Research Update: Xerox Holdings Corp. 'BB' Rating Affirmed, Outlook Negative On Difficult Operating Environment

U.S.-based print technology and services company Xerox Holdings Corp. continues to face revenue growth, profit, and free cash flow headwinds amidst a difficult operating environment notwithstanding the ongoing recovery in office print activity. We expect a more uncertain business recovery given the current macroeconomic and inflationary environment that will pressure profit margins and constrain free operating cash flow generation relative to historical levels. Credit metrics will be weaker than expected with higher adjusted leverage of 1.9x-2.1x in 2022 versus our 2.5x downside trigger. We revised our outlook to negative from stable and affirmed all our ratings including our 'BB' issuer credit rating on Xerox. The negative outlook reflects our expectation for rising macroeconomic risks and ongoing supply chain challenges that

...- U.S.-based print technology and services company Xerox Holdings Corp. continues to face revenue growth, profit, and free cash flow headwinds amidst a difficult operating environment notwithstanding the ongoing recovery in office print activity. - We expect a more uncertain business recovery given the current macroeconomic and inflationary environment that will pressure profit margins and constrain free operating cash flow generation relative to historical levels. Credit metrics will be weaker than expected with higher adjusted leverage of 1.9x-2.1x in 2022 versus our 2.5x downside trigger. - We revised our outlook to negative from stable and affirmed all our ratings including our '##' issuer credit rating on Xerox. - The negative outlook reflects our expectation for rising macroeconomic risks and ongoing supply chain challenges that create a more difficult operating environment for Xerox over the next 12 months. This will likely hurt enterprise IT demand and make it challenging to achieve...

Research Update