[Q2 2025 Financial Performance Overview](index=1&type=section&id=Q2%202025%20Financial%20Performance%20Overview) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Xerox reported stable Q2 2025 revenue at **$1.58 billion**, but profitability declined significantly to a **$106 million** GAAP net loss Q2 2025 Key Financial Results (vs Q2 2024) | (in millions, except per share data) | Q2 2025 | Q2 2024 | Change YOY | | :--- | :--- | :--- | :--- | | Revenue | $1,576 | $1,578 | $(2) | | Gross Profit | $451 | $520 | $(69) | | Gross Margin | 28.6% | 33.0% | (440) bps | | Pre-Tax (Loss) Income | $(60) | $25 | $(85) | | Adjusted Operating Income | $59 | $85 | $(26) | | Adjusted Operating Income Margin | 3.7% | 5.4% | (170) bps | | GAAP Diluted (Loss) per Share | $(0.87) | $0.11 | $(0.98) | | Adjusted Diluted (Loss) per Share | $(0.64) | $0.29 | $(0.93) | - Key performance indicators for Q2 2025 showed significant year-over-year declines: - GAAP net loss was **$(106) million**, a decline of **$124 million** - Adjusted net loss was **$(77) million**, a decline of **$118 million** - Operating cash flow was **$(11) million**, down **$134 million** - Free cash flow was **$(30) million**, down **$145 million**[5](index=5&type=chunk) - Management stated that the completion of the Lexmark acquisition is a key milestone in the company's "Reinvention," aiming to create a vertically integrated market leader, with growth in IT and Digital Solutions helping stabilize revenue[3](index=3&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) IT Solutions revenue grew **153.6%** due to acquisitions, offsetting an **8.6%** decline in Print and Other revenue and a **39.3%** drop in its profit Q2 2025 Segment Results (vs Q2 2024) | (in millions) | Q2 2025 | Q2 2024 | Change YOY | % Change YOY | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | | | | | | Print and Other | $1,366 | $1,494 | $(128) | (8.6)% | | IT Solutions | $213 | $84 | $129 | 153.6% | | **Profit** | | | | | | Print and Other | $65 | $107 | $(42) | (39.3)% | | IT Solutions | $10 | $1 | $9 | NM | - Effective Q1 2025, the company changed its reportable segments to "Print and Other" and "IT Solutions" to align with its key growth strategies, with prior period results recast for comparability[8](index=8&type=chunk) [2025 Full-Year Guidance](index=2&type=section&id=2025%20Full-Year%20Guidance) Xerox revised 2025 guidance to include Lexmark, targeting **~4.5%** adjusted operating margin and **~$250 million** free cash flow, factoring in tariffs and integration costs Revised 2025 Full-Year Guidance (in % and millions) | Metric | Guidance | | :--- | :--- | | Revenue Growth (Constant Currency) | 16-17% | | Adjusted Operating Margin | ~4.5% | | Free Cash Flow | ~$250 million | - The updated guidance includes several key factors: - Expected tariff-related expenses of **$30 to $35 million** - One-time synergy implementation costs of **$50 to $75 million** - A more conservative outlook for Print equipment demand due to tariff and policy uncertainty[10](index=10&type=chunk)[25](index=25&type=chunk) [Detailed Financial Review](index=9&type=section&id=Detailed%20Financial%20Review) [Management Discussion and Analysis](index=9&type=section&id=Management%20Discussion%20and%20Analysis) Management noted "Reinvention" improved revenue resilience, but Q2 profitability was impacted by a **5.6%** equipment sales decline, increased costs, tariffs, and higher Lexmark acquisition interest - Equipment sales fell **5.6%** (**6.7%** in constant currency) due to lower installations, soft demand in April/May amid tariff uncertainty, and the impact of Reinvention-related actions[24](index=24&type=chunk) - Post-sale revenue grew **1.5%**, but this was driven by a **10.6** percentage point benefit from the ITsavvy acquisition, with organic post-sale revenue declining due to lower managed print services revenue and tariff-related delays in supplies sales[24](index=24&type=chunk) - The pre-tax loss of **$60 million** was primarily due to lower gross profit, which was affected by product cost increases, incremental tariffs, and reduced financing fees, with higher non-financing interest expense also contributing to the loss[24](index=24&type=chunk) [Lexmark Acquisition](index=9&type=section&id=Lexmark%20Acquisition) Xerox finalized Lexmark acquisition on July 1, 2025, for **~$1.5 billion**, anticipating over **$1/share** accretion and mitigating U.S. tariff impacts via its Mexico manufacturing facility - The acquisition of Lexmark was completed on July 1, 2025, for approximately **$1.5 billion**, which included **~$860 million** in cash and the assumption of **$327 million** in debt[26](index=26&type=chunk) - Xerox continues to expect over **$1/share** of accretion from the transaction, despite higher-than-expected funding costs[27](index=27&type=chunk) - The company anticipates no material impact from proposed U.S. tariffs on Lexmark's results, as its manufacturing facility in Juarez, Mexico can support U.S. imports on a USMCA compliant basis[27](index=27&type=chunk) [Revenue Analysis](index=11&type=section&id=Revenue%20Analysis) Total Q2 2025 revenue was nearly flat at **$1.576 billion**, with a **5.6%** equipment sales decline offset by a **1.5%** post-sale revenue increase, shifting IT Solutions to **13%** of total revenue Q2 2025 Revenue Breakdown (vs Q2 2024) | (in millions) | 2025 | 2024 | % Change | % of Total Revenue 2025 | | :--- | :--- | :--- | :--- | :--- | | Equipment sales | $336 | $356 | (5.6)% | 21% | | Post sale revenue | $1,240 | $1,222 | 1.5% | 79% | | **Total Revenue** | **$1,576** | **$1,578** | **(0.1)%** | **100%** | Q2 2025 Revenue by Segment (vs Q2 2024) | (in millions) | 2025 | 2024 | % Change | % of Total Revenue 2025 | | :--- | :--- | :--- | :--- | :--- | | Print and Other | $1,366 | $1,494 | (8.6)% | 87% | | IT Solutions | $213 | $84 | 153.6% | 13% | | **Total Revenue** | **$1,576** | **$1,578** | **(0.1)%** | **100%** | [Costs, Expenses, and Profitability](index=12&type=section&id=Costs%2C%20Expenses%2C%20and%20Profitability) Q2 2025 profitability deteriorated, with total gross margin falling **440 bps** to **28.6%**, and other expenses, net, increasing from **$33 million** to **$80 million** due to higher acquisition-related interest Key Profitability Ratios (Q2 2025 vs Q2 2024) | | 2025 | 2024 | Change (pts.) | | :--- | :--- | :--- | :--- | | Total Gross Margin | 28.6% | 33.0% | (4.4) pts. | | RD&E as a % of Revenue | 2.7% | 3.2% | 0.5 pts. | | SAG as a % of Revenue | 23.4% | 24.9% | 1.5 pts. | | Pre-tax (Loss) Income Margin | (3.8)% | 1.6% | (5.4) pts. | | Adjusted Operating Income Margin | 3.7% | 5.4% | (1.7) pts. | - Other expenses, net, increased to **$80 million** in Q2 2025 from **$33 million** in Q2 2024, primarily driven by non-financing interest expense, which rose to **$55 million** from **$31 million**[38](index=38&type=chunk) [Reportable Segments Analysis](index=13&type=section&id=Reportable%20Segments%20Analysis) [Overview of Segment Changes and Performance](index=13&type=section&id=Overview%20of%20Segment%20Changes%20and%20Performance) Xerox realigned into "Print and Other" and "IT Solutions" segments in 2025; Q2 results show IT Solutions growing to **13%** of total revenue, with both segments achieving a **4.8%** profit margin - The company has two reportable segments: Print and Other, and IT Solutions, a change made to align reporting with how the CEO allocates resources and assesses performance against key growth strategies[40](index=40&type=chunk)[91](index=91&type=chunk) Segment Performance Summary (Q2 2025 vs Q2 2024) | (in millions) | Print and Other | IT Solutions | | :--- | :--- | :--- | | **2025 Revenue** | $1,366 | $213 | | **2025 Segment Profit** | $65 | $10 | | **2025 Segment Margin** | 4.8% | 4.8% | | **2024 Revenue** | $1,494 | $84 | | **2024 Segment Profit** | $107 | $1 | | **2024 Segment Margin** | 7.2% | 1.2% | [Print and Other](index=13&type=section&id=Print%20and%20Other) The largest Print and Other segment experienced an **8.6%** revenue decline to **$1.37 billion**, driven by a **5.6%** drop in equipment sales and a **9.5%** fall in post-sale revenue, with high-end products falling **26.7%** Print and Other Revenue (Q2 2025 vs Q2 2024) | (in millions) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Equipment sales | $336 | $356 | (5.6)% | | Post sale revenue | $1,030 | $1,138 | (9.5)% | | **Total Revenue** | **$1,366** | **$1,494** | **(8.6)%** | Equipment Sales by Product Group (Q2 2025 vs Q2 2024) | (in millions) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Entry | $51 | $56 | (8.9)% | | Mid-range | $235 | $235 | 0.0% | | High-end | $44 | $60 | (26.7)% | [IT Solutions](index=14&type=section&id=IT%20Solutions) IT Solutions segment reported explosive revenue growth of **153.6%** to **$213 million**, primarily fueled by the ITsavvy acquisition, with IT Products surging **173.2%** and IT Services growing **103.6%** IT Solutions Revenue (Q2 2025 vs Q2 2024) | (in millions) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | IT Products | $153 | $56 | 173.2% | | IT Services | $57 | $28 | 103.6% | | **Total IT Solutions** | **$213** | **$84** | **153.6%** | - This segment is comprised of the recent acquisition of ITsavvy, Canadian IT provider Powerland, and legacy XBS IT solutions[48](index=48&type=chunk) [Recast 2024 Segment Results](index=15&type=section&id=Recast%202024%20Segment%20Results) Xerox provided recast 2024 segment results for comparison, showing Print and Other generated **$5.86 billion** revenue with a **6.8%** margin, while IT Solutions generated **$358 million** revenue with break-even profit Full Year 2024 Recast Segment Results | (in millions) | Print and Other | IT Solutions | Total | | :--- | :--- | :--- | :--- | | Revenues | $5,864 | $358 | $6,221 | | Segment Profit | $396 | $0 | $302 | | Segment Margin | 6.8% | 0.0% | 4.9% | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) [Statements of (Loss) Income](index=5&type=section&id=Statements%20of%20%28Loss%29%20Income) For Q2 2025, Xerox reported total revenues of **$1.576 billion**, nearly flat year-over-year, but lower gross profit and increased 'Other expenses, net' led to a pre-tax loss of **$60 million** and a net loss of **$106 million** Condensed Consolidated Statements of (Loss) Income (Three Months Ended June 30) | (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $1,576 | $1,578 | | Total Costs and Expenses | $1,636 | $1,553 | | (Loss) Income before Income Taxes | $(60) | $25 | | Net (Loss) Income | $(106) | $18 | | Diluted (Loss) Earnings per Share | $(0.87) | $0.11 | [Balance Sheets](index=7&type=section&id=Balance%20Sheets) As of June 30, 2025, Xerox's total assets increased to **$8.87 billion** from **$8.37 billion**, driven by inventories and goodwill, while total liabilities rose to **$7.52 billion** due to increased long-term debt for the Lexmark acquisition Condensed Consolidated Balance Sheet Highlights | (in millions) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $449 | $576 | | Total current assets | $3,543 | $2,935 | | Total Assets | $8,874 | $8,365 | | Long-term debt | $3,484 | $2,814 | | Total Liabilities | $7,523 | $7,061 | | Total Equity | $1,127 | $1,080 | [Statements of Cash Flows](index=8&type=section&id=Statements%20of%20Cash%20Flows) Q2 2025 cash flow saw a significant downturn, with net cash used in operating activities of **$11 million**, negative free cash flow of **$30 million**, and a **$618 million** net inflow from financing due to Lexmark acquisition debt Condensed Consolidated Statements of Cash Flows (Three Months Ended June 30) | (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(11) | $123 | | Net cash used in investing activities | $(18) | $(2) | | Net cash provided by (used in) financing activities | $618 | $(336) | [Non-GAAP Financial Measures & Reconciliations](index=17&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Explanation of Non-GAAP Measures](index=17&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Xerox uses non-GAAP measures like Adjusted EPS, Operating Income, Constant Currency revenue, and Free Cash Flow to show underlying business trends by excluding restructuring, amortization, non-service retirement, and other discrete items - The company adjusts for several items, including: - Restructuring and related costs - Amortization of intangible assets - Non-service retirement-related costs - Transaction and related costs (e.g., M&A) - Other discrete, unusual or infrequent items[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk)[65](index=65&type=chunk) - Free Cash Flow is defined as operating cash flow less capital expenditures, providing a measure of cash available to fund acquisitions and pay dividends[70](index=70&type=chunk) [Reconciliation of Adjusted Net (Loss) Income and EPS](index=19&type=section&id=Reconciliation%20of%20Adjusted%20Net%20%28Loss%29%20Income%20and%20EPS) After adjustments, Xerox's Q2 2025 adjusted net loss was **$77 million**, or **($0.64)** per share, compared to an adjusted net income of **$41 million**, or **$0.29** per share, in the prior year Adjusted Net (Loss) Income and EPS Reconciliation (Q2 2025 vs Q2 2024) | (in millions, except per share) | 2025 | 2024 | | :--- | :--- | :--- | | Reported Net (Loss) Income | $(106) | $18 | | Total Adjustments | $29 | $23 | | **Adjusted Net (Loss) Income** | **$(77)** | **$41** | | Reported Diluted EPS | $(0.87) | $0.11 | | **Adjusted Diluted EPS** | **$(0.64)** | **$0.29** | [Reconciliation of Adjusted Operating Income and Margin](index=20&type=section&id=Reconciliation%20of%20Adjusted%20Operating%20Income%20and%20Margin) Xerox's Q2 2025 adjusted operating income was **$59 million**, with a **3.7%** margin, declining from **$85 million** and **5.4%** in Q2 2024, after removing restructuring, amortization, and other non-operating expenses Adjusted Operating Income Reconciliation (Q2 2025 vs Q2 2024) | (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Pre-tax (loss) income | $(60) | $25 | | Total Adjustments | $119 | $60 | | **Adjusted Operating Income** | **$59** | **$85** | | **Adjusted Operating Margin** | **3.7%** | **5.4%** | [Reconciliation of Free Cash Flow](index=20&type=section&id=Reconciliation%20of%20Free%20Cash%20Flow) Free cash flow for Q2 2025 was negative **$30 million**, a significant decrease of **$145 million** from the positive **$115 million** in Q2 2024, driven by lower net cash from operating activities Free Cash Flow Reconciliation (Q2 2025 vs Q2 2024) | (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(11) | $123 | | Capital expenditures | $(19) | $(8) | | **Free Cash Flow** | **$(30)** | **$115** | [Appendices](index=22&type=section&id=Appendices) [Appendix I: (Loss) Earnings per Share Calculation](index=22&type=section&id=Appendix%20I%3A%20%28Loss%29%20Earnings%20per%20Share%20Calculation) This appendix details basic and diluted EPS calculation for Q2 2025 and 2024, outlining adjustments from net income to common shareholders and listing anti-dilutive securities excluded from the calculation - For Q2 2025, a total of **44.6 million** securities were anti-dilutive and therefore excluded from the diluted EPS calculation, including restricted stock, performance shares, convertible preferred stock, and convertible notes[89](index=89&type=chunk) [Appendix II: Reportable Segments Definitions](index=23&type=section&id=Appendix%20II%3A%20Reportable%20Segments%20Definitions) This appendix explains the Q1 2025 segment change to "Print and Other" and "IT Solutions," linking it to growth strategies and the ITsavvy acquisition, providing detailed definitions and product groupings - The change in segments was made in Q1 2025 to align with how the CEO allocates resources and assesses performance, with the former Xerox Financial Solutions (XFS) segment now included within the Print and Other segment[91](index=91&type=chunk)[92](index=92&type=chunk) - The Print and Other segment's product groups are defined as: - **Entry:** A4 devices and desktop printers for small/medium workgroups - **Mid-Range:** A3 devices for large workgroups and light production - **High-End:** Production printing systems for graphic communications and large enterprises[96](index=96&type=chunk)

Core Insights - Xerox Holdings Corporation is set to report its Q2 '25 earnings on July 31st, prompting a review of the company's expectations and outlook for investors [1] Company Overview - The company is primarily focused on long-term investment strategies, typically with a 5-10 year horizon, emphasizing a portfolio that includes a mix of growth, value, and dividend-paying stocks [1] Investment Strategy - The investment approach leans towards value stocks, with occasional engagement in options trading to enhance returns [1]

Overview of the Transaction - The company plans to sell 100% equity of its indirect subsidiary, Lexmark International II, LLC, to Xerox Corporation for a cash transaction [3][4] - The transaction involves the joint investment entity Ninestar Holdings Company Limited, which is controlled by the company, PAG Asia Capital, and Shoda Investment [3][5] - The transaction is classified as a major asset restructuring due to the significant proportion of Lexmark's assets and revenue compared to the company's total assets and revenue [7][8] Transaction Details - The estimated transaction price is based on a benchmark amount of $1.5 billion, adjusted for estimated financing liabilities, net working capital, cash on the closing date, and transaction costs [4][10] - The final transaction price will be adjusted post-closing based on the final net working capital, financing liabilities, and other factors, with a maximum adjustment limit of $30 million [11] - The transaction is expected to close on July 1, 2025, subject to the fulfillment of certain conditions [9][10] Financial Analysis - The valuation report by Zhonglian International indicates that the equity value of Lexmark International II, LLC is estimated between $172 million and $198 million, with net adjustments leading to a final estimated value of $99 million to $125 million after accounting for various expenses [7] - The financial metrics of Lexmark International II, LLC show total assets of approximately ¥1,958.41 million and revenue of ¥1,596.13 million, which represent 52.43% and 60.43% of the company's respective totals [7] Regulatory and Approval Process - The transaction has undergone necessary internal approvals from the board and shareholders, and external regulatory approvals are in process [9][14] - The transaction does not constitute a related party transaction, and there are no changes in the company's control as a result of this sale [8][9] Company Background - The company, Nasda, is listed on the Shenzhen Stock Exchange with the stock code 002180 and has a registered capital of ¥1,422,989,339 [5][6] - Xerox Corporation, the buyer, is a publicly traded company on the NASDAQ with a focus on document management systems and solutions [6]

Summary of Key Points Core Viewpoint - The independent financial advisor, Dongfang Securities, has provided a verification opinion on the major asset sale of Nasda Co., Ltd., indicating that the transaction has been conducted in compliance with relevant laws and regulations, and that all necessary procedures have been followed [1][15]. Group 1: Transaction Overview - The transaction involves the sale of 100% equity of Lexmark International II, LLC (the target company) from Ninestar Group Company Limited to Xerox Corporation, with an estimated transaction price of $1.5 billion [6][8]. - The transaction is classified as a major asset restructuring, as the total assets and revenue of Lexmark International exceed 50% of Nasda's total assets and revenue [8][9]. - The transaction does not constitute a related party transaction, and there will be no change in the actual control of the company post-transaction [9]. Group 2: Financial Details - The estimated purchase price is calculated as $1.5 billion minus estimated financing liabilities and adjusted for net working capital, with a final purchase price adjustment not exceeding $30 million [11][12]. - The valuation of Lexmark's 100% equity is estimated between $172 million and $198 million, with net adjustments leading to a final estimated purchase price of approximately $90 million [7][11]. Group 3: Approval and Implementation - The transaction has completed all necessary internal and external approval processes, including board and shareholder meetings [10][11]. - The closing date for the transaction is set for July 1, 2025, with all preconditions for closing confirmed to be met [10][11]. - The transfer of the target company's equity has been completed, and there are no significant obstacles to the asset transfer [12][15].

Core Viewpoint - The European Commission has approved Xerox's acquisition of Lexmark, stating that the deal will have a limited impact on competition in the market for both companies [1] Company Summary - Xerox is set to acquire Lexmark, a manufacturer of laser printers, following the approval from the European Commission [1] - The European Commission assessed the competitive landscape and concluded that the merger would not raise any competition concerns [1] Industry Summary - The approval indicates a favorable regulatory environment for mergers and acquisitions within the printing and imaging industry [1] - The limited impact on competition suggests that the market dynamics will remain stable post-acquisition, potentially benefiting both companies in terms of market share and operational synergies [1]

Core Viewpoint - Xerox's shares dropped 13.7% following the announcement of a second dividend cut in six months, indicating a lack of confidence but also a strategic move to manage acquisition debt amid global economic uncertainty [1][5]. Group 1: Dividend Cuts - The first dividend cut occurred in December 2024, reducing the annual dividend from $1 per share to $0.50 due to the $1.5 billion acquisition of Lexmark International and an increase in debt load [2]. - The second cut announced recently further reduced the dividend to $0.10 annually, an 80% decrease, attributed to the accelerated closing of the Lexmark acquisition and global uncertainties from tariff policies [3]. Group 2: Financial Outlook - Xerox's market capitalization has fallen to $555 million, reflecting a low valuation multiple of 6 to 7 times projected operating income based on guidance for low-single-digit revenue growth and a 5% adjusted operating margin [6][7]. - The company anticipates generating approximately $315 million in operating income, leading to around $90 million in pre-tax income, assuming consistent interest expenses of $225 million [6]. Group 3: Strategic Considerations - The dividend cuts, while negative, are seen as a prudent measure to enhance financial flexibility and focus on debt reduction post-acquisition [5]. - Successful integration of Lexmark could provide significant upside potential for Xerox, despite current low growth prospects and high debt levels [8].

Group 1: Ross Stores, Inc. - Ross Stores reported quarterly earnings of $1.47 per share, beating the Street estimate of $1.44, with quarterly revenue of $4.99 billion, surpassing the consensus estimate of $4.97 billion [1][2] - The company issued second-quarter GAAP EPS guidance in the range of $1.40 to $1.55, which is below the analyst estimate of $1.65 [2] - Following the guidance, Ross Stores shares fell 11.2% to $135.00 in pre-market trading [2] Group 2: Other Companies - Bicara Therapeutics Inc. shares dipped 20.2% to $12.50 after announcing mixed results from a phase 1/1b trial for ficerafusp alfa [4] - Deckers Outdoor Corporation shares fell 16% to $105.90 after reporting fourth-quarter financial results and expecting first-quarter revenue of $890 million to $910 million, below estimates of $925.86 million [4] - Gyre Therapeutics, Inc. shares fell 14.4% to $9.60 due to a $20.0 million public offering of common stock [4] - Hallador Energy Company shares tumbled 9.7% to $17.00 in pre-market trading [4] - Xerox Holdings Corporation shares dipped 9.6% to $4.62 after reducing its quarterly dividend from $0.125 per share to $0.025 [4] - MINISO Group Holding Limited shares fell 8.5% to $20.30 following third-quarter results [4] - Workday, Inc. shares declined 6.5% to $254.40 after issuing second-quarter sales guidance below estimates [4] - Navitas Semiconductor Corporation shares dipped 6.3% to $4.73 after a significant jump of 164% on Thursday due to collaboration with Nvidia [4]

Financial Data and Key Metrics Changes - The meeting confirmed that there were 125,779,735 shares of common stock outstanding as of March 28, 2025, with approximately 96,207,757 shares represented at the meeting, indicating a quorum of about 76% of outstanding shares [4]. Business Line Data and Key Metrics Changes - No specific data or metrics related to individual business lines were provided in the meeting. Market Data and Key Metrics Changes - No specific market data or metrics were discussed during the meeting. Company Strategy and Development Direction and Industry Competition - The meeting included proposals for the election of directors, ratification of the independent auditor, and approval of executive compensation, indicating a focus on governance and operational efficiency [7][10]. Management's Comments on Operating Environment and Future Outlook - Management did not provide specific comments on the operating environment or future outlook during this meeting. Other Important Information - The proposals presented included the election of nine nominees for a one-year term as directors, the ratification of PricewaterhouseCoopers as the independent auditor for fiscal year 2025, and the approval of an amendment to increase share reserve in the equity and performance incentive plan [7][10]. Q&A Session All Questions and Answers - There were no questions or comments regarding the proposals during the meeting, indicating shareholder agreement or lack of inquiries [8].

Revenue Performance - Total revenue for Q1 2025 was $1.46 billion, a decrease of 3.0% year-over-year, including a 6.6-percentage point benefit from the acquisition of ITsavvy and a 1.9-percentage point unfavorable impact from currency [199]. - Total revenue for Q1 2025 decreased by 3.0% to $1,457 million compared to Q1 2024, with a 1.9-percentage point adverse impact from currency fluctuations [212]. - The Print and Other segment revenue decreased by 9.4% to $1.294 billion, while IT Solutions segment revenue increased by 121.6% to $164 million [202]. - First quarter 2025 revenues for the Print and Other segment were $1,294 million, a decrease of 9.4% from $1,428 million in Q1 2024, with equipment sales down 2.1% and post-sale revenue down 11.2% [254][257]. - IT products revenue surged by 123.4% to $105 million, driven by the ITsavvy acquisition, although excluding this impact, revenue decreased by 20.4% [218]. Profitability and Loss - Adjusted operating income for Q1 2025 was $22 million, a decrease of $11 million compared to Q1 2024, reflecting lower revenue and gross profit [192]. - Net loss for Q1 2025 was $90 million, an improvement of $23 million from a net loss of $113 million in Q1 2024, primarily due to divestitures and lower restructuring costs [201]. - Adjusted operating income margin for Q1 2025 was 1.5%, a decrease of 0.7 percentage points compared to Q1 2024, reflecting lower revenue and gross profit [245]. - Pre-tax loss improved to $67 million in Q1 2025 from a loss of $150 million in Q1 2024, resulting in a pre-tax loss margin of (4.6)% [219]. - The company reported a pre-tax loss of $1,216 million for the full year 2024, impacted by a goodwill impairment of $1,058 million [276]. Expenses and Cost Management - Selling, Administrative and General (SAG) expenses were $378 million, a decrease of $19 million from Q1 2024, with SAG as a percentage of revenue at 25.9% [227]. - Research, Development and Engineering (RD&E) expenses totaled $42 million, down from $49 million in Q1 2024, with RD&E as a percentage of revenue decreasing to 2.9% [223]. - The company anticipates a $50 million reduction in operating income due to incremental tariff costs in 2025, but expects to offset this through price increases and supply chain mitigation efforts [193]. - The company incurred inventory-related charges of approximately $7 million in Q1 2025 due to the exit of certain production print manufacturing operations, compared to $32 million in Q1 2024 [321]. Cash Flow and Debt Management - Operating cash flows are projected to be between $420 million to $470 million, with capital expenditures expected to be approximately $70 million in 2025 [207]. - As of March 31, 2025, total cash, cash equivalents, and restricted cash decreased to $390 million from $631 million at December 31, 2024, reflecting a decrease of $241 million [279]. - Total debt as of March 31, 2025, was $3,298 million, down from $3,399 million at December 31, 2024 [288]. - The company plans to use proceeds from new debt financing to fund the $1.5 billion acquisition of Lexmark International II LLC [279]. - The company completed a private offering of $400 million in aggregate principal amount of 10.25% Senior Secured First Lien Notes and $400 million in aggregate principal amount of 13.5% Senior Secured Second Lien Notes due in 2031 [322]. Acquisitions and Strategic Initiatives - The pending acquisition of Lexmark is progressing, with 32% of the required shareholder vote secured and expected closing in Q3 2025 [195]. - The company is focusing on restructuring efforts and managing financial risks as outlined in the "Financial Risk Management" section of the quarterly report [324]. - The company has not materially modified its financial risk management strategies in response to current market events [303]. Market Conditions and Future Outlook - The company expects revenue growth at low single-digits in constant currency for the full year 2025, including a full year of revenue from ITsavvy [207]. - The company anticipates continued monitoring of economic conditions which may affect future bad debt reserves [228]. - The effective tax rate for the three months ended March 31, 2025, was -34.3%, while the adjusted effective tax rate was 60.0% [318]. - The company is exposed to market risks from foreign currency exchange rates and interest rates, managing these through derivative financial instruments [300].

Core Insights - The article emphasizes a fundamentals-based approach to value investing, highlighting the importance of long-term growth and a strong balance sheet over low multiple stocks [1] Group 1: Company Analysis - Xerox (NASDAQ: XRX) has been recommended for a sell rating due to poor fundamentals and lack of visible earnings growth [1] - The author believes that many investors mistakenly assume that low multiple stocks are inherently cheap, which is not always the case [1] Group 2: Investment Philosophy - The focus is on identifying companies with steady long-term growth, minimal cyclicality, and robust financial health [1] - There is an acknowledgment of the risks involved in investing, particularly the potential to overpay for successful companies, underscoring the significance of valuation [1] - The article suggests that in certain situations, the potential for growth may outweigh immediate price concerns [1]