Revenue Flat for Lexmark, Announces Restructuring Plan and 500 Job Cuts
Lexmark International today announced results for the second quarter of 2015, with revenue of $879 million compared to $892 million for second-quarter 2014, and earnings per share (EPS) of -$0.59, compared to $0.59 for second-quarter 2014. The firm also announced a restructuring plan that would eliminate 500 jobs worldwide and which it says would result in annual savings of $65 million beginning in 2017.
Among the highlights for the second quarter were:
- Strong performance by Lexmark’s Enterprise Software group, with combined Enterprise Software and managed print services (MPS) revenue growing 37 percent versus second-quarter 2014, and making up 40 percent of total revenue.
- Annualized subscription contract value increased 124 percent year-over-year.
- Lexmark’s acquisition of Kofax nearly doubled its Enterprise Software annualized revenue (Lexmark purchased software-maker Kofax for $1 billion in May 2015).
Lexmark Chairman and CEO Paul Rooke commented: “Lexmark delivered strong growth in Higher-Value Solutions revenue, which is made up of Enterprise Software and Managed Print Services. Despite the ongoing headwinds from the strong U.S. dollar and near-term laser-supplies channel optimization particularly in EMEA, overall Lexmark delivered a good quarter. with the addition of Kofax, Lexmark increased Higher Value Solutions annualized revenue to approximately $1.5 billion while nearly doubling the annualized revenue of our Enterprise Software segment.”
Lexmark says it’s growing a “more predictable” annuity revenue base of laser-printer supplies, software maintenance, software subscriptions, and ISS extended warranty. Lexmark’s annuity revenue of $2.4 billion for its last four quarters grew 2 percent and made up 69 percent of core revenue.
Citing the strong U.S. dollar as negatively affecting its earnings, Lexmark announced a restructuring program that would eliminate 500 positions worldwide, primarily in general and administrative jobs, marketing and development, with about one-third of those jobs being shifted to “low-cost countries.” The firm will also be consolidating regional facilities, and expects to complete the restructuring plan by the end of 2016. It expects its restructuring to generate $2 million in savings in 2015, and annualized savings of $65 million beginning in 2017. The total pre-tax cost for this restructuring is expected to be approximately $55 million, with $37 million incurred in 2015 and the remainder in 2016.
Third-Quarter and Full-Year Forecast
For its third quarter of 2015, Lexmark is forecasting its core revenue to increase 3 to 5 percent year-over-year. Total revenue is expected to be in the range of -1 to +1 percent year-over-year. Earnings per share are expected to be around -$0.48 to -$0.38.
For full-year 2015, Lexmark expects core revenue to increase 3 to 5 percent year-over-year, and total revenue to be in the range of -1 to +1 percent year-over-year. Earnings per share are expected to be around -$0.49 to -$0.29.
- May 2015: Lexmark Completes Kofax Acquisition; Bish is New President of Lexmark Enterprise Software Division
- April 2015: Lower Revenue at Lexmark for First Quarter, But Meets Earnings Forecast
- March 2015: Lexmark to Acquire Kofax for $1 Billion – Will Create ‘Broadest’ Portfolio of Document- and Data-Capture Solutions
- January 2015: Lexmark Reports Loss for Fourth Quarter, but Seventh Consecutive Quarter of Revenue Growth
- January 2015: Lexmark Acquires Claron, Provider of Medical-Imaging and Distribution Software
- November 2014: ReadSoft is Now Officially Part of Lexmark International, Merged into Perceptive Software
- October 2014: Strong Quarter for Lexmark; MPS and Perceptive Software Revenue Forecast to Reach $1 Billion
- July 2014: Strong Quarter for Lexmark; Growth in MPS; Increases Full-Year Outlook
- April 2014: Revenue, Earnings Down for Lexmark’s First Quarter, but Exceeds Forecast