Lexmark Reports Solid Q2 Results: Revenues and Earnings Up
Press release from the issuing company
EPS of 67 cents exceeds year-ago quarter
LEXINGTON, Ky.--July 22, 2002-- Lexmark International, Inc. today announced record revenue and earnings per share for the second quarter of 2002 that included an 8 percent increase in revenue to $1.058 billion and earnings per share of 67 cents, up from 65 cents a year earlier.
"We are pleased to deliver second-quarter financial results that reflect growth in revenue, operating income and earnings per share," stated Paul J. Curlander, chairman and CEO. "Our innovative technology and our focus on cost and expense control, coupled with the continued strong growth in our recurring supplies annuity, enabled us to grow revenue and earnings."
Laser and inkjet supplies revenue grows 18 percent
Lexmark's revenue for the second quarter ended June 30 was $1.058 billion, an increase of 8 percent versus $981 million in the same period of 2001. Without the impact of foreign currency translation, revenue growth would have been 6 percent versus last year. Laser and inkjet supplies revenue was $566 million, an 18 percent increase over $482 million a year ago and now represents 53 percent of total revenue, up from 49 percent in the prior year. Laser and inkjet printer revenue was $394 million in the second quarter of 2002 versus $361 million a year earlier, a growth rate of 9 percent.
Gross profit margin was 32.0 percent for the quarter versus 34.2 percent a year ago due to lower printer margins, partially offset by higher supplies margins and an increase of supplies in the product mix. Operating expenses were 20.4 percent of revenue, a reduction of 1.4 points from the prior year, reflecting the company's continuing focus on expense management and benefits of the restructuring announced in the fourth quarter of 2001. Operating income was $123 million in the second quarter of 2002 versus $122 million last year. Diluted net earnings per share for the period were 67 cents, up 3 percent from a year ago.
Lexmark's debt-to-total-capital ratio at June 30, 2002 was 14 percent compared to 13 percent at March 31, 2002. Net cash provided by operating activities was $234 million, versus $14 million in the same period of 2001. Capital expenditures were $24 million in the second quarter with most of the spending for infrastructure support and new product development. The company repurchased approximately 3.5 million shares of its common stock during the quarter for $202 million, at prices ranging from $50.88 to $60.96 per share. During the first half of this year, Lexmark repurchased 5.0 million shares of its common stock for $279 million and, as of June 30, 2002, remaining share repurchase authorization was $40 million.
New multifunction products launched:
During the quarter, Lexmark introduced two multifunction laser printers that simplify the flow of business information and boost worker productivity with an innovative touch-screen interface. Compared to networked digital copiers, the Lexmark X620e provides enhanced functionality, but with a smaller footprint and a price that enables it to be widely distributed throughout large enterprises as well as small businesses. The Lexmark X750e features single-pass color laser technology developed by Lexmark, providing multifunctionality that is superior to devices costing thousands of dollars more.
Lexmark also announced the Lexmark X125 All-In-One Office Center and the Lexmark X75 PrinTrio, further expanding the company's highly successful X-family of inkjet products that print, scan, copy and fax. Priced at $179 and $149, respectively, these devices deliver 2400 dots per inch resolution and speeds up to 16 pages per minute at an unprecedented value to the consumer.
Laser and inkjet supplies account for 53 percent of revenue
Revenue for the six months ended June 30, 2002 was $2.108 billion, an increase of 7 percent versus $1.969 billion in the same period of 2001. First-half revenue from laser and inkjet supplies was $1.112 billion, an increase of 17 percent from $952 million a year ago. Laser and inkjet printer revenue of $795 million grew 7 percent from $744 million in the first six months of 2001. Operating income was $227 million versus $240 million a year earlier. Net earnings for the period were $161 million, or $1.20 per share on a diluted basis, versus earnings of $167 million, or $1.25 per share in the first half of 2001.
"As we look forward in the third quarter, we believe that we are well-positioned for continued earnings growth," said Curlander. "However, we continue to be cautious due to uncertain future information technology spending levels, a relatively weak consumer market, and aggressive competition. In the third quarter of 2002, we expect a year-over-year revenue growth rate in the low- to mid-single digits and earnings per share of 58 to 68 cents, compared to 52 cents in the third quarter of 2001."
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