Xerox Corporation (NYSE:XRX) Q4 2014 Earnings Conference Call - Final Transcript

Jan 30, 2015 • 10:00 am ET


Xerox Corporation (NYSE:XRX) Q4 2014 Earnings Conference Call - Final Transcript


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Ursula Burns

additional capacity to invest further in these businesses.

We've aligned our Services go-to-market model into a set of industry teams and our delivery model along functional capabilities such as customer care, human resources, consulting and analytics and transaction processing. We've made progress improving our government healthcare business and in 2014 we committed resources to maturing our MMIS enterprise platform.While we still have work to do, the hard work of the team is paying off. We remain bullish about this market and its opportunities for us.

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Innovation is a differentiator for us now and will continue to be in the future. Within customer care, we introduced an intelligent virtual customer care agent that can diagnose and resolve customer inquiries in the same way, if not better than a human agent would.

Xerox invested in HealthSpot, a pioneer in patient and provider-driven healthcare technology. As their exclusive BPO partner, we will support HealthSpot as they provide groundbreaking telehealth patients at convenient neighborhood locations. It's an important step in the transformation of healthcare and an exciting place for Xerox to be.

In the second half, the Document Technology team launched 20 new products that were well received and are a reminder to the market of our innovation power. We continue to receive recognition from the industry for business and technology leadership. Gartner, Quocirca and others recognized us for our managed print and content services, finance and accounting and BPO. Everest Group named Xerox a leader in its service provider landscape ranking for the contact center outsourcing market for the healthcare industry.

We're feeling good about our progress. We remain focused on being the best partner to our clients and making Xerox a great place to work for our people and delivering value to our investors.

Now let's take a look at the results in more detail. We delivered earnings just above our range and grew margin in both our segments and on a total Xerox basis. We're reporting adjusted EPS of $0.31 and GAAP EPS of $0.26. Profit improved this quarter as we made progress in Services. Services margin improved in the fourth quarter to 9.8% and we continued to benefit from a favorable environment and strong operational management in Document Technology.

On the revenue side, the improved growth in Services to 3% in the quarter is notable especially considering the impact from the loss of the Texas Medicaid contract. Document Technology revenue declined in-line with recent trends. Acquisitions remain a key aspect of our portfolio management strategy. For the full year 2014, we invested almost $350 million in acquisitions.

We're focused on enhancing our Services offerings and expanding our global reach. We have a goal in 2015 to get more done on this front, up to $900 million in acquisitions with part of those funds coming from the sale of our ITO business. With that objective in mind, we closed on one modestly sized acquisition since the beginning of the year, Intrepid Learning Systems which includes a service to ensure companies' employees