全錄公司 (XRX) 2023 Q4 法說會逐字稿

Welcome to the Xerox Holdings Corporation's Fourth Quarter 2023 Earnings Release Conference Call. After the presentation, there will be a question-and-answer session. (Operator Instructions) At this time, I would like to turn the meeting over to Mr. David Beckel, Vice President of Investor Relations. Please go ahead, sir.

歡迎參加施樂控股公司 2023 年第四季財報發布電話會議。演講結束後，將進行問答環節。 （操作員指示） 現在，我想將會議交給投資者關係副總裁 David Beckel 先生。請繼續，先生。

Good morning, everyone. I'm David Beckel, Vice President and Head of Investor Relations at Xerox Holdings Corporation. Welcome to the Xerox Holdings Corporation Fourth Quarter 2023 Earnings Release Conference Call hosted by Steve Bandrowczak, Chief Executive Officer. He's joined by John Bruno, President and Chief Operating Officer; and Xavier Heiss, Executive Vice President and Chief Financial Officer. 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. During this call, Xerox executives will refer to slides that are available on the web at www.xerox.com/investor. And 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'd like to turn the meeting over to Mr. Bandrowczak.

大家，早安。我是施樂控股公司副總裁兼投資人關係主管大衛‧貝克爾。歡迎參加由執行長 Steve Bandrowczak 主持的施樂控股公司 2023 年第四季收益發布電話會議。總裁兼營運長 John Bruno 也加入了他的行列；以及執行副總裁兼財務長 Xavier Heiss。應施樂控股公司的要求，今天的電話會議正在錄音。未經施樂明確許可，禁止本次通話進行其他錄音和/或轉播。在這次電話會議中，施樂高層將參考 www.xerox.com/investor 網站上提供的幻燈片。並將發表包含前瞻性陳述的評論，這些陳述本質上解決的是未來和不確定的問題。未來的實際財務結果可能與本文所述的結果有重大差異。現在，我想把會議交給 Bandrowczak 先生。

Good morning, and thank you for joining our Q4 2023 earnings call. I'd like to start by commending the Xerox team for delivering strong growth in full year adjusted operating income, EPS and free cash flow amid a challenging and uneven macroeconomic environment. We achieved 2023 adjusted operating income margin and free cash flow guidance despite slightly weaker-than-expected macro conditions in the second half of the year. Our ability to overcome top line headwinds and meet full year profit and cash flow targets is a testament to this company's culture of operating discipline, which has been forged and strengthened in recent years through operational and macroeconomic challenges.

早安，感謝您參加我們的 2023 年第四季財報電話會議。首先，我要讚揚施樂團隊在充滿挑戰和不平衡的宏觀經濟環境中實現了全年調整後營業收入、每股盈餘和自由現金流的強勁成長。儘管下半年宏觀環境略弱於預期，但我們還是實現了 2023 年調整後營業利潤率和自由現金流指引。我們克服頂線逆風並實現全年利潤和現金流目標的能力證明了該公司的經營紀律文化，近年來透過營運和宏觀經濟挑戰而得以形成和加強。

Summarizing results for the year. Revenue of $6.89 billion declined 3.1% in actual currency and 3.3% in constant currency. Our corporate digital and IT services businesses performed much better than this top line result would suggest, however. As Xavier will describe later in the call, revenue declined less than 1% in 2023 after adjusting for the effects of backlog reductions in the current and prior year, structural simplification efforts and the intentional de-emphasis of certain nonstrategic businesses. Adjusted EPS was $1.82, $0.70 higher year-over-year. Free cash flow was $649 million, an increase of $547 million over 2022 and adjusted operating margin of 5.6% was higher year-over-year by 170 basis points within our guidance range. 2023 was a pivotal year for Xerox and marked the first full year of a multiyear strategy to reposition our businesses for long-term sustainable growth in revenue and profits. Which we call our reinvention.

總結一年來的成果。營收為 68.9 億美元，以實際貨幣計算下降 3.1%，以固定匯率計算下降 3.3%。然而，我們的企業數位和 IT 服務業務的表現比這一頂線結果所顯示的要好得多。正如澤維爾稍後將在電話會議中描述的那樣，在調整了當年和上一年積壓訂單減少、結構簡化工作以及有意淡化某些非戰略業務的影響後，2023 年收入下降了不到1% 。調整後每股收益為 1.82 美元，年增 0.70 美元。自由現金流為 6.49 億美元，比 2022 年增加 5.47 億美元，調整後營業利潤率為 5.6%，年比高出 170 個基點，在我們的指導範圍內。 2023 年對施樂來說是關鍵的一年，也是我們重新定位業務以實現收入和利潤長期可持續增長的多年策略的第一個全年。我們稱之為「重塑」。

We took structural and foundational actions to improve our core business and simplify operations, resulting in greater operational focus and a clear path for more transformative reinvention actions this year and beyond. All the while, we delivered key accomplishments towards the strategic priorities set out at the beginning of 2023, which provided momentum for our reinvention in 2024. Starting with client success. Client success is and always will be a point of competitive differentiation for Xerox and is foundational to maintaining a strong and stable print business. Since accepting the CEO position in August of 2022, I directed my team to put more emphasis on client outcomes and solutions-based products and services that address the productivity challenges of a hybrid workplace. Our rigorous focus on positive client outcomes solidifies our position as a trusted adviser as clients build workplace technology solutions for the future.

我們採取了結構性和基礎性行動來改善我們的核心業務並簡化運營，從而更加註重運營，並為今年及以後採取更多變革性的重塑行動提供了明確的道路。同時，我們在 2023 年初制定的策略重點方面取得了關鍵成就，這為我們在 2024 年的重塑提供了動力。從客戶的成功開始。客戶的成功始終是施樂的競爭優勢之一，也是維持強大而穩定的印刷業務的基礎。自 2022 年 8 月接受執行長職位以來，我指示我的團隊更加重視客戶成果以及基於解決方案的產品和服務，以應對混合工作場所的生產力挑戰。我們對積極的客戶成果的嚴格關注鞏固了我們作為客戶建立未來工作場所技術解決方案值得信賴的顧問的地位。

It improves the predictability and repeatability of our business and expands total addressable market by ensuring we remain responsive to and take advantage of evolving market trends. Last year, we took actions to enable complete operational focus on the delivery of positive client outcomes in our core print, digital and IT service businesses. We divested PARC, Xerox Research Center of Canada and Elem 3D printing business. We signed partnerships with Peak Solution, an affiliate of HPS investment partners, allowing Fidel to focus exclusively on financial solutions that support the sales of Xerox equipment and services. We also reduced our presence in certain nonstrategic markets with lower levels of profitability, such as paper and certain types of IT hardware.

它提高了我們業務的可預測性和可重複性，並透過確保我們保持對不斷變化的市場趨勢的反應和利用不斷變化的市場趨勢來擴大整個潛在市場。去年，我們採取了行動，使我們的核心印刷、數位和 IT 服務業務完全專注於為客戶提供積極成果。我們剝離了 PARC、加拿大施樂研究中心和 Elem 3D 列印業務。我們與 HPS 投資合作夥伴的附屬公司 Peak Solution 簽署了合作夥伴關係，使 Fidel 能夠專注於支援 Xerox 設備和服務銷售的金融解決方案。我們也減少了在某些獲利水準較低的非策略市場的業務，例如紙張和某些類型的 IT 硬體。

In 2023, an enhanced focus on client success delivered the intended results, proving client centricity can drive revenue stability even in secularly challenged industry like Print. Xerox Net Promoter Score improved. We grew our share of equipment sales in the markets in which we compete, and we achieved revenue renewal rates above 100% across large account contract renewals, evidencing our ability to sell new print and digital services that more than offset reduction in traditional print spend. Moving to profitability. Transformation of the scope and scale contemplated by our reinvention requires a strong base of profits and margin profile from which to build. In 2023, we improved adjusted operating profit by more than $100 million and adjusted profit margin by 170 basis points year-over-year. Improvements stem from structural cost reduction efforts, pricing discipline and ongoing operational efficiencies and deliver reduction in nonstrategic revenue with low levels of profitability.

2023 年，對客戶成功的更加關注實現了預期結果，證明即使在印刷等長期面臨挑戰的行業中，以客戶為中心也可以推動收入穩定。施樂淨推薦值有所提升。我們在競爭市場中的設備銷售份額有所增長，並且在大客戶合約續約中實現了100% 以上的收入續約率，這證明了我們銷售新印刷和數位服務的能力，足以抵消傳統印刷支出的減少。轉向盈利。我們重塑所設想的範圍和規模的轉變需要堅實的利潤和利潤基礎。 2023 年，我們調整後營業利潤年增超過 1 億美元，調整後利潤率年增 170 個基點。改善源於結構性成本削減努力、定價紀律和持續的營運效率，並在獲利水準較低的情況下減少非策略收入。

These actions and the restructuring announced early this month put us firmly on the path to returning Xerox to double-digit profitability by 2026, while improving our capacity for a tactical reinvestment in growth areas. Finally, shareholder returns. It is important to our Board and management team that investors are rewarded while accompanying Xerox on its reinvention. In 2023, we achieved our shareholder return policy while reducing total debt while the $600 million of free cash flow when combined with excess cash on our balance sheet was used to pay our $1 per share dividend, lower our debt balance by approximately $450 million and reduced our share count by more than 20%. We will build on these achievements as our priorities evolved in 2024 year 2 of our reinvention. Our first priority of 2024 is the continued strengthening of our core print, digital and IT service businesses. These businesses form the bedrock of our strategic repositioning from which new capabilities and our client-centric mindset will be leveraged to drive incremental service opportunities and revenue diversification.

這些行動和本月初宣布的重組使我們堅定地走上了到 2026 年使施樂恢復兩位數盈利能力的道路，同時提高了我們在增長領域進行戰術再投資的能力。最後是股東回報。對我們的董事會和管理團隊來說，重要的是投資者在伴隨施樂進行重塑的同時獲得回報。 2023 年，我們實現了股東回報政策，同時減少了總債務，同時將6 億美元的自由現金流與資產負債表上的超額現金相結合，用於支付每股1 美元的股息，使我們的債務餘額減少了約4.5 億美元，並減少了我們的份額超過20%。隨著我們在 2024 年重塑的第二年制定優先事項，我們將在這些成就的基礎上再接再厲。我們 2024 年的首要任務是繼續加強我們的核心印刷、數位和 IT 服務業務。這些業務構成了我們策略重新定位的基石，我們將利用新的能力和以客戶為中心的思維來推動增量服務機會和收入多元化。

Earlier this month, we announced a significant reorganization of our businesses, including the adoption of a business unit rather than a geographic led operating model, along with a greater focus on a partner-led distribution. These changes are expected to both strengthen our core business and position us to capture new ancillary revenue opportunities over time. John Bruno, our President and COO, will provide more details on the operating changes. In short, a business unit-led operating model sharpens our client-centric mentality by more closely aligning Xerox products and services with the economic buyers of today's hybrid workplace. And with the establishment of a global partner ecosystem, we will pursue new partner relationships to expand the reach of our core businesses. Stronger end market alignment and partner reach is expected to further improve equipment market share and print, digital and IT service penetration rates with existing and prospective clients, resulting in new client wins and higher rates of revenue as contracts renew.

本月早些時候，我們宣布對業務進行重大重組，包括採用業務部門而不是地域主導的營運模式，以及更注重合作夥伴主導的分銷。這些變化預計將加強我們的核心業務，並使我們能夠隨著時間的推移抓住新的輔助收入機會。我們的總裁兼營運長約翰·布魯諾（John Bruno）將提供有關營運變化的更多詳細資訊。簡而言之，由業務部門主導的營運模式使施樂產品和服務與當今混合工作場所的經濟買家更加緊密地結合起來，從而強化了我們以客戶為中心的心態。隨著全球合作夥伴生態系統的建立，我們將尋求新的合作夥伴關係，以擴大我們核心業務的範圍。更強大的終端市場整合和合作夥伴覆蓋範圍預計將進一步提高設備市場份額以及現有和潛在客戶的印刷、數位和 IT 服務滲透率，從而贏得新客戶並在合約續約時獲得更高的收入。

Our second priority is the successful implementation of structural cost improvements associated with our reorganization. Which build on efficiencies and improvements put in place in 2023 and are expected to drive profits meaningfully higher again in 2024. We announced last quarter that reinvention is expected to deliver $300 million of net adjusted operating income improvements above the 2023 levels through 2026. We expect to achieve more than 1/3 of that improvement in 2024 due in large part to organizational cost savings associated with the reorganization announcement earlier this month. Our newly formed global business service organization or GBS, which John will further describe, will catalyze these expected organizational savings in 2024. Beyond 2024, we expect GBS to be an engine for continuous cost improvement and improve client satisfaction as this group works to embed advanced technologies like machine learning and AI into key internal processes, making it easier to do business with and within Xerox.

我們的第二個優先事項是成功實施與重組相關的結​​構性成本改善。這些措施建立在2023 年實施的效率和改進的基礎上，預計將在2024 年再次大幅提高利潤。我們上個季度宣布，到2026 年，重塑預計將帶來3 億美元的淨調整後營業收入改善，高於2023 年的水平。我們預計到 2024 年實現超過 1/3 的改進，這在很大程度上要歸功於與本月早些時候宣布的重組相關的組織成本節省。我們新成立的全球商業服務組織或GBS（約翰將進一步描述）將在2024 年促進這些預期的組織節省。在2024 年之後，我們預計GBS 將成為持續成本改善和提高客戶滿意度的引擎，因為該團隊致力於嵌入先進的技術將機器學習和人工智慧等技術融入關鍵的內部流程，使與施樂以及在施樂內部開展業務變得更加容易。

This year, we also began a more comprehensive optimization of our geographic footprint and product offerings, the savings of which are expected to further augment those associated with the recently announced restructuring program. Finally, capital allocation. As I mentioned, management and the Xerox Board of Directors believe it is important to directly reward shareholders as we execute our reinvention. In 2024, free cash flow is expected to be used to pay our $1 per share dividend and reduce leverage. Excess free cash flow is expected to be used to tactically invest in projects or acquisitions with high rates of expected returns on invested capital. Each of these 3 priorities puts us on the path towards achieving our long-term reinvention goals. I'll now hand the call over to John Bruno to provide more details on our recent organization announcement and our reinvention road map.

今年，我們也開始對我們的地理足跡和產品供應進行更全面的優化，預計節省的資金將進一步增加與最近宣布的重組計劃相關的成本。最後是資本配置。正如我所提到的，管理階層和施樂董事會認為，在我們實施重塑時直接獎勵股東非常重要。 2024 年，自由現金流預計將用於支付每股 1 美元的股息並降低槓桿率。多餘的自由現金流預計將用於戰術性投資於投資資本預期回報率較高的項目或收購。這三個優先事項中的每一個都使我們走上實現長期重塑目標的道路。現在，我將把電話轉交給約翰布魯諾，以提供有關我們最近的組織公告和重塑路線圖的更多詳細資訊。

Thank you, Steve, and good morning, everyone. I appreciate the opportunity to speak to you today and provide more context around our multiyear reinvention journey. At its core, reinvention is about operationalizing a balanced strategy to improve our legacy business and build a foundation to address adjacent opportunities with existing and new clients. These adjacent market opportunities are available to Xerox today, but they require enhancements to our client coverage model and our service offerings. And by the market, I'm predominantly referring to the mid-market, where digital IT services remain underutilized by our clients. There is opportunity for Xerox to improve client penetration of digital and IT services within this market, an assertion be validated through primary and secondary research as part of our reinvention planning. Critical to more fully addressing these market opportunities is a core business that is stable, fit for purpose in today's market environment and capable of meeting the evolving needs of our clients.

謝謝你，史蒂夫，大家早安。我很高興今天有機會與您交談，並為我們多年的重塑之旅提供更多背景資訊。重塑的核心是實施平衡的策略，以改善我們的傳統業務，並為抓住現有和新客戶的鄰近機會奠定基礎。如今，施樂可以利用這些相鄰的市場機會，但它們需要增強我們的客戶覆蓋模型和服務產品。就市場而言，我主要指的是中階市場，我們的客戶仍未充分利用該市場的數位 IT 服務。施樂有機會提高該市場中數位和 IT 服務的客戶滲透率，作為我們重塑計畫的一部分，這項主張可以透過初級和二級研究得到驗證。要更充分地抓住這些市場機會，關鍵在於要有穩定的核心業務，適合當今的市場環境，並且能夠滿足客戶不斷變化的需求。

We understand the dynamics of the markets we're in and to win in a secularly challenged market like Print, we must be more competitive, easier to do business with and relevant to our clients as their needs evolve. As such, our reinvention is aimed at addressing the complexity of our business that was built over time and for a different time. In its place, we are designing a simpler, more operationally efficient organization to address our clients' most important hybrid workplace challenges now and into the future. I have been part of similar transformation efforts with other large companies, which like Xerox, have strong heritage. Pattern recognition tells me Xerox has what we need to successfully modernize and transform this business. In my first year, I've experienced very little resistance or lack of desire to change. Our people are eager to embrace and direct change, and they're asking for it. And that's a great place to be as the work to reinvent any company is complex and requires tenacity and discipline.

我們了解我們所處市場的動態，為了在像印刷業這樣長期面臨挑戰的市場中獲勝，我們必須更具競爭力，更容易與客戶開展業務，並隨著客戶需求的變化與客戶保持密切聯繫。因此，我們的重塑旨在解決我們隨著時間的推移和不同時間而建立的業務的複雜性。取而代之的是，我們正在設計一個更簡單、營運效率更高的組織，以解決客戶現在和未來最重要的混合工作場所挑戰。我曾參與其他大公司的類似轉型工作，這些公司如施樂，擁有悠久的傳統。模式識別告訴我，施樂擁有成功實現業務現代化和轉型所需的一切。在我的第一年，我幾乎沒有遇到任何阻力或缺乏改變的慾望。我們的人民渴望擁抱和引導變革，而且他們也在要求這一點。這是一個很好的地方，因為重塑任何公司的工作都是複雜的，需要堅韌和紀律。

As Steve noted, 2023 was a foundational year for Xerox. We narrowed our focus and removed competing priorities to reduce our operating costs and organizational complexity. We set up a strategic program management office comprised of 16 work streams with more than 200 initiatives. This team designed, defined and are currently executing organizational and business operating system simplification, spanning from reductions of legal entities, ERPs, payroll and invoice systems to just name a few examples. 2024 marks the second year of our journey. The focus this year is building on the structural and foundational changes made in '23 with an improved operating model. Earlier this month, we announced a new organizational structure that merges sales regions, flatten layers of management, streamlines our global offering teams and collapses our go-to-market offering and delivery teams all to one business unit. We moved from a geography to business unit-led operating model to align our groups responsible for our print, digital and IT service businesses from product development to sales and services as one team to empower fewer leaders with the information they require to improve decision rights and be more agile.

正如史蒂夫指出的那樣，2023 年對施樂來說是奠基之年。我們縮小了關注範圍並取消了競爭性優先事項，以降低營運成本和組織複雜性。我們設立了策略專案管理辦公室，由 16 個工作流程和 200 多項措施組成。該團隊設計、定義並目前正在執行組織和業務作業系統簡化，包括減少法人實體、ERP、工資和發票系統等等。 2024 年是我們旅程的第二年。今年的重點是在 23 年進行的結構性和基礎性變革的基礎上改進營運模式。本月早些時候，我們宣布了一種新的組織結構，該結構合併了銷售區域，扁平化了管理層級，精簡了我們的全球產品團隊，並將我們的上市產品和交付團隊全部整合到一個業務部門。我們從地理主導轉向業務部門主導的營運模式，將負責印刷、數位和IT 服務業務的團隊從產品開發到銷售和服務整合為一個團隊，為更少的領導者提供他們所需的信息，以提高決策權和決策權。變得更加敏捷。

We formed a new organization, Global Business Services, or GBS, that will drive enterprise by efficiencies and productivity gains by centrally coordinating internal processes, leveraging shared capabilities and platforms. The formation of GBS goes well beyond previous cost efficiency efforts at Xerox. It involves an end-to-end redesign of our operations to enable touchless internal and external customer experiences. GBS will leverage the success we achieve from Project ONC and embed leading technologies to drive continuous innovation, we see GBS as a key enabler of long-term sustainable profit improvement. In 2024, we will selectively optimize our geographic distribution to improve regional profitability and reach as well as narrow offerings where we lack sufficient competitive differentiation to generate required rates of return on invested capital. These strategic actions will have a negative effect on revenue initially but are expected to generate improvements in total operating profit. The overhead costs currently in place to support these geographies and offerings more than outweigh potential reductions in revenue and associated gross profits.

我們成立了一個新的組織，即全球商業服務部（GBS），該組織將透過集中協調內部流程、利用共享功能和平台來提高效率和生產力，從而推動企業發展。 GBS 的形成遠遠超出了施樂之前在成本效率方面所做的努力。它涉及對我們的營運進行端到端的重新設計，以實現非接觸式的內部和外部客戶體驗。 GBS 將利用我們在 ONC 專案中取得的成功並嵌入領先技術來推動持續創新，我們將 GBS 視為長期可持續利潤改善的關鍵推動者。 2024年，我們將選擇性地優化地理分佈，以提高區域獲利能力和覆蓋範圍，以及縮小我們缺乏足夠競爭差異化以產生所需投資資本回報率的產品範圍。這些策略行動最初將對收入產生負面影響，但預計將改善總營業利潤。目前支持這些地區和產品的間接費用超過了收入和相關毛利的潛在減少。

In summary, the organization announced earlier this month is a key enabler of expected profit improvement in 2024. Progress toward our 3-year operating income target of $300 million above 2023 levels will be driven by 3 concurrent efforts. The first operating model simplification throughout the reinvention journey with continuous savings initiatives led by GBS. The second is geographic and offering simplification efforts, and they're going to continue into 2026, with net savings being generated from the replacement of direct operations in certain geographies with more efficient partner-led solutions and lower costs associated with a more simplified product portfolio. And finally, tactical investments in partnerships to grow our digital and IT services business will provide a more favorable revenue mix and profit profile through 2026 and beyond. I look forward to keeping you updated along our journey as our reinvention delivers improved financial results and shareholder returns. I'll now hand the call over to Xavier.

總之，本月稍早宣布的組織是 2024 年預期利潤改善的關鍵推動因素。我們將透過三個並行努力推動我們實現 3 年營業收入目標（在 2023 年水準之上 3 億美元）的進展。透過 GBS 領導的持續節約舉措，在整個重塑之旅中首次簡化了營運模式。第二個是地域和提供簡化工作，它們將持續到2026 年，透過更有效率的合作夥伴主導的解決方案取代某些地區的直接運營，以及與更簡化的產品組合相關的更低成本，產生淨節省。最後，為發展我們的數位和 IT 服務業務而對合作夥伴進行的戰術投資將在 2026 年及以後提供更有利的收入組合和利潤狀況。我期待向您通報我們的最新進展，因為我們的重塑帶來了更好的財務表現和股東回報。我現在將把電話轉給澤維爾。

Thank you, John, and good morning, everyone. As Steve mentioned, important steps were taken in 2023 to simplify our business and improve Xerox balance sheet on profit profile. For the year, we delivered strong growth in earnings per share and free cash flow despite a modest decline in revenue, reflecting the successful implementation of a more flexible cost structure and rigorous operating discipline. Additional structural efficiencies enabled by our reorganization are expected to drive further profit improvement in 2024, our second full year of reinvention. In Q4, revenue, margin and profit declined year-over-year due mainly to a significant reduction of equipment backlog in the prior year quarter. Revenue growth was further affected by the intentional reduction of certain nonstrategic revenue. Excluding this factor, revenue would have increased low single digit year-over-year.

謝謝約翰，大家早安。正如史蒂夫所提到的，2023 年我們採取了重要步驟來簡化我們的業務並改善施樂資產負債表的利潤狀況。今年，儘管收入略有下降，但每股收益和自由現金流仍強勁增長，反映出更靈活的成本結構和嚴格的營運紀律的成功實施。重組帶來的額外結構效率預計將推動 2024 年（我們重塑的第二個全年）利潤進一步改善。第四季度，營收、利潤率和利潤較去年同期下降，主要是由於去年同期設備積壓大幅減少。有意減少某些非策略性收入進一步影響了收入成長。排除此因素，營收年增將僅為低個位數。

Turning to profitability. Gross margin declined 130 basis points over the prior year quarter due mainly to lower activity, higher product costs on the termination of FG royalties, partially offset by strategic pricing actions, lower freight cost and the benefit of structural cost reductions. Adjusted operating margin of 5.4% declined 380 basis points year-over-year due to lower revenue and gross profit and higher compensation expense, partially offset by the benefit of pricing on structural simplification effort. Adjusted other expenses net were $45 million higher year-over-year due to lower sales of noncore business assets and an increase in nonfinancing interest expense. Adjusted tax rate was 15.2% compared to 21.9% last year. The decrease was largely due to the benefit associated with change to deferred tax asset valuation allowances and redetermination of certain unrecognized tax position. Adjusted EPS of $0.43 in the fourth quarter was $0.46 lower than the prior year, driven by lower operating income and higher other expenses, net, partially offset by the benefit of lower shares. GAAP loss per share of $0.50 was $1.24 lower than the prior year. This includes the EUR 78 million after-tax restructuring charge associated with the recently announced workforce reduction or $0.62 per share.

轉向盈利能力。毛利率較去年同期下降 130 個基點，主要是由於活動減少、終止 FG 特許權使用費導致產品成本上升，但部分被戰略定價行動、運輸成本下降和結構性成本削減的好處所抵消。由於收入和毛利下降以及薪酬費用增加，調整後營業利潤率為 5.4%，年減 380 個基點，但結構簡化努力的定價優勢部分抵消了這一影響。由於非核心業務資產銷售減少和非融資利息支出增加，調整後其他支出淨額年增 4,500 萬美元。調整後稅率為15.2%，去年為21.9%。減少的主要原因是與遞延所得稅資產評估備抵變化和重新確定某些未確認的稅務狀況相關的收益。第四季調整後每股收益為 0.43 美元，比上年同期低 0.46 美元，原因是營業收入下降和其他淨費用增加，但部分被股份減少的好處所抵消。 GAAP 每股虧損 0.50 美元，較前一年減少 1.24 美元。其中包括與最近宣布的裁員相關的 7,800 萬歐元稅後重組費用或每股 0.62 美元。

Let me now review revenue and cash flow in more detail. Starting with revenue. Equipment sales of $458 million in Q4 declined 17.3% year-over-year in actual currency or 18.3% in constant currency. The prior year effect of backlog reduction drove more than 25% point of the year-over-year decline. Underlying demand for our equipment remains stable and order activity is gaining momentum as backlog on macroeconomic conditions stabilize. Total equipment revenue outpaced installation activity due to favorable product mix, installations of high-end color equipment, which were less affected by prior year backlog reductions, increased year-over-year, while entry on mid offerings declined. Declines in entry reflect prior year reduction to backlog on current year constraint, while declines in mid primarily reflect prior year reduction to backlog. Post sales revenue of $1.3 billion declined 5.8% in actual currency year-over-year and 7.5% in constant currency.

現在讓我更詳細地回顧一下收入和現金流。從收入開始。第四季設備銷售額為 4.58 億美元，以實際貨幣計算年減 17.3%，以固定匯率計算年減 18.3%。去年積壓減少的影響導致年減超過 25%。隨著宏觀經濟狀況的積壓穩定，對我們設備的基本需求保持穩定，訂單活動正在成長。由於有利的產品組合，設備總收入超過了安裝活動，受上年積壓訂單減少影響較小的高端彩色設備的安裝量同比增加，而中端產品的進入量下降。入境數量的下降反映了去年積壓的減少，而中期的下降主要反映了去年積壓的減少。售後營收為 13 億美元，以實際貨幣計算年減 5.8%，以固定匯率計算下降 7.5%。

Excluding the effect of nonstrategic and lower-margin paper on IT endpoint device placement, which we plan to continue to reduce over time as well as the exit of Russia, the termination of the Fuji royalty on the absence of park revenue, post sales revenue declined only modestly. Geographically, both region decline in actual and constant currency. Given the signipance of Span nonstrategic item on our revenue trajectory in recent quarters and for the full year, I will provide additional commentary to help clarify the underlying revenue trends associated with our core businesses. For Q4, the prior year reduction in equipment backlog contributed around 690 basis points to the year-over-year decline in total revenue. Lower sales on nonstrategic paper on IT endpoint devices contributed around 160 basis points of the decline and the effect of lower full royalty revenue and strategic actions taken to simplify our business contributed around 190 basis points of the decline. When this combined effect are removed, revenue from our core businesses grew low single digit this quarter, reflecting stable demand on growth in digital and IT services partially offset by decline in printed page volumes.

排除非策略性和低利潤紙張對 IT 端點設備佈局的影響（我們計劃隨著時間的推移繼續減少這種影響）以及俄羅斯的退出、富士特許權使用費的終止導致公園收入的缺失，售後收入下降只是謙虛地。從地理上看，這兩個地區的實際貨幣和不變貨幣都出現下降。鑑於 Span 非策略性項目對我們最近幾季和全年營收軌跡的重要性，我將提供額外的評論，以幫助澄清與我們核心業務相關的基本收入趨勢。第四季度，去年設備積壓的減少導致總收入年減約 690 個基點。 IT 端點設備上的非策略性紙張銷售下降導致了約 160 個基點的下降，而全額特許權使用費收入下降以及為簡化業務而採取的戰略行動的影響導致了約 190 個基點的下降。當消除這種綜合影響後，本季我們核心業務的收入成長了低個位數，反映出數位和 IT 服務成長的穩定需求被印刷頁量的下降部分抵消。

For the year, this same item in the aggregate contributed around 230 basis points to the year-over-year decline in revenue. Therefore, core business revenue for the year would have declined a little less than 1%. Let's now review cash flow. Free cash flow was $379 million in Q4, higher by $211 million year-over-year. Operating cash flow was $389 million in Q4 compared to $186 million in Q4 2022. The improvements were mainly driven by a net source of cash associated with a reduction in financing receivables and improvement in working capital. Finance assets were a source of cash this quarter of $92 million compared to a use of cash of $169 million in the prior year, reflecting the benefit of our forward flow program with HPS on lower organization as expected. Working capital was a source of cash of $115 million, resulting in a $42 million year-over-year increase in cash driven mainly by a reduction in inventory. Investing activities were a use of cash of $8 million compared to a source of cash of $17 million in the prior year due to lower proceeds from the sales of noncore business assets, partially offset by lower CapEx. Financing activity consumed $383 million of cash this quarter, which includes a payment of around $300 million of secured debt and dividend totaling $34 million. During the quarter, we repaid a bridge loan with proceeds from the insurance of a term loan credit facility.

今年，同一項目總計導致營收年減約 230 個基點。因此，全年核心業務收入下降略低於1%。現在讓我們回顧一下現金流。第四季自由現金流為 3.79 億美元，較去年同期增加 2.11 億美元。第四季的營運現金流為 3.89 億美元，而 2022 年第四季為 1.86 億美元。這項改善主要是由於應收融資融資減少和營運資本改善帶來的淨現金來源所致。金融資產是本季 9,200 萬美元的現金來源，而前一年的現金使用量為 1.69 億美元，這反映了我們的 HPS 遠期流動計畫對較低層級組織的預期好處。營運資金是 1.15 億美元的現金來源，主要由於庫存減少，現金年增 4,200 萬美元。投資活動使用現金 800 萬美元，而前一年的現金來源為 1,700 萬美元，原因是出售非核心業務資產的收益減少，但部分被資本支出減少所抵銷。本季融資活動消​​耗了 3.83 億美元的現金，其中包括支付約 3 億美元的擔保債務和總計 3,400 萬美元的股息。在本季度，我們用定期貸款信貸安排保險收益償還了過橋貸款。

Turning to segments. FITTLE origination volume declined 25% year-over-year, reflecting FITTLE change in strategy to return its focus towards captive only financing solutions. Captive product origination were up 2%. FITTLE finance receivable balance declined around 3% sequentially in actual currency, reflecting the runoff of existing finance receivable on HPS funding of FITTLE origination. As previously highlighted, we expect our finance receivable balance to decline and normalize closer to $1 billion by 2027. FITTLE revenue was down slightly year-over-year in Q4 due to lower finance income and other fees associated with the decline in FITTLE finance receivable balance, partially offset by higher commission from the sales of finance receivable assets. Segment profit for FITTLE was $7 million, up $6 million year-over-year, mainly due to lower bad debt expenses and lower intercompany commissions. Print and Other revenue fell 9.5% year-over-year in Q4 due to lower equipment and post sales revenue, reflecting the effect of prior year backlog reduction on declines in nonstrategic items mentioned in my prior comments. Print and Other segment profit declined 50% versus the prior year quarter, resulting in a 430 basis point reduction in segment profit margin year-over-year, driven by lower revenue, partially offset by structural cost efficiencies and pricing actions.

轉向細分市場。 FITTLE 的發行量年減 25%，反映出 FITTLE 策略的改變，將重點重新轉向自保融資解決方案。自產產品原產地成長了 2%。 FITTLE 融資應收帳款餘額以實際貨幣計算連續下降約 3%，反映了 FITTLE 發起的 HPS 融資的現有應收融資資金的流失。如同先前所強調的，我們預期我們的財務應收帳款餘額將下降，並在2027 年正常化至接近10 億美元。由於財務收入和與FITTLE 財務應收帳款餘額下降相關的其他費用下降， FITTLE 第四季營收較去年同期略有下降，部分被應收融資資產銷售佣金增加所抵銷。 FITTLE 的部門利潤為 700 萬美元，年增 600 萬美元，主要是由於壞帳費用減少和公司間佣金減少。由於設備和售後收入下降，第四季度印刷和其他收入同比下降 9.5%，反映了上一年積壓訂單減少對我之前評論中提到的非戰略項目下降的影響。印刷及其他部門利潤較上年同期下降 50%，導致部門利潤率同比下降 430 個基點，原因是收入下降，但結構性成本效率和定價行為部分抵消了這一影響。

Turning to capital structure. We ended Q4 with $67 million of cash, cash equivalents and restricted cash, around $2.4 billion of the remaining $3.3 billion of our outstanding debt support our finance asset with a remaining debt of around $900 million attributable to the non-leasing business. Total debt concept of senior unsecured bonds, finance asset secured borrowing on the new term loan. We maintained a balanced bond maturity ladder over the next few years. Finally, I will address guidance. For revenue, we expect a decline of 3% to 5% in constant currency in 2024. Included in this guidance are the effect of prior year backlog reduction on headwind associated with the deemphasis of certain nonstrategic businesses, all of which are unrelated to the performance of our core print and services businesses. More specifically, the reduction of backlog in 2023 is expected to contribute around 200 basis points to the year-over-year decline in revenue, with another 200 basis points attributable to the decline of certain nonstrategic revenue, including lower sales of paper.

轉向資本結構。第四季末，我們擁有6,700 萬美元的現金、現金等價物和限制性現金，剩餘33 億美元的未償債務中的約24 億美元支持我們的金融資產，其中約9 億美元的剩餘債務歸因於非租賃業務。優先無擔保債券的總債務概念、新期限貸款的金融資產擔保借款。在接下來的幾年裡，我們保持了平衡的債券期限階梯。最後，我將談談指導。對於收入，我們預計 2024 年按固定匯率計算將下降 3% 至 5%。本指引中包括上一年積壓訂單減少對某些非戰略業務的淡化所帶來的不利影響，所有這些都與業績無關我們的核心印刷和服務業務。更具體地說，預計 2023 年積壓的減少將導致收入同比下降約 200 個基點，另外 200 個基點歸因於某些非戰略收入的下降，包括紙張銷量的下降。

Excluding the cumulative effect of this item, core business revenue is expected to be roughly flat year-over-year, reflecting stable print demand growth in digital and IT services and neutral macroeconomic condition. As future strategic action involving product or geographic simplification are decided, we will update guidance on the respective effect of these actions accordingly. In terms of quarterly cadence, the headwinds previously noted, particularly the year-over-year effect of backlog reduction are expected to affect revenue growth most significantly in the third and second quarter of the year. Q1 revenue is expected to decline at a rate between that of Q3 and Q4 2023 with sequential improvement in year-over-year revenue trajectory expected throughout the year. We expect 2024 adjusted operating income margin to be at least 7.5%, an improvement of at least 190 basis points year-over-year, resulting in the realization of more than 1/3 of the expected $300 million improvement in operating profit above 2023 level expected from reinventions through 2026.

剔除此專案的累積影響，預計核心業務收入將年比大致持平，反映出數位和IT服務印刷需求的穩定成長以及中性的宏觀經濟狀況。隨著涉及產品或地理簡化的未來策略行動的確定，我們將相應地更新有關這些行動各自效果的指南。就季度節奏而言，先前提到的不利因素，尤其是積壓訂單減少的同比影響，預計將對今年第三和第二季的收入成長產生最顯著的影響。預計第一季營收將以 2023 年第三季和第四季之間的速度下降，預計全年營收軌跡將連續改善。我們預計 2024 年調整後營業利潤率將至少為 7.5%，年比提高至少 190 個基點，從而實現 2023 年營業利潤預期 3 億美元改善的 1/3 以上預計到 2026 年將進行重新發明。

The increase in profit and profit margin in 2024 will mainly be driven by structural simplification actions, enabled by our reorganization, including the effect of the workforce reduction decision announced on January 3. Operating margin will be lowest in Q1 due to seasonal factor on the timing of structural cost reductions throughout 2024. We are expecting slight improvement in Q1 operating margin from Q4 2023 level with more significant improvement throughout the year. To be clear, our ability to achieve profit guidance is not predicated on revenue growth as the expected savings associated with our reorganization far outweighed the reduction in profit associated with lower nonstrategic revenue. Free cash flow is expected to be at least $600 million in 2024. Free cash flow will once again benefit from a reduction in our finance receivable balance. Improvement in cash flow from underlying operations are expected to be offset by onetime restructuring payment, higher cash taxes and an increase in pension contribution. We plan to pay our $1 share dividend on outstanding debt obligation at Xerox.

2024 年利潤和利潤率的成長將主要受到我們重組帶來的結構簡化行動的推動，包括1 月3 日宣布的裁員決定的影響。由於時間上的季節性因素，營業利潤率將在第一季度最低2024 年結構性成本削減。我們預計第一季營業利潤率將較 2023 年第四季的水準略有改善，全年會有更顯著的改善。需要明確的是，我們實現利潤指引的能力並不取決於收入成長，因為與重組相關的預期節省遠遠超過與非策略收入下降相關的利潤減少。預計 2024 年自由現金流將至少為 6 億美元。自由現金流將再次受益於我們的財務應收帳款餘額的減少。基礎業務現金流量的改善預計將被一次性重組付款、更高的現金稅和退休金繳款的增加所抵消。我們計劃就施樂的未償債務支付 1 美元的股息。

Excess free cash flow is expected to be deployed opportunistically according to expected rate of return on investment, including opportunity to strategically reinvest in the business and acquisition. In summary, we enter 2024 on solid footing, with stable demand for our product and services, momentum in orders and signing a simplified operating structure and clear line of sight to savings that will enable another year of meaningful improvement in operating profit. We will now open the line for Q&A.

多餘的自由現金流預計將根據預期投資回報率進行機會性部署，包括對業務進行策略性再投資和收購的機會。總而言之，我們以堅實的基礎進入 2024 年，對我們的產品和服務的穩定需求、訂單勢頭、簽署了簡化的運營結構以及明確的節約目標將使營業利潤在新的一年實現有意義的改善。我們現在將開通問答熱線。

Thirdly, one moment for our first question. And our first question comes from the line of Ananda Baruah from Loop Capital.

第三，請花點時間回答我們的第一個問題。我們的第一個問題來自 Loop Capital 的 Ananda Baruah。

I guess a couple, if I could. The headwinds to revenue that you guys pointed out -- pointed out on the call, you sort of quantified in the deck as well. And I think they impacted last quarter as well. When what's the good way to think about how those roll off as we move through the year? And I guess at what point in time do you expect them to be fully rolled off and for the reported revenue to kind of be sort of apples-to-apples. Can I have a quick...

如果可以的話，我想有一對。你們在電話會議上指出的收入不利因素，你們也在甲板上進行了量化。我認為它們也對上季度產生了影響。當我們度過這一年時，思考這些如何滾動的好方法是什麼？我猜你預計它們會在什麼時間點完全滾動，並且報告的收入會是同類的。我能快點...

Okay. Ananda, Xavier speaking here. Yes, so the phasing of the headwinds that we have there, they are different by nature here. But the main one, as you mentioned it, if you look at the next year, our forecast here is minus 3% to minus 5%. And we said we have around 40 basis points that are, I would say, normal by nature. They do not impact the core business there. The first one is the backlog. The backlog is 200 basis points out of the 400 basis point impact. The backlog, we expect the end of the compare of backlog to end at the end of quarter 2 2024. So quarter 3 and quarter 4 should be normal compare because last year in 2023, we still have the impact of pressing the backlog. The other item, the 200 basis point item that we have there, we phase out during the year, there are some items related to we mentioned paper sales, IT endpoint. They will stay within the year there, but the full year royalty, for example, is an item that will end at the end of Q1. So -- but they are less important in nature. The largest one is the backlog and the backlog is and of quarter 2.

好的。阿南達，澤維爾在這裡講話。是的，所以我們在那裡遇到的逆風的階段，它們在這裡本質上是不同的。但最主要的是，正如你所提到的，如果你看看明年，我們的預測是-3%到-5%。我們說我們有大約 40 個基點，我想說，這本質上是正常的。它們不會影響那裡的核心業務。第一個是積壓。積壓的影響為 400 個基點，其中 200 個基點。積壓方面，我們預計積壓的比較將在 2024 年第 2 季末結束。因此，第 3 季和第 4 季應該是正常比較，因為去年 2023 年，我們仍有壓積壓的影響。另一個項目，我們在那裡的 200 個基點項目，我們在年內逐步淘汰，有一些項目與我們提到的紙張銷售、IT 端點相關。它們將保留在一年內，但例如，全年特許權使用費將在第一季末結束。所以——但它們本質上不太重要。最大的是積壓，積壓是第二季的積壓。

That's super helpful. And then just sort of like a sanity check here. It looks like this is the easy math to do, but it looks like you're forecasting op profit to be up year-over-year. And maybe nicely up, I'm getting like $80 million to $100 million or something like that, depending on what revenue you use. Is that accurate? Is that an accurate assessment?

這非常有幫助。然後就像在這裡進行健全性檢查。看起來這是一個很容易做的數學，​​但看起來你預測營運利潤將比去年同期成長。也許很好，我會得到 8000 萬到 1 億美元或類似的東西，這取決於你使用的收入。準確嗎？這是一個準確的評估嗎？

Yes. And even higher. So the operating margin this year is 5.6%. After last year, it was 3.9%. So quite a nice progression that we have done in operating profit. And for next year, we are forecasting guiding at least 7.5%. So this is 190 basis points progress here that we're doing on operating margin. In absolute value, we are speaking about more than $100 million after this year, which has also been in operating income, adjusted operating income of more than $100 million as well. So a nice momentum that we are building -- and the other point I want to flag that is the dependency of delivering this operating profit or operating margin improvement is not entirely driven by revenue. We have given our revenue guidance, you understand the one-off impact there. But a lot of the actions that are supporting the operating profit, operating margin improvement are already actions that we have in play, one of this being the actions that we announced at the beginning of January, which is a large restructuring action that we have started now.

是的。甚至更高。因此今年的營業利益率為 5.6%。去年之後為3.9%。我們在營業利潤方面取得了相當不錯的進步。對於明年，我們預計指導價至少為 7.5%。因此，我們的營業利潤率提高了 190 個基點。從絕對值來看，我們說的是今年之後超過 1 億美元，其中營業收入也超過 1 億美元，調整後的營業收入也超過 1 億美元。因此，我們正在建立的良好勢頭 - 我想指出的另一點是，實現營業利潤或營業利潤率改善的依賴性並不完全由收入驅動。我們已經給出了收入指導，您了解那裡的一次性影響。但許多支持營業利潤、營業利潤率改善的行動已經是我們正在採取的行動，其中之一就是我們在一月初宣布的行動，這是我們已經開始的一項大型重組行動現在。

And that's super helpful. Just let me dovetail that into one last one. Can you remind us of the $300 million that you have for the 2026 goal incremental op income, how much of that is revenue driven versus things that are completely under the company's control? And then that's it for me.

這非常有幫助。讓我將其融入最後一個。您能否提醒我們，您為 2026 年目標增加的營運收入為 3 億美元，其中有多少是收入驅動的，而不是完全由公司控制的事情？然後我就這樣了。

On, one of the things we did, as you remember, we announced the very, very strategic structural changes and the launch of the reinvention and the combination of which drives an end-to-end simplification drives cost out and has a very strategic strengthening of our core business and make sure that we have the flexibility to adjust when the revenue goes up, our revenue goes down. So 2 pieces of it. One, reinvention will drive simplification. We talked about GBS and what we're doing there to drive our overall margins and drive improvements in our business. Second, we're going to take strategic actions in our geographies and our products. So the whole $300 million of operating profit independent of what happened to revenue so that we can adjust up and adjust down based on whatever decisions we make on nonstrategic revenue.

正如你所記得的，我們所做的一件事是，我們宣布了非常非常戰略性的結構性變革，並啟動了重塑，這兩者的結合推動了端到端的簡化，降低了成本，並具有非常策略性的強化我們的核心業務，並確保我們在收入上升或下降時能夠靈活地進行調整。所以2塊。第一，重塑將推動簡化。我們討論了 GBS 以及我們正在採取的措施來提高我們的整體利潤並推動我們業務的改進。其次，我們將在我們的地區和產品方面採取策略行動。因此，全部 3 億美元的營業利潤與收入發生的情況無關，這樣我們就可以根據我們對非策略性收入做出的任何決策進行向上和向下調整。

I got it. And so Steve, so any incremental revenue driven would be in addition to the $300 million? Is that accurate?

我得到了它。那麼史蒂夫，那麼除了 3 億美元之外，任何增量收入驅動都將是嗎？準確嗎？

Yes. It should. We are very strategically targeting higher revenue that has higher profitability. And by default, you're absolutely right. We increased our revenue, we should increase our profitability.

是的。它應該。我們非常有策略地瞄準更高的收入和更高的獲利能力。預設情況下，你是絕對正確的。我們增加了收入，我們應該增加獲利能力。

Thank you. One moment for our next question. And our next question comes from the line of Samik Chatterjee from JPMorgan.

謝謝。請稍等一下我們的下一個問題。我們的下一個問題來自摩根大通的 Samik Chatterjee。

I guess if I can start with a clarification on your revenue guide for 2024, you're guiding to flat when we x out the backlog and the exit from certain nonstrategic businesses. How do I keep that in context of what you're referring to here for 4Q, which is a mild softening in demand in the European market. How are you sort of thinking about or baking in the macro impact you've seen in 4Q into your 2024 outlook? And I have a follow-up.

我想，如果我可以先澄清一下你們 2024 年的收入指南，那麼當我們消除積壓訂單和退出某些非戰略業務時，你們的收入指南就會持平。我如何在您所指的第四季度（歐洲市場需求溫和疲軟）的背景下保持這一點。您如何看待或考慮第四季宏觀影響對 2024 年的展望？我有一個後續行動。

Yes. Let me take a start at that and then turn it over to Xavier for numbers. We took a look at Q4, and we saw strong signings in our services business and grow that, and that backlog looks extremely strong. We also see strengthening in our core business in the areas that we play today. So a combination of increase in orders, backlog and our service. And the other piece that Xavier mentioned was in our signings, we're signing now at over 100% on revenue renewal in our core contracts in our services business. So those gives us good foundation for growth and stability as we go forward. Xavier?

是的。讓我開始吧，然後把它交給澤維爾來獲取數字。我們看了第四季度，我們看到我們的服務業務簽約強勁，並且不斷成長，積壓訂單看起來非常強勁。我們也看到我們今天所從事的領域的核心業務得到了加強。因此，訂單、積壓訂單和我們服務的增加相結合。澤維爾提到的另一件事是我們的簽約，我們現在在服務業務的核心合約中以超過 100% 的收入續約率簽約。因此，這些為我們前進的成長和穩定奠定了良好的基礎。澤維爾？

Steve, I will add as well. So there's the macro conditions that we were observing, specifically Europe quarter 3, a little bit smoother in the quarter 4. We see a little bit of easing specifically around the interest rate on both sides of the Fan here. So this gives us a little bit of confidence on this revenue side. But the important thing, Samik, is when you look at the revenue normalized revenue, as you mentioned it here, is flat to minus 1%. This is what the industry is seeing here. When we look also at the trend of return to office page volume on (inaudible), we have also indicator that is telling us the numbers that we put on paper here can be sustained.

史蒂夫，我也會補充一下。因此，我們正在觀察宏觀狀況，特別是歐洲第三季度，第四季度稍微平穩一些。我們看到，特別是在范恩雙方的利率方面，有一點寬鬆。所以這讓我們對收入方面有了一點信心。但重要的是，Samik，當你查看收入標準化收入時，正如你在這裡提到的，它是持平至負 1%。這就是業界所看到的。當我們也關注返回辦公室頁面量的趨勢（聽不清楚）時，我們還有指標告訴我們，我們在這裡寫在紙上的數字可以持續下去。

Yes.Got it. Got it. Okay. And for my second one, on cash flow, you did $649 million in 2023. There's an operating income improvement of $100 million or so and then you have the HPS transaction continue to sort of accrue some cash. So maybe help us with the hope there? And particularly, what's the restructuring piece in there as well? And why is in the cash flow guidance a bit more -- a bit higher for 2024, I mean?

是的，明白了。知道了。好的。我的第二個目標是現金流，2023 年實現了 6.49 億美元。營業收入提高了 1 億美元左右，然後 HPS 交易繼續累積一些現金。那麼也許可以幫助我們實現希望？特別是其中的重組部分是什麼？我的意思是，為什麼 2024 年現金流量指導要多一點——更高一點？

Yes, Samik, that's a good question. So free cash flow, we said at least $600 million at this stage of the year. The improvement in the operating cash flow, which is directly related to the improvement of the operating income. We are still expecting our conversion rate from operating income or adjusted operating income to free cash flow being 70%, 80% range, which is what we are used to produce there. But for this year, as you mentioned it, we have a restructuring provision, restructuring provision from a cash point of view has an impact of around $140 million. then we have also an additional contribution in pensions that we have to do in the U.S. and due to the profitability as well additional cash tax there. So when you net all of this, it gives us this number of around 600. Over time, we will provide more visibility quarter-by-quarter on how this trend is going.

是的，薩米克，這是個好問題。因此，我們說今年這個階段的自由現金流至少為 6 億美元。經營現金流的改善，與營業收入的改善有直接關係。我們仍然預計營業收入或調整後營業收入到自由現金流的轉換率在 70% 到 80% 範圍內，這是我們在那裡生產的。但今年，正如你所提到的，我們有一項重組撥備，從現金角度來看，重組撥備的影響約為1.4億美元。然後，由於美國的獲利能力以及額外的現金稅，我們還必須在美國繳納額外的退休金。因此，當您計算所有這些數據後，我們得到的數字約為 600。隨著時間的推移，我們將逐季度提供有關此趨勢進展的更多可見性。

One moment for our next question. And our next question comes from the line of Erik Woodring from Morgan Stanley.

請稍等一下我們的下一個問題。我們的下一個問題來自摩根士丹利的艾瑞克‧伍德林。

I have a few as well. Steve, maybe if we just start, helpful color on the renewal rates for large customers. Can you maybe just help us understand what percentage of -- I don't know how you'd frame it services contracts, those large customers represent? And then how to think about the rest of those cohorts, the same metric for smaller customers. I believe you have a fairly long tail of SMB customers. So how do renewal rates look for that cohort? And how do I think about the importance of the large enterprise versus kind of SMB customer set? And then I have a follow-up, please.

我也有幾個。史蒂夫，也許如果我們剛開始，對大客戶的續約率有幫助的顏色。您能否幫助我們了解這些大客戶所佔的比例—我不知道您如何制定服務合約？然後如何考慮其餘的這些群體，對於較小的客戶採用相同的指標。我相信你們有相當長的中小企業客戶尾巴。那麼該族群的續訂率如何呢？我如何看待大型企業與中小企業客戶群的重要性？然後我有一個後續行動，請。

Yes. Thanks, Erik. Appreciate it. So it's roughly about 1/3 of our overall revenue. And so what we're seeing there is the opportunity to really embed IT and digital services on top of our core services contracts. So as we start to see and we're seeing renewals come up year-over-year. We've been a big focus on client centricity. And what that means is how do we help our clients drive productivity, how do we help them solve some of the biggest challenges they have. So if you think about headwinds, whether it's around use of capital, whether it's around labor pressure, whether it's around pressure on profitability, we continue to bring products and solutions that help them to offset that, and that's why we've been successful in our renewal rates up. Same thing applies in our SMB businesses, right?

是的。謝謝，埃里克。欣賞它。所以它大約占我們總收入的 1/3 左右。因此，我們看到有機會將 IT 和數位服務真正嵌入到我們的核心服務合約之上。因此，當我們開始看到續訂量逐年增加時。我們一直非常注重以客戶為中心。這意味著我們如何幫助客戶提高生產力，如何幫助他們解決所面臨的一些最大挑戰。因此，如果你考慮逆風，無論是資本使用、勞動力壓力還是盈利壓力，我們都會繼續提供產品和解決方案來幫助他們抵消這些逆風，這就是我們在以下方面取得成功的原因：我們的續約率提高了。同樣的事情也適用於我們的中小企業，對吧？

When we look at our SMB, it's probably even more of an opportunity. We see significant SMB has the same enterprise challenges with profitability due to increase of whether it's labor costs, whether it's pressure on capital, whether it's pressure on overall increase in costs, they're looking to us to help to offset. So we continually bring solutions. We talked about some of these last quarter on some of the vertical solutions that we're really focusing on, how do we help inside of health care, how do we help inside universities, law firms, et cetera. And so as we look at those renewal rates, we continue to bring solutions on top of it, and we've been very successful. And I've made the statement a couple of times now that we have a great opportunity to expand in existing accounts with products and services that we already have, better stated the term for us is beyond just the core that everybody sees is our core business. We need to execute and grow inside of our client accounts with products and services that we already have, and we're seeing evidence of that with new signings.

當我們審視我們的中小企業時，這可能更像是一個機會。我們看到，由於勞動成本的增加，無論是資本的壓力，還是整體成本增加的壓力，許多中小企業都面臨著同樣的企業獲利挑戰，他們希望我們幫助抵銷。因此，我們不斷推出解決方案。上個季度我們討論了一些我們真正關注的垂直解決方案，我們如何在醫療保健內部提供幫助，我們如何在大學、律師事務所等內部提供幫助。因此，當我們考慮這些續訂率時，我們繼續在此基礎上提供解決方案，並且我們非常成功。我已經多次聲明，我們有一個很好的機會透過我們現有的產品和服務來擴展現有客戶，更好地說，這個詞對我們來說不僅僅是每個人都看到的核心，而是我們的核心業務。我們需要利用我們現有的產品和服務來執行和發展我們的客戶帳戶，我們在新簽約中看到了這方面的證據。

Okay. Super. Very helpful, Steve. Xavier, if I maybe turn to you, can you maybe help us all better understand maybe the trajectory of gross margins relative to OpEx in 2024 to kind of land at that 7.5% operating margin target. And I just asked because depending on how we think about gross margins, we're looking at as a percentage of revenue, fairly significant reduction in OpEx, I understand you announced the RIF on January 2, but it would imply revenue as a percentage of OpEx that is quite low. And so I really just want to better understand how to think through some of those dynamics and how much you might be reinvesting on the other end? So just all of that collectively, if you could help us understand that for next year or this year 2024, please?

好的。極好的。非常有幫助，史蒂夫。 Xavier，如果我可以求助於您，您能否幫助我們更好地了解 2024 年毛利率相對於營運支出的軌跡，以達到 7.5% 的營業利潤率目標。我只是問，因為根據我們對毛利率的看法，我們將其視為收入的百分比，營運支出相當顯著的減少，我知道您在1 月2 日宣布了RIF，但這意味著收入佔收入的百分比營運支出相當低。所以我真的只是想更好地了解如何思考其中的一些動態以及您可能會在另一端再投資多少？就所有這些而言，您能否幫助我們了解明年或 2024 年的情況？

Yes. Eric, so you've got the big picture here. So what we are expecting is a slight expansion of gross margin. And this is just to, I would say, by all the actions that we have put in place, you know that we have supported or enable a lot of pricing action that have driven some margin expansion this year. But next year as well, we will have some expansion of gross margin. And also, as we mentioned it, we are exiting or reducing some low profitability revenue. We mentioned paper. I mentioned also IT endpoint solution with lower margin. And we are offsetting this margin or this revenue reduction by other type of an stream with a higher profitability. OpEx is clearly the area with improvement. And you have already been able to measure it this year. If you look at RD&E specifically with the park donation that we have done, it's a significant improvement year-over-year, and it reduced the earn amount that we had related to ppark by more than 100 basis points here. When you look at the trajectory, we will have on SAG with the restructuring here, and this is -- this will be the main driver of the operating margin -- adjusted operating margin improvement year-over-year. So 190 basis points are based on actions that we have already either announced on actioning or actions that were taken last year and the back end of last year where we will see the benefit on the flow-through. So the key point -- the key point behind my message here is that the dependency on the revenue trajectory, it is less on us executing the cost actions.

是的。艾瑞克，你已經了解大局了。所以我們預計毛利率會小幅擴張。我想說，透過我們採取的所有行動，你知道我們已經支持或啟用了許多定價行動，這些行動推動了今年的利潤率擴張。但明年，我們的毛利率也會有所擴大。而且，正如我們所提到的，我們正在退出或減少一些低盈利收入。我們提到了紙。我還提到了利潤率較低的 IT 端點解決方案。我們正在透過其他類型的具有更高盈利能力的流來抵消這一利潤或收入減少。營運支出顯然是需要改進的領域。今年你已經能夠測量它了。如果您特別關注 RD&E 和我們所做的公園捐贈，您會發現這是同比的顯著改善，並且它使我們與公園相關的收入金額減少了 100 多個基點。當你觀察軌跡時，我們將看到 SAG 進行了重組，這將是營業利潤率的主要驅動力，調整後的營業利潤率同比改善。因此，190 個基點是基於我們已經宣布的行動或去年和去年年底採取的行動，我們將看到流動性的好處。所以關鍵點——我在這裡傳達的訊息背後的關鍵點是，對收入軌蹟的依賴，而不是我們執行成本行動的依賴。

Eric, the other thing I'd like to add because we always get the question. You did the big actions that and doing reinvention. And so in the beginning of the year, we really looked at all of our end-to-end cost structure. Those as IT, finance, whether it's SG&A, what we did with sales coverage, et cetera. And when you look at that against industry benchmark and look at that against opportunity to where we can drive this company, that's where we're confident. We've still got a lot of work to do to simplify this business, whether it's around the number of systems we have, the number of processes we have, the variations in different ways in which we do business. So when we look at it just from a pure benchmark standpoint against other companies and industries, we've got a lot of opportunity ahead of us. And obviously, we've got to execute, we'll execute that through the next 24 to 36 months. But there's still a lot of room for us.

艾瑞克，我想補充的另一件事是因為我們總是收到這個問題。你採取了重大行動並進行了重塑。因此，在今年年初，我們確實審視了我們所有的端到端成本結構。包括 IT、財務、SG&A、我們在銷售範圍所做的工作等等。當你根據行業基準來看待這一點，並根據我們能夠推動這家公司發展的機會來看待這一點時，這就是我們有信心的地方。為了簡化這項業務，我們還有很多工作要做，無論是我們擁有的系統數量、流程數量，還是我們開展業務的不同方式的變化。因此，當我們僅從與其他公司和行業的純粹基準角度來看時，我們面前有很多機會。顯然，我們必須執行，我們將在接下來的 24 到 36 個月內執行。但我們還有很大的空間。

And that's really where we put GBS in place. GBS is really focused. Our Global Business Services is really focused on looking at each and every one of those end-to-end processes looking at the cost that we're using and that we're expanding in each one of those processes, how do we simplify it and then think about how do we automate and how do we drive technology. We see AI. We see Chat GPT, RPA, robotics process automation and the simplification of our business as a significant opportunity to grow those margins in the future, independent of the revenue line staying flat or a slight decline. So we're very, very optimistic that we can execute and we can drive, and we've got a lot of room in our cost basis to make this company a lot more efficient.

這正是我們設置 GBS 的地方。 GBS 確實很專注。我們的全球商業服務真正專注於查看每個端到端流程，查看我們正在使用的成本以及我們正在擴展的每個流程，我們如何簡化它以及然後思考我們如何實現自動化以及如何驅動技術。我們看到人工智慧。我們認為 Chat GPT、RPA、機器人流程自動化和我們業務的簡化是未來增加利潤的重要機會，而不受收入線保持持平或略有下降的影響。因此，我們非常非常樂觀地認為我們可以執行並且可以推動，並且我們在成本基礎上有很大的空間來使這家公司更有效率。

Super. Thank you and color Xavier the beginning for that. Maybe one last quick question, and that was on capital allocation, obviously, we didn't really hear about buybacks. And so I just want to make sure I kind of understood those priorities right and that we should not be thinking about any buybacks being done in 2024? And then that's it for me.

極好的。謝謝你，並為澤維爾著色。也許最後一個簡單的問題是關於資本配置的，顯然，我們並沒有真正聽說過回購。所以我只是想確保我正確理解了這些優先事項，並且我們不應該考慮在 2024 年進行任何回購？然後我就這樣了。

You are correct.

你是對的。

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Steve Bandrowczak for any further remarks.

今天節目的問答環節到此結束。我想將該程式交還給 Steve Bandrowczak，以供進一步評論。

Thank you for listening to our earnings conference call this morning. We are firmly on our path of reinvention. Our focus in this second year of our reinvention is to strengthen our core businesses, further reduce structural costs through reorganizations and allocate the more than $600 million of free cash flow we expect to generate in 2024 in a way that optimizes total shareholder returns. We have clear line of sight to targeted profit improvements in 2024 and are laser-focused on ensuring we exceed our 3-year goal of at least $300 million of adjusted operating income profit improvement above the '23, '24 levels by 2026. Thank you for listening, and have a great day.

感謝您今天早上收聽我們的財報電話會議。我們堅定地走在重塑之路上。我們在重塑的第二年的重點是加強我們的核心業務，透過重組進一步降低結構性成本，並以優化股東總回報的方式分配我們預計在 2024 年產生的超過 6 億美元的自由現金流。我們對 2024 年的目標利潤改善有明確的目標，並專注於確保超越我們的三年目標，即到 2026 年調整後營業收入利潤比“23”、“24”水平提高至少 3 億美元。謝謝聆聽，祝您有美好的一天。

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

女士們、先生們，感謝你們參加今天的會議。這確實結束了該程式。您現在可以斷開連線。再會。