Xerox Holdings Corporation · NASDAQ:XRX
Xerox — Q4 2023 Earnings Presentation
26 slides from Xerox's earnings presentation, Jan 25, 2024
Slide 1: Earnings Presentation Q4 2023 Results
Earnings Presentation Q4 2023 Results January 25, 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: Full Year 2023 Key Financial Measures
Full Year 2023 Key Financial Measures Revenue ($B) Adj1 Operating Margin Free Cash Flow1 ($M) $7.11 $6.89 $649 5.6% 3.9% $102 2022 2023 2022 2023 2022 2023 Operating 2023 % Change: (3.1)% @ AC, (3.3)% @ CC1 Cash Flow $159 $686 Revenue Trend ($M) Adj1 Earnings Per Share Shareholder Returns3 ($M) $2,0
Slide 4: Achievement of 2023 Priorities
Achievement of 2023 Priorities Priorities Accomplishments Employ a holistic, client-centric approach Enabled greater focus on client success and positive client outcomes by divesting or deemphasizing to deliver essential products and services businesses not core to Print, Digital and IT Services Cli
Slide 5: 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 6: Reinvention Roadmap
Reinvention Roadmap 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 2024 2025 2026 • Structural simplification • Imple
Slide 7: Frequently Asked Questions
Frequently Asked Questions How did underlying demand fare in 2023? What outlook for demand is embedded in guidance for 2024? In the back half of 2023, we experienced a mild softening of demand in our European markets, reflecting weakening macroeconomic conditions. Further, the cumulative effect of t
Slide 8: Financial Results Summary
Financial Results Summary (in millions, except per share data) B/(W) % Change P&L Measures Q4 2023 YOY YOY P&L Ratios Q4 2023 B/(W) YOY (9.1)% AC Revenue $ 1,765 $ (176) Gross Margin 33.5% (130) bps (10.6)% CC1 Operating Income – $ 96 $ (82) (46)% RD&E % 3.2% 40 bps Adjusted1 Other Expenses, net $ 3
Slide 9: Revenue
Revenue Quarterly Revenue Trend ($B) % Change YOY % Change YOY Q4 FY $1.94 (in millions) AC CC1 AC CC1 $1.72 $1.75 $1.65 $1.77 2023 2023 Equipment $458 (17.3)% (18.3)% $1,655 1.9% 1.7% Post Sale $1,307 (5.8)% (7.5)% $5,231 (4.6)% (4.8)% Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Total Revenue $1,765 (9.1)% (10.6
Slide 10: Cash Flow
Cash Flow (in millions) Q4 2023 Change YOY FY 2023 Change YOY Pre-tax Income (Loss) ($88) ($233) ($28) $297 Non-Cash Add-Backs1 96 35 339 (3) Non-Cash Goodwill Impairment, Net of Tax - - - (395) Restructuring Charges 121 103 146 84 Restructuring Payments (4) 10 (27) 25 Pension Contributions (27) (9)
Slide 11: Segment Results
Segment Results Revenue and Profit Q4 2023 B/(W) YoY Print & Intersegm ent Print & (in m illions) Other FITTLE Elim inations 1 Total Xerox Other FITTLE Total Xerox Total Revenue $ 1,686 $ 100 $ (21) $ 1,765 Total Revenue (9.5)% (1.0)% (9.1)% Segm ent Profit $ 89 $ 7 $ - $ 96 Segm ent Profit (49.7)%
Slide 12: Capital Structure
Capital Structure Debt and Cash Debt Maturity Ladder³ ($M) $879 (in billions) Q4 2023 Q4 2022 $129 $805 $55 Total Debt ($3.3) ($3.7) $572 Less: Financing Allocated Debt $2.4 $2.9 Core Debt ($0.9) ($0.8) $272 $750 $750 $344 $350 Less: Cash1 $0.6 $1.1 $250 Net Core Debt ($0.3) $0.3 $300 $56 $55 Total
Slide 13: 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: The company expects stable Print demand, growth in Digital and IT Services and neutral macroeconomic conditions. The guid
Slide 14: Appendix
Appendix 14
Slide 15: Operating Trends
Operating Trends 2022 2023 (in millions, except EPS) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Total Revenue $1,668 $1,747 $1,751 $1,941 $7,107 $1,715 $1,754 $1,652 $1,765 $6,886 % Change (2.5)% (2.6)% (0.4)% 9.2% 1.0% 2.8% 0.4% (5.7)% (9.1)% (3.1)% CC 1 % Change (0.7)% 1.1% 4.7% 13.9% 4.8% 5.5% 0.5% (7.4)% (10
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 under
Slide 17: 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 18: Adjusted Net (Loss) Income and EPS Reconciliation
Adjusted Net (Loss) Income and EPS Reconciliation Year Ended Q1-22 Q2-22 Q3-22 Q4-22 Decem ber 31, 2022 Net Net Net Net (Loss) (Loss) Net (Loss) (in millions, except per share amounts) Loss EPS Incom e EPS Incom e EPS Incom e EPS Incom e EPS Reported (1) $ (56) $ (0.38) $ (4) $ (0.05) $ (383) $ (2.4
Slide 19: Adjusted Effective Tax Rate Reconciliation
Adjusted Effective Tax Rate Reconciliation Year Ended Year Ended Q4-23 Q4-22 December 31, 2023 December 31, 2022 Pre-Tax Income Tax Pre-Tax Income Tax Pre-Tax Income Tax (Loss) (Benefit) Effective Tax Pre-Tax Income Tax Effective Tax (Loss) (Benefit) Effective Tax (Loss) (Benefit) Effective Tax (in
Slide 20: Adjusted Operating (Loss) Income and Margin Reconciliation
Adjusted Operating (Loss) Income and Margin Reconciliation Year Ended Q1-22 Q2-22 Q3-22 Q4-22 December 31, 2022 (Loss) (Loss) (Loss) (Loss) (in millions) Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin (1) Reported $ (56) $ 1,668 $ (4) $
Slide 21: Adjusted EBITDA and Margin Reconciliation
Adjusted EBITDA and Margin Reconciliation Year Ended Q1-22 Q2-22 Q3-22 Q4-22 December 31, 2022 (Loss) (Loss) (Loss) (Loss) (in millions) Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin Profit Revenue Margin (1) Reported $ (56) $ 1,668 $ (4) $ 1,747 $ (383) $ 1
Slide 22: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Year Ended Year Ended (in millions) Q1-22 Q2-22 Q3-22 Q4-22 December 31, 2022 Q1-23 Q2-23 Q3-23 Q4-23 December 31, 2023 (1) Reported $66 ($85) ($8) $186 $159 $78 $95 $124 $389 $686 Less: capital expenditures 16 13 10 18 57 8 7 12 10 37 Free Cash Flow $50 ($98) ($18) $16
Slide 23: Other Expenses, net Reconciliation
Other Expenses, net Reconciliation Three Months Ended Year Ended December 31, December 31, (in millions) 2023 2022 2023 2022 Reported $ 42 $ (2) $ 75 $ 60 Less: non-service retirement-related costs 5 6 19 (12) Adjusted $ 37 $ (8) $ 56 $ 72 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.