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Xerox's (XRX) Earnings Miss Estimates in Q1, Decrease Y/Y

Xerox XRX reported mixed first-quarter 2020 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same.

Adjusted earnings per share of 21 cents missed the consensus mark by a massive 52.3% and declined year over year. Total revenues of $1.86 billion surpassed the consensus mark by 6% but declined year over year on a reported as well as constant-currency (cc) basis. The coronavirus pandemic had a significant negative impact on the company’s quarterly results.

Shares of the company have depreciated 46% over the past year compared with the 17.1% decline of the industry it belongs to.

Revenues by Segment

Equipment sales totaled $325 million, down 27.5% year over year on a reported basis and 27% at cc. The segment contributed 17% to total revenues.

Post-sale revenues of $1.53 billion declined 11.4% year over year on a reported basis and 10.5% cc. The segment contributed 83% to total revenues.

Revenues by Region

Revenues from the Americas came in at $1.24 billion, down 12.1% year over year on a reported basis and 11.8% at cc. The region contributed 67% to total revenues.

EMEA revenues amounted to $575 million, down 19.2% year over year on a reported basis and 17.6% at cc. The region contributed 31% to total revenues.

Revenues from Other region totaled $46 million compared with the $58 million reported in the year-ago quarter. The region contributed 21% to total revenues.

Operating Performance

Adjusted operating profit of $87 million plummeted 63.6% year over year. Adjusted operating margin shrunk 630 basis points (bps) year over year to 4.7%.

Selling, administrative and general expenses, as a percentage of revenues, declined to 29.1% from the 25.1% reported in the year-ago quarter. Research, development and engineering expenses, as a percentage of revenues, came in at 4.5%, up from the year-ago quarter’s 4.2%.

Balance Sheet and Cash Flow

Xerox exited the first quarter with cash, cash equivalents and restricted cash balance of $2.7 billion compared with the $2.8 billion witnessed at the end of the prior quarter. Long-term debt was $3.2 billion at the end of the March-end quarter.

The company generated $173 million of cash from continuous operations and capex was $23 million in the reported quarter. Free cash flow was $150 million. Xerox paid out $58 million in dividends in the quarter.

Xerox currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

Robert Half International Inc. RHI reported first-quarter 2020 earnings of 79 cents per share that missed the Zacks Consensus Estimate by 2.5% and were down 15% year over year. Revenues of $1.51 billion marginally beat the consensus mark, and increased 3% year over year on a reported basis and 2% on an as-adjusted basis.

Equifax Inc. EFX came up with first-quarter 2020 adjusted earnings of $1.40 per share that beat the consensus estimate by 8.5% and improved 16% on a year-over-year basis. Revenues of $957.9 million outpaced the consensus estimate by 4.2% and improved 13% year over year on a reported basis.

The Interpublic Group of Companies, Inc. IPG delivered first-quarter 2020 adjusted earnings of 11 cents per share, beating the consensus mark by 22.2%, and being flat year over year. Net revenues of $1.97 billion outpaced the consensus estimate by 1.6% but decreased 16.5% on a year-over-year basis.

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