Xerox Holdings Corporation · NASDAQ:XRX
Xerox — Q1 2023 Earnings Presentation
27 slides from Xerox's earnings presentation, Apr 25, 2023
Slide 1: Earnings Presentation Q1 2023 Results
Earnings Presentation Q1 2023 Results April 25, 2023
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 2023 Key Financial Measures
Q1 2023 Key Financial Measures Revenue ($B) Adj1 Operating Margin Free Cash Flow1 ($M) $1.67 $1.72 6.9% $50 $70 2022 2023 (0.2)% 2022 2023 Operating 2023 % Change: 2.8% @ AC, 5.5% @ CC1 2022 2023 Cash Flow $66 $78 Revenue and Backlog Trend ($M) Adj1 Earnings Per Share Shareholder Returns ($M) $2,000
Slide 4: Xerox Priorities for 2023
Xerox Priorities for 2023 Employ a holistic, client-centric approach to deliver essential products Client Success and services that address the productivity challenges of a hybrid workplace and distributed workforce Implement a more flexible cost base and operating model to expand Focus on Profitabi
Slide 5: Frequently Asked Questions
Frequently Asked Questions How has the challenging macroeconomic environment affected demand for Xerox products and services? Demand for Xerox’s print equipment and related services remains resilient; as a result, we continue to expect stable demand and revenue for Macro / the year despite ongoing m
Slide 6: Financial Results Summary
Financial Results Summary (in millions, except per share data) B/(W) % Change P&L Measures Q1 2023 YOY YOY P&L Ratios Q1 2023 B/(W) YOY 2.8% AC Revenue $ 1,715 $ 47 Gross Margin 34.3% 250 bps 5.5% CC1 Operating Income – $ 118 $ 121 NM RD&E % 3.7% 100 bps Adjusted1 Other Expenses, net – $ 21 $ 10 32%
Slide 7: Revenue
Revenue % Change YOY Quarterly Revenue Trend ($B) $1.94 $1.67 $1.75 $1.75 $1.72 Q1 (in millions) % Total AC CC1 2023 Equipment $391 23% 24.5% 27.0% Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Post Sale $1,324 77% (2.2)% 0.5% Equipment Backlog as a % of ESR: 119% 110% 100% 40% 40% Total Revenue $1,715 100% 2.8% 5.
Slide 8: Cash Flow
Cash Flow (in millions) Q1 2023 Q1 2022 Pre-tax Income (Loss) $85 ($89) Non-Cash Add-Backs1 78 119 Restructuring Payments (6) (7) Pension Contributions (17) (38) Working Capital, net 2 (66) 93 3 Change in Finance Assets 120 5 4 Other (116) (17) Cash provided by Operations 78 66 Cash used in Investin
Slide 9: Profitability and Earnings
Profitability and Earnings Adjusted1 Operating Margin Adjusted1 Earnings (Loss) Per Share $0.89 9.2% 6.9% $0.49 3.7% $0.19 $0.13 2.0% $(0.12) (0.2)% Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 GAAP EPS²: $(0.38) $(0.05) $(2.48) $0.74 $0.43 • Y/Y improvement in profitability was drive
Slide 10: Segment Results
Segment Results Revenue and Profit Q1 2023 B/(W) YoY Print & Intersegm ent Print & (in m illions) Other FITTLE Elim inations 1 Total Xerox Other FITTLE Total Xerox Total Revenue $ 1,613 $ 154 $ (52) $ 1,715 Total Revenue 4.1% (2.5)% 2.8% Segm ent Profit $ 106 $ 12 $ - $ 118 Segm ent Profit NM (29)%
Slide 11: Capital Structure
Capital Structure Debt and Cash Senior Unsecured Debt Maturity Ladder ($B) (in billions) Q1 2023 Q4 2022 $0.75 $0.75 Total Debt $(3.3) $(3.7) Less: FITTLE Allocated Debt 2.8 2.9 $0.30 $0.35 $0.25 Core Debt (0.5) (0.8) Less: Cash1 0.7 1.1 2023 2024 2025 2028 2035 2039 Net Core Cash $0.2 $0.3 • $300 m
Slide 12: 2023 Full-Year Guidance and Capital Allocation
2023 Full-Year Guidance and Capital Allocation Guidance • Revenue growth: Flat to down low-single-digits in constant currency • Adjusted1 Operating Margin: 5.0% to 5.5% • Free Cash Flow1: At least $500 million Capital Allocation Policy • Shareholder Returns: At least 50% of annual Free Cash Flow1 Gu
Slide 13: Appendix
Appendix 13
Slide 14: Operating Trends
Operating Trends 2021 2022 2023 (in millions, except EPS) FY Q1 Q2 Q3 Q4 FY Q1 Total Revenue $7,038 $1,668 $1,747 $1,751 $1,941 $7,107 $1,715 % Change 0.2% (2.5)% (2.6)% (0.4)% 9.2% 1.0% 2.8% CC 1 % Change (1.4)% (0.7)% 1.1% 4.7% 13.9% 4.8% 5.5% Adj1 Operating Margin 5.3% (0.2)% 2.0% 3.7% 9.2% 3.9%
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 Income (Loss) and EPS Reconciliation
Adjusted Net Income (Loss) and EPS Reconciliation Three Months Ended Three Months Ended March 31, 2023 March 31, 2022 Net Diluted Net Diluted (in millions, except per share amounts) Income EPS Income EPS Reported (1) $ 71 $ 0.43 $ (56) $ (0.38) Adjustments: Restructuring and related costs, net 2 18
Slide 18: Adjusted Effective Tax Rate Reconciliation
Adjusted Effective Tax Rate Reconciliation Three Months Ended Three Months Ended March 31, 2023 March 31, 2022 Pre-Tax Income Tax Effective Tax Pre-Tax Income Tax Effective Tax (in millions) Income Expense Rate (Loss) (Benefit) Rate (1) Reported $ 85 $ 14 16.5% $ (89) $ (31) 34.8% (2) Non-GAAP Adjus
Slide 19: Adjusted Operating Income (Loss) and Margin Reconciliation
Adjusted Operating Income (Loss) and Margin Reconciliation Three Months Ended Three Months Ended March 31, 2023 March 31, 2022 (in millions) Profit Revenue Margin Loss Revenue (1) Reported $ 85 $ 1,715 5.0% $ (89) $ 1,668 Adjustments: Restructuring and related costs, net 2 18 Amortization of intangi
Slide 20: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Three Months Ended March 31, (in millions) 2023 2022 (1) Reported $ 78 $ 66 Less: capital expenditures 8 16 Free Cash Flow $ 70 $ 50 (1) Net cash provided b y operating activities. 20
Slide 21: Other Expenses, net Reconciliation
Other Expenses, net Reconciliation Three Months Ended March 31, (in millions) 2023 2022 Reported $ 20 $ 57 Less: non-service retirement-related costs (1) (7) Less: contract termination - product supply - 33 Adjusted $ 21 $ 31 21
Slide 22: Net Income (Loss) and EPS Reconciliation - Historical
Net Income (Loss) and EPS Reconciliation - Historical Year Ended Year Ended Decem ber 31, 2021 Q1-22 Q2-22 Q3-22 Q4-22 Decem ber 31, 2022 Net Net Net Net (Loss) Net (Loss) (Loss) Net (Loss) (in millions, except per share amounts) Incom e EPS Loss EPS Incom e EPS Incom e EPS Incom e EPS Incom e EPS R
Slide 23: Operating (Loss) Income and Margin Reconciliation - Historical
Operating (Loss) Income and Margin Reconciliation - Historical Year Ended Year Ended December 31, 2021 Q1-22 Q2-22 Q3-22 Q4-22 December 31, 2022 (Loss) (Loss) (Loss) (Loss) (Loss) (in millions) Profit Revenue Margin Loss Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit Revenue Margi
Slide 24: Free Cash Flow Reconciliation – Historical
Free Cash Flow Reconciliation – Historical Year Ended Year Ended (in millions) Q1-21 Q2-21 Q3-21 Q4-21 December 31, 2021 Q1-22 Q2-22 Q3-22 Q4-22 December 31, 2022 (1) Reported $117 $214 $100 $198 $629 $66 ($85) ($8) $186 $159 Less: capital expenditures 17 16 19 16 68 16 13 10 18 57 Free Cash Flow $1
Slide 25: Operating Income and Margin – Guidance
Operating Income and Margin – Guidance FY 2023 (in millions) Profit (2, 3) Margin Revenue (CC) (1) Estimated ~$220 ~$7,100 ~3.1% Adjustments: Restructuring and related costs, net 75 Amortization of intangible assets 40 Other expenses, net 40 (4) Adjusted ~$375 ~$7,100 5.0-5.5% __________ (1) Pre-tax
Slide 26: Free Cash Flow – Guidance
Free Cash Flow – Guidance (in millions) FY 2023 (1) Operating Cash Flow At least $550 Less: capital expenditures 50 Free Cash Flow At least $500 (1)Net cash provided by operating activities. 26
Slide 27: © 2022 Xerox Corporation. All rights reserved. Xerox® is a trademark of Xerox Corporation
© 2022 Xerox Corporation. All rights reserved. Xerox® is a trademark of Xerox Corporation in the United States and/or other countries.