EFI reports record Q3 results with $1bn sales target still in its sights

EFI has reported record Q3 sales of $245.6m (£202m), an increase of 7% compared with its $228.7m sales in Q3 2015, leaving its $1bn annual turnover target still just within reach.

EFI chief executive Guy Gecht attributed the results to the company’s “balanced business model”.

He said: “We are delighted with the strong organic growth in our Industrial Inkjet and Productivity Software segments, coupled with a rebound in cash from operations.

“We are entering the home stretch of 2016 with a robust pipeline of opportunities to partner with customers around the world in transforming and growing their businesses.”

The business reported Industrial Inkjet revenue of $143m, up 17% year-on-year, Productivity Software revenue of $40m, up 25% year-on-year, and Fiery revenue of $63m, down 15% year-on-year. The Fiery drop was attributed to one unspecified partner.

“We went into the quarter expecting product delays from a couple of partners and deferred buying decisions as customers wait for some of the new engines they saw at Drupa. Even with these issues, all but one of our partners came in largely flat with Q3 2015,” said Gecht.

“The orders from one of our largest partners were impacted by two new issues. The main factor was that this partner unexpectedly implemented a strict balance sheet optimisation push, which they have told us will continue to the end of the year.

“In addition, sales were weak in the exclusive Asia-Pacific channel, where soft demand not only impacted our revenue but caused this channel to push their own Asia-Pacific low-cost DFE alternatives.”

Gecht said the company expects weakness in the Asian market to continue but is upbeat about the opportunities it sees for Fiery sales to rebound in 2017, as the new platforms shown at Drupa start to ship.

Added on to its first-half results, the company’s revenue for the first nine months of 2016, to the end of September, was $725.4m, up 16% on the $626m sales at the same point last year.

It now requires Q4 sales of at least $274.6m to hit its $1bn target. In Q4 last year it recorded sales of $256.5m.

“The Fiery shortfall in the second half will make it challenging to achieve the $1bn revenue targets,” said Gecht.

“We’ll push hard to pass this milestone despite all the challenges. If we achieve the high end of the Q4 guidance we will successfully hit $1bn in revenue.”

Q3 gross profit was $125.2m, up 7.7% compared to $116.3m in Q3 2015, while gross profit for the first nine months of 2016 was $369m, up 11.8% from the $330m recorded at the same point in 2015.

Gecht said the Drupa-launched Nozomi inkjet corrugated press will deliver a boost for the business in 2017.

He added the first beta site will be installed during Q1 with a second site going live in Q2 and commercial availability beginning in June. The company expects to sell 10 units in 2017 and 20 in the first 12 months of shipments.

With regards to a report published in the US earlier this month that questioned EFI’s revenue reporting, Gecht said: “You can only imagine how frustrated we are that this anonymous group issued this report with so many misleading statements during our quiet period, so we could not instantly respond. I found the personal attacks levied against the board and [chief financial officer] Mark [Olin] to be distasteful.”

He added the firm has a highly qualified board of directors, a strong board audit committee and an experienced internal accounting team and that EFI promotes a strong culture from the top about the importance of ethical behavior and transparency.


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