Business News
Lexmark reports third quarter results
Tuesday 21. October 2008 - - Revenue of $1.13 billion, in line with expectations - Operating income year-to-year growth of 164 percent, 124 percent excluding restructuring - Cash generation of $117 million - Share repurchases of $274 million
Lexmark International, Inc. (NYSE:LXK) today announced financial results for the third quarter of 2008. Third-quarter revenue was $1.13 billion, down 5 percent compared to revenue of $1.20 billion last year. Third-quarter GAAP earnings per share were $0.42. Earnings per share for the third quarter of 2008 would have been $0.63 excluding $0.21 per share for restructuring-related activities. Third-quarter 2007 GAAP earnings per share were $0.48. Earnings per share for the third quarter of 2007 would have been $0.60 excluding $0.12 per share for restructuring-related activities.
“Although we encountered increasing economic weakness during the third quarter, our results were in line with our expectations at the beginning of the quarter, with good growth in our branded laser units and laser supplies, an improved performance in our U.S. laser business, strong growth in laser multifunction devices, and an ongoing R&D investment that resulted in the introduction of 38 new laser products yesterday,” said Paul J. Curlander, Lexmark chairman and chief executive officer. “As we look forward, despite a more difficult global economic environment, we expect to continue to make progress with our strategy to improve our focus and penetration in the higher usage market segments. Our strong balance sheet and good liquidity, with more than $1 billion in cash and marketable securities, and a long track record of good cash generation, positions us well to invest in the future and to compete effectively, even during challenging times.”
Third-quarter 2008 business segment revenue of $760 million grew 4 percent year to year. Consumer segment revenue of $371 million declined 21 percent compared to a year ago, primarily due to the strategic changes announced last October and the slowdown in the inkjet market. Third-quarter 2008 gross profit margin was 32.5 percent, operating expense was $314 million, the operating income margin was 4.8 percent, operating income was $54 million and net earnings were $37 million. Third-quarter 2008 operating income includes $25 million pretax charges in connection with the company’s restructuring-related actions.
Third-quarter 2007 gross profit margin was 27.8 percent, operating expense was $312 million, the operating income margin was 1.7 percent, operating income was $20 million, and net earnings were $45 million. Third-quarter 2007 operating income included $15 million restructuring-related pretax charges.
On a non-GAAP basis, excluding restructuring-related charges, third-quarter 2008:
— Gross profit margin would have been 34.1 percent, up 5.9 percentage points from 28.2 percent in the same period last year, principally due to a favorable product mix shift.
— Operating expense increased 1.7 percent to $307 million due to increased product development and demand generation investment.
— Operating income margin would have been 6.9 percent, up 4.0 percentage points from 2.9 percent last year.
— Operating income would have been $79 million, up 124 percent compared to $35 million in the same quarter last year.
— Net earnings would have been $55 million, compared to $57 million in the third quarter of 2007.
The company ended the quarter with $1.086 billion in cash and current marketable securities. Third-quarter net cash provided by operating activities was $117 million. Capital expenditures for the quarter were $58 million. Depreciation and amortization in the quarter was $56 million. Lexmark repurchased $274 million (7.7 million shares) of stock during the third quarter. The company’s remaining share repurchase authorization was approximately $613 million at quarter end.
38 New Laser Printer and MFP Models Target Pages in Businesses of All Sizes
Yesterday, in one of the broadest product introductions in its history, Lexmark announced 38 new laser printer and multifunction product (MFP) models specifically designed to meet the needs of users in heavy page-generating areas of large enterprises and small-to-medium businesses (SMBs).
The new Lexmark C540n Series of color laser printers and Lexmark X540 Series of color laser MFPs were added to the company’s award winning color laser line yesterday. Already, the C540n, C543dn and C544 color laser models were named Editor’s Choice by Better Buys for Business in its 2009 Color Laser Printer & Business Inkjet Printer Guide. With the C540 Series’ best-in-class rated color print speeds(1), best-in-class print quality(2), a small, yet robust footprint, and numerous, standard environmentally conscious features, the Lexmark C540n Series and Lexmark X540 Series are compelling values in the high growth color laser and color laser MFP segments, respectively.
With the introduction of the Lexmark T650 Series of monochrome laser printers and X650 Series of monochrome laser MFPs, the company significantly strengthened and updated its core line of workhorse, workgroup monochrome lasers and MFPs. This new line includes the X658de – a floor-standing MFP with finishing – designed to compete head-to-head against high page generating A3 (11 x 17 inch paper) copiers. SMB customers can produce professional quality documents while saving time, money and energy using the new Lexmark E260, E360 and E460 Series of monochrome laser printers.
Looking Forward
In the fourth quarter of 2008, the company expects revenue to be down in the low- to mid-teens percentage range year over year. It expects fourth-quarter 2008 GAAP EPS to be in the range of $0.40 to $0.50 per share. Restructuring-related costs and expenses are expected to be approximately $0.30 per share in the fourth quarter of 2008. Excluding these restructuring-related costs and expenses, non-GAAP EPS are expected to be in the range of $0.70 to $0.80 per share. GAAP EPS in the fourth quarter of 2007 were $1.04, or $1.29 excluding $0.25 per share for restructuring-related activities.