LEXINGTON, Ky. (Octobrt 21, 2014) — Lexington-based business print and data management services provider Lexmark International increased its third-quarter revenue by $28 million or 3.1 percent compared to the same quarter last year, in announced in financial results for the quarter.
Revenue was $918 million for the quarter ending Sept. 30, 2014, versus $890 million in 2013. Some $14 million of the increase represents Lexmark’s successful acquisition of Swedish ReadSoft, a business information software company for which Lexmark had to engage in a bidding war through much of the summer against Hyland Software of Ohio.
ReadSoft will become part of Lexmark’s expanding Perceptive Software division, which is offsetting the company’s managed exit from the inkjet printing business.
“In the third quarter, Managed Print Services and Perceptive Software combined revenue grew 20 percent, representing nearly one third of Lexmark’s total revenue, and is on track to exceed $1 billion this year,” said Paul Rooke, Lexmark chairman and CEO. “Our strong results reflect the work we have been doing to transform Lexmark to a solutions company, creating a unique portfolio of higher value imaging and software solutions.
“The acquisition of ReadSoft further broadens Lexmark’s solutions capabilities and reach, and supports our target of generating Perceptive Software revenue of $500 million in 2016,” Rooke said. “This acquisition demonstrates the disciplined execution of our capital allocation framework, which fuels Lexmark’s transformation and rewards our shareholders through the ongoing return of capital.”
For the third quarter, Lexmark reported earnings per share of 60 cents, which is an increase of 7 cents per share from the third quarter of 2013. The company spent $40 million paying dividends and repurchasing its own shares, which is a continuation of policies in place for the past several years. Operations produced a cash flow of $87 million, according to the third quarter earnings report.
The results for the quarter exceeded Lexmark’s guidance to financial markets investment analysts who monitor the IBM spinoff.
“It was a good quarter for us,” Rooke said.
Much of Lexmark’s business is with U.S. companies, especially large corporations, but it also has a significant customer base in Europe and Central and South America. It beat expectations despite ongoing weakness in the global economy.
“It’s still a bit sluggish worldwide,” Rooke said.
Lexmark has had success, however, in both holding onto the customers it has while gaining others.
“Our win rate is quite strong, because our product offering is differentiated,” he said. “And we don’t lose many customers.”
Lexmark has gained 22 Fortune 500-level customers from its competition in the past 24 months and lost none of its own in that size category.
“The offerings we have in managed print services and software services help our customers manage expenses and improve productivity,” according to Rooke. “That’s serving us well” and “resonating with large customers.”
Lexmark’s managed print services revenue grew by 12 percent and its software business revenue grew 6 percent.
The company conducts manufacturing operations in the Philippines and has a European headquarters in Switzerland. The Lexington offices are the company’s major product development site for imaging business and its general headquarters; those operations are stable, Rooke said.
Lexmark had more than 2,600 in Lexington as of 2013, according to a list of major regional employers compiled by Commerce Lexington.