Leader in an $85 billion market with focus on driving continued
strong cash flow, margin expansion, and improving revenue
trajectory
Xerox (NYSE:XRX) today will hold an Investor Conference to
provide details on its business strategy and long-term financial
model as a standalone company. Xerox expects to complete the
separation of Conduent Incorporated on Dec. 31, 2016.
“Today, we unveil the new Xerox, a company dedicated to helping
our customers innovate how they communicate, connect and work to
drive greater productivity,” said Jeff Jacobson, CEO of Xerox
following the separation. “Our strategy builds on our solid
financial foundation to drive strong cash generation and margin
expansion while improving our revenue trajectory over the long
term. We remain committed to delivering attractive, balanced
returns for our shareholders.”
Delivering on the New Xerox
During the conference, Xerox will outline actions to position
itself for continued leadership in the digital print technology
market and to drive strong shareholder returns that include:
- Accelerated productivity and cost
initiatives: The company continues to drive its three-year
strategic transformation program to deliver at least $1.5 billion
in productivity gains and cost savings for the standalone entity.
The program will further accelerate Xerox’s operational excellence
and cost competitiveness.
- Renewed focus on growth markets:
Xerox will invest in areas of strength and growth such as document
outsourcing and color production, and will execute strategies to
increase its participation in underpenetrated markets, including
small- and medium-sized businesses. As a result, the company will
shift its revenue mix toward growing markets to increasingly offset
declines in mature areas.
- Game-changing global product launch
and market expansion: Further solidifying its market leadership
and supporting its revenue objectives, Xerox is gearing up for the
largest new product launch in its history. The launch will enhance
its connected office portfolio with secure, smart multifunction
devices with high performance apps, on-the-go print capabilities
and cloud-connectivity. It will also support channel expansion,
particularly in the $20 billion multi-brand reseller space, by
providing partners a broader set of products, solutions and
vertically integrated tools, technology and service delivery
processes.
- Ongoing commitment to shareholder
returns: With a leadership position in equipment revenue and
the stability of a largely annuity-based business and cash flow,
the new Xerox will be well positioned to deliver attractive,
balanced shareholder returns. Demonstrating its ongoing commitment
to shareholders, Xerox announced an expected annualized per share
dividend of $0.25 after the separation.
Target Financial Model
At the event, Xerox will highlight the company’s compelling
investment proposition and long-term financial goals. The new Xerox
expects to:
- Expand operating margins to be in the
range of 12.5 – 14.5 percent in the near term by delivering at
least $1.5 billion cumulative gross productivity and cost savings
by 2018 from its strategic transformation program;
- Increase contribution from strategic
growth areas to 50 percent of total company revenue by 2020 and to
outperform the market over the long term;
- Continue to generate robust free cash
flow supported by annuity-driven revenues;
- Maintain a strong balance sheet and
investment grade rating;
- Provide a strong return of capital
through dividends and share repurchases along with targeted
M&A.
The company will provide guidance for fiscal year 2017 at its
fourth quarter 2016 earnings announcement in late January.
Webcast Information
A live audio webcast of today’s event along with relevant
presentation materials will be available at
https://www.news.xerox.com/investors at 9 a.m. ET. A replay of the
webcast can be found following the presentation at the same
link.
About Xerox
Xerox is helping change the way the world works. By applying our
expertise in imaging, business process, analytics, automation and
user-centric insights, we engineer the flow of work to provide
greater productivity, efficiency and personalization. Our employees
create meaningful innovations and provide business process
services, printing equipment, software and solutions that make
a real difference for our clients and their customers in 180
countries. On January 29, 2016, Xerox announced its plans to
separate into two independent, publicly traded companies – Xerox
Corporation, which will be comprised of the company’s Document
Technology and Document Outsourcing businesses, and Conduent
Incorporated, a business process services company. Learn more at
www.xerox.com.
Non-GAAP Measures
This release refers to the following non-GAAP financial
measures:
- Operating margin, which includes equity
in net income of unconsolidated affiliates and excludes the
following items - Non-service retirement related costs;
Restructuring and related costs; Amortization of intangible assets;
Separation costs; and Other expense, net.
- Free cash flow, which is cash flow from
operations less capital expenditures including internal use
software.
Refer to the “Non-GAAP Financial Measures” section of the Xerox
Investor Day Presentation for a further discussion of these
non-GAAP measures and their reconciliation to the reported GAAP
measure.
Forward-Looking Statements
This release contains “forward-looking statements” as defined in
the Private Securities Litigation Reform Act of 1995. The words
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,”
“should” and similar expressions, as they relate to us, are
intended to identify forward-looking statements. These statements
reflect management’s current beliefs, assumptions and expectations,
including with respect to the proposed separation of the Business
Process Outsourcing ("BPO") business from the Document Technology
and Document Outsourcing business, the expected timetable for
completing the separation, the future financial and operating
performance of each business, the strategic and competitive
advantages of each business, future opportunities for each business
and the expected amount of cost reductions that may be realized in
the cost transformation program, and are subject to a number of
factors that may cause actual results to differ materially. Such
factors include but are not limited to: changes in economic
conditions, political conditions, trade protection measures,
licensing requirements and tax matters in the United States and in
the foreign countries in which we do business; changes in foreign
currency exchange rates; our ability to successfully develop new
products, technologies and service offerings and to protect our
intellectual property rights; the risk that multi-year contracts
with governmental entities could be terminated prior to the end of
the contract term and that civil or criminal penalties and
administrative sanctions could be imposed on us if we fail to
comply with the terms of such contracts and applicable law; the
risk that our bids do not accurately estimate the resources and
costs required to implement and service very complex, multi-year
governmental and commercial contracts, often in advance of the
final determination of the full scope and design of such contracts
or as a result of the scope of such contracts being changed during
the life of such contracts; the risk that subcontractors, software
vendors and utility and network providers will not perform in a
timely, quality manner; service interruptions; actions of
competitors and our ability to promptly and effectively react to
changing technologies and customer expectations; our ability to
obtain adequate pricing for our products and services and to
maintain and improve cost efficiency of operations, including
savings from restructuring actions and the relocation of our
service delivery centers; the risk that individually identifiable
information of customers, clients and employees could be
inadvertently disclosed or disclosed as a result of a breach of our
security systems; the risk in the hiring and retention of qualified
personnel; the risk that unexpected costs will be incurred; our
ability to recover capital investments; the risk that our Services
business could be adversely affected if we are unsuccessful in
managing the start-up of new contracts; the collectability of our
receivables for unbilled services associated with very large,
multi-year contracts; reliance on third parties, including
subcontractors, for manufacturing of products and provision of
services; our ability to expand equipment placements; interest
rates, cost of borrowing and access to credit markets; the risk
that our products may not comply with applicable worldwide
regulatory requirements, particularly environmental regulations and
directives; the outcome of litigation and regulatory proceedings to
which we may be a party; the possibility that the proposed
separation of the BPO business from the Document Technology and
Document Outsourcing business will not be consummated within the
anticipated time period or at all, including as the result of
regulatory, market or other factors; the potential for disruption
to our business in connection with the proposed separation; the
potential that BPO and Document Technology and Document Outsourcing
do not realize all of the expected benefits of the separation; and
other factors that are set forth in the “Risk Factors” section, the
“Legal Proceedings” section, the “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” section
and other sections of our Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2016, June 30, 2016 and September 30,
2016, and our 2015 Annual Report on Form 10-K filed with the SEC.
Such factors also include, but are not limited to, the factors that
are set forth in the "Risk Factors" section, the "Legal
Proceedings" section and other sections of the Conduent
Incorporated Form 10 Registration Statement, as amended, filed with
the SEC. Xerox assumes no obligation to update any forward-looking
statements as a result of new information or future events or
developments, except as required by law.
Note: To receive RSS news feeds, visit
https://www.news.xerox.com. For open commentary, industry
perspectives and views visit http://twitter.com/xerox,
http://www.linkedin.com/company/xerox,
http://simplifywork.blogs.xerox.com,
http://www.facebook.com/XeroxCorp,
http://www.youtube.com/XeroxCorp.
Xerox® and Xerox and Design® are trademarks of Xerox in the
United States and/or other countries. Conduent is a trademark of
Xerox Business Services, LLC in the United States and/or other
countries.
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version on businesswire.com: http://www.businesswire.com/news/home/20161207005357/en/
Media:XeroxCarl Langsenkamp,
+1-585-423-5782carl.langsenkamp@xerox.comorInvestors:XeroxJennifer
Horsley, +1-203-849-2656jennifer.horsley@xerox.com
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