Daktronics, Inc. (DAKT) F4Q10 Earnings Call June 2, 2010 11:00 am ET Executives Bill Retterath – CFO Jim Morgan – CEO Analysts Jim Ricchiuti – Needham & Company Analyst for Steve Dyer – Craig-Hallum Capital Group Dick Ryan – Dougherty & Company P resentation Operator
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As noted in the news release our commercial business is showing signs of recovery although the price pressure in the marketplace remains keen. We have seen great interest in our new 4000 series billboard product which we are just starting to ship. This product as we have discussed previously offers improved performance, life cycle cost and reduced price point. We are also getting some positive indications from the marketplace that deployment rates may start to pick up gradually starting this summer.While we are seeing some Chinese competitor activity in the commercial market it tends to be more focused on the national accounts business and it has been a bit sporadic. Orders in both our live events and our schools and theaters business units both of which are heavily dependent on sports venues were down over the same quarter the previous year but up sequentially over Q3. Regarding trends, the sports dependent businesses didn’t turn down as fast as the commercial business going into the downturn and it appears they will lag commercial coming back as well. We attribute this to the long-term nature of many of the projects related to sports. However, we do see opportunities for upgrades and retrofits that can sometimes materialize in a matter of months. We have seen much more aggressive efforts by the Chinese competitors in the live events business. Their approach into the market is to come in with low pricing. We started shipping our new DVX video product in Q4. We are excited about that. As we didn’t discuss that previously it offers an improved functionality at a reduced price point. This product has been very well received in the marketplace. Also as noted in the release our transportation market had a great year in both orders and sales. To put that in perspective that was about 10% of our total revenue in the transportation business. The transportation business unit situation was a bit different than our other businesses going into the downturn as they hadn’t previously seen the high rate of growth between FY05 and FY08 that we had seen in the other businesses so our cost structure there was more contained. While FY09 sales were down slightly over FY08, fiscal 2010 sales were up more than 15% over fiscal 2009 to achieve a record high.
We are just beginning to ship our new Vanguard product and we will be phasing that in. That is again our over the roadway motorist information product. We will be phasing that in over the next couple of quarters so that should help us remain competitive and maintain margins in the transportation business. One of the new products we have been working on is for computer controlled architectural lighting applications. While we did some custom jobs for this application, we have done over the past 3-4 years, we have been developing products for this application over the past few years as we explored the needs of the marketplace. We are now offering product in both the linear stick form, as we refer to it, and a round pixel form similar to a hockey puck.We ended the quarter with two orders for products of this application which combined totaled about $7 million. In both cases this was for the stick type product element. In one case the elements will be arranged in a flat, rectangular pattern and operate similar to a typical video display with commercial advertising. The other order of the product is being incorporated into the building exterior in a large property development in China. It will be used more for effect as these are high rise buildings and they will be visible for several miles across an open body of water. So we believe there is significant opportunity in this and we are excited about these two projects as references going forward. Read the rest of this transcript for free on seekingalpha.com