What EFI's textile acquisitions mean to Guy Gecht – and to the industry
The recent announcement by EFI that its quarter two revenue shows significant growth should not come as a surprise to anyone following the remarkable, continuing climb by the company. Well-known for its somewhat meteoric rise up the ladder of print innovation its reputation is, in no small part, the result of shrewd planning and acquisitions. These take into account the moves being made throughout all segments by digital technology by manufacturers and users alike.
As a result, while these acquisitions might appear to be numerous, analysis of each demonstrates a clear vision of the advantages to be gained by all parties. The businesses being incorporated will benefit as a result of being brought under the umbrella provided by EFI, becoming part of a larger structure. Additionally, end users will enjoy a wider field of expertise and the ability for future integration as part of overall productivity.
Being able to absorb third-party specialities into an already diverse product mix cannot fail to give EFI a stronger foothold across the entire digital printing sector and all the disparate elements that hold it together. Nonetheless, not all acquisitions run sweetly and contribute to stronger revenues from the moment of announcement. To be factored in are periods of adjustment, consideration for varied demographic, cultural and geographic positioning, cross-over and resulting overlap in portfolio products, and acceptance by the end-user base. But, where some companies seem to fail dismally in understanding these essential criteria, EFI has always demonstrated logic and common sense in its understanding of how to welcome a new company into the fold. It has the realism to know that continuing down a successful route with a newly acquired business rarely happens overnight but has to be planned strategically to become a smoothly operating cog in the wheel.
While this week's revenue announcement will have surprised nobody with its increase, the timing of the acquisitions of both Matan and Reggiani actually follow the company's record for June, as EFI chief executive Guy Gecht explains. "We started talking to Reggiani last September and we've known the company for a long time. With Matan, we commenced early this year and, following evaluation and negotiation, both of these came to closure around mid-June. As our quarter was judged on results and not on acquisitions, we decided to make the announcement on July 1st and start with a clear quarter. I don't remember any company closing two acquisitions at the same time."
The addition of two very different lines into the company's product family also now answers the question asked by many about hardware additions to the portfolio. The resulting acquisitions cement the diversification provided by both production businesses and achieve the aim of broadening the EFI roadmap by adding industrial textile, on the one hand, and additional UV-curable print engines on the other.
Both manufacturers offer fascinating opportunities to EFI. At 65 years of age, Reggiani is still entrenched in screen-printing lines for textile production but digital print has become a very strong, fast-growing arm of this Italian company's production offering. Matan has been around for the best part of two decades and has always been one of those businesses knocking at the door, using Fujifilm as a market outlet for its products under the Uvistar name. But people forget, or might not know in the first place, that these were the people responsible for bringing some of the earliest wide-format printers to market, including the Nur Outboard and original GrandJet from Scitex.
"Part of the EFI strategy is to grow organically and now we have everything we need for that," continues Gecht. "But, of course, there's work to be done with a lot of customers out there and they need to be convinced that EFI is going to add value and keep focused. Now we have great expertise for ink-jet in Italy, Spain, the USA and Israel where there are people passionate about innovation and this means that our research and development teams are in the perfect position to collaborate."
Gecht has always stressed the importance of different cultures blending but his key principle is one that is summed up succinctly. "Of primary importance is that our customers are happy, our shareholders are happy and our employees are happy. The ink-jet DNA contains an international passion for growth when moving from analogue to digital and Reggiani provides an excellent example in demonstrating this transition."
Making EFI stronger and more appealing is also key to the company's strategy. "Every customer thinks they are different but, actually, there's a lot of commonality within printing businesses around the world," states Gecht. "In terms of challenges, appetite and investment our job is to provide great technologies that let businesses become more competitive."
One interesting aspect relating to Matan is, of course, the current distribution situation with Fujifilm but this agreement won't change following EFI's acquisition. Notably, these machines are popular in Africa and Australasia but, as Gecht points out, EFI has a large number of partners world-wide – one of which is Fujifilm, with Fiery and front-end products. Matan provides a good opportunity to build on this relationship although, of course, the EFI name will be added.
Currently Reggiani might be better known in the industrial textile segment and Gecht is not alone, of course, in acknowledging the roll-to-roll digital market as in the ascendant thanks to the growing demand for easier logistics, mass customisation, shorter lead times and the ability for brands to refresh their inventories more quickly. "The combination of Reggiani with EFI technology not only helps the textile sector make the move to industrial digital, it also presents a great opportunity for soft signage," he says. "But people don't realise it yet because they don't know the manufacturer. However, we've already had a lot of interest from existing customers wanting to look at the system and, of course, in time we'll optimise it for this sector."
As for the $1 billion revenue target upon which EFI has set its sights for 2016, Gecht is confident that this is on track, with digital textile being an obvious growth opportunity where conversion from analogue is still in its relatively early days. But his pragmatism is such that he's quick to acknowledge that the market for printing onto documents is shrinking; this brings a huge opportunity for people wanting to move into parallel and vertical markets.
"We call it the 'Imaging of Things' – people can now print digitally onto other materials, including packaging, textiles and other forms of decoration," Gecht concludes. "The reason why EFI is doing so well is because we work hard to take care of our customers. And the reason they buy from us is because our aim is to make their businesses successful; there's a direct link between how well they're doing and how well the company is doing. That's our mission and our purpose, and that's why we continue to focus not only on what we have today but, maybe, future acquisitions. Our story is just at the beginning – we are at the start of the ink-jet revolution."