Inkjet & Digital Printing

Lexmark reports full year and fourth quarter 2010 results

Tuesday 01. February 2011 - - GAAP revenue growth of 8 percent in full year 2010 driven by record laser revenue, non-GAAP revenue growth of 9 percent

– Full year 2010 GAAP EPS growth of 130 percent, non-GAAP EPS growth of 52 percent
– Generated more than half a billion in net cash from operations in 2010, more than $150 million in fourth quarter 2010
Lexmark International, Inc. (NYSE: LXK) today announced financial results for the full year and fourth quarter of 2010.
“2010 was a very good year for Lexmark,” said Paul Rooke, Lexmark president and chief executive officer. “We grew revenue 9 percent driven by a record performance in laser revenue, significantly expanded our operating margins, and generated cash flow of more than half a billion dollars.
“Lexmark’s managed print services continued to experience rapid growth as we earned the business of some of the world’s largest companies, leveraging our industry leading, cloud-based fleet management software tools. Additionally, our acquisition of Perceptive Software, a leader in enterprise content management software, extends our value and represents another key step in growing software and services to help businesses of all sizes save time and money,” added Rooke.
Full Year 2010 Results
GAAP revenue of $4.200 billion grew 8 percent year on year driven by record laser revenue of $3.006 billion, up 15 percent year to year.
Earnings Per Share 2010 2009
—————— —- —-
GAAP $4.28 $1.86
Restructuring-related
adjustments 0.37 1.40
Acquisition-related
adjustments 0.31 0.00
—- —-
Non-GAAP $4.96 $3.26
GAAP earnings per share for 2010 were $4.28. Excluding $0.68 per share for restructuring-related and acquisition-related adjustments, earnings per share for 2010 would have been $4.96. GAAP earnings per share for 2009 were $1.86. Earnings per share for 2009 would have been $3.26 excluding $1.40 per share for restructuring-related adjustments.
Hardware revenue of $1.062 billion grew 13 percent in 2010. Supplies revenue of $2.915 billion grew 6 percent in 2010. Software and Other revenue was $223 million, or $236 million excluding acquisition-related adjustments.
Imaging Solutions and Services (ISS) revenue of $4.162 billion grew 7 percent in 2010. Perceptive Software revenue in 2010 (June 8 – Dec. 31, 2010) was $37 million, or $50 million excluding acquisition-related adjustments.
2010 GAAP full year results:
— Gross profit margin was 36.2 percent versus 33.8 percent in 2009.
— Operating expense was $1.073 billion compared to $1.094 billion last
year.
— Operating expense to revenue ratio was 25.5 percent compared to 28.2
percent last year.
— Operating income margin of 10.6 percent includes $71 million pretax for
restructuring-related and acquisition-related adjustments. Operating
income margin in 2009 of 5.6 percent included $141 million for pretax
restructuring-related adjustments.
— Net earnings for the year were $340 million, an increase of 133 percent
compared to 2009 net earnings of $146 million.
2010 non-GAAP full year results, excluding restructuring-related and acquisition-related adjustments:
— Revenue would have been $4.213 billion, up 9 percent from last year.
— Gross profit margin would have been 37.0 percent, up 1.9 percentage
points from 35.1 percent in the same period last year.
— Operating expense would have been $1.041 billion, compared to $1.004
billion last year.
— Operating expense to revenue ratio would have been 24.7 percent, down
1.2 percentage points from 25.9 percent last year.
— Operating income margin would have been 12.3 percent, an increase of 3.1
percentage points from 9.2 percent last year.
— Net earnings would have been $395 million, an increase of 54 percent
compared to $256 million in 2009.
The company ended the year with $1.2 billion in cash and current marketable securities. Net cash provided by operating activities was $520 million in 2010. Capital expenditures were $161 million for the year. Depreciation and amortization was $198 million in 2010.
Fourth Quarter 2010 Results
GAAP revenue for the fourth quarter of 2010 of $1.104 billion increased 3 percent from the same quarter last year driven by record laser revenue of $806 million, up 8 percent year to year.
Earnings Per Share 4Q10 4Q09
—————— —- —-
GAAP $1.10 $0.76
Restructuring-related
adjustments 0.07 0.40
Acquisition-related
adjustments 0.12 0.00
—- —-
Non-GAAP $1.29 $1.16
GAAP earnings per share for the fourth quarter of 2010 were $1.10. Excluding $0.19 per share for restructuring-related and acquisition-related adjustments, earnings per share for the fourth quarter of 2010 would have been $1.29. GAAP earnings per share for the fourth quarter of 2009 were $0.76. Earnings per share for the fourth quarter of 2009 would have been $1.16 excluding $0.40 per share for restructuring-related adjustments.
Hardware revenue grew 3 percent year on year in the fourth quarter. Supplies revenue grew 1 percent year on year in the fourth quarter. Software and Other revenue grew 42 percent, or 53 percent excluding acquisition-related adjustments.
ISS revenue of $1.088 billion grew 1 percent in the fourth quarter compared to the same period last year. Perceptive Software revenue in the fourth quarter was $17 million, or $22 million excluding acquisition-related adjustments.
Fourth quarter 2010 GAAP results:
— Gross profit margin was 35.6 percent versus 35.7 percent in 2009.
— Operating expense was $292 million, compared to $293 last year.
— Operating expense to revenue ratio was 26.4 percent compared to 27.3
percent last year.
— Operating income margin of 9.2 percent includes $20 million pretax for
restructuring-related and acquisition-related adjustments. Operating
income margin in 2009 of 8.4 percent included $46 million for pretax
restructuring-related adjustments.
— Net earnings for the quarter were $88 million, an increase of 47 percent
compared to fourth quarter 2009 net earnings of $60 million.
Fourth quarter 2010 non-GAAP results, excluding restructuring-related and acquisition-related adjustments:
— Revenue would have been $1.110 billion, up 3 percent from last year.
— Gross profit margin would have been 36.5 percent, down 0.4 percentage
points from 36.9 percent in the same period last year.
— Operating expense would have been $283 million, compared to $261 million
last year.
— Operating expense to revenue ratio would have been 25.5 percent, up 1.2
percentage points from 24.3 percent last year.
— Operating income margin would have been 11.0 percent, a decrease of 1.6
percentage points from 12.6 percent last year.
— Net earnings would have been $103 million, an increase of 12 percent
compared to $92 million in the fourth quarter of 2009.
In the fourth quarter of 2010, net cash provided by operating activities was $153 million, capital expenditures were $53 million, and depreciation and amortization was $54 million.
ISS Leads in Combined U.S. Laser and Inkjet Awards
Lexmark continued its leadership position in combined U.S. laser and inkjet awards in 2010 – a testament to the strength and innovation of the company’s product offering. Lexmark earned 24 percent of the awards in 2010 while its next closest competitor earned 13 percent.
In the fourth quarter, Better Buys for Business, a leading independent evaluator of document imaging equipment, endorsed the productivity features and intuitive interfaces of Lexmark’s newest workgroup color devices with its prestigious annual award. Each of Lexmark’s workgroup color devices launched this past October – the C792, X792, C925 and X925 families – has been recognized with a 2010 Innovative Product of the Year Award.
Also during the fourth quarter, Lexmark garnered three distinguished Pick of the Year Awards from Buyers Laboratory Inc. (BLI), a leading independent testing lab for office equipment:
— Two of Lexmark’s most recent workgroup color lasers, the C792 and X792
Series, impressed BLI with their rich feature sets and outstanding ease
of use. The C792 Series was recognized in the category of “Outstanding
A4 Color Printer for Large Workgroups,” while the X792 Series won the
category for “Outstanding A4 Color MFP for Large Workgroups.”
— In addition, Lexmark’s new Markvision Enterprise fleet management
software was praised by BLI with a Pick of the Year Award for being an
outstanding document imaging software solution. Markvision Enterprise
was a top-performing solution evaluated in BLI’s software testing,
earning it the title of “Outstanding Network Device Management
Solution.”
In January, Lexmark was also named an International CES Innovations 2011 Design and Engineering Awards Honoree for the Genesis all-in-one inkjet printer. The award is sponsored by the Consumer Electronics Association (CEA), the producer of the International CES, the world’s largest consumer technology tradeshow.
Perceptive Software Receives Notable Industry Recognition
Perceptive Software was ranked the No. 2 document management and imaging vendor in the healthcare industry in the “2010 Top 20 Best in KLAS Awards: Software and Professional Services.” KLAS is a research and consulting firm that specializes in monitoring and reporting the performance of information technology vendors in the healthcare field.
Perceptive Software also attained a notable Pick of the Year Award from BLI for “Outstanding Enterprise Content Management Solution,” which recognized the ImageNow 6.5 software for its innovative features and flexibility to be customized precisely to meet an organization’s needs.
Looking Forward
In the first quarter of 2011, the company currently expects about 1 percent revenue growth year on year and GAAP earnings per share to be around $1.08 to $1.18, or $1.18 to $1.28 excluding $0.10 per share for restructuring-related and acquisition-related adjustments. GAAP earnings per share in the first quarter of 2010 were $1.20, or $1.35 excluding $0.15 per share for restructuring-related adjustments.