Lexmark Expects Acquisition to Close in 2016

First gain in last 7 quarters

Lexmark International reported its third quarter 2016 on October 28, 2016 (see Figures 1 and Figure 2) below:

  • Company revenue of $844 million (M) declined 1 percent
  • Enterprise Software revenue of $156M, up 5 percent
  • ISS revenue of $688M, down 2 percent
  • Higher Value Solutions (comprised of MPS and ES revenue) of $366M, up 3 percent
  • Operating income margin of 4.3 percent, down 44 percent YTY
  • Announced payment of 20th consecutive quarterly dividend of $0.36/share (3.62% yield)

2016-1028-fig-1-lxk-q316-earnings

2016-1028-fig-2-lxk-q316-earnings

Our View

Lexmark reported a gain of $18.3 million (29¢ per share) in its third quarter, its second gain in the past seven quarters.

Enterprise Software had a Y/Y increase in revenue of five percent while the ISS business unit had a decline in revenue of two percent.

YTD revenue is down three percent although Enterprise Software continues to make a nice improvement in revenue of a 15 percent increase.

Lexmark reported it had received clearance from the Committee on Foreign Investment in the United States (CFIUS) “to proceed with the proposed acquisition of the company.” The transaction must still clear China’s State Administration of Foreign Exchange. As mentioned previously, both parties expect the transaction to close in 2016.

No conference call will be held while the transaction is pending.

 

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