Daktronics, Inc. Announces Fourth Quarter And Fiscal 2013 Results

BROOKINGS, S.D., May 29, 2013 (GLOBE NEWSWIRE) -- Daktronics, Inc. (Nasdaq:DAKT) today reported fiscal 2013 fourth quarter net sales of $124.5 million and net income of $1.8 million, or $0.04 per diluted share, compared to net sales of $112.0 million and a net loss of $(0.5) million, or $(0.01) per diluted share, for the fourth quarter of fiscal 2012. Fiscal 2013 fourth quarter orders were $113.8 million compared to $115.0 million for the fourth quarter of fiscal 2012. Backlog at the end of the fiscal 2013 fourth quarter was $141.3 million, compared with a backlog of $122.8 million a year earlier and $149.1 million at the end of the third quarter of fiscal 2013.

Net sales, net income and earnings per diluted share for the fiscal year ended April 27, 2013 were $518.3 million, $22.8 million and $0.53 per diluted share, respectively. This compares to $489.5 million, $8.5 million and $0.20 per diluted share, respectively, for the same period in fiscal 2012.

Free cash flow, defined as cash provided by operations less net purchases of property and equipment, was $41.3 million through the fourth quarter of fiscal 2013, compared to $3.7 million for the same period in fiscal 2012. Cash and marketable securities at the end of the fourth quarter of fiscal 2013 were $64.7 million, which compares to $55.9 million at the end of the fiscal 2012 fourth quarter.

"Our fourth quarter and fiscal 2013 financial performance improved over fiscal 2012. We are pleased with the improvements in our operating income and plan to continue working on increasing operating income in fiscal 2014," said Jim Morgan, president and chief executive officer.

For the quarter, gross profit levels were lower compared to the prior quarters of fiscal 2013 due in part to several large projects that generated revenue with lower than typical margins due to the competitive pricing on the projects. In addition, we had unexpected warranty expenses in the quarter which reduced gross profit margin by approximately three percentage points as compared to fourth quarter fiscal 2012. Offsetting the decline were gross profit level improvements in our Schools & Theatres business unit. Operating expenses for the quarter were down compared to the fourth quarter of fiscal 2012.

Orders

  • Commercial business unit orders were down approximately eight percent in the fourth quarter of fiscal 2013 compared to the fourth quarter of fiscal 2012. This decrease was due in part to decreased levels of replacement orders from our national accounts customers and new or replacement orders for our billboard customers in outdoor advertising. These declines were partially offset by growth in large video contracts in our reseller segment including approximately $3.7 million of orders placed by a national developer of retail space using video displays for on premise advertising at multiple locations.  
  • Orders in the fourth quarter of fiscal 2013 for the Live Events business unit declined approximately 17 percent compared to the fourth quarter of fiscal 2012. The decline is due in part to lower order volume in college and university systems, which we believe is due to order timing versus a trend in the business. Subsequent to the end of fiscal 2013, we secured orders for two large video display systems totaling approximately $16 million for an NFL stadium and for a university football stadium.  
  • Orders in the Schools and Theatres business unit remained flat for the fourth quarter of fiscal 2013, compared to the same period in fiscal 2012. We continue to see interest for video display systems for high schools.  
  • Orders in the Transportation business unit were up approximately 20 percent in the fourth quarter of fiscal 2013 compared to the same period in fiscal 2012, primarily as a result of securing orders on a number of projects for state departments of transportation.  
  • Orders in the International business unit were up approximately 67 percent over the fourth quarter of fiscal 2012. We had orders in a number of locations around the world. Notable orders include a $4.7 million system for a major sports venue in the United Kingdom, a $1.4 million order for an architectural lighting display in the Asia Pacific region, a $1.1 million video display order for a project in downtown London, and a $1.3 million billboard order from a customer in South America.

Outlook

Morgan added, "We have a strong backlog going into fiscal 2014 to help us get off to a good start for the year. While competition remains intense, we also see a strong pipeline in the worldwide marketplace which should help us achieve modest growth in fiscal 2014. In addition, we have new products coming to the market including outdoor products using LED surface mount technology, full color Vanguard displays for our Transportation business unit, and enhanced architectural lighting and mesh display products. We completed the acquisition of OPEN Out-of-Home Solutions (OPEN), a Belgium company, at the beginning of fiscal year 2014. This acquisition offers us another avenue into the third party advertising (TPA) market worldwide, with an initial focus on Europe. We are excited about this opportunity as we see the worldwide TPA market starting to adopt digital. We are moving in the right direction in our strategic goals to significantly improve operating margin and we continue to focus efforts with initiatives across the company to increase gross profit margins and control operating costs." 

"We anticipate capital expenditures to be approximately $16 million for fiscal 2014. The most significant capital investment areas will be new or replacement production equipment, including additional equipment for our new outdoor surface mount LED module platforms, and information technology infrastructure," continued Morgan.

Dividend

As previously announced on Form 8-K on May 29, 2013, the company approved a regular semi-annual dividend of $0.12 per share payable June 14, 2013 to holders of record at the close of business on June 3, 2013.

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 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, Schools and Theatres and Transportation, and one International business unit. For more information, visit the company's World Wide Web site at: http://www.daktronics.com, e-mail 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., PO 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 2012 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.
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
         
  Three Months Ended Twelve Months Ended
  April 27, April 28, April 27, April 28,
   2013   2012   2013   2012 
         
Net sales  $ 124,482  $ 111,994  $ 518,322  $ 489,526
Cost of goods sold  96,379  87,388  384,428  376,089
Gross profit  28,103  24,606  133,894  113,437
         
Operating expenses:        
Selling expense  13,231  13,758  52,759  52,233
General and administrative  7,256  7,011  27,404  27,422
Product design and development  5,654  6,457  23,131  23,507
   26,141  27,226  103,294  103,162
Operating income (loss)  1,962  (2,620)  30,600  10,275
         
Nonoperating income (expense):        
Interest income  357  421  1,523  1,747
Interest expense  (204)  (104)  (355)  (335)
Other (expense) income, net  (615)  111  (839)  (110)
         
Income (loss) before income taxes  1,500  (2,192)  30,929  11,577
Income tax (benefit) expense  (344)  (1,687)  8,150  3,088
Net income (loss)  $ 1,844  $ (505)  $ 22,779  $ 8,489
         
Weighted average shares outstanding:        
Basic  42,553  41,991  42,280  41,869
Diluted  42,777  41,991  42,621  42,304
         
Earnings (loss) per share:        
Basic  $ 0.04  $ (0.01)  $ 0.54  $ 0.20
Diluted  $ 0.04  $ (0.01)  $ 0.53  $ 0.20
         
Cash dividends paid per share  $ --  $ --  $ 0.73  $ 0.62
 
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
     
   April 27,   April 28, 
   2013   2012 
  (unaudited)  
     
ASSETS    
CURRENT ASSETS:    
Cash, cash equivalents and restricted cash  $ 40,676  $ 30,592
Marketable securities  24,052  25,258
Accounts receivable, net  63,227  66,923
Inventories  49,045  54,924
Costs and estimated earnings in excess of billings  39,355  23,020
Current maturities of long-term receivables  4,807  5,830
Prepaid expenses and other assets  6,185  5,528
Deferred income taxes  12,755  10,941
Income tax receivables  46  5,990
Total current assets  240,148  229,006
     
Long-term receivables, less current maturities  11,325  12,622
Goodwill  3,306  3,347
Intangibles  1,181  1,409
Advertising rights, net and other assets  772  1,157
Deferred income taxes  1,061  30
   17,645  18,565
PROPERTY AND EQUIPMENT:    
Land  1,497  1,497
Buildings  57,012  56,431
Machinery and equipment  65,600  61,654
Office furniture and equipment  16,118  15,648
Computer software and hardware  41,745  42,172
Equipment held for rental  868  1,003
Demonstration equipment  8,400  9,806
Transportation equipment  4,026  4,116
   195,266  192,327
Less accumulated depreciation  133,641  123,931
   61,625  68,396
TOTAL ASSETS  $ 319,418  $ 315,967
 
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
     
   April 27,   April 28, 
   2013   2012 
  (unaudited)  
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES:    
Notes payable, bank  $ --  $ 1,459
Accounts payable  38,651  33,906
Accrued expenses  24,331  22,731
Warranty obligations  13,933  13,049
Billings in excess of costs and estimated earnings  14,245  14,385
Customer deposits (billed or collected)  12,375  12,826
Deferred revenue (billed or collected)  9,112  9,751
Current portion of other long-term obligations  356  359
Income taxes payable  1,689  665
Deferred income taxes  --  42
Total current liabilities  114,691  109,173
     
     
Long-term warranty obligations  11,213  9,166
Long-term deferred revenue (billed or collected)  4,424  4,361
Other long-term obligations, less current maturities  843  1,009
Deferred income taxes  --  1,453
Total long-term liabilities  16,480  15,989
TOTAL LIABILITIES  131,172  125,162
     
SHAREHOLDERS' EQUITY:    
Common stock  37,429  34,631
Additional paid-in capital  27,194  24,320
Retained earnings  123,750  131,830
Treasury stock, at cost  (9)  (9)
Accumulated other comprehensive (loss) income  (118)  33
TOTAL SHAREHOLDERS' EQUITY  188,246  190,805
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $ 319,418  $ 315,967
 
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
  Year Ended
  April 27, April 28,
  2013 2012
     
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income  $ 22,779  $ 8,489
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation  15,379  17,273
Amortization  228  245
Amortization of premium/discount on marketable securities  190  183
Loss (Gain) on sale of property and equipment  42  (16)
Share-based compensation  3,037  3,262
Excess tax benefits from share-based compensation  --  (48)
Provision for doubtful accounts  331  (150)
Deferred income taxes, net  (4,340)  (68)
Change in operating assets and liabilities  13,103  (9,132)
Net cash provided by operating activities  50,749  20,038
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment  (9,674)  (16,524)
Proceeds from sales of property and equipment  198  231
Purchases of marketable securities  (16,506)  (18,870)
Proceeds from sales or maturities of marketable securities  17,451  16,410
Net cash used in investing activities  (8,531)  (18,753)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Borrowings on notes payable  --  782
Payments on notes payable  (1,459)  (1,711)
Proceeds from exercise of stock options  1,316  547
Excess tax benefits from share-based compensation  --  48
Dividends paid  (30,859)  (25,950)
Net cash used in financing activities  (31,002)  (26,284)
     
EFFECT OF EXCHANGE RATE CHANGES ON CASH  (11)  114
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  11,205  (24,885)
     
CASH AND CASH EQUIVALENTS:    
Beginning of period  29,423  54,308
End of period  $ 40,628  $ 29,423
 
Daktronics, Inc. and Subsidiaries
Net Sales and Orders by Business Unit
(in thousands)
(unaudited)
         
  Three Months Ended Twelve Months Ended
  April 27, April 28, April 27, April 28,
  2013 2012 2013 2012
Net Sales:        
Commercial  $ 35,469  $ 33,346  $ 144,596  $ 148,585
Live Events 36,921 37,257 158,562 160,933
Schools & Theatres 14,489 13,245 66,128 59,662
Transportation 15,557 14,083 73,270 48,284
International 22,046 14,063 75,766 72,062
   $ 124,482  $ 111,994  $ 518,322  $ 489,526
         
Orders:        
Commercial  $ 38,406  $ 41,949  $ 152,028  $ 153,268
Live Events 29,317 35,188 161,602 157,695
Schools & Theatres 16,690 16,945 64,796 58,534
Transportation 13,922 11,601 73,426 55,060
International 15,491 9,279 80,158 55,396
   $ 113,826  $ 114,962  $ 532,010  $ 479,953
 
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow
(in thousands)
(unaudited)
     
  Twelve Months Ended
  April 28, April 30,
  2012 2011
     
Net cash provided by operating activities  $ 50,749  $ 20,038
Purchases of property and equipment (9,674) (16,524)
Proceeds from sales of property and equipment 198 231
Free cash flow  $ 41,273  $ 3,745
     
     
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.
CONTACT: INVESTOR RELATIONS:         Sheila M. Anderson, Chief Financial Officer         (605) 692-0200         Investor@daktronics.com

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