Electronics For Imaging's CEO Discusses Acquisition Of Cretaprint (Transcript)

Electronics For Imaging, Inc. (EFII)

Acquisition of Cretaprint Conference Call

January 10, 2012 5:00 pm ET


JoAnn Horne – Investor Relations, Market Street Partners

Guy Gecht – Chief Executive Officer

Vincent Pilette – Chief Financial Officer


Shannon Cross – Cross Research

Ananda Baruah – Brean Murray, Carret & Co.

Keith Bachman – BMO Capital Markets

Morris Ajzenman – Griffin Securities



Good afternoon. My name is Valerie, and I will be your conference operator today. At this time, I would like to welcome everyone to the EFI call to discuss the acquisition of Cretaprint and Q4 2011 preliminary results. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

At this time, I will turn the call over to Ms. JoAnn Horne of Investor Relations. Ma'am, you may begin.

JoAnn Horne

Thank you, operator and thank you, everyone for joining us today. I have here with me today, Guy Gecht, our Chief Executive Officer; and Vincent Pilette, our Chief Financial Officer. Before we get started, let me review the Safe Harbor statement. During the call, we’ll be making forward-looking statements that are statements other than statements of historical facts including, but lot limited to our expected fourth quarter results, revenues and EPS, the impact of the Cretaprint acquisition on our 2012 results, our estimates regarding the ceramic inkjet products and revenue to be derived from that market and any statements or assumptions underlying any of the foregoing.

Forward-looking statements are statements of risks and uncertainties that could cause our results to differ materially or cause a material adverse effect on our results. Please refer to the risk factors discussed in our SEC filings and the press release. We do not undertake to update in light of new information or future events. In addition, reference will be made to non-GAAP financial measures. Information regarding the reconciliation of the non-GAAP and GAAP measures can be found in the press release that was issued this afternoon on our website on the IR section at www.efi.com.

I’ll now turn the call over Guy Gecht. Guy?

Guy Gecht

Thank you, JoAnn, good afternoon everyone and thank you for joining us on short notice. As you saw from our press release earlier today, we have two very exciting topics to discuss. First, we announced the acquisition of Cretaprint, a leading provider of inkjet printers for ceramic tiles. This transaction [extends our time] and further accelerates the growth of our inkjet segment, which was key factor in our record Q4 results. Our second piece of great news today.

We're very pleased to have achieved record revenues for the fourth quarter of 2011, with revenues of approximately $163 million. We expect non-GAAP earnings per share to be in the range of $0.34 to $0.35. Now this includes approximately $0.03 of negative non-operational FX impact. These solid results reflect the increasing importance of our direct sales businesses as we achieved record revenues in both the inkjet and APPS segments in Q4. Our direct business now represents close to 60% of total company revenues.

Changing the mix toward our APPS and inkjet segments where we typically sell directly to customers and enjoy growing recording revenue stream is that cornerstone in our strategy and particularly important in light of the uncertain economic environment, as we have greater control in successfully marketing, selling and supporting customers around the world. Obviously, we will have much more detail on our fourth quarter results and our outlook for the Q1 2012 on our regular [earning] call, scheduled for January 24.

As such, we don't we plan to provide additional detail about Q4 today, as the primary purpose of this call is to discuss the strategy behind our expansion into ceramic tile imaging, which we have been evaluating for a long time and our choice of Cretaprint to enable EFI to participate in this fast transition from analog to digital technology. Cretaprint, which is located in Spain, is a leading provider of inkjet printers for ceramic tile. EFI paid approximately $31 million in cash, in addition to up to $21 million earn-out based on growth targets over the next two years. We expect Cretaprint to contribute approximately 5% to 7% of our 2012 revenue and anticipate the acquisition will be immaterial to Q1 earnings and accretive to the full year 2012 results.

We are very excited about this transaction as it [extends the time] for inkjet business by about $500 billion, while tile imaging is estimated to be only 4% converted to digital technology today. The pressure in past couple of years on the construction industry has accelerated the adoption of digital print, due to both the reduced costs along with the saving presented by not getting inventory of hundreds of tile design. Further the capability and the quality of digital print have reached a level where it’s superior to the analog forces and as such it enables manufactures to charge a premium for the higher quality.

Currently tile imaging is one of the industries converting the fastest digital printing technology. as noted by an industry analyst in our press release this morning, the payback can be as fast as six months. Synergies are key factor behind this field. Cretaprint would benefit from EFI’s industrial leading inkjet R&D capabilities to innovate as well as supply chain synergies as both companies use similar designs and key components.

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