Lexmark Reports 1Q Results, Earnings at the Top End of Guidance
Tuesday, April 23, 2002
LEXINGTON, Ky.--April 22, 2002--Lexmark International today announced financial results for the first quarter of 2002. First-quarter revenue was a record $1.050 billion, up 6 percent (8 percent in constant currency) from 2001. Diluted net earnings per share were 53 cents. "As we entered the first quarter, given existing market conditions, we anticipated flat revenue year-to-year and earnings per share in the range of 43 to 53 cents. However, our first quarterrevenue growth of 6 percent exceeded our expectations and earnings per share came in at the top end of our guidance," stated Paul J. Curlander, chairman and CEO. "Our positive results were driven by double-digit growth in laser and inkjet printers, particularly consumer all-in-one products. I believe these results indicate that Lexmark has continued to outperform in a weak market and reflect the power of our supplies-annuity business model." Financial highlights: Laser and inkjet supplies account for 52 percent of revenue Lexmark's revenue for the first quarter ended March 31 was $1.050 billion, an increase of 6 percent versus $988.0 million in the same period of 2001. Without the negative impact of foreign currency translation, revenue growth would have been 8 percent versus last year. Laser and inkjet supplies revenue was $546 million, a 16 percent increase over $471 million a year ago and now represents 52 percent of total revenue, up from 48 percent in the prior year. Laser and inkjet printer revenue was $401 million in the first quarter of 2002 versus $383 million a year earlier, a growth rate of 5 percent. Gross profit margin was 29.5 percent for the quarter versus 32.6 percent a year ago due to lower laser and inkjet printer margins, partially offset by an increase of supplies in the product mix. Operating expenses were 19.5 percent of revenue, a reduction of 1.2 points from the prior year, reflecting the company's continuing focus on expense management. Operating income was $105 million in the first quarter of 2002 versus $118 million last year due to the lower gross profit margin. Diluted net earnings per share for the period were 53 cents. Lexmark's debt-to-total-capital ratio at March 31, 2002 was 13 percent, unchanged from year end 2001. Capital expenditures were $22 million in the first quarter with most spending in support of new product development, infrastructure support and the completion of capacity expansion projects initiated in prior years. The company repurchased approximately 1.5 million shares of its common stock during the quarter for $77 million, at prices ranging from $50.00 to $54.95 per share. During the first quarter, Lexmark's board of directors increased the cumulative stock repurchase authorization by $200 million to $1.2 billion, of which $241 million remains at March 31, 2002. New inkjet family launched: During the first quarter, Lexmark again demonstrated its technology leadership with the launch of a new generation of the award-winning "Z" family of inkjet printers. The $199 Lexmark Z65 Color Jetprinter (along with the $229 Z65n network model) at 4800 x 1200 dots per inch (dpi), offers twice the resolution of the closest competitor and delivers best-in-class print speeds of up to 21 pages per minute (ppm) in black and 15 ppm in color. The new Lexmark Z55 also provides best-in-class 3600 x 1200 dpi resolution and a three picoliter microfine color drop size for only $129. Rounding out the new line are the Lexmark Z45, Z35 and Z25 Color Jetprinters at $89, $69 and $49, respectively, each establishing new standards for price and performance in the market. Looking forward: "We believe that Lexmark is well-positioned due to our strong product announcements in 2001 and early 2002 and we expect to continue to outperform the market," said Curlander. "As we move through 2002, we are uncertain about the level of information technology spending and therefore, remain cautious. In the second quarter of 2002, we anticipate that year-over-year revenue growth will exceed that of the first quarter, and could grow at a double-digit rate. We expect earnings per share to be in the range of 56 to 66 cents."