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Xerox Downgraded to ‘B’ by S&P Amid Cash Flow and Lexmark Integration Concerns
S&P Global Ratings has downgraded Xerox from B+ to B, citing continued cash flow challenges, tariff pressures, and delays in cost-saving measures. The downgrade reflects concerns over Xerox’s ability to generate positive free operating cash flow (FOCF) in the near term, with 2025 projections now showing a shortfall of $50–60 million.While the Lexmark acquisition was expected to strengthen Xerox’s market position, S&P noted that integration costs—estimated at $50–75 million over two years—are straining near-term financial performance. Additionally, focus on the integration has delayed execution of Xerox’s broader Reinvention cost-saving strategy. The company also faces $60–65 million in tariff-related expenses next year, despite efforts to shift production out of China. Combined with higher interest costs from added debt, these factors have pushed margins and credit metrics below S&P’s expectations. Though the Lexmark deal is not solely to blame, it has added complexity and near-term financial burden to an already challenged operating environment.
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