Planar Reports Fiscal Third Quarter 2014 Financial Results

By Business Wire,  July 31, 2014, 04:05:00 PM EDT


Company Reports 53 Percent Year-Over-Year Growth in Quarterly Sales of Digital Signage Products

BEAVERTON, Ore.--(BUSINESS WIRE)-- Planar Systems, Inc. (NASDAQ:PLNR), a global leader in display and digital signage technology, recorded sales of $43.9 million and GAAP income per share of $0.03 in its third fiscal quarter ended June 27, 2014. On a non-GAAP basis (see reconciliation table below), income per share was $0.05 in the third quarter of fiscal 2014.

FISCAL Q3 2014 OPERATIONAL HIGHLIGHTS

  • Quarterly sales of digital signage products increased 53 percent to $21.4 million, compared to the third fiscal quarter of 2013.
  • Non-GAAP EBITDA totaled $1.6 million (see reconciliation table), resulting in $4.4 million in non-GAAP EBITDA fiscal year to-date.
  • Rolled out the Clarity™ Matrix Video Wall Calculator, a first-of-its-kind, free online tool that makes it easier, faster and more accurate to design and install video walls.
  • Advanced the adoption of Ultra HD with the introduction of four new 4K displays: Planar UltraRes 98", Planar EP-Series 58" and 65", and Planar IX-Series 28" UHD displays.
  • Honored with Most Innovative Video Display and Best of Show Awards at InfoComm 2014. Planar UltraRes Series and Clarity Matrix LCD Video Wall System recognized by Systems Contractor News and Digital Signage Magazine.

FISCAL Q3 2014 FINANCIAL RESULTS

Sales of digital signage products totaled $21.4 million in the third fiscal quarter of 2014, a 53 percent increase over the same period a year ago. Total revenue increased 17 percent compared to the third quarter of fiscal 2013, as increases in sales of digital signage products more than offset the decline in sales of Commercial and Industrial (C&I) products. Sales of C&I products decreased 4 percent to $22.5 million compared with the same quarter a year ago. This decrease was primarily driven by lower sales of touch monitors and high-end home products, partially offset by higher sales of custom C&I displays and rear projection cubes.

The Company's consolidated gross profit margin, as a percentage of sales (on a non-GAAP basis), was 24.4 percent in the third quarter of 2014, up from 21.7 percent in the third quarter of 2013 (see reconciliation table). The improvement in gross profit rate is the result of both an increase in sales of higher margin digital signage products relative to lower margin C&I products as well as higher gross profit rates on sales of digital signage products compared with the prior year.

Total operating expenses (on a non-GAAP basis) for the third quarter of 2014 were $9.6 million compared with $9.0 million in the same quarter last year (see reconciliation table), primarily driven by increases in sales and marketing expenditures.

The Company's cash balance decreased $1.5 million sequentially to $11.5 million at the end of the third fiscal quarter of 2014 compared to the end of the second quarter of fiscal 2014. The primary drivers of working capital remained flat with the second fiscal quarter as reductions in inventory, which improved inventory turns to 5.1, and a small increase in accounts payable were roughly offset by an increase in accounts receivable. Cash declined in the quarter primarily as a result of payments made to a third party for certain components related to the EL business for which the buyer of the EL business, Beneq Products Oy, has agreed to repay the Company over time.

MANAGEMENT COMMENTARY

"Our third quarter results came in above our expectations for both revenue and profits, bolstered by strong growth in sales of our strategic focus area of digital signage products," said Gerry Perkel, Planar's president and chief executive officer. "As a result of the strong performance in the third quarter, coupled with a favorable outlook for the fourth quarter, we are increasing our estimates for revenue and non-GAAP EPS for the full fiscal year."

BUSINESS OUTLOOK

Looking forward, the Company currently expects to see continued strong revenue for digital signage and custom C&I products in the fourth fiscal quarter of 2014, and therefore anticipates revenue in the range of $48 million to $50 million and non-GAAP income per share of $0.08 to $0.10. As a result, the Company has raised its estimates for the full fiscal year 2014, and currently expects revenue in the range of $173.4 million to $175.4 million and non-GAAP income per share of $0.21 to $0.23.

CONFERENCE CALL

Management will discuss the results of operations and the business outlook in a conference call later today, July 31, 2014, beginning at 2:00 p.m. Pacific time. The call can be heard via the Internet through a link on Planar's website at www.planar.com and will be available for replay until August 31, 2014. The Company will post on its website management's prepared remarks shortly after the call.

ABOUT PLANAR

Planar Systems, Inc. (NASDAQ:PLNR) is a global leader in display and digital signage technology, providing premier solutions for the world's most demanding environments. Retailers, educational institutions, government agencies, businesses, utilities and energy firms, and home theater enthusiasts all depend on Planar to provide superior performance when image experience is of the highest importance. Planar video walls, large format LCD displays, interactive touch screen monitors and many other solutions are used by the world's leading organizations in applications ranging from digital signage to simulation and from interactive kiosks to large-scale data visualization. Founded in 1983, Planar is headquartered in Oregon, USA, with offices, manufacturing partners and customers worldwide. For more information, visit www.planar.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 relating to Planar's business operations and prospects, including statements under the "Business Outlook" heading relating to the Company's expected revenue growth, revenue range and non-GAAP income per share range for fiscal 2014, and the Company's expected revenue growth, total revenue range and non-GAAP income per share range for the fourth quarter of fiscal 2014. These statements are made pursuant to the safe harbor provisions of the federal securities laws. These and other forward-looking statements, which may be identified by the inclusion of words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "goal" and variations of such words and other similar expressions, are based on current expectations, estimates, assumptions and projections that are subject to change, and actual results may differ materially from the forward-looking statements. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Many factors, including the following, could cause actual results to differ materially from the forward-looking statements: poor or weakened domestic and international business and economic conditions; changes or reductions in the demand for products in the various display markets served by the Company; any delay in the timing of customer orders or the Company's ability to ship product upon receipt of a customer order; the extent and timing of any additional expenditures by the Company to address business growth opportunities; any inability to reduce costs or to do so quickly enough, in either case, in response to reductions in revenue; adverse impacts on the Company or its operations relating to or arising from any inability to fund desired expenditures, including due to difficulties in obtaining necessary financing; changes in the flat-panel monitor industry; changes in customer demand or ordering patterns; changes in the competitive environment including pricing pressures, increased commoditization or the ability to keep pace with technological changes; technological advances; shortages of manufacturing capacity from the Company's third-party manufacturing partners or other interruptions in the supply of components the Company incorporates in its finished goods including as a result of natural disasters; future production variables resulting in excess inventory and other risk factors listed from time to time in the Company's periodic filings with the Securities and Exchange Commission (SEC). The forward-looking statements contained in this press release speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release.

Note Regarding the Use of non-GAAP Financial Measures:

In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), the Company's earnings release contains non-GAAP financial measures that exclude certain items set forth in the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. The exclusions relate primarily to charges of a non-cash nature. Management uses the non-GAAP financial measures for internal managerial purposes, including as a means to compare period-to-period results on a consolidated basis and as a means to evaluate the Company's results on a consolidated basis compared to those of other companies. In addition, management uses certain of these measures when publicly providing forward-looking statements on expectations regarding future consolidated basis financial results. The Company discloses this information to the public to enable investors to be able to more easily assess the Company's performance on the same basis applied by management. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Planar Systems, Inc.
Consolidated Statement of Operations
(In thousands, except per share amounts)
(unaudited)
         
Three months ended Nine months ended
Jun. 27, 2014   Jun. 28, 2013 Jun. 27, 2014   Jun. 28, 2013
 
Sales $ 43,853 $ 37,485 $ 125,385 $ 121,101
Cost of Sales   33,188       29,359     95,325       93,954  
Gross Profit 10,665 8,126 30,060 27,147
 
Operating Expenses:
Research and development, net 1,560 1,620 4,273 5,475
Sales and marketing 5,187 4,819 14,914 14,923
General and administrative 3,158 2,833 9,614 9,159
Amortization of intangible assets - 147 - 442
Restructuring 10 2,407 31 2,601
Loss on sale of assets   -       -     -       1,314  
Total Operating Expenses 9,915 11,826 28,832 33,914
 
Income (Loss) from operations 750 (3,700 ) 1,228 (6,767 )
 
Non-operating income (expense):
Interest, net 99 39 234 104
Foreign exchange, net (1 ) (1 ) (54 ) (14 )
Other, net   (27 )     166     422       462  
Net non-operating income 71 204 602 552
 
Income (loss) before taxes 821 (3,496 ) 1,830 (6,215 )
Provision for income taxes   115       71    

266

      114  
Net Income (loss) $ 706     $ (3,567 ) $ 1,564     $ (6,329 )
 
Net Income (loss) per share - basic $ 0.03 ($0.17 ) $ 0.07 ($0.31 )
Net Income (loss) per share - diluted $ 0.03 ($0.17 ) $ 0.07 ($0.31 )
 
Weighted average shares outstanding - basic 21,491 20,899 21,302 20,672
Weighted average shares outstanding - diluted 21,623 20,899 21,506 20,672
 
Planar Systems, Inc.
Consolidated Balance Sheets
(In thousands)
(unaudited)
   
Jun. 27, 2014 Sept. 27, 2013
ASSETS
Cash $ 11,517 $ 11,971
Accounts receivable, net 25,175 22,821
Inventories 26,247 30,003
Other current assets   4,602     2,426  
Total current assets 67,541 67,221
 
Property, plant and equipment, net 5,313 6,434
Other assets   7,582     6,230  
$ 80,436   $ 79,885  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 16,156 $ 17,042
Current portion of capital leases 443 759
Deferred revenue 1,638 1,685
Other current liabilities   13,455     12,848  
Total current liabilities 31,692 32,334
 
Long-term portion of capital leases - 394
Other long-term liabilities   4,396     5,390  
Total liabilities 36,088 38,118
 
Common stock 187,517 186,202
Retained deficit (140,612 ) (141,735 )
Accumulated other comprehensive loss   (2,557 )   (2,700 )
Total shareholders' equity   44,348     41,767  
$ 80,436   $ 79,885  
 
Reconciliation of GAAP to Non-GAAP Financial Measures      
(In thousands, unaudited)
     
For the three months ended
Jun. 27, 2014 Jun. 28, 2013
Gross Profit:
GAAP Gross Profit 10,665 8,126
 
Share-based compensation 27   22  
Total Non-GAAP adjustments 27   22  
   
NON-GAAP GROSS PROFIT 10,692   8,148  
   
NON-GAAP GROSS PROFIT PERCENTAGE 24.4 % 21.7 %
 
Research and Development:
GAAP research and development expense 1,560 1,620
 
Share-based compensation (15 ) -  
Total Non-GAAP adjustments (15 ) -  
   
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSE 1,545   1,620  
 
Sales and Marketing:
GAAP sales and marketing expense 5,187 4,819
 
Share-based compensation (55 ) (61 )
Total Non-GAAP adjustments (55 ) (61 )
   
NON-GAAP SALES AND MARKETING EXPENSE 5,132   4,758  
 
General and Administrative:
GAAP General and Administrative Expense 3,158 2,833
 
Share-based compensation (259 ) (208 )
Total Non-GAAP adjustments (259 ) (208 )
   
NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSE 2,899   2,625  
 
Operating Expenses:
GAAP Total Operating Expenses 9,915 11,826
 
Share-based compensation (329 ) (269 )
Amortization of intangible assets - (147 )
Restructuring charges (10 ) (2,407 )
Total Non-GAAP adjustments (339 ) (2,823 )
   
NON-GAAP TOTAL OPERATING EXPENSES 9,576   9,003  
 
Reconciliation of GAAP to Non-GAAP Financial Measures Continued    
(In thousands, unaudited)
     
For the three months ended
Jun. 27, 2014 Jun. 28, 2013
 
Income (Loss) from Operations:
GAAP income (loss) from operations 750 (3,700 )
 
Share-based compensation 356 291
Amortization of intangible assets - 147
Restructuring charges   10   2,407  
Total Non-GAAP adjustments   366   2,845  
   
NON-GAAP INCOME (LOSS) FROM OPERATIONS   1,116   (855 )
 
Income (Loss) before taxes & EBITDA:
GAAP income (loss) before taxes 821 (3,496 )
 
Share-based compensation 356 291
Amortization of intangible assets - 147
Restructuring charges 10 2,407
Foreign exchange, net   1   1  
Total Non-GAAP adjustments   367   2,846  
   
NON-GAAP INCOME (LOSS) BEFORE TAXES   1,188   (650 )
Depreciation   416   330  
NON-GAAP EBITDA   1,604   (320 )
 
Net Income (Loss):
GAAP Net Income (loss) 706 (3,567 )
Share-based compensation 356 291
Amortization of intangible assets - 147
Restructuring charges 10 2,407
Foreign exchange, net 1 1
Income tax effect of reconciling items   (5 ) 315  
Total Non-GAAP adjustments   362   3,161  
   
NON-GAAP NET INCOME (LOSS)   1,068   (406 )
 
GAAP weighted average shares outstanding--basic 21,491 20,899
GAAP weighted average shares outstanding--diluted 21,623 20,899
 
GAAP Net Income (Loss) per share - basic $ 0.03 ($0.17 )
Non-GAAP adjustments detailed above 0.02 0.15
NON-GAAP NET INCOME (LOSS) PER SHARE (basic) $ 0.05 ($0.02 )
 
GAAP Net Income (Loss) per share - diluted $ 0.03 ($0.17 )
Non-GAAP adjustments detailed above 0.02 0.15
NON-GAAP NET INCOME (LOSS) PER SHARE (diluted) $ 0.05 ($0.02 )
 
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, unaudited)    
     
For the nine months ended
Jun. 27, 2014 Jun. 28, 2013
Gross Profit:
GAAP Gross Profit 30,060 27,147
 
Share-based compensation   73   75  
Total Non-GAAP adjustments   73   75  
   
NON-GAAP GROSS PROFIT   30,133   27,222  
   
NON-GAAP GROSS PROFIT PERCENTAGE   24.0 % 22.5 %
 
Research and Development:
GAAP research and development expense 4,273 5,475
 
Share-based compensation   (34 ) (82 )
Total Non-GAAP adjustments   (34 ) (82 )
   
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSE   4,239   5,393  
 
Sales and Marketing:
GAAP sales and marketing expense 14,914 14,923
 
Share-based compensation   (141 ) (212 )
Total Non-GAAP adjustments   (141 ) (212 )
   
NON-GAAP SALES AND MARKETING EXPENSE   14,773   14,711  
 
General and Administrative:
GAAP General and Administrative Expense 9,614 9,159
 
Share-based compensation   (896 ) (791 )
Total Non-GAAP adjustments   (896 ) (791 )
   
NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSE   8,718   8,368  
 
Operating Expenses:
GAAP Total Operating Expenses 28,832 33,914
 
Share-based compensation (1,071 ) (1,085 )
Amortization of intangible assets - (442 )
Restructuring charges (31 ) (2,601 )
Loss on sale of assets   -   (1,314 )
Total Non-GAAP adjustments   (1,102 ) (5,442 )
   
NON-GAAP TOTAL OPERATING EXPENSES   27,730   28,472  
 
Reconciliation of GAAP to Non-GAAP Financial Measures Continued
(In thousands, unaudited)
 
For the nine months ended
Jun. 27, 2014 Jun. 28, 2013
 
Income (Loss) from Operations:
GAAP income (loss) from operations 1,228 (6,767 )
 
Share-based compensation 1,144 1,160
Amortization of intangible assets - 442
Restructuring charges 31 2,601
Loss on sale of assets   -   1,314  
Total Non-GAAP adjustments   1,175   5,517  
   
NON-GAAP INCOME (LOSS) FROM OPERATIONS   2,403   (1,250 )
 
Income (Loss) before taxes & EBITDA:
GAAP income (loss) before taxes 1,830 (6,215 )
 
Share-based compensation 1,144 1,160
Amortization of intangible assets - 442
Restructuring charges 31 2,601
Loss on sale of assets - 1,314
Foreign exchange, net   54   14  
Total Non-GAAP adjustments   1,229   5,531  
   
NON-GAAP INCOME (LOSS) BEFORE TAXES   3,059   (684 )
Depreciation   1,331   1,015  
NON-GAAP EBITDA   4,390   331  
 
Net Income (Loss):
GAAP Net Income (loss) 1,564 (6,329 )
 
Share-based compensation 1,144 1,160
Amortization of intangible assets - 442
Restructuring charges 31 2,601
Loss on sale of assets - 1,314
Foreign exchange, net 54 14
Income tax effect of reconciling items   (43 ) 371  
Total Non-GAAP adjustments   1,186   5,902  
   
NON-GAAP NET INCOME (LOSS)   2,750   (427 )
 
GAAP weighted average shares outstanding--basic 21,302 20,672
GAAP weighted average shares outstanding--diluted 21,506 20,672
 
GAAP Net Income (Loss) per share - basic $ 0.07 ($0.31 )
Non-GAAP adjustments detailed above 0.06 0.29
NON-GAAP NET INCOME (LOSS) PER SHARE (basic) $ 0.13 ($0.02 )
 
GAAP Net Income (Loss) per share - diluted $ 0.07 ($0.31 )
Non-GAAP adjustments detailed above 0.06 0.29
NON-GAAP NET INCOME (LOSS) PER SHARE (diluted) $ 0.13 ($0.02 )
 
Planar Systems, Inc.
Revenue by Product Line
(In millions)
(unaudited)
           
Three months ended % Change
Jun. 27, 2014   Jun. 28, 2013   Mar. 28, 2014

 

vs. Prior Year   vs. Prior Quarter
 
Digital Signage Sales $ 21.4 $ 14.1 $ 19.0 53 % 13 %
 
Commercial & Industrial Sales 22.5 23.4 22.1 -4 % 2 %
Desktop Monitors 9.3 9.2 7.7 1 % 21 %
Rear Projection Cubes 4.6 3.5 4.1 29 % 12 %
Touch Monitors 3.2 5.0 3.7 -37 % -14 %
High-end Home 1.2 2.2 1.7 -44 % -29 %
Custom Commercial & Industrial 4.2 3.3 4.7 27 % -11 %
Other - 0.2 0.2 -100 % -100 %
               
Total Sales $ 43.9   $ 37.5   $ 41.1 17 %   7 %
 
Planar Systems, Inc.
Revenue by Product Line
(In millions)
(unaudited)
       
Nine months ended

% Change

Jun. 27, 2014   Jun. 28, 2013 vs. Prior Year
 
Digital Signage Sales $ 59.3 $ 44.4 34 %
 
Commercial & Industrial Sales 66.1 76.7 -14 %
Desktop Monitors 25.1 26.9 -7 %
Rear Projection Cubes 13.7 15.9 -14 %
Touch Monitors 10.1 15.2 -34 %
High-end Home 4.6 7.7 -41 %
Custom Commercial & Industrial 12.2 7.9 54 %
Electroluminescent(1) - 2.3 -100 %
Other 0.4 0.8 -45 %
       
Total Sales $ 125.4   $ 121.1 4 %
Electroluminescent(1)   -     2.3 -100 %
Total Sales without Electroluminescent $ 125.4   $ 118.8 6 %

 

(1) In the first quarter of 2013, the Company sold the assets and liabilities related to the Electroluminescent product line, including custom glass, which was included in other commercial & industrial sales.

Source: Planar Systems, Inc.



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