The pioneer manufacturers of lamination film in China.

electronics for imaging\'s ceo hosts 2013 investor day webcast (transcript)

by:Top-In     2020-08-07
Imaging Electronics Co. , Ltd. (NASDAQ:EFII)
Daily broadcast of 2013 investors (Transcript)
November 8, 2013 morning 9:00 etexecutivesguy gecht-
Chief Executive Officer OfficerGhilad Dziesietnik-
Chief Technology Officer Scott Schinlever-
Senior vice president and general manager, EFI inkjettobyvis-
Senior vice president and general manager, EFI FieryCharlie Grace
Vice President, EFI AmericasDennis Gus-
Bennett-
Image options for Olin
Temporary cfoanalyst Jim Suva
Shannon Cross, Citigroup
Matt Kempler
I see everyone here, thank you for coming.
I think you will have a very good day and we will provide you, a lot of people, with information about future opportunities.
So I have a short day.
Normally I am the messenger, but there are actually some great people behind me who deliver the results globally and you will hear from some of them today.
Before we leave, we would like to remind you that we should all be well aware of the safe harbor now, so do not waste time on this.
From the beginning of what we are going to talk about, if you want to summarize three clear messages, you will hear the first one more and more, and we are in the early stages of analog to digital conversion, so we benefit from it, if all the growth you see from us is related to this, but we will tell you how far it is, in the early innings, by the way, I used a baseball movie. it was good long ago.
So when you are sure that opportunity is organic, we will also tell you why we think EFI is the best place to capture the opportunity, in the market in which we compete, we are a unique company.
The third thing, because it\'s an investor day, we\'re going to talk about how to use the cash we have today, and what we\'re going to generate in the next few years to supplement the two tops
Line and bottom line growth.
So I\'m going to spend a slide showing every piece of information in it, but the team is going to have a deeper look at each piece of information.
Early very simple digital printing is changing printing or manufacturing, and when people place some images on any material, you can see some examples there, and of course many others.
This is printing, they use it all over the world, mainly with mock posters, in many cases you look at the plates of numbers over and over again can cause interference with manufacturing technology, you can make it on demand and it offers more industries you can imagine.
When we get into Talprint, I believe that digital printing can actually be applied as a surprise for many of you.
Today, it makes more sense and has more--
In fact, many of us sitting here will have more potential opportunities than our expertise today.
Our market concentration is between zero, we will start 35%, in fact, the market we are dealing with is 35%, and more.
As a result, in these growing markets, our business scale can reach 100%.
Inkjet technology is the driving force of the inflection point.
Inkjet technology is not like other marketing technologies, we will have some discussion about this.
Finally, it is not just a technology that can realize analog digital conversion.
This is the customer who wants to reduce the end customer demand of the inventory, make it according to the demand, or want to personalize the end customer.
We leave with the word personalized to become powerful flight.
Marketers like to personalize information and they don\'t want to do both for everyone.
As a result, being personalized is becoming more and more a part of us and people like to sit there, prompting manufacturers to think about digital printing.
So, these are two aspects that make it available and more applicable to more areas of technology, and it is the need to get personalized manufacturing needs that helped drive this shift.
So, this is the first message.
The second one is that some believe that I think it is clear that there is a huge opportunity to believe in analog to digital conversion.
Why is EFI the best place to capture this?
We are unique.
Our products are very unique.
We have digital fountains that manage digital printing.
We have color management.
We have expertise in the workflow.
We have what we call an ecosystem.
Not only can we help people get into digital printing, but, to optimize it to get the most value out of it and show them the benefits from it through data.
We have an extraordinary analysis.
All the time we collect from the best people in the industry, color science, imaging science, hardware, machinery, we have amazing instincts.
Scott will talk more about this.
So, we have a great entity, and I think it\'s the best in any industry, and we\'re going to go after it, and the industry we\'re doing today is the best.
Then we have a very strong sales team, which we have built over the years.
Ten years ago, we were just an OEM listed company.
Today, I believe we have the best direct sales staff in the printing industry and we have very good partners and channels.
If someone wants us to do it, there are many ways we can get the market.
Therefore, we have the ability not only to produce excellent products, but also to enter the market.
Culture is unique.
Usually, on investor day, we don\'t talk too much about culture, you will see some, and I will go back to that if there is time in the end.
So, it\'s unique.
So if you believe that digital printing has great potential, if you believe in EFI\'s unique status as we do, math is simple.
We have the opportunity, we have a strong position, and we build a lot of confidence when we talk to you today.
So, as you may see in the press release, we are setting a goal of 2016 to reach the billion dollar.
This is not the last increase, but we saw it three years later.
We are improving the long-term operating profit margin of our model and Marc will delve into the long-term model, the new model.
We actually say that organic growth will take us to most of the places there, but we will do some mergers and acquisitions there.
When Mark talks about the use of capital, we will discuss how many M & A we need to reach billion and what additional resources we can use [outlay].
So, let\'s go ahead with the third message today and we will use our cash to supplement the top and bottomline both.
M & A is part of the strategy.
We did our last merger.
We did a good job, but we learned a lot.
Our script is now solidified.
EFI is a well-planned m & a machine.
Because of inkjet, we made quite a complex acquisition of Cretaprint, because this is the basis of Spain, because we have to sell in regions that have never been sold before, or we have never sold a family before when we approach the second year of this business, we are very happy and happy with both of them
We feel that our integration script has been solidified.
To give you a little bit of an idea of how the pipes are placed, we also have, obviously, that you don\'t provide the name of the target in this area.
We counted the last 12 months and we actually didn\'t see the exact 70,000 people, and when we said we saw that it meant we got a point sign NDA and we changed the message, there is a meeting at EFI.
Some of them are actually $100 million, the largest of which is about $0. 2 billion.
I can tell you for sure that we have never negotiated $0. 2 billion. -
That\'s what we think we need.
We will pursue it now.
So, from the small zero dollar factory to the relatively large factory in all the factories, to increase all the factories to the supplementary factory, we also make the three parts of the business stronger, none of them is something we don\'t like.
Now, when we are very confident about Cretaprinters integrated in EFI, especially a few quarters ago, we began to shift our focus to inkjet acquisitions.
Perhaps we are focusing on a more thoughtful geographic expansion.
So I\'m not sure we will. -
In the portfolio of acquisitions, you will say no more inkjet in the next few days.
We then continue to make small deals on softer aspects to allow expansion and geographic expansion.
A few years ago, almost 100% of the software business came from North America, to Europe, to Latin America, to Asia, and the market has been expanding. We bought small companies, and use these talents to build our software business in commercial software or elsewhere.
If you look at the last quarter, we did an amazing job in Europe, taking advantage of all the work in this quarter, which is usually a very slow summer month in Europe, actually
The second priority of cash is repurchase.
We announced today a new plan of $0. 2 billion, which replaces the plan of $100 million in the past three years.
We will buy it step by step, we may start with the price you see on 2013, and if we feel that the stock needs support, we will accelerate at the right time, as I have told many of you, we believe that buybacks are an opportunity to support stocks, and for whatever reason we would like to take this opportunity and we will not last for 12 months.
Thankfully, there is not a lot of foundation, we feel we need to pull the stock.
If the requirements for M & A channels are not that high from a cash perspective, it is clear that we will accelerate competition, but the goal is to gradually use the technology over the next three years.
So far this year, we think our goal is to complete a $25 million buyback, just to give you an impact calibration that we are going to complete this year.
So these three messages, early innings, if my best location, we use cash to supplement the growth at the top and bottom, from analog to digital.
Now on the agenda, Ghilad will start with CTO and talk about why inkjet is a software technology in the business we operate today, giving you a little bit of insight into what we can do in the future.
The three GMs will discuss their areas, what we have the opportunity to do today, how we develop our business, and where the growth opportunities will be in the coming years.
Then you will see something very unique and interesting.
Charlie Grace runs our US sales and has done a great job in the past many years, every quarter, you will be presented with two outstanding customers who will tell you in digital printing how their story digital printing can help them grow and create a good focus.
Mark will summarize it with track.
He will learn more about the new long term.
Term model, cash use, then I will come back and we will summarize and do some Q &.
In the process, we will have some Q & A based on these topics so that you can get specific questions, that is, if you have any questions, you also have the opportunity to ask customers questions.
Let me hand it over to Ghilad and I will come to Q &. Thanks.
So in the next few minutes I\'m trying to see many of you, and I know, I\'ll talk about inkjet technology, which has unique features, enabling us to apply to many applications and many applications with it, many industries were previously impossible.
I want to talk to you about the opportunity, technology and unique value of inkjet. I would like to discuss it a little. if you believe in this opportunity and we will make good use of this opportunity, then I\'ll talk a little bit about how we can expand our market accessibility re-acquisition and areas that might be of interest to us.
In print, we talk many times about drivers from analog to digital conversion.
We talked about the short and loud unique job personalizing, showing the supply chain, the number of orders online, and they need to manage the business effectively in order to squeeze out the office from lower profits.
All of this has been discussed many times in the context of printing.
Surprisingly, it is perfect for many other manufacturing processes.
If you think about the basics, you will find that the inventory is reduced, the number of SKUs is growing fast, and security is replaced, so don\'t buy it yourself today, so there will be more changes.
That\'s what happened today.
While they may want to, this is not achieved in other industries.
If you go to Home Depot and want laminated furniture, I don\'t know why you want it, but if you want laminated furniture, you will see that the number of options you have is actually limited, because the process of generating them today is complex, this variability is not allowed.
So all the content of the printing that I am talking about here is very applicable to other manufacturing processes.
Another thing we talked about a lot of time is the break-even point between numbers and simulations.
We always say that the cost of the numbers is almost flat, and with the acceleration of the machine\'s output speed and the decline in operating costs, you know that consumables in the machine are falling.
For all the other manufacturing processes, this trend reappears.
I\'ll show it to you in a certain market later, and I don\'t know what Colgate might be like. Colgate is a [corpus]
Even if there is no reason not to print on it through the digital process.
The return on investment is not so good yet.
So this is in the process of moving towards digital, but because of these concerns it has been infiltrated, these are the key issues of choosing the right industry or digital decoration manufacturing.
So, what is unique about inkjet technology?
Inkjet technology is of course a combination of the head, the jet head of the overflow, the jet head of the jet material and the material.
One of the main features of inkjet is that it is a non-
Contact print, think about what it gives, you can print on scrap, you can print on hot material, you can print on rough material.
Impossible or very difficult and expensive things without inkjet.
By the way, inkjet is not necessarily the only contact, but also one of the main functions.
All of these derivatives are that you can print in the cold process.
Scott will tell you later that our LED technology is super cold, but in general it allows you to do so.
It allows you to pop up many types of material.
People know how to liquify the metal and of course there are many other coloring or decorative materials that can be rented out to liquid or semi-liquid
Liquid mode and pop up.
We can pop up a lot, we can pop up very little, we can also pay attention to the density of printing.
We can set the speed efficiency, at the end of the day, your production line is open, remember the breakeven side, we can create cost-effective solutions.
Just to remember what we are trying to do with a jet.
Spray has always been a whole and I should probably pay more attention to the healthy light and things of this nature, but they are all stimulus materials for decoration and what we really want is a device, it allows us to fully control the size, location and resolution of what we can pop up.
There are many types of ink spray heads, many technologies, technologies based on thermal phenomena, and heads based on electric feed phenomena.
We \'ve been focusing on a technology that\'s been going on for years now, and that\'s what\'s called a drop on demand, it\'s basically an electronic mechanical device, the hammer will push the liquid of a small container and push it down
The beauty of this technology is that it creates the most versatile precision capability to store materials.
This was developed by many powerful companies, companies specializing in inkjet and semiconductor industries, very, very vigorously.
It is becoming a very, very complex semiconductor manufacturing process, and it actually gives us a lot of choices to choose the right head for the right application.
You see this is a slow device that can be controlled for every drop, sometimes it has a long array of two [s]dimensional]
The nozzle array, which can have 10 to 1,200 nozzle pill holes per inch, looks like a device like this, which is a very charming device.
I know it\'s crazy.
So if you look at what it allows us to do, there are a lot of apps that are suddenly open to us now.
Look around you before I take the elevator.
This can be printed, the carpet can be printed, the wood can be applied on this side, the paint is sufficient, but it can be printed.
We already have several applications.
Scott will describe in more detail what we are doing there.
What we\'re doing is some kind of soft sign [synthetic]substrate]
Used for display.
But look at the list, the stuff I showed you was great, just here and so on.
Of course, there\'s cloth. we\'ll choose a pair, some boxes. scenarios]
I will give it to you later until disclosure allows.
We will choose the right technology to move forward.
I will show you the size of these markets.
I think you will be impressed. I’ll show you.
So, well, there are a lot of opportunities, and we\'re not the only one to see them, because it\'s not necessarily mature as technology matures or is available, but a lot of companies are looking for these things.
We believe that we are in a very successful position in the transformation to digital manufacturing.
We have gathered unique capabilities for the size of other companies that have very efficient teams that know how to do equipment or hardware, electronics, ink and image processing.
I\'ll give an example later on why this combination creates a very powerful and unique solution in the industry.
In fact, we are now able to attract the best talent in the industry.
Some are due to paying for other companies, many because we now actually offer the perfect opportunity to be at the top of the technology in this industry.
Over the years, we have a fairly broad track record in entering a new market and becoming the strongest participant in this market or legal participant in this market.
As Guy described to you, we call it the EFI ecosystem.
The ability to connect all manufacturing-related processes, I will describe it in one second to achieve effective control and information flow from ordering products to delivering products.
This enables manufacturers to profit from all the products ordered.
We have a very familiar knowledge of the market in this industry, for a long time we only focus on printing and decoration.
We have no other business.
Because we are in all the manufacturing stages from ordering to management to printing to Consumer balance, we have a close understanding or intimate relationship with the business, from owner to employee, this gives us a very good idea of what they need.
All of this has led to our current business performance, but it has also led to great recognition in the industry.
In the past few years, we have achieved the most technological achievements than very large companies such as Xerox, HP or Kodak.
So I\'m not going to discuss all of this when we talk about the ecosystem, but if you think about it, we are [involved].
We provide our customers with the ability to manage their work acquisition, online ordering, or other means.
We manage work, manage scheduling, manage manufacturing processes, manage inventory, manage profitability, and then manage content.
We manage colors, we manage the composition of the work, we are managing consumption efficiency, and in some areas we are also involved in the actual printing equipment on the right side of marking labels and ceramic printing.
All of this creates an unparalleled ecosystem that is very beneficial to customers.
I think our customers may talk a bit.
So if I look at the growth that we are confident to get, some of it will come from innovation.
Let me give you a few examples of our recent innovations.
We have a long history.
How to Mix, Scott will talk more about hybrid printing, the ability to print flat and flexible materials in one device.
We are the best in the industry and the leading company selling these types of machines, from medium performance to the highest performance with very, very high quality and accuracy, which is no accident.
We are also the only company that makes LED curing.
Curing refers to the process of bonding ink to the substrate.
The Led sounds green, but it not only enables customers to save electricity, but is environment-friendly, but uses substrates that were previously unavailable for digital printing because the LED did not heat the substrate, you can use very thin, very low-cost substrates to provide more opportunities for customers.
In one ceramic printing, we obtained Cretaprint, and through all our cross-group technologies, we have created a most flexible and modular printer in the industry.
In tag printing, for example, if you see, we create [factory]in one product.
We print paper, we print, we cut, we peel it off, all in one product.
We have a lot of new apps, Thermoform, because you can see the samples, we have smart signage that allows static signage to collect information from the audience, etc.
We can grow by expanding our products in the markets we have already penetrated.
If you look at ceramic printing, we are now creating the only way in the market to create the right color for the printer and to control the amount of ink being used.
We created a new model of how to order custom sizes.
The factor we haven\'t explored yet is the chance of ink, but we will certainly do so.
So if you look at the ink, it\'s a huge business.
Ink almost matches the equipment business, in which the ink will be larger than the equipment business.
In this market, each machine consumes between 600 and 1500 kilograms of ink per month.
The price range of the ink depends on the position between the color and $35 to $80.
If you only look at the EFI cretapint installation-
You can see that in 2013 we spent the most, or our customers spent almost $100 million or $75 million in ink.
If you just look at the small calculations we consider when installing --
Basically about 350 printers, we have a very conservative ink price of $20, which is actually at a low
End of range.
You can see the calculation of 2013, then the calculation of 2014, say more than 500 printers, you can see the great contribution of ink to the potential revenue of EFI.
We will go into the ink and we certainly plan to moderate penetration at the beginning and increase all the time.
Our acquisition is an expansion of our TAM.
As guy said to [in] Geographical expansionsoftware]
The indicators and indicators I used for the acquisition also show you that they are very consistent on the name of the company.
Going back to the market in the last chapter, as I said, this will be solved by our technology, or we say that inkjet technology can be solved, maybe we need to solve this problem in the future, but this is a huge market.
If you look at ceramics and compare it to the market here, you can see that, assuming that we will succeed in inkjet and the machines and inks in these markets, the size of the opportunity, the market size of machines and inks is huge.
I\'m not going to look at all the numbers, but it\'s very important that you can see it.
If we don\'t discuss some of these issues in the next month, I would be very surprised.
If you look at these markets a bit like a teaser, it\'s like ceramics in textiles, there\'s almost no ceramic material, but my latest example is very [lean]
I mean, people really need to make some near distributed elements in the short term, etc, which is a huge return on investment for digital solutions.
The lamination we are talking about is actually paper printing.
There will be a lot of process after printing, but it is paper, very high resolution, very high quality, very suitable for wide and fast one way printer.
It sounds a bit close to paper printing if you think about it.
Wood, wood is very close to the number, it is UV Curing Ink, we are experts in this area.
This is still a market and a market that deserves attention.
Glass, decorative glass, is very similar to ceramic in this regard, or it sounds very close to the inorganic ink we use today, as well as industrial glass.
So, we\'re not going to do these markets, I\'m just showing you how we think about why we\'re going to get into them.
So what I said just now, we are talking about the topic of power Inkjet, the uniqueness of Inkjet, what kind of opportunity Inkjet has opened for us.
We say the combination of EFI with our technology, people and knowledge is perfect to take advantage of the market, we talk about mergers and acquisitions of this huge opportunity, let\'s be frank
Linear growth in the future.
Thank you very much.
I\'m going to Scott right now.
Thanks, Gillard.
Good Morning, everyone.
So Ghilad is really in all the areas of opportunity in the filming of industrial printing, many of which are still not infiltrated by numbers today, and others are at all stages of digital adoption.
In fact, the common theme of all these areas is, first of all, how the transformative inkjet technology is evolving in this area, not just that you can print on many different types of materials, at the same time, it also provides a very powerful leverage on the entire technology platform, and can work overtime to enter new areas.
But what I\'m going to talk about today is our three parts.
They are at all stages of digital transformation.
Therefore, the display graphics are in the stage of rapid growth, very, very good, steadily breaking through the current number of about thirty years old.
Labels and packaging are very early, but in the long run, this is a great opportunity in terms of overall production.
The tiles were then quickly adopted in that particular market.
It all benefits from the unique and sustainable difference of ink technology, today is UV.
We are the largest UV ink manufacturer in the world.
Our UV ink production is up 20% per quarter.
At this point, our ink sales account for about 30% of our reported total inkjet revenue.
So first let me start by showing the graphics, this is the core market for everything you see around you when you shop, when you cross the train station, you pass the airport.
Its application is very wide, very colorful, very bright, very high quality, designed to attract your intention.
In addition, with the development of technology, we have introduced higher printing quality and revolution, and we can also enter more emerging markets, and gain new opportunities in applications that we couldn\'t reach before.
So, these devices, especially hybrid products, I\'ll talk to you and let\'s address very broad issues outside of the core market for display graphics.
So, in terms of the digital conversion of the display graphics, it is [free train).
It grows very well.
In the first half of the year, driven by the overall volume growth in the analog and digital printing markets, the overall annual growth rate was about 4%.
This is by out-of-
Home and outdoor advertisingof-
Home advertising is the second fastest growing form after the Internet.
What is this, all the signs you see today are considering other forms of promotion, whether it\'s spam in your mail or spam in Post Office products, or non-mandatory phone calls, there are many ways we can ignore marketing information and not even absorb them.
As your daily routine goes on, or as you shop in the store, showing the graphics is really right in front of you.
Therefore, there are still many net growth in the market, and the printing volume is also very large.
Of course, the numbers are growing at the rate of digital dialogue, so from a composite growth rate perspective, the numbers are growing by about 9%.
Another thing that happens inside the numbers is that I call the old numbers converted to the new ones.
Therefore, there are some old technologies, including solvent and equal spacing, that people turn to UV-type platforms for the advantages it provides.
So even in the digital world, we are beginning to see a strong shift to the latest technology.
Also, I will talk to you about the UV to LED Curing transition we are leading.
In terms of the market we serve, when you see the UV printer, ink and display graphics, it costs about $1 billion.
Analysts predict that it depends on your reading, which is a fairly broad market growth, and they predict that the combined numbers range from 5% to 12%.
We think this is definitely at the high end of the range because we see that ink will continue to grow and continue to accelerate as the device grows faster and faster.
If you think back to the last slide, one of the digital transitions, the biggest factor driving printing speed is when you roll out a faster, faster printer at the same capital cost, you will get more print volume.
Of course, they will bring you more ink as a supplier.
In terms of the market segments of our services, in the production display graphics space of inkjet. The high-
This is the real equipment, the price of hybrid and rolling is at $700,000. to-roll.
This is really our sweet spot and this is where we are very involved.
We have been gaining share for the past three years.
This is the first continuous product innovation and product introduction.
We got into the rolling-to-
Roll space in a larger way with the help of additional product products.
LED Curing, I will talk to you more in a moment, we will continue to expand and become the leader in the market in this regard, and also the continuous improvement of our GS hybrid platform, continue to launch new features.
We launched the HS100 earlier this year, and this is the first time we have entered the ultra highend space.
So these products are about $1 million to $1.
The price is 3 million.
This is a new part for us.
We have had great success in the early installation of this product, and one more, we have seen the great potential and great growth of our overtime work, because many of our very successful customers are really trying to push the market to these devices as sales grow.
So let\'s open up new markets.
At the same time, from a low point of view, opportunities are still before us. end. So the low-
For us, the terminal equipment is $100,000 to $200,000.
Therefore, we have been conducting market research with cooperative companies.
We have developed a series of products from Asia.
We will work overtime in this area because it is a great opportunity for us.
As far as our portfolio is concerned, we are definitely the most technically extensive portfolio on the market today, and in fact, it drops in two barrels, so rollingto-
The roll product is a flexible material that really focuses on billboards and signage.
From our entry-level production type we have a range of products for $130,000, $140,000, up to $500,000 to $600,000, plus a 5 m wide printer, facing a full-size billboard.
At the same time in the mixing space, this is where the UV starts, because Ghilad says the ability to print in both volumesto-roll and [liquid]
Materials, starting at an entry level of about $100,000, all the way to the range of more than $1 million.
The foundation of all our technologies, first of all we will continue to expand the LED, I will discuss this more in the next slide to provide a huge scale, why this is a key difference for us, we call it Orion, also known as the foundation of the common lever operating system.
So let\'s be able to launch new products at a faster pace and apply them to unique areas.
Even the GS series we launched three years ago is a hybrid.
We just launched the new version, which offers a special ink that works for me and you can see this in the football you picked up today.
The only part about this is printed on flat material and then through the thermoforming process, I ask why this is a big deal?
Usually, when you used to do this with digital ink, it broke and fell off when you put the ink in the thermoforming process.
So this is very unique, it has very large applications not only on signage, but also in many different types of industrial fields, I mean think about it, the dashboard on your car, this is a good example.
It is print-in-print for some type of thermoforming process at the end, but DNS performs this part, which is our unique way of leveraging different ink technologies on a common platform.
As far as LED is concerned, we talked a lot, which is a big deal in our market.
We are definitely the leader in this area, which is really the next development direction of UV ink.
It\'s a much lower energy use for simple reasons, and as Ghilad says, it\'s more of a cooling cure, see not to wrinkle the substrate.
So what makes you do is that you can print on the substrate of the first thought, but you can also run the normal substrate at a higher speed, because you don\'t worry about hot bending and stopping the printing process.
So what\'s happening is that we \'ve been out for about a year and a half and these customers have printed more.
We tracked their ink.
The amount they print has increased by about 50%, which is good news for us as the amount of ink for each gs led footprint we put there has increased by about 50%.
We first listed in this segment, and after a year and a half, we are still the only one in our segment.
We were well recognized at the STI trade show just held earlier this month.
Now let me jump to the other part and it\'s early on so it\'s the label and the packaging.
So these are all things, this is not a promotion, this is a more permanent tag type.
You can see it from anything in the consumer product, all the way to the more functional labels you see, things like accessories, warning labels, etc.
So the key to the label market or key information is the huge opportunity that lies ahead of us, but for digital inkjet, this is something early on.
In terms of output value, the market is growing by nearly 5% a year, so production is driving this growth.
But on the chart on the right, I am sorry that it is a bit difficult to read, and the gold bar or gold bar at the top represents the number.
In terms of machine delivery, Digital is growing at a rate of 15% per year, but it is too early for a large part of the market.
So in the inkjet market, we are the leader of the inkjet market, but the market is small, but the opportunity is big, we have been there before, we have seen this is a proper space.
We were quickly adopted over time.
This is a very, very big opportunity for EFI.
We just launched the Continue LED theme, which is more important in the label, because if you think about how thin the label inventory is, it\'s very sensitive to heat.
We just launched 49.
A few months ago, 50 LX Labelexpo was the first printer in this class to be cured using full LED.
So the foundation of all this is UV ink. one of the very unique things we do in this market is that we cooperate.
Develop our ink with printer platform and [Fiery RIP]
In this field, we will develop hardware to getthe-shelf third-
To integrate the party\'s ink and work into its printer.
The problem with this is that over time you limit the functionality that ink can do, which is a late stage in the development process, so you \'d better do one together.
At the same time, this cooperation
Development, what it brings you is the ability to have the best performance and get the best color and the best print quality in terms of output, which is the absolute key to pursuing and transitioning more simulation spaces, because you have to absolutely master the quality of printing.
Last but not least, ceramics, so [power]
In the production process, you see a lot of people talking about the video, which is obviously a different space, a fast growing space, the number is about the third of the total amount now, but at this point, your sales are growing at 6% to 8% a year.
This is a bit different because we actually have a digital ink sharing Press installed in a manufacturing plant.
Therefore, there is no rate of decline in entering the digital field.
As part of this process, it\'s digital full-speed production and you can see it in the video.
Another unique thing is a lot of markets, so to speak, we think it\'s an emerging market, but it\'s China, it\'s Brazil, it\'s India, and it\'s very, very different in terms of geographical coverage.
That\'s why our global presence has brought about a very strong advantage.
In terms of printing revenue, Ghilad talks about this and we\'re clearly focused on getting our own ink into Cretaprint printers, and we\'re really close to the biggest growth that\'s going to be an inflection point for ink opportunities.
Over time, as you get deeper and deeper, you get high speed, which is a bit typical for numbers, and the ink gets bigger and bigger as you have more footprints on your device.
So our new product at this stage is Cretaprint C3, which is very unique not only in terms of inkjet capability, number of heads, actually number of colors, but also highly integrated with our fiery front end.
Bringing Fiery into this space with all the color management and workflow it offers is a very, very unique difference when the market responds to very, very low. So our long-
The long-term strategy on ceramics is indeed the frontier driving the transition from analog to inkjet, as the speed of the device is full [1 [RAID]
It is printed online.
We need to focus on emerging markets and remain sensitive, which is a very different geographical distribution, ensuring that we can really drive local development, not just technology, but infrastructure and support.
If you consider this environment, it is definitely 24/7 in a very, very large production plant, so you have to bring all your products and support to the local factory.
Make the most of it over time, and more EFI ecosystems, it\'s not just hot, it\'s not just banks, it\'s also our productivity software that lets you run print operations more efficiently.
Like Ghilad said, we will--
We are very focused on putting our own ink into the printer itself.
The key point, as we explained last night, is to give that guy what the rehearsal Bureau is so that we get through it all.
But we are really in the early stages of what can be said to be the analog-to-digital transformation, and what drives its technology, but at the same time, it\'s a comprehensive portfolio, it\'s also the support of trusted partners, which does make it active and a big opportunity for EFI.
At this point, we are capable and have proven it.
We became the leader when we entered the industrial inkjet field, so whether in display graphics, playbooks, or in small emerging products, we were the leader in the inkjet and ceramic industries.
So what we really focus on is not just the new opportunities for EFI, but the opportunities for us to be leaders.
With this, I will give it to you. -
I think we will open it in the next Q &. Okay.
So at this point we will open it to answer the question.
So Ghilad will be here with me as well, and we think we\'re kind of like this, so we can answer inkjet printing questions before we start anything else. Question-and-
Frank Scott selleff will get it, Jim is here.
Two unidentified analysts asked two questions, you have one, I thought you said the percentage of total income was about 30%, did I hear it wrong?
Scott SchinleverYes, the income of inkjet.
An unidentified analyst
Actually, given your installation base and the amount of time you guys are involved in, it sounds very low, how do you look at the transition next year, which is rising as a percentage of the total (inaudible)?
Then the second related to it is Cretaprint, can you give us an update on your transition on these systems?
Scott.
I will deal with the first part and the second part will transition to Ghilad.
Basically, one of the reasons it looks very low is that one of the legs on our stool is Cretaprint, and at this point EFI has no ink revenue and no decent revenue.
So I think it\'s a bit distorted.
So I think in general we certainly have a chance because we come out with our own ink and penetrate into our own base.
This starts in this percentage over time.
Unidentified analyst, but if you consider at the end of this \"15\" or \"16\", can you give any way? It\'s 35% to 40% as we are on this target.
Scott schin solves this with metrics, then this will be a good transition for Ghilad, because when you come up with ink and ink technology as the core of what we are developing it now,
We \'ve made some colors, but it\'s still a bit unpredictable over time.
So the first big assumption is when do you start, and that\'s the part, which is actually a bit hard to measure in terms of a certain year, I mean, it\'s obviously going to come up in the near future, but it\'s a starting point, then how you infiltrate, how fast you infiltrate after that.
Ghilad DziesietnikLet I talk about the opportunity of Cretaprint, we definitely have to market with the best ink available.
If not, it\'s a little [proximal].
We are using the team we need to launch and we have developed ink for over a year.
We have established a team with expertise in the field of inorganic.
We have tested one and almost two colors at the customer and the result is very good because you know we are certainly Using EFI-
Cretaprint\'s expertise in Spain, which we are mixing today.
I think, as I said, we will introduce this ink this year, during the period 2014.
As I have also said, I think we will enter a mature market with our suppliers in 100, so this is ceramic material and we are working on a very conservative plan for this.
In fact, the unidentified analyst, because I know I will never get it back once someone gets the microphone, but when you talk about that footsteps, you guys don\'t have the right extrusion technique, but inkjet technology is yours but, if you get some extrusion technology, how hard is it to transition to a market that is usually classified as 3D, because I think this is my fifth or sixth year your analyst day the label we are talking about is short term and it never really takes off, so why not enter this market?
Ghilad DziesietnikSo you know the current valuation of these 3D companies, so please bring it in.
You see, we have decided that at present we focus on the decoration and business management of the color ink and printing process, and the way we look at 3D printing today at least has such an opportunity in 3D.
We\'re not going to do 3D devices and materials right now to create real printers, but I think as we keep pushing on to hot technology and business management applications, we have the opportunity to develop revenue in this market. Jim Suva -
Thank you.
Jim Suva of Citigroup
Can you talk about whether the percentage of ink your device has a task is going out or you don\'t have, maybe break it down and it sounds like Cretaprint is zero now, so if you can take us through non-
Cretaprint, if EFI ink is used, what are people\'s tasks for those who don\'t have inches, and what matters is how they are trending up, down, or steady?
And then as a follow-up
For Cretaprint you mentioned, you are testing one or two colors, it\'s been a while since I said card class, I don\'t know if there are three red greens, blue or something more.
If so, would we consider another 12 months until you have a fully authorized color deviation or how should we consider it?
What you want to say is Ghilad DziesietnikDo. . . ?
Yes, Scott.
First of all, as far as the attachment rate is concerned, let me talk first on the tag and VUTek space if you wish.
When we look at the UV attachment rate, it is still well above 90% and remains firm.
We are not only in terms of the ink performance of the printer, but also in terms of warranty and everything else, providing very important value to the customer, the printer does have a problem, there is no debate about whether to think about it, this is the same supplier.
So we believe that this is very, very stable in both parts and continue to do so. Jim Suva -
Citigroup UV is 90%.
Scott SchinleverIt is higher than 90%.
Jim Suva over 90-Citigroup and nonUV?
Scott in symplectic loft Agricultural
UV, it\'s running out as far as all of our installation bases are concerned, so we don\'t even track it anymore.
Ghilad DziesietnikFor Cretaprint color, there is a set of colors that are common in the industry and are actually not related to the color that looks like an LED, it is more brown some trends are almost red and so on.
We are developing all these colors in parallel.
We just run the test with the customer at the stage where the customer allows us to basically do the test.
All colors are developed, and at the same time all colors are basically in the same stage, all colors are developed very well.
Question about the exact date guy also likes to give me the exact date and I would like to know everything about the date.
So, as I told you, 2014 is an important year of ink for us.
Jim Suva-Citigroup as a follow-up company, brand new, are you replacing ceramic nano finishes on tiles, or are you just firing organic pieces under porcelain and nano-curing?
As you know, the tiles are made up of many, many layers, have a body with some eyes in the body, some other material, then the decoration, and then the coverage.
We just decorate the parts and when they are placed below us or above, color is applied to the device, which is not the part we provide.
Scott sinlever, so we have time to ask two more questions now, and then we will answer the other questions at the end. Go Shannon. Shannon Cross -
Cross-research by cross-research companies.
My first question is, can you talk about how the whole company works together?
So you have their fiery VUTEk, can you take a little back and say how you worked with the fiery department?
How do you use the software?
How much interaction?
At this point, what do you see in cross-selling?
I mean, how much percentage of your installation base uses Fiery, and if low wants Fiery, then what is the potential for these markets?
Scott SchinleverWell, in order to give you an idea, let me display the graphics and (inaudible)
Our additional rate is 90%, more than 95% new machines.
Obviously our installation base is more complex because people can use other sales repsEFI.
In terms of how we work together, this is really a big advantage for us. let me give you an example of our electronic products.
So for inkjet development and display graphics, I have been in VUTEk business since 2001.
We really hit the wall in about 2004, 2005 of the time, during which the performance of inkjet is so high that the bottleneck in this process is that the electronic device sees the video of 1000 DPIs68]
Color, big size, all good things.
So now is a good time to be a part of EFI, because the first thing we do is to merge the electronics development team together.
So actually, a lot of things in VUTEk printers and basic electronics are proven by Fiery, so this is just an example.
Another example is on the ink side, so we have color scientists on the hot side, on the ink side, and over time on how to extract more performance from the platform, there is a lot of cooperation, especially in the more primitive technology, so there is a lot of cooperation there.
In terms of software, wemarried us]
Combine different integrated products on a regular basis while making sure we have hooks and handles in future technologies, but some people don\'t want to do that now, but they want to know, over time, we will be compatible with our other products.
So there\'s a lot of cross
Cooperation across the United StatesS.
All over the world.
Ghilad DziesietnikI would like to add that we have a lot of areas of cooperation but that is part of the culture.
Two years ago, one day later, we acquired Cretaprint, and I was highly involved in the Cretaprint business, and it was very soon clear that the future of e-products to be self-operated in Stone City, will be in each (inaudible)
The Toby team will make rates, I mean it\'s not a problem and it doesn\'t need to be convincing, it\'s the best part of our culture. Shannon Cross -
The cross-study is great, then the last question, simply go back, can you talk about inkjet and label printing? Because I think this is probably the most disappointing in terms of growth and expansion, and what the industry has just adopted.
When you make R & D investments, engineering investments, can you talk about how you balance between VUTEk and label printing?
I mean, it\'s a bit unemphasized in the short term, obviously you put the LED into this technology, but how do you balance the investment?
Including 49 and 50 voters in our balance is a good example.
We have adopted a lot of common platform elements in our 49 330 series, which are basically built on these elements.
So instead of developing from scratch, we actually try to use the platform elements we get from architecture, etc.
Then turn it into a higher resolution, LED product.
It will be a practice for some time, because we are at a critical moment in the market, or as you said, adoption rates are lower than we would like.
In the meantime, I balanced it in the display graphics library.
I mean, we really have a lot of hot shows right now.
Therefore, we stress that we will also try to follow the most popular places in the market.
So I\'m putting a lot of emphasis on VUTEk right now, especially in the high row.
End with hs100.
So it\'s just a juggling show.
Obviously, this type of thing can also be hot as we incorporate more things into the fold.
From a business model perspective, inkjet technology is exciting.
Because of all these technical leverage points, if you have the right culture, these technical leverage points that Ghilad says can be ported between businesses.
We have people, we air people from Spain to work on VUTEk and vice versa, we send some VUTEk people to Spain to help with the machinery and electrical on the latest Cretaprit
So we are trying to make it a natural part of the process.
I think there\'s one more question. Yes, sir.
Can you guys talk about the penetration rate of display graphics and tiles?
I think you said 35%. where do you think they are?
What is their potential to eventually enter each segment?
What is your forecast?
Can you tell the difference between their position in the developing market and the emerging market opportunities you are talking about?
Then I will follow up.
Unidentified company representative well, I think Scott, as you said, gives you the penetration rate to show the graphics, and also gives you a long-term growth of 5% in a few weeks.
Yes, Scott. 5 points.
I think this speed is still going on in terms of displaying the graphics.
In the ceramic industry, the adoption speed is much faster. I expect there will be hundreds of applications in the next few years. in three to five years, 100% times have been passed, then that\'s why some of our discussions at this stage are focused on ink.
In emerging markets where I \'ve described a long list of things, I don\'t know how to describe adoption, which is still a huge technical challenge to get into those markets, and we\'re still exploring that we\'re going to model adoption.
Unknown analysts who display graphics, where do you think the market can finally get digital penetration?
Scott SchinleverI believes that from a very, very, very point of view, most of it can penetrate, because once you break the barrier to printing speed, the difference between ceramic and display graphics will
Ceramics, you can move on today, which means you won\'t be shuttling around behind ink spray heads and their four heads.
You are consistent with the product, and the speed here is as fast as the simulated printing process.
You can do this on ceramics because the process is more forgiving in terms of printing quality.
Put down the stored materials very quickly, anyway, you have to go through the firing process, which often mixes them together to produce a lot of artistic effects.
The display graphics are a much higher print quality and obviously this is what you see all the discussion here, so you really need to have the perfect print quality, you can have jet drop-outs or artistic effects.
Therefore, the future Nirvana status definitely refers to the price of the day, just like a screen press or label Flexo.
We still have a way to go from here.
The last analyst was unknown.
Everything you can talk to your references;
I understand the M & A pipeline, have you gotten the way to do this, and I want what happens between the way you need to get it and being able to develop it?
This is our daily discussion because there is (inaudible)
Few parties are in a unique position without what we want to do, and the rest may be doing mergers and acquisitions.
If we can get M & A and use our cash to acquire a company that is not only a great advantage in the market as well as in the market relationship.
This is a guarantee that with good execution, we will be very successful in the market, rather than slowly entering this opportunity, which is a real acceleration to a large extent.
This is also a point of deployment of the land plan.
Unconfirmed analyst (Inaudible).
No, some, as we described, we have our own experiments and we are looking for opportunities for M &.
Scott in symplectic the vökel
We will continue to discuss the remaining issues at the end of the meeting.
So now, let\'s flip over from the printer and ink and hand it over to Toby Weiss to talk about the hot business.
Thanks a lot to Scott.
Good Morning, everyone.
My name is Toby and for the next 20 minutes we will discuss this hot industry and then I will have 10 minutes of Q & A time.
What\'s the heat I\'m going through?
Fiery is an addressable market and I realize this is familiar to some of you, but even for those who are familiar with it, there may be some minor changes.
How can we make the hot business bigger?
From a competitive point of view, how is Fiery based?
Then I\'ll let you know what I think are the three key points of the fire business.
Then we will sum up things and do a problem. and-answer session.
So, first of all, what is fire?
Fiery is a digital front end, usually abbreviated as DFE, sometimes you hear it called controller, sometimes you hear it called rip, sometimes you hear it really rip.
The digital front end is a very important piece in the digital printing environment.
All digital printing engines require a digital front end, which has some important parts in the entire workflow of digital printing.
So, let\'s talk about what is DFE?
What is the digital front end?
DFE is responsible for many key parts of the process.
The first thing I want to talk about is high-speed data processing.
Why does the digital front end need to do high-speed data processing? [
Technical difficulty
You have designers and designers working in the latest Adobe cloud-based tools that work in design or in Photoshop and more.
These clouds are becoming more and more complex.
They get richer and richer, they add more layers to it, and they sometimes change, and as you know, designers are always there to push the edges.
On the other hand, you have a printer, the resolution of the printer itself is getting higher and higher, in many hot areas, it is 100 pages per minute, 150 pages per minute faster and faster.
In the future, you will definitely see the printer continue to break the limit in terms of speed.
The Fiery digital printer side needs to be in between, and this is a process that includes everything involved in these design files and keeps the printer running as well as possible.
Give you an idea that if you do math on this you would say 100 pages per minute printer with a resolution of 1,200 points per inch if you would be that highdefinition TV.
Fiery is a very important part of high-speed data processing.
That\'s why this shift, the Fiery shift in our proprietary technology within Fiery, may be higher than that-
Ending the video game gives you a hard-to-solve problem, the reason for high speed performance.
Fiery or digital finance is also responsible for job management and work convincing the printing plant that operators may need to decide when to print to work and when not to print.
Therefore, if there is a problem with the resume job, all of these things, there is a problem with the job management and filling out the job management queue.
Color management is very important, and of course, it is very important that marketers, marketers, and brands that correct them usually receive intense printing.
It doesn\'t matter, what type of stock is it printed on thin paper, thick paper, bleach paper
Whether it\'s Canon equipment or Ricoh equipment, colored paper on Xerox equipment, regardless of humidity, temperature, these variables work, Coca-Cola people want to drink Coca-Cola red every time.
People in Coach want to make sure that their materials accurately represent the color of the product they have.
Therefore, completing color management is a very important part of the hot.
The professional graphics app is also from Fiery or digital printing.
What does this mean?
You can think of this as almost a print operator app like Photoshop type.
Someone walked into the print room and said, of course I want to print this, but I got the Magic Quadrant of Gartner, for example, which shows my project and the product does a good job.
So can you insert this particular Gartner slide between the two? I have the file and you can design it, but I want you to put another file in.
By the way, can you put the page number on it, but don\'t put the page number on the first or last page.
I want a blank page at the end.
By the way, can you make the middle part of an excel sheet? I want to be a three. fold.
So the print operator needs to say, well, I hope to be able to do it all.
We gave them the tools to be able to assemble the various composition and spelling tools for the printing job and to have them finish the work later on
The stage edit at the time of printing, may be to add a tab on a document or all of this.
Many times you know, sometimes you print a brochure.
Finally, Fiery is a bunch of workflow tools and integrations.
Customers want to automate a lot of what they do.
They may create various folders and automate certain tasks.
Fiery has a unique user interface that customers love.
Fiery has been integrated into their printing environment.
Probably one of the most important integrations that Fiery customers care about most-
It is our integration of EFI management information software.
You will hear more about MIS business automation software later, but in fact, customers, high-end commercial printers are running their business, even my products are using this type of software to run their business, and Fiery can go in and talk to it seamlessly, which is how customers can better manage their environment. Now Fiery is --
Our partners
We have been working with almost all the leading printing companies and I can say that the printing manufacturer issues Fiery.
We work with them from the perspective of R & D, sometimes 12 to 18 months before the printer actually market.
We will work with these manufacturers to develop Fiery.
They will then really start Fiery.
They sell hot because end users ask for it and they sell hot as a performance, a high
The final performance options of the printers they sell.
For people who are not familiar with it, I often like this analogy, just like you are going to buy a car, you are going to buy a Lexus or something, but you have the option to get the stereo that comes with the car, or you can spend a little more on getting these two stereo options, and Fiery often sells in the same way.
This is an optional performance upgrade for the base package.
The purchase decision is determined by the customer himself.
The customer asked for Fiery.
This is the key thing, they ask for all the advantages I mentioned earlier and I will go through some of them as well.
Fiery is a very profitable growth from a partner perspective-sell.
Usually, Fiery\'s price in the market is 200% or 300% mark-
Therefore, our customers prefer our partners rather than those revenue streams and profits that are part of their business.
Fiery often attracts more clicks or prints from the device compared to competitors.
This is because Fiery is able to handle more so that they can get more throughput from the printer.
Because of the combination of the two, Fiery users are often Super users.
Our partners certainly like to attract customers with more clicks, which is good for them, and their business model is built on consumables.
Because super users tend to have more finishing devices, getting a hot customer is usually a bigger sale for them from the perspective of our partners.
This will mean more finishing equipment, which will mean a good profit on Fiery, and then it will mean that there may be more consumables at the end of the day.
When we talk about some of the main partners of Fiery, Ricoh, Canon, and Konica Minolta, Xerox is the company we don\'t classify as external partners, but, I heard about thisand-
The previous answer was also built--
So is the product.
VUTEk line is so hot [so HOT]
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