Elbit Vision Systems Ltd. (fka EVSNF)

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Elbit Vision Systems' (EVSNF) CEO Sam Cohen on Q4 2016 Results - Earnings Call Transcript

Apr. 6, 2017 12:54 PM ET| About: Elbit Vision Systems Ltd. (EVSNF)
FQ4: 04-03-17 Earnings Summary
News
EPS of $0.05 | Revenue of $2.78M (+ 18.3% Y/Y)
Elbit Vision Systems Ltd. (OTCQB:EVSNF) Q4 2016 Earnings Conference Call April 6, 2017 9:00 AM ET

Executives

Gavriel Frohwein - GK IR

Sam Cohen - CEO

Yaron Menashe - CFO

Analysts

Brian Kinstlinger - Maxim Group

Michael Siegel - National Securities

Kevin Dede - Rodman and Renshaw

Mike Schellinger - MicroCapClub

Ian Cassel - MicroCapClub



Gavriel Frohwein

Thank you, operator and my apologies for that interruption. Welcome to EVS' fourth quarter and full year 2016 conference call. I would like to welcome all of you to the conference call and I would like to thank EVS' management for hosting this call.


With us on the call today are Sam Cohen, CEO and Yaron Menashe, CFO. Sam will introduce EVS and discuss some of the key highlights of the fourth quarter, while Yaron will summarize some of the financial highlights of the fourth quarter. After this, we will open the call for the question-and-answer session.

Now, I would like to hand over the call to Sam Cohen, EVS' CEO. Sam, please go ahead.

Sam Cohen

Thank you. I would like to welcome all of you to our conference call and thank you for your interest in our company.

These results [both] the success in our plans for continued year-over-year growth in sales and revenue, but more importantly they demonstrate the significant step forward to realize our goals of the complete text information and quality standardization.

Our overall R&D expenses increased by 80% year-over-year in 2016. However, we want to emphasize that R&D expenses increased specifically in Q4 by about $200,000 due to a one-time retirement grant expense given to two employees. On the bottom line, we reported fourth quarter net income of $449,000, up 35% year-over-year despite this single R&D expense.

Looking ahead we expect our quarterly operating expenses to return to the average level seen in early quarters in 2016. In terms of revenue, our first quarter 2017 revenue looks in line to slightly ahead of those of the first quarter of last year. Our current backlog is similar to that at the same time last year.

However, it is too early to make an average estimate for 2017 since we have a number of potential iBar opportunities in the pipeline, which we are actively working on and which could have a significant positive impact on the year.

Throughout this year, iBar sales continued its positive trend. We have seen year-over-year growth exceed 50% and today we have over 200 units running in production. We currently have multiple customers with over 20 units installed as well as one customer with nearly 80 units. We are also excited to report that we currently have about 10 trial placements that represent potential sales of over 500 units in variety of textile products.

Obviously, the iBar sales have not progressed on the timeline we originally expected, but over the past two years, we have acquired a vast amount of knowledge regarding how to better promote the product. For example, we now understand that most commodity weavers tend to calculate a return on investment strictly from labor stating.

However, iBar provides multitude of cost savings like reduced raw material cost, downtime reduction, significant quality improvement, lower inspection cost and direct from loan shipping. When these factors are brought to light, payback become obvious to all.

And other strategy we are working on is large scale leasing. No one can argue that having an iBar unit can save a minimum of $3,000 to $5,000 per year even on the lowest price commodity goods. By aligning annual capital expenditure with the bare minimum of saving calculations even the greatest of critics can see the benefits.

This further understanding of the market tendencies, coupled with architect sales that include iBar trials has allowed us to capture sales in many customers who were initially reluctant to buy. We know this will be a winning strategy moving forward.

As we have discussed many times in the past, EVS is an automation company specializing in machine region. It is clear to everyone that replacing repetitive human labor is no longer a choice but a necessity to survival. EVS has positioned itself as the automation leader of the second largest industry in the world with over $7.5 billion in potential machine region sales.

Given that, this market is only beginning to adopt automation, EVS is well positioned for long-term sustainable, substantial revenue growth.

Last week our stock performed at 10 to 1 reverse share split. Under the mechanics of the split, our ticker was temporarily changed to EVSND but we returned EVSNF next week. The reverse split brings our share to well above $1, which is a price that institutions are more comfortable investing it and this action combined with our above $5 million in shareholder equity reported today with the conditions required to operate to the NASDAQ capital market.

Though we have no immediate plans to uplift the step we have taken to prepare the groundwork to make this move when we feel the time is right. In summary, we remain very pleased with our performance in 2016 and look forward to continued growth ahead.

And with that, I would like to hand over to Yaron Menashe, our CFO. Yaron go ahead.

Yaron Menashe

Thank you, Sam. Today, we announced solid financial results for both the quarter and full year of 2016. Revenue for the first quarter of 2016 were $2.8 million representing year-over-year growth of 18%. For 2016 as a whole, we reported $10.1 million and recognized a new level and up 11% year-over-year.

Fourth quarter gross profit was $1.5 million, 22% ahead of those of last year with the gross margin of 54%. In 2016, we reported gross profit of $5.6 million up 7% year-over-year with gross margin of 55.4%. Operating income in the first quarter of 2016 was $478,000, 23% ahead of the first quarter of last year with a operating margin of 70.2%.

As Sam mentioned, our OpEx was higher in the first quarter of 2016, primarily due to high level of R&D expenses, which amount to $614,000 versus $253,000 last year. We expect our R&D expenses to return to the level of the third quarter last year. For the year, operating income was $2.2 million versus $2.3 million last year with operating margins of 21.3%. Net income for the first quarter of 2016 was $459,000 an increase of 25% over last year and represented a net margin of 16.1%.

For the full year, we reported net income of $2 million versus $2.5 million reported last year with the net margin of 19.9%. Our diluted earnings per share for the year was $0.022 per share versus $0.025 last year. Cash and cash equivalents and short term deposits as of December last year were $4.5 million compared to $3.3 million as of December 2015.

As of year-end, our shareholder equity strongly improved and stood at $5.8 million up by $2.1 million or $3.7 million reported at the end of last year.

And with that, we will be happy to take your questions. Operator?

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, at this time, we'll begin the question-and-answer session. [Operator Instructions] The first question is from Brian Kinstlinger of Maxim Group. Please go ahead.

Brian Kinstlinger

Hi good morning, Sam.

Sam Cohen

Good morning.

Brian Kinstlinger

So, 11% growth is solid in '16, but like you said progress has been a little bit slower than you would have expected. So, based on your pipeline when do you think growth can accelerate to say 25% or more and what kind of sales and marketing investments do you think is necessary to sustain that kind of growth?

Sam Cohen

You know the opportunities are there. As we reported, we have more than 10 trials running right now and the potential is more than 500 units. But it's very difficult to exactly -- pinpoint exactly the timing when it's going to happen. Obviously if it's going to happen, it represents a very large growth.

But even if it will happen, I believe that these customers will say okay, we would like to hold 150 units, but we would like to consume it in 12 month or in 18 months or something like that. So, it's very difficult to predict exactly when it will be 25% or 30% growth.

But we feel very strong that obviously, it will happen. It's clear that we didn’t started to scratch the potential here, but exactly when it's going to happen, it's hard to say, sorry.

Brian Kinstlinger

So, I was going to say what point did the company step up sales and marketing to get double the number of trials or triple the number of trials. So, you have more shots on goal to say per se?

Sam Cohen

Right now, what you decided as kind of tactic, I don’t want to say strategy, but as a tactic, every time when we say likely that for our legacy business like if it's for SVA, we also offer almost as an automatic, we're offering an iBar together with it.

Obviously, the customers most of them like it, like the idea. We like it because it's let's say multiply our sales power technical force because if I already have an engineer that is going to work for one month and installing IQ-TEX 4 at the same time or in parallel, he can install iBar and present and prove to the customer that the potential of the iBar.

We started to do it in U.S. and it worked very nice and now we're doing it in Europe and in Asia. So, this is part of how we kind of almost increasing the number of engineers that we have and we also trained all of our engineers globally. We trained them to know how to install and how to operate the iBar.

Brian Kinstlinger

Great. And with that said, the company is already profitable and I think you meet the requirements. So, what is it that management wants to accomplish before uplifting like you mentioned the company is not ready for that.

Sam Cohen

We think we didn't say the company is not ready. We said that it's not the right timing. It's important for us to feel -- not to feel, but everything will be in place. We are now let's say hiring more people in the management level that will be -- that will help us in operation, in marketing, in R&D and when everything is going to be in place, production is going to be -- everything will be in place, all of our people and territories will work flawless and we feel that the customer is adapting these products without real issues with folks still out or anything that can happen then we're going to do it.

Brian Kinstlinger

Okay. Thanks very much.

Sam Cohen

You're welcome.

Operator

The next question is from Michael Siegel of National Securities. Please go ahead.

Michael Siegel

Good morning. Thank you. You mentioned that you expect the first quarter to be flat to slightly up from last year on the revenue side. Do you see the same on the margin and profitability side or do you think there is some room for improvement there?

Sam Cohen

I feel it's the same probably better.

Michael Siegel

Okay. On the marketing side of the stock itself, you guys have any plans yet on getting the word out through various methods, conferences anything like that?

Sam Cohen

Can you explain. I don't understand your question.

Michael Siegel

Getting more shareholders. Getting more shareholders to know about your company.

Sam Cohen

Yes, yes, of course, of course. We're planning to have more seminars and we are going to work with our IR and more roadshows during 2017.

Michael Siegel

Okay. Great.

Sam Cohen

This is definitely going to be part of I believe that once we'll make a decision to uplift we then have to do a lot of work here in the U.S., Europe and in India by the way.

Michael Siegel

Right. Right. Finally, you mentioned a possible large scale leasing model. How would that impact margins and revenue recognition etcetera? Is it going to look more like a subscription type model?

Sam Cohen

I don't feel it's going to have a huge impact. On the other hand, it would give us kind of a market upgrade every two years. We have more customers right now that we're talking about two options, either three years leasing or five years leasing. So, if it's going to two of the three years leasing, then after three years, we're going to automatically upgrade to the new ones, to the iBars, which we're working on.

As you can imagine, we are working on new generations, all of our products, on all of our products. So, I like this because it gives the customers more -- they're more open for this expenditure. They're more -- they can accept this and some places it's taxable and other financial or should I say, tricks, but this is -- it's really good to push large number of systems and for us, we feel like this is a cash flow, positive cash flow, for us it's fantastic too.

Michael Siegel

Great. Thank you very much. Congratulations.

Sam Cohen

Thank you.

Operator

The next question is from [indiscernible]. Please go ahead.

UnidentifiedCapital

Hey Sam. Thanks for taking the questions. Do you have any sort of timeline on when that leasing program could be rolled out? It sounds like it's started, but maybe just on a global scale when it will start rolling out.

Sam Cohen

We started in the U.S. with two companies. One of them is pure North American operation and one of them is -- they have plans in North America and in Asia and Thailand and both of them really like it. Both of them really -- we are continuing the negotiation process with them.

We are excited about it. They are excited about it. I don't see, I feel like this is a good strategy. We should start in the U.S. or with North American companies because also North America it's more common to do things like this. I can tell you that every time I discussed it with companies from India, they were not open for that.

I just came from South Korea and they were open. One of them says okay, I’m willing to listen to such structure and other companies said no, we will buy everything we want. So, I think we are instead of growing globally one time, we’re going to do it step by step just to make sure it's working, its running because we also need to make sure that our system is capable to handle such a situation.

For example, if a customer decides not to not to pay for one month, we need to be in control and we got to make sure that the machines will not work in such case and that’s why we want to do it first in North America where with respectable companies, AAA companies and we know which are different, we know them, they know us. So, everything will work flawless.

Unidentified Analyst

Thank you. That’s helpful and then in the past couple quarters, you cited a number of engineers as not having enough engineers as kind of bottleneck from iBar sales. Is that still a bottleneck or has that kind of subsided or is that…

Sam Cohen

Let’s put it this way, it's not a bottleneck here, but it’s still a painful subject. We continue to improve this all the time and hiring more and more engineers, field engineers train them, especially in Asia. As a matter of fact. I was in Asia in the last two, two three weeks and I was very pleased with the progress of our engineers over there. It looks like they made huge progress especially in China. So, it's something that will be probably forever here and it’s good problem because it means that we're growing, we need to fulfil the demand.

Unidentified Analyst

Okay. Thank you. That’s all from me.

Sam Cohen

Thank you, Kirk.

Operator

The next question is from Kevin Dede of Rodman. Please go ahead.

Kevin Dede

Hi, Sam. Thanks for taking the question.

Sam Cohen

Hi, Kevin.

Kevin Dede

Yeah, could you just talk a little about the addressable market? I'm curious to see whether or not you think your potential customers are becoming more in tune with using machinery and vision systems to help improve their yields. So, could you talk a little bit about how you see that end market changing during 2000 -- from the end of 2015 through 2016.

Sam Cohen

Sure. Almost like any industry with return on investment. Of course, there are many hidden benefits to our products, but at the end of the day, people will always measure return on investment. And we're working very hard on these two things. We're working very hard to increase our value and we're working very hard to reduce the cost and we're doing it and in fact, we are very, very pleased with the progress we are making.

Today iBar we can sell iBar probably half of what we used to sell a year ago and still make the same profit, the same ratios. So, we feel like, it's all a question of performance and the price, once and both of them, we're working both with both of them.

So, if the price will be in the range of $7,000, $6,500, $8,000, these kind of numbers, if I’m talking about iBar, then I don't feel -- I feel like let’s say at least 70%, 80% of the addressable market, which is one million weaving machines will adapt this, this kind of technology.

As I said in the script, in the conference that we feel that just to find $3,000 per year it's no brainer, it's very difficult for me and you can -- I would be happy to discuss it with any weaver that can show me that he cannot justify $3,000 per machine and this is one year.

So, it you take $6,000 or $7,000 you have less than three years, about two years to pay back on these machines and of course if we have more value, which means more statistical tools, all kind of managements and operations and all these, all the detection that we have on these machines that improve the first quality, reduce the off quality then this is where the payback is. This is where the payback is coming from and this is where we feel strong that weavers or textile companies will adapt our product.

Moreover, we feel very strong about OEMs agreement. Those about 50,000 weaving machine, new weaving machines being sold every year. These company all the weaving machineries manufacturers companies are looking at EVS, they are investigating EVS. We see them on every exhibition.

I must say that we are not pushing them at this point. We want to be more mature as a company. We want to be -- we want to have their product much more matured than it is right now. We want it to be more closer to plug and play. We want our customers to push their suppliers to have EVS.

So, when a company want to buy provide, let's say they bought new weaving machineries, they want to ask their -- the weaving machine suppliers why don’t you contact EVS and see if I can have these machines already integrated with iBar system. So, we want to be in that situation.

This is our strategy. This is how we are -- this is why we feel so strong about the market and regarding addressable market, as I mentioned, it is about one million weaving machines and even if you take $7,000 or $8,000 you can see per machine, you can see that it's about $6.5 billion.

Regarding our legacy business, our legacy business addressable market is less between $1 billion to $2 billion if you take into consideration the non-woven industry.

So, if you take the pure textile, it's about 10,000, 10,000 finishing lines. If you sell IQ-TEX for about $100,000 together, then it's about $1 billion and as I said if you had the non-woven production lines and film production lines, all kind of plastics and coated material that has nothing to do with textile, all kinds of surface, then you feel that the potential is even higher.

Kevin Dede

Okay, thanks. Thanks Sam. Could you talk a little bit about the sales cycle and the backlog and how that's changed over the past year? Now you mentioned and I apologize I didn’t catch the number, but I know you talked about the number of machines that you have in backlog and not it being about the same level as last year.

But given that your pricing has come down and the ROI picture that you are offering your customers has improved, can you talk a little bit about how the sales cycle has changed through 2016 and how you hope it changes in 2017?

Sam Cohen

How the sales cycle of iBars you mean this question?

Kevin Dede

Yes, just curious to see if you think that customers are going to make a decision faster.

Sam Cohen

Customers don’t make decision faster because our systems are better and our engineers who work on the system are better and they have much better understanding and they're not going to have -- they're not going to have to tweak out the system for three or four weeks like we used to have in the past. And we're adding more and more features, new features, new capabilities that are more even find more companies that's good enough for them.

And when we started, even though we had a business plan and we defined the product from a marketing point of view, all this is good and fine, but I clearly put 100 machines in production, you really -- you are going to miss many things and we already factored a stage. So today the system I'm not saying is perfect, I will put it, we have a lot of things to do, but it is much better than it was a year ago or a year and half ago and have much more capabilities.

So once the machine, let's say if the machine is completely automatic, it's going to take one day for the customers to say okay, I'm happy, let's talk about more systems.

Today it should take two weeks, one month, maximum two months to get to the point where the customer is ready to talk about more systems and budgetary questions and quotations and negotiations etcetera.

Kevin Dede

Okay. And then how do you think that changed from last year and then how do you think that's changed the backlog.

Sam Cohen

It didn’t change much the backlog, but it changed a lot the potential. We feel very -- with a potentially right now, the real potential, but we have in the pipeline is more than 500 machines. So, once we are going to do everything if the customers will realize what we have done, we have the potential to get very large, let’s say hundreds of orders. In fact, we have today something that we didn't have a year ago. We are talking to at least three customers on more than 100 machines on each one of them.

Actually, one of them is we are talking to him about more than 200 machines. So, it’s changed a lot from a year before. A year before we talked about okay, once we put one machine or two machines and the customer says okay it's glad to have and says okay, let’s buy 10 more, let’s buy 14 and then we'll see.

So, now we are -- very quickly, we are getting to the point where customers are talking about much more than additional five machines. So, it didn’t change the backlog, but it changed dramatically the potential.

Kevin Dede

Understood, understood. Okay. Yeah thank you for that color Sam. My last question is can you talk about the number of customers that you had in 2015 versus the number of customers you have now or the end of 2015?

Sam Cohen

You know Kevin, it’s almost the same as far as iBar and as far as potential, if you're talking about -- if you're talking about number of trials or number of customers that are trying these machine whether they bought it or not, it doesn’t really matter, but it's not significant. But obviously, we have much more customers for iBars today. I think we have about 20 customers that are using iBar successfully. So right now, we're working with in parallel globally with 10 new customers and we have 20 customers who are already using these -- the iBar for a long time.

Kevin Dede

Okay. Okay. Perfect Sam. Thank you so much for indulging me and the additional color. I appreciate it greatly.

Sam Cohen

You’re welcome. Thank you.

Operator

The next question is from Mike Schellinger of MicroCapClub. Please go ahead.

Mike Schellinger

Yes, I was wondering if you could tell me about what improvements you might have underway for the iBar and to the extent you can talk about it, maybe talk about how that might impact the end market?

Sam Cohen

Hi Mike. It's simple, once you have multiple number of iBars, it's okay, it's one thing to stop the machine, the weaving machine when something is wrong and when the process is wrong when there is something that you understand that you have to stop the machine for that and this where you save a lot of off quality.

When you have all this information, all this flow hundreds of thousands of information that goes into one computer, the center computer, you want to be true to the weavers management to say okay, I’ve got a problem with this beyond a suppliers because I see that all the yarns that he provide me has more defect by 10% or 20% than the other yarn supplier.

The tools, statistical tools that we can give to the management that increase the value and prove their products that we've eventually give them. I believe that working in this area with all the database, ERP systems that are linked to their even customers today, let’s say they receive an order to supply 100,000 meters of fabric, obviously good fabric, so they wanted to measure the length of all the off quality from all the weaving machines because they say okay if added, if I will add in the next month all the size in one direction, all the defects linked and I will get to let’s say instead of 100,000, I will get to 99,000, then it means I need to add -- I need to weave 1,000 more in order to supply the $100,000 order that I receive from my customer.

So, this kind of tools we didn’t have it initially and we're adding this now and we give business to the customer. We put it in our presentation, in our speeches and they like it. They see the value. It's clear to them because today they have no control.

Today if they have an order of 100,000 specifically they know from their experience that they need to add 5% more. So, they will produce 100,000 and 5% more because they know they have off-quality here and there. So, this is a waste. Today we can sell it accurate to the point exactly how much they need to produce more and that’s going to save them a lot of money. This is just an example.

Mike Schellinger

Okay. Thank you.

Sam Cohen

You’re welcome.

Operator

The next question is a follow up from [Michael]. Please go ahead.

Unidentified Analyst

I had just an obvious housekeeping thing. You talked about earnings per share last year, obviously, you were talking about pre-split right.

Yaron Menashe

Yeah.

Unidentified Analyst

And it was point to -- so just that’s all just to make it clear. Thank you.

Sam Cohen

Okay Michael.

Unidentified Analyst

Yes. That was it.

Sam Cohen

Sorry.

Unidentified Analyst

Yeah, just on the earnings per share, just that it was pre-split.

Sam Cohen

Before the split?

Unidentified Analyst

Yeah, did you say the earning per share was like $0.022 a share or share or something like that and that's $0.20 split adjusted that's all.

Yaron Menashe

The $0.022 after the reverse split. We reflected the reverse split in our earnings for full 2016. The number was adjusted.

Unidentified Analyst

Okay, but for the year, adjusted it would be $0.20 a year, right?

Yaron Menashe

No, $0.022. One second.

Unidentified Analyst

No problem.

Yaron Menashe

No, sorry its…

Unidentified Analyst

On the screen, I’m looking at the last 12 months’ earnings and its $0.20 that sort of service.

Yaron Menashe

Yes, for the year it's $0.22 sorry. Our mistake.

Unidentified Analyst

No worries. Thank you.

Yaron Menashe

You're welcome.

Operator

The next question is from Ian Cassel of MicroCapClub. Please go ahead.

Ian Cassel

Yes, my question is about innovation. I know innovation is important to you Sam and the company. I was wondering if there are any other areas within the textile market for products that you are working on that you think can be significant to the company over the long-term?

Sam Cohen

Hi Ian, thank you. Obviously, innovation is critical for us. We are working on -- actually we're working on five new products in parallel right now, some of them sub-contractors and some of them in-house. But there is one point that I mentioned this in the script, I said standardization, I was talking about standardization.

The pattern that EVS has is all about consolidation. We're basically controlling the standard, the regional standard in weaving today, in weaving quality today, there is no standard and although we have a patent on this, we didn’t implement in the iBar.

Once this feature will be implemented in the iBar in general companies, end users like J.C. Penney and Wal-Mart and Costco and beyond and all these companies will be able to order fabric in quality standard. So, they can say we want 100,000 meters of standard EVS 125 and this is our goal and this is something that we are working on right now very hard and hopefully we will be able to implement it during 2017.

This is going to revolutionize all the weaving process because it's going to force and this is going to force the weavers to use it because we are going to expose all these ideas of standardization to all these end users and this is going to my opinion completely change all the game plan.

So, in that we work on digitalization on iBar. We're working on new products called Prin-Tex which is pattern recognition system that should give a fantastic answer to all the printing industry, the digital printing industry.

We're right now working on the definition of software development kit, which will allow us to literally compete with companies like Cognex and InfraVision, basically will allow other integrators, other value-added resellers to use our hardware. We are developing hardware since 1992 and we have a very nice hardware, fantastic I don't want to say the best in the world, but I definitely believe it's the best in the world.

We just need to have access to other engineers all over the world to the hardware and exited the hardware, which means better software. So those huge let's say potential using the same technology, the same algorithm that we have today, we just need to be more open, open company, open software, open source to let other people use this hardware.

Ian Cassel

Great. Thank you.

Sam Cohen

You're welcome.

Operator

[Operator Instructions] We have a question from [Andy Carter from Securities]. Please go ahead.

Unidentified Analyst

What do you see is the normal R&D dollars with big brief that occurred in the fourth quarter and the other question is why your sales and marketing in the fourth quarter have got down when you have 50% increase in revenues?

Sam Cohen

Okay. Could you repeat the first question please?

Unidentified Analyst

Yes, since you have such a big increase in R&D in the fourth quarter, what you see as a normal R&D going forward? Is it going to be $600,000 per quarter or is it going to be closer to the $300,000?

Sam Cohen

Well it's going to be similar to the third quarter of 2016. Okay. This is as far as R&D. As far as sales and marketing, we see a reduction, I believe mainly because of commission, commission structure. The commission structure in the fourth quarter was much lower than our regular structure which was mainly due who are not with agents or distributors or direct sales.

As you know, I don’t know if you know Andy, but we have two ways of selling in the U.S. and China and India we sell directly, sell directly to our customers. We have our own sales people. In all other countries, we sell through agents and so when agents sales are going down, we pay less commission for this is what happened in the fourth quarter.

Unidentified Analyst

Okay. Thank you.

Sam Cohen

You're welcome.

Operator

There are no further questions at this time. Before I ask Mr. Cohen to go ahead with closing statements, I would like to remind participants that a replay of this call will be available tomorrow on Elbit Vision Systems’ website www.evs.co.il. I see with another questions a follow-up from Kevin Dede. Please go ahead.

Kevin Dede

Sorry, I got it in the last minute. Hi Sam, thanks again for staying on the line. I appreciate it. Listen, I was just wondering if you could talk a little bit to the competitive environment? How have you seen that change or do you feel you still have a pretty good shot at addressing this industry without too much competition?

Sam Cohen

Well obviously, competition didn’t change much at this point. We have company in England Sheraton and we have InfraVision and Cognex that are working on other industries, most of they being non-movement and film industry, but not really in textile, but I'm pretty sure Kevin that there will be a competition, companies I know for in fact company always watch EVS. They watch what we're doing and they want to see that we are going to succeed.

So, I feel like once EVS revenue will be let's say $30 million, $40 million, there is no doubt in my mind that we will have very strong competition and we are working very hard to be in position ourselves to be in very good position when this competition will come.

So, this is one of the reasons we really work hard to improve our products, get as much market share as possible. I think this is the key that more customers we'll have the more systems we'll have, this will be a strong barrier to our competition. Kevin, please go ahead.

Kevin Dede

Okay Sam. Thanks, thanks for that color. We appreciate it.

Sam Cohen

Sure Kevin, no problem.

Operator

There are no further questions at this time. Mr. Cohen, would you like to make your concluding statements?

Sam Cohen

Yes, thank you. On behalf of the management or EVS, I would like to thank you all for joining us today and wish you a great day. Have a good day.