Xerox Reports Second-Quarter 2015 Earnings

NORWALK, Conn., July 24, 2015 – Xerox (NYSE: XRX) announced today second-quarter 2015 adjusted earnings per share of 22 cents. Adjusted EPS excludes 5 cents related to the amortization of intangibles and 8 cents for the previously announced non-cash software impairment charges, resulting in GAAP EPS from continuing operations of 9 cents.

In the second quarter, total revenue of $4.6 billion was down 7 percent or 3 percent in constant currency. Annuity revenue was 84 percent of total revenue.

Revenue from the company’s Services business, which represented 56 percent of total revenue, was $2.6 billion, down 3 percent or up 1 percent in constant currency. Services margin was 7.5 percent, down 1 percentage point.

Revenue from the company’s Document Technology business was $1.9 billion, down 12 percent or 7 percent in constant currency. Document Technology margin was 12.1 percent, down 2.3 percentage points.

Second-quarter operating margin of 8.2 percent was down 1.6 percentage points from the same quarter a year ago. Gross margin was 31.1 percent, and selling, administrative and general expenses were 19.7 percent of revenue.

Xerox generated $349 million in cash flow from operations during the second quarter, ending the quarter with a cash balance of $1.6 billion. The company repurchased $395 million in stock in the quarter, bringing the total to $611 million in the first-half of 2015.

“We delivered adjusted earnings in line with our guidance, met our Services and Document Technology margin expectations and delivered solid operating cash flow of $349 million in the quarter,” said Ursula Burns, Xerox chairman and chief executive officer. “We are intensely focused on improving our Services margin and are implementing restructuring actions and prioritizing investments to accelerate benefits from our new operating model.”

Xerox expects third-quarter 2015 GAAP earnings of 17 to 19 cents per share. Third-quarter adjusted EPS is expected to be 22 to 24 cents per share.

For full-year 2015, Xerox expects GAAP earnings of 69 to 75 cents per share and adjusted EPS at the lower end of the 95 cents to $1.01 per share range.

Xerox continues to expect full-year 2015 cash flow from operations of $1.7 to $1.9 billion and free cash flow from operations of $1.3 to $1.5 billion.

The company is adjusting its 2015 capital allocation plans, increasing share repurchases by $300 million to $1.3 billion and reducing acquisition investments.

About Xerox

Xerox is a global business services, technology and document management company helping organizations transform the way they manage their business processes and information. Headquartered in Norwalk, Conn., we have more than 130,000 Xerox employees and do business in 180 countries. Together, we provide business process services, printing equipment, hardware and software technology for managing information — from data to documents. Learn more at www.xerox.com.