Lexington, KY - Lexmark announced a 1 percent increase in revenue in the third quarter of 2011, a rate stronger than expected, bringing revenue to $1,035,000,000 for the quarter.
Despite the year-to-year growth, net profit was down for the quarter compared to the same period in 2009.
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"Our earnings per share was less than we expected but primarily not from operational items but from a discreet tax item that hit us about 6 cents (per share)," Lexmark's Chairman and CEO Paul Rooke said in an interiview with Tuesday morning. "So if you take our 95-cents plus this item and some actually currency affects we had, you would have been very much toward the high-end of our range (for earnings per share).
"We feel pretty good both at the top line and operationally, it was a pretty good quarter," he added.
Lexmark finished the quarter with $1.2 billion on hand, some of which was used to purchase Pallas Athena, a Dutch company that will work under Perspective Software, a company Lexmark acquired in 2010.
The $50 million cash deal announced last week was "relatively speaking... a smaller acquisition for us. It's more about continuing to extend our solutions capabilities," Rooke said about the acquisition.
"We evolve as our customers evolve," he said. "When we started back in 1991, we were very much a hardware-centric company, but as we move through the 90s and started then getting into multifunction devices, fleet management services."
Now with Perceptive and Pallas, Lexmark continues down a path of being a full service document solutions company that allows for electronic document storage and transfer.
In the third quarter results, the company announced:
Gross profit margin was 36.9 percent versus 35.4 percent in 2010.
Operating expense was $283 million compared to $268 million last year.
Operating income margin of 9.6 percent includes $9 million pretax for restructuring-related and acquisition-related adjustments. Operating income margin in 2010 of 9.1 percent included $19 million for pretax restructuring-related and acquisition-related adjustments.
Net earnings for the quarter were $67 million compared to third quarter 2010 net earnings of $72 million.
Looking at the fourth quarter the company is projecting a dip in revenue compared to 2010 in the mid single digits.
"While we do have some momentum, we do have some headwinds as we look forward. Some of those being currency, certainly... we have an issue in Thailand, it only affects a portion of our hardware business, the flood crisis there has affected some of our sub-tier suppliers which is going to be constraining hardware temporarily, so there's an impact there," Rooke said.