Bill Muir has been welcomed as CEO of EFI by a disappointing set of financial results, despite declaring record revenue of $257 million for the third financial quarter of the year. However, the company reported a pretax loss of $2.3 million ($4.2 million).
And inkjet, the division that accounts for 60% of those revenues, is responsible for the disappointment. There have been delays in shipping the new H3 and H5 hybrid printers, particularly the latter, and a hit on sales of existing products as customers wait for the new machines.
There was also a hit on ink sales as the shortage of photoinitiators from China affected supply and increased price that the company has to pay for what is a key component of its ink. Against this demand and sales of Nozomi, its single-pass inkjet machine designed for corrugated packaging, have been strong. The company shopped seven machines in Q3 and anticipates shipment of eight presses in the final quarter.
This demand has caused the company to revise revenue targets from this product upwards. What had been $50 million a year has become $65 million and now will top $70 million says the board. Next year Nozomi will bringing in $120 million, most from equipment sales. It takes 12 months for a new user to ramp demand for the inks to reach the $500,000 to $1 million expected per machine.
Just two weeks into the job, Muir has pointed to changes that are necessary to exploit the strong position the company has in the market. This comes down to presenting itself as a single company and tight integration across the product offerings and sectors. “For EFI to be at its very best, we must leverage the many capabilities we possess simultaneously and more seamlessly for our customers,” he told analysts in a call to discuss the results.
The company has been inconsistent in the way that it scales in support of its customers business and has been tardy in bringing innovation to market he says. The McKinley product lines, comprising currently of the H3 and H5, are not shipping in the numbers expected because of delays in production. And there is a gap at the high end of the market that another derivative of this platform will fill, but not until the second half of 2019.
The immediate future though belongs to Nozomi, currently the most successful of machines aimed at corrugated packaging (though not all machines are used in this way). The company is geared up to produce ten machines a quarter during 2019. EFI will also introduce a derivative of this print platform, called Bolt, for the textile sector. As this production level is based on a single-shift operation, there is potential to increase volumes.
The industrial inkjet division generated sales of $154.9 million ($142.9 million) making it comfortably the largest of the three divisions where EFI is active. Sales rose also in productivity software, up to $40.4 million ($37.2 million) while Fiery revenue continued its gradual decline to $61.8 million ($68.3 million).
One of the priorities for new CEO Bill Muir is to ensure that EFI tackles the delay in bringing new inkjet presses to market. The delay in delivering its H3 and H5 models, announced earlier this year, is fingered as a reason for the disappointing results.