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Xerox shares rise after Q1 beats earnings expectations

Rochester Business Journal
April 22, 2014

Shares of Xerox Corp. were up some 2 percent Tuesday afternoon after the company reported earnings per share that beat Street expectations.

Shares of Xerox (NYSE: XRX) were trading midday at $11.72, up from Monday’s close of $11.47.

Xerox on Tuesday morning reported a drop in first-quarter profit and sales Tuesday, due, in part, to higher than expected investments in its government health care business.

The company reported net income from continuing operations attributable to Xerox of $279 million, down 5 percent from $293 million a year ago. Adjusted earnings per share were 27 cents. Including special charges, earnings per share were 23 cents, flat with a year ago.
 
Analysts polled by Thomson Reuters expected Xerox to report earnings per share of 24 cents on sales of $5.16 billion.

Total revenue was $5.1 billion, down 2 percent, from roughly $5.2 billion.
 
Revenue from the company’s services business, which represented 57 percent of total revenue, was $2.9 billion, flat year over year. Revenue from the company’s document technology business, which represented 40 percent of total revenue, was $2 billion, down 4 to 5 percent in constant currency.

Xerox had told the investment community it expected earnings of 19 to 21 cents a share and adjusted earnings per share of 23 to 25 cents.

“Our first-quarter reflects the value of our diversified business,” Chairman and CEO Ursula Burns said in a statement. “Good profitability in document technology, along with strength in document outsourcing and in commercial outsourcing services, contributed positively to our results.”

The company generated $286 million in cash flow from operations during the first quarter and repurchased $275 million in Xerox stock.

As a result of increased implementation costs in government health care, the company is lowering its guidance for full-year services segment margin and 2014 earnings.

Second-quarter 2014 earnings per share is expected to be 21 to 23 cents a share, the company said. Second-quarter adjusted earnings per share is expected to be 25 to 27 cents.

In the second quarter, the company expects to incur additional restructuring charges of 2 cents a diluted share for actions and initiatives that have not been finalized.

The company expects full-year 2014 earnings per share of 90 to 96 cents and full-year adjusted earnings per share of $1.07 to $1.13.

Worldwide employment of some 141,400 as of March 31 was down roughly 1,700 from Dec. 31 because of restructuring actions, normal attrition outpacing hiring and the impact of acquisitions, Xerox said.

During the first quarter, Xerox recorded net restructuring and asset impairment charges of $27 million, which included roughly $28 million of severance costs related to headcount reductions of 1,250 employees worldwide, $1 million of lease cancellation costs and $4 million of asset impairments.

Xerox, which employs some 6,385 local workers, ranked first on the most recent Rochester Business Journal list of manufacturers.

(c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.


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