Lexmark Beats, Announces Restructuring

Oct.23.07 | About: Lexmark International, (LXK)

Lexmark International reported a 47% drop in third-quarter net income to $45.2 million, or $0.48/share ($0.60/share on an adjusted basis), as sales declined 3% to $1.24B. Both figures beat analyst expectations of $0.13/share on sales of $1.19B. In a statement, CEO Paul J. Curlander said despite Q3 EPS being better than expected, the significant difference in y/y EPS reflects the "continuation of a very challenging situation in our consumer market segment" (full earnings call transcript later today). In order to improve its cost and expense structure, Lexmark announced a restructuring plan which includes closing a manufacturing facility in Mexico and further consolidation of global activities in lower-cost regions. The company plans to relocate 1,650 jobs to lower-cost countries and forecasts total cost savings of around $40M in 2008 and $60M annually thereafter. Lexmark will take pretax charges of $20M in 2007 and $70M in 2008. Lexmark said it expects Q4 EPS of $0.32 to $0.42, or $0.50 excluding restructuring charges, compared to analysts' average estimate of $0.40. Shares of Lexmark rose 3.3% to $43.74 on Monday and were last up 6.3% to $46.50 in very thin pre-market trading.

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