Xerox Holdings Corporation · NASDAQ:XRX
Xerox — Q1 2024 Earnings Presentation
26 slides from Xerox's earnings presentation, Apr 23, 2024
Slide 1: Earnings Presentation Q1 2024 Results
Earnings Presentation Q1 2024 Results April 23, 2024
Slide 2: Forward-Looking Statements
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 the Private Securities Litigation Reform Act of 1995. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “will”, “
Slide 3: Q1 2024 Key Financial Measures
Q1 2024 Key Financial Measures Revenue ($B) Adj1 Operating Margin Free Cash Flow1 ($M) $1.72 $70 6.9% $1.50 2.2% $(89) 2023 2024 2023 2024 2023 2024 Operating 2024 % Change: (12.4)% @ AC, (13.2)% @ CC1 Cash Flow $78 $(79) Revenue Trend ($M) Adj1 Earnings Per Share Shareholder Returns ($M) $2,000 $0.
Slide 4: Strategic Priorities for 2024
Strategic Priorities for 2024 • Re-align products, services and distribution with the needs of economic buyers of today’s hybrid workplace Strengthen Core • Business unit-led operating model to drive incremental Print, Digital and IT services penetration with existing and prospective clients Busines
Slide 5: Reinvention Progress Update
Reinvention Progress Update Reinvention Goal: Strengthen core businesses while building the foundation for long-term, sustainable growth in revenue and profits through expanded penetration of services that address clients’ workplace productivity needs. 2023 Q1 2024 Milestones 2025-2026 • Transitione
Slide 6: Frequently Asked Questions
Frequently Asked Questions How is underlying demand for Xerox products and services trending? Demand for our products and services remains stable amid a corporate spending environment that is improving yet somewhat cautious. Demand Excluding the impact of backlog reductions in the prior year quarter
Slide 7: Financial Results Summary
Financial Results Summary (in millions, except per share data) B/(W) % Change P&L Measures Q1 2024 YOY YOY P&L Ratios Q1 2024 B/(W) YOY (12.4)% AC Revenue $ 1,502 $ (213) Gross Margin – Adjusted1 31.9% (240) bps (13.2)% CC1 Operating Income – 33 (85) (72)% RD&E % 3.3% 40 bps Adjusted1 Other Expenses
Slide 8: Revenue
Revenue % Change YOY Quarterly Revenue Trend ($B) Q1 (in millions) % Total AC CC1 $1.72 $1.75 $1.65 $1.77 2024 $1.50 Equipment $290 19% (25.8)% (26.3)% Post Sale $1,212 81% (8.5)% (9.3)% Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Total Revenue $1,502 100% (12.4)% (13.2)% Q1 Installs & CC¹ Equipment Revenue B/(W)
Slide 9: Cash Flow
Cash Flow (in millions) Q1 2024 Q1 2023 Pre-tax (Loss) Income ($150) $85 1 Non-Cash Add-Backs 236 78 Restructuring Payments (16) (6) Pension Contributions (31) (17) Working Capital, net 2 (135) (66) 3 Change in Finance Assets 188 120 4 Other (171) (116) Cash (used in) provided by Operations (79) 78
Slide 10: Segment Results
Segment Results Revenue and Profit Q1 2024 B/(W) YoY Print & Intersegm ent Print & (in m illions) Other XFS1 Elim inations 2 Total Xerox Other XFS1 Total Xerox Total Revenue $ 1,430 $ 91 $ (19) $ 1,502 Total Revenue (12.6)% (10.8)% (12.4)% Segm ent Profit $ 33 $ - $ - $ 33 Segm ent Profit (67)% (100
Slide 11: Capital Structure
Capital Structure Debt and Cash Debt Maturity Ladder³ ($M) $844 $805 (in billions) Q1 2024 Q4 2023 $55 Total Debt ($3.6) ($3.3) $344 Less: Financing Allocated Debt $2.2 $2.4 $520 $132 $400 Core Debt ($1.4) ($0.9) $374 $750 $350 1 Less: Cash $0.8 $0.6 $157 $250 $500 Net Core Debt ($0.6) ($0.3) $388 $
Slide 12: 2024 Full-Year Guidance
2024 Full-Year Guidance Guidance • Revenue: Decline of 3% to 5% in constant currency • Adjusted1 Operating Margin: At least 7.5% • Free Cash Flow1: At least $600 million Revenue: Assumes stable Print demand, growth in Digital and IT Services and neutral macroeconomic conditions. The guided year-over
Slide 13: Appendix
Appendix 13
Slide 14: Operating Trends
Operating Trends 2022 2023 2024 (in millions, except EPS) FY Q1 Q2 Q3 Q4 FY Q1 Total Revenue $7,107 $1,715 $1,754 $1,652 $1,765 $6,886 $1,502 % Change 1.0% 2.8% 0.4% (5.7)% (9.1)% (3.1)% (12.4)% CC 1 % Change 4.8% 5.5% 0.5% (7.4)% (10.6)% (3.3)% (13.2)% Adj1 Operating Margin 3.9% 6.9% 6.1% 4.1% 5.4%
Slide 15: Non-GAAP Financial Measures
Non-GAAP Financial Measures We have reported our financial results in accordance with generally accepted accounting principles (GAAP). In addition, we have discussed our financial results using the non-GAAP measures described below. We believe these non- GAAP measures allow investors to better under
Slide 16: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Operating Income (Loss) and Margin We calculate and utilize adjusted operating income (loss) and margin measures by adjusting our reported pre-tax income (loss) and margin amounts. In addition to the costs and expenses noted as adjustments for our adjusted earnin
Slide 17: Adjusted Net (Loss) Income and EPS Reconciliation
Adjusted Net (Loss) Income and EPS Reconciliation Year Ended Year Ended Decem ber 31, 2022 Q1-23 Q2-23 Q3-23 Q4-23 Decem ber 31, 2023 Q1-24 Net Net Net Net (Loss) Net (Loss) Net (Loss) Net (Loss) (in millions, except per share amounts) Incom e EPS Incom e EPS Incom e EPS Incom e EPS Incom e EPS Inco
Slide 18: Adjusted Effective Tax Rate Reconciliation
Adjusted Effective Tax Rate Reconciliation Three Months Ended Three Months Ended March 31, 2024 March 31, 2023 Pre-Tax Income Tax (Loss) (Benefit) Effective Tax Pre-Tax Income Tax Effective Tax (in millions) Income Expense Rate Income Expense Rate (1) Reported $ (150) $ (37) 24.7% $ 85 $ 14 16.5% (2
Slide 19: Adjusted Gross Profit and Margin Reconciliation
Adjusted Gross Profit and Margin Reconciliation Three Month Ended Three Month Ended (in millions) March 31, 2024 March 31, 2023 (1) Revenue $ 1,502 $ 1,715 Cost of revenue (1) 1,059 1,126 Gross Profit and Margin 443 29.5% 589 34.3% Adjustment: Inventory impact related to the exit of certain Producti
Slide 20: Adjusted Operating Income and Margin Reconciliation
Adjusted Operating Income and Margin Reconciliation Year Ended Year Ended Decem ber 31, 2022 Q1-23 Q2-23 Q3-23 Q4-23 Decem ber 31, 2023 Q1-24 (Loss) (Loss) (Loss) (Loss) (in millions) Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit
Slide 21: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation Year Ended Year Ended Decem ber 31, 2022 Q1-23 Q2-23 Q3-23 Q4-23 Decem ber 31, 2023 Q1-24 (Loss) (Loss) (Loss) (Loss) (in millions) Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit Revenue M
Slide 22: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Year Ended Year Ended (in millions) December 31, 2022 Q1-23 Q2-23 Q3-23 Q4-23 December 31, 2023 Q1-24 (1) Reported $159 $78 $95 $124 $389 $686 ($79) Less: capital expenditures 57 8 7 12 10 37 10 Free Cash Flow $102 $70 $88 $112 $379 $649 ($89) Add: one-time contract ter
Slide 23: Other Expenses, net Reconciliation
Other Expenses, net Reconciliation Three Months Ended March 31, (in millions) 2024 2023 Reported $ 44 $ 20 Less: Non-service retirement-related costs 23 (1) Less: Gain on early extinguishment of debt (3) - Adjusted $ 24 $ 21 23
Slide 24: Adjusted Operating Income and Margin – Guidance
Adjusted Operating Income and Margin – Guidance FY 2024 (in millions) Profit (2, 3) Margin Revenue (CC) (1) Estimated ~$335 ~$6,610 ~5.1% Adjustments: Restructuring and related costs, net 40 Amortization of intangible assets 40 Other expenses, net 85 (4) Adjusted ~$500 ~$6,610 At least 7.5% ________
Slide 25: Free Cash Flow – Guidance
Free Cash Flow – Guidance (in millions) FY 2024 (1) Operating Cash Flow At least $650 Less: capital expenditures 50 Free Cash Flow At least $600 (1) Net cash provided by operating activities. 25
Slide 26: © 2024 Xerox Corporation. All rights reserved. Xerox® is a trademark of Xerox Corporation
© 2024 Xerox Corporation. All rights reserved. Xerox® is a trademark of Xerox Corporation in the United States and/or other countries.