Xerox Investor Handoutas of Q4 2018
Third Quarter 2018 Earningshttp://www.xerox.com/investor
Forward-Looking Statements
This presentation,and other written or oral statements made from time to time by management contain "forward-looking statements" as defined in thePrivate Securities Litigation Reform Act of 1995. Thewords "anticipate", "believe", "estimate", "expect", "intend", "will", "should" and similar
expressions, as they relate to us, 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: 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; 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; 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 individually identifiable information of customers, clients and employees could be inadvertently disclosed or disclosed as a result of a breach of our security systems; reliance on third parties, including subcontractors, formanufacturing of products and provision of services; 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; the outcome of our process to evaluate all strategic alternatives to maximize shareholder value, including terminating or restructuring Xerox's relationship withFUJIFILM Holdings Corporation ("Fujifilm"); 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 our 2017 Annual Report on
Form 10-K, as well as our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC. 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.
Initial Perspectives on the Business
Strengths
Areas to Improve
•Customers,partnersandemployeeswho want Xerox to succeed
•Globally recognizedbrandfor quality, reliability and ease of use
•Market shareleadership
•Robustportfolioof products and solutions
•Leadership inmanaged print services
•Innovationcapabilities
•Cashgeneration
•Complexoperatingmodel; lack of accountability
•Supply chain
• Software and R&D "lost" in product business
•Capitalizationon innovation
•Strategic transformationflow-through
•Capital deployment and returns
Positioning Xerox for Success
LaunchedProject "Own It" to drive businessoptimization
1 | Drive revenue | • • Serve customers via channels that most effectively meet their requirements Enhance capabilities to sell higher-value services • Make it easier for customers and partners to do business with Xerox |
2 | Optimize operations for simplicity to better serve clients & partners | • • • Simplify operating model for greater accountability and ownership Drive effectiveness and efficiency in business operations Optimize supply chain and increase supplier competitiveness |
3 | Re-energize the innovation engine |
•Drive growth in software and services businesses
•Create incubation businesses for focus and accountability
•Revamp innovation business model: investments, M&A, monetization
4 | Focus on cash flow andincrease capital returns | • • | Maximize cash flow potential Deliver on commitment to return at least 50% of free cash flow to shareholders; opportunistic share repurchase up to $700 million in 2018 |
Third Quarter in Summary
Revenue | Earnings | Cash |
$2.4B, down 5.8% or 4.7% CC1 | GAAP2EPS: $0.34, down $0.33 YOY | OCF3: $274M, up $157M YOY* |
Equipment down 3.8% or 2.7% CC1 | Adj1EPS: $0.85, down $0.04 YOY | FCF3: $251M, up $157M YOY* |
Post sale down 6.4% or 5.2% CC1 | Ending cash5: $1.2B | |
Market Share | Profitability | Shareholder Returns |
#1 Equipment Share Leader4 | Gross margin: 40.1%, flat YOY | $353M(141% FCF)returned through |
share repurchase and dividends | ||
Adj1op margin: 13.1%, up 1.0 pt YOY | ||
Increasing 2018 share repurchase | ||
expectations up to $700M(from $500M) |
Focused on driving operational improvement to generate sustainable shareholder value
Note: all numerical comparisons shown above are on a year-over-year basis.(1)Constant Currency (CC) and other adjusted measures: see Non-GAAP Financial Measures.(2)GAAP EPS from Continuing Operations.(3)OCF= Operating Cash Flow from Continuing Operations , FCF = Free Cash Flow from Continuing Operations.(4)Source equipment share leader: IDC and Internal Xerox estimates, Source leader in Managed Print: IDC.(5)Cash, Cash Equivalents and Restricted Cash
* Prior year cash flow compares adjusted to exclude incremental pension contribution of $500M and to include deferred proceeds and beneficial interest from sales of receivables within working capital
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Xerox Corporation published this content on 05 November 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 05 November 2018 21:00:01 UTC