdings (IQV - Free Report) . All of them are slated to report on May 1.
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Image: Bigstock
Xerox (XRX) Beats Q1 Earnings Estimates, Ups 2019 EPS View
Xerox Corporation (XRX - Free Report) mixed first-quarter 2019 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
Adjusted earnings per share of 91 cents beat the consensus mark by 6 cents and increased 23 cents from the year-ago quarter’s tally. Total revenues of $2.21 billion missed the consensus mark by $115 million. The top line fell 9.4% year over year on a reported basis and 7% on a constant-currency (cc) basis.
Shares of Xerox have gained 70.5% year to date, outperforming the 38.1% rise of the industry it belongs to.
Let’s check out the numbers in detail.
Revenues by Segment
Equipment sales totaled $448 million, which declined 10.2% year over year on a reported basis and 7.6% on a constant-currency basis. The segment contributed 20% to total revenues.
Post sale revenues of $1.76 billion declined 9.2% year over year on a reported basis and 6.8% at cc. The segment contributed 80% to total revenues.
Revenues by Region
Revenues from Americas came in at $1.41 billion, down 8.1% year over year on a reported basis and 7.5% at cc. The region contributed 64% to total revenues.
EMEA revenues amounted to $712 million, down 10.4% year over year on a reported basis and 4.3% at cc. The region contributed 32% to total revenues.
Revenues from Other region totaled $84 million, down 20% year over year on a reported basis as well as at cc. The region contributed 4% to total revenues.
Xerox Corporation Revenue (TTM)
Xerox Corporation Revenue (TTM) | Xerox Corporation Quote
Operating Results
Gross profit of $889 million fell 8.4% from the prior-year quarter’s figure. Total gross margin of 40.3% declined 50 basis points (bps) year over year.
While equipment gross margin surged 310 bps year over year to 35.7%, post sale gross margin contracted 20 bps to 41.5%.
Adjusted operating profit of $249 million was up 2.9% year over year. Adjusted operating margin improved 140 bps year over year to 11.3%.
Selling, administrative and general expenses, as a percentage of revenues, declined to 24.8% from 25.8% in the year-ago quarter. Research, development and engineering expenses, as a percentage of revenues, increased to 4.2% from 4.1% in the prior-year quarter.
Balance Sheet and Cash Flow
Xerox exited the first quarter with cash, cash equivalents and restricted cash balance of $786 billion compared with $1.15 billion at the end of the previous quarter. Long-term debt was $4.27 billion, flat with the prior quarter tally.
The company generated $226 million of cash from operating activities and spent $15 million on capex in the quarter. Free cash flow was $211 million.
2019 Guidance
Xerox raised its 2019 adjusted EPS guidance. It now expects adjusted EPS in the range of $3.80 to $3.95 compared with the previous expectation of $3.70 to $3. 80. The Zacks Consensus Estimate is pegged at $3.76.
Revenues are expected to decline roughly 5% at cc. The company expects operating cash flow in the range of $1.15-$1.25 billion and free cash flow in the range of $1.0-$1.1 billion. Adjusted operating margin is anticipated between 12.6% and 13.1%.
Zacks Rank & Upcoming Releases
Currently, Xerox carries 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 Zacks Business Services sector are awaiting first-quarter 2019 earnings reports of key players like Avis Budget (CAR - Free Report) , Clean Harbors (CLH - Free Report) and IQVIA Holdings (IQV - Free Report) . All of them are slated to report on May 1.
Radical New Technology Creates $12.3 Trillion Opportunity
Imagine buying Microsoft stock in the early days of personal computers… or Motorola after it released the world’s first cell phone. These technologies changed our lives and created massive profits for investors.
Today, we’re on the brink of the next quantum leap in technology. 7 innovative companies are leading this “4th Industrial Revolution” - and early investors stand to earn the biggest profits.
See the 7 breakthrough stocks now>>