Planar Reports Fiscal Third Quarter 2014 Financial Results

  Planar Reports Fiscal Third Quarter 2014 Financial Results

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

Business Wire

BEAVERTON, Ore. -- July 31, 2014

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,     Jun. 28,
                                                     2014          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,         1,560           1,620          4,273         5,475
   net
   Sales and            5,187           4,819          14,914        14,923
   marketing
   General and          3,158           2,833          9,614         9,159
   administrative
   Amortization of
   intangible           -               147            -             442
   assets
   Restructuring        10              2,407          31            2,601
   Loss on sale of     -            -            -          1,314   
   assets
   Total Operating      9,915           11,826         28,832        33,914
   Expenses
                                                                   
Income (Loss) from      750             (3,700  )      1,228         (6,767  )
operations
                                                                   
Non-operating
income (expense):
   Interest, net        99              39             234           104
   Foreign              (1      )       (1      )      (54     )     (14     )
   exchange, net
   Other, net          (27     )     166          422        462     
   Net
   non-operating        71              204            602           552
   income
                                                                   
Income (loss)           821             (3,496  )      1,830         (6,215  )
before taxes
Provision for          115          71           266        114     
income taxes
Net Income (loss)    $  706        $  (3,567  )    $ 1,564     $ (6,329  )
                                                                   
Net Income (loss)    $  0.03            ($0.17  )    $ 0.07          ($0.31  )
per share - basic
Net Income (loss)
per share -          $  0.03            ($0.17  )    $ 0.07          ($0.31  )
diluted
                                                                   
Weighted average
shares outstanding      21,491          20,899         21,302        20,672
- basic
Weighted average
shares outstanding      21,623          20,899         21,506        20,672
- diluted
                                                                             

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            1,545          1,620     
    EXPENSE
                                                                 
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          2,899          2,625     
    EXPENSE
                                                                 
Operating Expenses:
    GAAP Total Operating Expenses                9,915           11,826
                                                                 
                 Share-based compensation        (329      )     (269      )
                 Amortization of intangible      -               (147      )
                 assets
                 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       -            147
                   assets
                   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       -            147
                   assets
                   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       -            147
                   assets
                   Restructuring charges            10           2,407
                   Foreign exchange, net            1            1
                   Income tax effect of            (5      )    315       
                   reconciling items
     Total Non-GAAP adjustments                    362         3,161     
                                                                
     NON-GAAP NET INCOME (LOSS)                    1,068       (406      )
                                                                 
GAAP weighted average shares                        21,491       20,899
outstanding--basic
GAAP weighted average shares                        21,623       20,899
outstanding--diluted
                                                                 
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        $  0.05         ($0.02    )
     (basic)
                                                                 
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        $  0.05         ($0.02    )
     (diluted)
                                                                 

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             4,239       5,393     
     EXPENSE
                                                                 
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           8,718       8,368     
     EXPENSE
                                                                 
Operating Expenses:
     GAAP Total Operating Expenses                  28,832       33,914
                                                                 
                 Share-based compensation           (1,071  )    (1,085    )
                 Amortization of intangible         -            (442      )
                 assets
                 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         -            442
                 assets
                 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         -            442
                 assets
                 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         -            442
                 assets
                 Restructuring charges              31           2,601
                 Loss on sale of assets             -            1,314
                 Foreign exchange, net              54           14
                 Income tax effect of              (43     )    371       
                 reconciling items
     Total Non-GAAP adjustments                    1,186       5,902     
                                                                
     NON-GAAP NET INCOME (LOSS)                    2,750       (427      )
                                                                 
GAAP weighted average shares                        21,302       20,672
outstanding--basic
GAAP weighted average shares                        21,506       20,672
outstanding--diluted
                                                                 
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        $  0.13         ($0.02    )
     (basic)
                                                                 
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        $  0.13         ($0.02    )
     (diluted)
                                                                           

Planar Systems, Inc.
Revenue by Product Line
(In millions)
(unaudited)
                                                              
                       Three months ended                 % Change
                       Jun. 27,   Jun. 28,   Mar. 28,     vs.        vs. Prior
                       2014      2013      2014        Prior     Quarter
                                                          Year
                                                                     
Digital Signage        $  21.4    $  14.1    $  19.0      53    %    13     %
Sales
                                                                     
Commercial &              22.5       23.4       22.1      -4    %    2      %
Industrial Sales
Desktop Monitors          9.3        9.2        7.7       1     %    21     %
Rear Projection           4.6        3.5        4.1       29    %    12     %
Cubes
Touch Monitors            3.2        5.0        3.7       -37   %    -14    %
High-end Home             1.2        2.2        1.7       -44   %    -29    %
Custom Commercial &       4.2        3.3        4.7       27    %    -11    %
Industrial
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                  $    125.4     $    118.8      6      %
Electroluminescent


^(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.

Contact:

Planar Systems, Inc.
Media:
Kim Brown, 503-748-6724
kim.brown@planar.com
or
Investors:
Ryan Gray, 503-748-8911
ryan.gray@planar.com
 
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