Daktronics, Inc. (NASDAQ - DAKT) today reported fiscal year and
fourth quarter 2022 results.
Fiscal 2022 financial highlights:
- Fiscal net sales
of $611.0 million as a result of record orders and eased pandemic
related site restrictions
- Operating income of $4.0 million
realized through headwinds of inflation in materials, personnel and
freight related expenses
- Product order backlog of $472
million(1), driven by record order volume of $846.1 million(1) and
softer conversion to sales due to supply chain challenges
Reflection on FY2022 Reece
Kurtenbach, chairman, president and chief executive officer,
stated, "Thank you to our Daktronics team for increasing our
capacity, adjusting to the uncertain and volatile supply chain
conditions, and serving our customers as our industry recovers from
the pandemics implications. Last year at this time, lockdowns were
ending and people began gathering, renewing our customers'
confidence in their business outlook and allowing our order volume
to rebound from pandemic year lows. Daktronics products and
solutions are chosen for our industry-leading value as highlighted
by our all-time order record of $846 million for the year. Part of
this record was attributed to being selected as the dynamic video
system provider for the LA Clippers' new arena Intuit Dome and the
Real Madrid Soccer Club’s Santiago Bernabéu Stadium. Customers also
placed orders sooner than historical patterns to secure our
manufacturing capacity for their future deliveries.
While orders have recovered from the pandemic
the supply chain has not, which is a key reason our product backlog
grew to $472 million. Our production levels have frequently been
disrupted by varying supply chain challenges. Semiconductor parts,
including integrated circuits and other components needed for
production, have had sporadic availability because of global demand
growth, allocations, slowed transportation, or continued Covid
restrictions in certain geographies. These factors injected a level
of disruption in our organization over the past year. To combat
these headwinds and support timely deliveries, we have increased
our investment in inventories, adjusted delivery expectations,
redesigned product lines for other available material, and
increased investment in automated manufacturing machinery. We
responded to inflationary pressures by increasing pricing in all
areas starting in the third quarter of fiscal 2022. We continue to
monitor our supply chains and our marketplaces and adapt our
pricing methodologies accordingly."
Outlook for FY2023 and Beyond
Kurtenbach added, “We expect dynamic and volatile supply chain and
labor conditions to persist at least through the calendar year. As
the environment evolves, we plan to adjust and adapt our pricing
and our production schedules to best serve our customers. Our focus
remains on strategically investing in new technologies and
solutions, resilient supply chains, production capacity, and
growing and serving our existing and new customers and markets.
These strategies position us for long-term growth and increasing
value for our stakeholders."
Fourth Quarter and Year to Date
ResultsOrders for the fourth quarter of fiscal 2022
increased 67.0 percent as compared to the fourth quarter of fiscal
2021. Each business unit's order volume grew through fiscal 2022
reflecting the recovery from the impact of the global pandemic
among our customers. In Live Events, Commercial and International,
we booked multimillion-dollar orders also contributing to the
increases. Customers also placed orders sooner than historical
order patterns in order to secure our manufacturing capacity for
their future deliveries.
Net sales for the fourth quarter of fiscal 2022
increased by 38.8 percent as compared to the fourth quarter of
fiscal 2021. Net sales for fiscal 2022 increased 26.7 percent as
compared to fiscal 2021. Sales growth was driven by the order
recovery. Material supply and labor shortages are creating an
increase in lead times and extending the timing of converting some
orders to sales in the near-term. This has contributed to a larger
than typical backlog.
Gross profit as a percentage of net sales was
18.5 percent for the fourth quarter of fiscal 2022 as compared to
23.6 percent a year earlier and 19.1 percent for fiscal 2022, as
compared to 25.0 percent a year earlier. The decline in gross
profit percentage in fiscal 2022 is primarily related to the
ongoing supply chain disruptions and inflationary challenges in
materials, freight and personnel related costs, the difference in
sales mix between periods, increases in warranty reserves for
inflation and other factors experienced during fiscal 2021. Factors
impacting gross profit in fiscal 2021 included a positive $2.1
million or 0.4 percent gross profit impact from a litigation claim
reversal, and adjustments to operations capacity and governmental
support programs because of the COVID-19 pandemic.
Operating expenses for the fourth quarter of
fiscal 2022 were $30.3 million compared to $26.4 million for the
fourth quarter of fiscal 2021 or an increase of 14.5 percent and
$112.7 million for fiscal 2022 as compared to $103.5 million for
fiscal 2021 or an increase of 8.9 percent. The increases were
primarily personnel related expenses.
Operating margin for the fourth quarter of
fiscal 2022 was breakeven, compared to 1.0 percent for the fourth
quarter of fiscal 2021 and operating income as a percentage of
sales was 0.7 percent for fiscal 2022 as compared to 3.5 percent
for fiscal 2021.
The effective tax rate for fiscal 2022 was 46.6
percent. The effective income tax rate for fiscal 2022 was impacted
due to tax benefits from permanent tax credits offset by valuation
allowances as well as other various permanent tax adjustments and
state taxes with additional expense for prior year provision to
return adjustments. The effective tax rate for fiscal 2021 was 22.3
percent resulting from the tax benefit of permanent tax credits and
previous year provision to return adjustments offset by valuation
allowances as well as other various permanent tax adjustments and
state taxes.
Cash, restricted cash and marketable securities
at the end of fiscal 2022 were $22.0 million, which compares to
$80.4 million at the end of fiscal 2021. The change in cash use
was created by growing operating assets for the growth of order
activity, specifically for inventory and accounts receivable, and
because of increased investments of capital assets for capacity,
loans to affiliates, and the share repurchase program. Free cash
flow, defined as cash provided by or used in operating activities
less net investment in property and equipment, was a negative $46.5
million for fiscal 2022, as compared to a positive free cash flow
of $61.5 million for fiscal 2021. Net investment in property and
equipment was $19.5 million for fiscal 2022, as compared to $4.7
million for fiscal 2021.
Webcast Information
The company will host a conference call and
webcast to discuss its financial results today at 10:00 am (Central
Time). This call will be broadcast live at
http://investor.daktronics.com and be available for replay
shortly after the event.
(1) Orders and backlog are not measures defined
by accounting principles generally accepted in the United States of
America ("GAAP"), and our methodology for determining orders and
backlog may vary from the methodology used by other companies in
determining their orders and 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 May 1, 2021.
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 and
orders, fluctuations in margins, the introduction of new products
and technology, the impact of adverse weather conditions, increased
regulation and other risks described in the company's SEC filings,
including its Annual Report on Form 10-K for its 2021 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 M. Anderson, Chief Financial OfficerTel (605)
692-0200Investor@daktronics.com
Daktronics, Inc. and
SubsidiariesConsolidated Statements of
Operations(in thousands, except per share
amounts)(unaudited)
|
Three Months Ended |
|
Year Ended |
|
April 30, 2022 |
|
May 1, 2021 |
|
April 30, 2022 |
|
May 1, 2021 |
Net sales |
$ |
162,203 |
|
|
$ |
116,883 |
|
|
$ |
610,970 |
|
|
$ |
482,033 |
|
Cost of sales |
|
132,266 |
|
|
|
89,316 |
|
|
|
494,273 |
|
|
|
361,450 |
|
Gross profit |
|
29,937 |
|
|
|
27,567 |
|
|
|
116,697 |
|
|
|
120,583 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Selling |
|
14,063 |
|
|
|
12,435 |
|
|
|
51,075 |
|
|
|
48,649 |
|
General and administrative |
|
8,463 |
|
|
|
7,203 |
|
|
|
32,563 |
|
|
|
27,980 |
|
Product design and development |
|
7,730 |
|
|
|
6,793 |
|
|
|
29,013 |
|
|
|
26,846 |
|
|
|
30,256 |
|
|
|
26,431 |
|
|
|
112,651 |
|
|
|
103,475 |
|
Operating (loss) income |
|
(319 |
) |
|
|
1,136 |
|
|
|
4,046 |
|
|
|
17,108 |
|
|
|
|
|
|
|
|
|
Nonoperating (expense)
income: |
|
|
|
|
|
|
|
Interest income (expense), net |
|
37 |
|
|
|
(19 |
) |
|
|
171 |
|
|
|
(65 |
) |
Other expense, net |
|
(496 |
) |
|
|
(606 |
) |
|
|
(3,109 |
) |
|
|
(2,983 |
) |
|
|
|
|
|
|
|
|
(Loss) income before income taxes |
|
(778 |
) |
|
|
511 |
|
|
|
1,108 |
|
|
|
14,060 |
|
Income tax expense |
|
339 |
|
|
|
254 |
|
|
|
516 |
|
|
|
3,134 |
|
Net (loss) income |
$ |
(1,117 |
) |
|
$ |
257 |
|
|
$ |
592 |
|
|
$ |
10,926 |
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
44,963 |
|
|
|
45,147 |
|
|
|
45,188 |
|
|
|
44,989 |
|
Diluted |
|
44,963 |
|
|
|
45,360 |
|
|
|
45,326 |
|
|
|
45,202 |
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.02 |
) |
|
$ |
0.01 |
|
|
$ |
0.01 |
|
|
$ |
0.24 |
|
Diluted |
$ |
(0.02 |
) |
|
$ |
0.01 |
|
|
$ |
0.01 |
|
|
$ |
0.24 |
|
Daktronics, Inc. and
SubsidiariesConsolidated Balance
Sheets(in thousands)
|
April 30, 2022 |
|
May 1, 2021 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
$ |
17,143 |
|
$ |
77,590 |
Restricted cash |
|
865 |
|
|
2,812 |
Marketable securities |
|
4,020 |
|
|
— |
Accounts receivable, net |
|
101,099 |
|
|
67,808 |
Inventories |
|
134,392 |
|
|
74,356 |
Contract assets |
|
41,687 |
|
|
32,799 |
Current maturities of long-term receivables |
|
2,798 |
|
|
1,462 |
Prepaid expenses and other current assets |
|
14,963 |
|
|
7,445 |
Income tax receivables |
|
603 |
|
|
731 |
Total current assets |
|
317,570 |
|
|
265,003 |
|
|
|
|
Property and equipment, net |
|
66,765 |
|
|
58,682 |
Long-term receivables, less current maturities |
|
1,490 |
|
|
1,635 |
Goodwill |
|
7,927 |
|
|
8,414 |
Intangibles, net |
|
1,472 |
|
|
2,083 |
Investment in affiliates and other assets |
|
32,321 |
|
|
27,403 |
Deferred income taxes |
|
13,331 |
|
|
11,944 |
TOTAL ASSETS |
$ |
440,876 |
|
$ |
375,164 |
Daktronics, Inc. and
SubsidiariesConsolidated Balance Sheets
(continued)(in thousands)
|
April 30, 2022 |
|
May 1, 2021 |
|
(unaudited) |
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Accounts payable |
$ |
76,313 |
|
|
$ |
40,251 |
|
Contract liabilities |
|
90,393 |
|
|
|
64,495 |
|
Accrued expenses |
|
34,959 |
|
|
|
30,672 |
|
Warranty obligations |
|
11,621 |
|
|
|
10,464 |
|
Income taxes payable |
|
408 |
|
|
|
738 |
|
Total current liabilities |
|
213,694 |
|
|
|
146,620 |
|
|
|
|
|
Long-term warranty obligations |
|
17,257 |
|
|
|
15,496 |
|
Long-term contract liabilities |
|
10,998 |
|
|
|
10,720 |
|
Other long-term obligations |
|
6,599 |
|
|
|
7,816 |
|
Long-term income tax payable |
|
477 |
|
|
|
548 |
|
Deferred income taxes |
|
287 |
|
|
|
410 |
|
Total long-term liabilities |
|
35,618 |
|
|
|
34,990 |
|
|
|
|
|
SHAREHOLDERS' EQUITY: |
|
|
|
Common stock |
|
61,794 |
|
|
|
60,575 |
|
Additional paid-in capital |
|
48,372 |
|
|
|
46,595 |
|
Retained earnings |
|
96,608 |
|
|
|
96,016 |
|
Treasury stock, at cost |
|
(10,285 |
) |
|
|
(7,297 |
) |
Accumulated other comprehensive loss |
|
(4,925 |
) |
|
|
(2,335 |
) |
TOTAL SHAREHOLDERS'
EQUITY |
|
191,564 |
|
|
|
193,554 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY |
$ |
440,876 |
|
|
$ |
375,164 |
|
Daktronics, Inc. and
SubsidiariesConsolidated Statements of Cash
Flows(in thousands)(unaudited)
|
Year Ended |
|
April 30, 2022 |
|
May 1, 2021 |
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
Net income |
$ |
592 |
|
|
$ |
10,926 |
|
Adjustments to reconcile net income to net cash (used) provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
15,394 |
|
|
|
17,077 |
|
Gain on sale of property, equipment and other assets |
|
(743 |
) |
|
|
(572 |
) |
Share-based compensation |
|
1,973 |
|
|
|
2,067 |
|
Equity in loss of affiliates |
|
2,970 |
|
|
|
2,370 |
|
Provision for doubtful accounts, net of recovery |
|
(286 |
) |
|
|
1,299 |
|
Deferred income taxes, net |
|
(1,555 |
) |
|
|
1,314 |
|
Change in operating assets and liabilities |
|
(45,380 |
) |
|
|
31,731 |
|
Net cash (used)/provided by operating
activities |
|
(27,035 |
) |
|
|
66,212 |
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
Purchases of property and equipment |
|
(20,376 |
) |
|
|
(7,891 |
) |
Proceeds from sales of property, equipment and other assets |
|
885 |
|
|
|
3,184 |
|
Purchases of marketable securities |
|
(4,045 |
) |
|
|
— |
|
Proceeds from sales or maturities of marketable securities |
|
— |
|
|
|
1,230 |
|
Purchases of and loans to equity investees |
|
(7,848 |
) |
|
|
(6,744 |
) |
Net cash used in investing activities |
|
(31,384 |
) |
|
|
(10,221 |
) |
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
Borrowings on notes payable |
|
46,801 |
|
|
|
— |
|
Payments on notes payable |
|
(46,801 |
) |
|
|
(15,000 |
) |
Principal payments on long-term obligations |
|
(200 |
) |
|
|
(460 |
) |
Proceeds from exercise of stock options |
|
8 |
|
|
|
— |
|
Payments for common shares repurchased |
|
(3,184 |
) |
|
|
— |
|
Tax payments related to RSU issuances |
|
(200 |
) |
|
|
(125 |
) |
Net cash used in financing activities |
|
(3,576 |
) |
|
|
(15,585 |
) |
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES
ON CASH |
|
(399 |
) |
|
|
(416 |
) |
NET (DECREASE)/ INCREASE IN CASH,
CASH EQUIVALENTS AND RESTRICTED CASH |
|
(62,394 |
) |
|
|
39,990 |
|
|
|
|
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH: |
|
|
|
Beginning of period |
|
80,402 |
|
|
|
40,412 |
|
End of period |
$ |
18,008 |
|
|
$ |
80,402 |
|
Daktronics, Inc. and
SubsidiariesNet Sales and Orders by Business
Unit(in thousands)(unaudited)
|
Three Months Ended |
|
Twelve Months Ended |
|
April 30,2022 |
|
May 1,2021 |
|
DollarChange |
|
PercentChange |
|
April 30,2022 |
|
May 1,2021 |
|
DollarChange |
|
PercentChange |
Net
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
$ |
46,872 |
|
$ |
32,353 |
|
$ |
14,519 |
|
44.9 |
% |
|
$ |
154,211 |
|
$ |
127,300 |
|
$ |
26,911 |
|
21.1 |
% |
Live Events |
|
48,266 |
|
|
30,423 |
|
|
17,843 |
|
58.6 |
|
|
|
199,106 |
|
|
143,049 |
|
|
56,057 |
|
39.2 |
|
High School Park and Recreation |
|
27,454 |
|
|
20,392 |
|
|
7,062 |
|
34.6 |
|
|
|
111,816 |
|
|
91,557 |
|
|
20,259 |
|
22.1 |
|
Transportation |
|
20,273 |
|
|
16,694 |
|
|
3,579 |
|
21.4 |
|
|
|
62,707 |
|
|
58,284 |
|
|
4,423 |
|
7.6 |
|
International |
|
19,338 |
|
|
17,021 |
|
|
2,317 |
|
13.6 |
|
|
|
83,130 |
|
|
61,843 |
|
|
21,287 |
|
34.4 |
|
|
$ |
162,203 |
|
$ |
116,883 |
|
$ |
45,320 |
|
38.8 |
% |
|
$ |
610,970 |
|
$ |
482,033 |
|
$ |
128,937 |
|
26.7 |
% |
Orders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
$ |
49,218 |
|
$ |
45,949 |
|
$ |
3,269 |
|
7.1 |
% |
|
$ |
192,917 |
|
$ |
138,878 |
|
$ |
54,039 |
|
38.9 |
% |
Live Events |
|
144,275 |
|
|
63,558 |
|
|
80,717 |
|
127.0 |
|
|
|
313,940 |
|
|
157,177 |
|
|
156,763 |
|
99.7 |
|
High School Park and Recreation |
|
49,059 |
|
|
29,710 |
|
|
19,349 |
|
65.1 |
|
|
|
156,305 |
|
|
94,292 |
|
|
62,013 |
|
65.8 |
|
Transportation |
|
21,139 |
|
|
11,983 |
|
|
9,156 |
|
76.4 |
|
|
|
77,993 |
|
|
49,696 |
|
|
28,297 |
|
56.9 |
|
International |
|
22,138 |
|
|
19,977 |
|
|
2,161 |
|
10.8 |
|
|
|
104,916 |
|
|
75,841 |
|
|
29,075 |
|
38.3 |
|
|
$ |
285,829 |
|
$ |
171,177 |
|
$ |
114,652 |
|
67.0 |
% |
|
$ |
846,071 |
|
$ |
515,884 |
|
$ |
330,187 |
|
64.0 |
% |
Reconciliation of Free Cash
Flow*(in thousands)(unaudited)
|
Twelve Months Ended |
|
April 30, 2022 |
|
May 1, 2021 |
Net cash (used in) provided by operating activities |
$ |
(27,035 |
) |
|
$ |
66,212 |
|
Purchases of property and
equipment |
|
(20,376 |
) |
|
|
(7,891 |
) |
Proceeds from sales of
property and equipment |
|
885 |
|
|
|
3,184 |
|
Free cash flow |
$ |
(46,526 |
) |
|
$ |
61,505 |
|
* 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
accounting principles generally accepted in the United States of
America ("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)
Historical Stock Chart
From Jun 2024 to Jul 2024
Daktronics (NASDAQ:DAKT)
Historical Stock Chart
From Jul 2023 to Jul 2024