Xerox Holdings Corporation · NASDAQ:XRX
Xerox — Q1 2021 Earnings Presentation
28 slides from Xerox's earnings presentation, Apr 20, 2021
Slide 1: Earnings Presentation Q1 2021 Results
Earnings Presentation Q1 2021 Results April 20, 2021 1
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 2021 Key Financial Measures
Q1 2021 Key Financial Measures Revenue ($B) Adj1 Operating Margin Free Cash Flow1 ($M) $1.86 $1.71 $150 4.7% 5.2% $100 2020 2021 2020 2021 2020 2021 Operating 2021 % Change: (8.1)% @ AC, (10.4)% @ CC1 Cash Flow $173 $117 Revenue Trend1 Adj1 Earnings Per Share Shareholder Returns ($M) $216 -5.0% -10.
Slide 4: Strategic Initiatives to Transform Xerox
Strategic Initiatives to Transform Xerox • Continuously improve our operating model for greater efficiency Optimize operations • Invest in augmented reality and analytics to drive efficiencies for simplicity • Reduce complexity and simplify billing and offerings • Expand software offerings to transf
Slide 5: Frequently Asked Questions
Frequently Asked Questions How do you expect the global macro environment to impact your business in 2021? We have witnessed a correlation between COVID vaccine distribution, businesses coming back to the office and increased Global Macro page volumes. Our strong performance in Q1 Equipment sales ac
Slide 6: Financial Results Summary
Financial Results Summary (in millions, except per share data) Q1 B/(W) % Change P&L Measures 2021 YOY YOY P&L Ratios Q1 2021 B/(W) YOY (8.1)% AC Revenue $ 1,710 $ (150) Gross Margin 35.7% (260) bps (10.4)% CC1 Operating Income – $ 89 $ 2 2.3% RD&E % 4.3% 20 bps Adjusted1 Other Expenses, net $ 4 $ 1
Slide 7: Revenue
Revenue % Change YOY Quarterly Revenue Trend ($B) Q1 $1.93 (in millions) % Mix AC CC1 $1.86 $1.77 $1.71 2021 $1.47 Equipment $ 381 22% 17.2% 14.2% Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Post Sale $ 1,329 78% (13.4)% (15.6)% YOY Change (CC1): (13.9)% (34.6)% (19.7)% (22.3)% (10.4)% Total Revenue $ 1,710 100%
Slide 8: Cash Flow
Cash Flow (in millions) Q1 2021 Q1 2020 Pre-tax Income (Loss) $ 53 $ (5) Non-Cash Add-Backs1 143 237 Restructuring Payments (27) (35) Pension Contributions (35) (33) Working Capital, net2 43 91 Change in Finance Assets3 9 61 Other4 (69) (143) Cash from Operations $ 117 $ 173 Cash used in Investing $
Slide 9: Profitability and Earnings
Profitability and Earnings Adjusted1 Operating Margin Project Own It 9.5% 7.4% 4.7% 5.2% • Project Own It is a multi- 4.2% year program to simplify our operations and instill Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 a culture of continuous improvement • Achieved ~$1.4B of gross cost savings Adjusted1 EPS throu
Slide 10: Xerox Financial Services (XFS)
Xerox Financial Services (XFS) XFS Strategy XFS Portfolio • Create a global leasing solutions business serving • XFS assets: $3.4 billion as of March 31, 2021 technology, office equipment and adjacent markets • Leases managed: Over 700,000 equipment leases • Growth will be driven by expanding the po
Slide 11: Capital Structure
Capital Structure Debt and Cash Senior Unsecured Debt Maturity Ladder ($B) 3 (in billions) Q1 2021 Q4 2020 Total Debt $ (4.4) $ (4.4) $1.00 $0.75 $0.75 Less: XFS debt 2.9 3.0 $0.30 $0.30 $0.35 $0.25 Core Debt1 (1.5) (1.4) Less: Cash2 2.5 2.7 2022 2023 2024 2025 2028 2035 2039 Net Core Cash $ 1.0 $ 1
Slide 12: Summary and 2021 Guidance
Summary and 2021 Guidance Full-Year Guidance • Revenue (CC)1: At least $7.2B, ~2.5% growth • Free Cash Flow 1: At least $500M • Shareholder Returns: At least 50% of annual Free Cash Flow1 In 2021, our four strategic initiatives—optimize operations for simplicity, drive revenue, reenergize the innova
Slide 13: Appendix
Appendix 13 19 April 2021 13
Slide 14: Operating Trends – Continuing Operations
Operating Trends – Continuing Operations 2019 2020 2021 (in millions, except EPS) FY Q1 Q2 Q3 Q4 FY Q1 Total Revenue $9,066 $1,860 $1,465 $1,767 $1,930 $7,022 $1,710 % Change (6.2)% (14.7)% (35.3)% (18.9)% (21.0)% (22.5)% (8.1)% CC1 % Change (4.7)% (13.9)% (34.6)% (19.7)% (22.3)% (22.7)% (10.4)% Adj
Slide 15: Non-GAAP Financial Measures
Non-GAAP Financial Measures 15 19 April 2021 15
Slide 16: 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 unders
Slide 17: Non-GAAP Financial Measures (cont'd)
Non-GAAP Financial Measures (cont’d) • Transaction and related costs, net: Transaction and related costs, net are costs and expenses primarily associated with certain strategic M&A projects. These costs are primarily for third-party legal, accounting, consulting and other similar type professional s
Slide 18: Non-GAAP Financial Measures (cont'd)
Non-GAAP Financial Measures (cont’d) Adjusted Operating Income and Margin We calculate and utilize adjusted operating income and margin measures by adjusting our reported pre-tax income and margin amounts. In addition to the costs and expenses noted as adjustments for our Adjusted Earnings measures,
Slide 19: Net Income (Loss) and EPS reconciliation
Net Income (Loss) and EPS reconciliation Three Months Ended Three Months Ended March 31, 2021 March 31, 2020 Net Income Net (Loss) (in millions, except per share amounts) EPS Income EPS Reported(1) $ 39 $ 0.18 $ (2) $ (0.03) Adjustments: Restructuring and related costs, net 17 41 Amortization of int
Slide 20: Effective Tax Rate reconciliation
Effective Tax Rate reconciliation Three Months Ended Three Months Ended March 31, 2021 March 31, 2020 Pre-Tax Income Tax Pre-Tax Income Tax Effective (Loss) (Benefit) Effective (in millions) Income Expense Tax Rate Income Expense Tax Rate Reported(1) $ 53 $ 14 26.4% $ (5) $ (1) 20.0% Non-GAAP 12 4 7
Slide 21: Operating Income and Margin reconciliation
Operating Income and Margin reconciliation Three Months Ended Three Months Ended March 31, 2021 March 31, 2020 (Loss) (in millions) Profit Revenue Margin Profit Revenue Margin Reported (1) $ 53 $ 1,710 3.1% $ (5) $ 1,860 (0.3)% Adjustments: Restructuring and related costs, net 17 41 Amortization of
Slide 22: Free Cash Flow reconciliation
Free Cash Flow reconciliation Three Months Ended March 31, (in millions) 2021 2020 Change Reported (1) $ 117 $ 173 $ (56) Capital expenditures (17) (23) 6 Free Cash Flow $ 100 $ 150 $ (50) ____________________ (1) Net cash provided by operating activities. 22
Slide 23: Other Expenses, Net reconciliation
Other Expenses, Net reconciliation Three Months Ended March 31, (in millions) 2021 2020 Reported $ 4 $ 23 Less: Non-service retirement-related costs (20) 1 Less: Contract termination costs – IT services - 3 Adjusted $ 24 $ 19 23
Slide 24: Free Cash Flow – Guidance
Free Cash Flow – Guidance (in millions) FY 2021 Operating Cash Flow(1) At least $600 Less: Capital expenditures (100) Free Cash Flow At least $500 ___________________________ (1)Net cash provided by operating activities. 24
Slide 25: Net Income (Loss) and EPS reconciliation – historical
Net Income (Loss) and EPS reconciliation – historical Year Ended Year Ended December 31, 2019 Q1-20 Q2-20 Q3-20 Q4-20 December 31, 2020 Net Net (Loss) Net Net Net Net (in millions, except per share amounts) Income EPS Income EPS Income EPS Income EPS Income EPS Income EPS Reported (1) $ 648 $ 2.78 $
Slide 26: Operating Income and Margin reconciliation – historical
Operating Income and Margin reconciliation – historical Year Ended Year Ended Decem ber 31, 2019 Q1-20 Q2-20 Q3-20 Q4-20 Decem ber 31, 2020 (Loss) (in millions) Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Reporte
Slide 27: Free Cash Flow reconciliation – historical
Free Cash Flow reconciliation – historical Year Ended Year Ended December 31, December 31, 2019 Q1-20 Q2-20 Q3-20 Q4-20 2020 (in millions, except per share amounts) Reported (1) $ 1,244 $ 173 $ 34 $ 106 $ 235 $ 548 Capital expenditures (65) (23) (19) (18) (14) (74) Free Cash Flow from Continuing Ope
Slide 28: © 2021 Xerox Corporation. All rights reserved. Xerox® is a trademark of Xerox Corporation
© 2021 Xerox Corporation. All rights reserved. Xerox® is a trademark of Xerox Corporation in the United States and/or other countries.