|Home » Printer & Ink News » 4.28.16: Xerox Releases 1Q Financials and Update on Separation|
Xerox Releases 1Q Financials and Update on Separation
April 28, 2016
Earlier this week Xerox unveiled their full first quarter financial data as well as an update on the forthcoming separation of the company. For those not familiar, back in January the company revealed their plans to divide into a Document Technology company and a Business Process Outsourcing company by the end of 2016.
Looking at the numbers provided by Xerox, they provide further confirmation of the benefits each would have by serving as their own entities. Xerox Services had a revenue of $2.5 billion, up 1% year-over-year and Document Technology had a revenue of $1.6 billion, which is a 10% decline year-over-year. Overall Xerox had 1Q revenue of $4.3 billion, which was equal to a 4 percent decline. They used $25 million in cash flow from operations during the quarter and at the end had a cash balance of $1.2 billion.
According to CEO Ursula Burns, "We delivered adjusted EPS in line with our guidance, revenue growth in both the Document Outsourcing and BPO businesses of our Services segment, and a strong renewal rate in Services. Document Technology revenue declines remained in line with last quarter and continue to be pressured by weak developing markets economies. We have accelerated our cost reduction efforts across the company and expect to begin realizing the benefits in the second quarter."
In terms of the separation, Burns added, "I’m pleased with our progress on our strategic transformation and separation. We put in place a robust program management structure, mapped our path to the separation, initiated leadership searches and began building the strategic, operational and financial foundation of each company."
The company says that it is still on track to complete their proposed separation from a single entity during the 2016 calendar year. In July 2016, they will submit the final Form 10 registration statement with the Securities and Exchange Commission (SEC). The best way forward for the OEM is to complete a tax-free spinoff of its Business Process Outsourcing (BPO). Overall, the total cost of the switch (minus any tax costs) is expected to reach between $200 to $250 million, including the $8 million necessary during this past quarter.
Along with the separation, Xerox has chosen to implement a 3-year strategic transformation program to improve their overall productivity and reduce costs across their businesses. With the shift they are undergoing, the company anticipates annualized savings of $700 million in 2016 from these maneuvers. During the first quarter, the company used $126 million for restructuring and believes for the year that figure will reach about $300 million.