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Xerox (XRX - Free Report) reported mixed third-quarter 2019 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
Adjusted earnings per share of $1.08 beat the consensus mark by 23 cents and increased 27.1% from the year-ago quarter’s figure. Total revenues of $2.20 billion missed the consensus mark by $16 million. The top line fell 6.5% year over year on a reported basis and 5.3% on a constant-currency (cc) basis.
Shares of the company have gained a massive 59.4% year to date, outperforming the 49.5% rally of the industry it belongs to.
Revenues by Segment
Equipment sales totaled $494 million, which declined 3.3% year over year on a reported basis and 2.2% on a constant-currency basis. The segment contributed 22% to total revenues.
Post sale revenues of $1.71 billion declined 7.3% year over year on a reported basis and 6.2% at cc. The segment contributed 78% to total revenues.
Revenues by Region
Revenues from Americas came in at $1.49 billion, down 3.7% year over year on a reported basis and 3.6% at cc. The region contributed 68% to total revenues.
EMEA revenues amounted to $641 million, down 10.1% year over year on a reported basis and 6.8% at cc. The region contributed 29% to total revenues.
Revenues from Other region totaled $72 million, down 24.2% year over year on a reported basis as well as at cc. The region contributed 3% to total revenues.
Operating Performance
Adjusted operating profit of $267 million rose 3.9% year over year. Adjusted operating margin improved 120 basis points (bps) year over year to 12.1%.
Selling, administrative and general expenses, as a percentage of revenues, declined to 23.3% from 24.8% reported in the year-ago quarter. Research, development and engineering expenses, as a percentage of revenues, increased to 4.5% from 4.3% reported in the prior-year quarter.
Balance Sheet and Cash Flow
Xerox exited the third quarter with cash, cash equivalents and restricted cash balance of $922 billion compared with $712 million at the end of the year-ago quarter. Long-term debt was $3.23 billion, compared with $3.96 billion at the end of the prior-year quarter.
The company generated $356 million of cash from operating activities and capex was $17 in the reported quarter. Free cash flow was $339 million.
2019 Guidance
Xerox raised its 2019 guidance for adjusted EPS, operating cash flow and free cash flow. The company now expects adjusted EPS in the range of $4.00 to $4.10, compared with the previous guidance of $3.80 to $3.95. The current Zacks Consensus Estimate is pegged at $3.89.
The company expects free cash flow in the range of $1.1 to $1.2 billion, compared with the previous guidance of $1.0-$1.1 billion. Operating cash flow is anticipated between $1.2 billion and $1.3 billion. Revenues are expected to decline roughly 6% at cc.
Long-term earnings (three to five years) growth rate for FleetCor, S&P Global and Paychex is estimated at 15.6%, 10% and 7%, respectively.
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Xerox (XRX) Beats Q3 Earnings Estimates, Raises '19 EPS View
Xerox (XRX - Free Report) reported mixed third-quarter 2019 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
Adjusted earnings per share of $1.08 beat the consensus mark by 23 cents and increased 27.1% from the year-ago quarter’s figure. Total revenues of $2.20 billion missed the consensus mark by $16 million. The top line fell 6.5% year over year on a reported basis and 5.3% on a constant-currency (cc) basis.
Shares of the company have gained a massive 59.4% year to date, outperforming the 49.5% rally of the industry it belongs to.
Revenues by Segment
Equipment sales totaled $494 million, which declined 3.3% year over year on a reported basis and 2.2% on a constant-currency basis. The segment contributed 22% to total revenues.
Post sale revenues of $1.71 billion declined 7.3% year over year on a reported basis and 6.2% at cc. The segment contributed 78% to total revenues.
Revenues by Region
Revenues from Americas came in at $1.49 billion, down 3.7% year over year on a reported basis and 3.6% at cc. The region contributed 68% to total revenues.
EMEA revenues amounted to $641 million, down 10.1% year over year on a reported basis and 6.8% at cc. The region contributed 29% to total revenues.
Revenues from Other region totaled $72 million, down 24.2% year over year on a reported basis as well as at cc. The region contributed 3% to total revenues.
Operating Performance
Adjusted operating profit of $267 million rose 3.9% year over year. Adjusted operating margin improved 120 basis points (bps) year over year to 12.1%.
Selling, administrative and general expenses, as a percentage of revenues, declined to 23.3% from 24.8% reported in the year-ago quarter. Research, development and engineering expenses, as a percentage of revenues, increased to 4.5% from 4.3% reported in the prior-year quarter.
Balance Sheet and Cash Flow
Xerox exited the third quarter with cash, cash equivalents and restricted cash balance of $922 billion compared with $712 million at the end of the year-ago quarter. Long-term debt was $3.23 billion, compared with $3.96 billion at the end of the prior-year quarter.
The company generated $356 million of cash from operating activities and capex was $17 in the reported quarter. Free cash flow was $339 million.
2019 Guidance
Xerox raised its 2019 guidance for adjusted EPS, operating cash flow and free cash flow. The company now expects adjusted EPS in the range of $4.00 to $4.10, compared with the previous guidance of $3.80 to $3.95. The current Zacks Consensus Estimate is pegged at $3.89.
The company expects free cash flow in the range of $1.1 to $1.2 billion, compared with the previous guidance of $1.0-$1.1 billion. Operating cash flow is anticipated between $1.2 billion and $1.3 billion. Revenues are expected to decline roughly 6% at cc.
Zacks Rank & Stocks to Consider
Currently, Xerox carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are FleetCor , S&P Global (SPGI - Free Report) and Paychex (PAYX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings (three to five years) growth rate for FleetCor, S&P Global and Paychex is estimated at 15.6%, 10% and 7%, respectively.
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The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
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