Large Format Review - Business News

X-Rite, Incorporated today announced its financial results for the quarter ended July 4, 2009.

Highlights of today's announcement:

•    Second quarter 2009 net sales of $49.4 million
•    Improved profitability as a result of the Company's profit improvement plan
    -    Second quarter operating income of $2.5 million and a significant reduction in the net loss in the second quarter versus prior year
    -    Adjusted EBITDA margin in the quarter of 24.8 percent of net sales, up 1.1 percentage points from prior year
   -    Healthy cash flow from operations
•    Strengthened balance sheet
    -    Debt paid down in the second quarter by $13.4 million and $34.2 million year-to-date
    -   Net debt balance of $202.9 million at close of second quarter
    -    Second quarter ending cash balance of $33.8 million
•    Closure of Viptronic business operations in June 2009
    -   Expected completion of campus sale by end of third quarter 2009 for $2.4 million
•    New MatchRite iVue color matching system announced as next generation solution for Benjamin Moore stores in North America
•    Increased adoption of ColorMunki Design by major industry partners and customers as key workflow tool in creative phase of product realization process

The Company reported second quarter 2009 net sales of $49.4 million compared to $73.5 million in second quarter 2008. These results are in the range of Company expectations given market conditions and reflect a decline of 32.8 percent (29.8 percent after a currency impact of $2.2 million) versus a comparatively strong prior year performance. On a year-to-date basis net sales were $96.0 million, 31.1 percent (27.9 percent after $4.5 million of currency impact) below the same period results last year. Both the Color Measurement and Color Standards segments experienced similar year over year declines as many customers and channel partners continued to delay purchase decisions in key X-Rite markets.

"While we are beginning to make progress in some new market segments that have been less affected by the global economic slump, core markets such as printing and automotive continue to face weak customer demand and corresponding investment levels, which in turn impact the demand for X-Rite's products. Generally, discretionary CAPEX spending remains below pre-recession levels," said Thomas J. Vacchiano Jr., X-Rite's chief executive officer. "Some good news is that we are beginning to see an increasing number of customers and partners reengaging in discussions with X-Rite about previously suspended projects or new projects, which may be an indicator of improving order rates later this year or in 2010."

Supported by the Company's profit improvement actions, the second quarter net loss was $7.6 million versus a loss of $20.9 million in the same period in 2008. Adjusted EBITDA in the second quarter was $12.3 million compared to $17.4 million in the second quarter 2008. Adjusted EBITDA as a percentage of net sales was 24.8 percent in the second quarter, an improvement of 1.1 percentage points from 2008. Operating income for the second quarter of 2009 was $2.5 million or 5 percent of net sales as compared to $0.4 million in the same period last year.

The Company reported that despite the net sales decline in the second quarter, successful execution of the profit improvement plan along with effective working capital management practices yielded healthy cash flows. The Company's cash position ending the period was $33.8 million and debt was reduced by $13.4 million in the second quarter to $236.7 million.

Bradley J. Freiburger, X-Rite's interim chief financial officer commented, "While we are pleased with our progress managing costs and working capital during these challenging times, we remain committed to keeping costs and working capital levels aligned with the realities of the current market. We believe X-Rite is poised to deliver attractive levels of cash flow and profitability when market opportunities improve."

The Company has completed its announced closure of business operations for Viptronic, a subsidiary of X-Rite located in Brixen, Italy as of June 2009. It is expected that the sale of the campus will be completed by September of this year at a price estimated to be $2.4 million.

X-Rite also announced that momentum for its new MatchRite iVue system continues to build as Benjamin Moore recently decided to adopt this technology as the next generation solution for its retail stores. Additionally, the Company reported that an increasing number of customers adopted its new ColorMunki Design product to improve speed, cost or quality in the design phase of their product realization processes. Early adopters include partners such as Corel and Bunkspeed, and customers such as Kohl's and Columbia Sportswear.

Vacchiano closed by commenting, "The general economic climate continues to cause substantial uncertainty making it impractical to provide guidance. That said, I am encouraged by new project design wins as noted in this press release. It is an indicator of the future opportunity for our industry and the leadership role that X-Rite has established."

Electronics For Imaging, Inc. (Nasdaq:EFII), the world leader in customer-focused digital printing innovation, today announced its results for the second quarter of 2009. For the quarter ended June 30, 2009, the Company reported revenues of $90.1 million, compared to second quarter 2008 revenue of $143.8 million.

GAAP net loss was $(13.3) million or $(0.27) per diluted share in the second quarter of 2009, compared to a GAAP net loss of $(0.1) million or $(0.00) per diluted share for the same period in 2008.

GAAP net income was $13.4 million or $0.26 per diluted share for the six months ended June 30, 2009, compared to a GAAP net loss of $(5.3) million or $(0.10) per diluted share for the same period in 2008.

Non-GAAP net loss was $(6.1) million or $(0.12) per diluted share in the second quarter of 2009, compared to non-GAAP net income of $12.0 million or $0.21 per diluted share for the same period in 2008.

Non-GAAP net loss was $(10.5) million or $(0.21) per diluted share for the six months ended June 30, 2009, compared to non-GAAP net income of $24.0 million or $0.41 per diluted share for the same period in 2008.

“Our results reflect the continued challenges in our industry compounded by the delay in broad availability of our new line-up of inkjet printers. While our overall results are disappointing, we are pleased with the approximately 14% sequential growth in our Inkjet business and the execution on our commitment to align spending with revenue, with operating expenses reduced by 22% year-over-year,” said Guy Gecht, CEO of EFI. “Despite the product delay, we remain very excited with the opportunities for our inkjet segment and the record number of industry-leading new products we plan to bring to market over the next several months.”

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 our Non-GAAP Net Income and Adjustments

To supplement our 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.

We believe that the presentation of non-GAAP net income and non-GAAP earnings per diluted share provides important supplemental information to management and investors regarding non-cash expenses, significant recurring and nonrecurring items that we believe are important to understanding our 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 that the exclusion of the items described below, for which the amounts and/or timing may vary significantly depending upon 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.

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 recurring amortization of acquisition-related intangibles, stock-based compensation expense, as well as restructuring related and non-recurring charges and gains and the tax effect of these adjustments. Such nonrecurring charges and gains include project abandonment costs, asset impairment charges, costs related to our stock option review completed in 2008, certain legal settlements, and our sale of certain real estate assets. Examples of these excluded items are described below:

    - Amortization of acquisition-related intangibles. Intangible assets acquired to date are being amortized on a straight-line basis.
    - Stock-based compensation expense is recognized in accordance with SFAS 123R.
    - Non-recurring charges and gains, including:

          o Restructuring related charges. We have incurred restructuring charges as we reduce the number and size of our facilities and the size of our workforce.
          o Asset impairment costs consist of equipment and non-cancellable purchase orders incurred relating to a planned product that was cancelled.
          o Gain on sale of building and land. On January 29, 2009, we sold a portion of the Foster City, California campus for $137.3 million to Gilead Sciences, Inc., resulting in a gain on sale of $80.0 million.
    - Tax effect of these adjustments.

These non-GAAP measures are not in accordance with or an alternative for GAAP and may be materially different from 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.

The full report can be read on the EFI website.

 

Agfa-Gevaert reports second quarter results - Regulated information

    - Market trends in line with previous statements: Group sales decreased in line with Q1 trend
    - Recurring EBIT at 38 million Euro versus 37 million Euro in the second quarter of 2008 and 28 million Euro in the first quarter of 2009
    - Operating result (26 million Euro) remained stable versus the second quarter of 2008
    - Decrease of SG&A costs well ahead of previously announced plans
    - Net result at minus 9 million Euro
    - Net financial debt improved considerably versus the first quarter of 2009
    - Agreement with banks about the sale of receivables for an amount of 160 million Euro

Compared to the second quarter of 2008, Group sales decreased 12.9 percent to 677 million Euro. In Agfa Graphics and Agfa Specialty Products, the sales trend was in line with the first quarter of 2009, whereas Agfa HealthCare's sales figures showed the impact of the longer decision processes for investments in IT and equipment.

The sales decrease affected the Group's manufacturing efficiency due to lower use of capacity. This was partially offset by the positive effects of the lower raw material prices. As a result, the Group's recurring gross profit margin decreased from 32.6 percent in the second quarter of 2008 to 31.6 percent. However, the decrease versus last year's quarter is less than in the first quarter of 2009.

Due to its strict cost management, Agfa-Gevaert succeeded in further reducing its Selling and General Administration expenses. The monthly SG&A expense was brought down from 57 million Euro in the second quarter of 2008, to 46 million Euro in the second quarter of 2009, which is a cost decrease by 19.3 percent. The SG&A expenses represented 20.4 percent of sales, versus 22.0 percent in the second quarter of 2008. The Group has taken a number of additional measures to further lower its costs. It will continue to evaluate the market trends in all business groups and take further action if necessary.

The recurring EBIT was affected by a newly imposed pension charge (amounting to 4 million Euro) related to pension insurances in Germany.

The Group's recurring EBITDA (the sum of Graphics, HealthCare, Specialty Products and the unallocated portion) decreased from 66 million Euro in the second quarter of 2008 to 64 million Euro. Recurring EBIT increased from 37 million Euro to 38 million Euro.

The restructuring and non-recurring items resulted in an expense of 12 million Euro, stable compared to the second quarter of 2008.

As in the first quarter of 2009, the non-operating result was affected by pension provisions (mainly concerning inactives), to cover for increased pension deficits in the USA and the UK. The non-operating result amounted to minus 27 million Euro.

Taxes amounted to 8 million Euro versus 2 million Euro in the second quarter of 2008.

The net result amounted to minus 9 million Euro, compared to 3 million Euro in the second quarter of 2008.
Balance sheet and cash flow

- Next to its long-term funding, the Group improved its mid-term funding options by signing agreements with three core banks about the sale of receivables for an amount of 160 million Euro. This transaction has reduced the Group's net debt by 40 million Euro in the second quarter. It is one of the levers to further reduce net debt in the future.
- At the end of June 2009, total assets were 2,963 million Euro, compared to 3,160 million Euro at the end of 2008.
- Inventories were 543 million Euro (or 99 days). Trade receivables amounted to 657 million Euro, or 69 days (including deferred revenue and advanced payments) and trade payables were 187 million Euro, or 34 days.
- Net financial debt further improved to 569 million Euro at the end of June 2009, compared to 673 million Euro at the end of 2008, and 737 million Euro at the end of June 2008. In addition to the sale of receivables (40 million Euro), this improvement is due to working capital improvements and the strict cash management control.
- Net operating cash flow amounted to 106 million Euro.

Following the trend of the previous months, Agfa Graphics' sales were severely hit by the impact of the global economic crisis on the printing industry. The effects of the crisis are the strongest in the field of investment goods, but the slowdown in the advertising markets also resulted in a lower use of consumables, such as graphic film and printing plates. Competitive pressure also increased in recent months, mainly due to - among other reasons - overcapacity. Agfa Graphics' sales decreased 15.3 percent versus last year's second quarter.

The volume decline as well as the competitive pressure affected Agfa Graphics' gross margin. These adverse effects were partially offset by some positive effects of the lower raw material prices. The business group continued its efforts to reduce its Selling and General Administration costs, which decreased by 19 million Euro versus the second quarter of 2008. The recurring EBITDA margin increased to 7.3 percent of sales. The recurring EBIT margin was 3.7 percent of sales, which is a status quo compared to last year's second quarter, but a significant improvement versus this year's first quarter.

In prepress, Agfa Graphics added a new solution to its :Avalon N range of platesetters. The :Avalon N4 is fit for midsize commercial printers and ideally suited to work with Agfa Graphics' :Azura chemistry-free printing plates. Agfa Graphics also introduced a new release of its :Apogee Suite workflow software, which allows printers to shorten their production time and to further simplify their production chain.

In industrial inkjet, Agfa Graphics unveiled the second generation of its :M-Press industrial flatbed press at the Fespa Digital 2009 trade fair. The :M-Press Tiger combines a 300 percent increase in productivity with higher quality output. Agfa Graphics' single pass :Dotrix Modular inkjet press was acclaimed as the 'Best Industrial (Specialty) Printing Solution of the Year 2009' by the European Digital Press Association. Furthermore, Agfa Graphics sold its first :Dotrix Modular in the Asian region to Unit Safety Signs in Tokyo (Japan). At the Sign Expo trade fair (Las Vegas, US), numerous :Anapurna systems were sold, stressing the success of Agfa Graphics' range of large-format inkjet printers.


Outlook

As announced in the publications concerning the first quarter results, Agfa-Gevaert is inclined to believe that the crisis-driven decline in its most important markets is bottoming out. However, it is still impossible to predict when the markets will pick up and when demand will recover. Meanwhile, Agfa-Gevaert continuously adapts the cost structures of its business groups to the situation in their respective markets in order to safeguard and strengthen their competitive positions.

The full report can be found on the Agfa website.

    - Net revenue of $27.5 billion, down 2% from the prior year and up 4% in constant currency

    - GAAP operating profit down 14% to $2.2 billion; GAAP earnings per share $0.67, down from $0.80 a year earlier

    - Non-GAAP operating profit up 8% to $3.0 billion; non-GAAP earnings per share $0.91, up from $0.86 a year earlier

    - Cash flow from operations of $3.9 billion, up 15% from the prior year

    - Record Services profit of $1.3 billion

HP today announced financial results for its third fiscal quarter ended July 31, 2009, with net revenue of $27.5 billion, down 2% from a year earlier and up 4% when adjusted for the effects of currency.

In the third quarter, GAAP operating profit was $2.2 billion and GAAP diluted earnings per share (EPS) was $0.67, down from $0.80 in the prior-year period. Non-GAAP operating profit was $3.0 billion, with non-GAAP diluted EPS of $0.91, up from $0.86 in the prior-year period. Non-GAAP financial information excludes $568 million of adjustments on an after-tax basis, or $0.24 per diluted share, related primarily to amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

“HP’s performance this quarter is a result of our strong business portfolio, efficient cost structure and scale. We made positive gains in extending our market leadership in key segments and strengthening our competitive position,” said Mark Hurd, HP chairman and chief executive officer. “Business is stabilizing, and we are confident that HP will be an early beneficiary of an economic turnaround and will continue to outperform when conditions improve.”
                                               
Information about HP’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information” below. Unless otherwise noted, all growth rates reflect year-over-year comparisons.

“Record profit in Services, double-digit revenue growth in China, and solid cash flow demonstrate HP’s ability to execute,” said Cathie Lesjak, HP executive vice president and chief financial officer. “We are investing for the future and executing operational efficiencies with the goal of driving long-term, profitable growth.”

Revenue grew 8% in the Americas to $12.6 billion. Revenue declined 12% in Europe, the Middle East and Africa and 4% in Asia Pacific to $9.9 billion and $5.0 billion, respectively. When adjusted for the effects of currency, revenue grew 11% in the Americas while declining 2% in Europe, the Middle East and Africa while Asia Pacific was flat. Revenue from outside of the United States in the third quarter accounted for 62% of total revenue, with revenue in the BRIC countries (Brazil, Russia, India and China) declining 6% over the prior-year period while accounting for 10% of total HP revenue.

Services
Services revenue increased 93% to $8.5 billion due primarily to the EDS acquisition. Infrastructure Technology Outsourcing posted revenue of $3.9 billion while Technology Services, Application Services and Business Process Outsourcing posted revenue of $2.4 billion, $1.4 billion and $711 million, respectively. Operating profit was $1.3 billion, or 15.2% of revenue, up from $567 million, or 12.9% of revenue, in the prior-year period. The EDS integration is tracking ahead of plan.

Enterprise Storage and Servers

Enterprise Storage and Servers (ESS) reported total revenue of $3.7 billion, down 23%. Storage revenue declined 21%, with the midrange EVA product line down 23%. Industry Standard Server revenue declined 21% and Business Critical Systems revenue declined 30%, while ESS blade revenue was down 14%. Operating profit was $356 million, or 9.7% of revenue, down from $544 million, or 11.5% of revenue, in the prior-year period.

HP Software

HP Software revenue declined 22% to $847 million. Business Technology Optimization declined 22%, and Other Software revenue declined 23%. Operating profit was $153 million, or 18.1% of revenue, up from $135 million, or 12.4% of revenue, in the prior-year period.

Personal Systems Group

Personal Systems Group (PSG) posted an increase of unit shipments of 2% and maintained the leading market position in PCs worldwide. PSG revenue declined 18% to $8.4 billion. Notebook revenue for the quarter was down 10%, while Desktop revenue declined 26%. Commercial client revenue was down 22%, while Consumer client revenue decreased 13%. Operating profit was $386 million, or 4.6% of revenue, down from $587 million, or 5.7% of revenue, in the prior-year period.

Imaging and Printing Group

Imaging and Printing Group (IPG) revenue declined 20% to $5.7 billion. Supplies revenue was down 13% due in part to continued channel inventory realignment, while Commercial hardware revenue and Consumer hardware revenue declined 37% and 21%, respectively. Printer unit shipments decreased 23%, with Commercial printer hardware units down 42% and Consumer printer hardware units down 16%. Operating profit was $960 million, or 17.0% of revenue, versus $1.0 billion, or 14.8% of revenue, in the prior-year period.

HP Financial Services

HP Financial Services (HPFS) reported revenue of $670 million, down 1% from the prior-year period. Financing volume increased 12%, and net portfolio assets increased 6%. Operating margin was 7.9% of revenue, up from 7.5% in the prior-year period.

Asset management

HP generated $3.9 billion in cash flow from operations for the third quarter. Inventory ended the quarter at $5.9 billion, down 10 days. Accounts receivable of $14.7 billion was up 4 days. Accounts payable ended the quarter at $12.8 billion, down 7 days. HP’s dividend payment of $0.08 per share in the third quarter resulted in cash usage of $191 million. HP utilized $999 million of cash during the third quarter to repurchase approximately 28 million shares of common stock in the open market. HP exited the quarter with $13.7 billion in gross cash.

Outlook

HP expects fourth quarter FY09 revenue to be up approximately 8% sequentially. Fourth quarter FY09 non-GAAP diluted EPS is expected to be approximately $1.12. Fourth quarter FY09 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.15 per share, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges. On a GAAP basis, fourth quarter FY09 diluted EPS is expected to be approximately $0.97.

For the full year 2009, HP expects revenue and earnings to be in-line with the mid-point of the outlook range provided on May 19, 2009.

More information on HP’s quarterly earnings, including additional financial analysis and an earnings overview presentation, is available on HP’s Investor Relations website at www.hp.com/investor/home

Xerox Corporation announced today second-quarter 2009 results that include earnings per share of 16 cents and $609 million in operating cash flow.

"During the second quarter, we exceeded our expectations for EPS and cash flow, reflecting our disciplined approach to operational improvements across the board," said Ursula M. Burns, Xerox chief executive officer. "Gross margin and cash are up; expenses are down – all key factors to our strong financial position that is serving us well during this tough economy.

"At the same time, our industry continues to face challenges from the decline in enterprise spending on technology. We have seen sequential improvement with revenue up 5 percent from the first quarter. However, assuming current economic conditions persist, we expect revenue will remain under pressure during the balance of this year," she added.

Total revenue of $3.7 billion was down 18 percent from second-quarter 2008 including a 5 point negative impact from currency. Post-sale and financing revenue was down 14 percent, or 8 percent in constant currency. Equipment sale revenue declined 29 percent, or 25 percent in constant currency. The revenue decline is largely due to continued spending constraints in the overall business environment, which is delaying purchasing decisions for new technology and slowing demand for document-related supplies.

"In this cost-conscious environment, our clients are responding to Xerox's managed print services that reduce document costs by up to 30 percent, and to the value we provide through innovation like the Xerox ColorQube solid ink system that cuts the cost of color pages by up to 62 percent," noted Burns. "Xerox's value proposition along with the breadth of our offerings for businesses of any size, expanded distribution, and global account management gives us confidence in the strength of our long-term competitive position."

Second-quarter operating cash flow of $609 million was $167 million higher than prior year driven by working capital improvements. Following this strong performance, the company raised its expectations for full-year operating cash flow to $1.5 billion from $1.3 billion. Xerox ended the second quarter with a cash balance of $1.2 billion, and total debt was down $347 million through the first half of the year. Xerox plans to reduce overall debt by $1 billion this year.

Gross margin was 40.2 percent in the second quarter, an increase of one point from the prior year and up 1.3 points from the first quarter of this year. Second-quarter selling, administrative and general (SAG) expenses were down year over year by $157 million and SAG as a percent of revenue was 27.2 percent.

Xerox expects third-quarter 2009 earnings per share in the range of 10 cents to 12 cents, delivering full-year 2009 earnings per share of 50 cents to 55 cents.

Velmex Distribution, based in Mitcham Surrey, announced today their strategic relationship with EFI to boost their product offerings into the large format channel. EFI’s prepress and production products provide an end to end solution when used with the recently Fogra certified Canon iPF5100 or iPF6100 products.  Velmex, the leading Canon UK large format distributor now have a Fogra certified engineer who can calibrate and install a Colorproof XF system that produces an “EFI-Fogra cert” compliant proof. By passing this certification Velmex are now able to offer a full chain of Fogra compliant products. The importance of this solution means Velmex are now able to distribute the total printing package to the reseller channel, and offer their customers a full EFI – Fogra certification on their printing systems once calibrated.  Daniel Judge, Product Specialist for Velmex distribution said, “It gives us the opportunity to provide a further value added service to our resellers, allowing them to sell our solutions with the knowledge we can provide the qualification to back it up.”

Whilst EFI’s product range is vast the concentration for Velmex is around three products, EFI’s Colorproof –XF, Colorproof – Express and for production environments the EFI Fiery XF. “Our aim was to provide quality products that gave our customers a good range to choose from, whatever their requirement” says Judge, “These products provide the perfect balance to our portfolio, and our EFI Fogra Certification means we can now provide a full end to end solution or any element within that.”    EFI, a company with a pedigree in rip production since 1989, are based in Foster City in the Silicon Valley, they have 23 offices worldwide and are leaders in the digital print industry.  EFI together with Tecco and Fogra set up the “EFI Fogra cert” initiative for compliant proofs to guarantee high quality and reliably printing, it means that resellers, consultants, printing houses and prepress business and their customers can understand what the standardisation means and receive all the benefits from it. As an EFI Fogra certified engineer Judge can go onto a customer’s site and using the approved EFI Colorproof XF and Canon iPF5100 or iPF6100 printer produce a proof card to be submitted to Fogra so the customer can receive Fogra certification on their printing system.  “This opens up sales avenues for our channel” says Judge, “the feedback we’ve had from our resellers is excellent and we have all products and upgrades now in stock and we’re looking forward to a long term relationship with EFI to help take us further into the proofing market.”