Lexmark (LXK) Tops Q2 EPS by 16c; Announces Restructuring Actions

Lexmark (NYSE: LXK) reported Q2 EPS of $0.97, $0.16 better than the analyst estimate of $0.81. Revenue for the quarter came in at $879 million versus the consensus estimate of $889.73 million.

2015 Restructuring Expected to Generate Ongoing Pretax Savings of $65 Million

• Lexmark is announcing restructuring actions today designed to increase profitability and operational efficiency.
• These global restructuring actions are expected to be broad-based but are primarily expected to capture the anticipated cost and expense synergies from the Kofax and ReadSoft acquisitions.
• Also, as the strong U.S. dollar continues to negatively impact the company's earnings, restructuring actions will also be taken to reduce cost and expense structure in the ISS segment and corporate organization.
• Primary impact will be general and administrative, marketing and development positions as well as the consolidation of regional facilities.
• These actions are expected to result in the elimination of approximately 500 positions worldwide over the next 18 months, with approximately one third of the positions being shifted to low cost countries.
• These actions are expected to generate $2 million savings in 2015, and annualized savings of $65 million beginning in 2017. Lexmark expects the savings will be split approximately 90 percent operating expense, and 10 percent cost of goods sold.
• The total pretax cost for these actions is expected to be approximately $55 million, with $37 million incurred in 2015 and the remainder in 2016.
• The cash impact for these actions is expected to be $55 million, with $13 million incurred in 2015 and the remainder in 2016.

Guidance:

Lexmark sees Q3 2015 EPS of $0.51-$0.61, versus the consensus of $0.89.

Lexmark sees FY2015 EPS of $3.55-$3.75, versus the consensus of $3.68.

For earnings history and earnings-related data on Lexmark (LXK) click here.

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