“In an important period for Xerox when our separation-related activities ramped up significantly, we delivered solid financial results despite challenging market conditions. This reflects our commitment to executing on all aspects of our ambitious agenda, including our strategic transformation and achieving our 2016 financial objectives,” said Ursula Burns, Xerox chairman and CEO.
Xerox reported third-quarter GAAP EPS from continuing operations of 17 cents, up 21 cents compared to the same period last year, primarily due to a prior-year charge related to the company’s Health Enterprise strategy change.
Third-quarter total revenue of $4.2 billion was down 3% year-over-year, or 4% on an adjusted constant currency basis. Operating margin of 9.2% was down 0.2 percentage points year-over-year.
Services segment revenue of $2.4 billion was up 1%, or down 2% on an adjusted constant currency basis. Services margin improved 1.6 percentage points year-over-year on an adjusted basis to 9.4%, driven by significant productivity and cost savings across the company’s BPO business.
Document Technology revenue was $1.6 billion, down 9% or 7% in constant currency. Document Technology margin remained strong at 13.1%, down 0.8 percentage points year-over-year but up 0.5 percentage points sequentially, reflecting continued productivity gains and cost savings from the company’s strategic transformation program.
Xerox generated cash flow from operations of $370 million during the third quarter, up from $271 million in the same quarter last year. The company ended the quarter with a cash balance of $1.4 billion.
Xerox continued its progress toward the planned separation and remains on track to complete it by year-end.
Xerox continues to expect full-year 2016 cash flow from operations of $950 million to $1.2 billion and free cash flow of $600 to $850 million.