BusinessWire

Xerox Releases Third-Quarter Results, Raises 2019 Guidance

Cash Flow, EPS and Profit Margins Increase and Revenue Trend Improves from Prior Quarters


Third-Quarter 2019 Financial Summary:

  • $356 million of operating cash flow, up $82 million year-over-year, and $339 million of free cash flow, up $88 million year-over-year
  • GAAP earnings per share (EPS) of $0.96, up $0.62 year-over-year, and adjusted EPS of $1.08, up $0.23 year-over-year (YOY)
  • Adjusted operating margin of 12.1 percent, up 120 basis points year-over-year
  • $2.2 billion of revenue in the quarter, a decrease of 6.5 percent in actual currency, or 5.3 percent in constant currency, year-over-year
  • Increasing 2019 guidance for GAAP EPS to $3.10 - $3.20, adjusted EPS to $4.00 - $4.10, operating cash flow to $1.2 - $1.3 billion and free cash flow to $1.1 - $1.2 billion
  • Completed $368 million of share repurchases through the third quarter, expecting at least $600 million in total for the year

 

NORWALK, Conn.--(BUSINESS WIRE)--$XRX #Xerox--Today Xerox Holdings Corporation (NYSE: XRX) announced its third-quarter 2019 financial results and said it would raise 2019 guidance for EPS and cash flow.

Our strategy and execution delivered a strong third quarter despite industry headwinds. We increased cash flow, earnings per share and adjusted operating margin while we improved the revenue trend. These results give us confidence to raise our earnings and cash flow guidance for the year as we position Xerox for long-term growth,” said Xerox Vice Chairman and CEO John Visentin.

Key Financial Results:

(in millions, except per share data)

 

Q3 2019

 

Q3 2018

 

B/(W)

YOY

 

% Change

YOY

Revenue

 

$2,200

 

$2,352

 

$(152)

 

(6.5)% AC
(5.3)% CC1

Gross Margin

 

40.0%

 

40.1%

 

(10) bps

 

 

RD&E %

 

4.5%

 

4.3%

 

(20) bps

 

 

SAG %

 

23.3%

 

24.8%

 

150 bps

 

 

Pre-Tax Income

 

$230

 

$192

 

$38

 

19.8%

Pre-Tax Income Margin

 

10.5%

 

8.2%

 

230 bps

 

 

Operating Income - Adjusted1

 

$267

 

$257

 

$10

 

3.9%

Operating Margin - Adjusted1

 

12.1%

 

10.9%

 

120 bps

 

 

GAAP EPS

 

$0.96

 

$0.34

 

$0.62

 

nm

EPS - Adjusted1

 

$1.08

 

$0.85

 

$0.23

 

27.1%

  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.

Key Business Highlights:

  • On track to drive 2019 gross savings of at least $640 million under Project Own It, Xerox’s enterprise-wide initiative to simplify operations, drive continuous improvement and free up capital to reinvest in the business
  • Added and renewed several contracts with Fortune 500 and public sector clients such as AstraZeneca, Leonardo S.p.A., Cardiff Council, and Prince George's County Public Schools
  • Launched new products and enhancements such as the Xerox PrimeLink™ C9065/C9070and the iGen® 5 XLSto capture incremental production volume

Xerox also announced today that it has completed its evaluation of its customer financing business and will not pursue a sale of the business at this time. The company received and reviewed bids from multiple potential counterparties that were interested in purchasing the business at an attractive premium but ultimately determined that retaining and optimizing the business through Project Own It will generate the greatest return for shareholders.

About Xerox

In the era of intelligent work, we’re not just thinking about the future, we’re making it. Xerox Holdings Corporation is a technology leader focused on the intersection of digital and physical. We use automation and next-generation personalization to redefine productivity, drive growth and make the world more secure. Every day, our innovative technologies and intelligent work solutions-Powered by Xerox®-help people communicate and work better. Discover more at www.xerox.com and follow us on Twitter at @Xerox.

Non-GAAP Measures

This release refers to the following non-GAAP financial measures for the third quarter 2019 and 2018 and full-year 2019 guidance:

  • Adjusted EPS, which excludes restructuring and related costs (including our share of Fuji Xerox restructuring), the amortization of intangible assets, non-service retirement-related costs, transaction and related costs, net and other discrete adjustments.
  • Adjusted operating margin and income, which exclude the EPS adjustments noted above as well as the remainder of other expenses, net.
  • Constant currency (CC) revenue growth, which excludes the effects of currency translation.
  • Free cash flow, which is cash flow from operations 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: 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 potential termination or restructuring of our relationship with Fujifilm Holdings Corporation; the shared services arrangements entered into by us as part of Project Own It; 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 Corporation's 2018 Annual Report on Form 10-K, as well as in Xerox Corporation's and Xerox Holdings 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://twitter.com/xerox, http://www.facebook.com/XeroxCorp, https://www.instagram.com/xerox/, http://www.linkedin.com/company/xerox, http://www.youtube.com/XeroxCorp.

Xerox®, iGen®, PrimeLink™ and Powered by Xerox® are trademarks of Xerox in the United States and/or other countries.

XEROX HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

(in millions, except per-share data)

 

2019

 

2018

 

2019

 

2018

Revenues

 

 

 

 

 

 

 

 

Sales(1)

 

$

804

 

 

$

856

 

 

$

2,379

 

 

$

2,628

 

Services, maintenance and rentals(1)

 

1,336

 

 

1,431

 

 

4,132

 

 

4,465

 

Financing

 

60

 

 

65

 

 

184

 

 

204

 

Total Revenues

 

2,200

 

 

2,352

 

 

6,695

 

 

7,297

 

Costs and Expenses

 

 

 

 

 

 

 

 

Cost of sales(1)

 

515

 

 

539

 

 

1,531

 

 

1,664

 

Cost of services, maintenance and rentals(1)

 

772

 

 

838

 

 

2,400

 

 

2,620

 

Cost of financing

 

33

 

 

33

 

 

98

 

 

100

 

Research, development and engineering expenses

 

100

 

 

102

 

 

280

 

 

303

 

Selling, administrative and general expenses

 

513

 

 

583

 

 

1,580

 

 

1,835

 

Restructuring and related costs

 

27

 

 

29

 

 

176

 

 

91

 

Amortization of intangible assets

 

9

 

 

12

 

 

35

 

 

36

 

Transaction and related costs, net

 

4

 

 

(33

)

 

8

 

 

63

 

Other expenses, net

 

(3

)

 

57

 

 

74

 

 

126

 

Total Costs and Expenses

 

1,970

 

 

2,160

 

 

6,182

 

 

6,838

 

Income before Income Taxes & Equity Income(2)

 

230

 

 

192

 

 

513

 

 

459

 

Income tax expense

 

66

 

 

142

 

 

108

 

 

220

 

Equity in net income (loss) of unconsolidated affiliates

 

58

 

 

43

 

 

137

 

 

(6

)

Net Income

 

222

 

 

93

 

 

542

 

 

233

 

Less: Net income attributable to noncontrolling interests

 

1

 

 

4

 

 

7

 

 

9

 

Net Income Attributable to Xerox Holdings

 

$

221

 

 

$

89

 

 

$

535

 

 

$

224

 

 

 

 

 

 

 

 

 

 

Basic Earnings per Share

 

$

0.99

 

 

$

0.34

 

 

$

2.34

 

 

$

0.84

 

Diluted Earnings per Share

 

$

0.96

 

 

$

0.34

 

 

$

2.27

 

 

$

0.83

 

____________________________

  1. Certain prior year amounts have been conformed to the current year presentation. See Appendix III for this change in presentation.
  2. Referred to as “Pre-Tax Income” throughout the remainder of this document.

XEROX HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

(in millions)

 

2019

 

2018

 

2019

 

2018

Net income

 

$

222

 

 

$

93

 

 

$

542

 

 

$

233

 

Less: Net income attributable to noncontrolling interests

 

1

 

 

4

 

 

7

 

 

9

 

Net Income Attributable to Xerox Holdings

 

221

 

 

89

 

 

535

 

 

224

 

 

 

 

 

 

 

 

 

 

Other Comprehensive (Loss) Income, Net

 

 

 

 

 

 

 

 

Translation adjustments, net

 

(155

)

 

(13

)

 

(122

)

 

(159

)

Unrealized gains (losses), net

 

1

 

 

(9

)

 

3

 

 

5

 

Changes in defined benefit plans, net

 

(48

)

 

83

 

 

(38

)

 

191

 

Other Comprehensive (Loss) Income, Net

 

(202

)

 

61

 

 

(157

)

 

37

 

Less: Other comprehensive income, net attributable to noncontrolling interests

 

1

 

 

 

 

1

 

 

 

Other Comprehensive (Loss) Income, Net Attributable to Xerox Holdings

 

(203

)

 

61

 

 

(158

)

 

37

 

 

 

 

 

 

 

 

 

 

Comprehensive Income, Net

 

20

 

 

154

 

 

385

 

 

270

 

Less: Comprehensive income, net attributable to noncontrolling interests

 

2

 

 

4

 

 

8

 

 

9

 

Comprehensive Income, Net Attributable to Xerox Holdings

 

$

18

 

 

$

150

 

 

$

377

 

 

$

261

 

XEROX HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share data in thousands)

 

September 30, 2019

 

December 31, 2018

Assets

 

 

 

 

Cash and cash equivalents

 

$

922

 

 

$

1,084

 

Accounts receivable, net

 

1,188

 

 

1,276

 

Billed portion of finance receivables, net

 

106

 

 

105

 

Finance receivables, net

 

1,145

 

 

1,218

 

Inventories

 

758

 

 

818

 

Other current assets

 

221

 

 

194

 

Total current assets

 

4,340

 

 

4,695

 

Finance receivables due after one year, net

 

2,037

 

 

2,149

 

Equipment on operating leases, net

 

374

 

 

442

 

Land, buildings and equipment, net

 

442

 

 

499

 

Investments in affiliates, at equity

 

1,517

 

 

1,403

 

Intangible assets, net

 

203

 

 

220

 

Goodwill

 

3,853

 

 

3,867

 

Deferred tax assets

 

688

 

 

740

 

Other long-term assets

 

1,206

 

 

859

 

Total Assets

 

$

14,660

 

 

$

14,874

 

Liabilities and Equity

 

 

 

 

Short-term debt and current portion of long-term debt

 

$

1,602

 

 

$

961

 

Accounts payable

 

1,070

 

 

1,091

 

Accrued compensation and benefits costs

 

321

 

 

349

 

Accrued expenses and other current liabilities

 

930

 

 

850

 

Total current liabilities

 

3,923

 

 

3,251

 

Long-term debt

 

3,230

 

 

4,269

 

Pension and other benefit liabilities

 

1,599

 

 

1,482

 

Post-retirement medical benefits

 

335

 

 

350

 

Other long-term liabilities

 

473

 

 

269

 

Total Liabilities

 

9,560

 

 

9,621

 

 

 

 

 

 

Convertible Preferred Stock

 

214

 

 

214

 

 

 

 

 

 

Common stock

 

221

 

 

232

 

Additional paid-in capital

 

3,000

 

 

3,321

 

Treasury stock, at cost

 

(68

)

 

(55

)

Retained earnings

 

5,552

 

 

5,072

 

Accumulated other comprehensive loss

 

(3,850

)

 

(3,565

)

Xerox Holdings shareholders’ equity

 

4,855

 

 

5,005

 

Noncontrolling interests

 

31

 

 

34

 

Total Equity

 

4,886

 

 

5,039

 

Total Liabilities and Equity

 

$

14,660

 

 

$

14,874

 

 

 

 

 

 

Shares of common stock issued

 

221,292

 

 

231,690

 

Treasury stock

 

(2,329

)

 

(2,067

)

Shares of Common Stock Outstanding

 

218,963

 

 

229,623

 

XEROX HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

(in millions)

 

2019

 

2018

 

2019

 

2018

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net Income

 

$

222

 

 

$

93

 

 

$

542

 

 

$

233

 

Adjustments required to reconcile Net income to Cash flows from operating activities

 

 

 

 

 

 

 

 

Depreciation and amortization

 

104

 

 

122

 

 

332

 

 

398

 

Provisions

 

16

 

 

16

 

 

58

 

 

56

 

Net gain on sales of businesses and assets

 

(19

)

 

(3

)

 

(20

)

 

(35

)

Undistributed equity in net income of unconsolidated affiliates

 

(59

)

 

(43

)

 

(102

)

 

9

 

Stock-based compensation

 

11

 

 

15

 

 

41

 

 

44

 

Restructuring and asset impairment charges

 

8

 

 

29

 

 

80

 

 

91

 

Payments for restructurings

 

(17

)

 

(39

)

 

(71

)

 

(130

)

Defined benefit pension cost

 

21

 

 

36

 

 

89

 

 

89

 

Contributions to defined benefit pension plans

 

(37

)

 

(36

)

 

(107

)

 

(111

)

Decrease in accounts receivable and billed portion of finance receivables

 

51

 

 

1

 

 

62

 

 

37

 

Decrease (increase) in inventories

 

16

 

 

(20

)

 

33

 

 

(91

)

Increase in equipment on operating leases

 

(41

)

 

(63

)

 

(113

)

 

(182

)

Decrease in finance receivables

 

5

 

 

39

 

 

124

 

 

181

 

(Increase) decrease in other current and long-term assets

 

(14

)

 

(4

)

 

1

 

 

17

 

Increase (decrease) in accounts payable

 

21

 

 

(31

)

 

(34

)

 

12

 

(Decrease) increase in accrued compensation

 

(15

)

 

4

 

 

(99

)

 

(97

)

Increase in other current and long-term liabilities

 

27

 

 

15

 

 

19

 

 

11

 

Net change in income tax assets and liabilities

 

40

 

 

124

 

 

27

 

 

165

 

Net change in derivative assets and liabilities

 

5

 

 

21

 

 

15

 

 

(2

)

Other operating, net

 

11

 

 

(2

)

 

18

 

 

30

 

Net cash provided by operating activities

 

356

 

 

274

 

 

895

 

 

725

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Cost of additions to land, buildings, equipment and software

 

(17

)

 

(23

)

 

(48

)

 

(73

)

Proceeds from sales of businesses and assets

 

20

 

 

 

 

21

 

 

32

 

Acquisitions, net of cash acquired

 

 

 

 

 

(42

)

 

 

Other investing, net

 

1

 

 

 

 

1

 

 

1

 

Net cash provided by (used in) investing activities

 

4

 

 

(23

)

 

(68

)

 

(40

)

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Net proceeds (payments) on debt

 

2

 

 

 

 

(399

)

 

(306

)

Dividends

 

(61

)

 

(69

)

 

(183

)

 

(204

)

Payments to acquire treasury stock, including fees

 

(68

)

 

(284

)

 

(368

)

 

(284

)

Other financing, net

 

(10

)

 

(6

)

 

(33

)

 

(21

)

Net cash used in financing activities

 

(137

)

 

(359

)

 

(983

)

 

(815

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(20

)

 

(1

)

 

(13

)

 

(20

)

Increase (decrease) in cash, cash equivalents and restricted cash

 

203

 

 

(109

)

 

(169

)

 

(150

)

Cash, cash equivalents and restricted cash at beginning of period

 

776

 

 

1,327

 

 

1,148

 

 

1,368

 

Cash, Cash Equivalents and Restricted Cash at End of Period

 

$

979

$

1,218

 

$

979

 

$

1,218

 

Revenues

 

 

Three Months Ended
September 30,

 

 

 

 

 

% of Total Revenue

(in millions)

 

2019

 

2018

 

%
Change

 

CC %
Change

 

2019

 

2018

Equipment sales

 

$

494

 

 

$

511

 

 

(3.3)%

 

(2.2)%

 

22%

 

22%

Post sale revenue

 

1,706

 

 

1,841

 

 

(7.3)%

 

(6.2)%

 

78%

 

78%

Total Revenue

 

$

2,200

 

 

$

2,352

 

 

(6.5)%

 

(5.3)%

 

100%

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to Condensed Consolidated Statements of Income:

 

 

 

 

 

 

 

 

 

 

 

 

Sales(1)

 

$

804

 

 

$

856

 

 

(6.1)%

 

(5.0)%

 

 

 

 

Less: Supplies, paper and other sales(1)

 

(310

)

 

(345

)

 

(10.1)%

 

(9.2)%

 

 

 

 

Equipment Sales

 

$

494

 

 

$

511

 

 

(3.3)%

 

(2.2)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services, maintenance and rentals(1)

 

$

1,336

 

 

$

1,431

 

 

(6.6)%

 

(5.6)%

 

 

 

 

Add: Supplies, paper and other sales(1)

 

310

 

 

345

 

 

(10.1)%

 

(9.2)%

 

 

 

 

Add: Financing

 

60

 

 

65

 

 

(7.7)%

 

(7.0)%

 

 

 

 

Post Sale Revenue

 

$

1,706

 

 

$

1,841

 

 

(7.3)%

 

(6.2)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

1,487

 

 

$

1,544

 

 

(3.7)%

 

(3.6)%

 

68%

 

66%

EMEA

 

641

 

 

713

 

 

(10.1)%

 

(6.8)%

 

29%

 

30%

Other

 

72

 

 

95

 

 

(24.2)%

 

(24.2)%

 

3%

 

4%

Total Revenue(2)

 

$

2,200

 

 

$

2,352

 

 

(6.5)%

 

(5.3)%

 

100%

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

Memo:

 

 

 

 

 

 

 

 

 

 

 

 

Xerox Services(3)

 

$

830

 

 

$

883

 

 

(6.0)%

 

(4.6)%

 

38%

 

38%

____________________________

CC - Constant Currency (see "Non-GAAP Financial Measures" section).

  1. Certain prior year amounts have been conformed to the current year presentation. See Appendix III for this change in presentation.
  2. Refer to Appendix II for our Geographic Sales Channels and Products and Offerings Definitions.
  3. Excluding equipment revenue, Xerox Services was $719 million and $760 million in the third quarter 2019 and 2018, respectively, representing a decrease of 5.4% including a 1.6-percentage point unfavorable impact from currency.

Third quarter 2019 total revenue decreased 6.5% as compared to third quarter 2018, including a 1.2-percentage point unfavorable impact from currency, and an approximate 0.7-percentage point unfavorable impact from lower OEM sales. Third quarter 2019 total revenue reflected the following:

  • Post sale revenue primarily reflects contracted services, equipment maintenance, supplies and financing. These revenues are associated not only with the population of devices in the field, which is affected by installs and removals, but also by the page volumes generated from the usage of such devices, and the revenue per printed page. Post sale revenue also includes transactional IT hardware sales and implementation services from our XBS organization. Post sale revenue decreased 7.3% as compared to third quarter 2018, including a 1.1-percentage point unfavorable impact from currency, and reflected the following:
    • Services, maintenance and rentals revenue includes rental and maintenance revenue (including bundled supplies) as well as the post sale component of the document services revenue from our Xerox Services offerings. These revenues decreased 6.6% as compared to third quarter 2018, including a 1.0-percentage point unfavorable impact from currency. The decline at constant currency1 reflected the continuing trend of lower page volumes (including a higher mix of lower usage products), an ongoing competitive price environment, and a lower population of devices, which are partially associated with continued lower Enterprise signings and lower installs in prior periods.
    • Supplies, paper and other sales includes unbundled supplies and other sales. These revenues decreased 10.1% as compared to third quarter 2018, including a 0.9-percentage point unfavorable impact from currency and a 3.9-percentage point unfavorable impact from lower OEM sales. Excluding OEM sales, the decline at constant currency1 reflected lower paper sales from developing markets (primarily from the Latin America region), as well as the impact of lower supplies revenues primarily associated with lower page volume trends. These declines were partially offset by the implementation of a large transactional IT sales arrangement from our XBS organization.
    • Financing revenue is generated from financed equipment sale transactions. The 7.7% decline in these revenues reflected a continued decline in the finance receivables balance due to lower equipment sales in prior periods and included a 0.7-percentage point unfavorable impact from currency.

 

 

Three Months Ended
September 30,

 

 

 

 

 

% of Equipment Sales

(in millions)

 

2019

 

2018

 

%
Change

 

CC %
Change

 

2019

 

2018

Entry

 

$

49

 

 

$

56

 

 

(12.5)%

 

(10.9)%

 

10%

 

11%

Mid-range

 

344

 

 

351

 

 

(2.0)%

 

(1.2)%

 

70%

 

69%

High-end

 

96

 

 

94

 

 

2.1%

 

3.4%

 

19%

 

18%

Other

 

5

 

 

10

 

 

(50.0)%

 

(50.0)%

 

1%

 

2%

Equipment Sales

 

$

494

 

 

$

511

 

 

(3.3)%

 

(2.2)%

 

100%

 

100%

____________________________

CC - Constant Currency (see "Non-GAAP Financial Measures" section).

  • Equipment sales revenue decreased 3.3% as compared to third quarter 2018, including a 1.1-percentage point unfavorable impact from currency as well as the impact of price declines of approximately 5%. The decline at constant currency1 was primarily driven by lower sales of our office-centric devices (entry and mid-range products) partially offset by higher sales of our production-centric systems (high-end). The decline at constant currency1 reflected the following:
    • Entry - The decrease reflected lower sales of devices primarily from developing market regions in EMEA reflecting in part continued weakness and delayed decisions as a result of uncertainty in the economic environment. Revenues from entry products through our indirect channels in the U.S. also declined as they were further impacted by price investments, and lower sales of devices from the lower end of the portfolio.
    • Mid-range - The decrease reflected lower sales from EMEA, primarily from developing market regions reflecting in part continued weakness and delayed decisions as a result of uncertainty in the economic environment. Revenues from our Americas region were flat as compared to the prior year, reflecting the favorable impact of a large account order (part of a refresh cycle), some of which occurred earlier than anticipated, offsetting lower sales from our US indirect channels and from our XBS sales organization, which continued to gradually stabilize from the impact of organizational changes that were part of our Project Own It transformation actions (including the transitioning of accounts to implement coverage changes, consolidation of real estate locations and the reduction of management layers).
    • High-end - The increase reflected higher sales of color systems associated with continued demand for our Iridesse production press and installs of our Versant production systems, as well as higher sales of our iGen press in the U.S., partially offset by lower sales of black-and-white systems.

Total Installs

Installs reflect new placement of devices only. Revenue associated with equipment installations may be reflected up-front in Equipment sales or over time either through rental income or as part of our Xerox Services revenues (which are both reported within our post sale revenues), depending on the terms and conditions of our agreements with customers.


Contacts

Media Contact:
Caroline Gransee-Linsey, Xerox, +1-203-849-2359, Caroline.Gransee-Linsey@xerox.com
Investor Contact:
Ann Pettrone, Xerox, +1-203-849-2590, Ann.Pettrone@xerox.com


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