“We posted another solid quarter of earnings, margins, and cash flow in line with our expectations, supported by our on-going Strategic Transformation initiatives,” said Jeff Jacobson, Xerox chief executive officer. “Revenue decline improved sequentially which we expect to carry through the rest of the year.” Jacobson added, “All 29 of our new ConnectKey -enabled office products are now available and shipping to large and small customers around the globe; momentum is building, as expected, entering the last quarter of the year.”
The company delivered third-quarter 2017 GAAP earnings per share (EPS) from continuing operations of 67 cents, up 1.5 percent year-over-year. Adjusted EPS was 89 cents, up 6.0 percent year-over-year, and excludes 22 cents per share of after-tax costs related to the amortization of intangibles, restructuring and related costs, and certain retirement-related costs.
Revenues were $2.5 billion in the quarter, down 5.0 percent or 5.9 percent in constant currency. Post sale revenue was 79 percent of total revenue.
Third-quarter adjusted operating margin was 12.2 percent, down 0.4 points year-over-year.
Operating cash flow from continuing operations was a $383 million use of cash and included $671 million in pension contributions, which reflect the incremental $500 million contributions to domestic pension plans that Xerox announced in September.
Excluding total pension contributions in both years, operating cash flow increased $44 million year-over-year. Cash balance at the end of the quarter was $1.8 billion. This includes $475 million, paid in October, for the redemption of a portion of the 6.35 percent Senior Notes due May 2018. The company returned $68 million in dividends to shareholders.
Full-Year 2017 Guidance
The company updated its full-year 2017 guidance of GAAP EPS from continuing operations to $1.97 to $2.13 (from previous $1.84 to $2.08) and adjusted EPS to $3.28 to $3.44 (from previous $3.20 to $3.44). Xerox revised its operating cash flow from continuing operations guidance to reflect incremental pension contributions, the elimination of certain accounts receivable (A/R) sales programs and higher operating cash flow. The company expects to end the year with more than $1.0 billion of cash on its balance sheet.