“It’s clear after two months as CEO of this iconic brand that we can return Xerox to the forefront as a leading tech company,” said Visentin. “We currently have software, services and printing technologies, along with a pipeline of innovations, which can disrupt the marketplace and bring increased value to those we serve.”
“Our second-quarter results demonstrate the benefit of having a business model underpinned by annuity cash flow. However, it also highlights the challenge of improving revenue and flowing cost savings to the bottom line,” he noted. “Our success will depend on operating with a relentless focus on optimization. Actions include improving the effectiveness and efficiency of our supply chain and go-to-market channels. Equally important is ensuring we provide a great experience for our customers and address their evolving business needs.”
Demonstrating its commitment to enhancing shareholder returns, the Xerox board of directors authorized a $1 billion share repurchase program and the company will repurchase up to $500 million in 2018. “This positive step forward is a strong endorsement of the company and represents an immediate action to deliver value to our investors,” said Visentin.
The company confirmed that it is not conducting an auction process. Visentin stated, “While there has been much speculation about Xerox, I want to be clear. My mission is to do what is right for Xerox. Our focus is on leveraging the assets and capabilities we have today to create a sustainable company that provides a compelling value proposition for customers and partners.”
Second quarter 2018 financial results include GAAP earnings per share (EPS) from continuing operations of 42 cents, down 21 cents compared to the same period in 2017, primarily due to transaction costs of $58 million or 17 cents. Adjusted EPS of 80 cents is a decrease of 6 cents year over year.
Total revenue was $2,510 million, down 2.2% year-over-year or 4.0% in constant currency. Adjusted operating margin was 11.9%, down 1.3 points year-over-year. Operating cash flow was $235 million in the second quarter and $451 million for the first half.
Xerox will focus on driving strong cash generation and continues to expect full-year operating cash flow of $900 million to $1,100 million and free cash flow of $750 to $950 million. The company plans to return at least 50% of its free cash flow to shareholders through common dividends and share repurchases on an annual basis. Xerox will use excess cash on the balance sheet to opportunistically repurchase up to $500 million of shares in 2018.