Xerox reports improved revenues but earnings still challenged
Xerox Corp. reports third-quarter revenue was down 0.4 percent year-over-year to $1.75 billion and GAAP (loss) earnings per share (EPS) of $(2.48), down $2.96 year-over-year.
“Over the past few months, I’ve met in-person with customers, partners and employees across the globe and I’ve gained greater insight into the range of opportunities we have to grow our business,” said Steve Bandrowczak, chief executive officer at Xerox. “Top-line strength and cost discipline resulted in sequential improvement to our adjusted operating margin this quarter, but profitability remains challenged by persistently high inflation and continued supply chain constraints. In the near-term, we are focused on improving operating margins and free cash flow amid a challenging macroeconomic environment.
Longer-term, I am confident we can expand and capture more of the addressable market within – and create value for – our existing client base by further embedding our offerings into their workflows.”
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Third-Quarter Key Financial Results |
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(in millions, except per share data) |
Q3 2022 |
Q3 2021 |
B/(W) YOY |
% Change B/(W) YOY |
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|
Revenue |
$1,751 |
$1,758 |
$(7) |
(0.4) % AC 4.7% CC2 |
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Gross Margin |
31.8% |
32.4% |
(60) bps |
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RD&E % |
4.2% |
4.7% |
50 bps |
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SAG % |
23.9% |
23.5% |
(40) bps |
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Pre-Tax (Loss) Income1 |
$(380) |
$84 |
$(464) |
NM |
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Pre-Tax (Loss) Income Margin1 |
(21.7)% |
4.8% |
NM |
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Operating Income – Adjusted2 |
$65 |
$74 |
$(9) |
(12.2)% |
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Operating Income Margin – Adjusted 2 |
3.7% |
4.2% |
(50) bps |
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GAAP Diluted (Loss) Earnings per Share1 |
$(2.48) |
$0.48 |
$(2.96) |
NM |
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Diluted Earnings Per Share – Adjusted2 |
$0.19 |
$0.48 |
$(0.29) |
(60.4)% |
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___________ |
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(1) Third quarter 2022 pre-tax loss and EPS include a $412 million non-cash goodwill impairment charge ($395 million after-tax), or $2.54 per share. |
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(2) Refer to the “Non-GAAP Financial Measures” section of this release for a discussion of these non-GAAP measures, and their reconciliation to the reported GAAP measures. |
Beginning in the first quarter of 2022, the company made a change to its reportable segments from one reportable segment to two reportable segments – Print and Other, and Financing (FITTLE).
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Third-Quarter Segment Results |
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(in millions) |
Q3 2022 |
Q3 2021 |
B/(W) YOY |
% Change B/(W) YOY |
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Revenue |
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|
|
|
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Print and Other |
$1,641 |
$1,636 |
$5 |
0.3% |
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Financing (FITTLE) |
150 |
171 |
(21) |
(12.3)% |
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Intersegment Elimination1 |
(40) |
(49) |
9 |
(18.4)% |
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Total Revenue |
$1,751 |
$1,758 |
$(7) |
(0.4)% |
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Profit |
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|
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Print and Other |
$57 |
$50 |
$7 |
14.0% |
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Financing (FITTLE) |
8 |
24 |
(16) |
(66.7)% |
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Total Profit |
$65 |
$74 |
$(9) |
(12.2)% |
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___________ |
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(1) Reflects net revenue, primarily commissions and other payments, made by the Financing segment (FITTLE) to the Print and Other Segment for the lease of Xerox equipment placements. |