BROOKINGS, S.D., June 01, 2016 (GLOBE NEWSWIRE) -- Daktronics, Inc. (NASDAQ:DAKT) today reported fiscal 2016 fourth quarter net sales of $138.5 million, operating loss of $3.7 million, and net loss of $2.9 million, or $(0.07) per diluted share, compared to net sales of $158.1 million, operating income of $7.0 million, and a net income of $3.8 million, or $0.09 per diluted share, for the fourth quarter of fiscal 2015.  Fiscal 2016 fourth quarter orders were $143.2 million compared to $196.1 million for the fourth quarter of fiscal 2015.  Backlog at the end of the fiscal 2016 fourth quarter was $181.2 million, compared to a backlog of $190.5 million a year earlier and $176.3 million at the end of the third quarter of fiscal 2016.

Net sales, operating income, net income, and earnings per share for the fiscal year ended April 30, 2016, were $570.2 million, $2.5 million, $2.1 million and $0.05 per diluted share, respectively.  This compares to $615.9 million, $31.3 million, $20.9 million and $0.47 per diluted share, respectively, for fiscal 2015.  Fiscal 2016 was a 52-week year and fiscal 2015 was a 53-week year.  The extra week of fiscal 2015 fell within the first quarter, resulting in a 52-week versus a 53-week year end comparison.

Free cash flow, defined as cash provided from or used in operating activities less capital expenditures, was negative $3.6 million for fiscal 2016, as compared to a positive free cash flow of $35.4 million for fiscal 2015.  Cash provided by operations was $13.3 million for fiscal 2016, compared to $53.2 million for fiscal 2015.  Net investment in property and equipment was $16.9 million for fiscal 2016, as compared to $17.8 million for fiscal 2015.  Cash, restricted cash, and marketable securities at the end of the fourth quarter of fiscal 2016 were $53.2 million, which compares to $83.1 million at the end of the fourth quarter of fiscal 2015.

Sales and orders for the fourth quarter of fiscal 2016 decreased by 12.4 percent and 27.0 percent, respectively, as compared to the fourth quarter of fiscal 2015.  The orders decline was due to International and Live Events multi-million dollar projects that were booked during the fourth quarter of fiscal 2015, while no orders of similar size occurred during the fourth quarter of fiscal 2016.  Sales decreased primarily due to lighter International and Commercial billboard and spectacular demand.  Operating loss was 2.6 percent of sales for the quarter due to increased warranty impact for the quarter and lower production levels.

Orders decreased in fiscal 2016 by $70.8 million as compared to fiscal 2015.  International, Commercial and Live Events business unit orders declined during the year.  The decline in International orders was due to the inherent timing volatility in the booking of large orders, various macroeconomic trends, and the competitive environment.  Commercial business unit orders declined in spectacular and billboard niches due to a softening in customer demand and delaying commitments on large projects and programs.  While Live Events orders declined by 2.6 percent, underlying demand remained strong considering fiscal 2015 orders included a significantly sized NFL stadium project with no similar sized project in fiscal 2016.  Orders increased by 10.5 percent in High School Park and Recreation business unit due to increased video project sizes with higher average sales price and increased market demand.  Transportation orders increased by 11.8 percent due to increased market demand with the passing of the federal highway funding bill.  Finally, approximately 2.0 percent of the annual order decline was due to the additional week in fiscal 2015.

Sales for fiscal 2016 decreased 7.4 percent as compared to fiscal 2015.  Approximately 2.0 percent of this decline is due to the decrease of one week in the fiscal 2016 year and the remaining decline was primarily due to decreases in sales in Live Events, Commercial, and International business units.  Live Events declined due to the timing of customer deliveries extending beyond the fiscal year.  The Commercial sales decline was driven by decreased customer demand in billboard and spectacular niches.  Sales in the International business unit declined due to lower orders during the last half of the year.

Annual operating income as a percentage of sales decreased to 0.4 percent for fiscal 2016 as compared to 5.1 percent for fiscal 2015.  The decline is primarily attributable to the impact of additional warranty expenses of 1.6 percent and an increase in operating expenses.  The increase in operating expense dollars is due to additional activity in design areas and increases in personnel related and information technology costs.

Reece Kurtenbach, chairman, president and chief executive officer, stated, "Fiscal 2016 was a challenging year for Daktronics.  A warranty issue caused margin declines and high opportunity costs with time spent solving and correcting the issue. We believe we have accrued our best estimate for the most probable ultimate costs and we will continue to monitor over the coming year.  We also experienced lower demand in some markets resulting in lower production rates through our infrastructure.

"While we had these challenges, we were also successful in a number of ways.  Daktronics continues to be the world leader in market share in the video display industry. We were successful in winning and delivering orders to expanding sports and worldwide transportation markets and to global accounts.  We launched a number of new solutions in the latter part of fiscal 2016, which we anticipate will positively impact fiscal 2017.  In addition, we made progress on product enhancements to both meet specific customer needs and improve lifetime quality and reliability at lower overall cost to produce.  Finally, we acquired a company during the year to expand our capabilities in the growing industry of digital media networks."

OutlookKurtenbach continued, "The marketplace we operate in continues to expand as digital technology becomes ever more prevalent.  We are the most experienced market provider for video system design and delivery, lifetime support, and value to our customers. Global macroeconomic factors including low oil prices, strong U.S. dollar, slowing GDP, political instability and other uncertainties continue to affect customer purchasing decisions.  This creates some uncertainty in the near-term outlook for orders; therefore, we expect modest growth in fiscal 2017 and we will carefully manage our spending.

"Strategically, we are accelerating activities to complete product developments for a number of customer solution areas.  For example, we are investing in our control platform to allow customers to continue to experience our best-in-class control systems while lowering our ongoing development and support costs.  We also continue to invest in the video processing applications for higher resolution displays.  Finally, we are developing solutions to meet global demand for lower cost systems with performance targeted for certain applications.  This will add to our product lineup and improve our ability to capture a broader customer base in this growing global market."

Webcast InformationThe 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 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: http://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 2015 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 30,2016   May 2,2015   April 30,2016   May 2,2015
               
Net sales $ 138,463     $ 158,086     $ 570,168     $ 615,942  
Cost of goods sold 110,487     122,849     449,149     471,363  
Gross profit 27,976     35,237     121,019     144,579  
               
Operating expenses:              
Selling expense 15,939     14,558     58,812     57,963  
General and administrative 8,607     7,789     32,801     30,679  
Product design and development 7,085     5,879     26,911     24,652  
  31,631     28,226     118,524     113,294  
Operating (loss) income (3,655 )   7,011     2,495     31,285  
               
Nonoperating income (expense):              
Interest income 193     294     987     1,119  
Interest expense (25 )   (40 )   (228 )   (223 )
Other (expense) income, net 539     (280 )   (128 )   (498 )
               
(Loss) income before income taxes (2,948 )   6,985     3,126     31,683  
Income tax (benefit) expense (18 )   3,146     1,065     10,801  
Net (loss) income $ (2,930 )   $ 3,839     $ 2,061     $ 20,882  
               
Weighted average shares outstanding:              
Basic 44,094     43,707     43,990     43,514  
Diluted 44,094     43,966     44,456     44,443  
               
Earnings per share:              
Basic $ (0.07 )   $ 0.09     $ 0.05     $ 0.48  
Diluted $ (0.07 )   $ 0.09     $ 0.05     $ 0.47  
               
Cash dividends declared per share $ 0.10     $ 0.10     $ 0.40     $ 0.40  

  Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets(in thousands)
 
  April 30,  2016   May 2,  2015
  (unaudited)    
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $ 28,328     $ 57,284  
Restricted cash 198     496  
Marketable securities 24,672     25,346  
Accounts receivable, net 77,554     80,857  
Inventories, net 69,827     64,389  
Costs and estimated earnings in excess of billings 30,200     35,068  
Current maturities of long-term receivables 3,172     3,784  
Prepaid expenses and other assets 6,468     6,663  
Deferred income taxes     10,640  
Income tax receivables 4,812     5,543  
Total current assets 245,231     290,070  
       
Long-term receivables, less current maturities 3,866     6,090  
Goodwill 9,208     5,269  
Intangibles, net 7,721     1,824  
Investment in affiliates and other assets 2,414     2,680  
Deferred income taxes 9,437     702  
  32,646     16,565  
PROPERTY AND EQUIPMENT:      
Land 2,155     2,147  
Buildings 65,247     64,186  
Machinery and equipment 82,973     80,664  
Office furniture and equipment 14,746     15,823  
Computer software and hardware 48,917     51,083  
Equipment held for rental 374     803  
Demonstration equipment 8,026     7,299  
Transportation equipment 6,596     6,012  
  229,034     228,017  
Less accumulated depreciation 155,871     155,173  
  73,163     72,844  
TOTAL ASSETS $ 351,040     $ 379,479  

Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (continued)(in thousands)
    April 30,2016   May 2,2015
    (unaudited)    
LIABILITIES AND SHAREHOLDERS' EQUITY        
CURRENT LIABILITIES:        
Accounts payable   43,441     52,747  
Accrued expenses   23,532     26,063  
Warranty obligations   16,564     11,838  
Billings in excess of costs and estimated earnings   10,361     23,797  
Customer deposits (billed or collected)   16,012     16,828  
Deferred revenue (billed or collected)   10,712     9,524  
Current portion of other long-term obligations   585     587  
Income taxes payable   310     636  
Total current liabilities   121,517     142,020  
         
Long-term warranty obligations   13,932     14,643  
Long-term deferred revenue (billed or collected)   5,603     3,914  
Other long-term obligations, less current maturities   5,151     3,190  
Long-term income tax payable   3,016     2,734  
Deferred income taxes   754     939  
Total long-term liabilities   28,456     25,420  
TOTAL LIABILITIES   149,973     167,440  
         
SHAREHOLDERS' EQUITY:        
Common stock   51,347     48,960  
Additional paid-in capital   35,351     32,693  
Retained earnings   117,276     132,771  
Treasury stock, at cost   (9 )   (9 )
Accumulated other comprehensive loss   (2,898 )   (2,376 )
TOTAL SHAREHOLDERS' EQUITY   201,067     212,039  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 351,040     $ 379,479  

Daktronics, Inc. and Subsidiaries Consolidated Statements of Cash Flows(in thousands)(unaudited)
    Year Ended
    April 30,2016   May 2,2015
    (unaudited)    
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income   $ 2,061     $ 20,882  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation   16,561     14,764  
Amortization   295     204  
Amortization of premium/discount on marketable securities   87     168  
Gain on sale of property and equipment   (71 )   (1,207 )
Share-based compensation   2,958     3,038  
Excess tax benefits from share-based compensation   (3 )   (38 )
Gain on sale of equity investee   (119 )    
Provision for doubtful accounts   481     (222 )
Deferred income taxes, net   911     2,146  
Change in operating assets and liabilities   (9,886 )   13,433  
Net cash provided by operating activities   13,275     53,168  
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of property and equipment   (17,056 )   (21,837 )
Proceeds from sales of property, equipment and other assets   152     4,037  
Purchases of marketable securities   (21,286 )   (15,653 )
Proceeds from sales or maturities of marketable securities   21,862     15,532  
Proceeds from sale of equity method investment   377      
Acquisitions, net of cash acquired   (7,867 )   (6,306 )
Net cash used in investing activities   (23,818 )   (24,227 )
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Payments on notes payable   (38 )   (81 )
Proceeds from exercise of stock options   610     2,513  
Excess tax benefits from share-based compensation   3     38  
Principal payments on long-term obligations   (467 )   (1,163 )
Dividends paid   (17,556 )   (17,377 )
Net cash used in financing activities   (17,448 )   (16,070 )
         
EFFECT OF EXCHANGE RATE CHANGES ON CASH   (965 )   (641 )
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (28,956 )   12,230  
         
CASH AND CASH EQUIVALENTS:        
Beginning of period   57,284     45,054  
End of period   $ 28,328     $ 57,284  

Daktronics, Inc. and Subsidiaries Net Sales and Orders by Business Unit(in thousands)(unaudited)
  Three Months Ended   Twelve Months Ended
  April 30,2016   May 2,2015   DollarChange   PercentChange   April 30,2016   May 2,2015   DollarChange   PercentChange
Net sales:                              
Commercial $ 35,600     $ 44,321     $ (8,721 )   (19.7 )%   $ 148,261     $ 165,793     $ (17,532 )   (10.6 )%
Live Events 55,401     60,066     (4,665 )   (7.8 )%   205,151     231,877     (26,726 )   (11.5 )%
High School Park andRecreation 15,883     12,532     3,351     26.7 %   70,035     67,657     2,378     3.5 %
Transportation 13,490     13,526     (36 )   (0.3 )%   52,249     48,333     3,916     8.1 %
International 18,089     27,641     (9,552 )   (34.6 )%   94,472     102,282     (7,810 )   (7.6 )%
  $ 138,463     $ 158,086     $ (19,623 )   (12.4 )%   $ 570,168     $ 615,942     $ (45,774 )   (7.4 )%
Orders:                              
Commercial $ 40,742     $ 44,606     $ (3,864 )   (8.7 )%   $ 135,824     $ 170,209     $ (34,385 )   (20.2 )%
Live Events 52,295     76,775     (24,480 )   (31.9 )%   220,377     226,354     (5,977 )   (2.6 )%
High School Park andRecreation 20,925     14,494     6,431     44.4 %   76,485     69,188     7,297     10.5 %
Transportation 14,099     13,860     239     1.7 %   56,834     50,845     5,989     11.8 %
International 15,161     46,344     (31,183 )   (67.3 )%   71,266     114,977     (43,711 )   (38.0 )%
  $ 143,222     $ 196,079     $ (52,857 )   (27.0 )%   $ 560,786     $ 631,573     $ (70,787 )   (11.2 )%

Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow(in thousands)(unaudited)
  Twelve Months Ended
  April 30,2016   May 2,2015
Net cash provided by operating activities $ 13,275     $ 53,168  
Purchases of property and equipment (17,056 )   (21,837 )
Proceeds from sales of property, equipment and other assets 152     4,037  
Free cash flow $ (3,629 )   $ 35,368  
 

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.
For more information contact:INVESTOR RELATIONS:Sheila Anderson, Chief Financial Officer(605) 692-0200Investor@daktronics.com

Primary Logo