PLNR

Planar Systems, Inc. (PLNR)

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Planar Systems Inc. (PLNR)

F3Q 2013 Results - Earnings Call Transcript

August 8, 2013 5:00 PM ET

Executives

Gerry Perkel - President and Chief Executive Officer

Ryan Gray - Chief Financial Officer

Analysts

Jeff Martin - Roth Capital

Sam Bergman - Bayberry Asset Management

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the third quarter 2013 Planar Systems earnings conference call. My name is Aisha and I'll be your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Gerry Perkel, President and CEO. You may proceed, sir.

Gerry Perkel

Good afternoon and thank you for joining us for Planar’s third quarter earnings conference call. With me this afternoon is Ryan Gray, Planar’s Chief Financial Officer. Before I begin, I do need to say that the press release we issued today contains forward-looking statements. On this conference call we will comment on our strategic, business and financial outlook and make other forward-looking statements based on our current expectations, estimates, assumptions and projections. Words such as expects, anticipates, intends, plans, believes, sees, estimates and variations of such words and similar expressions are intended to identify such forward-looking statements.

All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. I refer you to the earnings press release we issued earlier today and to our periodic audit filings with the SEC for a description of factors that could cause actual results to differ materially from the results described in the forward-looking statements.

The forward-looking statements we make today speak only as of today and we do not undertake any obligation to update any such statements to reflect events or circumstances occurring after today.

With that behind us, let me move on to talking about our results. Total revenue came in at $37.5 million for the quarter which represents 6% decline compared to the third quarter last year when excluding our EL product line which we sold back in November.

We are pleased that we were able to deliver over 20% year-on-year in our targeted growth product lines of digital signage products and touch monitors, with digital signage products growth at 19% and touch monitors growing at 30% versus Q3 a year ago.

In our digital signage product area, we saw very strong performance from our signage monitor products based on the strength of our UltraLux 70 and 80-inch signage monitors as well as our PS series of economical signage products.

We also began shipping our new UltraRes 4k 84-inch solution and are seeing potential for that product family begin to grow in our sales funnel. A part of our digital signage product growth strategy this year has been to expand our digital signage monitor product portfolio and revenue levels to provide added growth opportunities on top of our titled LCD video wall products.

I am pleased that we are seeing result, positive results in this area as signage monitor product revenues have grown over 100% through the first three quarters of this year when compared with the first three quarters of FY12.

Our titled LCD video wall products also continue to grow but at a slower rate than we had seen previously. We announced a new member of this product category which offers a more economical video wall solution but having slightly larger bezels than our super narrow products.

We look to have this product to expand the number of applications that can be addressed by video walls. In our touch product family, we again experienced strong growth. We also have begun to deliver several new products including a 24-inch version of our popular Helium family of Windows 8 capable touch monitors. We’ve had good success with the 27-inch version, which began shipping last October and look to leverage this new size in more affordable price point to drive additional volume.

In our other product lines there were a few noteworthy items. In our custom product line we experienced some decline compared to Q3 a year ago. However at the end of the quarter, we began the initial shipments of the new design win which we have previously mentioned. This new custom design win will offer the opportunity for some good sequential growth in Q4 as we have a full quarter of shipments and will offer some opportunity for enhanced revenue in the custom product line as we move forward into FY14.

We experienced some year-on-year growth in our desktop monitor line, which was offset by decline in our rear projection cube product line and our Runco high end home theater product line.

Another important part of our Q3 results was a significant growth in our order backlog exiting the quarter. Our shippable backlog when entering Q4 was more than $5 million larger than our backlog enter in Q3, which supports our expectation to sequential revenue growth in Q4.

This sequential growth coupled with our expectation for improved gross profits in Q4 is driving our expectation to move to non-GAAP profitability in Q4 as Ryan will outline in a moment.

We also launched a new ERP system in the quarter. This was the major undertaking and replaces an aged and less functional IT system infrastructure and provides us a good platform to support our growth going forward. This system was launched in May and while we had a few productivity challenges initially, we're making good progress in utilizing the new system and look forward to finding more opportunities to leverage the system for increased productivity that we believe will support our growth goals.

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