Ariana Research
Long/short equity, deep value, special situations

Lexmark: Strong Free Cash Flow Generator With Catalysts In Place

Lexmark International, Inc. (NYSE:LXK)

Executive Summary

Lexmark International, Inc. ("Lexmark", "LXK" or the "Company") is a leading printing and imaging solutions supplier and enterprise content management provider. In FY2012, the Company derived 96% of revenue from its ISS segment, and 4% from Perceptive Software. The Company generated $3.6B in revenue and $563MM in EBITDA for TTM 6/30/2013, respectively.

Lexmark currently trades at an undemanding multiple of 3.2x EV/EBITDA, for a Company with a leading market share, highly cash generative business along with a catalyst in place as the Company is slowly going private through share repurchases. Why does this opportunity exist? It exists as the bear case against LXK is evident with a 20% short interest, as the

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