Revenues were $2.7 billion in the quarter, down 7.2% or 5.0% in constant currency. Fourth-quarter adjusted operating margin of 14.0% was up 0.7 percentage points from the same quarter a year ago. Gross margin was 40.0%, and selling, administrative and general expenses were 23.4% of revenue.
Xerox generated $462 million in cash flow from continuing operations during the fourth quarter and ended 2016 with a cash balance of $2.2 billion, which includes $1.0 billion of cash expected to be used for the repayment of maturing Senior Notes in the first quarter 2017.
“Our fourth quarter results demonstrate that we are realizing significant benefits from our Strategic Transformation program,” said Jeff Jacobson, Xerox CEO. “We delivered strong margins that countered expected pressure on revenue.
“With the separation of Conduent now complete, we turn our full attention to delivering on our strategy, which includes pursuing the growing areas of the market,” Jacobson continued.
For full-year 2017, Xerox expects GAAP earnings from continuing operations of 44 to 52 cents per share; adjusted EPS is expected to be 80 to 88 cents per share. Total revenue was $10.8 billion.
Xerox expects to generate operating cash flow from continuing operations of $700 to $900 million and free cash flow from continuing operations of $525 to $725 million in 2017.
On Dec. 31, 2016, Xerox successfully completed the separation of its business process services business, now an independent company named Conduent Incorporated. The financial results announced today represent the continuing operations of the new Xerox.