EFI posts record revenues, eyes 3D printing and inkjet opportunities
Wednesday, January 29, 2014
EFI has posted record Q4 and full year revenue increases following double digit revenue growth from all three of its operating segments.
Fourth quarter growth was spearheaded by the US-based manufacturer's Industrial Inkjet segment, comprising its Vutek superwide printers, EFI wide format printers, Jetrion digital label printers and Cretaprint printers, as well as its own brand UV inkjet inks.
Divisional revenues were up 16% for the quarter "driven by strong demand for the LED line up, the HS 100 and Cretaprint".
Sales of inkjet printers were aided in Q4 by "agressive" pricing, which resulted in gross margin for the segment dropping below the 40% target. EFI's new chief financial officer David Reeder said that this was enabled by gross margin growth across EIF's other two divisions.
"We had margin strength both from Fiery up 110 basis points and productivity software of 60 basis points," he said. "What that did is it enabled us to opportunistically expand our industrial inkjet footprint while keeping corporate gross margin flat."
EFI chief executive Guy Gecht added: "We definitely allowed our sales force to be a little bit more aggressive, giving the opportunity to grow more units, and we feel very good about the ink growth especially.
"We know that whatever we sell in Q4, we are going to get return in years to come. I think that was the right action to take in Q4 and we will see if we have the right balance between going after more install base and keeping [the gross margin] around 40%."
UV ink volume was up 33% in Q4 and 25% for the year, which Gecht described as "an outstanding number", adding: "That means our customers are really doing very well with our inkjet product and obviously all the inkjet printers we shipped in Q4 - most of them at least – will start to generate ink revenue for us during Q1".
Gecht also hinted at a strong product pipeline for 2014, including a new LED printer that would be "a different level in productivity", while highlighting the potential for EFI's Productivity Software division to expand into the nascent 3D printing market.
"We are looking at some other areas including the much talked about 3D printing where a lot of customers are telling us the same challenges that the printing industry saw in the last 10-15 years are starting to emerge," said Gecht.
"That means that they need an accurate estimate on the cost of the product and they need to be able to schedule that, they need to connect the buyer to the producer over the internet. So we are looking carefully at the opportunity with that emerging market.
EFI's Fiery digital front end (DFE) business posted 10% revenue growth in Q4 and revenues for the coming quarter are predicted to be roughly equivalent despite Q1 being a seasonally low quarter.
Gecht highlighted the recent Landa partnership, which - although not expected to lead to any "meaningful revenue contribution in 2014" - he described as "an important statement about Fiery leadership in the digital content market".
Meanwhile, EFI will release new Fiery DFE software in 2014 while it will also receive a boost from OEM partners launching new products - the first of which is expected to be announced in the next few weeks.
EFI's Productivity Software division grew 14% in Q4 with good demand in Europe and Latin America; Gecht said EFI would continue to deliver new releases, localisation and more functionality through 2014 in the form of new modules, which would be available on both cloud-bases SaaS and subscription basis.
Group revenues grew 13% in Q4, to $197.2m, and 12% for the full year, to $727.7m. EFI also posted a significant increase in operating income, which - excluding the $118m boost from the sale of land and buildings - came in at $21.9m for the quarter and $57.4m for the year.
This represented an 86% increase in Q4 and 69% growth year-on-year. Pre-tax profit (excluding the building sale) was similarly up 85% for the quarter at $22.5m and 60% for the year at $55.9m.