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Xerox's (XRX) Earnings Miss Estimates in Q1, Increase Y/Y

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Xerox Holdings Corporation (XRX - Free Report) reported mixed first-quarter 2021 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same.

Adjusted earnings per share of 22 cents missed the consensus mark by 4.4% but increased 4.8% year over year. Total revenues of $1.71 billion surpassed the consensus mark by 5.7% but declined 8.1% year over year on a reported basis and 10.4% 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 gained 42.1% over the past year, underperforming the 75.6% rally of the industry it belongs to.

Revenues in Detail

Equipment sales revenues totaled $381 million, up 17.2% year over year on a reported basis and 14.2% on a constant-currency basis, contributing 22% to total revenues. Post-sale revenues totaled $1.33 billion, down 13.4% year over year on a reported basis and 15.6% on a constant-currency basis, contributing 78% to total revenues.

Operating Performance

Adjusted operating profit of $89 million increased 2.3% year over year. Adjusted operating margin expanded 50 basis points (bps) year over year to 5.2%. Selling, administrative and general expenses, as a percentage of revenues, decreased 290 bps year over year to 26.2%. Research, development and engineering expenses, as a percentage of revenues, were 4.3%, down from the year-ago quarter’s 4.5%.

Xerox Holdings Corporation Price, Consensus and EPS Surprise

Xerox Holdings Corporation Price, Consensus and EPS Surprise

Xerox Holdings Corporation price-consensus-eps-surprise-chart | Xerox Holdings Corporation Quote

Key Balance Sheet and Cash Flow Figures

Xerox exited the quarter with cash, cash equivalents and restricted cash balance of $2.38 billion compared with $2.63 billion at the end of the prior quarter. Long-term debt was $3.67 billion compared with $4.05 billion at the end of the previous quarter.

The company generated $117 million of cash from operating activities and paid out $54 million as dividends. Capital expenditures and free cash flow during the quarter were $17 million and $100 million, respectively.

2021 Guidance

Xerox expects operating cash flow and free cash flow to be $600 million and $500 million, respectively, in 2021.

Xerox currently carries a Zacks Rank #4 (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 first-quarter 2021 earnings 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 its earnings on Apr 28, Waste Management and Republic Services will report the same on Apr 27 and May 5, respectively.

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