Lexmark Earnings Up, Predicts Lower Earnings for the Rest of 2001
Tuesday, July 24, 2001
LEXINGTON, Ky.-July 23, 2001--Lexmark International, Inc. today announced record revenue, operating income and earnings per share for the second quarter of 2001. Second quarter revenue was $988 million, up 11 percent (14 percent in constant currency) from the same period in 2000. Diluted net earnings per share were 65 cents compared to 62 cents reported a year ago. "We are pleased to report these solid second quarter financial results, which are in line with our expectations,'' said Paul J. Curlander, chairman and CEO. "We continue to grow sales, market share and profits in the face of challenging macroeconomic conditions and intense competition, which attests to the long-term attractiveness of our business model.'' Financial highlights: Printers and associated supplies revenue up 17 percent in constant currency Revenue for the second quarter ended June 30 was $988 million, an increase of 11 percent versus $893 million in the same period of 2000. Revenue growth would have been 14 percent versus last year without the negative impact of foreign currency translation. Printers and associated supplies revenue was up 13 percent from a year earlier, and would have grown 17 percent if not for the negative currency impact. Gross profit margin was 34.7 percent for the quarter, an improvement of 0.2 points from 34.5 percent a year ago due to higher sales of printer supplies, partially offset by lower hardware margins. Operating expense was $221 million versus $194 million for the same period of 2000. Operating income was up 7 percent to $122 million, versus the $114 million reported a year ago. Net earnings for the quarter were $87 million, or 65 cents per share on a diluted basis, an earnings per share increase of 5 percent versus net earnings of $84 million, or 62 cents per share in the second quarter of 2000. Lexmark's debt-to-total-capital ratio at June 30, 2001 was 20 percent, unchanged from March 31, 2001. Capital expenditures were $56 million in the second quarter, primarily supporting new products and capacity expansion. Other achievements: New inkjet and laser families launched During the quarter, Lexmark introduced a wide range of new laser and inkjet products. In April, the company unveiled its 2001 Z-line of Color Jetprinters, with multiple sub-$100 printers that feature 2400 x 1200 dots per inch resolution and seven picoliter color drop size for brilliant photo quality. The Lexmark X83 and X73 All-In-One Print Centers were also launched during the quarter, combining Lexmark's award-winning inkjet output with the convenience of scan and copy capabilities, both at unprecedented price points under $200. For the corporate business customer, a new family of Lexmark monochrome laser and multifunction solutions were introduced, establishing new industry standards for price performance. These highly versatile products deliver print speeds from 20 to 45 pages per minute at prices beginning as low as $699. Six-month review: 19 percent constant currency revenue growth in printers and associated supplies Revenue for the six months ended June 30, 2001 was $1.987 billion, an increase of 11 percent versus $1.785 billion in the same period of 2000. Without the negative impact of foreign currency translation, revenue growth would have been 15 percent versus last year. First-half revenue from printers and associated supplies increased 15 percent from a year ago and would have grown 19 percent if not for the negative currency impact. Operating income was $240 million, an increase of 2 percent over the $234 million reported for the first half of 2000. Net earnings for the period were $167 million, or $1.25 per share on a diluted basis, an earnings per share increase of 3 percent versus earnings of $164 million, or $1.21 per share in the first six months of 2000. Looking forward: "Last September, we provided guidance for full year 2001 earnings per share growth of 15 to 20 percent,'' stated Curlander. "Since that time, there has been a considerable slowdown in market demand, compounded with more aggressive laser and inkjet printer price competition. In addition, foreign currency comparisons continue to be negative. While Lexmark's supplies-driven business model provides some insulation from these factors, our expected earnings growth is being affected. We do, however, expect to achieve solid year-over-year growth. For the third quarter, we expect revenue to increase by 8 to 12 percent and earnings per share to be in a range of 50 to 60 cents, compared to 50 cents per share last year. For the fourth quarter, we expect earnings per share to be in the range of 70 to 80 cents, compared to 64 cents per share last year.''