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NORWALK, Conn. - Xerox Holdings Corporation (NASDAQ: XRX) announced a reduction in its quarterly dividend to $0.025 per share today, a move approved by its Board of Directors in anticipation of the company’s upcoming acquisition of Lexmark. The new dividend rate, down from the previous amount, will be payable on July 31, 2025, to shareholders of record as of June 30, 2025. According to InvestingPro data, this represents a significant shift for Xerox, which has maintained dividend payments for 19 consecutive years and previously offered a yield of nearly 10%.
The decision to slash the dividend follows a December 2024 announcement by Xerox, which indicated a dividend cut in line with the planned purchase of Lexmark. The company highlighted the need to prioritize debt repayment after the acquisition closes. Xerox has experienced a rise in yields on its publicly traded debt, leading to a higher cost of capital. With a debt-to-equity ratio of 3.33 and total debt of $3.5 billion, this financial pressure, combined with the accelerated timeline for completing the Lexmark deal and ongoing trade uncertainties, has underscored the importance of maintaining fiscal flexibility.
Mirlanda Gecaj, Xerox’s chief financial officer, stated that reducing the dividend is in line with the company’s strategy to lower leverage after the Lexmark acquisition. Gecaj emphasized that the dividend remains a key element of Xerox’s capital allocation policy as the company prepares for the acquisition’s completion.
Xerox reaffirmed its 2025 financial guidance, which does not account for the Lexmark acquisition’s impact. The guidance includes expectations of low single-digit revenue growth in constant currency, an adjusted operating margin of at least 5%, and free cash flow between $350 million and $400 million. The company also anticipates at least $238 million in synergies from the Lexmark transaction, expected to be realized within two years of the deal’s close. InvestingPro analysis shows the company’s financial health score as "FAIR," with analysts projecting a return to profitability this year despite recent challenges. Get access to detailed financial metrics and 10+ additional ProTips for Xerox through InvestingPro’s comprehensive research platform.
The anticipated benefits of the acquisition include improved EBITDA and free cash flow, enabling Xerox to reduce its debt towards a target of 3x gross debt leverage. Current EBITDA stands at $313 million, with a free cash flow yield of 69%. As the company progresses in lowering its debt levels, it plans to re-evaluate the amount of capital returned to shareholders.
In addition to the common stock dividend, Xerox declared a quarterly dividend of $20.00 per share on its outstanding Series A Convertible Perpetual Preferred Stock, payable on July 1, 2025, to shareholders of record on June 15, 2025.
This financial update is based on a press release statement from Xerox Holdings Corporation.
In other recent news, Xerox Holdings Corporation reported a challenging first quarter of 2025, with earnings and revenue falling short of expectations. The company posted an adjusted loss per share of $0.06, significantly missing the forecasted earnings per share of $0.10. Revenue reached $1.46 billion, below the anticipated $1.54 billion. Despite these setbacks, Xerox maintained its full-year guidance and highlighted strong growth in equipment installations, which increased by 24%.
Additionally, Xerox issued $100 million in senior secured notes, which will help fund the acquisition of Lexmark International II, LLC, and repay a portion of Lexmark’s outstanding debt. The acquisition deal is valued at $1.5 billion and is expected to be finalized in the third quarter of 2025, pending regulatory approvals. In a strategic move, Xerox appointed two key Lexmark executives to its leadership team, which is anticipated to enhance the company’s future direction.
Meanwhile, Loop Capital revised its price target for Xerox shares, lowering it to $4.50 from $5.50, while maintaining a Hold rating. This adjustment followed the mixed results of the first-quarter earnings report. The integration of ITsavvy is showing promising growth, and Xerox is preparing for the final stages of integrating Lexmark, with expectations of significant growth in 2026. These developments indicate ongoing strategic shifts as Xerox navigates current market challenges.
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