Xerox Reports Third-Quarter 2014 Earnings

• GAAP EPS from continuing operations of 22 cents  Adjusted EPS of 27 cents
• Total revenue of $5.1 billion, 57 percent from Services
• Services revenue of $2.9 billion, up 1 percent
• Operating margin of 9.5 percent, up 0.1 points year-over-year
• Cash flow from operations of $595 million
• Share repurchase of $251 million

Xerox (NYSE: XRX) announced today third- quarter 2014 adjusted earnings per share of 27 cents. Adjusted EPS excludes 5 cents related to amortization of intangibles, resulting in GAAP EPS from continuing operations of 22 cents.
In the third-quarter, total revenue of $5.1 billion was down 2 percent. Revenue from the company's Services business, which represented 57 percent of total revenue, was $2.9 billion, up 1 percent and flat year-over-year in constant currency. Revenue from the company's Document Technology business, which represented 40 percent of total revenue, was $2 billion, down 6 percent. Segment margin for Services was 8.9 percent while the Document Technology business was 14 percent.
"This quarter we delivered earnings at the high end of our range. Profits from our Document Technology business came in above expectations while Services results were lower than planned," said Ursula Burns, Xerox chairman and chief executive officer. "Our Document Technology business continues to provide strong profitability, and we are continuing to invest in our Services business for revenue and profit improvement by strengthening leadership and evolving our operating model to better leverage our scale and drive efficiency and customer value. These activities will position us well for the future."
Third-quarter operating margin of 9.5 percent improved 0.1 points year-over- year, resulting in operating profit of $486 million. Gross margin was 30.8 percent, and selling, administrative and general expenses were 18.6 percent of revenue.
The company generated $595 million in cash flow from operations during the quarter. In the third-quarter, Xerox repurchased $251 million in stock and $730 million through Sept. 30, 2014 and is increasing its full-year expectation for repurchases to approximately $1 billion. "Our business continues to deliver strong cash flow that enables us to invest for growth while returning capital to shareholders through share repurchases and dividends," added Burns.
For the fourth-quarter, Xerox expects 2014 GAAP earnings per share to be 26 to 28 cents per share. Fourth-quarter adjusted EPS is expected to be 30 to 32 cents.
The company expects full-year 2014 GAAP earnings per share of 93 to 95 cents and full-year adjusted EPS of $1.11 to $1.13.
www.xerox.com

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