Xerox Corporation (XRX) has reported a 29.30 percent fall in profit for the quarter ended Dec. 31, 2016. The company has earned $181 million, or $0.17 a share in the quarter, compared with $256 million, or $0.24 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $260 million, or $0.25 a share compared with $285 million or $0.27 a share, a year ago.
Revenue during the quarter dropped 7.20 percent to $2,734 million from $2,946 million in the previous year period. Gross margin for the quarter expanded 30 basis points over the previous year period to 40.01 percent. Total expenses were 93.45 percent of quarterly revenues, up from 90.26 percent for the same period last year. That has resulted in a contraction of 319 basis points in operating margin to 6.55 percent.
Operating income for the quarter was $179 million, compared with $287 million in the previous year period.
However, the adjusted operating income for the quarter stood at $384 million compared to $393 million in the prior year period. At the same time, adjusted operating margin improved 71 basis points in the quarter to 14.05 percent from 13.34 percent in the last year period.
"Our fourth quarter results demonstrate that we are realizing significant benefits from our Strategic Transformation program," said Jeff Jacobson, Xerox chief executive officer. "We delivered strong margins that countered expected pressure on revenue." Jacobson continued, "With the separation of Conduent now complete, we turn our full attention to delivering on our strategy, which includes pursuing the growing areas of the market. As the strategy begins to yield results, our revenue trajectory is expected to improve over time while we expand our margins and continue to generate strong cash flows."
For fiscal year 2017, Xerox Corporation expects diluted earnings per share to be in the range of $0.44 to $0.52. The company expects diluted earnings per share to be in the range of $0.80 to $0.88 on adjusted basis.
Working capital increases sharply
Xerox Corporation has recorded an increase in the working capital over the last year. It stood at $2,338 million as at Dec. 31, 2016, up 63.38 percent or $907 million from $1,431 million on Dec. 31, 2015. Current ratio was at 1.50 as on Dec. 31, 2016, up from 1.27 on Dec. 31, 2015.
Cash conversion cycle (CCC) has increased to 31 days for the quarter from 27 days for the last year period. Days sales outstanding were almost stable at 39 days for the quarter, when compared with the last year period.
Days inventory outstanding was almost stable at 24 days for the quarter, when compared with the last year period. At the same time, days payable outstanding went down to 32 days for the quarter from 35 for the same period last year.
Debt comes down
Xerox Corporation has recorded a decline in total debt over the last one year. It stood at $6,316 million as on Dec. 31, 2016, down 13.23 percent or $963 million from $7,279 million on Dec. 31, 2015. Total debt was 34.81 percent of total assets as on Dec. 31, 2016, compared with 29.33 percent on Dec. 31, 2015. Debt to equity ratio was at 1.30 as on Dec. 31, 2016, up from 0.80 as on Dec. 31, 2015.
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