Earnings Details
Quarter July 2018
Tuesday, August 21, 2018 7:30:00 AM
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Daktronics (DAKT) Recent Earnings

Daktronics (DAKT) reported Quarter July 2018 earnings of $0.10 per share on revenue of $154.2 million.. Revenue fell 10.7% compared to the same quarter a year ago.

Daktronics Inc along with its subsidiaries is engaged in the design, manufacture and sale of electronic display systems and related products for Commercial, Live Events, Schools and Theatres, and Transportation.

Reported Earnings
Earnings Whisper
Consensus Estimate
Reported Revenue
$154.2 Mil
Revenue Estimate
Earnings Growth
Revenue Growth
Power Rating
Earnings Release

Daktronics, Inc. Announces First Quarter Fiscal 2019 Results

BROOKINGS, S.D., Aug. 21, 2018 (GLOBE NEWSWIRE) -- Daktronics, Inc. (NASDAQ - DAKT) today reported fiscal 2019 first quarter net sales of $154.2 million, operating income of $4.0 million, and net income of $4.6 million, or $0.10 per diluted share, compared to net sales of $172.7 million, operating income of $11.7 million, and net income of $8.4 million, or $0.19 per diluted share, for the first quarter of fiscal 2018.  Fiscal 2019 first quarter orders were $159.6 million, compared to $153.1 million for the first quarter of fiscal 2018.  Product order backlog at the end of the fiscal 2019 first quarter was $177 million, compared to a backlog of $184 million a year earlier and $171 million at the end of the fourth quarter of fiscal 2018.(1)

Cash used in operating activities in the first three months of fiscal 2019 was $10.3 million, compared with cash used in operating activities of $4.9 million in the same period last year. Cash flow from operating activities fluctuated due to a rise in accounts receivable, contract assets, and inventories corresponding with the seasonality of our business.  Free cash flow, defined as cash provided from or used in operating activities less net investment in property and equipment, was a negative $14.9 million for the first three months of fiscal 2019, as compared to a negative free cash flow of $8.9 million for the same period of fiscal 2018.  Net investment in property and equipment was $4.6 million for the first three months of fiscal 2019, as compared to $4.0 million for the first three months of fiscal 2018.  Cash, restricted cash, and marketable securities at the end of the first quarter of fiscal 2019 were $43.3 million, which compares to $52.1 million at the end of the first quarter of fiscal 2018 and $64.3 million at the end of fiscal 2018.

Orders for the first quarter of fiscal 2019 increased 4.3 percent as compared to the first quarter of fiscal 2018.  Orders increased in the Commercial, High School Park and Recreation, Transportation, and International business units and decreased in the Live Events business unit.

Net sales decreased by 10.7 percent in the first quarter of fiscal 2019 as compared to the first quarter of fiscal 2018.  Net sales increased in the International business unit, decreased in the Commercial, Live Events, and Transportation business units, and remained relatively flat in the High School Park and Recreation business unit.  The increase in International business unit was primarily due to the timing of projects and buildable backlog coming into the quarter. Live Events sales decreased as we had completed a number of NFL stadiums in 2018, with no similar sized projects in the first quarter of 2019.

Gross profit, as a percentage of net sales, was 24.8 percent for the first quarter of fiscal 2019 as compared to 25.8 percent a year earlier.  The decrease in gross profit percentage was primarily due to lower sales volumes over relatively fixed infrastructure costs, partly offset by lower warranty expenses.  Operating expenses for the first quarter of 2019 were $34.2 million, compared to $32.9 million for the first quarter of fiscal 2018.  The increase in total operating expenses was primarily attributable to an increase in variable selling expenses.  Operating income as a percent of sales for the quarter decreased to 2.6 percent as compared to the first quarter of fiscal 2018 operating income of 6.8 percent.  We recorded a tax benefit during the quarter for estimated tax credits exceeding estimated tax expense.

Reece Kurtenbach, chairman, president and chief executive officer stated, “As expected, first quarter sales were less than the first quarter of 2018 and reflect the financial fluctuations caused by the timing of large projects.  Year to date orders have increased over last year, and we achieved a respectable gross profit margin on this level of business.  During the quarter, we installed several of the new generation of narrow pixel pitch products for high resolution indoor applications.  We continue to invest in broadening our narrow pixel pitch product line and control solutions.  Our pipeline of innovative new products and technologies is poised to meet the growing market demand for digital canvases.”

(1) Backlog is not a measure defined by U.S. generally accepted accounting principles ("GAAP"), and our methodology for determining backlog may vary from the methodology used by other companies in determining their backlog amounts.  For more information related to backlog, see Part I, Item 1. Business of our Annual Report on Form 10-K for the fiscal year ended April 28, 2018.

Kurtenbach added, “While we remain optimistic about long-term growth in the digital display industry, most of us are aware the current global tariff and trade environment is very dynamic. The current financial impact to us is related to the volatility in pricing and demand of aluminum, electrical, and other components.  We would expect some of the measures being contemplated by various governments could have a financial impact in future quarters.  We will continue to monitor the situation and take action as necessary.  We are focused on winning more orders and continuing our velocity in product development, as well as quality and reliability programs.  In addition, we are carefully managing our operational spend as we continue on our path to long-term profitable growth.”

Webcast Information
The company will host a conference call and webcast to discuss its financial results today at 10:00 a.m. (CST).  This call will be broadcast live at http://investor.daktronics.com and available for replay shortly after the event.

About Daktronics
Daktronics has strong leadership positions in, and is the world's largest supplier of, large-screen video displays, electronic scoreboards, LED text and graphics displays, and related control systems.  The company excels in the control of display systems, including those that require integration of multiple complex displays showing real-time information, graphics, animation, and video.  Daktronics designs, manufactures, markets and services display systems for customers around the world in four domestic business units:  Live Events, Commercial, High School Park and Recreation, and Transportation, and one International business unit.  For more information, visit the company's website at: www.daktronics.com, email the company at investor@daktronics.com, call (605) 692-0200 or toll-free (800) 843-5843 in the United States, or write to the company at 201 Daktronics Dr., P.O. Box 5128, Brookings, S.D. 57006-5128.

Safe Harbor Statement
Cautionary Notice: In addition to statements of historical fact, this news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and is intended to enjoy the protection of that Act.  These forward-looking statements reflect the Company's expectations or beliefs concerning future events.  The Company cautions that these and similar statements involve risk and uncertainties which could cause actual results to differ materially from our expectations, including, but not limited to, changes in economic and market conditions, management of growth, timing and magnitude of future contracts, fluctuations in margins, the introduction of new products and technology, the impact of adverse weather conditions, and other risks noted in the company's SEC filings, including its Annual Report on Form 10-K for its 2018 fiscal year.  Forward-looking statements are made in the context of information available as of the date stated.  The Company undertakes no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.

For more information contact:  
Sheila Anderson, Chief Financial Officer  
(605) 692-0200  

Daktronics, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
  Three Months Ended
  July 28,
 July 29,
Net sales $154,188  $172,728 
Cost of sales 115,941  128,082 
Gross profit 38,247  44,646 
Operating expenses:    
Selling 16,378  14,939 
General and administrative 8,537  8,935 
Product design and development 9,292  9,047 
  34,207  32,921 
Operating income 4,040  11,725 
Nonoperating income (expense):    
Interest income 197  211 
Interest expense (39) (86)
Other (expense) income, net (154) 145 
Income before income taxes 4,044  11,995 
Income tax (benefit) expense (530) 3,566 
Net income $4,574  $8,429 
Weighted average shares outstanding:    
Basic 44,638  44,244 
Diluted 44,831  44,461 
Earnings per share:    
Basic $0.10  $0.19 
Diluted $0.10  $0.19 
Cash dividends declared per share $0.07  $0.07 

Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)

 July 28,
 April 28,
Cash and cash equivalents$15,915  $29,727 
Restricted cash26  28 
Marketable securities27,352  34,522 
Accounts receivable, net100,362  77,387 
Inventories78,983  75,335 
Contract assets41,283  30,968 
Current maturities of long-term receivables1,435  1,752 
Prepaid expenses and other assets7,712  9,029 
Income tax receivables6,280  5,385 
Total current assets279,348  264,133 
Long-term receivables, less current maturities1,552  1,641 
Goodwill8,115  8,264 
Intangibles, net6,729  3,682 
Investment in affiliates and other assets5,248  5,091 
Deferred income taxes7,938  7,930 
 29,582  26,608 
Land2,142  2,161 
Buildings67,776  67,773 
Machinery and equipment94,841  93,439 
Office furniture and equipment5,987  5,878 
Computer software and hardware53,117  53,004 
Equipment held for rental287  287 
Demonstration equipment6,971  7,035 
Transportation equipment7,675  7,632 
Property and equipment238,796  237,209 
Less accumulated depreciation171,506  169,150 
 67,290  68,059 
TOTAL ASSETS$376,220  $358,800 

Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
 July 28,
 April 28,
Accounts payable$48,726  $48,845 
Contract liabilities50,629  39,379 
Accrued expenses30,778  27,445 
Warranty obligations13,468  13,891 
Current portion of other long-term obligations2,453  1,088 
Income taxes payable360  660 
Total current liabilities146,414  131,308 
Long-term warranty obligations15,777  16,062 
Long-term contract liabilities8,073  7,475 
Other long-term obligations2,307  2,285 
Long-term income tax payable3,599  3,440 
Deferred income taxes604  614 
Total long-term liabilities30,360  29,876 
TOTAL LIABILITIES176,774  161,184 
Common stock55,608  54,731 
Additional paid-in capital40,979  40,328 
Retained earnings108,559  107,105 
Treasury stock, at cost(1,834) (1,834)
Accumulated other comprehensive loss(3,866) (2,714)

Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
  Three Months Ended
  July 28,
 July 29,
Net income $4,574  $8,429 
Adjustments to reconcile net income to net cash used in operating activities:    
Depreciation and amortization 4,488  4,460 
Gain on sale of property, equipment and other assets (69) (17)
Share-based compensation 651  672 
Equity in loss of affiliate 134  85 
Provision for doubtful accounts (29) 14 
Deferred income taxes, net (65) 30 
Change in operating assets and liabilities (19,944) (18,580)
Net cash used in operating activities (10,260) (4,907)
Purchases of property and equipment (4,727) (4,092)
Proceeds from sales of property, equipment and other assets 106  63 
Purchases of marketable securities (1,986)  
Proceeds from sales or maturities of marketable securities 9,181  7,643 
Purchases of equity investment (426) (607)
Acquisitions, net of cash acquired (2,250)  
Net cash (used in) provided by investing activities (102) 3,007 
Borrowings on notes payable 3,000   
Payments on notes payable (3,000)  
Proceeds from exercise of stock options 57  211 
Principal payments on long-term obligations (458) (1,018)
Dividends paid (3,121) (3,094)
Net cash used in financing activities (3,522) (3,901)
Beginning of period 29,755  32,839 
End of period $15,941  $27,090 

Daktronics, Inc. and Subsidiaries
Net Sales and Orders by Business Unit
(in thousands)
 Three Months Ended
 July 28,
 July 29,
Net Sales:       
  Commercial$30,569  $32,863  $(2,294) (7.0)%
  Live Events49,472  77,612  (28,140) (36.3)
  High School Park and  Recreation28,120  28,479  (359) (1.3)
  Transportation17,157  18,912  (1,755) (9.3)
  International28,870  14,862  14,008  94.3 
 $154,188  $172,728  $(18,540) (10.7)%
  Commercial$35,792  $29,937  $5,855  19.6%
  Live Events39,395  61,605  (22,210) (36.1)
  High School Park and Recreation38,449  32,180  6,269  19.5 
  Transportation21,916  9,269  12,647  136.4 
  International24,058  20,090  3,968  19.8 
 $159,610  $153,081  $6,529  4.3%

Reconciliation of Free Cash Flow*
(in thousands)
 Three Months Ended
 July 28,
 July 29,
Net cash used in operating activities$(10,260) $(4,907)
Purchases of property and equipment(4,727) (4,092)
Proceeds from sales of property and equipment106  63 
Free cash flow$(14,881) $(8,936)

*In evaluating its business, Daktronics considers and uses free cash flow as a key measure of its operating performance.  The term free cash flow is not defined under U.S. generally accepted accounting principles (“GAAP”) and is not a measure of operating income, cash flows from operating activities or other GAAP figures and should not be considered alternatives to those computations.  Free cash flow is intended to provide information that may be useful for investors when assessing period to period results.


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Source: Daktronics, Inc.