NORWALK, Conn., April 22, 2014 – Xerox announced its first quarter 2014 adjusted earnings per share of 27 cents. Total revenue in the first quarter was $5.1 billion, down 2 percent. Revenue from the company’s Services business, which represented 57 percent of total revenue, was $2.9 billion, flat year over year.
Revenue from the company’s Document Technology business, which represented 40 percent of total revenue, was $2.0 billion, down 4 percent or 5 percent in constant currency.
“Our first-quarter performance reflects the value of our diversified business. Good profitability in Document Technology along with strength in document outsourcing and in commercial outsourcing services contributed positively to our results,” said Ursula Burns, Xerox chairman and chief executive officer. “But these gains were offset by higher-than-anticipated investments in our government healthcare business as we implement new Medicaid and health insurance exchange platforms. We’re focused on driving Services growth and margin improvement by executing on our Five-Plank Strategy and expect the benefits to build through 2014.”
The company generated $286 million in cash flow from operations during the first quarter. Also during the quarter, the company repurchased $275 million in Xerox stock.
“Our strong cash position enabled a fast start to our share repurchase program, and we are increasing our full-year share repurchase expectations from at least $500 million to at least $700 million. We continue to make investments in expanding services outside of the United States and to build out our services capabilities in areas that provide significant customer value,” Burns added.
First-quarter operating margin of 8.6 percent improved 1.1 points year over year. Gross margin was 30.2 percent, and selling, administrative and general expenses were 18.8 percent of revenue.
As a result of increased implementation costs in government healthcare, the company is lowering its guidance for both full-year Services segment margin and 2014 earnings.
Second-quarter 2014 GAAP earnings per share is expected to be 21 to 23 cents per share. Second-quarter adjusted EPS is expected to be 25 to 27 cents.
The company expects full-year 2014 GAAP earnings per share of 90 to 96 cents and full-year adjusted EPS of $1.07 to $1.13.