NORWALK, Conn.–(BUSINESS WIRE)–Xerox Holdings Corporation (NASDAQ: XRX) today announced its 2024 first-quarter results.
“This quarter, Xerox orchestrated one of its most intense periods of structural change in recent history, continuing the hard work required to reposition our business for long-term, sustainable growth. We implemented comprehensive and strategic operating model changes to align our organization more closely with our buyers’ needs and improve efficiency,” said Steve Bandrowczak, chief executive officer at Xerox. “While results were below our expectations in Q1, I have full confidence we have the right team and the right strategy to execute Xerox’s Reinvention and deliver on our adjusted operating income targets.”
First-Quarter Key Financial Results
|
(in millions, except per share data) |
Q1 2024 |
|
Q1 2023 |
|
B/(W) YOY |
|
% Change B/(W) YOY |
|
Revenue |
$1,502 |
|
$1,715 |
|
$(213) |
|
(12.4)% AC (13.2)% CC(1) |
|
Gross Profit |
$443 |
|
$589 |
|
$(146) |
|
|
|
Gross Margin |
29.5% |
|
34.3% |
|
(480) bps |
|
|
|
RD&E % |
3.3% |
|
3.7% |
|
40 bps |
|
|
|
SAG % |
26.4% |
|
23.7% |
|
(270) bps |
|
|
|
Pre-Tax (Loss) Income (2) |
$(150) |
|
$85 |
|
$(235) |
|
NM |
|
Pre-Tax (Loss) Income Margin (2) |
(10.0)% |
|
5.0% |
|
NM |
|
|
|
Gross Profit – Adjusted (1) |
$479 |
|
$589 |
|
$(110) |
|
|
|
Gross Margin – Adjusted (1) |
31.9% |
|
34.3% |
|
(240) bps |
|
|
|
Operating Income – Adjusted (1) |
$33 |
|
$118 |
|
$(85) |
|
(72.0)% |
|
Operating Income Margin – Adjusted (1) |
2.2% |
|
6.9% |
|
(470) bps |
|
|
|
GAAP Diluted (Loss) Earnings per Share (2) |
$(0.94) |
|
$0.43 |
|
$(1.37) |
|
NM |
|
Diluted Earnings Per Share – Adjusted (1) |
$0.06 |
|
$0.49 |
|
$(0.43) |
|
(87.8)% |
First-Quarter Segment Results
|
(in millions) |
Q1 2024 |
|
Q1 2023 |
|
B/(W) YOY |
|
% Change B/(W) YOY |
|
Revenue |
|
|
|
|
|
|
|
|
Print and Other |
$1,430 |
|
$1,636 |
|
$(206) |
|
(12.6)% |
|
Xerox Financial Services (XFS) (3) |
91 |
|
102 |
|
(11) |
|
(10.8)% |
|
Intersegment Elimination (4) |
(19) |
|
(23) |
|
4 |
|
(17.4)% |
|
Total Revenue |
$1,502 |
|
$1,715 |
|
$(213) |
|
(12.4)% |
|
Profit |
|
|
|
|
|
|
|
|
Print and Other |
$33 |
|
$100 |
|
$(67) |
|
(67.0)% |
|
Xerox Financial Services (XFS) (3) |
— |
|
18 |
|
(18) |
|
(100.0)% |
|
Total Profit |
$33 |
|
$118 |
|
$(85) |
|
(72.0)% |
| _____________ | ||
|
(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. |
|
(2) |
|
First quarter 2024 Pre-Tax (Loss) and Margin, and (Loss) per Share, include restructuring-related charges associated with the Company’s Reinvention, primarily related to the exit of certain Production Print manufacturing operations and geographic simplification. |
|
(3) |
|
Xerox Financial Services (XFS) (formerly FITTLE) |
|
(4) |
|
Reflects revenue, primarily commissions and other payments, made by the XFS segment to the Print and Other segment for the lease of Xerox equipment placements. |
2024 Guidance
- Revenue: decline of 3% to 5% in constant currency
- Adjusted Operating Margin: at least 7.5%
- Free cash flow: at least $600 million
Guidance assumes stable Print demand, growth in Digital and IT Services and neutral macroeconomic conditions. The guided year-over-year decline in revenue is attributable to the following: around 200 basis points of headwind from prior-year backlog reduction and around 200 basis points from the deemphasis of certain non-strategic revenue, including lower sales of paper. Margin guidance implies adjusted1 operating income margin improvement of more than 190 basis points, and adjusted1 operating income improvement of more than $100 million, year-over-year.
The company maintains its three-year target of $300 million of incremental adjusted1 operating income above 2023 levels and a return to double-digit adjusted1 operating income margin by 2026.
