Company reports higher revenue, EPS and free cash flow while increasing investments in targeted growth areas
Financial Summary
- $1.79 billion of revenue, up 22.4 percent year-over-year or 18.1 percent in constant currency.
- GAAP earnings per share (EPS) of $0.46, up $0.35 year-over-year, and adjusted EPS of $0.47, up $0.32 year-over-year.
- Adjusted operating margin of 7.0 percent, up 280 basis points year-over-year.
- $214 million of operating cash flow, up $180 million year-over-year.
- $198 million of free cash flow, up $183 million year-over-year.
NORWALK, Conn.–(BUSINESS WIRE)–$XRX—Xerox Holdings Corporation (NYSE: XRX) today announced 2021 second-quarter results.
“We saw growing demand for our products and services in the second quarter. Increased equipment sales and print volumes in many regions are consistent with a continuing, gradual return to the office and give us confidence to reaffirm our revenue and cash flow guidance for the year,” said Xerox Vice Chairman and CEO John Visentin. “Over the past 18 months, our team has successfully managed through an unprecedented level of uncertainty to continue delivering value to our clients. This focus will continue in the second half of the year as we manage through global supply chain disruption while investing for sustainable, long-term growth.”
Second-Quarter Key Financial Results:
(in millions, except per share data) |
Q2 2021 |
Q2 2020 |
B/(W) YOY |
% Change YOY |
Revenue |
$1,793 |
$1,465 |
$328 |
22.4% AC 18.1% CC1 |
Gross Margin |
35.6% |
38.5% |
(290) bps |
|
RD&E % |
4.4% |
5.2% |
80 bps |
|
SAG % |
24.2% |
29.1% |
490 bps |
|
Pre-Tax Income |
$99 |
$35 |
$64 |
182.9% |
Pre-Tax Income Margin |
5.5% |
2.4% |
310 bps |
|
Operating Income – Adjusted1 |
$126 |
$62 |
$64 |
103.2% |
Operating Margin – Adjusted1 |
7.0% |
4.2% |
280 bps |
|
GAAP Earnings per Share |
$0.46 |
$0.11 |
$0.35 |
318.2% |
Earnings Per Share – Adjusted1 |
$0.47 |
$0.15 |
$0.32 |
|
_______________ |
(1) 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. |
Non-GAAP Measures
This release refers to the following non-GAAP financial measures:
- Adjusted EPS, which excludes Restructuring and related costs, net, Amortization of intangible assets, non-service retirement-related costs, Transaction and related costs, net and other discrete adjustments from GAAP-EPS, as applicable.
- Adjusted operating margin and income, which exclude the EPS adjustments noted above as well as the remainder of Other expenses, net from pre-tax income and margin.
- Constant currency (CC) revenue change, which excludes the effects of currency translation.
- Free cash flow, which is operating cash flow less capital expenditures.
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.
Forward-Looking Statements
This release, and other written or oral statements made from time to time by management contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “will”, “should”, “targeting”, “projecting”, “driving” and similar expressions, as they relate to us, our performance and/or our technology, are intended to identify forward-looking statements. These statements reflect management’s current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially. Such factors include but are not limited to: the effects of the COVID-19 pandemic on our and our customers’ businesses and the duration and extent to which this will impact our future results of operations and overall financial performance; our ability to address our business challenges in order to reverse revenue declines, reduce costs and increase productivity so that we can invest in and grow our business; our ability to attract and retain key personnel; changes in economic and political conditions, trade protection measures, licensing requirements and tax laws in the United States and in the foreign countries in which we do business; the imposition of new or incremental trade protection measures such as tariffs and import or export restrictions; changes in foreign currency exchange rates; our ability to successfully develop new products, technologies and service offerings and to protect our intellectual property rights; the risk that multi-year contracts with governmental entities could be terminated prior to the end of the contract term and that civil or criminal penalties and administrative sanctions could be imposed on us if we fail to comply with the terms of such contracts and applicable law; the risk that partners, subcontractors and software vendors will not perform in a timely, quality manner; actions of competitors and our ability to promptly and effectively react to changing technologies and customer expectations; our ability to obtain adequate pricing for our products and services and to maintain and improve cost efficiency of operations, including savings from restructuring actions; the risk that confidential and/or individually identifiable information of ours, our customers, clients and employees could be inadvertently disclosed or disclosed as a result of a breach of our security systems due to cyber attacks or other intentional acts; reliance on third parties, including subcontractors, for manufacturing of products and provision of services; the exit of the United Kingdom from the European Union; our ability to manage changes in the printing environment and expand equipment placements; interest rates, cost of borrowing and access to credit markets; funding requirements associated with our employee pension and retiree health benefit plans; the risk that our operations and products may not comply with applicable worldwide regulatory requirements, particularly environmental regulations and directives and anti-corruption laws; the outcome of litigation and regulatory proceedings to which we may be a party; any impacts resulting from the restructuring of our relationship with Fujifilm Holdings Corporation; and the shared services arrangements entered into by us as part of Project Own It. Additional risks that may affect Xerox’s operations and other factors that are set forth in the “Risk Factors” section, the “Legal Proceedings” section, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other sections of Xerox Holdings Corporation’s and Xerox Corporation’s combined 2020 Annual Report on Form 10-K, as well as in Xerox Holdings Corporation’s and Xerox Corporation’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC.
These forward-looking statements speak only as of the date of this release or as of the date to which they refer, and Xerox assumes no obligation to update any forward-looking statements as a result of new information or future events or developments, except as required by law.
Note: To receive RSS news feeds, visit https://www.news.xerox.com. For open commentary, industry perspectives and views, visit http://www.linkedin.com/company/xerox, http://twitter.com/xerox, http://www.facebook.com/XeroxCorp, https://www.instagram.com/xerox/, http://www.youtube.com/XeroxCorp.
Xerox® is a trademark of Xerox in the United States and/or other countries.
XEROX HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) |
||||||||||||||||
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
(in millions, except per-share data) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Revenues |
|
|
|
|
|
|
|
|
||||||||
Sales |
|
$ |
670 |
|
|
$ |
460 |
|
|
$ |
1,272 |
|
|
$ |
1,025 |
|
Services, maintenance and rentals |
|
1,067 |
|
|
949 |
|
|
2,120 |
|
|
2,185 |
|
||||
Financing |
|
56 |
|
|
56 |
|
|
111 |
|
|
115 |
|
||||
Total Revenues |
|
1,793 |
|
|
1,465 |
|
|
3,503 |
|
|
3,325 |
|
||||
Costs and Expenses |
|
|
|
|
|
|
|
|
||||||||
Cost of sales |
|
468 |
|
|
338 |
|
|
888 |
|
|
725 |
|
||||
Cost of services, maintenance and rentals |
|
658 |
|
|
533 |
|
|
1,309 |
|
|
1,264 |
|
||||
Cost of financing |
|
28 |
|
|
30 |
|
|
56 |
|
|
60 |
|
||||
Research, development and engineering expenses |
|
79 |
|
|
76 |
|
|
153 |
|
|
160 |
|
||||
Selling, administrative and general expenses |
|
434 |
|
|
426 |
|
|
882 |
|
|
967 |
|
||||
Restructuring and related costs, net |
|
12 |
|
|
3 |
|
|
29 |
|
|
44 |
|
||||
Amortization of intangible assets |
|
14 |
|
|
10 |
|
|
29 |
|
|
21 |
|
||||
Transaction and related costs, net |
|
— |
|
|
7 |
|
|
— |
|
|
24 |
|
||||
Other expenses, net |
|
1 |
|
|
7 |
|
|
5 |
|
|
30 |
|
||||
Total Costs and Expenses |
|
1,694 |
|
|
1,430 |
|
|
3,351 |
|
|
3,295 |
|
||||
Income before Income Taxes & Equity Income(1) |
|
99 |
|
|
35 |
|
|
152 |
|
|
30 |
|
||||
Income tax expense |
|
9 |
|
|
8 |
|
|
23 |
|
|
7 |
|
||||
Equity in net income of unconsolidated affiliates |
|
1 |
|
|
— |
|
|
1 |
|
|
2 |
|
||||
Net Income |
|
91 |
|
|
27 |
|
|
130 |
|
|
25 |
|
||||
Less: Income attributable to noncontrolling interests |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Net Income Attributable to Xerox Holdings |
|
$ |
91 |
|
|
$ |
27 |
|
|
$ |
130 |
|
|
$ |
25 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic Earnings per Share |
|
$ |
0.47 |
|
|
$ |
0.11 |
|
|
$ |
0.64 |
|
|
$ |
0.08 |
|
Diluted Earnings per Share |
|
$ |
0.46 |
|
|
$ |
0.11 |
|
|
$ |
0.64 |
|
|
$ |
0.08 |
|
_______________ |
(1) Referred to as “Pre-Tax Income” throughout the remainder of this document. |
XEROX HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) |
||||||||||||||||
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
(in millions) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Net Income |
|
$ |
91 |
|
|
$ |
27 |
|
|
$ |
130 |
|
|
$ |
25 |
|
Less: Net income attributable to noncontrolling interests |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Net Income Attributable to Xerox Holdings |
|
91 |
|
|
27 |
|
|
130 |
|
|
25 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Comprehensive Income (Loss), Net |
|
|
|
|
|
|
|
|
||||||||
Translation adjustments, net |
|
54 |
|
|
25 |
|
|
3 |
|
|
(172 |
) |
||||
Unrealized (losses) gains, net |
|
— |
|
|
(2 |
) |
|
(7 |
) |
|
3 |
|
||||
Changes in defined benefit plans, net |
|
16 |
|
|
80 |
|
|
71 |
|
|
134 |
|
||||
Other Comprehensive Income (Loss), Net Attributable to Xerox Holdings |
|
70 |
|
|
103 |
|
|
67 |
|
|
(35 |
) |
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive Income (Loss), Net Attributable to Xerox Holdings |
|
$ |
161 |
|
|
$ |
130 |
|
|
$ |
197 |
|
|
$ |
(10 |
) |
XEROX HOLDINGS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
||||||||
(in millions, except share data in thousands) |
|
June 30, 2021 |
|
December 31, 2020 |
||||
Assets |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
2,124 |
|
|
$ |
2,625 |
|
Accounts receivable (net of allowance of $68 and $69, respectively) |
|
846 |
|
|
883 |
|
||
Billed portion of finance receivables (net of allowance of $3 and $4, respectively) |
|
89 |
|
|
99 |
|
||
Finance receivables, net |
|
1,057 |
|
|
1,082 |
|
||
Inventories |
|
815 |
|
|
843 |
|
||
Other current assets |
|
244 |
|
|
251 |
|
||
Total current assets |
|
5,175 |
|
|
5,783 |
|
||
Finance receivables due after one year (net of allowance of $130 and $129, respectively) |
|
1,971 |
|
|
1,984 |
|
||
Equipment on operating leases, net |
|
271 |
|
|
296 |
|
||
Land, buildings and equipment, net |
|
372 |
|
|
407 |
|
||
Intangible assets, net |
|
230 |
|
|
237 |
|
||
Goodwill |
|
4,104 |
|
|
4,071 |
|
||
Deferred tax assets |
|
491 |
|
|
508 |
|
||
Other long-term assets |
|
1,496 |
|
|
1,455 |
|
||
Total Assets |
|
$ |
14,110 |
|
|
$ |
14,741 |
|
Liabilities and Equity |
|
|
|
|
||||
Short-term debt and current portion of long-term debt |
|
$ |
642 |
|
|
$ |
394 |
|
Accounts payable |
|
935 |
|
|
983 |
|
||
Accrued compensation and benefits costs |
|
263 |
|
|
261 |
|
||
Accrued expenses and other current liabilities |
|
851 |
|
|
840 |
|
||
Total current liabilities |
|
2,691 |
|
|
2,478 |
|
||
Long-term debt |
|
3,597 |
|
|
4,050 |
|
||
Pension and other benefit liabilities |
|
1,436 |
|
|
1,566 |
|
||
Post-retirement medical benefits |
|
340 |
|
|
340 |
|
||
Other long-term liabilities |
|
537 |
|
|
497 |
|
||
Total Liabilities |
|
8,601 |
|
|
8,931 |
|
||
|
|
|
|
|
||||
Convertible Preferred Stock |
|
214 |
|
|
214 |
|
||
|
|
|
|
|
||||
Common stock |
|
189 |
|
|
198 |
|
||
Additional paid-in capital |
|
2,214 |
|
|
2,445 |
|
||
Treasury stock, at cost |
|
(159 |
) |
|
— |
|
||
Retained earnings |
|
6,308 |
|
|
6,281 |
|
||
Accumulated other comprehensive loss |
|
(3,265 |
) |
|
(3,332 |
) |
||
Xerox Holdings shareholders’ equity |
|
5,287 |
|
|
5,592 |
|
||
Noncontrolling interests |
|
8 |
|
|
4 |
|
||
Total Equity |
|
5,295 |
|
|
5,596 |
|
||
Total Liabilities and Equity |
|
$ |
14,110 |
|
|
$ |
14,741 |
|
|
|
|
|
|
||||
Shares of common stock issued |
|
188,817 |
|
|
198,386 |
|
||
Treasury stock |
|
(6,641 |
) |
|
— |
|
||
Shares of Common Stock Outstanding |
|
182,176 |
|
|
198,386 |
|
XEROX HOLDINGS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
||||||||||||||||
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
(in millions) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
||||||||
Net income |
|
$ |
91 |
|
|
$ |
27 |
|
|
$ |
130 |
|
|
$ |
25 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjustments required to reconcile Net income to Cash flows from operating activities |
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
84 |
|
|
88 |
|
|
170 |
|
|
182 |
|
||||
Provisions |
|
14 |
|
|
21 |
|
|
34 |
|
|
101 |
|
||||
Net gain on sales of businesses and assets |
|
(1 |
) |
|
— |
|
|
(1 |
) |
|
(1 |
) |
||||
Stock-based compensation |
|
14 |
|
|
13 |
|
|
30 |
|
|
24 |
|
||||
Restructuring and asset impairment charges |
|
4 |
|
|
(2 |
) |
|
25 |
|
|
27 |
|
||||
Payments for restructurings |
|
(22 |
) |
|
(17 |
) |
|
(49 |
) |
|
(52 |
) |
||||
Defined benefit pension cost |
|
(2 |
) |
|
13 |
|
|
(2 |
) |
|
37 |
|
||||
Contributions to defined benefit pension plans |
|
(34 |
) |
|
(31 |
) |
|
(69 |
) |
|
(64 |
) |
||||
(Increase) decrease in accounts receivable and billed portion of finance receivables |
|
(55 |
) |
|
262 |
|
|
37 |
|
|
428 |
|
||||
Decrease (increase) in inventories |
|
22 |
|
|
(99 |
) |
|
4 |
|
|
(225 |
) |
||||
Increase in equipment on operating leases |
|
(35 |
) |
|
(23 |
) |
|
(63 |
) |
|
(55 |
) |
||||
(Increase) decrease in finance receivables |
|
(25 |
) |
|
97 |
|
|
12 |
|
|
190 |
|
||||
Decrease (increase) in other current and long-term assets |
|
48 |
|
|
1 |
|
|
66 |
|
|
(15 |
) |
||||
Decrease in accounts payable |
|
(2 |
) |
|
(210 |
) |
|
(33 |
) |
|
(159 |
) |
||||
Increase (decrease) in accrued compensation |
|
1 |
|
|
(21 |
) |
|
(35 |
) |
|
(129 |
) |
||||
Increase (decrease) in other current and long-term liabilities |
|
127 |
|
|
(92 |
) |
|
92 |
|
|
(130 |
) |
||||
Net change in income tax assets and liabilities |
|
(4 |
) |
|
13 |
|
|
2 |
|
|
3 |
|
||||
Net change in derivative assets and liabilities |
|
(5 |
) |
|
(10 |
) |
|
(2 |
) |
|
(2 |
) |
||||
Other operating, net |
|
(6 |
) |
|
4 |
|
|
(17 |
) |
|
22 |
|
||||
Net cash provided by operating activities |
|
214 |
|
|
34 |
|
|
331 |
|
|
207 |
|
||||
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
||||||||
Cost of additions to land, buildings, equipment and software |
|
(16 |
) |
|
(19 |
) |
|
(33 |
) |
|
(42 |
) |
||||
Proceeds from sales of businesses and assets |
|
1 |
|
|
— |
|
|
1 |
|
|
2 |
|
||||
Acquisitions, net of cash acquired |
|
(37 |
) |
|
— |
|
|
(37 |
) |
|
(193 |
) |
||||
Other investing, net |
|
(3 |
) |
|
1 |
|
|
(3 |
) |
|
1 |
|
||||
Net cash used in investing activities |
|
(55 |
) |
|
(18 |
) |
|
(72 |
) |
|
(232 |
) |
||||
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
||||||||
Net payments on debt |
|
(114 |
) |
|
(310 |
) |
|
(209 |
) |
|
(308 |
) |
||||
Dividends |
|
(54 |
) |
|
(57 |
) |
|
(108 |
) |
|
(115 |
) |
||||
Payments to acquire treasury stock, including fees |
|
(251 |
) |
|
— |
|
|
(413 |
) |
|
— |
|
||||
Other financing, net |
|
(10 |
) |
|
(5 |
) |
|
(17 |
) |
|
(9 |
) |
||||
Net cash used in financing activities |
|
(429 |
) |
|
(372 |
) |
|
(747 |
) |
|
(432 |
) |
||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
12 |
|
|
5 |
|
|
— |
|
|
(24 |
) |
||||
Decrease in cash, cash equivalents and restricted cash |
|
(258 |
) |
|
(351 |
) |
|
(488 |
) |
|
(481 |
) |
||||
Cash, cash equivalents and restricted cash at beginning of period |
|
2,461 |
|
|
2,665 |
|
|
2,691 |
|
|
2,795 |
|
||||
Cash, Cash Equivalents and Restricted Cash at End of Period |
|
$ |
2,203 |
|
|
$ |
2,314 |
|
|
$ |
2,203 |
|
|
$ |
2,314 |
|
Impact of COVID-19 on Our Business Operations
In response to the COVID-19 pandemic, we continue to prioritize the health and safety of our employees, customers and partners and support their needs so they can perform their work flawlessly, whether in the office or a remote location.
During the second quarter 2021, our business continued to be impacted by the pandemic. However, we saw a continued gradual recovery of our revenues in the quarter as businesses gained confidence in the control of the pandemic and as a result invested in new printing technology and services. We continued to see a positive correlation between the roll-out of vaccinations, the return of employees to the office, and the gradual recovery of our page-volume driven post sale revenues. We expect that measures to control the pandemic and expand economic activity will result in a moderate economic improvement in 2021. However, in the near term, the recovery may be uneven and affected by the emergence of new variants of the COVID-19 virus which could result in a resurgence of cases in various countries and regions.
We have a strong balance sheet and sufficient liquidity, including approximately $2.1 billion of cash and cash equivalents and access to our undrawn $1.8 billion revolver. With our Project Own It transformation and cost savings, we have built a leaner and more flexible cost structure. We also continue to focus our efforts on incremental actions to prioritize and preserve cash as we manage through the pandemic. These actions include the continued reduction of discretionary spend such as near-term targeted marketing programs and the suspension of 401(k) matching contributions. In addition, in response to the COVID-19 pandemic, various governments continue to employ temporary measures to provide aid and economic stimulus directly to companies through cash grants and credits or indirectly through payments to temporarily furloughed employees. During second quarter 2021, we recognized savings of approximately $10 million from the use of such measures in the U.S., Canada and Europe. We continue to monitor government programs and actions being implemented or expected to be implemented to counter the economic impacts of the COVID-19 pandemic.
The savings from government assistance of approximately $10 million and $60 million during the second quarter 2021 and 2020, respectively, were recorded as follows in the Condensed Consolidated Statements of Income:
|
|
Three Months Ended June 30, |
||||||
(in millions) |
|
2021 |
|
2020 |
||||
Cost of services, maintenance and rentals |
|
$ |
6 |
|
|
$ |
40 |
|
Research, development and engineering expenses |
— |
1 |
||||||
Selling, administrative and general expenses |
4 |
19 |
||||||
Total Estimated Savings |
|
$ |
10 |
|
|
$ |
60 |
|
Financial Review
Revenues
|
|
Three Months Ended June 30, |
|
|
|
|
|
% of Total Revenue |
||||||||||||
(in millions) |
|
2021 |
|
2020 |
|
% Change |
|
CC % Change |
|
2021 |
|
2020 |
||||||||
Equipment sales |
|
$ |
429 |
|
|
$ |
310 |
|
|
38.4 |
% |
|
34.0 |
% |
|
24 |
% |
|
21 |
% |
Post sale revenue |
|
1,364 |
|
|
1,155 |
|
|
18.1 |
% |
|
13.8 |
% |
|
76 |
% |
|
79 |
% |
||
Total Revenue |
|
$ |
1,793 |
|
|
$ |
1,465 |
|
|
22.4 |
% |
|
18.1 |
% |
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation to Condensed Consolidated Statements of Income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales |
|
$ |
670 |
|
|
$ |
460 |
|
|
45.7 |
% |
|
40.7 |
% |
|
|
|
|
||
Less: Supplies, paper and other sales |
|
(241 |
) |
|
(150 |
) |
|
60.7 |
% |
|
54.4 |
% |
|
|
|
|
||||
Equipment Sales |
|
$ |
429 |
|
|
$ |
310 |
|
|
38.4 |
% |
|
34.0 |
% |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Services, maintenance and rentals |
|
$ |
1,067 |
|
|
$ |
949 |
|
|
12.4 |
% |
|
8.3 |
% |
|
|
|
|
||
Add: Supplies, paper and other sales |
|
241 |
|
|
150 |
|
|
60.7 |
% |
|
54.4 |
% |
|
|
|
|
||||
Add: Financing |
|
56 |
|
|
56 |
|
|
— |
% |
|
(3.4 |
)% |
|
|
|
|
||||
Post Sale Revenue |
|
$ |
1,364 |
|
|
$ |
1,155 |
|
|
18.1 |
% |
|
13.8 |
% |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Americas |
|
$ |
1,133 |
|
|
$ |
990 |
|
|
14.4 |
% |
|
12.7 |
% |
|
63 |
% |
|
68 |
% |
EMEA |
|
617 |
|
|
428 |
|
|
44.2 |
% |
|
33.2 |
% |
|
35 |
% |
|
29 |
% |
||
Other |
|
43 |
|
|
47 |
|
|
(8.5 |
)% |
|
(8.5 |
)% |
|
2 |
% |
|
3 |
% |
||
Total Revenue(1) |
|
$ |
1,793 |
|
|
$ |
1,465 |
|
|
22.4 |
% |
|
18.1 |
% |
|
100 |
% |
|
100 |
% |
_______________ |
CC – Constant currency (refer to “Constant Currency” in the Non-GAAP Financial Measures section). |
(1) Refer to Appendix II for our Geographic Sales Channels and Products and Offerings Definitions. |
Equipment sales revenue
|
|
Three Months Ended June 30, |
|
|
|
|
|
% of Equipment Sales |
||||||||||||
(in millions) |
|
2021 |
|
2020 |
|
% Change |
|
CC % Change |
|
2021 |
|
2020 |
||||||||
Entry |
|
$ |
69 |
|
|
$ |
44 |
|
|
56.8 |
% |
|
54.0 |
% |
|
16 |
% |
|
14 |
% |
Mid-range |
|
276 |
|
|
195 |
|
|
41.5 |
% |
|
37.0 |
% |
|
64 |
% |
|
63 |
% |
||
High-end |
|
80 |
|
|
67 |
|
|
19.4 |
% |
|
14.4 |
% |
|
19 |
% |
|
22 |
% |
||
Other |
|
4 |
|
|
4 |
|
|
— |
% |
|
— |
% |
|
1 |
% |
|
1 |
% |
||
Equipment Sales |
|
$ |
429 |
|
|
$ |
310 |
|
|
38.4 |
% |
|
34.0 |
% |
|
100 |
% |
|
100 |
% |
_______________ |
CC – Constant Currency (refer to “Constant Currency” in the Non-GAAP Financial Measures section). |
Costs, Expenses and Other Income
Summary of Key Financial Ratios
The following is a summary of key financial ratios used to assess our performance:
|
|
Three Months Ended June 30, |
|||||||||||
(in millions) |
|
2021 |
|
2020 |
|
B/(W) |
|||||||
Gross Profit |
|
$ |
639 |
|
|
$ |
564 |
|
|
$ |
75 |
|
|
RD&E |
|
79 |
|
|
76 |
|
|
(3) |
|
|
|||
SAG |
|
434 |
|
|
426 |
|
|
(8) |
|
|
|||
|
|
|
|
|
|
|
|
||||||
Equipment Gross Margin |
|
28.1 |
% |
|
28.8 |
% |
|
(0.7) |
|
pts. |
|||
Post sale Gross Margin |
|
38.1 |
% |
|
41.1 |
% |
|
(3.0) |
|
pts. |
|||
Total Gross Margin |
|
35.6 |
% |
|
38.5 |
% |
|
(2.9) |
|
pts. |
|||
RD&E as a % of Revenue |
|
4.4 |
% |
|
5.2 |
% |
|
0.8 |
|
pts. |
|||
SAG as a % of Revenue |
|
24.2 |
% |
|
29.1 |
% |
|
4.9 |
|
pts. |
|||
|
|
|
|
|
|
|
|
||||||
Pre-tax Income |
|
$ |
99 |
|
|
$ |
35 |
|
|
$ |
64 |
|
|
Pre-tax Income Margin |
|
5.5 |
% |
|
2.4 |
% |
|
3.1 |
|
pts. |
|||
|
|
|
|
|
|
|
|
||||||
Adjusted(1) Operating Profit |
|
$ |
126 |
|
|
$ |
62 |
|
|
$ |
64 |
|
|
Adjusted(1) Operating Margin |
|
7.0 |
% |
|
4.2 |
% |
|
2.8 |
|
pts. |
_______________ |
(1) Refer to the Non-GAAP Financial Measures section for an explanation of the non-GAAP financial measure. |
Other Expenses, Net
|
|
Three Months Ended June 30, |
||||||
(in millions) |
|
2021 |
|
2020 |
||||
Non-financing interest expense |
|
$ |
24 |
|
|
$ |
18 |
|
Interest income |
|
(1 |
) |
|
(3 |
) |
||
Non-service retirement-related costs |
|
(22 |
) |
|
(8 |
) |
||
Gains on sales of businesses and assets |
|
(1 |
) |
|
— |
|
||
Currency losses, net |
|
1 |
|
|
2 |
|
||
All other expenses, net |
|
— |
|
|
(2 |
) |
||
Other expenses, net |
|
$ |
1 |
|
|
$ |
7 |
|
Forward-Looking Statements
This release, and other written or oral statements made from time to time by management contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “will”, “should”, “targeting”, “projecting”, “driving” and similar expressions, as they relate to us, our performance and/or our technology, are intended to identify forward-looking statements. These statements reflect management’s current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially. Such factors include but are not limited to: the effects of the COVID-19 pandemic on our and our customers’ businesses and the duration and extent to which this will impact our future results of operations and overall financial performance; our ability to address our business challenges in order to reverse revenue declines, reduce costs and increase productivity so that we can invest in and grow our business; our ability to attract and retain key personnel; changes in economic and political conditions, trade protection measures, licensing requirements and tax laws in the United States and in the foreign countries in which we do business; the imposition of new or incremental trade protection measures such as tariffs and import or export restrictions; changes in foreign currency exchange rates; our ability to successfully develop new products, technologies and service offerings and to protect our intellectual property rights; the risk that multi-year contracts with governmental entities could be terminated prior to the end of the contract term and that civil or criminal penalties and administrative sanctions could be imposed on us if we fail to comply with the terms of such contracts and applicable law; the risk that partners, subcontractors and software vendors will not perform in a timely, quality manner; actions of competitors and our ability to promptly and effectively react to changing technologies and customer expectations; our ability to obtain adequate pricing for our products and services and to maintain and improve cost efficiency of operations, including savings from restructuring actions; the risk that confidential and/or individually identifiable information of ours, our customers, clients and employees could be inadvertently disclosed or disclosed as a result of a breach of our security systems due to cyber attacks or other intentional acts; reliance on third parties, including subcontractors, for manufacturing of products and provision of services; the exit of the United Kingdom from the European Union; our ability to manage changes in the printing environment and expand equipment placements; interest rates, cost of borrowing and access to credit markets; funding requirements associated with our employee pension and retiree health benefit plans; the risk that our operations and products may not comply with applicable worldwide regulatory requirements, particularly environmental regulations and directives and anti-corruption laws; the outcome of litigation and regulatory proceedings to which we may be a party; any impacts resulting from the restructuring of our relationship with Fujifilm Holdings Corporation; and the shared services arrangements entered into by us as part of Project Own It. Additional risks that may affect Xerox’s operations and other factors that are set forth in the “Risk Factors” section, the “Legal Proceedings” section, the “
Contacts
Media Contact:
Callie Ferrari, APR, Xerox, +1-203-849-5254, Callie.Ferrari@xerox.com
Investor Contact:
David Beckel, Xerox, +1-203-849-2318, David.Beckel@xerox.com