Xerox’s (XRX) CEO Ursula Burns on Q2 2014 Results – Earnings Call Transcript

Source: Seeking Alpha


Xerox Corporation (NYSE:XRX)

Q2 2014 Results Earnings Conference Call

July 25, 2014 10:00 AM ET


Ursula Burns – Chairman and CEO

Kathy Mikells – Executive Vice President and CFO

Jim Lesko – Vice President, Investor Relations

Bob Zapfel – EVP, President, Xerox Services

Jeff Jacobson – President, Document Technology


Brian Essex – Morgan Stanley

Ben Reitzes – Barclays

Shannon Cross – Cross Research

Jim Suva – Citigroup

George Tong – Piper Jaffray

Keith Bachman – BMO Capital Markets

Tien-tsin Huang – JPMorgan

Ananda Baruah – Brean Capital

Bill Shope – Goldman Sachs

James Friedman – Susquehanna


Good morning. And welcome to the Xerox Corporation Second Quarter 2014 Earnings Release Conference Call hosted by Ursula Burns, Chairman of the Board and Chief Executive Officer. She is joined by Kathy Mikells, Executive Vice President and Chief Financial Officer.

During this call, Xerox executives will refer to slides that are available on the web at At the request of Xerox Corporation, today’s conference call is being recorded. Other recording and/or rebroadcasting of this call are prohibited without the express permission of Xerox. After the presentation, there will be a question-and-answer session. (Operator Instructions)

During this conference call, Xerox executives will make comments that contain forward-looking statements, which by their nature address matters that are in the future and are uncertain. Actual future financial results may be materially different than those expressed herein.

At this time, I would like to turn the meeting over to Ms. Burns. Ms. Burns, you may begin.

Ursula Burns – Chairman and CEO

Good morning and thanks for joining our call. Today we are reporting second quarter 2014 earnings that continued to reflect the benefits of our diversified portfolio and strong cash flow. We remain focused on our priorities and we are making progress.

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This quarter we saw a return to growth in Services and the business is well-positioned for sustained improvement. Services is now 57% of revenue and we are on track to reach our target of two-third by 2017. This important shift will drive overall revenue growth.

Our Document Technology business drove strong profits again this quarter and continues to be an important for us, generating cash and profits above expectation. We continue our initiatives to improve Services profitability. We are seeing good profitability improvement especially within areas like document outsourcing, our commercial BPO business and ITO businesses, including healthcare and international services.

We know that more need to be done especially in government healthcare, where we continue to stand-up a new Medicaid platform and deal with a couple of challenging contracts. So this remains a top priority.

And of course, both segments, Services and Technology we remained focused on our important stakeholder with the keen attention on supporting our customers, delivering value for our investors and making Xerox a great place to work for our people.

In the quarter we invested $227 million in acquisitions. Welcoming into Xerox the employees and customers of Smart Data Consulting and ISG Holdings. ISG is a leading provider of workers compensation software in the U.S.

This acquisition will expand our significant present in the healthcare payor and insurance BPO markets, and we continue to invest organically in areas where we see good market opportunity, such as in private health exchanges, we have a differentiated offering for large employers through Buck Consultants at Xerox.

We have a business that delivers strong cash flow. This gives us flexibility to not only invest for growth, but also build short and long-term shareholder value through a balanced approach to capital allocation that includes share repurchases and dividends.

To execute on our direction, we have a strong team. Jeff Jacobson was recently named the President of our Document Technology business, taking over from Armando Zagalo de Lima, who is retiring after 31 years at Xerox.

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I want to thank Armando for everything that he has done for Xerox. He has put our document technology business on a solid foundation by transforming the organization to be more customer-focused, profitable and well-positioned to adapt to changes in the market.

Here to look our results and my perspective. As I mentioned earlier, there are bright spots and positive trends, but we still have work — more work to do. We reported adjusted EPS of $0.27, which is at the high-end of the range that we said.

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