Planar Systems, Inc. (PLNR)

F2Q2012 Earnings Conference Call

May 02, 2012, 17:00 p.m. ET


Gerry Perkel - President and CEO

Scott Hildebrandt - VP and CFO


Steve Spence - RBC Wealth Management

Derek Brumfield - The Kelt Group



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Good day ladies and gentlemen and welcome to the Second Quarter 2012 Planar Systems Earnings Conference Call. My name is Trisha, and I will be operator for today. At this time all participants are in listen-only mode. Later we will conduct the question-and-answer session. (Operator Instructions) As a reminder this conference is being recorded for replay purposes.

I’d now like to turn the conference over to your host for today Mr. Gerry Perkel, President and CEO. Please proceed.

Gerry Perkel

Good afternoon and thank you for joining us for Planar’s first quarter earnings conference call. With me this afternoon is Scott Hildebrandt, Planar’s Chief Financial Officer.

Before I begin, I do need to say that the press release we issue today contain 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 expect, anticipate, intends, plans, belief, seize, 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 to our periodic 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. 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.

That behind us, let me move on and talk a little bit about our results. We are obviously disappointed in the revenue levels and resulting loss the company generated last quarter. We have been expecting to see orders at a slightly lower level than we had seen in the previous two quarters, but our order rate came in much softer in our second quarter than in the previous two quarters and below our expectations.

We have typically seen some seasonality to our revenues with the second quarter typically being our softest quarter, and while we expected some softness the order rate simply came in much lower than we expected.

There were several drivers to the lower order rate. First, we saw average order size in some product areas to be smaller than we have previously experienced as a number of larger transactions slipped outside the quarter. We also experienced some softer demand from some of our OEM customers as they saw softness or changes in their businesses. We also built a bit of backlog this quarter as some of the new orders we did received were scheduled out beyond the end of our quarter based on the customer’s requirements.

Finally, we saw some loss of productivity as we made some changes in our sales organization as part of our continued work to transform our company to be better positioned to access the digital signage and growth opportunity.

Now let me talk a bit about our various product lines. In a digital signage area, we saw growth in our standard digital signage product offset by a decline in our custom digital signage products. Overall, sales of digital signage products were $7.5 million which is down 3.9 million from the second quarter of last year with custom digital signage products being down approximately $4.8 million as two of our larger signage customer did not reorder this year after having purchased large amounts last year during the second quarter.

Our standard digital signage product sales were up 14% compared to the second quarter of last year as our Matrix product line continue to grow delivering 33% year-over-year growth in the second quarter.

As we move forward with our digital signage growth effort, we expect the primary growth driver to come from our standard digital signage products. We launched several new products this past quarter to help propel that growth. Most noteworthy is our new Planar Mosaic product line. This multi display system builds off our Matrix technology base, extended significantly and will allow us to enable customers to build tiled LCD wall of a variety of shapes and sizes and design, and to address new applications of tiled LCD walls. This also includes a new square video tile which will enable new types of designs as well.

In addition, we launched new additions to the Matrix family of product to enable more applications to be accessed with our product line. We also have several other new products under development that address the digital signage market which we expect to launch and begin shipping later this fiscal year.

In our commercial and industrial product lines, we saw sales of $30 million which was down 18% from the second quarter a year ago. We saw good growth in our desktop monitor and touch monitor product lines which has offset by a declines in our rear projection cubes, EL, and high end home lines.

As we look forward in our commercial and industrial product lines, we do see some potential for sequential improvement in the third quarter as we see some improvement in rear projection cubes and continue to strengthen desktop and touch monitors. In addition, we expect to see improvement in our custom commercial and industrial product lines as we see a strengthening with some of our production customers.

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