Financial results for the fiscal second quarter ended March 27, 2015 for Planar [1], a Beaverton, Oregon-based display and digital signage technology company, show that the company continues to grow and anticipates even further growth though 2016.
[2]Compared to the same Q2 last year. Planar’s Digital Signage product sales are up 32% to $24.9 million, while its Commercial and Industrial product sales are up 10% to $24.2 million.
Non-GAAP net income up $1.3 million to $1.9 million Non-GAAP EBITDA (earnings before interest, taxes, depreciation, amortization, and non-cash stock-based compensation) increased 90% to $2.1 million.
Total revenue increased 20% to $49.1 million from $41.1 million in the second quarter of fiscal 2014. 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.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 Digital Signage products.
Non-GAAP operating expenses totaled $10.8 million compared to $9.4 million in the same quarter last year. The increase was primarily due to higher sales and marketing expenses.
GAAP net income totaled $1.6 million, an increase of 607% from $228,000 in the second quarter of fiscal 2014.
At quarter end, the company’s cash balance totaled $16.2 million, up 9% from $14.9 million at December 26, 2014.
“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,” says 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, multibillion dollar market for digital signage.
“This progress was evident in the stronger performance of our Digital Signage 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 Digital Signager 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. 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.
Perkel says that custom C&I product line has been benefiting from recurring orders from a large customer in the oil field services industry. However, looking ahead, company management foresees 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.
“However, 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,” says Perkel. “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 Digital Signage 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. 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.