Lexmark Reports 5% Growth in Laser Business

On July 22, Lexmark International, Inc. released its second-quarter (2Q2014) financial results showing revenues of $894 million. With Inkjet Exit revenues excluded, total revenue increased 5% compared with the same period last year. Net earnings were $37 million, a significant drop from 2Q2013 net earnings of $94 million.

Imaging Solutions and Services (including Laser and Inkjet Exit segments) revenue was $830 million, a slight rise compared to 2Q2013. Laser revenue ($764 million) grew 5% driven by expansion in MPS, large workgroup and supplies revenues. According to Lexmark, the 5% growth in its laser business was realized by 7% laser hardware revenue growth, largely driven by a 9% expansion in large workgroup hardware revenues, and a 5% increase in laser supplies revenue. On the other hand, Inkjet Exit revenues of $67 million–now 7% of total revenue—saw a 33% decline.

Lexmark reported 7% year-to-year growth in hardware revenue ($183 million), driven by 7% growth in units and increased average unit revenue. Large workgroup hardware revenue grew 9%. Large workgroup laser unit growth was driven by 20% growth in MFPs. Small workgroup units grew 6% year-to-year, also driven by 16% MFP growth.

Supplies revenue of $602 million declined 1% year-to-year. Laser supplies revenue grew 5% compared to the same period last year. Lexmark continued to see good end-user demand for laser supplies, “reflecting the continued growth in our MPS and large workgroup installed base.”

The Inkjet Exit supplies revenue declined 32% and saw sales growth in all geographies year-to-year, highlighted by 10% growth in Europe. All geographies experienced year-to-year laser supplies growth in 2Q2014.

As to the performance of Lexmark’s Managed Print Services and Perceptive Software businesses, CEO and Chairman Paul Rooke commented, “In the second quarter, our higher-value solutions portfolio revenue, comprised of Managed Print Services and Perceptive Software, grew 11%, accounted for nearly 30% of Lexmark’s total revenue and is expected to exceed $1 billion this year.”

During a 2Q2014 Earnings Conference Call, Lexmark said it is undergoing a transformation to a higher value portfolio, by:

• Focusing on solving customers’ unstructured information challenge
• Growing higher value solutions and software markets, with revenue expected to exceed $1 billion in 2014
• Increasing participation in higher value markets

(Source: www.seekingalpha.com, www. lexmark.com)