Earnings Round-up: Xerox, Lexmark, Harley-Davidson, AK Steel, Coach

Earnings Round-up: Xerox, Lexmark, Harley-Davidson, AK Steel, Coach

A bunch of important companies in various industries reported earnings this morning before the opening bell. Most companies reported fiscal Q3 earnings. We are rounding up some of the interesting names.

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Earnings Round-up: Xerox, Lexmark, Harley-Davidson, AK Steel, Coach

Xerox Corporation (NYSE:XRX) reported 3Q12 non-GAAP EPS of $0.25, in line with consensus of $0.25; company guidance was $0.24-$0.26, as below-the-line items helped offset weaker revenues. Both gross margins and operating margins came in below expectations. Xerox Corporation (NYSE:XRX) generated $594 million in cash from operations in the quarter, resulting in $0.34 of free cash flow per share – but the cash flow included a significant benefit from factoring. The company repurchased $361 million in stock in 3Q12. Xerox also reiterated its expectation for $2.0-2.3 billion in cash flow from operations in FY12, as the company expects significant 4Q improvement. Xerox Corporation (NYSE:XRX) expects to repurchase between $0.9-$1.1 billion in stock in FY12. While investors may appreciate the headline of maintaining cash flow guidance, investors are concerned about the need to factor financing receivables. This method of cash generation is not something that companies do unless they need cash – and was something Xerox did back in 1999 and 2000 when it had significant accounting and operating difficulties.

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Shares of Xerox Corporation (NYSE:XRX) are down 6.5% at the time of this writing.

Lexmark reported non-GAAP EPS of $0.94 vs.  consensus of $0.78 excluding $0.94 per share in charges.  The better than expected quarter was due to higher than expected gross margins and much lower than expected SG&A (offsetting a higher tax rate). While Lexmark’s execution – especially in the US – was a bit better than expected in the quarter,  secular issues are impacting the printing market in addition to macro pressures – even in laser printers – the business Lexmark is committed to. While Lexmark has a compelling services offering – the managed print services trend actually hurts printing hardware and supplies sales over the long-term since the service itself consolidates units in the field.

Lexmark International Inc (NYSE:LXK) shares are up 4.6% at the time of this writing.

Harley-Davidson, Inc. (NYSE:HOG) reported Q3 sales of $1.09 bil and EPS of $0.59, relatively in line with management guidance as well as consensus estimates of $1.12 billion and $0.59, respectively. Management maintained full-year 2012 guidance for unit shipments of 245k-250k, gross margins of 34.75-35.75%, and tax rate of 35.5%.

Harley-Davidson, Inc. (NYSE:HOG) management confirms U.S. retail sales declined in July/Aug as new model launch timing shifted back, but encouraging a rebound in sales momentum in Sept. as soon as new products became available. Consistent with feedback from recent channel checks, management noted U.S. retail sales of H-D bikes fell in July and August, but rebounded encouragingly in September, as timing of new model year product launches were shifted to late Aug this year (to accommodate the ERP implementation) compared to late Jun last year. Once new model year 2013 bikes became available, U.S. dealers gained momentum exiting the quarter.

Fast growing Latin America market drives strength in International business. Overall retail sales were down 1% in Q3, as the aforementioned decline in U.S. for Q3 (off 5%) was offset by a surprisingly strong 8% unit increase in International. Such overseas growth represented an acceleration from 1% growth in Q2. By region, Latin America rose a strong 32%, with Asia-Pacific up 10% and EMEA up 2%, also noteworthy, given macroeconomic weakness in Europe.

Shares of Harley-Davidson, Inc. (NYSE:HOG) are up nearly 8% in current market trading.

US steel: Excluding a previously highlighted valuation allowance for deferred tax assets of $33.1m ($0.30), AKS reported EPS of a loss of -$0.25, vs. mid-quarter guidance of a loss -$0.34-$0.39,  and consensus of a loss of -$0.37. However this included roughly $0.16 in LIFO credits after-tax.

Q4’12 Outlook: AK Steel Holding Corporation (NYSE:AKS) stated that they expect to incur a net loss for Q4 2012, which includes a non-cash tax expense related to an anticipated change in its tax valuation allowance, which the company will incur regardless of its 4Q pretax result. The company also stated that they still need to work through higher cost raw material inventories before seeing benefits from low costs.

Shares of the large steel manufacturer are currently down over 8%.

Coach, Inc. (NYSE:COH) reported in line first fiscal 2013 quarter revenue and EPS results of $0.77 a share, up 5.5%, on a 10.6% increase in total sales to $1.2 billion.

• North American volume increased 8% with DTC sales up 11% and comps ahead by 5.5%, a 380 basis point improvement from the fourth fiscal quarter, in part, reflecting benefits from the return to couponing in the factory channel as well as greater men’s product penetration, a 2.6% increase in square footage, and the Legacy rollout. The addressable market increased 10%. At point of sale (POS), revenues in North American department stores were flat while shipments declined as inventories were planned lower.

• International revenues increased 15% with China up nearly 40% driven by incremental distribution and a double-digit increase in comps. Shipments into international wholesale accounts also rose at a double digit pace. Sales in Japan were flat (up 1% on a constant currency basis). The company completed the acquisition its retail businesses in Korea and Malaysia.

Shares of Coach, Inc. (NYSE:COH) are up 10% on the news.

Disclosure: No position in any securities mentioned

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