Xerox Q4 Adj Profit Tops View, But Revenues Miss; Trims 2015 Outlook

(RTTNews) - Document technology and business process services provider Xerox Corp. (XRX) reported Wednesday a profit for the fourth quarter that halved from last year, reflecting a revenue decline and a loss from discontinued operations as a result of the ITO divestiture.

Adjusted earnings per share from continuing operations topped analysts' expectations by two cents, while quarterly revenues missed their estimates. The company also provided earnings forecast for the first quarter, below Street view, and trimmed full-year 2015 outlook.

"We delivered strong profit and cash in the fourth quarter. Services revenue growth improved and margin expanded both sequentially and year-over-year... Total contract signings increased 20 percent, driven by renewals." Chairman and CEO Ursula Burns said.

The Norwalk, Connecticut-based company reported net income of $156 million or $0.13 per share for the fourth quarter, sharply lower than $306 million or $0.24 per share in the prior-year quarter.

Income from continuing operations grew to $305 million or $0.26 per share from $297 million or $0.23 per share last year.

Excluding items, net income from continuing operations for the quarter was $357 million or $0.31 per share, compared to $344 million or $0.27 per share in the year-ago quarter.

On average, nine analysts polled by Thomson Reuters expected the company to earn $0.29 per share in the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter declined 3 percent to $5.03 billion from $5.21 billion in the same quarter last year, and missed eight Wall Street analysts' consensus estimate of $5.07 billion. Total revenue was down 1 percent in constant currency.

Sales revenues for the quarter declined 7 percent from the prior-year quarter to $1.41 billion, and outsourcing, maintenance and rental revenues edged down 1 percent from a year ago to $3.53 billion. Financing revenues also decreased 22 percent to $93 million from the same quarter last year.

On a segment-basis, revenues from document technology, which represents the sale of document systems as well as the supplies, technical service and financing of products, declined 8 percent to $2.16 billion from last year.

Meanwhile, services revenues, which represents the company's business process, IT and document outsourcing offerings, totaled $2.73 billion, up 1 percent from last year.

Operation margin for the quarter improved 100 basis points to 10.4 percent from last year, and gross margin expanded 10 basis points as well as selling, administrative and general expenses as a percentage of total revenues improved 90 basis points.

The Xerox board of directors also declared a 12 percent higher quarterly cash dividend of $0.07 per share, payable on April 30 to shareholders of record on March 31, 2014.

Looking ahead to the first quarter, Xerox expects adjusted earnings from continuing operations in a range of $0.20 to $0.22 per share. Analysts expect earnings of $0.25 per share for the quarter.

For fiscal 2015, the company also trimmed its adjusted earnings guidance to a range of $1.00 to $1.06 per share from the prior forecast in the range of $1.11 to $1.17 per share. Street is currently looking for full-year 2015 earnings of $1.09 per share.

XRX closed Thursday's regular trading session at $13.56, up $0.32 on a volume of 10.41 million shares. In the past 52-week period, the stock has been trading in a range of $10.26 to $14.36.