Planar Reports Fiscal Second Quarter 2015 Financial Results

Digital Signage Product Sales up 32% to $24.9 Million, Driving $0.08 Non-GAAP EPS

BEAVERTON, Ore.--(BUSINESS WIRE)-- Planar Systems, Inc. (NASDAQ: PLNR), a global leader in display and digital signage technology, reported financial results for the fiscal second quarter ended March 27, 2015.

Fiscal Q2 2015 Financial Highlights (compared to the same-year-ago quarter)

• Digital Signage (DS) product sales up 32% to $24.9 million.
• Commercial and Industrial (C&I) product sales up 10% to $24.2 million.
• Non-GAAP net income up $1.3 million to $1.9 million or $0.08 per diluted share (see reconciliation to GAAP, below).
• GAAP net income up 607% to $1.6 million or $0.07 per diluted share.
• Non-GAAP EBITDA (earnings before interest, taxes, depreciation, amortization, and non-cash stock-based compensation) increased 90% to $2.1 million (see reconciliation to GAAP, below).

	Fiscal Q2 2015 Key Financial Metrics
	(in millions except per share data and percentages)		Q2 2015				vs. Q2 2014				Change				Change (	%)
	Revenue		$	49.1			$	41.1			$	8.0			20	%
	Gross Profit		$	12.2			$	9.7			$	2.5			26	%
	GAAP Net Income		$	1.6			$	0.2			$	1.4			607	%
	GAAP EPS		$	0.07			$	0.01			$	0.06			577	%
	Non-GAAP Gross Profit		$	12.3			$	9.7			$	2.6			27	%
	Non-GAAP Gross Profit (%)			25.0	%			23.6	%			1.4	%
	Non-GAAP Net Income		$	1.9			$	0.6			$	1.3			204	%
	Non-GAAP EPS		$	0.08			$	0.03			$	0.05			191	%
	Non-GAAP EBITDA		$	2.1			$	1.1			$	1.0			90	%
	Non-GAAP EBIDTA (%)			4.3	%			2.7	%			1.6	%

*For each of the non-GAAP figures above, please see the reconciliation to GAAP figures presented below.

Fiscal Q2 2015 Operational Highlights

• Debuted the Planar® DirectLight™ LED Video Wall System, which provides exceptional visual performance, thin mounting depth, precise alignment, reliability and adaptability to different customer uses.
• DirectLight LED Video Wall System was named “Best New Indoor Display” by rAVe Publications.
• Previewed next-generation transparent OLED technology with improved transparency of see-through displays, creating new opportunities for design while overcoming a major hurdle to transparent display adoption.
• Launched a new iOS app that can manage multiple sources on Planar® UltraRes™ Series 4K LCD displays using an iPhone® or iPad®.
• Added nearly 60 new value-added resellers to Planar’s reseller network, bringing the total to over 2,000 globally.

Fiscal Q2 2015 Financial Results

Total revenue increased 20% to $49.1 million from $41.1 million in the second quarter of fiscal 2014. The improvement was driven by a 32% increase in sales of the company’s DS products, which totaled $24.9 million (or 51% of total revenue) compared to $19.0 million (or 46% of total revenue) in the same year-ago period. Sales of C&I products increased 10% to $24.2 million (or 49% of total revenue) compared to $22.1 million (or 54% of total revenue) in the same year-ago quarter.

Consolidated gross profit margin as a percentage of sales (on a non-GAAP basis) was 25.0%, an improvement from 23.6% in the second quarter of fiscal 2014 (see reconciliation to GAAP, below). The increase was due to lower labor and overhead expenses related to improved capacity utilization, as well as a change in the mix of products sold towards higher margin DS products.

Non-GAAP operating expenses totaled $10.8 million compared to $9.4 million in the same quarter last year (see reconciliation to GAAP, below). The increase was primarily due to higher sales and marketing expenses.

GAAP net income totaled $1.6 million or $0.07 per diluted share, an increase of 607% or $0.06 per diluted share from $228,000 or $0.01 per diluted share in the second quarter of fiscal 2014.

Non-GAAP net income totaled $1.9 million or $0.08 per diluted share, an increase of 204% or $0.05 per diluted share from $612,000 or $0.03 per diluted share in the same year-ago quarter (see reconciliation to GAAP, below).

Non-GAAP EBITDA increased 90% to $2.1 million from $1.1 million in the second quarter of fiscal 2014 (see reconciliation to GAAP, below).

At quarter end, the company’s cash balance totaled $16.2 million, up 9% from $14.9 million at December 26, 2014.

Management Commentary

“Our second quarter was consistent with our expectations for strong year-over-year revenue growth, driven by sales of our industry-leading digital signage products and custom C&I displays,” said Gerry Perkel, Planar’s president and CEO. “These results also reflected meaningful progress in our transition from selling lower-margin products in mature, highly-competitive markets to delivering state-of-the-art solutions to the fast growing, multi-billion dollar market for digital signage.

“This progress was evident in the stronger performance of our DS product line, which produced a 69% increase in signage monitor sales and a 14% increase in sales of tiled LCD systems when compared to the second quarter of 2014. Q2 also marked the second straight quarter that DS product sales exceeded 50% of total revenues.

“Our positive momentum has been supported by the strategic expansion of our sales and marketing resources, which has enabled us to better capitalize on new opportunities and deepen our relationships with key resellers. During the quarter we added nearly 60 new reseller relationships and our total network of value-added resellers is over 2,000 globally.

“It was also a great quarter for new product announcements for Planar, highlighted by the introduction of our new DirectLight LED Video Wall System at the Digital Signage Expo in March. This innovative approach to video walls was well received by the industry and won the award for ‘Best New Indoor Display’ by rAVe Publications. Based upon what we see in the market, we believe there exists the potential for strong, long-term growth for indoor LED video walls.

“DirectLight complements our highly successful Clarity Matrix LCD Video Wall System, and addresses the increasing demand by customers for a seamless, high-quality video walls that meet mission-critical requirements. The unique features and functionality of DirectLight meets these demands head-on and further extends Planar’s leadership in video wall innovation. The initial customer response to this offering has been very strong, and we have been experiencing a strong level of quoting activity. We expect to begin shipping this product in fiscal Q4.”

Financial Outlook

“Our custom C&I product line has been benefitting from recurring orders from a large customer in the oil field services industry,” said Perkel. “Looking ahead, we see C&I revenue declining in the near-term as this customer delays purchasing decisions in light of low crude oil prices and correlating reduction in drilling activity. Meanwhile, some digital signage buyers are continuing to order our Clarity Matrix LCD Video Wall System and others are considering our new DirectLight System, which we will begin shipping in fiscal Q4 2015. Despite these factors, we expect fiscal 2015 to be another growth year, with increasing Digital Signage product revenues and total revenues leading to improved profitability compared to fiscal 2014. We expect this improved financial performance along with an expanding product portfolio and sales pipeline to set the stage for further improvement in fiscal 2016.”

For the fiscal third quarter ending June 26, 2015, the company expects modest year-over-year growth in DS product sales, along with a decline in custom C&I display sales, due to the factors mentioned above. Accordingly, the company anticipates revenue in the fiscal third quarter of 2015 to range between $43 million and $45 million, with non-GAAP net income at around breakeven. This compares to $43.9 million in revenue and non-GAAP net income of $0.05 per share in the third quarter of fiscal 2014.

Given the company’s current orders and sales pipeline, management expects fiscal Q4 to offer sequential improvement in revenue and profit performance compared to fiscal Q3 and fiscal 2015 revenue to be between $196 million and $202 million, which would represent an increase of 9% to 13% compared to fiscal 2014. Non-GAAP net income for fiscal 2015 is expected to range between $0.32 and $0.36 per diluted share, improving from $0.27 per diluted share in fiscal 2014.

Conference Call

Management will discuss the results of operations and business outlook on a conference call later today (May 7, 2015) at 5:00 p.m. Eastern time (2:00 p.m. Pacific time).

Planar President and CEO Gerry Perkel and CFO Ryan Gray will host the call, followed by a question and answer period.

U.S. dial-in: (888) 680-0869International dial-in: (617) 213-4854Participant Passcode: 60709033

The conference call will be broadcast simultaneously and available for replay via the investor section of the company’s website at http://investor.planar.com/phoenix.zhtml?c=111133&p=irol-irhome.

Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at (949) 574-3860.

A replay of the call will be available after 9:00 p.m. Eastern time on the same day through June 6, 2015.

U.S. replay dial-in: (888) 286-8010International replay dial-in: (617) 801-6888Replay ID: 29109723

About Planar Systems

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 “Management Commentary” and “Financial Outlook” heading relating to the markets for the Company’s products, expected revenue growth, revenue range and non-GAAP income per share range for the third quarter of fiscal 2015 and fiscal year 2015. 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 labor unrest (including the present work slowdowns and certain west coast ports) or 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									Six months ended
			Mar. 27, 2015				Mar. 28, 2014					Mar. 27, 2015				Mar. 28, 2014
Sales			$	49,169			$	41,077				$	104,949			$	81,532
Cost of Sales				36,946				31,414					78,320				62,137
Gross Profit				12,223				9,663					26,629				19,395
Operating Expenses:
	Research and development, net			1,606				1,469					3,238				2,713
	Sales and marketing			6,170				5,054					12,258				9,727
	General and administrative			3,721				3,189					7,706				6,456
	Restructuring			43				10					53				21
	Total Operating Expenses			11,540				9,722					23,255				18,917
Income (Loss) from operations				683				(59	)				3,374				478
Non-operating income (expense):
	Interest, net			134				82					273				135
	Foreign exchange, net			587				(10	)				855				(53	)
	Other, net			66				274					170				449
	Net non-operating income			787				346					1,298				531
Income before taxes				1,470				287					4,672				1,009
Provision (benefit) for income taxes				(142	)			59					(29	)			151
Net Income			$	1,612			$	228				$	4,701			$	858
Net Income per share - basic			$	0.07			$	0.01				$	0.21			$	0.04
Net Income per share - diluted			$	0.07			$	0.01				$	0.21			$	0.04
Weighted average shares outstanding - basic				22,050				21,302					21,910				21,207
Weighted average shares outstanding - diluted				22,395				21,458					22,317				21,424

Planar Systems, Inc.
Consolidated Balance Sheets
(In thousands)
(unaudited)
		Mar. 27, 2015					Sept. 26, 2014
ASSETS
Cash		$	16,182				$	13,068
Accounts receivable, net			24,341					28,333
Inventories			31,228					26,805
Other current assets			5,035					3,909
Total current assets			76,786					72,115
Property, plant and equipment, net			4,472					5,039
Other assets			4,865					7,250
		$	86,123				$	84,404
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable		$	20,469				$	18,176
Current portion of capital leases			42					394
Deferred revenue			1,479					1,637
Other current liabilities			10,870					12,974
Total current liabilities			32,860					33,181
Other long-term liabilities			4,484					5,189
Total liabilities			37,344					38,370
Common stock			189,887					188,127
Retained deficit			(135,321	)				(138,508	)
Accumulated other comprehensive loss			(5,787	)				(3,585	)
Total shareholders' equity			48,779					46,034
		$	86,123				$	84,404

Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, unaudited)
					For the three months ended
					Mar. 27, 2015			Mar. 28, 2014
Gross Profit:
	GAAP Gross Profit				12,223			9,663
			Share-based compensation		66			21
	Total Non-GAAP adjustments				66			21
	NON-GAAP GROSS PROFIT				12,289			9,684
	NON-GAAP GROSS PROFIT PERCENTAGE				25.0	%		23.6	%
Research and Development:
	GAAP research and development expense				1,606			1,469
			Share-based compensation		(67	)		(10	)
	Total Non-GAAP adjustments				(67	)		(10	)
	NON-GAAP RESEARCH AND DEVELOPMENT EXPENSE				1,539			1,459
Sales and Marketing:
	GAAP sales and marketing expense				6,170			5,054
			Share-based compensation		(161	)		(49	)
	Total Non-GAAP adjustments				(161	)		(49	)
	NON-GAAP SALES AND MARKETING EXPENSE				6,009			5,005
General and Administrative:
	GAAP General and Administrative Expense				3,721			3,189
			Share-based compensation		(496	)		(294	)
	Total Non-GAAP adjustments				(496	)		(294	)
	NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSE				3,225			2,895
Operating Expenses:
	GAAP Total Operating Expenses				11,540			9,722
			Share-based compensation		(724	)		(353	)
			Restructuring charges		(43	)		(10	)
	Total Non-GAAP adjustments				(767	)		(363	)
	NON-GAAP TOTAL OPERATING EXPENSES				10,773			9,359

Reconciliation of GAAP to Non-GAAP Financial Measures Continued
(In thousands, unaudited)
					For the three months ended
					Mar. 27, 2015				Mar. 28, 2014
Income (Loss) from Operations:
	GAAP income (loss) from operations					683				(59	)
			Share-based compensation			790				374
			Restructuring charges			43				10
	Total Non-GAAP adjustments					833				384
	NON-GAAP INCOME FROM OPERATIONS					1,516				325
Income before taxes & EBITDA:
	GAAP income before taxes					1,470				287
			Share-based compensation			790				374
			Restructuring charges			43				10
			Foreign exchange, net			(587	)			10
	Total Non-GAAP adjustments					246				394
	NON-GAAP INCOME BEFORE TAXES					1,716				681
			Depreciation			411				437
	NON-GAAP EBITDA					2,127				1,118
Net Income:
	GAAP Net Income					1,612				228
			Share-based compensation			790				374
			Restructuring charges			43				10
			Foreign exchange, net			(587	)			10
			Income tax effect of reconciling items			-				(10	)
	Total Non-GAAP adjustments					246				384
	NON-GAAP NET INCOME					1,858				612
GAAP weighted average shares outstanding--basic						22,050				21,302
GAAP weighted average shares outstanding--diluted						22,395				21,458
NON-GAAP weighted average shares outstanding--diluted						22,395				21,458
GAAP Net Income per share - basic					$	0.07			$	0.01
	Non-GAAP adjustments detailed above					0.01				0.02
	NON-GAAP NET INCOME PER SHARE (basic)				$	0.08			$	0.03
GAAP Net Income per share - diluted					$	0.07			$	0.01
	Non-GAAP adjustments detailed above					0.01				0.02
	NON-GAAP NET INCOME PER SHARE (diluted)				$	0.08			$	0.03

Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, unaudited)
					For the six months ended
					Mar. 27, 2015			Mar. 28, 2014
Gross Profit:
	GAAP Gross Profit				26,629			19,395
			Share-based compensation		143			46
	Total Non-GAAP adjustments				143			46
	NON-GAAP GROSS PROFIT				26,772			19,441
	NON-GAAP GROSS PROFIT PERCENTAGE				25.5	%		23.8	%
Research and Development:
	GAAP research and development expense				3,238			2,713
			Share-based compensation		(89	)		(19	)
	Total Non-GAAP adjustments				(89	)		(19	)
	NON-GAAP RESEARCH AND DEVELOPMENT EXPENSE				3,149			2,694
Sales and Marketing:
	GAAP sales and marketing expense				12,258			9,727
			Share-based compensation		(352	)		(86	)
	Total Non-GAAP adjustments				(352	)		(86	)
	NON-GAAP SALES AND MARKETING EXPENSE				11,906			9,641
General and Administrative:
	GAAP General and Administrative Expense				7,706			6,456
			Share-based compensation		(1,150	)		(637	)
	Total Non-GAAP adjustments				(1,150	)		(637	)
	NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSE				6,556			5,819
Operating Expenses:
	GAAP Total Operating Expenses				23,255			18,917
			Share-based compensation		(1,591	)		(742	)
			Restructuring charges		(53	)		(21	)
	Total Non-GAAP adjustments				(1,644	)		(763	)
	NON-GAAP TOTAL OPERATING EXPENSES				21,611			18,154

Reconciliation of GAAP to Non-GAAP Financial Measures Continued
(In thousands, unaudited)
					For the six months ended
					Mar. 27, 2015				Mar. 28, 2014
Income from Operations:
	GAAP income from operations					3,374				478
			Share-based compensation			1,734				788
			Restructuring charges			53				21
	Total Non-GAAP adjustments					1,787				809
	NON-GAAP INCOME FROM OPERATIONS					5,161				1,287
Income before taxes & EBITDA:
	GAAP income before taxes					4,672				1,009
			Share-based compensation			1,734				788
			Restructuring charges			53				21
			Foreign exchange, net			(855	)			53
	Total Non-GAAP adjustments					932				862
	NON-GAAP INCOME BEFORE TAXES					5,604				1,871
			Depreciation			809				915
	NON-GAAP EBITDA					6,413				2,786
Net Income:
	GAAP Net Income					4,701				858
			Share-based compensation			1,734				788
			Restructuring charges			53				21
			Foreign exchange, net			(855	)			53
			Income tax effect of reconciling items			-				(38	)
	Total Non-GAAP adjustments					932				824
	NON-GAAP NET INCOME					5,633				1,682
GAAP weighted average shares outstanding--basic						21,910				21,207
GAAP weighted average shares outstanding--diluted						22,317				21,424
NON-GAAP weighted average shares outstanding--diluted						22,317				21,424
GAAP Net Income per share - basic					$	0.21			$	0.04
	Non-GAAP adjustments detailed above				$	0.05				0.04
	NON-GAAP NET INCOME PER SHARE (basic)				$	0.26			$	0.08
GAAP Net Income per share - diluted					$	0.21			$	0.04
	Non-GAAP adjustments detailed above					0.04				0.04
	NON-GAAP NET INCOME PER SHARE (diluted)				$	0.25			$	0.08

Planar Systems, Inc.
Revenue by Product Line
(In millions)
(unaudited)
			Three months ended										% Change
			Mar. 27, 2015			Mar. 28, 2014			Dec. 26, 2014				vs. Prior Year			vs. Prior Quarter
Digital Signage Sales			$	24.9		$	19.0		$	29.8			32	%		-16	%
Commercial & Industrial Sales				24.2			22.1			26.0			10	%		-7	%
	Custom Commercial & Industrial			7.0			4.7			8.3			48	%		-16	%
	Desktop Monitors			9.2			7.7			9.2			19	%		0	%
	Touch Monitors			2.8			3.7			2.9			-24	%		-3	%
	Rear Projection Cubes			4.4			4.1			4.8			6	%		-8	%
	High-end Home			0.8			1.7			0.8			-51	%		0	%
	Other			-			0.2			-			-85	%		0	%
Total Sales			$	49.1		$	41.1		$	55.8			20	%		-12	%

Planar Systems, Inc.
Revenue by Product Line
(In millions)
(unaudited)
			Six months ended						% Change
			Mar. 27, 2015			Mar. 28, 2014			vs. Prior Year
Digital Signage Sales			$	54.7		$	37.9		44	%
Commercial & Industrial Sales				50.2			43.6		15	%
	Custom Commercial & Industrial			15.3			8.0		91	%
	Desktop Monitors			18.4			15.8		17	%
	Touch Monitors			5.7			6.9		-18	%
	Rear Projection Cubes			9.2			9.1		1	%
	High-end Home			1.6			3.4		-51	%
	Other			-			0.4		-91	%
Total Sales			$	104.9		$	81.5		29	%

Company Contact
Planar Systems, Inc.
Ryan Gray, 503-748-8911
[email protected]
or
Investor Contact
Liolios Group, Inc.
Matt Glover or Michael Koehler, 949-574-3860
[email protected]

Source: Planar Systems, Inc.

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