Planar Announces Fiscal Third Quarter 2012 Financial Results

Planar Systems, Inc. (NASDAQ:PLNR), a worldwide leader in specialty display solutions, recorded sales of $44.7 million and GAAP loss per share of $0.08 in its third fiscal quarter ended June 29, 2012. On a Non-GAAP basis (see reconciliation table), loss per share was $0.04 in the third quarter of fiscal 2012.

“Our fiscal third quarter financial results were better than our expectations, driven by our highest quarterly sales of digital signage products to date,” said Gerry Perkel, Planar’s President and Chief Executive Officer. “We also announced a number of new digital signage products during the quarter as we look to broaden our differentiated digital signage product portfolio.”

THIRD QUARTER BUSINESS SUMMARY
  • Announced the Planar® UltraLux™ Series, a family of 60", 70" and 80" LCD displays that feature a unique industrial design and forward-thinking engineering which bring current consumer electronics styling to the commercial digital signage market
  • Announced Planar® LookThru™, a unique digital display box that incorporates a transparent display to create a first-of-its-kind merchandising and exhibition solution
  • Launched Planar Mosaic Project Designer™, developed in conjunction with the Planar® Mosaic™ video wall system; this free, online application lets users create individualized designs for the recently introduced architectural video wall system
  • Planar® Mosaic™ video wall received industry recognition with Commercial Integrator's BEST Award and AV Technology’s Best New Video Wall Product Award

THIRD QUARTER FISCAL 2012 RESULTS

The Company’s total revenues increased 19 percent compared to the second quarter of fiscal 2012 and declined 2 percent compared to the third quarter of fiscal 2011. Geographic results (in terms of quarterly revenue compared with the third quarter of fiscal 2011) were mixed, with Asia Pacific increasing 6 percent, the Americas decreasing 4 percent, and Europe, the Middle East and Africa (EMEA) being approximately equal to the third quarter of last year. Sales of Digital Signage products totaled $11.8 million in the third quarter of 2012, a 9 percent increase from the same period a year ago. This increase was driven by higher sales of Clarity® Matrix™ tiled LCD systems, which increased 66 percent compared with the same period a year ago, partially offset by a decline in sales of custom digital signage displays due to large shipments in the prior year which did not repeat in the third quarter of fiscal 2012. Sales of Commercial and Industrial (C&I) products declined 5 percent to $32.9 million compared with the same quarter a year ago. This decrease was primarily driven by lower sales of Electroluminescent (EL) displays and high-end home products, partially offset by increased sales of desktop, touch, and custom monitors.

The Company’s consolidated gross profit margin (on a Non-GAAP basis) was 22.0 percent in the third quarter of 2012, down from 28.1 percent in the third quarter of 2011 (see reconciliation table). The decrease in gross profit margin, as a percent of sales, from the previous year was primarily due to the under-absorption of expenses in certain production areas with a relatively higher fixed cost basis, such as EL product facilities, and an unfavorable product mix with a greater proportion of total revenue derived from sales of relatively lower margin products such as desktop monitors.

Total operating expenses (on a Non-GAAP basis) for the third quarter of 2012 decreased $2.1 million, or 16 percent, to $11.1 million compared with the same quarter a year ago, as expenses declined in all functions as a result of cost reduction measures implemented early in the third quarter of 2012.

The Company’s cash balance increased $1.1 million sequentially to $16.2 million at the end of the third quarter compared to the end of the second quarter of fiscal 2012. The increase in cash was primarily caused by a $7 million reduction in inventory, partially offset by an increase in accounts receivable associated with sequential revenue growth and a reduction in accounts payable.

BUSINESS OUTLOOK

Looking forward, the Company continues to see opportunities to grow sales of digital signage products by accessing new customers and expanding relationships with existing customers as well as by adding new products to the digital signage portfolio such as Planar Mosaic, Planar LookThru, and Planar UltraLux.

For the fourth quarter of fiscal 2012, the Company expects continued revenue growth in sales of digital signage products and a reduction in sales of commercial and industrial products on a year over year basis. As a result, for the fourth fiscal quarter of 2012 the Company currently anticipates similar revenue, gross profit margins, levels of operating expenses and profits compared with the third fiscal quarter of 2012.

Results of operations and the business outlook will be discussed in a conference call today, August 13, 2012, beginning at 2:00 PM Pacific Time. The call can be heard via the Internet through a link on Planar’s website, www.planar.com, or through numerous other investor sites, and will be available for replay until September 13, 2012. The Company intends to post on its website a transcript of the prepared management commentary from the conference call shortly after the conclusion of the call.

ABOUT PLANAR

Planar Systems Inc. (NASDAQ: PLNR) is a global leader in digital display 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 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 relating to the Company’s expected levels of revenue and revenue growth, gross profit levels and gross profit rates, and operating expense levels for the fourth quarter of fiscal 2012 and the other statements made under the heading “Business Outlook,”. 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 further weakened domestic and international business and economic conditions; changes or continued 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 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 like the recent earthquakes and tsunami in Japan; 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 share-based compensation and the requirements of Topic 718 of the FASB Accounting Standards Codification TM, “Compensation-Stock Compensation”. The Non-GAAP financial measures also exclude impairment and restructuring charges, the amortization of intangible assets related to previous acquisitions, various tax charges including the valuation allowance against deferred tax assets, the gain or loss on foreign currency due to the non-cash nature of the charge, and various other adjustments. 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. 29, 2012   Jul. 1, 2011 Jun. 29, 2012   Jul. 1, 2011
   
Sales $ 44,704 $ 45,659 $ 129,954 $ 135,379
Cost of Sales   34,895       32,835     102,427       96,912  
Gross Profit 9,809 12,824 27,527 38,467
 
Operating Expenses:
Research and development, net 2,319 2,781 7,805 7,968
Sales and marketing 6,019 6,892 19,662 18,889
General and administrative 3,167 4,200 10,947 12,639
Amortization of intangible assets 175 512 525 1,536
Restructuring   -       -     518       -  
Total Operating Expenses 11,680 14,385 39,457 41,032
 
Income (Loss) from operations (1,871 ) (1,561 ) (11,930 ) (2,565 )
 
Non-operating income (expense):
Interest, net 1 9 7 23
Foreign exchange, net 260 (208 ) 523 (830 )
Other, net   129       (10 )   450       222  
Net non-operating income (expense) 390 (209 ) 980 (585 )
 
Income (loss) before taxes (1,481 ) (1,770 ) (10,950 ) (3,150 )
Provision (benefit) for income taxes   212       127     604       146  
Net Income (loss) $ (1,693 )   $ (1,897 ) $ (11,554 )   $ (3,296 )
 
Net Income (loss) per share - basic ($0.08 ) ($0.10 ) ($0.58 ) ($0.17 )
Net Income (loss) per share - diluted ($0.08 ) ($0.10 ) ($0.58 ) ($0.17 )
 
Weighted average shares outstanding - basic 20,219 19,506 20,024 19,362
Weighted average shares outstanding - diluted 20,219 19,506 20,024 19,362
 
 
Planar Systems, Inc.Consolidated Balance Sheets(In thousands)(unaudited)
 
  Jun. 29, 2012   Sept. 30, 2011
ASSETS
Cash $ 16,247 $ 22,231
Accounts receivable, net 21,902 25,881
Inventories 36,806 42,967
Other current assets   2,990     4,587  
Total current assets 77,945 95,666
 
Property, plant and equipment, net 3,605 4,265
Intangible assets, net 735 1,261
Other assets   5,835     4,110  
$ 88,120   $ 105,302  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 13,415 15,549
Current portion of capital leases 219 -
Deferred revenue 1,952 2,339
Other current liabilities   16,581     18,485  
Total current liabilities 32,167 36,373
 
Long-term portion of capital leases 327 -
Other long-term liabilities   5,166     6,270  
Total liabilities 37,660 42,643
 
Common stock 184,021 182,826
Retained earnings (deficit) (130,036 ) (118,096 )
Accumulated other comprehensive loss   (3,525 )   (2,071 )
Total shareholders' equity   50,460     62,659  
$ 88,120   $ 105,302  
 
 
Reconciliation of GAAP to Non-GAAP Financial Measures(In thousands, unaudited)
 
  For the three months ended
Jun. 29, 2012   Jul. 1, 2011
Gross Profit:
GAAP Gross Profit 9,809 12,824
 
Share-based Compensation 32 14
Total Non-GAAP adjustments 32 14
   
NON-GAAP GROSS PROFIT 9,841 12,838
   
NON-GAAP GROSS PROFIT PERCENTAGE 22.0% 28.1%
 
Research and Development:
GAAP research and development expense 2,319 2,781
 
Share-based Compensation (36) (56)
Total Non-GAAP adjustments (36) (56)
   
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSE 2,283 2,725
 
Sales and Marketing:
GAAP sales and marketing expense 6,019 6,892
 
Share-based Compensation (58) (148)
Total Non-GAAP adjustments (58) (148)
   
NON-GAAP SALES AND MARKETING EXPENSE 5,961 6,744
 
General and Administrative:
GAAP General and Administrative Expense 3,167 4,200
 
Share-based Compensation (286) (479)
Total Non-GAAP adjustments (286) (479)
   
NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSE 2,881 3,721
 
Operating Expenses:
GAAP Total Operating Expenses 11,680 14,385
 
Share-based Compensation (380) (683)
Amortization of intangible assets (175) (512)
Total Non-GAAP adjustments (555) (1,195)
   
NON-GAAP TOTAL OPERATING EXPENSES 11,125 13,190
 
Income (Loss) from Operations:
GAAP income (loss) from operations (1,871) (1,561)
 
Share-based Compensation 412 697
Amortization of intangible assets 175 512
Total Non-GAAP adjustments 587 1,209
   
NON-GAAP INCOME (LOSS) FROM OPERATIONS (1,284) (352)
 
Income (Loss) before taxes & EBITDA:
GAAP income (loss) before taxes (1,481) (1,770)
 
Share-based Compensation 412 697
Amortization of intangible assets 175 512
Foreign Exchange, net (260) 208
Total Non-GAAP adjustments 327 1,417
   
NON-GAAP INCOME (LOSS) BEFORE TAXES (1,154) (353)
Depreciation 505 528
NON-GAAP EBITDA (649) 175
 
Net Income (Loss):
GAAP Net Income (loss) (1,693) (1,897)
Share-based Compensation 412 697
Amortization of intangible assets 175 512
Foreign Exchange, net (260) 208
Income tax effect of reconciling items 645 259
Total Non-GAAP adjustments 972 1,676
   
NON-GAAP NET INCOME (LOSS) (721) (221)
 
GAAP weighted average shares outstanding--basic 20,219 19,506
NON-GAAP weighted average shares outstanding--diluted 20,219 19,506
 
GAAP Net Income (Loss) per share - basic ($0.08) ($0.10)
Non-GAAP adjustments detailed above 0.04 0.09
NON-GAAP NET INCOME PER SHARE (basic) ($0.04) ($0.01)
 
GAAP Net Income (Loss) per share - diluted ($0.08) ($0.10)
Non-GAAP adjustments detailed above 0.04 0.09
NON-GAAP NET INCOME PER SHARE (diluted) ($0.04) ($0.01)
 
 
Reconciliation of GAAP to Non-GAAP Financial Measures(In thousands, unaudited)
 
  For the nine months ended
Jun. 29, 2012   Jul. 1, 2011
Gross Profit:
GAAP Gross Profit 27,527 38,467
 
Share-based Compensation 68 44
Total Non-GAAP adjustments 68 44
   
NON-GAAP GROSS PROFIT 27,595 38,511
   
NON-GAAP GROSS PROFIT PERCENTAGE 21.2% 28.4%
 
Research and Development:
GAAP research and development expense 7,805 7,968
 
Share-based Compensation (99) (159)
Total Non-GAAP adjustments (99) (159)
   
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSE 7,706 7,809
 
Sales and Marketing:
GAAP sales and marketing expense 19,662 18,889
 
Share-based Compensation (113) (380)
Total Non-GAAP adjustments (113) (380)
   
NON-GAAP SALES AND MARKETING EXPENSE 19,549 18,509
 
General and Administrative:
GAAP General and Administrative Expense 10,947 12,639
 
Share-based Compensation (785) (1,003)
Total Non-GAAP adjustments (785) (1,003)
   
NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSE 10,162 11,636
 
Operating Expenses:
GAAP Total Operating Expenses 39,457 41,032
 
Share-based Compensation (997) (1,542)
Amortization of intangible assets (525) (1,536)
Restructuring charges (518) -
Total Non-GAAP adjustments (2,040) (3,078)
   
NON-GAAP TOTAL OPERATING EXPENSES 37,417 37,954
 
Income (Loss) from Operations:
GAAP income (loss) from operations (11,930) (2,565)
 
Share-based Compensation 1,065 1,586
Amortization of intangible assets 525 1,536
Restructuring charges 518 -
Total Non-GAAP adjustments 2,108 3,122
   
NON-GAAP INCOME (LOSS) FROM OPERATIONS (9,822) 557
 
Income (Loss) before taxes & EBITDA:
GAAP income (loss) before taxes (10,950) (3,150)
 
Share-based Compensation 1,065 1,586
Amortization of intangible assets 525 1,536
Restructuring charges 518 -
Foreign Exchange, net (523) 830
Total Non-GAAP adjustments 1,585 3,952
   
NON-GAAP INCOME (LOSS) BEFORE TAXES (9,365) 802
Depreciation 1,594 1,603
NON-GAAP EBITDA (7,771) 2,405
 
Net Income (Loss):
GAAP Net Income (loss) (11,554) (3,296)
 
Share-based Compensation 1,065 1,586
Amortization of intangible assets 525 1,536
Restructuring charges 518 -
Foreign Exchange, net (523) 830
Income tax effect of reconciling items 4,116 (155)
Total Non-GAAP adjustments 5,701 3,797
   
NON-GAAP NET INCOME (LOSS) (5,853) 501
 
GAAP weighted average shares outstanding--basic 20,024 19,362
NON-GAAP weighted average shares outstanding--diluted 20,024 19,728
 
GAAP Net Income (Loss) per share - basic ($0.58) ($0.17)
Non-GAAP adjustments detailed above 0.29 0.20
NON-GAAP NET INCOME PER SHARE (basic) ($0.29) $0.03
 
GAAP Net Income (Loss) per share - diluted ($0.58) ($0.17)
Non-GAAP adjustments detailed above 0.29 0.20
NON-GAAP NET INCOME PER SHARE (diluted) ($0.29) $0.03
 

Copyright Business Wire 2010

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