Daktronics, Inc. (NASDAQ - DAKT) today reported fiscal 2019 second
quarter net sales of $172.7 million, operating income of $9.0
million, and net income of $8.6 million, or $0.19 per diluted
share, compared to net sales of $169.3 million, operating income of
$9.4 million, and net income of $7.1 million, or $0.16 per diluted
share, for the second quarter of fiscal 2018. Fiscal 2019
second quarter orders were $151.4 million, compared to $142.3
million for the second quarter of fiscal 2018. Product order
backlog at the end of the fiscal 2019 second quarter was $150
million, compared to a backlog of $155 million a year earlier and
$177 million at the end of the first quarter of fiscal 2019.(1)
Net sales, operating income, net income, and
earnings per share for the six months ended October 27, 2018,
were $326.9 million, $13.1 million, $13.2 million, and $0.29 per
diluted share, respectively. This compares to $342.0 million,
$21.2 million, $15.6 million, and $0.35 per diluted share,
respectively, for the same period in fiscal 2018.
Cash provided by operating activities in the
first six months of fiscal 2019 was $22.6 million, compared with
cash provided by operating activities of $9.3 million in the same
period last year. Cash flow from operating activities
fluctuated due to changes in net operating assets and liabilities
offset by decrease in net income. Free cash flow, defined as
cash provided from or used in operating activities less net
investment in property and equipment, was a positive $12.9 million
for the first six months of fiscal 2019, as compared to a positive
free cash flow of $3.6 million for the same period of fiscal
2018. Net investment in property and equipment was $9.7
million for the first six months of fiscal 2019, as compared to
$5.7 million for the first six months of fiscal 2018. Cash,
restricted cash, and marketable securities at the end of the second
quarter of fiscal 2019 were $67.3 million, which compares to $61.5
million at the end of the second quarter of fiscal 2018 and $64.3
million at the end of fiscal 2018.
Orders for the second quarter of fiscal 2019
increased 6.4 percent as compared to the second quarter of fiscal
2018. Orders increased in the Commercial, High School Park
and Recreation, and Transportation business units, decreased in the
International business unit, and remained relatively flat in the
Live Events business unit.
Net sales increased by 2.0 percent in the second
quarter of fiscal 2019 as compared to the second quarter of fiscal
2018. Net sales increased in the Commercial, High School Park
and Recreation, Transportation, and International business units,
and decreased in the Live Events business unit. The increase
in the Commercial business unit was primarily due to the timing of
large custom projects in the spectacular niche, increased order
volumes in the on-premise niche, and an increase in the out-of-home
niche shipments. Live Events sales decreased primarily due to
the decrease of orders on a year to date basis.
Gross profit, as a percentage of net sales, was
relatively flat at 24.8 percent for the second quarter of fiscal
2019 as compared to 25.2 percent a year earlier. Operating
expenses for the second quarter of fiscal 2019 were $33.7 million,
compared to $33.2 million for the second quarter of fiscal
2018. Operating income as a percent of sales for the quarter
decreased to 5.2 percent as compared to the second quarter of
fiscal 2018 operating income of 5.6 percent. In the first
quarter of fiscal 2019, we recorded a tax benefit and in the second
quarter we recorded a tax expense, which resulted in a zero-tax
expense for year to date as our estimated effective tax rate is
based on our estimate of permanent research and development tax
credits which offsets the estimated tax expense for the year.
Reece Kurtenbach, chairman, president and chief
executive officer stated, “The diversity of our end-markets and
competitive solution portfolio enabled us to increase orders for
the first half of the year. Strong market demand continued
for larger sized spectacular projects, larger sports systems in
high schools, after-sale service offerings, and signage for
transportation infrastructure. And while the order volume was
down for the first half of the year internationally, we were
successful in winning transportation and global out-of-home
advertising projects. Fewer large project opportunities were
available in Live Events so far this year, causing orders and
related sales to be down on a year to date basis. Warranty as
a percent of sales for the quarter decreased to 2.5 percent as
compared to the second quarter of fiscal 2018 warranty as a percent
of sales of 3.9 percent. However, this improvement was offset
by higher commodity costs and increases in selling expenses.
(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.
OutlookKurtenbach added, “As we
enter into the second half of our fiscal year, we remain optimistic
about our long-term outlook. Our portfolio of innovative
products and technologies positioned us to capitalize on the
growing market demand for digital canvases. In the short
term, the current global tariff and trade environment has created
cost headwinds on commodity and components used in the production
of our solutions. We continue to monitor the situation and
evaluate ways to minimize these impacts through vendor
negotiations, alternative sources, and potential price
adjustments. Our teams are focused on the continued
development of industry leading solutions and global sales channels
to support long-term profitable growth.”
Webcast InformationThe 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 DaktronicsDaktronics 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 StatementCautionary
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:INVESTOR
RELATIONS:Sheila Anderson, Chief Financial Officer(605)
692-0200Investor@daktronics.com
Daktronics, Inc. and
SubsidiariesConsolidated Statements of
Operations(in thousands, except per share
amounts)(unaudited) |
|
|
Three Months Ended |
|
Six Months Ended |
|
|
October 27, 2018 |
|
October 28, 2017 |
|
October 27, 2018 |
|
October 28, 2017 |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
172,692 |
|
|
$ |
169,309 |
|
|
$ |
326,880 |
|
|
$ |
342,037 |
|
Cost of sales |
|
129,935 |
|
|
126,705 |
|
|
245,876 |
|
|
254,787 |
|
Gross profit |
|
42,757 |
|
|
42,604 |
|
|
81,004 |
|
|
87,250 |
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling |
|
16,125 |
|
|
15,350 |
|
|
32,503 |
|
|
30,289 |
|
General
and administrative |
|
8,574 |
|
|
8,868 |
|
|
17,111 |
|
|
17,803 |
|
Product
design and development |
|
9,039 |
|
|
8,948 |
|
|
18,331 |
|
|
17,995 |
|
|
|
33,738 |
|
|
33,166 |
|
|
67,945 |
|
|
66,087 |
|
Operating income |
|
9,019 |
|
|
9,438 |
|
|
13,059 |
|
|
21,163 |
|
|
|
|
|
|
|
|
|
|
Nonoperating income
(expense): |
|
|
|
|
|
|
|
|
Interest
income |
|
188 |
|
|
151 |
|
|
385 |
|
|
362 |
|
Interest
expense |
|
(2 |
) |
|
(47 |
) |
|
(41 |
) |
|
(133 |
) |
Other
(expense) income, net |
|
(66 |
) |
|
(87 |
) |
|
(220 |
) |
|
58 |
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
9,139 |
|
|
9,455 |
|
|
13,183 |
|
|
21,450 |
|
Income
tax expense |
|
533 |
|
|
2,323 |
|
|
3 |
|
|
5,889 |
|
Net income |
|
$ |
8,606 |
|
|
$ |
7,132 |
|
|
$ |
13,180 |
|
|
$ |
15,561 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
44,780 |
|
|
44,412 |
|
|
44,717 |
|
|
44,345 |
|
Diluted |
|
44,950 |
|
|
44,679 |
|
|
44,994 |
|
|
44,696 |
|
|
|
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.19 |
|
|
$ |
0.16 |
|
|
$ |
0.29 |
|
|
$ |
0.35 |
|
Diluted |
|
$ |
0.19 |
|
|
$ |
0.16 |
|
|
$ |
0.29 |
|
|
$ |
0.35 |
|
|
|
|
|
|
|
|
|
|
Cash dividends declared
per share |
|
$ |
0.07 |
|
|
$ |
0.07 |
|
|
$ |
0.14 |
|
|
$ |
0.14 |
|
Daktronics, Inc. and
SubsidiariesConsolidated Balance
Sheets(in thousands) |
|
October 27, 2018 |
|
April 28, 2018 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and
cash equivalents |
$ |
35,557 |
|
|
$ |
29,727 |
|
Restricted cash |
26 |
|
|
28 |
|
Marketable securities |
31,721 |
|
|
34,522 |
|
Accounts
receivable, net |
92,194 |
|
|
77,387 |
|
Inventories |
69,529 |
|
|
75,335 |
|
Contract
assets |
30,633 |
|
|
30,968 |
|
Current
maturities of long-term receivables |
1,305 |
|
|
1,752 |
|
Prepaid
expenses and other current assets |
8,172 |
|
|
9,029 |
|
Income
tax receivables |
6,015 |
|
|
5,385 |
|
Total
current assets |
275,152 |
|
|
264,133 |
|
|
|
|
|
Property
and equipment, net |
69,470 |
|
|
68,059 |
|
Long-term
receivables, less current maturities |
1,348 |
|
|
1,641 |
|
Goodwill |
8,053 |
|
|
8,264 |
|
Intangibles, net |
6,101 |
|
|
3,682 |
|
Investment in affiliates and other assets |
5,623 |
|
|
5,091 |
|
Deferred
income taxes |
7,939 |
|
|
7,930 |
|
Total
non-current assets |
98,534 |
|
|
94,667 |
|
TOTAL ASSETS |
$ |
373,686 |
|
|
$ |
358,800 |
|
|
|
|
|
Daktronics, Inc. and
SubsidiariesConsolidated Balance Sheets
(continued)(in thousands) |
|
October 27, 2018 |
|
April 28, 2018 |
|
(unaudited) |
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
CURRENT
LIABILITIES: |
|
|
|
Accounts
payable |
$ |
46,764 |
|
|
$ |
48,845 |
|
Contract
liabilities |
47,198 |
|
|
39,379 |
|
Accrued
expenses |
29,717 |
|
|
27,445 |
|
Warranty
obligations |
13,009 |
|
|
13,891 |
|
Current
portion of other long-term obligations |
1,106 |
|
|
1,088 |
|
Income
taxes payable |
272 |
|
|
660 |
|
Total
current liabilities |
138,066 |
|
|
131,308 |
|
|
|
|
|
Long-term
warranty obligations |
15,709 |
|
|
16,062 |
|
Long-term
contract liabilities |
8,520 |
|
|
7,475 |
|
Other
long-term obligations, less current portion |
2,420 |
|
|
2,285 |
|
Long-term
income taxes payable |
3,623 |
|
|
3,440 |
|
Deferred
income taxes |
611 |
|
|
614 |
|
Total
long-term liabilities |
30,883 |
|
|
29,876 |
|
TOTAL LIABILITIES |
168,949 |
|
|
161,184 |
|
|
|
|
|
SHAREHOLDERS'
EQUITY: |
|
|
|
Common
stock |
55,608 |
|
|
54,731 |
|
Additional paid-in capital |
41,345 |
|
|
40,328 |
|
Retained
earnings |
114,033 |
|
|
107,105 |
|
Treasury
stock, at cost |
(1,834 |
) |
|
(1,834 |
) |
Accumulated other comprehensive loss |
(4,415 |
) |
|
(2,714 |
) |
TOTAL SHAREHOLDERS'
EQUITY |
204,737 |
|
|
197,616 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY |
$ |
373,686 |
|
|
$ |
358,800 |
|
Daktronics, Inc. and
SubsidiariesConsolidated Statements of Cash
Flows(in thousands)(unaudited) |
|
|
Six Months Ended |
|
|
October 27, 2018 |
|
October 28, 2017 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
Net
income |
|
$ |
13,180 |
|
|
$ |
15,561 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
9,300 |
|
|
8,902 |
|
Gain on
sale of property, equipment and other assets |
|
(93 |
) |
|
(1,221 |
) |
Share-based compensation |
|
1,263 |
|
|
1,341 |
|
Contingent consideration adjustment |
|
(956 |
) |
|
— |
|
Equity in
loss of affiliate |
|
265 |
|
|
191 |
|
Provision
for doubtful accounts |
|
51 |
|
|
(21 |
) |
Deferred
income taxes, net |
|
(85 |
) |
|
81 |
|
Change in
operating assets and liabilities |
|
(368 |
) |
|
(15,496 |
) |
Net cash provided by operating activities |
|
22,557 |
|
|
9,338 |
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
Purchases
of property and equipment |
|
(9,833 |
) |
|
(7,735 |
) |
Proceeds
from sales of property, equipment and other assets |
|
182 |
|
|
2,000 |
|
Purchases
of marketable securities |
|
(9,209 |
) |
|
— |
|
Proceeds
from sales or maturities of marketable securities |
|
12,034 |
|
|
10,802 |
|
Purchases
of equity investment |
|
(854 |
) |
|
(607 |
) |
Acquisitions, net of cash acquired |
|
(2,250 |
) |
|
— |
|
Net cash (used in) provided by investing
activities |
|
(9,930 |
) |
|
4,460 |
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
Proceeds
from exercise of stock options |
|
57 |
|
|
511 |
|
Principal
payments on long-term obligations |
|
(431 |
) |
|
(1,027 |
) |
Dividends
paid |
|
(6,252 |
) |
|
(6,197 |
) |
Tax
payments related to RSU issuances |
|
(246 |
) |
|
(311 |
) |
Net cash used in financing activities |
|
(6,872 |
) |
|
(7,024 |
) |
|
|
|
|
|
EFFECT OF EXCHANGE RATE
CHANGES ON CASH |
|
73 |
|
|
113 |
|
NET INCREASE IN CASH,
CASH EQUIVALENTS AND RESTRICTED CASH |
|
5,828 |
|
|
6,887 |
|
|
|
|
|
|
CASH, CASH EQUIVALENTS
AND RESTRICTED CASH: |
|
|
|
|
Beginning
of period |
|
29,755 |
|
|
32,839 |
|
End of
period |
|
$ |
35,583 |
|
|
$ |
39,726 |
|
|
|
|
|
|
Daktronics, Inc. and
SubsidiariesNet Sales and Orders by Business
Unit(in thousands)(unaudited) |
|
Three Months Ended |
|
Six Months Ended |
|
October 27, 2018 |
|
October 28, 2017 |
|
Dollar Change |
|
Percent Change |
|
October 27, 2018 |
|
October 28, 2017 |
|
Dollar Change |
|
Percent Change |
Net
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
$ |
46,069 |
|
|
$ |
34,377 |
|
|
$ |
11,692 |
|
|
34.0 |
% |
|
$ |
76,638 |
|
|
$ |
67,240 |
|
|
$ |
9,398 |
|
|
14.0 |
% |
Live
Events |
55,099 |
|
|
68,653 |
|
|
(13,554 |
) |
|
(19.7 |
) |
|
104,571 |
|
|
146,265 |
|
|
(41,694 |
) |
|
(28.5 |
) |
High
School Park and Recreation |
31,580 |
|
|
29,660 |
|
|
1,920 |
|
|
6.5 |
|
|
59,700 |
|
|
58,139 |
|
|
1,561 |
|
|
2.7 |
|
Transportation |
18,077 |
|
|
16,476 |
|
|
1,601 |
|
|
9.7 |
|
|
35,234 |
|
|
35,388 |
|
|
(154 |
) |
|
(0.4 |
) |
International |
21,867 |
|
|
20,143 |
|
|
1,724 |
|
|
8.6 |
|
|
50,737 |
|
|
35,005 |
|
|
15,732 |
|
|
44.9 |
|
|
$ |
172,692 |
|
|
$ |
169,309 |
|
|
$ |
3,383 |
|
|
2.0 |
% |
|
$ |
326,880 |
|
|
$ |
342,037 |
|
|
$ |
(15,157 |
) |
|
(4.4 |
)% |
Orders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
$ |
46,731 |
|
|
$ |
39,134 |
|
|
$ |
7,597 |
|
|
19.4 |
% |
|
$ |
82,523 |
|
|
$ |
69,071 |
|
|
$ |
13,452 |
|
|
19.5 |
% |
Live
Events |
43,641 |
|
|
43,730 |
|
|
(89 |
) |
|
(0.2 |
) |
|
83,036 |
|
|
105,335 |
|
|
(22,299 |
) |
|
(21.2 |
) |
High
School Park and Recreation |
18,445 |
|
|
14,737 |
|
|
3,708 |
|
|
25.2 |
|
|
56,894 |
|
|
46,917 |
|
|
9,977 |
|
|
21.3 |
|
Transportation |
21,279 |
|
|
14,245 |
|
|
7,034 |
|
|
49.4 |
|
|
43,195 |
|
|
23,514 |
|
|
19,681 |
|
|
83.7 |
|
International |
21,260 |
|
|
30,414 |
|
|
(9,154 |
) |
|
(30.1 |
) |
|
45,318 |
|
|
50,504 |
|
|
(5,186 |
) |
|
(10.3 |
) |
|
$ |
151,356 |
|
|
$ |
142,260 |
|
|
$ |
9,096 |
|
|
6.4 |
% |
|
$ |
310,966 |
|
|
$ |
295,341 |
|
|
$ |
15,625 |
|
|
5.3 |
% |
Reconciliation of Free Cash Flow*(in
thousands)(unaudited) |
|
Six Months Ended |
|
October 27, 2018 |
|
October 28, 2017 |
Net cash provided by
operating activities |
$ |
22,557 |
|
|
$ |
9,338 |
|
Purchases of property
and equipment |
(9,833 |
) |
|
(7,735 |
) |
Proceeds from sales of
property and equipment |
182 |
|
|
2,000 |
|
Free cash
flow |
$ |
12,906 |
|
|
$ |
3,603 |
|
*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.
Daktronics (NASDAQ:DAKT)
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Daktronics (NASDAQ:DAKT)
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From Sep 2023 to Sep 2024