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Partners Buoy Xerox Quarterly Sales, CFO Says

CFO William Osbourn tells investors that partners helped stem losses in the quarter, and the managed print side channel business is “growing upwards of low double-digits in recent quarters.”

Xerox channel partners rescued the companies’ fourth quarter sales from suffering worse losses, company leaders announced Tuesday during an earnings call.

While North American revenue was down 5.2 percent and equipment sales were off 9.5 percent across the board, channel sales -- as well as managed print services offered through the channel -- helped to minimize that downturn, said Xerox CFO William Osbourn.

For the fourth quarter ending Dec. 31, Xerox revenue was $2.53 billion, down 7.6 percent from the $2.74 billion the company earned a year ago. The company also reported earnings per share of $0.56 on net income of $141 million. In afternoon trading on Tuesday, Xerox was up $2.81 to $27.11, an 11.56-percent spike.

“We closed the year strong, growing adjusted EPS 10 percent, expanding adjusted operating margin 180 basis points and delivering over $1.05 billion in free cash flow, 92 percent of which we returned to shareholders,” CEO John Visentin said. “We've laid a good foundation for 2019.”

At the end of the year, Xerox unveiled several leadership changes inside the company, which included streamlining the chain of command for its channel, removing two reporting tiers, and saying farewell to its channel chief, Pete Peterson.

Xerox realigned its go-to-market leadership into two groups: the Americas Operations and EMEA. Leading the Americas operation is Mike Feldman, currently president of North America operations for the company. Hervé Tessler, president of international operations, will lead EMEA Operations.

And in some positive news for Xerox resellers, their work buoyed the company’s overall performance in the quarter, according to CFO William Osbourn.

“North America revenues were down 4.9 percent in constant currency driven by weakness in large enterprise accounts and high-end sales that were partially offset by growth in Xerox Business Solutions, formally GIS, as well as indirect channel equipment sales growth,” Osbourn told investors.

Xerox does not publicly break out channel numbers, however Osbourn said its accounting shows strong sales there.

“From our internal measures, the SMB part which includes a lot of MPS business through indirect channels is growing upwards of low double-digits in recent quarters,” he told investors.

Xerox Accredited Master Elite MPS Partner Josh Justice -- who runs JustTech a reseller in metro Washington, D.C. -- said he had a record year in 2018.

The 13-year-old business saw a 102-percent increase in sales versus 2017 with $7.5 million in total revenue. He said on the managed print services side, JustTech exceeded $2.1 million for the year growing at 73 percent.

“Our growth is because of our very talented and highly skilled employees, amazing business partners and our loyal clients that have embraced our solutions and have grown with us,” he said. “ We really do have the best customers and I am so thankful for them.”

Visentin said the company has prepared a three-year road map for growth that he will discuss at Xerox Investors Day next week in New York. Visentin, who took over as CEO in May, said he initiated Project Own It inside Xerox in an effort to make the company a simpler, more agile, and effective organization.

“Key opportunities under Project Own It include establishing more effective shared service centers, nationalizing our IT infrastructure and real estate footprint, creating greater velocity in our supply chain and unlocking greater productivity in our supplier base,” he said. “These efforts are critical to making us more competitive and giving us the capacity to invest and grow and maximize shareholder returns.”

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