Electronics For Imaging, Inc. (Nasdaq:EFII), a world leader in
customer-focused digital printing innovation, today announced
preliminary financial results for the three months ended December
31, 2018:
- Revenues are expected to be between $255 million to $257
million,
- GAAP earnings per share for the period are expected to be
$(0.18)-$(0.08), while non-GAAP earnings per share are expected to
be $0.45-$0.47, and
- Cash flow from operating activities is expected to be $30
million to $33 million for the quarter or approximately 93-98% of
non-GAAP net income for the full year.
The Company indicated that its results were impacted by
weakening economic conditions experienced across its direct
businesses, with customers delaying spend on capital equipment and
software, which materially reduced the Company’s close rates at
quarter end.
“Late in the quarter we began seeing a substantial shift in
buying behavior versus the prior year in many of the industries we
serve. This was felt most significantly in the Americas. Customers
became increasingly concerned about economic trends and many
decided to defer capital expenditures until they had greater
clarity on the economic environment,” said Bill Muir, CEO of EFI.
“Though we entered the quarter with a robust pipeline and our
Inkjet sales progress through mid-December was tracking ahead of
the prior year, the last few weeks of the quarter were
exceptionally weak.”
The Company reported that the majority of the revenue shortfall
was in its Industrial Inkjet business, which declined approximately
5-6% year-over-year. Display Graphics and Building Materials, which
were expected to be weak in the quarter, were down more
significantly than anticipated. As expected, there was strong
demand for the new mid-range Display Graphics products, which sold
out, and again weakness at the high end of the portfolio. However,
there was greater than anticipated softness around more mature
hybrid products. The competitive advantage offered by the newest
products outweighed some economic concerns, but not enough to make
up the shortfall from the mature hybrid products.
In Building Materials, the shortfall was primarily in China
along with other developing economies, with deals pushed out due to
the weak construction industry. Textile was also below plan, with
weakness in converting the pipeline during December. Nozomi revenue
was approximately $65 million for the full year with some customers
delaying decisions until 2019, with concerns about capex spending
cited as a significant reason. The Company continues to expect that
Nozomi will achieve revenues of $120 million for full year
2019.
Productivity Software declined approximately 6-7% year-over-year
due to pushed deals and a significantly lower fourth quarter close
rate. The Americas were the main source of the weakness for
Software, with currency also a factor for delays in Latin America
deal closings.
Fiery revenues are expected to be largely in line with guidance,
at approximately $60 million.
The Company believes that the majority of the unclosed deals
across all of the business units remain in the pipeline and were
not lost to competition.
“While I am very disappointed in the quarter, I remain confident
in our market positioning and new product portfolio. One example is
our BOLT printer, which was very well received by the textile
industry when it was introduced in October. I continue to be
encouraged by the large number of packaging companies actively
evaluating Nozomi, as they look to leverage the new opportunities
that digital technology brings to their business, in what we expect
will be a $9 billion market for equipment and ink.”
During the quarter, EFI also completed steps to enhance its
capital structure, including issuing a $150 million convertible
bond and, on January 2, 2019, closed on a $150 million revolving
credit facility.
Mr. Muir continued, “As I learn more about our industry and
spend time with customers, I see so many opportunities, but I also
see gaps in our execution. The industry is consolidating, and our
customer base increasingly comprises larger and more complex
organizations. In my first few months with EFI, it has become clear
that our go-to-market approach has not sufficiently evolved to meet
the growing needs and expectations of many of our customers.
Additionally, the results of the quarter reinforce the need for
comprehensive strength across our product portfolio; gaps such as
those we are currently experiencing in the high-end of Display
Graphics only exacerbate revenue headwinds.
“I am firmly committed to addressing the robustness of our
portfolio, augmenting our go-to- market approach, and improving the
customer experience. Initiatives to address these areas have
already kicked off, and I look forward to providing detail around
our plans at our Investor Day in May. I am confident we will see
substantial progress from our efforts late in the year, allowing us
to deliver the results our customers, shareholders and employees
deserve,” concluded Muir.
Preliminary & Fourth Quarter Conference
Calls
The Company will host a conference call to discuss these
preliminary fourth quarter results on January 15, 2019 at 5:00 p.m.
Eastern Time (2:00 p.m. Pacific Time).
The Company will also host its quarterly conference call to
discuss fourth quarter and 2018 results on January 30, 2019 at 5:00
p.m. Eastern Time (2:00 p.m. Pacific Time).
The conference calls will be webcast, and investors will be able
to access the webcast at the Investor Relations, Events &
Presentations portion of EFI's web site at http://ir.efi.com/.
A replay of the webcast will be available online at the website
following the conclusion of the conference call.
About EFIEFI™ is a global technology company,
based in Silicon Valley, and is leading the worldwide
transformation from analog to digital imaging. We are
passionate about fueling customer success with products that
increase competitiveness and boost productivity. To do
that, we develop breakthrough technologies for the manufacturing of
signage, packaging, textiles, ceramic tiles, and personalized
documents, with a wide range of printers, inks, digital front ends,
and a comprehensive business and production workflow suite
that transforms and streamlines the entire production
process. (www.efi.com)
Safe Harbor for Forward Looking
StatementsCertain statements in this press release are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Statements other than
statements of historical fact including words such as “achieve”,
“address”, “believe”, “continue”, “develop”, “expect”,
“further”, “progress”, and "will" and statements in the
future tense are forward looking statements. The statements in this
press release that could be deemed forward-looking statements
include statements regarding EFI’s strategy, plans, expectations
regarding its revenue growth, introduction of new products, product
portfolio, productivity, future opportunities for EFI and its
customers, demand for products, the CEO transition, and any
statements or assumptions underlying any of the foregoing.
Forward-looking statements are subject to certain risks and
uncertainties that could cause our actual future results to differ
materially, or cause a material adverse impact on our results.
Potential risks and uncertainties include, but are not necessarily
limited to, intense competition in each of our businesses,
including competition from products developed by EFI’s customers;
our ability to remediate the material weaknesses identified in
EFI’s internal control over financial reporting; the uncertainty of
the outcome of the pending securities lawsuits against EFI;
unforeseen expenses; fluctuations in currency exchange rates; the
difficulty of aligning expense levels with revenue; management’s
ability to forecast revenues, expenses and earnings; our ability to
successfully integrate acquired businesses; changes in the mix of
products sold; the uncertainty of market acceptance of new product
introductions; challenge of managing asset levels, including
inventory and variations in inventory levels; the uncertainty of
continued success in technological advances; the challenges of
obtaining timely, efficient and quality product manufacturing and
supply of components; any world-wide financial and economic
difficulties and downturns; adverse tax-related matters such as tax
audits, changes in our effective tax rate or new tax legislative
proposals; the unpredictability of development schedules and
commercialization of products by the leading printer manufacturers
and declines or delays in demand for our related products; the
impact of changing consumer preferences on demand for our textile
products; litigation involving intellectual property rights or
other related matters; the uncertainty regarding the amount and
timing of future share repurchases by EFI and the origin of funds
used for such repurchases; the market prices of EFI's common stock
prior to, during and after the share repurchases; and any other
risk factors that may be included from time to time in the
Company’s SEC reports.
The statements in this press release are made as of the date of
this press release and are subject to revision until the Company
will have filed its Annual Report on Form 10-K for the year
ended December 31, 2018. EFI undertakes no obligation to
update information contained in this press release. Amounts
are subject to rounding.
For further information regarding risks and uncertainties
associated with EFI’s businesses, please refer to the section
entitled “Risk Factors” in the Company’s SEC filings, including,
but not limited to, its annual report on Form 10-K and its
quarterly reports on Form 10-Q, copies of which may be obtained by
contacting EFI’s Investor Relations Department by phone at
650-357-3828 or by email at investor.relations@efi.com or
EFI’s Investor Relations website at www.efi.com.
Guidance ($M) |
Q4 2018 |
GAAP Gross
Margin |
approx
48% - 49% |
Non-GAAP
Gross Margin |
approx
48% - 49% |
GAAP
EPS |
$(0.20) - $0.00 |
Non-GAAP
EPS |
$0.45
- $0.47 |
Shares used
in diluted per share calculation |
44,528 |
Investor RelationsJoAnn HorneMarket Street
Partners415-445-3233
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