Xerox Corporation announced today second-quarter 2009 results that include earnings per share of 16 cents and $609 million in operating cash flow.
"During the second quarter, we exceeded our expectations for EPS and cash flow, reflecting our disciplined approach to operational improvements across the board," said Ursula M. Burns, Xerox chief executive officer. "Gross margin and cash are up; expenses are down – all key factors to our strong financial position that is serving us well during this tough economy.
"At the same time, our industry continues to face challenges from the decline in enterprise spending on technology. We have seen sequential improvement with revenue up 5 percent from the first quarter. However, assuming current economic conditions persist, we expect revenue will remain under pressure during the balance of this year," she added.
Total revenue of $3.7 billion was down 18 percent from second-quarter 2008 including a 5 point negative impact from currency. Post-sale and financing revenue was down 14 percent, or 8 percent in constant currency. Equipment sale revenue declined 29 percent, or 25 percent in constant currency. The revenue decline is largely due to continued spending constraints in the overall business environment, which is delaying purchasing decisions for new technology and slowing demand for document-related supplies.
"In this cost-conscious environment, our clients are responding to Xerox's managed print services that reduce document costs by up to 30 percent, and to the value we provide through innovation like the Xerox ColorQube solid ink system that cuts the cost of color pages by up to 62 percent," noted Burns. "Xerox's value proposition along with the breadth of our offerings for businesses of any size, expanded distribution, and global account management gives us confidence in the strength of our long-term competitive position."
Second-quarter operating cash flow of $609 million was $167 million higher than prior year driven by working capital improvements. Following this strong performance, the company raised its expectations for full-year operating cash flow to $1.5 billion from $1.3 billion. Xerox ended the second quarter with a cash balance of $1.2 billion, and total debt was down $347 million through the first half of the year. Xerox plans to reduce overall debt by $1 billion this year.
Gross margin was 40.2 percent in the second quarter, an increase of one point from the prior year and up 1.3 points from the first quarter of this year. Second-quarter selling, administrative and general (SAG) expenses were down year over year by $157 million and SAG as a percent of revenue was 27.2 percent.
Xerox expects third-quarter 2009 earnings per share in the range of 10 cents to 12 cents, delivering full-year 2009 earnings per share of 50 cents to 55 cents.