Xerox has lowered its 2022 revenue guidance after reporting a slight drop in third quarter revenue to $US1.75 billion, with lower cash flows and lower earnings per share.
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| "High inflation and continued supply chain constraints": Steve Bandrowczak CEO Xerox |
“Top-line strength and cost discipline resulted in sequential improvement to our adjusted operating margin this quarter, but profitability remains challenged by persistently high inflation and continued supply chain constraints,” said Steve Bandrowczak, chief executive officer at Xerox.
“In the near-term, we are focused on improving operating margins and free cash flow amid a challenging macroeconomic environment.
"Longer-term, I am confident we can expand and capture more of the addressable market within – and create value for – our existing client base by further embedding our offerings into their workflows.”
Financial Summary
- $1.75 billion of revenue, down 0.4 percent year-over-year or up 4.7 percent in constant currency.
- GAAP (loss) earnings per share (EPS) of $(2.48), down $2.96 year-over-year. GAAP EPS includes an after-tax non-cash goodwill impairment charge of $395 million or $2.54 per share.
- Adjusted EPS of $0.19, down $0.29 year-over-year.
- Adjusted operating margin of 3.7 percent, down 50 basis points year-over-year.
- Operating cash flow use of $8 million, lower by $108 million year-over-year.
- Free cash flow use of $18 million, lower by $99 million year-over-year.
- Lowered 2022 revenue guidance to a range of $7.0B to $7.1B in actual currency; lowered 2022 free cash flow guidance to at least $125 million.
“We adjusted our revenue guidance primarily to reflect higher-than-expected currency effects associated with a weaker Euro and British Pound,” Xerox said. “We lowered our free cash flow guidance due to slower-than-expected supply chain improvements and persistently high rates of inflation, which negatively affected operating profit, as well as a greater-than-expected use of working capital to fund growth of originations and operating leases at FITTLE and inventories. Our free cash flow guidance excludes a one-time payment associated with a product supply contract termination charge.”
2022 Guidance
- Revenue from at least $7.1 billion to a range of $7.0 billion to $7.1 billion in actual currency.
- Free cash flow from at least $400 million to at least $125 million.
- Return at least 50% of free cash flow to shareholders.
Earlier this month, Xerox announced it was scaling down its Elem Additive 3D printing business.
