Fourth-quarter sales fell more than 2 percent for Xerox Holdings Corp., the document company reported this week, but still managed to beat Street estimates.
For the quarter ended Dec. 31, Xerox reported revenue of $2.44 billion, down from $2.5 billion in the fourth quarter last year. Net income was $819 million, compared with $141 million in the year-ago quarter. On a per-share basis, earnings were $1.22, compared with 37 cents a year ago.
Consensus estimates were $1.09 per share on revenue of $2.43 billion.
“We are delivering on our three-year plan. We grew earnings per share, increased cash flow and expanded adjusted operating margin for the full year, and we improved our revenue trajectory in the second half of the year as our investments in the business gained traction,” said Xerox Vice Chairman and CEO John Visentin. “We accomplished this while returning more than 70 percent of free cash flow to shareholders, paying down approximately $950 million in debt and increasing investments in our innovation areas. We are well positioned to carry this momentum into 2020 and lead the way for long-overdue industry consolidation.”
For the full year, revenues fell from $9.66 billion to $9.07 billion, while net income improved to $1.36 billion, from $374 million in fiscal 2018. Diluted earnings per share were $5.80, compared with $1.38 a year ago.
At year-end, Xerox reported assets of $6.14 billion, up from $4.71 billion a year ago. That includes cash of $2.74 billion, compared with $1.08 billion a year ago.
Fourth-quarter and full-year results include a $77 million benefit associated with an OEM license agreement with Fuji Xerox. Xerox and Fujifilm Holdings Corp. announced last year that Xerox would sell its one-quarter stake in Fuji Xerox—an arrangement that began more than 50 years ago when Xerox was at its height in Rochester—back to Fujifilm.
Xerox officials noted several business highlights during 2019, including “expanding Xerox’s relationship with HP.” Since November, Xerox and HP have been engaged in a back-and-forth as Xerox attempts to curry favor among HP shareholders in a hostile takeover attempt.
HP officials this week told Bloomberg that Xerox’s earnings report doesn’t help with “fundamental concerns about the continued revenue declines and health of the Xerox business.” Xerox’s proposal would, in essence, ask that HP shareholders trade the value of HP’s balance sheet for “stock in a company of questionable value and expose (them) to meaningful risk, due to inordinate leverage and sustained, declining performance.”
Shares of Xerox stock (NYSE: XRX) initially took a hit this week, dropping 2 percent following the company’s earnings report, but have bounced back, opening Thursday at $36.85. The company’s 52-week range is $27.25 to $39.47.