Lexmark Q3 Profit, Revenue Top Estimates

(RTTNews) - Lexmark International, Inc. (LXK), a manufacturer of printing, imaging, device management, and managed print services, reported Tuesday a surge in third-quarter profit on lower charges and higher margin, despite decline in revenues. Adjusted earnings per share and revenues beat analysts' estimates. The company also issued fourth-quarter outlook.

In pre-market activity, shares gained $2.11 or 5.89 percent, and traded at $37.92.

For the third quarter, net earnings were $28.5 million or $0.45 per share, compared to last year's breakeven earnings.

The latest quarter results included adjustments of $0.50 per share, compared with prior year's adjustments of $0.94 per share. Adjusted earnings, which excluded items, were $61 million or $$0.95 per share, compared to last year's earnings of $65 million or $0.94 per share.

On average, 11 analysts polled by Thomson Reuters expected earnings of $0.91 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter declined to $890.5 million from $919.2 million last year. Adjusted revenues were $896 million, down 3 percent from last year. Excluding the ongoing decline in Inkjet Exit revenue, non-GAAP revenue grew 5 percent. Analysts expected revenues of $872.19 million.

The company said its gross profit margin improved to 38.9 percent versus 35.7 percent in 2012.

Paul Rooke, Lexmark chairman and chief executive officer, said, "In the third quarter, Lexmark continued solid execution of our strategy of transforming to an end-to-end solutions provider, and delivered revenue that exceeded our July guidance range, EPS at the top of the range and also strong free cash flow."

Looking ahead for the fourth quarter, the company expects earnings per share to be around $0.57 to $0.67, compared to last year's $0.10 per share.

Non-GAAP earnings per share are expected to be around $1.07 to $1.17, compared to $0.61 in the fourth quarter of 2012.

Total revenue is currently expected to decline 3 to 5 percent, compared to last year. Revenue excluding Inkjet Exit revenue is expected to be flat to up 2 percent year to year. The company expects a continued negative impact from the decision to exit inkjet.

Analysts expect earnings of $1.11 per share on revenues of $915.11 million.