EFI has revealed it is in the midst of selling its Jetrion inkjet label presses business whilst reporting disappointing figures for the third quarter of this year.
Essentially, EFI is planning to spin off the printer manufacturer, sales and support of the Jetrion label printers, while keeping the intellectual property and the ink manufacturing. Gecht says that EFI has been in “an intensive discussion with one of the firms that contacted us in the past with an interest in taking over the product line.” This firm has now been revealed to be Xeikon.
He noted the industrial markets were bigger than the demand for digital labelling, adding that the “competitive landscape is much more crowded as label printing is the easiest technical application in inkjet.” Of course, that all depends on how you go about it, with other digital vendors having taken a bigger slice of the market.
The total revenue for the third quarter was $248.4 million, up 1% compared to third quarter 2016 revenue of $245.6 million. However, net income according to Generally Accepted Accounting Principles was $1.9 million, down 89% compared to $17.7 million for the same period in 2016. The cash flow from operating activities was $3.4 million, down 86% compared to $24.0 million during the same period in 2016.
Gecht commented: “The primary issues behind the weak revenue were a number of deals that got pushed out and softer, ceramic and display graphics along with the strategic change we’re making in regards to label printers.”
More worryingly, Gecht also said that the commercial print market is slowing, which has affected sales of the Fiery controllers. He pointed out: “The latest input trend report shows that decline in revenue in this segment over the last six months is the largest has been since the financial crisis.” This may affect the production digital print market though EFI is still trying to determine the reason for the slowdown. Gecht added: “but we do know that some customers are still waiting for new inkjet products and don’t seem compelled to buy the existing toner while some are shying away from investing in new equipment before seeing greater evidence of opportunity.”
He noted: “for now our working assumption for the Fiery is that quarterly revenues will remain at the low $16 million level for some time.” This is something that should worry everyone involved in selling production printers, since most of these use Fiery front ends so if EFI is experiencing problems then that will likely also affect other manufacturers.
However, Gecht went on to say: “On the positive side, the industrial textile business again achieved double-digit growth and we make significant progress in our rollout of Nozomi.” He said that EFI will ship four Nozomi’s by the end of this year and will make a further 24 next year, adding: “Our working assumption is that we will recognize $60 million in printers and ink revenue from these units during 2018 with the balance of the revenue recognized in 2018.”
Gecht concluded: “To reaccelerate growth, we are reallocating budget and talent toward our largest opportunities, in textile and packaging, along with making organizational changes and adding senior positions to improve focus and execution.”
Essentially, EFI’s strategy is to concentrate on developing industrial print solutions, meaning the Reggiani and FabriVu textile printers and the Nozomi corrugated machine, augmented by ink supplies for label printing and the Fiery platform. EFI has traditionally shied away from manufacturing printers so as not to compete with its Fiery customers, but these announcements seem to indicate that the company is repositioning itself as a manufacturer of industrial print solutions.
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