Xerox (XRX) has reported a 95.49 percent plunge in profit for the quarter ended Jun. 30, 2015. The company has earned $12 million, or $0.01 a share in the quarter, compared with $266 million, or $0.22 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $246 million, or $0.22 a share compared with $303 million or $0.25 a share, a year ago. Revenue during the quarter dropped 7.10 percent to $4,590 million from $4,941 million in the previous year period. Gross margin for the quarter contracted 101 basis points over the previous year period to 31.07 percent. Total expenses were 98.39 percent of quarterly revenues, up from 93.91 percent for the same period last year. That has resulted in a contraction of 448 basis points in operating margin to 1.61 percent.
Operating income for the quarter was $74 million, compared with $301 million in the previous year period.
However, the adjusted operating income for the quarter stood at $378 million compared to $483 million in the prior year period. At the same time, adjusted operating margin contracted 154 basis points in the quarter to 8.24 percent from 9.78 percent in the last year period.
"We delivered adjusted earnings in line with our guidance, met our Services and Document Technology margin expectations and delivered solid operating cash flow of $349 million in the quarter," said Ursula Burns, Xerox chairman and chief executive officer. "We are intensely focused on improving our Services margin and are implementing restructuring actions and prioritizing investments to accelerate benefits from our new operating model."
For financial year 2015, Xerox projects diluted earnings per share to be in the range of $0.69 to $0.75. It projects diluted earnings per share to be in the range of $0.95 to $1.01 on adjusted basis for the same period.
For the third-quarter, Xerox expects revenue to grow at by percent. The company projects diluted earnings per share to be in the range of $0.17 to $0.19 for the same period. It projects diluted earnings per share to be in the range of $0.22 to $0.24 on an adjusted basis, for the same period.
Operating cash flow declines
Xerox has generated cash of $462 million from operating activities during the first half, down 24.39 percent or $149 million, when compared with the last year period. Cash flow from investing activities was $733 million for the first half as against cash outgo of $446 million in the last year period. It has incurred net capital expenditure of $181 million on net basis during the first six months, down 5.24 percent or $10 million from year ago period.
Cash flow from financing activities was almost stable for the quarter at $908 million, when compared with the previous year period.
Cash and cash equivalents stood at $1,641 million as on Jun. 30, 2015, up 62.96 percent or $634 million from $1,007 million on Jun. 30, 2014.
Working capital declines
Xerox has witnessed a decline in the working capital over the last year. It stood at $2,102 million as at Jun. 30, 2015, down 8.17 percent or $187 million from $2,289 million on Jun. 30, 2014. Current ratio was at 1.37 as on Jun. 30, 2015, down from 1.40 on Jun. 30, 2014.
Cash conversion cycle (CCC) has decreased to 54 days for the quarter from 71 days for the last year period. Days sales outstanding went down to 68 days for the quarter compared with 85 days for the same period last year.
Days inventory outstanding has increased to 30 days for the quarter compared with 29 days for the previous year period. At the same time, days payable outstanding was almost stable at 44 days for the quarter, when compared with the previous year period.
Debt remains almost stable
Xerox has recorded a decline in total debt over the last one year. It stood at $7,646 million as on Jun. 30, 2015, down 0.82 percent or $63 million from $7,709 million on Jun. 30, 2014. Total debt was 29.39 percent of total assets as on Jun. 30, 2015, compared with 27.04 percent on Jun. 30, 2014. Debt to equity ratio was at 0.76 as on Jun. 30, 2015, up from 0.62 as on Jun. 30, 2014.
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