FREMONT, Calif., July 17, 2014 (GLOBE NEWSWIRE) -- Electronics For Imaging, Inc. (Nasdaq:EFII), a world leader in customer-focused digital printing innovation, today announced its results for the second quarter of 2014.
For the quarter ended June 30, 2014, the Company reported record second quarter revenue of $193.0 million, up 7% compared to second quarter 2013 revenue of $180.3 million. Second quarter 2014 non-GAAP net income was $21.0 million or $0.44 per diluted share, up 15% and 16%, respectively, compared to non-GAAP net income of $18.3 million or $0.38 per diluted share for the same period in 2013. GAAP net income was $6.9 million or $0.14 per diluted share, down 27% and 30%, respectively, compared to $9.4 million or $0.20 per diluted share for the same period in 2013.
For the six months ended June 30, 2014, the Company reported revenue of $381.7 million, up 9% year-over-year compared to $351.7 million for the same period in 2013. Non-GAAP net income was $41.3 million or $0.86 per diluted share, compared to non-GAAP net income of $34.0 million or $0.71 per diluted share for the same period in 2013. GAAP net income was $17.0 million or $0.35 per diluted share, compared to $17.8 million or $0.37 per diluted share for the same period in 2013.
"The EFI team delivered yet another solid quarter, showcasing our balanced portfolio and the benefit of the EFI ecosystem," said Guy Gecht, CEO of EFI. "Our innovation leadership was the driving factor, with new products launched across our Industrial Inkjet and Fiery portfolios. We look for new innovations to fuel our results for the second half of the year as we help our global customer base achieve their own growth objectives."
EFI will discuss the Company's financial results by conference call at 2:00 p.m. PDT today. Instructions for listening to the conference call over the Web are available on the investor relations portion of EFI's website at www.efi.com.
About EFI
EFI™ (www.efi.com) is a worldwide provider of products, technology, and services leading the transformation of analog to digital imaging. Based in Silicon Valley with offices around the globe, the company's powerful integrated product portfolio includes digital front-end servers; superwide, wide-format, label, and ceramic inkjet presses and inks; production workflow, web-to-print, and business automation software; and office, enterprise, and mobile cloud solutions. These products allow users to produce, communicate and share information in an easy and effective way, and enable businesses to increase their profits, productivity, and efficiency.
Safe Harbor for Forward Looking Statements
Certain 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 "anticipate", "believe", "consider", "continue", "estimate", "expect", "look", and "plan" 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, product portfolio, productivity, future opportunities for EFI and its customers, demand for products, 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, unforeseen expenses; the difficulty of aligning expense levels with revenue; management's ability to forecast revenues, expenses and earnings; 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; changes in the mix of products sold; the uncertainty of market acceptance of new product introductions; intense competition in each of our businesses, including competition from products developed by EFI's customers; 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; litigation involving intellectual property rights or other related matters; our ability to successfully integrate acquired businesses; 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; the compliance with the new requirements regarding the "conflict minerals," if they are found to be used in our products, 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. EFI undertakes no obligation to update information contained in this press release. 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.
Use of Non-GAAP Financial Information
To supplement our condensed consolidated financial results prepared under generally accepted accounting principles, or GAAP, we use non-GAAP measures of net income and earnings per diluted share that are GAAP net income and GAAP earnings per diluted share adjusted to exclude certain recurring and non-recurring costs, expenses and gains. A reconciliation of the adjustments to GAAP results for the six months ended June 30, 2014 and 2013 is provided below. In addition, an explanation of how management uses non-GAAP financial information to evaluate its business, the substance behind management's decision to use this non-GAAP financial information, the material limitations associated with the use of non-GAAP financial information, the manner in which management compensates for those limitations, and the substantive reasons management believes that this non-GAAP financial information provides useful information to investors is included under "About our Non-GAAP Net Income and Adjustments" after the tables below.
These non-GAAP measures are not in accordance with or an alternative to GAAP and may be materially different from other non-GAAP measures, including similarly titled non-GAAP measures, used by other companies. The presentation of this additional information should not be considered in isolation from, as a substitute for, or superior to, net income or earnings per diluted share prepared in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect certain items that may have a material impact upon our reported financial results. We expect to continue to incur expenses of a nature similar to the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP net income and non-GAAP earnings per diluted share should not be construed as an inference that these costs are unusual, infrequent, or non-recurring.
Electronics For Imaging, Inc. | ||||
Condensed Consolidated Statements of Operations | ||||
(in thousands, except per share data) | ||||
(unaudited) | ||||
Three Months Ended | Six Months Ended | |||
June 30, | June 30, | |||
2014 | 2013 | 2014 | 2013 | |
Revenue | $ 192,965 | $ 180,298 | $ 381,653 | $ 351,657 |
Cost of revenue | 89,192 | 82,315 | 174,905 | 159,814 |
Gross profit | 103,773 | 97,983 | 206,748 | 191,843 |
Operating expenses: | ||||
Research and development | 33,650 | 32,092 | 66,723 | 63,159 |
Sales and marketing | 35,485 | 34,512 | 71,789 | 67,248 |
General and administrative | 15,509 | 13,343 | 32,356 | 27,041 |
Amortization of identified intangibles | 5,112 | 4,946 | 9,982 | 9,873 |
Restructuring and other | 1,547 | 1,269 | 2,641 | 3,247 |
Total operating expenses | 91,303 | 86,162 | 183,491 | 170,568 |
Income from operations | 12,470 | 11,821 | 23,257 | 21,275 |
Interest and other expense, net | (159) | (388) | (285) | (3,236) |
Income before income taxes | 12,311 | 11,433 | 22,972 | 18,039 |
Provision for income taxes | (5,399) | (2,009) | (5,978) | (253) |
Net income | $ 6,912 | $ 9,424 | $ 16,994 | $ 17,786 |
Diluted EPS calculation | ||||
Net income | $ 6,912 | $ 9,424 | $ 16,994 | $ 17,786 |
Net income per diluted common share | $ 0.14 | $ 0.20 | $ 0.35 | $ 0.37 |
Shares used in diluted per share calculation | 47,987 | 48,254 | 48,163 | 48,149 |
Electronics For Imaging, Inc. | ||||
Reconciliation of GAAP Net Income to Non-GAAP Net Income | ||||
(in thousands, except per share data) | ||||
(unaudited) | ||||
Three Months Ended | Six Months Ended | |||
June 30, | June 30, | |||
2014 | 2013 | 2014 | 2013 | |
Net income | $ 6,912 | $ 9,424 | $ 16,994 | $ 17,786 |
Amortization of identified intangibles | 5,112 | 4,946 | 9,982 | 9,873 |
Stock based compensation – Cost of revenue | 582 | 382 | 1,114 | 851 |
Stock based compensation – Research and development | 1,931 | 1,671 | 4,166 | 3,538 |
Stock based compensation – Sales and marketing | 1,172 | 947 | 2,583 | 1,835 |
Stock based compensation – General and administrative | 3,968 | 2,798 | 8,254 | 6,218 |
Restructuring and other | 1,547 | 1,269 | 2,641 | 3,247 |
General and administrative: | ||||
Acquisition-related transaction costs | 169 | 672 | 674 | 691 |
Change in fair value of contingent consideration | (1,037) | (544) | (1,594) | (806) |
Litigation settlements | 122 | — | 237 | — |
Sublease income related to our deferred property sale | — | (997) | — | (1,717) |
Depreciation expense related to our deferred property sale | — | 410 | — | 820 |
Interest and other expense, net | ||||
Interest expense related to our deferred property sale | — | 611 | — | 1,491 |
Tax effect of non-GAAP adjustments | 481 | (3,302) | (3,719) | (9,789) |
Non-GAAP net income | $ 20,959 | $ 18,287 | $ 41,332 | $ 34,038 |
Non-GAAP net income per diluted common share | $ 0.44 | $ 0.38 | $ 0.86 | $ 0.71 |
Shares used in diluted per share calculation | 47,987 | 48,254 | 48,163 | 48,149 |
Electronics For Imaging, Inc. | ||
Condensed Consolidated Balance Sheets | ||
(in thousands) | ||
(unaudited) | ||
June 30, | December 31, | |
2014 | 2013 | |
Assets | ||
Cash and cash equivalents | $ 163,947 | $ 177,084 |
Short-term investments | 160,971 | 177,957 |
Accounts receivable, net | 147,802 | 130,717 |
Inventories | 70,518 | 68,345 |
Other current assets | 45,403 | 46,461 |
Total current assets | 588,641 | 600,564 |
Property and equipment, net | 83,950 | 84,829 |
Goodwill | 240,671 | 233,203 |
Intangible assets, net | 63,674 | 68,722 |
Other assets | 16,294 | 39,066 |
Total assets | $ 993,230 | $ 1,026,384 |
Liabilities & Stockholders' equity | ||
Accounts payable | $ 80,421 | $ 75,132 |
Accrued and other liabilities | 115,130 | 121,084 |
Income taxes payable | 2,416 | 4,654 |
Total current liabilities | 197,967 | 200,870 |
Imputed financing obligation | 11,991 | 11,500 |
Contingent and other liabilities | 5,033 | 6,815 |
Deferred tax liabilities | 4,749 | 6,738 |
Long term taxes payable | 15,037 | 33,011 |
Total liabilities | 234,777 | 258,934 |
Total stockholders' equity | 758,453 | 767,450 |
Total liabilities and stockholders' equity | $ 993,230 | $ 1,026,384 |
Electronics For Imaging, Inc. | ||
Condensed Consolidated Statements of Cash Flows | ||
(in thousands) | ||
(unaudited) | ||
Six Months Ended | ||
June 30, | ||
2014 | 2013 | |
Cash flows from operating activities: | ||
Net income | $ 16,994 | $ 17,786 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 14,806 | 14,343 |
Deferred taxes | (5,951) | (7,714) |
Tax benefit from employee stock plans | 5,054 | 2,474 |
Excess tax benefit from stock-based compensation | (6,647) | (2,637) |
Stock-based compensation | 16,117 | 12,442 |
Provisions for inventory obsolescence | 2,759 | 2,361 |
Provisions for bad debts and sales-related allowances | 422 | 2,169 |
Contingent consideration payments related to businesses acquired | (10) | (618) |
Other non-cash charges and gains | 193 | 627 |
Changes in operating assets and liabilities, net of effect of acquired businesses | (10,356) | 444 |
Net cash provided by operating activities | 33,381 | 41,677 |
Cash flows from investing activities: | ||
Purchases of short-term investments | (40,483) | (17,781) |
Proceeds from sales and maturities of short-term investments | 56,392 | 34,513 |
Purchases, net of proceeds from sales, of property and equipment | (10,610) | (27,324) |
Businesses purchased, net of cash acquired | (6,585) | (4,533) |
Net cash used for investing activities | (1,286) | (15,125) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 11,415 | 7,906 |
Purchases of treasury stock and net share settlements | (60,761) | (17,837) |
Repayment of debt assumed through business acquisitions | (519) | (1,621) |
Contingent consideration payments related to businesses acquired | (2,060) | (9,998) |
Excess tax benefit from stock-based compensation | 6,647 | 2,637 |
Net cash used for financing activities | (45,278) | (18,913) |
Effect of foreign exchange rate changes on cash and cash equivalents | 46 | (1,625) |
Increase (decrease) in cash and cash equivalents | (13,137) | 6,014 |
Cash and cash equivalents at beginning of quarter | 177,084 | 283,996 |
Cash and cash equivalents at end of quarter | $ 163,947 | $ 290,010 |
Electronics For Imaging, Inc. | ||||
Revenue by Operating Segment and Geographic Area | ||||
(in thousands) | ||||
(unaudited) | ||||
Three Months Ended | Six Months Ended | |||
June 30, | June 30, | |||
Revenue by Operating Segment | 2014 | 2013 | 2014 | 2013 |
Industrial Inkjet | $ 93,899 | $ 88,003 | $ 181,843 | $ 168,306 |
Productivity Software | 30,760 | 28,509 | 62,453 | 56,238 |
Fiery | 68,306 | 63,786 | 137,357 | 127,113 |
Total | $ 192,965 | $ 180,298 | $ 381,653 | $ 351,657 |
Revenue by Geographic Area | ||||
Americas | $ 101,567 | $ 100,516 | $ 202,548 | $ 194,413 |
EMEA | 66,899 | 49,984 | 127,440 | 100,030 |
APAC | 24,499 | 29,798 | 51,665 | 57,214 |
Japan | 5,770 | 5,815 | 11,587 | 13,034 |
APAC, ex Japan | 18,729 | 23,983 | 40,078 | 44,180 |
Total | $ 192,965 | $ 180,298 | $ 381,653 | $ 351,657 |
About our Non-GAAP Net Income and Adjustments
Use of Non-GAAP Financial Information
To supplement our condensed consolidated financial results prepared in accordance with GAAP, we use non-GAAP measures of net income and earnings per diluted share that are GAAP net income and GAAP earnings per diluted share adjusted to exclude certain recurring and non-recurring costs, expenses, and gains.
We believe that the presentation of non-GAAP net income and non-GAAP earnings per diluted share provides important supplemental information regarding non-cash expenses and significant recurring and non-recurring items that we believe are important to understanding financial and business trends relating to our financial condition and results of operations. Non-GAAP net income and non-GAAP earnings per diluted share are among the primary indicators used by management as a basis for planning and forecasting future periods and by management and our Board of Directors to determine whether our operating performance has met specified targets and thresholds. Management uses non-GAAP net income and non-GAAP earnings per diluted share when evaluating operating performance because it believes the exclusion of the items described below, for which the amounts and/or timing may vary significantly depending on the Company's activities and other factors, facilitates comparability of the Company's operating performance from period to period. We have chosen to provide this information to investors so they can analyze our operating results in the same way that management does and use this information in their assessment of our business and the valuation of our Company.
Use and Economic Substance of Non-GAAP Financial Measures
We compute non-GAAP net income and non-GAAP earnings per diluted share by adjusting GAAP net income and GAAP earnings per diluted share to remove the impact of amortization of acquisition-related intangibles, stock-based compensation expense, restructuring and other expenses, acquisition-related transaction expenses, costs to integrate such acquisitions into our business, changes in the fair value of contingent consideration, litigation settlement charges, imputed interest expense and depreciation, net of accrued sublease income and capitalized interest, related to the sale of our corporate headquarters facility and related land, and the tax effects of those adjustments. Effective in the first quarter of 2014, we use a constant non-GAAP tax rate of 19%, which we believe reflects the long term average tax rate based on our international structure and geographic distribution of revenue and profit.
These excluded items are described below: