Shares of Electronics for Imaging Inc. (NASDAQ:EFII) were up 15.3% as of 11:20 a.m. EDT Wednesday after the digital printing technology company announced an update on its ongoing business assessment and third-quarter guidance.
EFI shares plunged over 40% early last month after the company postponed its second-quarter call in order to "complete an assessment on the timing of recognition of revenue." The company further noted that its disclosure controls "were not effective" in previous periods.
For perpsective, shares still trade nearly 20% below last month's highs. But today Electronics for Imaging announced that it "does not currently expect to report any material error that would require a restatement of any of its previously reported financial results for any period." (Note that its review is not yet complete.)
That said, EFI also reiterated that it expects to report both "material weaknesses in internal control over financial reporting," as well as ineffective disclosure controls in prior periods. Given EFI's previous press releases on the topic, neither is terribly surprising to investors at this point.
In addition, for the current third quarter of 2017, EFI expects revenue in the range of $255 million to $260 million, GAAP earnings per diluted share of $0.02 to $0.07, and adjusted (non-GAAP) earnings per share of $0.55 to $0.60. Analysts, on average, were modeling higher adjusted earnings of $0.63 per share on revenue of roughly $262.8 million. But we should also note that EFI's adjusted earnings guidance includes a $0.05-per-share negative impact from the commercialization of its new Nozomi inkjet printer for corrugated packaging during the quarter.
Finally, EFI promised that upon completion of its assessments and review, it will "promptly" hold a conference call to discuss its second-quarter results and third-quarter guidance in more detail.
In the meantime, it's hard to blame investors for breathing a sigh of relief that EFI has confirmed its review -- at least at its current stage -- isn't expected to result in any material restatements.