Planar Reports Fiscal Third Quarter 2014 Financial Results

BEAVERTON, Ore.--(BUSINESS WIRE)--

Planar Systems, Inc. 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. 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.