Xerox Reports Worse-Than-Expected Q1 2024 Results, Shares Fall. (negative cash flow of $79 million)

[jim]

Xerox Reports Worse-Than-Expected Q1 2024 Results, Shares Fall.
Xerox Faces Challenging First Quarter with Drop in Profits and Sales. In its first quarter of 2024, Xerox Holdings Corporation (NASDAQ: XRX) encountered a challenging period marked by a 19% decline in profits and a 12.4% drop in revenue compared to the same period in the previous year. The company’s financial results reflect the impact of structural changes and ongoing efforts to reposition the business for long-term growth.

Key Financial Results for Q1 2024: Revenue: Xerox’s revenue for Q1 2024 was $1.50 billion, down from $1.71 billion in Q1 2023. Net Loss: The company reported a GAAP net loss of $113 million, translating to a loss of $0.94 per share. This represents a decrease of $184 million or $1.37 per share year-over-year. The net loss includes after-tax charges related to Project Reinvention, amounting to $100 million or $0.80 per share.

Adjusted Net Income: Xerox’s adjusted net income declined to $11 million, or $0.06 per share, down by $71 million or $0.43 per share year-over-year. Operating Margin: The adjusted operating margin stood at 2.2%, reflecting a 470-basis point decrease compared to the previous year. Cash Flow: Operating cash flow decreased by $157 million year-over-year, resulting in a negative cash flow of $79 million. Free cash flow also declined by $159 million, reaching $89 million in the negative.

Strategic Changes and Confidence in Reinvention: Xerox’s CEO, Steve Bandrowczak, emphasized the company’s commitment to strategic changes aimed at aligning the organization with buyer needs and improving efficiency. Despite the Q1 results falling below expectations, Bandrowczak expressed confidence in Xerox’s team and strategy to execute the ongoing Reinvention process and achieve adjusted operating income targets.

Segment Results: Print and Other: Revenue in this segment declined by 12.6%, totaling $1.43 billion in Q1 2024. Profit also decreased by 67% to $33 million. Xerox Financial Services (XFS): Revenue from XFS dropped by 10.8% to $91 million, with no profit reported in this segment. While Xerox faces headwinds, its focus on transformation and adaptation remains crucial as it navigates market challenges and strives for sustainable growth. Investors will closely monitor the company’s actions and performance in the coming quarters to assess its ability to rebound and deliver value to shareholders.

[Author]

April 23, 2024 at 2:14 PM