Xerox Corporation (NYSE:XRX) Q3 2019 Earnings Conference Call - Final Transcript
Oct 29, 2019 • 08:00 am ET
Good morning, and welcome to the Xerox Holdings Corporation Third Quarter 2019 Earnings Release Conference Call hosted by John Visentin, Vice Chairman and Chief Executive Officer. He is joined by Bill Osbourn, Chief Financial Officer.
During this call, Xerox executives will refer to slides that are available on the web at www.xerox.com/investor. At the request of Xerox Holdings Corporation, today's conference call is being recorded. Other recording and/or rebroadcasting of this call are prohibited without the expressed permission of Xerox.
During this conference call, Xerox executives will make comments that contain forward-looking statements, which, by their nature, address matters that are in the future and are uncertain. Actual future financial results may be materially different than those expressed herein.
At this time, I would like to turn the meeting over to Mr. Visentin. Mr. Visentin, you may begin.
Good morning, and thank you for joining our Q3 2019 earnings call. We delivered a strong quarter marked by increased cash flow, earnings per share and adjusted operating margin and we improved our revenue trajectory. Results were underpinned by the team's strong execution of our strategy to drive revenue, optimize operations, innovate and focus on cash. We recognize the challenges facing our industry but are laser-focused on the opportunities and our path to stand up a better, more agile and competitive company for the future.
We are pleased with our cash performance. We generated $356 million of operating cash flow in the quarter, an increase of $82 million from a year ago. Free cash flow was $339 million, up $88 million year-over-year. Adjusted operating margin for the quarter was 12.1%, up 120 basis points year-over-year, strong evidence of the hard work we are doing as a team. Margin expansion contributed to adjusted EPS of $1.08 in the quarter, up $0.23 year-over-year.
The benefits of near-term revenue-directed initiatives are starting to flow through results. Third quarter revenue declined 5.3% at constant currency year-over-year, in line with expectations. While we've made progress, we have more work to do here. Results paired with our execution gives us the confidence to raise guidance. We are increasing our free cash flow outlook to be in the range of $1.1 billion to $1.2 billion from $1 billion to $1.1 billion. We are also raising our full year adjusted EPS to $4 to $4.10, up from our previously increased range of $3.80 to $3.95.
We remain on track to deliver at least $640 million of gross savings this year due to Project Own It, our enterprise-wide initiative to simplify and streamline our operations and build a culture of continuous improvement. During the first half of the year, we started executing several components of Project Own It, such as transforming our shared services operations. As I previously alluded to, we intentionally moved fast, knowing there will be some disruption. The strength of our third quarter demonstrates our ability to rebound and react fast to change. We remain focused on managing our shared services operations to mitigate the risk of