Xerox Corporation (NYSE:XRX) Q1 2020 Earnings Conference Call - Final Transcript
Apr 28, 2020 • 08:00 am ET
Good morning, and welcome to the Xerox Holdings Corporation First Quarter 2020 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. [Operator Instructions] 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 Q1 2020 earnings call. I hope everyone is safe and healthy. This is an unprecedented time for individuals, businesses and governments around the world. None of us have lived through a global health crisis of this proportion.
So we are learning fast, adapting and making decisions in the best interest of all our stakeholders, including employees, customers, partners, shareholders and society. While we saw an immediate impact to our business due to the rapid implementation of lockdown measures globally, the disciplined approach we implemented over the last two years provides a foundation to move quickly to preserve cash, continue operations, provide support to our many clients on the front line and apply our manufacturing and R&D expertise to help save lives. I'm incredibly proud of Xerox team's dedication and ingenuity during this extraordinary time.
For the first quarter, we generated $173 million of operating cash flow from continuing operations, a decrease of $49 million from a year ago. Free cash flow was $150 million, down $57 million year-over-year. Adjusted operating margin was 4.7%, down 630 basis points year-over-year. First quarter revenue declined 13.9% in constant currency year-over-year. GAAP loss from continuing operations was minus $0.03 per share, down $0.37 year-over-year, and adjusted earnings per share was $0.21, down $0.45 year-over-year.
These numbers are a direct reflection of the impact COVID-19 had on our business in the first quarter. All but two countries where Xerox operates experienced a full or partial lockdown in the first quarter. The absence of people from the office resulted in an approximately 50% decline in page volumes in March, which impacts our variable rate contracts. Delayed installs, whether because of an office was closed or limiting vendors on site, lowered equipment sales revenue by approximately $100 million in the quarter.
And the financial impact this global health crisis is projected to have on global GDP and our leasing portfolio required us to increase our bad debt reserve by approximately $60 million. As a result, we are withdrawing our 2020 financial guidance. While we have modeled and are prepared for a range of potential outcomes, we don't believe it is