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Xerox Releases Fourth-Quarter and Full-Year Results

Xerox Holdings Corporation (NASDAQ: XRX) today announced its 2024 fourth-quarter and full-year results and guidance for 2025. “2024 was a critical year as we implemented a new operating model and st...

Business Wire

Company advances Reinvention; guides to growth in revenue and profits for 2025

Financial Summary

Q4 2024

  • Revenue of $1.61 billion, down 8.6 percent, or 8.0 percent in constant currency.
  • GAAP net (loss) of $(21) million, or $(0.20) per share, an improvement of $37 million or $0.30 per share, year-over-year, respectively.
  • Adjusted net income of $49 million, or $0.36 per share, down $7 million or $0.07 per share, year-over-year, respectively.
  • Adjusted operating margin of 6.4 percent, up 100 basis points year-over-year.
  • Operating cash flow of $351 million, down $38 million year-over-year.
  • Free cash flow of $334 million, down $45 million year-over-year.

FY 2024

  • Revenue of $6.22 billion, down 9.7 percent, or 9.5 percent in constant currency.
  • GAAP net (loss) of $(1.32) billion, or $(10.75) per share, down $1.32 billion or $10.66 per share, year-over-year, respectively. 2024 includes an after-tax non-cash goodwill impairment charge of $1.0 billion, or $8.17 per share.
  • Adjusted net income of $135 million, or $0.97 per share, down $152 million or $0.85 per share, year-over-year, respectively.
  • Adjusted operating margin of 4.9 percent, down 70 basis points year-over-year.
  • Operating cash flow of $511 million, down $175 million year-over-year.
  • Free cash flow of $467 million, down $182 million year-over-year.

NORWALK, Conn.: Xerox Holdings Corporation (NASDAQ: XRX) today announced its 2024 fourth-quarter and full-year results and guidance for 2025.

“2024 was a critical year as we implemented a new operating model and structural process improvements to position Xerox for long-term, sustainable growth,” said Steve Bandrowczak, chief executive officer at Xerox. “We continue to see steady progress in our Reinvention, reflecting the resilience of our team and initiatives taken to-date. In 2025, we expect to build on changes made in 2024 in order to focus on executing our Reinvention strategy, realizing the benefits of the ITsavvy and pending Lexmark acquisitions, and strengthening our balance sheet.”

Fourth-Quarter Key Financial Results

(in millions, except per share data)

Q4 2024

 

Q4 2023

 

B/(W)
YOY

 

% Change
B/(W) YOY

Revenue

$1,613

 

$1,765

 

$(152)

 

(8.6)% AC

(8.0)% CC1

Gross Profit

$502

 

$592

 

$(90)

 

(15.2)%

Gross Margin

31.1%

 

33.5%

 

(240) bps

 

 

RD&E %

2.9%

 

3.2%

 

30 bps

 

 

SAG %

23.4%

 

24.9%

 

150 bps

 

 

Pre-Tax (Loss)2

$(4)

 

$(88)

 

$84

 

NM

Pre-Tax (Loss) Margin2

(0.2)%

 

(5.0)%

 

480 bps

 

 

Gross Profit - Adjusted1

$509

 

$592

 

$(83)

 

(14.0)%

Gross Margin - Adjusted1

31.6%

 

33.5%

 

(190) bps

 

 

Operating Income - Adjusted1

$104

 

$96

 

$8

 

8.3%

Operating Income Margin - Adjusted1

6.4%

 

5.4%

 

100 bps

 

 

GAAP Diluted (Loss) per Share2

$(0.20)

 

$(0.50)

 

$0.30

 

NM

Diluted Earnings Per Share - Adjusted1

$0.36

 

$0.43

 

$(0.07)

 

(16.3)%

Full-Year Key Financial Results

(in millions, except per share data)

FY 2024

 

FY 2023

 

B/(W)
YOY

 

% Change
B/(W) YOY

Revenue

$6,221

 

$6,886

 

$(665)

 

(9.7)% AC

(9.5)% CC1

Gross Profit

$1,960

 

$2,314

 

$(354)

 

(15.3)%

Gross Margin

31.5%

 

33.6%

 

(210) bps

 

 

RD&E %

3.1%

 

3.3%

 

20 bps

 

 

SAG %

24.7%

 

24.6%

 

(10) bps

 

 

Pre-Tax (Loss)2

$(1,216)

 

$(28)

 

$(1,188)

 

NM

Pre-Tax (Loss) Margin2

(19.5)%

 

(0.4)%

 

NM

 

 

Gross Profit - Adjusted1

$2,011

 

$2,314

 

$(303)

 

(13.1)%

Gross Margin - Adjusted1

32.3%

 

33.6%

 

(130) bps

 

 

Operating Income - Adjusted1

$302

 

$389

 

$(87)

 

(22.4)%

Operating Income Margin - Adjusted1

4.9%

 

5.6%

 

(70) bps

 

 

GAAP Diluted (Loss) per Share2

$(10.75)

 

$(0.09)

 

$(10.66)

 

NM

Diluted Earnings Per Share - Adjusted1

$0.97

 

$1.82

 

$(0.85)

 

(46.7)%

_____________

  • Refer to the “Non-GAAP Financial Measures” section of this release for a discussion of these non-GAAP measures and their reconciliation to the reported GAAP measures.
  • Fourth quarter 2024 Pre-Tax (Loss) and Margin and Diluted (Loss) per Share includes a $37 million pre-tax ($28 million after-tax) write-off of intangibles, or $0.22 per share, and $19 million of pre-tax ($15 million after-tax) Reinvention and transaction-related costs, or $0.12 per share. Full-year 2024 Pre-Tax (Loss) and Margin, and Diluted (Loss) per Share includes the following: Q1-24 $129 million pre-tax ($100 million after-tax) Reinvention-related charge, or $0.81 per share, primarily related to the exit of certain Production Print manufacturing operations and geographic simplification; Q3-24 pre-tax non-cash goodwill impairment charge of approximately $1.1 billion (approximately $1.0 billion after-tax), or $8.17 per share; Q4-24 $37 million pre-tax ($28 million after-tax) write-off of intangibles, or $0.22 per share, and $19 million of pre-tax ($15 million after-tax) Reinvention and transaction-related costs, or $0.12 per share. Full year 2024 also includes a Q3-24 tax expense charge of $161 million, or $1.30 per share, related to the establishment of a valuation allowance against certain deferred tax assets to reflect their realizability. Full year 2023 Pre-Tax (Loss) and Margin, and Diluted (Loss) per Share includes a Q2-23 net pre-tax PARC donation charge of $132 million ($92 million after-tax), or $0.58 per share, and a Q4-23 $104 million pre-tax Restructuring and related costs, net charge ($78 million after-tax), or $0.52 per share, related to the Reinvention-related workforce reduction.
  • Fourth-Quarter Segment Results

    (in millions)

    Q4 2024

     

    Q4 2023

     

    B/(W)
    YOY

     

    % Change
    B/(W) YOY

    Revenue

     

     

     

     

     

     

     

    Print and Other

    $1,540

     

    $1,686

     

    $(146)

     

    (8.7)%

    XFS

    89

     

    100

     

    (11)

     

    (11.0)%

    Intersegment Elimination1

    (16)

     

    (21)

     

    5

     

    (23.8)%

    Total Revenue

    $1,613

     

    $1,765

     

    $(152)

     

    (8.6)%

    Profit

     

     

     

     

     

     

     

    Print and Other

    $87

     

    $89

     

    $(2)

     

    (2.2)%

    XFS

    17

     

    7

     

    10

     

    142.9%

    Total Profit

    $104

     

    $96

     

    $8

     

    8.3%

    Full-Year Segment Results

    (in millions)

    FY 2024

     

    FY 2023

     

    B/(W)
    YOY

     

    % Change
    B/(W) YOY

    Revenue

     

     

     

     

     

     

     

    Print and Other

    $5,935

     

    $6,571

     

    $(636)

     

    (9.7)%

    XFS

    357

     

    401

     

    (44)

     

    (11.0)%

    Intersegment Elimination1

    (71)

     

    (86)

     

    15

     

    (17.4)%

    Total Revenue

    $6,221

     

    $6,886

     

    $(665)

     

    (9.7)%

    Profit

     

     

     

     

     

     

     

    Print and Other

    $268

     

    $360

     

    $(92)

     

    (25.6)%

    XFS

    34

     

    29

     

    5

     

    17.2%

    Total Profit

    $302

     

    $389

     

    $(87)

     

    (22.4)%

    _____________

  • Reflects revenue, primarily commissions and other payments, made by the XFS segment to the Print and Other segment for the lease of Xerox equipment placements.
  • 2025 Guidance

    • Revenue: low single-digit growth in constant currency1
    • Adjusted 1 Operating Margin: at least 5.0%
    • Free cash flow1: $350 million to $400 million

    Guidance does not include any impacts associated with the pending acquisition of Lexmark, which is expected to close in 2H 2025.

    Non-GAAP Measures

    This release refers to the following non-GAAP financial measures:

    • Adjusted1 EPS, which excludes the Goodwill impairment charge, a tax expense charge related to the establishment of a valuation allowance against certain deferred tax assets, Reinvention-related costs, as well as Restructuring and related costs, net, Amortization of intangible assets, non-service retirement-related costs, and other discrete adjustments from GAAP EPS, as applicable.
    • Adjusted 1 operating income and margin, which exclude the EPS adjustments noted above, except the tax expense charge related to the establishment of a valuation allowance against certain deferred tax assets, as well as the remainder of Other expenses, net from pre-tax (loss) and margin.
    • Constant currency (CC) revenue change, which excludes the effects of currency translation.
    • Free cash flow 1, which is operating cash flow less capital expenditures.

    _____________

    1 Refer to the “Non-GAAP Financial Measures” section of this release for a discussion of these non-GAAP measures and their reconciliation to the reported GAAP measures.

    Forward Looking Statements

    Certain statements contained in this communication may be characterized as forward-looking under the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially.

    Statements in this communication regarding Xerox and Lexmark that are forward-looking may include statements regarding: (i) the transaction; (ii) the expected timing of the closing of the transaction; (iii) considerations taken into account in approving and entering into the transaction; (iv) the anticipated benefits to, or impact of, the transaction on Xerox's and Lexmark's businesses; and (v) expectations for Xerox and Lexmark following the closing of the transaction. There can be no assurance that the transaction will be consummated.

    Risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements, in addition to those identified above, include: (i) the possibility that the conditions to the closing of the transaction are not satisfied, including the risk that required shareholder and regulatory approvals are not obtained, on a timely basis or at all; (ii) the occurrence of any event, change or other circumstance that could give rise to a right to terminate the transaction, including in circumstances requiring Xerox or Lexmark to reimburse the other’s expenses or pay a termination fee; (iii) possible disruption related to the transaction to Xerox's and Lexmark's current plans, operations and business relationships, including through the loss of customers and employees; (iv) the amount of the costs, fees, expenses and other charges incurred by Xerox and Lexmark related to the transaction; (v) the risk that Xerox's stock price may fluctuate during the pendency of the transaction and may decline if the transaction is not completed; (vi) the diversion of Xerox and Lexmark management's time and attention from ongoing business operations and opportunities; (vii) the response of competitors and other market participants to the transaction; (viii) potential litigation relating to the transaction; (ix) uncertainty as to timing of completion of the transaction and the ability of each party to consummate the transaction; (x) Xerox’s ability to finance the transaction; (xi) the ability of the combined company to achieve potential market share expansion; (xii) the ability of the combined company to achieve the identified synergies; (xiii) Xerox’s indebtedness, including the indebtedness Xerox expects to incur and/or assume in connection with the transaction and the need to generate sufficient cash flows to service and repay such debt; (xiv) the ability to integrate the Lexmark business into Xerox and realize the anticipated strategic benefits of the transaction within the expected time-frames or at all; (xv) that such integration may be more difficult, time-consuming or costly than expected; (xvi) that operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers or suppliers) may be greater than expected following the transaction; (xvii) rating agency actions and Xerox’s ability to access short- and long-term debt markets on a timely and affordable basis; (xviii) general economic conditions that are less favorable than expected; and (xix) other risks and uncertainties detailed in the periodic reports that Xerox filed with the Securities and Exchange Commission, including Xerox's Annual Report on Form 10-K. All forward-looking statements in this communication are based on information available to Xerox as of the date of this communication, and Xerox intends these forward-looking statements to speak only as of the date of this release and does not undertake to update or revise them as more information becomes available, except as required by law.

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