"In the third quarter, Lexmark continued solid execution of our strategy of transforming to an end-to-end solutions provider, and delivered revenue that exceeded our July guidance range, EPS at the top of the range and also strong free cash flow," said Paul Rooke, Lexmark Chairman and Chief Executive Officer. "Perceptive Software's profitability increased significantly compared to last year and once again both managed print services and Perceptive Software revenue grew at a double-digit rate, reflecting the imaging and software synergies we're creating.
"In the third quarter, Lexmark continued solid execution of our strategy of transforming to an end-to-end solutions provider, and delivered revenue that exceeded our July guidance range, EPS at the top of the range and also strong free cash flow," said Paul Rooke, Lexmark Chairman and Chief Executive Officer. "Perceptive Software's profitability increased significantly compared to last year and once again both managed print services and Perceptive Software revenue grew at a double-digit rate, reflecting the imaging and software synergies we're creating.
"Lexmark's value proposition is unique and squarely focused on helping our customers solve their unstructured information challenges, enabling us to lead in this large and expanding market," Rooke said.
"Lexmark is continuing to increase shareholder value through acquisitions and organic investments that are accelerating our transition to a higher value solutions portfolio, and through the ongoing capital return of more than 50 percent of free cash flow," added Rooke.
Third Quarter Results
GAAP revenue of $890 million includes $5 million of acquisition-related adjustments. Non-GAAP1 revenue of $896 million declined 3 percent compared with last year. Excluding the ongoing decline in Inkjet Exit revenue2, non-GAAP revenue grew 5 percent year to year. GAAP earnings per share for the third quarter of 2013 were $0.45, compared with GAAP earnings of $0.00 per share in the third quarter of 2012.
Segment Revenue
Imaging Solutions and Services (ISS) revenue of $837 million declined 5 percent compared to the same period last year. ISS revenue, excluding Inkjet Exit revenue2, grew 3 percent, compared to last year. On a year-to-year basis:
- Record Managed Print Services (MPS) revenue3 of $184 million grew 18 percent.
- Non-MPS revenue4 of $569 million declined 1 percent.
- Inkjet Exit revenue2 of $84 million declined 44 percent, represented 9 percent of total company revenue, and is expected to decline as a percentage of total revenue as the trailing inkjet supplies revenue from the remaining installed base of inkjet printers naturally decreases over time.
Perceptive Software revenue was $54 million. Perceptive Software revenue, excluding acquisition-related adjustments of $5 million, was $59 million and grew 38 percent compared to the same period in 2012.
Product Revenue
Hardware revenue of $182 million and Supplies revenue of $606 million declined 11 percent and 4 percent, respectively, compared to last year. Software and Other revenue of $102 million grew 21 percent compared to last year, or 24 percent, excluding acquisition-related adjustments.
GAAP Results
· Revenue was $890 million compared to $919 million last year.
· Gross profit margin was 38.9 percent versus 35.7 percent in 2012.
· Operating expense was $294 million compared to $316 million last year.
· Operating income margin was 5.9 percent compared to 1.3 percent in 2012.
· Net earnings were $29 million compared to 2012 net earnings of $0 million.
Maintaining Capital Allocation Discipline to Deliver Shareholder Value
Lexmark is continuing to execute on its stated capital allocation framework of returning more than 50 percent of free cash flow5 to shareholders, on average, through quarterly dividends and share repurchases while building and growing its solutions and software business through expansion and acquisitions. Lexmark has returned more than $650 million to shareholders through dividends and share repurchases since July 2011.
In the third quarter of 2013, Lexmark paid a dividend of $0.30 per share totaling $19 million and also repurchased 0.5 million of the company's shares for $21 million. The company's remaining share repurchase authorization is currently $189 million.
Two Acquisitions Strengthen Software Solutions Presence, Capabilities
With its two recent acquisitions, Lexmark increased the company's enterprise content management (ECM) presence in Europe, and further strengthened its capabilities of providing the platform, products and solutions that help its healthcare customers manage their unstructured information challenges.
· Saperion
During the third quarter, Lexmark completed the acquisition of Germany-based Saperion, a leading provider of ECM software in Europe. Saperion is focused on providing document archive and workflow solutions and now reports into Perceptive Software. Lexmark purchased Saperion for $72 million utilizing non-U.S. cash.
- PACSGEAR
Earlier this month, Lexmark announced the acquisition of PACSGEAR, a leading provider of connectivity solutions for healthcare providers to capture, manage and share medical images and related documents and integrate them with existing picture archiving and communication systems and electronic medical records (EMR) systems. Lexmark paid a cash purchase price of $54 million.
With this acquisition, Perceptive Software will be uniquely positioned to offer a vendor-neutral, standards-based, clinical content platform for capturing, managing, accessing and sharing patient imaging information and related documents within healthcare facilities through an EMR and between facilities via PACSGEAR technology.
Perceptive Software a Leader in Enterprise Content Management
Perceptive Software recently announced it has been positioned by Gartner, Inc. in the Leaders Quadrant for enterprise content management (ECM) solutions, 20136. Gartner evaluated 23 vendors in its most recent iteration of the annual Magic Quadrant for ECM. Gartner's evaluation was based on completeness of vision and ability to execute.
Perceptive Software continues to deliver double-digit revenue growth reflecting the imaging and software synergies being created by Lexmark. Perceptive Software's technology platform spans content management, process management, intelligent capture and enterprise search that, both separately and together, connect the unstructured printed and digital information across the enterprise with the processes, applications, and people that need it.
Looking Forward
In the fourth quarter of 2013, revenue excluding Inkjet Exit revenue2 is expected to be flat to up 2 percent year to year. The company expects a continued negative impact from the decision to exit inkjet. Total revenue is currently expected to decline 3 to 5 percent, compared to last year. GAAP earnings per share in the fourth quarter of 2013 are expected to be around $0.57 to $0.67, compared with GAAP earnings per share of $0.10 in the fourth quarter of 2012. Non-GAAP earnings per share in the fourth quarter of 2013 are expected to be around $1.07 to $1.17, compared with non-GAAP earnings per share of $0.61 in the fourth quarter of 2012.
ENDS
|
In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release non-GAAP earnings per share amounts and related income statement items which management believes provides useful information to investors. When used in this press release, "non-GAAP" earnings per share amounts and related income statement items exclude restructuring-related, acquisition and divestiture-related, and debt extinguishment-related adjustments. The rationale for management's use of non-GAAP measures is included in Appendix A to the financial information attached hereto. |
|
|
Inkjet Exit revenueis defined as consumer and business inkjet hardware and supplies that the company is exiting. |
|
|
MPS revenueis defined as ISS laser hardware, supplies and fleet management solutions sold through a managed services agreement. |
|
|
Non-MPS revenueis defined as ISS laser hardware, laser supplies, dot matrix hardware, and dot matrix supplies not sold as a part of an MPS agreement. Non-MPS also includes parts and service related to hardware maintenance. |
|
|
Free Cash Flowis defined as net cash flows provided by operating activities minus purchases of property, plant and equipment plus proceeds from sale of fixed assets. |
|
|
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose © 2013 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. For more information, email [email protected] or visit gartner.com. Used with permission. |
About Lexmark
Lexmark is uniquely focused on connecting unstructured printed and digital information across enterprises with the processes, applications and people that need it most. For more information, please visit www.lexmark-me.com.
You could also visit us on Facebook: www.facebook.com/LexmarkMiddleEastor
www.facebook.com/lexmarkmideast
For more information on Perceptive Software, please visit www.perceptivesoftware.com.
Lexmark and Lexmark with diamond design are trademarksof Lexmark International, Inc., registered in the U.S.
and/or other countries. All other trademarks are the property of their respective owners.
For further information please contact:
BIZ COM – For PRoactive Communications
P.O. Box 48889
Dubai – UAE
T: +971 4 332-0888
F: +971 4 332-0999