Planar Systems, Inc. (PLNR)
F3Q10 (Qtr End 06/25/10) Earnings Call
July 29, 2010 5:00 p.m. ET
Gerry Perkel - President & CEO
Scott Hildebrandt - CFO
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Good day ladies and gentlemen and welcome to the Q3, 2010 Planar Systems Earnings Conference Call. My name is Christopher, and I will be your operator for today. At this time all lines are in a listen-only mode. Later, we will conduct the question-and-answer session. (Operator Instructions).
I'd now like to turn the conference over to Mr. Gerry Perkel, President and CEO. Please proceed, sir.
Good afternoon and thank you for joining you for Planar's third 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 issued 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 expects, anticipates, intends, plans, believes, sees, estimates and other 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 press release we issued earlier today, and 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.
The forward-looking statements, we make today speak only as of today and we do not undertake any obligation to update such statements to reflect events or circumstances occurring after today.
With that behind us let me say that we are very pleased with the third quarter performance we were able to exceed our expectations of both at the top line, and we are profitable for the quarter in a non-GAAP basis. Based on that improved performance, we were also able to end the quarter with a stronger cash position than we had anticipated.
Total company sales for the third quarter were $444.7 million, which represents 13% sequential growth and 1% year-on-year growth. Sales growth was due to nice sequential and year-on-year in our customer and embedded product lines as well s our IT product lines. In addition, based on more volume than expected in a relatively product mix, gross margins came in stronger than expected at just under 28% of sales for the quarter. We also were able to manage our expenses to be down slightly on a sequential basis while we're continuing to selectively and carefully make expenditures to capitalize and opportunities for growth, we've taken other actions to reduce expenses to help fund those growth areas.
Now let me briefly talk about our various product lines. During the quarter, we experienced nice improvement in our customer embedded product lines. Sales were strong in the quarter as the third quarter represents a better seasonal sales period for us. And as additional installations of a couple of ongoing retail custom signage products continue.
We continue to see opportunity for additional sales related to these specific designs, design wins and also to capture other design wins resulting in future sales for our custom and embedded products. In our IT product lines, sales were also strong in the quarter both for touch products as well as our desktop monitors. We've been adding resources as we can afford to improve both our touch product line and go-to-market capabilities with the goal to grow our touch revenues moving forward.
Our high end product, our high end home product lines continue to struggle somewhat as the housing market has not begun to recover, and spending in this category is relatively soft. We're experiencing success with the LED projectors for which installations are growing. Unfortunately, the flat portion of our high end product line has declined as additional competitive offerings have made this category challenging.
We have new products under development and they are improving both our projector revenues and our flat panel revenues. Our video wall product lines were mixed. While we did see sequential growth from our seasonally soft fiscal Q2 in this lines, our sales levels were down from a year ago, where projection cube revenues were down from a year ago as the market has been impacted in part by the substitution of thin bezel LCD solutions.
In addition, the market is going to a fairly rapid transition from lamp-based cube products to cubes with LED-based light sources. Some of our competitors release their LED version sooner than we did which has impacted our revenue somewhat as well.
As we move through the fourth quarter, we will have all of our new LED version shipping which should offer us opportunity to recapture share and grow this product line our new metric super narrow basal LCD video wall product that we began shipping in the first quarter of this year continues to creates new opportunities for video wall installations in new markets such as indoor digital signage.
Incremental revenue from this new product offering has offset to some degree the decline in your projection of cube sales. In summary, we are pleased with the sales growth return to non-GAAP profitability. In fact we were able to perform better than our expectations for the quarter.
With that let me turn the all over to Scott Hildebrandt to discuss our financial performance in more detail. Scott?