“I am proud of our employees who did what was necessary during this unprecedented disruption to support our business and clients, especially those delivering essential services,” said Xerox CEO John Visentin announcing the company’s Q2 2020 results. Revenue was down 35 percent year over year to $US1.47 billion. “We have evaluated our business under numerous recovery scenarios to ensure we can respond quickly."
In the period April 1 to June 30 2020 Xerox recorded revenue of $1.47 billion - a decrease of 35.3 percent year-over-year. Operating Income was $62 million, down 77.9% from $280 million for Q2 2019.
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| 'We have modelled numerous scenarios': John Visentin CEO Xerox |
“While the bulk of our markets were fully or partially shut down during the quarter, our team’s financial discipline enabled us to deliver positive earnings per share and cash flow while continuing to invest in key areas of growth,” said Visentin.
“No one can control or accurately predict what happens next. We have modelled numerous scenarios to ensure we have flexibility no matter how the pandemic continues to impact global business.”
In its Earnings Presentation, the company said: “We have evaluated our business under numerous recovery scenarios to ensure we can respond quickly.
“The pandemic has accelerated the digital transformation needs of companies large and small. As a part of our strategic initiatives to transform Xerox, we have been investing in areas such as digital services and solutions to help our clients transition from largely paper-based processes to digital ones.
“While many parts of the world quickly moved to remote working in response to the pandemic, we believe the workplace will remain a key part of how businesses operate for years to come.”
Xerox said it would continue a strategic initiative to transform the company by re-energizing its innovation engine. “Specifically we are continuing to invest in software and services that enhance mobility, analytics and security as these are key drivers of growth in the very competitive print industry.
“We are focused on cloud-based software that supports an array of offerings including Digital Mail, Capture & Content as well as Digital Hub & Cloud Print. We also expanded our IT Services in the U.S., Canada and the U.K. since the beginning of the year.
"We continue to progress on our five innovation pillars: 3D, sensors and IoT, clean tech, digital packaging, and AI. The impact of COVID-19 has accelerated needs in many of these areas. For example, COVID-19 has highlighted the risks globally dispersed supply chains pose for many businesses. Xerox’s liquid metal 3D printing solution can help strengthen supply chains with locally manufactured parts, and we remain on track to deliver our first product by year end.
“Our balance sheet and liquidity are strong, with approximately $2.3B of cash, cash equivalents and restricted cash and a $1.8B undrawn revolver as of June 30th.
"Our capital allocation priorities remain unchanged. In light of the pandemic and the anticipated impact of business closures around the globe, we managed our capital conservatively in Q2. We closed a $340M private U.S. securitization in July, which effectively refinanced a May 2020 bond maturity, and we have approximately $740M of debt maturing in Q3, which we plan to refinance.”
In November 2019, US-based Xerox announced it would sell its 25% stake in Fuji Xerox - its joint venture with Japan’s Fujifilm Holdings - for $2.3 billion, after billionaire Xerox investors Carl Icahn and Darwin Deason blocked a proposed $6 billion merger deal between the two companies.
Second-Quarter Key Financial Results - Continuing Operations
$34 million of operating cash flow from continuing operations, down $242 million year-over-year, and $15 million of free cash flow, down $245 million year-over-year
Adjusted operating margin of 4.2 percent, down 820 basis points year-over-year
$1.47 billion of revenue, a decrease of 35.3 percent year-over-year or 34.6 percent in constant currency
GAAP earnings per share (EPS) from continuing operations of $0.11 per share, down $0.49 year-over-year, and adjusted EPS of $0.15, down $0.64 year-over-year
Full release here
Meanwhile, Reuters reports that Japan's Canon recorded its first quarterly net loss since it started quarterly disclosures in 2001, as the coronavirus outbreak took a toll on demand for printers and cameras. Net loss in April-June was 8.8 billion yen ($US83.4 million) compared with the prior year's profit of 34.5 billion yen in the same quarter.
