April 24, 2013
OEM announces first quarter results, with services business earnings up by four percent.
Xerox’s focus on its services businesses was reflected in the OEM’s first quarter earnings report for 2013, with the services business seeing a four percent increase in earnings despite overall earnings decreasing by three percent, and services representing 55 percent of the company’s total revenue.
Xerox’s overall revenue during the quarter fell to $5.4 billion (€4.1 billion), while its adjusted earnings per share was reported at 27 cents, including a two cent benefit from a reserve reduction related to recent litigation developments.
The report stated that first quarter operating margin declined 1.1 points to 7.4 percent, while gross margin was 30 percent and selling, administrative and general expenses were 19.7 percent of revenue. Xerox also stated that it used $87 million (€66.8 million) in operating cash during the quarter, which was in-line with cash flow seasonality and reflects the company’s increase in inventory related to new product launches.
Ursula Burns, CEO and Chairman of Xerox, said: “We delivered solid revenue growth in our services business along with a stable segment margin and a 64 percent increase in the total contract value of signings to $3.7 billion (€2.8 billion).”
She added that revenue from Xerox’s document technology business was down by nine percent “which had an adverse impact on segment margin as market conditions and the timing on a recent product platform launch put pressure on the sale of document systems, supplies and related services”.
Commenting on the company’s direction, Burns said: “We’re continuing to shift our business model to adapt to market trends by expanding indirect distribution and streamlining our supply chain and product portfolio. These changes, along with implementing broader operational improvements across the company, will result in increased margins that will help us scale profitable revenue in services while maintaining strong market share in document technology.”
In terms of estimates for the second quarter of 2013, Xerox expects GAAP earnings of 19 to 21 cents per share and adjusted EPS of 23 to 25 cents per. It also plans to implement a higher level of restructuring activities in the second quarter; and aims to generate operating cash flow of $2.1 billion (€1.6 billion) to $2.4 billion (€1.8 billion) in 2013.
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