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Xerox's (XRX) Earnings Miss Estimates in Q4, Decrease Y/Y

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Xerox Holdings Corporation (XRX - Free Report) reported mixed fourth-quarter 2020 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same.

Adjusted earnings per share of 58 cents missed the consensus mark by 3.3% and declined 56.4% year over year. Total revenues of $1.93 billion surpassed the consensus mark by 1.9% but declined 21% year over year on a reported basis and 22.3% on a constant-currency basis. The coronavirus pandemic had a significant negative impact on the company’s quarterly results.

Notably, the company’s shares have slumped 40.8% over the past year compared with a 1.7% decline for the industry.

Other Quarterly Details

Equipment sales revenues totaled $510 million, down 17.2% year over year on a reported basis and 18.8% on a constant-currency basis, contributing 26% to total revenues. Post-sale revenues totaled $1.42 billion, down 22.3% year over year on a reported basis and 23.5% on a constant-currency basis, contributing 74% to total revenues.

Adjusted operating profit of $184 million declined more than 100% year over year. Adjusted operating margin shrunk 730 basis points year over year to 9.5%. Selling, administrative and general expenses, as a percentage of revenues, increased 1.7% year over year to 25.1%. Research, development and engineering expenses, as a percentage of revenues, came in at 22.8%, up from the year-ago quarter’s 20.9%.

Xerox exited the quarter with cash, cash equivalents and restricted cash balance of $2.7 billion compared with $3.3 billion at the end of the prior quarter. Long-term debt was $4.1 billion compared with $3.8 billion at the end of the previous quarter.

The company generated $235 million of cash from continuous operations and free cash flow was $221 million.

2021 Guidance

Xerox expects revenues to grow 2.5% on a constant-currency basis. Cash from continuous operations and free cash flow are anticipated to be $600 million and $500 million, respectively.

Xerox currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the broader Zacks Business Services sector are keenly awaiting fourth-quarter 2020 earnings reports of key players like Waste Connections (WCN - Free Report) , Waste Management (WM - Free Report) and Republic Services (RSG - Free Report) . While Waste Connections will release earnings on Feb 17, Waste Management and Republic Services will report the same on Feb 18 and Feb 22, respectively.

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