Lexmark Reports Weaker Hardware, Supplies Revenue in 1Q2013

Lexmark reported its first quarter financial results showing revenue was $886 million, down 11% year over year (YOY), but up roughly $11M from forecasts. Net earnings fell from $60.8 million in 1Q2012 to $34.8 million in the first quarter of 2013, a 42.8% decline.

Lexmark indicates that $181 million of its revenue came from hardware, down 9% from previous year. Another $609 million came from supplies, a 16% decline compared with the year-ago period. Perceptive Software revenue ($44 million) grew by 54% and Managed Print Services increased by 10% in 1Q2013. The company continues to deal with sales declines caused by its decision to stop selling inkjet printers. Inkjet Exit revenue declined 34% YOY.

John W. Gamble, Lexmark’s Chief Financial Officer of Lexmark, said: “Large workgroup laser hardware revenue, which now represents 83% of total hardware revenue, declined 2% YOY. MFP units were strong as we saw unit growth in both monochrome and color MFPs. Color units overall were strong, growing over 10% in the quarter. Small workgroup laser hardware revenue, which now represents 16% of total hardware revenue, declined 19% YOY, driven by declining units. Although units declined 18%, we saw strong growth in color MFPs—up over 20%.”

Gamble also noted that “Supplies revenue declined YOY in both laser and inkjet. As I indicated earlier, supplies channel inventories declined less than expected in 1Q2013, favorably impacting our performance versus our January guidance. On a year-to-year basis, however, as supplies inventories grew in 1Q2012, the impact of supplies channel inventory on YOY supplies growth was negative.”

He reported that “Software and Other revenue growth were primarily driven by the 54% growth in Perceptive Software. Perceptive saw very good organic growth as well, up 15%. During the quarter, Perceptive saw strong placements of content solutions in healthcare and insurance applications and intelligent capture applications in accounts payable, bills of lading, as well as other insurance applications. Geographically, all regions were impacted by our planned exit from inkjet technologies and the generally weak demand.”