Tear Sheet: Xerox Holdings Corp.

Revenues increased 5.5% year-over-year (on a constant currency basis) while S&P Global Ratings-adjusted EBITDA margin improved to about 13% compared to 4% the prior year. Xerox?s revenue improvements were generally expected, though favorable product mix and positive effects of nonrecurring items lifted margins higher. We expect margins in the 8.3%-9.4% range over 2023-2024 as the company targets cost efficiencies across the organization including research and development to preserve profitability. While we view management?s cost discipline as positive, we also believe material EBITDA expansion will likely be a challenge given uncertain market conditions, inflation and supply chain pressures, and slow print volume improvements. Additionally, our negative outlook continues to reflect high event and business execution risks to restore and sustain revenue

...May 10, 2023 Xerox's quarterly earnings benefited from improved supply chain conditions. Revenues increased 5.5% year-over-year (on a constant currency basis) while S&P Global Ratings-adjusted EBITDA margin improved to about 13% compared to 4% the prior year. Xerox's revenue improvements were generally expected, though favorable product mix and positive effects of nonrecurring items lifted margins higher. We expect margins in the 8.3%-9.4% range over 2023-2024 as the company targets cost efficiencies across the organization including research and development to preserve profitability. While we view management's cost discipline as positive, we also believe material EBITDA expansion will likely be a challenge given uncertain market conditions, inflation and supply chain pressures, and slow print volume improvements. Additionally, our negative outlook continues to reflect high event and business execution risks to restore and sustain revenue and free operating cash flow (FOCF) growth. FOCF...

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