- Xerox Holdings Corp (NASDAQ: XRX) shares are up over 14% Tuesday morning following its first-quarter results. The company said its equipment and services demand remains resilient despite a challenging macroeconomic climate.
- XRX reported first-quarter FY23 sales growth of 2.8% year-on-year to $1.715 billion, marginally missing the consensus of $1.720 billion. Revenues grew 5.5% at constant currency.
- The backlog for the printing and digital document product manufacturer declined for the third consecutive quarter as supply chain conditions further normalized.
- Equipment sales increased 24.5%, while Post sale revenue declined 2.2%.
- Sales in the Americas rose 4% Y/Y, and EMEA inched up 0.4%.
- Gross margin expanded 250 basis points Y/Y to 34.3%. The benefits of a more flexible cost base and ongoing operational efficiencies helped drive improvements in profitability in the first quarter.
- The company reported an adjusted operating income of $118 million, compared to a loss of $(3) million last year, and the margin expanded 710 basis points to 6.9%.
- Adjusted EPS of $0.49 beat the analyst consensus of $0.17. The company reported an Adjusted loss per share of $(0.12) a year ago.
- Xerox held $591 million in cash and equivalents as of March 2023. Operating cash flow for the quarter totaled $78 million, with a free cash flow of $70 million.
- "Despite a challenging macroeconomic climate, demand for our equipment and services remains resilient and is supported by service offerings that help our clients mitigate current macro headwinds like higher inflation, labor shortages, and tighter liquidity conditions," said CEO Steve Bandrowczak.
- Overall, the company exects low-to-mid single-digit gross operating cost efficiencies for the year, driven by continuous productivity improvement and specific cost reductions.
- FY23 Outlook: The company continues to expect revenue to be flat to down low-single-digits in constant currency. The company forecasts a free cash flow of at least $500 million.
- Adjusted operating margin in the band of 5% to 5.5% expected, up from the prior guidance of at least 4.7%.
- Price Action: XRX shares are trading higher by 14.24% at $15.52 on the last check Tuesday.
- Photo Via Company
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