EFI has crept over $1 billion in sales for the first time in its history, but at the cost of pretax profits and with a weak ending to the final quarter of the year.
CEO Bill Muir is optimistic for the longer term but warns that the first quarter will not show any immediate improvement. “Q1 will be the low point in this transition year,” he has told financial analysts in a conference to mark the release of the results.
The incoming CEO has a number of issues on his plate which will improve margins. There will be a greater attention to ensure that the company is buying efficiently. Mid-single-digit percentage point savings have been identified, he says. A high level appointment will focus on this aspect of business.
The display graphics business needs attention he says, to “avoid delayed product cycle cadence that has impacted display graphics”. The H3 hybrid printer is fully available, but the larger H5 has only become available in the final quarter of the year. This division is also to get a dedicated president as Muir brings in a team that has worked with him in the past.
More importantly for EFI’s future, the company will be building deeper expertise in the new markets it is approaching, namely packaging with Nozomi and textiles with Bolt. The customers are larger and more complex business than the family owned companies that have been EFI’s core customers in the display graphics business.
He is at pains to stress that this is not a change in how the company approaches existing customers, but in addition to that sales effort. There have been multiple sales of Nozomi to existing customers, but Nozomi sales were slower in the final quarter despite being higher than expected over the course of the year.
The company has a single shift manufacturing operation that can produce ten units a quarter and which can scale through increasing the number of shifts. It means that Muir can look forwards to growth in sales in the second half giving overall growth in revenue and earnings per share over the financial year.
In 2018 sales reached $1.02 billion ($993.3 million) with a net loss cut to $1.0 million ($15.3 million loss). Muir continues to stress that EFI’s technology platform was key reason that attracted him to the business. “I am confident we have the right strategy in place to match EFI’s technological expertise with the superior execution that will delight our customers,” he says.
By Gareth Ward
Nozomi, along with Bolt, will be a key driver of growth for EFI, but will require a different approach to sales says new CEO Bill Muir. He is also instigating changes to introduce efficiency changes in the purchasing area and to speed up innovation in display graphics.