XRX - Earnings call transcript Q4 2024 | Xerox Holdings Corporation

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Operator

Thank you for standing by, and welcome to the Xerox Holdings Corporation's Fourth Quarter 2024 Earnings Conference call. [Operator Instructions] As a reminder, today's program is being recorded.

And now I'd like to introduce your host for today's program, Mr. David Beckel, Vice President and Head of Investor Relations at Xerox Holdings Corporation. Please go ahead, sir.

David Beckel

everyone. morning, Good Vice Xerox Beckel, Head Investor of I'm Corporation. President at Holdings Relations David and Welcome Holdings Chief the Call to Xerox hosted Release XXXX by Conference Earnings Steve Bandrowczak, Executive Corporation Officer. Fourth Quarter Rolando by John and Officer; Financial He's Giza, Bruno, Chief joined incoming Chief President Operating and Officer.

is of this request prohibited call of call without Corporation, Xerox. recording Other the today's Holdings the recorded. and/or permission are At conference expressed Xerox being rebroadcasting of

the nature, on at During forward-looking the slides that future Xerox that may materially Actual we'll this comments www.xerox.com/investor are financial uncertain. executives to make be available call, different and refer statements, will are which, address in web those that contain than herein. results and by future their matters expressed

I'd Mr. to over like meeting the Bandrowczak. time, to turn At this

Steven Bandrowczak

goals. which processes a you critical business the economic call. by from operating position business Good of Xerox. for revenue Changes our business in in realignment sales newly are to structural shift our executed and QX include joining our for and offerings an profit. efforts was morning, alignment important of reinvention reinvention our to buyer efficiencies, and the now widespread key of XXXX growth of phase of year for a XXXX enablers formed organizational model, organization sustainable global thank have We both service all the centralization the organization. our journey stronger a unit-led within with long-term critical We changes, geographic implementing improved Xerox earnings better and of

Lexmark better accelerate integrate operating in are resilient more and us towards -- income simpler and stabilization our revenue double-digit path transactions, acquire to to and adjusted which margins. a Further, a expected ITsavvy position put operating and model

which decline quarter, efficiently we revised margin revenue, a achieving run and business. year-over-year improved ended proof a point the consecutive despite cash view intended second And year of benefits execution, revenue year improved with more in operating free a adjusted income flow the We guidance. full total for the as and of

of in decreased X.X% Summarizing for currency the X.X% year, revenue constant results and $X.X currency. in billion actual

of lower was was benefits generated of which revenue XX We constant lower results, $XXX by ITsavvy EPS $X.XX income free lower X.X% $X.XX, currency. operating in the was around weeks year-over-year Adjusted year-over-year. cash year-over-year, declined million Excluding million X margin $XXX and adjusted basis points. of of flow, XX.X%

backlog reduction of offering decline the The full affected reductions revenue. year year and in in by of the noncore geographic revenue intentional other and impacts previous was part in simplification

reductions cease revenue related in XXXX. largely reinvention to after expect We

services which losses X% conditions demand excludes Throughout growth in at acquisition market were to market equipment equipment Core print and and underlying the organic ITsavvy implemented products modest around beginning of year. for changes the digital revenue, managed strong, these stable, share in primarily market we our reflecting XXXX, IT share decline remain scale volumes, attribute the business and last model our of of the pace in page offset the lower year, effects legacy and and services. by and in declined

amidst resiliency core business in team's Xerox over commend sustainable organizational experience revenue work With in trajectory in to lessons an to and improvements the hard widespread of driving has the team our print again core once XXXX, I and confident efficiencies from print drive past XXXX. improved structural share the change. and benefit learned helping equipment are the we year grow knowledge operating

important to productivity as continue a and driving our and indicator core our streamlined more our Sales go-to-market we trajectory is with operations. leading teams, offerings. improve sales, our through Xerox to for of allowing means redesign distribution positive Starting outcomes ability effective organizational efficient optimizing our The force business. an marketing revenue clients

reductions sales in in increase enough large a fully experience offset not headcount. in to did We productivity XXXX

with in However, of an the continuing resulted the new a XX% improved client signings increase progress Greater initiatives in productivity earlier approach observed a perception alignment business year-over-year. focused and the improvement in client implementation sales year. productivity in ongoing QX, in our sequential drove more force selling

managed again And our once revenue for contributors grew in the our mix markets we digital year, businesses, and growth. service IT rates underlying higher towards with legacy shift planned key to of

AX acquisition across drive provides and diversifying expect as We our IT supply further the savvy an Lexmark increased offering IT strengthen should ITsavvy's penetration acquisition within strengthen business print print, growing existing chain markets our business our to opportunity of to reach of the exposure enhanced to client pending base. by the of businesses, core color. Xerox market Lexmark such solutions And and

the second with the realizing half we plan XXXX. begin benefits XXXX transactions both benefits to transaction, in closing Assuming of greater expected of Lexmark in the

to we simplification in targeted and close expenses geographic a model enablers print operating offering declined In and reductions. more costs. critical achieved countries streamlined of Moving are costs. distribution efficient excluding million select cost which $XXX gross and both and ITsavvy reinvention the transaction onetime XXXX, company total future cost of portfolio The of resulted savings in execution XX%, efforts of successful to

dividends, transactions, executed approach reduction liquidity debt is Finally, as they capital of and forma debt free by improve maturity The flow repay due and secured result acquire further. our flow cash immediate a series our to we a capacity cash allocations, accretion we an of free Through leverage to transaction we unsecured reduce expected obligations. generated announced to acquisition refinancing in that $XXX extending should to in the debt pro in of pay from Lexmark million improved million debt came debt of balanced used XXXX, $XXX ITsavvy. in obligations

such few flow to Financial are [indiscernible] support over executed Canada, forward cash Finally, the with recently Services the the Inc. expected generation programs years. as deal additional flow free next

the savvy balance Lexmark XXXX, past and associated the sheet changes I'll realizing structural announced on: the to two, benefits three, our to plan the in we of reinvention improving now strategy; move IT next health. In focus on one, build acquisition; to priorities. implemented XXXX year with the executing phase and

and operations reinvention. leverage execution the simplify and will with John reinvention designed to the efficiencies. in initiatives Starting Bruno implemented this expected the our of design GBS be describe some to further XXXX focus the progress operating of will to in and organization continue detail. of to we'll commercial, reinvention continuous optimize implement specific business, initiatives to The more year

important an benefits is of Lexmark. year realizing last ITsavvy of closed the which XXXX for November planned acquisition acquisition and the

comprehensive print. size of IT we around be a suite a estimate ITsavvy, business a wider With TAM better Xerox IT IT spectrum the Xerox of offers to budgets, addition position clients' to clients solutions, infrastructure of more Solutions of XXx the target

favorably adoption advantage refreshes key driven center, of including Window data tailwinds, take spend growth the modern business AIPC, Solutions return and work and end is positioned upgrades market Microsoft IT aided points, by on Solution and XX to the trends. Cloud Our by hardware to

these client expect solutions this drive our incremental We Solutions of Xerox penetration services enhanced QX existing separately within to offering of will beginning IT be a base. year. IT an reported segment

than we run from updates penetration business the with this more of our KPIs acquisition, of we provide the which intend the integration on rate to associated client will is other as growing and year. way cost realizing million We on synergies and realize expected $XX this are to most completed well

order expected cost begin X-year transaction close to million the diligently over Lexmark in working are synergies a we planning integration period. of and capture to more Separately, $XXX than

strength. sheet balance Finally,

expand to to negotiations continue our forward flow program Europe. We

expected expansion incremental receivable with associated as sales the receivable free Finance reduce we generate are portfolio. our flow to cash finance

to return conference during and cash noted call, allocation we As capital $X.XX Lexmark to debt acquisition repayment of is plan annual primary of an priority shareholders the our dividend now share. the per via

over to as journey. call of reinvention to we forward now operational our John the overview an in I'll hand provide move our roadmap

John Bruno

Thank Steve. you,

headwinds changes and year operating implemented aligned to As model, to calls, and a through were improve Steve streamline organizational them. accountability. we decision changes noted, work discussed previous last These widespread our to and I've and which on performance, rates necessary we've comprehensive created new

However, wavered this and improvements management model, supporting realize in to resolve our operating organizational to the systems we've benefits strategy. structure the targeted never of our

way structural Slide we our our more tactical encouraged than and as lessons as will plan revenue In initiatives X, with start segment We've previous and learned XXX year, execute the forward. the of reinvention. are to we our XXXX applied of XXXX many year implementation and to roadmap, shown in removed initiatives reinvention talks profitability. to the we operational This on the third us we continue implement and going business additional years, complexity, enhance clearing X for designed progress.

of We benefits. acquisition simplification, and classified realization Geo these simplification, categories: initiatives and across X growth the commercial operational broad optimization

in XX models. an end we to the with In profitability operations complete X serve. to slated of we primarily we to direct simplification. Europe. This simplification in This past a executed mark of our to optimize the additional the the program to XX approach now transitions targeted we In countries months, an are we Starting geographic these markets will XXXX, in partner-led year, operations geographic up work regions. maximize our as took to

full have confidence Xerox standards own client for success. will line these services and products partners countries high our We deliver in with our in

simplification. Moving to operational

roadmaps to and technology-driven the reduction to operating we In quickly implement business efficiencies cost enablers operational services operating execute million multiyear for throughout enable moved foundational build a GBS for immediate XXXX, established program. global year a organization and and efficiencies. enhancements future enterprise-wide $XXX gross

to census. do outsourcing create it Xerox. new with plans technology to easier is and greater leverage and our of to while the restructuring foundational operating along line and largest our with commercial flexibility also with XXXX, with In flows reduce expenses GBS tools, an technology business, example both making process arrangements client-centric enablers, these and in As some process of business within to partners

with drive the our implementing GBS year, our reducing associated technology will automate complexity standardization platform this that the Additionally, legacy greatly processes, both new infrastructure. business of a will begin enterprise-wide and

Moving productivity. superior most create to production our share high-end gain strategy. to designed of shift commercial return and with of reinvention focus XXXX, the to we optimization print submarkets stopped favorable a category enable and This mix services-led growth component on encapsulates ecosystem equipment production profiles operator the manufacturing and software-enabled In growth.

XXXX, also pricing extend go-to-market geographies pricing strengthen tools this and planned through across base. these markets to improved for coverage select seek additional utilizing further and across pricing productivity tools look in performance We Other routes delivery to costs AI-based initiatives structures client to and our optimize optimize additional began market. service In tools. to sales we year

acquisitions feedback a our client and integrate this on of in Accordingly, diversification partner establishing focus group new segment last We key Partner and expand as revenue in Score, reached recent QX. partners. has investment our partner highs gauge expect improved. global channel third-party Since we from improved year, sentiment

our revenue savings cost to gross our targeted operating which unlock of $XXX additional and reinvention higher drive our cost on continue to gross I a savings roadmap objective are driving million. over we time. mix gross initiatives to will In is of are XXXX, favorable the shortly. initiatives we pipeline mention Collectively, key than operating realization final these expect acquisition $XXX of The expected and benefits, more more cost margins savings of deliver than achieved million more to which

minute our strategy by ITsavvy, acquisitions, handing announced recently progress Before Xerox's diversifying last to revenue our Roland business. mix call announced which closed and core which Both and to incoming against I our gain strengthening reflecting Lexmark, the share transactions was on X want month. November demonstrate shift spend CFO, print a in mix

Xerox double for business several has the working Starting the revenue to XXXX. practices acquired businesses is grew the and on in team to drive proven aggressively and that XXXX, as both known years. a leadership best and team under a IT with ITsavvy leveraging inorganic of organic stand-alone of In growth past growth digits combined ITsavvy Solutions. the model integration leverage delivered be The on a company basis,

Lexmark closes. We expect to transaction the the integration complete before be

was sense Lexmark a operations. lower debt lines, current print, exposure The our and X transaction with be Lexmark little capacity EX expands X.X. and transaction adds adjusted leverage complementary The our reach in relationship today familiar immediately announced than with operating improve other acquisition market ago. OEM for through pro manufacturing month of leaders AX each and accretive greater proposed a X.X expected product from our growing EPS about segments cash to more combines office our adjusted to to and The flow, forma margin is to income provides free within print. ratio our of

EPS The of a Xx $XXX of realization EBITDA. synergies than debt $X adjusted by is reduce more and drive than to cost million of share leverage more accretion expected

working are and Xerox to look transaction close forward We welcoming the Lexmark to to team. this

Xavier. I over to how call I'm end month a did Xavier I'll now commitment replaced if the his decades. at His his say unwavering unique hand to well-deserved over who X Xerox for Xavier incoming the as this CFO, excited of retirement. remiss our begins personal for much Heiss but and On note, to style

friend. missed be will my You

Unknown Executive

John, my earnings you, call today CFO. to join you incoming as morning, I'm everyone. honored Xerox's and on Thank good first

my lead the Before I the next of discuss convey will the to at Xerox's steady the officially results, who excitement phase leadership transferred Xavier for My me organization predecessor, facilitated the the his reinvention. this my by finance month. been of I company's genuine want through of to opportunity transition responsibilities end to Heiss, has

X.X% in constant currency revenue with QX, in X% In declined in actual expectations. and line our currency,

the quarter-over-quarter, sales successful in refreshed force effects AX reflecting in revenue of of EMEA backlog productivity, equipment and fluctuations Excluding launch growth reinvention improved actions the sequential equipment in and PrimeLink improvement our trajectory revenue. product

of acquisition close the of with Wholesale results prior roughly quarter, XX. revenue declines benefits the ITsavvy of the November on inclusive since were that consistent

margin related mix of cost gross expenses periods. executive of compensation and points equipment, and when expense, the A operating print cost well somewhat transaction-related principally profit. million ITsavvy. year-over-year the were operating results effects. acceleration gross favorable by year-over-year lower AX effects and for of lower $XX and lower ITsavvy recent declined basis This reinvention XX% beneficial or discipline drove basis from on higher currency focus offset lower as XXX and savings entry the an points impacts inclusion of of revenue almost profitability. Adjusted operating a by Turning reductions costs X.X% represents of due reinvention XXX as year-over-year the to inclusion of Adjusted reductions adjusting by partially total offset was higher reinvention as volumes to margin

from net the due to nonrecurring same expenses tax in compared The largely the nonoperating Adjusted changes lower last tax and various allowances other million year-over-year increase were from XX.X% audit release valuation settlements. deferred to of $X quarter higher largely benefits release X offset of as Adjusted was another. year. tax reserves expenses, XX.X% of in tax asset the rate

of and tax than the of or after-tax and per million improved transaction-related $X.XX EPS of and or share. $XX includes $X.XX operating offset as higher higher million reinvention per per or adjusted of after-tax an write-off the $X.XX and effects. lower currency rate benefits Adjusted year million intangible included per $X.XX restructuring an after-tax more costs share. loss share The share, $X.XX were of year-over-year quarter was $XX year than $X.XX of prior GAAP a $XX prior charge $X.XX income by

revenue and detail. flow review more cash now me Let in

to XX.X% Starting fluctuations year XX.X% backlog million accounting with QX mix equipment large and XXX the currency. in of revenue. of sale product decline. The year actions families a equipment sales of and $XXX constant prior effects in declined the reflects and points prior the of decline in actual in reinvention currency and remainder for between The basis quarter. close within unfavorable the production

sold year-over-year revenue high-end mid-range equipment and margin high-margin in a is at but equipment For periods. the entry and in the Entry second grew XX% in categories quarter, price reflecting growth mid-range drives total and than quarter, double consecutive supplies Installations future the installations products. digits. increased fourth lower

of outpatient installations to evolution a equipment partners. taken channels. to through declined support grew actions Entry installations both will revenue XX% approximately growth trends Improved year-over-year reflecting to sales declined portfolio and indirect installations the higher modestly, unfavorable in rationalization print AX installations mix our grew post due future high-end Mid-range and offering mix periods, product and revenue and but higher year. ongoing high-end channel revenue sales midrange sale this production due of

and declined around full year, currency. in the revenue actual constant XX% For Equipment

for share around expanded and to through XXXX, grow PrimeLink of refreshed to of designed the and the AX market. reinvention impact benefits the participation, product, our channel sales equipment of rollout we In full global year. enhancements share market early double fluctuations revenue the Excluding equipment declined force partner our X% ongoing expect actions, of backlog initiatives productivity

pace constant that QX, of the For X.X% currency, declined with revenue post quarter. a sale X.X% actual in and currency billion $X.X is prior consistent in

and the revenue ITsavvy managed and by declined offset Post in nonstrategic page of acquisition lower effects and services. reductions of and actual partially inclusion revenue growth supplies reinvention of since actions. digital the in currency, revenue the sale closing volumes, legacy Excluding reflecting X% IT

revenue full approximately sale declined constant in the actual currency. year, For X% post and

nonstrategic in reinvention revenue revenue acquisition other the of actual post and inclusive in declined effects currency, reductions of ITsavvy sale the benefits Excluding revenue in actions, since X% closing. from period

rates benefits, In trajectory growth XXXX, AI-enabled to by we pricing retention organic improve, improve legacy initiatives driven IT client solutions. core expect revenue post digital sale in services and to and designed

$XX million, the cash than by cash in Let's Operating prior $XXX flow. year-over-year. lower flow cash million, million the the now flow was million review lower $XXX year quarter Free $XX quarter higher from interest compensation and and restructuring working partially and timing higher cash higher cash capital by receivables. tax payments the from due a payments, of finance source to executive offset was of

a prior to compared of debt was for $XX financing million net $XX in million $XXX use and of other $XX quarter, activity cash activity million payment of $XXX this Investment year, Financing ITsavvy. primarily consumed to of dividends cash the due outflows. reflecting $X cash of million repayments million million the

sequentially year-over-year million XFS offset captive-only as in $XX assets and Turning strategy profit balance, lower other by XFS' with finance receivable declined increased partially XX% year-over-year to to gross revenue. reductions in our receivable XX% revenue with QX, QX its by XX% in operating solutions. finance finance XFS our lower financing than return revenue mainly focus down of forward to due offset currency from to actual balance associated more segments. around around expenses strategy. due profit higher segment lower the the around In decline income was sale associated line commission and in fee XFS finance with to receivable flow

profit X% with decreased this X% segment and as Other gross associated segment. allocated revenue exceeded Print to and the the and direct operating declines fell segment and reduction in Print Other by expenses indirect profit

$XXX Focusing Around finance of and to cash, core debt $X.X remaining with restricted the billion on $X.X cash. capital assets million equivalents attributable billion with cash structure. of We business. billion ended of the outstanding debt remaining $X.X our supports QX of nonfinancing

Total a decline with repayments. by amount million sequential million associated by due offset debt secured larger increased to a debt the to increased $XXX ITsavvy debt seller of partially assets. due finance sequentially $XXX acquisition, total the Core a in addition note

million to we $XXX realized savings. total an provide XXXX, million. the than $XXX more of update today In now I'll combined than bringing savings, on gross more cost reinvention

maintain to million $XXX million the includes around pipeline which or already continue savings cost implemented a be $XXX We to gross close of term. near expected to actions of relating savings, implemented of to in

$XXX We of expect reinvention than savings million gross XXXX. with actions associated in to realize cost more related

Finally, I pending any Lexmark. associated which of not include impacts will does acquisition guidance, address with the

acquisition. geographic manufacturing low European flow-through the in of Revenue reinvention ongoing production finance print reductions from sales constant guidance associated with decision simplification around full continued end recent the sale the in expect digits our and our in equipment, of with We to revenue XXXX currency the paper of of including receivable grow business in associated a revenue effects, headwinds includes actions to of basis of decline high-end points ITsavvy XXX associated of equipment portfolio. inclusive high-end single revenue XFS reduction a year with the

share be core and is revenue stable a print from higher experienced to gains well to revenue solutions. expected rates as core of is We than market demand but in Organic and driven an services by legacy equipment improved lower as XXXX. market rate IT decline expected digital growth at trajectory we

X%, costs. slight product cost be incremental income offset expected margin adjusted reflects higher a partially XXXX, In improvement gross to year-over-year savings, operating least at is by

The cash a in Finally, as the expect decline capital. to to million free $XXX expected, offset of is receivable by in improved full and range income flow in million. year-over-year finance free cash reduction flow flow attributable year partially working operating forward $XXX adjusted be primarily we benefits to

with adjusted improving year-over-year with an growth IT give margin seasonally operating QX outlook stronger summary, guidance we enhanced reinvention revenue modest revenue the execution, of us and ended quarter reminder, adjusted XXXX. a income. year confidence lowest slate and expect for only In trajectory in actions As In profitability operating in our line is for aimed a and the our we business solutions and year, in revenue our income at QX. for

now the line Q&A. We'll open for

Operator

for Baruah Ananda question from first our line of today And Capital. Instructions] from [Operator comes the Loop

Ananda Baruah

working miss in with with really you. you're enjoyed Really you, appreciate And Welcome. I'm out if there Xavier, looking working it. forward

-- of detail. Steve, of greater lot through and look, maybe So on details ITsavvy. this you calls, -- sort Can on real John, I walked do call guess, including the just of quick couple in last the you've you a

a describe been with to company they networking the end I've how sell sell operate? us well? as on they verticals, looks IT deep relationships all you barite solutions with to their an Can are Are customer like vendors? to guys they you servers Like they from And website, integrator relationships being IT just across verticals. it website, everything with rack like all from systems

So of would just description a super it. more me. be a I appreciate I helpful there guess for bit

Steven Bandrowczak

I'll turn Yes. the conversation. you, and Great, on start, I'll and over Ananda, to for John enhancement it thank

So with added the tremendous we spend within the as a can ITsavvy of suppliers CIO's think some VAR around XX-plus percent that services largest that, a addressable budget. with that. then total With address relationship of of

that now tie that ability along put companies that build for are and services into wrap you to we if journey. building out are points end infrastructure the infrastructure have think capacity, help how we do AI-enabled, around about them AI that, as So services and

it drive workloads Microsoft AI. transition move of to is and cloud things their and like the take the what into clients The to their to version Microsoft utilization cloud on to XX and ability trying

but both combination you our on around so obviously, and value-added it's help relationship can website, that clients so adding the the that partners, we services great clients that, with journey. services a of, our saw we more some to our the our importantly, And have journey. of ability wrap around along in help And partners

that capabilities end and to don't outcomes. to things stand. we've we together have And and this especially talked in today, expertise clients the drive put really the solutions where our create of the mid-market, about that's Many these before,

ability the education, drive and these take help have We wrap companies so whether technologies, in have in specifically it's the whether firms, can outcomes verticals, to in together, we that it's these end hospitals, it and outcomes. it that's a we that put have reseller differentiator drive or forward where add and either to and really of have tremendous we these the And inside of verticals around actually great be as to horizontal we whether value-added to it's implement ability processes go value solutions technologies. we law services some in ability

else you add? want anything John, to

John Bruno

I VAR it savvy, thing less would probably IT them part The think a important is the component. would very only the part. that's the I reseller reseller But an lot add used. on the to V emphasis term is on emphasis and a would is well relates I put as I call

attracted reclamation do through cycle, on space. on this We the installation good in maintenance what the because their but flow a on margins are they of their life lot are to in they equipment differentiated of but the very quite others turnovers, business product the because model and and on from do refreshes, only the not their

a this have them and North Steve to activities all somewhere is largely pointed of laptops us in the lot the capabilities Western heard positioned AI the in such Europe. laptops, describe services of into that space their ones IT-related the you've companies, And because for of stuff these with are movement in refreshes they're very emergence to all America, the players out. well provisioning Many of that from hosted cloud of private or regional moving value-added

business show last organically operating And years we that the both a that and they've if over and to inorganically. into doubled that demonstrated essentially the model growth, add that you it's capabilities several already did, reverse can existing they that consistent we an

us cross diamond, value there's with of VARs on a margin of captive but the platinum program. ITsavvy hardware our that cetera, contracts added, has a SI just reseller will most takes So have higher of -- businesses on with large a help set and of of We've all systems on much et very them the year. ours of the integrator emphasis allows will large of part of comparable of purely it number are been the levels lot talking to add the reseller them which discounts that them very to that clients, all great out space, expansion to threshold about also but offers differentiate them. IT there,

to excited Now company. to guys add have these we're to opportunity as the pretty the you know,

Ananda Baruah

And I so appreciate a or amplification And think there, revenue follow-up now way just growth the What's about kind Steve, a of backing. John. useful quick it. with ITsavvy's Xerox to potential

Steven Bandrowczak

Yes.

I of things. think couple there's a

the big it's First X years. next trends, X to of over there, whether it's growth single digits that X growing around look all, are X TAMs at CAGR take high they're in, whether right, the are industry the could next to to a you the big years, infrastructure, that endpoints, is over around and those cloud, whether the movement the all of

thousand infrastructure. the But now through those today that in clients importantly, about can have I've medium that more take think clients you ITsavvy we XXX-plus put and SMB said them we the you IT we ability addressable IT take full Xerox to the stack. spend at market have a if this at before, with now clients, full the existing look and look our

IT into existing I will with execution solutions also, stabilize bring is terms our to of think, our in So Xerox and the relationships very core business. help in grow. significant helping ability It

print core and so is team, level very we at ways different business, with with the If in now wrap the about could you put can real that CIO the strategic really that we we our there. procurement team, think have in conversations estate

is been other not The thing Print selling has ITsavvy Print Solutions. Solutions Managed and

customer it bring Xerox base. solutions take into can we So ITsavvy and

by right, able sales them the partners them, all And solutions train my to space, It's So to on they execution bring the it's want team. them have well. these can we about they we about solutions of grow to that my have enable in as it. getting thousands so all IT partners, way, and be grow

Operator

And our next from of Samik question the line JPMorgan. Chatterjee comes from

Samik Chatterjee

I congrats that's forward on I look saw saying the get reinvention. -- you to in think with from of you're basis maybe revenue the And if effects XXXX if line. start retirement. Project working with in headwind Reinvention the to of points XXXX Xavier, Project what we XXX the about right, can I numbers on comparable

just to as a took well? is for actions revenue Maybe it the of us spillover to like continue spillover particularly, that seems largely we outline of most into that in sort -- have headwind XXXX sort is? have that continuing fair what then effect see in effect the XXXX this you of XXXX, assume And

And a expansion have an And of then of there is quick Lexmark sort reinvention follow-up pending there. I project acquisition? given the

Unknown Executive

Yes. Thank you, Samik.

that headwinds of in for prior XXXX, looking tactical. we it's actions are it relates more basis of continuations we are took are reinvention, we as describing years. XXXX what that XXX our points in in to there So

finished kind changes have deep We we that organizational 'XX. and in 'XX saw of

So implement to we our to yes, gross and couple XXXX. of in in reinvention about see And years. difference we'll $XXX deliver the the what million. have cost actions deliver we next savings that's continue still to of the

those as then a full continuing and X will with plan on do just As and to it continue what we we from synergy reinvention. perspective. we relates reinvention close to But Lexmark, -- we'll see our once them separate to enough for is now to speed deliver reinvention, Lexmark see reassess, need

John Bruno

that we technology model more our side the are ones work question Yes. all are issues. the in foundational product platform Geo that The or specifically look the would We OD add out carryover your a answer and forecast pointed And have did that the just 'XX, or are us no, there's optimization. a elements to behind still on the should that, simplification, The that to I do production as upgrades simplification of headwind. correct. business you process the not on

But integration of type to the we do think about more as the share print AX and moving easier that gain attain necessary to IT mix want more color drive all to make simplification more Lexmark of that acquisition solutions. forward business strategy more integration, we our shift as

integration cost but handle of exit year we stand-alone separately, we years elements we point So do of the carry first Lexmark this at this it behind is and stand-alone will year, kind they'll X.X this middle $XXX into on have going XXXX, integration. the the as us through foundational goal not expect is we the the million of

Steven Bandrowczak

reinvention. ask the terms question integration, get that you is So do Lexmark asked key IT a will be largely much? think ITsavvy around done it of you of we too One to couple the about points. of right? closes, think in Lexmark -- whatever us, I'd sappy acquisition things now that How before X-year about So is behind of X.X at a running We're overall those that running. part be Lexmark left, will integration. implementing about we're end the journey. So we years that will into will we of the . The right? be integration it, talked programs as put out. and the tail done reinvention,

reinvention We'll ITsavvy not think the Lexmark that wrap Good the and if about integration. X/X overall of So done. that done. portion, roll into

XXXX. into we as We'll to it integration don't overall encompassing different So into program. strategy forward that, be we reinvention X we'll go X see run will trying have with balls. all really roll in of as Lexmark and terms

Samik Chatterjee

in are to cash takes of generation? sort Got XXXX. profit. just it. midpoint largely looks through and this less me similar walk the -- flow of underlying like And you flow just down Can X.XX X.XX Is follow-up, to at operating sorry, for the the X.XX step through the quickly to drivers? forward at particularly cash it XXXX guidance, maybe flow? free the to X.XX and walk sort the you're guiding puts And from on what business Or my

Unknown Executive

Yes.

So you. thank

primarily you finance our XXXX planned, when will what is the XXXX. see is and finance we're at about receivable of of driven end and have assets disclosed lower with flow, this be and think inflow it's So accordance where we this we you cash the And as in mentioned, lower. sale from free guiding receivable

higher But will income. net by working and be it capital also impacted higher operating

So assets, capital net-net, really is improvements finance XXXX. lower and working in operating inflow receivable margin for and

Operator

Morgan next from line of our Stanley. Woodring question And Erik the comes from

Erik Woodring

The either the fairly X trajectory. echo working guys, have you it's forward margins. sentiment I'll the gross rest gross to And the of around a too. on been on retirement team from target Xavier's question, Steve or Samik And and with this and of you. just consistent margins looking downward

count, taking us margins. actions even tax There's You're reinvention and you're obviously the can just share you costs through as around lot still obviously, through out and faced EPS stabilize OI&E -- some rate. some you a you to with walk a go lower taking puts gross pressure. takes, But of but maybe

And trajectory be margins accounting in before about follow-up. Lexmark? quick And XXXX gross to related the thinking how really company we have should total of for anything then I a

Unknown Executive

Yes.

you. So thank

points AX was All and lower mix driven offset currency. were of QX gross primarily margin benefits of and volumes print and So in our reinvention XXX XXXX, inclusion by partially these in did equipment of ITsavvy. mentioned, specifically, as I by basis decline

to driven ITsavvy. product margin we some inclusion than than XXXX, into XXXX, business primarily is Looking be that well print gross our ITsavvy lower and has lower gross as increases. a as expect margin by of

will We offering pricing offset to those initiatives. benefits with productivity plan and from and technology-enabled

Steven Bandrowczak

pay business that is years. we see and year and thing a that. actually for solid add we're good grow we AX really QX, growth the which Yes, the indicator that an we the unit a to we coming is the that year the seeing a segment. lower I'd our won't in, in effects but had business, third start important good in trying high-margin to upfront future but supplies is in that say the of is of growing tale So expansion, share growth other and see until to is second, to And QX, had actual AX That next of off very AX on significant double business, in will us supplies margin, right? growing and gross we're

John Bruno

-- continuing we focused is increase. are I'd say last to operating just my that be margin on And you point

shift that do of profitability, acquisition and do EPS EPS our things are adjustments These flow as the we and company Our deleverage integration. operating cash different we associated the free the the The necessary the of the purely share efficiency we've doing. -- work articulated. the and benefits the bit where a the strategies we're you every comes That's can in gain of performance business to of that's down see as This ballgame. generation. mix are

Erik Woodring

helpful detail. alluded to of flow on go years. days you the want per about that Okay. with kind announcements question X flow to cash Super. free to consecutive maybe tailwinds $XXX I original of And If had million the year early then back think double-click flow. of for we just cash Really I Samik's

I of $X.X billion effect done think almost something you've to thus the far.

pulled forward little that bit. So a

thinking maybe just from you kind but really be to which how at about should get beyond. should about contribution not point in we program And thinking program this free comes a what talk Can is, to the core halt is and cash be we there program. trying of future on a this to this focusing of XXXX, I'm just really your just the and flow.

the for understand maybe that. timing impact any factors to trying that would that it And or of me. help that's Just

Unknown Executive

you to Erik. $X X-year we are Thanks, program, $X.X program be around And expect billion. this We Yes. -- receivable -- right? billion. We started correct, finance balance with

you close As And finance billion. have million of over done years. about that will mentioned, to we we've X about the $XXX sell right we we next now, $X.X receivables think

program. X you originations next review at about that we be trailing years, will that we and in have still to review plans, the to XX-month we the So flow and go what's that free total kind X planned but finance benefit our or 'XX, able XX% years -- -- next a we when 'XX. the I in are cash of more basis, again, to HPS program rate it's finance like sold We receivables partner. balance. come, receivables to that through when flow look of our And and forward sell will could think We about if sort a X-year of our

Operator

the today's the program. conclude to any back remarks. And it like Mr. further session for Bandrowczak of does I'd program hand question-and-answer to

Steven Bandrowczak

as . I'd and change a actions our solid new like we an luck wish Xavier expect and than from drive In XXXX, his impactful to and of role and thousands date. years. to Thank revenue further operating my progress the these the in steady your excellence many, you. On thanks Recapping going me colleagues the actions, employees. at leadership. I today's call, best dedicated business in Xerox is of current along we me comfortable XX friend, helping helping me has we and of helping to as well. Xavier reinvention you Xerox fomented growth rigorously miss to the Xavier adjusted focused CFO, to outgoing He And thank greatly me Heiss, more former also everyone speed took most as company, at to of importantly, hundreds, operating get and a to if his and retirement. of ended and Xerox tenure, of him and a really see taken leader to many during benefits champion income. the CEO get been up service our on personal behalf execution the of year optimization, initiatives will acquisitions I'm for my not for with journey,

Thank you a today's Have day. call. for great

Operator

in Thank the you, does participation ladies This conclude program. gentlemen, conference. for your today's and

disconnect. now may Good You day.

Xerox (XRX) 28 Jan 252024 Q4 Earnings call transcript