Xerox Corporation (XRX - Free Report) reported disappointing fourth-quarter 2018 results, missing the Zacks Consensus Estimate on both counts.
Adjusted earnings per share of $1.14 missed the consensus mark by 2 cents but increased 11 cents from the year-ago quarter’s tally. Total revenues of $2.53 billion missed the consensus mark by $99 million. The top line fell 7.8% year over year on a reported basis and 6.1% on a constant-currency basis.
Shares of Xerox have declined 26% in the past year compared with the industry’s 1.4% decline.
Let’s check out the numbers in detail.
Revenues by Segment
Equipment sales totaled $629 million, which declined 9.5% year over year on a reported basis and 7.7% on a constant-currency (cc) basis. The segment contributed 25% to total revenues.
Post sale revenues of $1.90 billion declined 7.2% year over year on a reported basis and 5.5% at cc. The segment contributed 75% to total revenues.
Revenues by Region
Revenues from North America came in at $1.52 billion, down 5.2% year over year on a reported basis and 4.9% at cc. The region contributed 60% to total revenues.
International revenues amounted to $929 million, down 7.2% year over year on a reported basis and 3.2% at cc. The region contributed 37% to total revenues.
Revenues from Other region totaled $87 million, down 40% year over year on a reported basis as well as at cc. The region contributed 3% to total revenues.
Xerox Corporation Revenue (TTM)
Operating Results
Gross profit of $1.01 billion fell 8.5% from the prior-year quarter’s figure. Total gross margin of 40% declined 30 basis points (bps) year over year.
While equipment gross margin surged 532 bps on a year-over-year basis to 33.1%, post sale gross margin contracted 230 bps to 42.3%.
Adjusted operating profit of $409 million was up 4.3% year over year. Adjusted operating margin improved 180 bps year over year to 16.1%.
Selling, administrative and general expenses, as a percentage of revenues, declined to 21.9% from 23.2% in the year-ago quarter.Research, development and engineering expenses, as a percentage of revenues, declined to 3.7% from 3.9% in the prior-year quarter.
Balance Sheet and Cash Flow
Xerox exited the fourth quarter with cash, cash equivalents and restricted cash balance of $1.15 billion compared with $1.22 billion at the end of the previous quarter. Long-term debt was $4.27 billion compared with $4.82 billion in the preceding quarter. The company generated $415 million of cash from operating activities in the reported quarter.
Xerox returned $969 million to shareholders through share repurchase and dividends in 2018.
2019 Guidance
Xerox expects adjusted earnings between $3.70 and $3.80 per share, higher than the Zacks Consensus Estimate of $3.66. 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%, an expansion of 100-150 bps year over year.
Zacks Rank & Upcoming Releases
Xerox currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader Business Services sector are General Finance Corporation , Omnicom Group Inc (OMC - Free Report) and Paychex, Inc (PAYX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected EPS (three to five years) growth rate for General Finance, Omnicom and Paychex is 11%, 6.9% and 8.8%, respectively.
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Xerox Corporation (XRX - Free Report) reported disappointing fourth-quarter 2018 results, missing the Zacks Consensus Estimate on both counts.
Adjusted earnings per share of $1.14 missed the consensus mark by 2 cents but increased 11 cents from the year-ago quarter’s tally. Total revenues of $2.53 billion missed the consensus mark by $99 million. The top line fell 7.8% year over year on a reported basis and 6.1% on a constant-currency basis.
Shares of Xerox have declined 26% in the past year compared with the industry’s 1.4% decline.
Let’s check out the numbers in detail.
Revenues by Segment
Equipment sales totaled $629 million, which declined 9.5% year over year on a reported basis and 7.7% on a constant-currency (cc) basis. The segment contributed 25% to total revenues.
Post sale revenues of $1.90 billion declined 7.2% year over year on a reported basis and 5.5% at cc. The segment contributed 75% to total revenues.
Revenues by Region
Revenues from North America came in at $1.52 billion, down 5.2% year over year on a reported basis and 4.9% at cc. The region contributed 60% to total revenues.
International revenues amounted to $929 million, down 7.2% year over year on a reported basis and 3.2% at cc. The region contributed 37% to total revenues.
Revenues from Other region totaled $87 million, down 40% year over year on a reported basis as well as at cc. The region contributed 3% to total revenues.
Xerox Corporation Revenue (TTM)
Operating Results
Gross profit of $1.01 billion fell 8.5% from the prior-year quarter’s figure. Total gross margin of 40% declined 30 basis points (bps) year over year.
While equipment gross margin surged 532 bps on a year-over-year basis to 33.1%, post sale gross margin contracted 230 bps to 42.3%.
Adjusted operating profit of $409 million was up 4.3% year over year. Adjusted operating margin improved 180 bps year over year to 16.1%.
Selling, administrative and general expenses, as a percentage of revenues, declined to 21.9% from 23.2% in the year-ago quarter.Research, development and engineering expenses, as a percentage of revenues, declined to 3.7% from 3.9% in the prior-year quarter.
Balance Sheet and Cash Flow
Xerox exited the fourth quarter with cash, cash equivalents and restricted cash balance of $1.15 billion compared with $1.22 billion at the end of the previous quarter. Long-term debt was $4.27 billion compared with $4.82 billion in the preceding quarter. The company generated $415 million of cash from operating activities in the reported quarter.
Xerox returned $969 million to shareholders through share repurchase and dividends in 2018.
2019 Guidance
Xerox expects adjusted earnings between $3.70 and $3.80 per share, higher than the Zacks Consensus Estimate of $3.66. 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%, an expansion of 100-150 bps year over year.
Zacks Rank & Upcoming Releases
Xerox currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader Business Services sector are General Finance Corporation , Omnicom Group Inc (OMC - Free Report) and Paychex, Inc (PAYX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected EPS (three to five years) growth rate for General Finance, Omnicom and Paychex is 11%, 6.9% and 8.8%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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