LEXINGTON, Ky. (April 24, 2012) — Lexmark International, Inc. (NYSE: LXK) today announced financial results for the first quarter of 2012.
“Our first quarter financial results were in line with guidance, reflecting growth in large workgroup hardware and core supplies,” said Paul Rooke, Lexmark chairman and chief executive officer. “Also, managed print services and Perceptive Software continued to significantly outpace the market. Our performance in these high value strategic focus areas indicates we are making good progress as we continue to evolve our business mix.
“The addition of our compelling new line of smart devices for the mid-range color workgroup segment, and the acquisition of three more software companies further positions Lexmark as a key provider of business solutions. Adding Brainware, ISYS and Nolij to our company enables us to integrate new content and process management technologies into our solutions portfolio,” said Rooke. “We also remain committed to returning more than 50 percent of free cash flow, on average, to shareholders through share repurchase and a quarterly dividend consistent with our capital allocation framework.”
First Quarter Results
GAAP revenue of $992 million includes $0.4 million of acquisition-related adjustments. Non-GAAP revenue of $993 million declined 4 percent compared with last year, which was at the high end of the guidance range.
Earnings Per Share 1Q12 1Q11
GAAP $0.84 $1.04
Restructuring-related adjustments 0.11 0.02
Acquisition-related adjustments 0.10 0.08
Non-GAAP $1.05 $1.14
GAAP earnings per share for the first quarter of 2012 were $0.84. Excluding $0.21 per share for restructuring-related and acquisition-related adjustments, earnings per share for the first quarter of 2012 would have been $1.05. GAAP earnings per share for the first quarter of 2011 were $1.04. Earnings per share for the first quarter of 2011 would have been $1.14 excluding $0.10 per share for restructuring-related and acquisition-related adjustments.
Hardware revenue and supplies revenue declined 9 percent and 4 percent, respectively. Software and Other revenue grew 10 percent, or 6 percent excluding acquisition-related adjustments. Core(1) revenue, which principally includes laser and business inkjet hardware and supplies, managed print services and software, grew 1 percent year to year while Legacy(1) revenue, which includes consumer inkjet hardware and supplies that the company is exiting, declined 34 percent. Lexmark’s focus continues to be on growing the company’s Core, as Legacy, which in the first quarter of 2012 represented about 11 percent of Lexmark’s revenue, continues to become a less significant portion of the company’s revenue mix.
Imaging Solutions and Services (ISS) revenue of $963 million declined 5 percent compared to the same period last year. Perceptive Software revenue was $30 million. Perceptive Software revenue excluding acquisition-related adjustments of $0.4 million was $30 million and grew 41 percent compared to the same period in 2011.
1Q12 GAAP results:
• Revenue was $992 million compared to $1.034 billion last year.
• Gross profit margin was 38.4 percent versus 37.6 percent in 2011.
• Operating expense was $292 million compared to $276 million last year.
• Operating income margin of 9.0 percent includes $20 million pre-tax for restructuring-related and acquisition-related adjustments. Operating income margin in 2011 of 10.9 percent included $10 million for pre-tax restructuring-related and acquisition-related adjustments.
• Net earnings were $61 million compared to 2011 net earnings of $83 million.
1Q12 non-GAAP results, excluding restructuring-related and acquisition-related adjustments:
• Revenue would have been $993 million compared to $1.037 billion last year.
• Gross profit margin would have been 39.4 percent versus 38.2 percent in 2011.
• Operating expense would have been $282 million compared to $272 million last year.
• Operating income margin would have been 11.0 percent compared to 11.9 percent last year.
• Net earnings would have been $76 million compared to $91 million in 2011.
Looking forward
In the second quarter of 2012, the company currently expects revenue to decline 7 to 9 percent year on year. GAAP earnings per share in the second quarter of 2012 are expected to be around $0.65 to $0.75, or $0.95 to $1.05 excluding $0.30 per share for restructuring-related and acquisition-related adjustments. GAAP earnings per share in the second quarter of 2011 were $1.27, or $1.36 excluding restructuring-related and acquisition-related adjustments.
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