Lexmark Reports Loss for Fourth Quarter, but Seventh Consecutive Quarter of Revenue Growth

new hqJanuary 27, 2015 – Lexmark International today reported results for fourth-quarter 2014,with revenue, excluding inkjet revenue, a business that Lexmark is exiting, growing for the seventh consecutive quarter. The firm, however, reported an operating loss of $22 million for fourth-quarter 2014, compared to income of $151 million for fourth-quarter 2013. However, taking into account acquisition costs and other charges for fourth-quarter 2014, (non-GAAP) net earnings were $68 million, compared to $75 million in 2013.

.Other results for fourth-quarter 2014 include:

  • Revenue growth exceeded Lexmark’s October 2014 guidance range.
  • Combined manged print services (MPS) and Perceptive Software revenue exceeded $1.1 billion in 2014.
  • Revenue was $1.023 billion, compared to $1.006 billion in 2013.

“Fourth-quarter 2014 revenue of $1.023 billion includes acquisition-related adjustments of $9 million. Taking this account, fourth-quarter 2014 revenue of $1.032 billion grew 2 percent year-over-year, and grew 7 percent excluding Lexmark’s ongoing decline in Inkjet-exit revenue.

Fourth quarter earnings per share were ($0.42) and $1.48 in 2014 and 2013, respectively. For fourth-quarter 2014, Lexmark recognized an $84 million pre-tax loss ($0.97 per share) compared to a pre-tax gain of $82 million ($0.64 per share) in the same period last year.

n the fourth quarter, Lexmark delivered revenue growth that exceeded October guidance,” commented Lexmark Chairman and CEO Paul Rooke. “For the year, Lexmark’s Managed Print Services and Perceptive Software combined revenue exceeded $1.1 billion, grew 18 percent and increased to 30 percent of Lexmark’s total revenue.

“These results reflect Lexmark’s ongoing transformation to a higher-value portfolio of imaging and software solutions that enable customers to manage their unstructured information challenges,” said Rooke. “Approximately 70 percent of Lexmark’s revenue comes from our more predictable imaging and software annuity streams.”

Fourth-Quarter 2014 Higher-Value Solutions Revenue

Lexmark’s Higher Value Solutions revenue (MPS and Perceptive Software) revenue of $341 million, excluding acquisition-related adjustments of $9 million, grew 22 percent year-to-year and accounted for 33 percent of total revenue, up from 28 percent in the same period in 2013.

Fourth-Quarter 2014 Segment Revenue

Fueling fourth-quarter 2014 revenue growth was Lexmark’s MPS and Perceptive Revenue, while printer and MFP revenue growth, as well as printer and MFP supplies revenue growth, remained flat:

  • Imaging Solutions and Services (ISS) revenue of $933 million declined less than 1 percent year-over-year. ISS revenue, excluding Inkjet Exit revenue, grew 4 percent year-over-year.
  • MPS revenue of $242 million grew 16 percent year-over-year.
  • Non-MPS revenue of $633 million was about flat year-over-year.
  • Inkjet Exit revenue of $58 million declined 42 percent year-over-year.
  • Perceptive Software revenue was $90 million. Excluding acquisition-related adjustments, Perceptive Software revenue grew 37 percent year-over-year.
  • Printer and MFP hardware revenue of $236 million grew 3 percent year-over-year.
  • Printer andMFP supplies revenue of $646 million declined 2 percent year-over-year.
    • Laser supplies revenue of $589 million grew 5 percent year-over-year.
  • Software and Other revenue was $140 million. Excluding acquisition-related adjustments, Software and Other revenue of $150 million grew 23 percent year-over-year.

Full-Year 2014 Results

2014 revenue of $3.710 billion includes acquisition-related adjustments of $17 million. 2014 adjusted (non-GAAP) revenue of $3.728 billion grew 1 percent year-over-year, and grew 6 percent excluding Lexmark’s planned and ongoing decline in Inkjet Exit revenue. For full-year 2014, Lexmark recognized an $81 million pre-tax loss ($0.91 per share) compared to a pre-tax gain of $82 million ($0.63 per share) for full-year 2013.

Full-Year 2014 Higher Value Solutions Revenue

  • 2014 Higher Value Solutions revenue of $1.134 billion, excluding acquisition-related adjustments of $17 million, grew 18 percent year-over-year and accounted for 30 percent of total revenue, up from 26 percent in the same period in 2013.

Full-Year 2014 Segment Revenue

  • ISS revenue of $3.415 billion declined less than 1 percent year-over-year. ISS revenue, excluding Inkjet Exit revenue, grew 4 percent year-over-year.
    • MPS revenue of $821 million grew 14 percent year-over-year.
    • Non-MPS revenue of $2.337 billion grew 1 percent year-over-year.
    • Inkjet Exit revenue of $257 million declined 37 percent year-over-year.
  • Perceptive Software revenue was $296 million. Excluding acquisition-related adjustments, Perceptive Software revenue grew 31 percent year-over-year.
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