![]() |
News Releases
|
Lexmark reports fourth quarter results
01/30/2007
View earnings table
Strong branded unit growth in targeted segments
Cash generation of $143 million remained strong
Lexmark International, Inc. (NYSE: LXK) today announced financial
results for the fourth quarter of 2006. Fourth-quarter revenue
was $1.369 billion, about flat compared to revenue of $1.365
billion last year. Fourth-quarter earnings per share were $0.91
and include $0.06 per share for share-based compensation expenses
resulting from the company¡¯s adoption of SFAS 123R. The tax
rate in the fourth quarter was 15.9 percent, primarily reflecting
the retroactive extension of the U.S. Research and Experimentation
tax credit. Earnings per share would have been $1.05, excluding
$0.14 per share restructuring-related charges for actions announced
in January 2006. Fourth-quarter 2005 earnings per share were
$0.71.
¡°Overall, this was a good quarter for Lexmark and we believe
we are on course with our strategy. We saw strong branded unit
growth in the quarter in our targeted growth segments of low-end
monochrome lasers, color lasers, laser all-in-ones, and inkjet
all-in-ones. Our ongoing investments in product and brand development
are better positioning us in these targeted segments, which
are the engine for long-term growth,¡± said Lexmark Chairman
and Chief Executive Officer Paul J. Curlander.
Fourth-quarter business segment revenue of $772 million grew
11 percent year to year, and consumer segment revenue of $597
million declined 11 percent compared to a year ago. Fourth-quarter
2006 gross profit margin was 30.8 percent, the operating expense
to revenue ratio was 23.3 percent, and operating income margin
was 7.5 percent. These results include restructuring-related
pretax charges totaling $19 million, comprised of $3 million
in cost of revenue and $16 million in operating expense. Excluding
restructuring-related charges:
Fourth-quarter 2006 gross profit margin would have been 31.1
percent, up from 28.3 percent in the same period last year.
This improvement was driven primarily by a change in the mix
between hardware and supplies.
Fourth-quarter 2006 operating expense to revenue ratio would
have been 22.1 percent, up from 20.0 percent in the same quarter
last year. This increase was due mainly to increased research
and development investment, increased marketing investment,
and SFAS 123R expenses.
Fourth-quarter 2006 operating income margin was 8.9 percent,
up from 8.3 percent last year.
Fourth-quarter net cash provided by operating activities was
$143 million. Capital expenditures for the quarter were $58
million. Lexmark repurchased approximately 2.1 million shares
of its stock during the quarter for $141 million. The company¡¯s
remaining share repurchase authorization was about $460 million
at quarter end.
Recent wins showcase strength of Lexmark¡¯s value proposition
The U.S. Federal Aviation Administration (FAA), The Children¡¯s
Hospital at Westmead, and Health First are among customers who
have recently chosen Lexmark to help them print smarter, move
information faster and more effectively, and better manage their
printing environment.
The FAA chose Lexmark to provide monochrome and color laser
printers and multifunction products (MFP) to the FAA¡¯s more
than 800 offices, serving more than 45,000 employees. After
a rigorous multi-vendor review, Lexmark was selected based on
the company¡¯s products, federal-industry expertise, and ability
to help FAA achieve cost savings objectives and bring value
to FAA employees around the country.
Lexmark won a five-year contract with The Children¡¯s Hospital
at Westmead, a leading pediatric hospital in Australia. Lexmark¡¯s
solutions will improve workflow for hospital staff, reducing
complicated, multi-step processes to the touch of an icon, and
allowing staff to quickly complete critical tasks such as patient
admission and pharmacy requests. These solutions will help ensure
accurate information is transmitted to help prevent errors and
will also give staff more time to spend directly with patients.
Lexmark won a three-year agreement to help Health First, an
850-bed health care network located in Central Florida, implement
a world-class, proactive, fleet management solution. Once the
implementation is completed, Lexmark will manage approximately
1,000 devices throughout Health First¡¯s network.
Accolades for Lexmark¡¯s products continue
Lexmark is continuing to garner industry recognition for its
innovative new products, the introduction of which has been
supported by its increased level of investment in research and
development. Lexmark¡¯s 2006 success in winning awards for its
products is being featured in updated television advertising.
The advertising highlights the fact that, last year, the top
U.S. independent test labs awarded Lexmark more laser printer
awards in its class than any other leading printer brand.
Among the recognition received during the fourth quarter, Lexmark
received Fall Pick of the Year awards from Buyers Laboratory,
Inc., for laser hardware and software solutions, including:
Lexmark Document Distributor software, which helps customers
reduce cost and increase productivity by intelligently routing
electronic content captured from MFPs to network folders, e-mail,
fax servers, databases and enterprise content management systems;
Most Outstanding Monochrome Multifunction Printer line; and
The Lexmark X642e, X646ef, X850e and X852e
received individual awards in their respective workgroup MFP
categories.
Lexmark also earned recognition for
Best Hardware Solution across its line of products at CMP
Media¡¯s 2006 XChange Tech Innovator Conference.
Also during the quarter, PC Magazine named the new Lexmark
C534dn color laser printer as an Editors¡¯ Choice.
In addition, Lexmark¡¯s new X5470 inkjet four-in-one was
named as an International Consumer Electronics Show (CES)
Innovations 2007 Design and Engineering Awards honoree in
the Mobile/Home Office Category.
Full-year results
2006 revenue was $5.108 billion, down 2 percent compared
to revenue of $5.222 billion in 2005. 2006 business segment
revenue grew 3 percent, and consumer segment revenue declined
8 percent.
2006 operating income of $443 million includes $41 million
for share-based compensation expenses resulting from the
company¡¯s adoption of SFAS 123R. Operating income would
have been $568 million, excluding $135 million for restructuring-related
charges and $10 million pension curtailment benefit for
actions announced in January 2006. 2005 operating income
was $534 million, or $544 million excluding 2005 workforce
reduction charges.
2006 earnings per share were $3.27 and include $0.24 per
share for share-based compensation expenses resulting from
the company¡¯s adoption of SFAS 123R. Excluding $0.85 per
share restructuring-related charges and pension curtailment
benefit for actions announced in January 2006, earnings
per share would have been $4.12. 2005 earnings per share
were $2.91. 2005 EPS would have been $3.37 excluding $0.06
per share workforce reduction charges and the net tax cost
of $0.40 per share primarily resulting from the approval
to repatriate $684 million during 2005 under the American
Jobs Creation Act.
2006 net cash provided by operating activities was $671
million. Capital expenditures for the year were $202 million.
Lexmark repurchased approximately 16.5 million shares of
its stock during the year for $871 million.
Looking forward
In the first quarter of 2007, the company expects revenue
to decline in the low- to mid-single digit percentage range
year over year. It expects first-quarter 2007 EPS to be
in the range of $0.90 to $1.00. This includes restructuring-related
charges of approximately $0.03 per share. EPS excluding
restructuring-related charges in the first quarter are expected
to be in the range of $0.93 to $1.03. EPS in the first quarter
of 2006 were $0.78, or $1.03 excluding $0.31 per share restructuring-related
charges and $0.06 per share pension curtailment benefit.
|
|
|
