IKON Announces Fourth Quarter and Fiscal 2004 Results2 Nov, 2004
IKON Announces Fourth Quarter and Fiscal 2004 Results
IKON Office Solutions reported net income for the fourth quarter was $25.6 million on revenues of $1.17 billion.
Revenues for the fourth quarter of Fiscal 2004 were $1.17 billion compared to $1.20 billion for the fourth quarter of Fiscal 2003, a decline of 2.5%. Targeted revenues increased by 3% and represented 96% of the revenue mix. Targeted revenues exclude finance revenues from the Company's exit from its captive leasing business in North America in the second and third quarters of Fiscal 2004, and de-emphasized technology hardware. Foreign currency translation provided a 1.5% benefit to total revenues.
"Our fourth quarter performance reflects steady progress toward our long-term objectives, as we continue to shift to a stronger product, services, and customer mix," stated Matthew J. Espe, IKON's Chairman and Chief Executive Officer. "We maintained our focus on our strategic priorities: operational leverage, optimizing our core sales and service capabilities in areas such as national accounts and color, and expansion into profitable adjacencies such as Professional Services. Our national account business continues to be successful with revenues up 40% over the same period in Fiscal 2003. Color revenues increased by 19% in the quarter, strengthening our prospects for future service and supply revenues. Also in the quarter, we launched Enterprise Services' new integrated solutions portfolio of document management services that will allow us to address the specific business problems and document challenges our customers are facing in both office and production environments. Our new partners in this endeavor are best-in-class providers like EMC (Documentum), Captaris, Kofax and Equitrac, who, together with our equipment partners, enable us to offer complete, end-to-end solutions addressing every phase of the document management lifecycle.
"Two major factors contributed to our performance in the quarter: the slower summer months, which had a greater impact on the volume experienced in our off-site Managed Services businesses than we anticipated, and our aggressive posture in winning new transactions in some of our growth platforms, which caused some softness in our Net Sales margins. However, we are exiting the fourth quarter better positioned for growth in Fiscal 2005; in fact, the fourth quarter marked our highest quarter for new customer wins in both our national account group and our facilities management business - the largest component of Managed Services. We are clearly seeing the benefits of our strategic investments in 2004 and look forward to applying that same rigor to other areas of the business in 2005.
"This year marked a strategic milestone for us as we commenced the transition out of our lease financing business in North America as part of a new strategic alliance with GE Commercial Finance ("GE") and achieved a more attractive business model with a lower risk profile, a more favorable capital structure, and expanded alternatives for cash usage. The balance sheet is strong; 44% of our $805 million in corporate debt matures in 2025/2027; and, we have $473 million in cash on hand," Mr. Espe concluded.