BROOKINGS, S.D., Feb. 21, 2017 (GLOBE NEWSWIRE) -- Daktronics, Inc. (NASDAQ:DAKT) today reported fiscal 2017 third quarter net sales of $115.7 million, operating loss of $6.9 million, and net loss of $5.1 million, or $0.12 per diluted share, compared to net sales of $123.8 million, operating loss of $5.5 million, and net loss of $2.0 million, or $0.04 per diluted share, for the third quarter of fiscal 2016.  Fiscal 2017 third quarter orders were $143.3 million, compared to $116.9 million for the third quarter of fiscal 2016.  Backlog at the end of the fiscal 2017 third quarter was $170 million, compared with a backlog of $176 million a year earlier and $142 million at the end of the second quarter of fiscal 2017. 

Net sales, operating income, net income, and earnings per share for the nine months ended January 28, 2017, were $442.9 million, $13.7 million, $9.4 million, and $0.21 per diluted share, respectively.  This compares to $431.7 million, $6.2 million, $5.0 million, and $0.11 per diluted share, respectively, for the same period in fiscal 2016. 

Cash flow provided by operating activities in the first nine months of fiscal 2017 was $45.4 million, compared with cash provided by operating activities of $2.5 million in the same period last year.  Free cash flow, defined as cash provided from or used in operating activities less net investment in property and equipment, was a positive $38.8 million for the first nine months of fiscal 2017, as compared to a negative free cash flow of $10.8 million for the same period of fiscal 2016.  Net investment in property and equipment was $6.5 million for the first nine months of fiscal 2017, as compared to $13.3 million for the first nine months of fiscal 2016. We repurchased approximately 0.3 million shares of common stock at an average price of $6.42 per share for a total use of cash of $1.8 million during the first nine months of fiscal 2017.  Cash, restricted cash, and marketable securities at the end of the third quarter of fiscal 2017 were $76.6 million, which compares to $56.3 million at the end of the third quarter of fiscal 2016 and $53.2 million at the end of fiscal 2016.  

Orders for the third quarter of fiscal 2017 increased 22.6 percent as compared to the third quarter of fiscal 2016.  Orders increased in the International, Live Events, Transportation and Commercial business units and decreased in the High School Park and Recreation business unit.  The timing of orders for large projects vary according to the needs of the customer.  That was the case in this quarter as large project order timing was the primary cause of the increase in order volume quarter over quarter.  International orders increased because of spectacular niche project awards in Europe, transportation type orders in the Middle East and sports stadium project awards in Australia. Transportation orders increased due to the award of a multi-million dollar project for an active traffic management system.  Live Events orders increased due to an increase in minor league baseball stadium projects, and timing of project awards in college and university venues and professional sport stadium venue projects for baseball and football this year.  Commercial orders increases are attributable to the digital billboard niche and on-premise niche offset by a decline in spectacular niche awards as compared to last year's third quarter.  High School Park and Recreation orders decreased during the quarter because there were fewer large sports video projects awarded during the third quarter of fiscal 2017 compared to the third quarter of fiscal 2016.

Net sales decreased by 6.5 percent in the third quarter of fiscal 2017 as compared to the third quarter of fiscal 2016.  Commercial and High School Park and Recreation business units sales increased quarter over quarter as a result of large project orders that were available for delivery during the third quarter of fiscal 2017.  Live Events, Transportation and International business unit sales all decreased quarter over quarter primarily due to lower customer delivery needs during the quarter this year as compared to last year.

Gross profit percentage for the quarter increased as compared to last year due to a combination of lower warranty charges, lower production costs, and sales mix.

Operating expenses increased by 9.7 percent in the third quarter of fiscal 2017 as compared to the third quarter of fiscal 2016.  The increase in selling expense was related to the addition of a full quarter of expenses from ADFLOW, the company we acquired late in fiscal 2016.  General and administrative expense increased in personnel expenses and professional fees.  Product development expenses increased primarily for personnel related expenses.

Operating loss as a percent of sales for the quarter increased to 6.0 percent as compared to the third quarter of fiscal 2016 operating loss of 4.5 percent.

Net loss in the third quarter of fiscal year 2016 was positively impacted by a $2.0 million tax benefit resulting from the retroactive United States reinstatement of the research and development credit.  In fiscal 2017, this benefit is being recognized on a quarterly basis.

Reece Kurtenbach, chairman, president and chief executive officer stated, "We are having a successful year through the third quarter.  Our order volume has increased year over year.  Some significant awards during the third quarter of fiscal 2017 included Nevada Department of Transportation's Project NEON, University of Wisconsin, London's Piccadilly Circus, and LA Memorial Coliseum.  This demonstrates the strength of our broad solution offerings and value offered to customers in our global markets.  While our Live Events orders are down year over year, our overall win ratio remained consistent indicating the market had lighter activity during fiscal 2017.  We expect Live Events activity to increase in the coming quarters.  Our third quarter is historically lighter for sales and profits due to the seasonality of our sports business, construction cycles, and the decrease in production days due to holidays.  This trend continued which resulted in lower sales and an operating loss for the quarter; however, we were pleased that our gross margins improved.  On a year-to-date basis, our operating profit has improved."

OutlookKurtenbach added, "We remain confident in our ability to profitability capitalize on global market growth opportunities.  Our value statement sets us apart from others and meets our diverse customers' needs across all business units.  The pipeline of order opportunities remains strong. We are optimistic about our long-term growth as we see increasing activity and interest in the worldwide marketplace for digital display technology.  To capitalize on this opportunity, we are increasing the velocity in product development.  While these efforts will increase development expenses, we believe it's necessary to drive forward exceptional solutions to capture global market share and deliver value to our customers."

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 2016 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   Nine Months Ended
    January 28,  2017   January 30,  2016   January 28,  2017   January 30,  2016
                 
Net sales   $ 115,719     $ 123,816     $ 442,857     $ 431,705  
Cost of goods sold   92,403     101,787     336,166     338,662  
Gross profit   23,316     22,029     106,691     93,043  
                 
Operating expenses:                
Selling expense   14,678     13,784     45,828     42,873  
General and administrative   8,599     7,908     26,007     24,194  
Product design and development   6,973     5,883     21,142     19,826  
    30,250     27,575     92,977     86,893  
Operating (loss) income   (6,934 )   (5,546 )   13,714     6,150  
                 
Nonoperating income (expense):                
Interest income   183     230     559     794  
Interest expense   (56 )   (113 )   (174 )   (203 )
Other (expense) income, net   (305 )   7     (250 )   (667 )
                 
(Loss) income before income taxes     (7,112 )   (5,422 )   13,849     6,074  
Income tax (benefit) expense   (1,985 )   (3,469 )   4,416     1,083  
Net (loss) income   $ (5,127 )   $ (1,953 )   $ 9,433     $ 4,991  
                 
Weighted average shares outstanding:                
Basic   44,102     44,021     44,071     43,933  
Diluted   44,102     44,021     44,206     44,357  
                 
Earnings per share:                
Basic   $ (0.12 )   $ (0.04 )   $ 0.21     $ 0.11  
Diluted   $ (0.12 )   $ (0.04 )   $ 0.21     $ 0.11  
                 
Cash dividends declared per share   $ 0.07     $ 0.10     $ 0.24     $ 0.30  
                                 

 
Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets(in thousands)
 
  January 28,  2017   April 30,  2016
  (unaudited)    
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $ 48,377     $ 28,328  
Restricted cash 206     198  
Marketable securities 28,034     24,672  
Accounts receivable, net 71,637     77,554  
Inventories, net 61,922     69,827  
Costs and estimated earnings in excess of billings   33,204     30,200  
Current maturities of long-term receivables 2,229     3,172  
Prepaid expenses and other assets 5,968     6,468  
Income tax receivables 255     4,812  
Total current assets 251,832     245,231  
       
Long-term receivables, less current maturities 2,876     3,866  
Goodwill 7,866     8,116  
Intangibles, net 5,334     7,721  
Investment in affiliates and other assets 3,570     2,414  
Deferred income taxes 9,677     9,437  
  29,323     31,554  
PROPERTY AND EQUIPMENT:      
Land 2,093     2,155  
Buildings 65,219     65,247  
Machinery and equipment 83,508     82,973  
Office furniture and equipment 5,578     14,746  
Computer software and hardware 50,642     48,917  
Equipment held for rental 374     374  
Demonstration equipment 7,770     8,026  
Transportation equipment 6,863     6,596  
  222,047     229,034  
Less accumulated depreciation 155,096     155,871  
  66,951     73,163  
TOTAL ASSETS $ 348,106     $ 349,948  
       

 
Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (continued)(in thousands)
 
  January 28,  2017   April 30,  2016
  (unaudited)    
LIABILITIES AND SHAREHOLDERS' EQUITY      
CURRENT LIABILITIES:      
Accounts payable 38,688     43,441  
Accrued expenses 25,560     23,532  
Warranty obligations 14,847     16,564  
Billings in excess of costs and estimated earnings 12,080     10,361  
Customer deposits (billed or collected) 14,483     16,012  
Deferred revenue (billed or collected) 12,282     10,712  
Current portion of other long-term obligations 453     585  
Income taxes payable 1,788     310  
Total current liabilities 120,181     121,517  
       
Long-term warranty obligations 14,640     13,932  
Long-term deferred revenue (billed or collected) 5,424     5,603  
Other long-term obligations, less current maturities   4,099     4,059  
Long-term income tax payable 3,063     3,016  
Deferred income taxes 985     754  
Total long-term liabilities 28,211     27,364  
TOTAL LIABILITIES 148,392     148,881  
       
SHAREHOLDERS' EQUITY:      
Common stock 52,530     51,347  
Additional paid-in capital 37,294     35,351  
Retained earnings 116,143     117,276  
Treasury stock, at cost (1,834 )   (9 )
Accumulated other comprehensive loss (4,419 )   (2,898 )
TOTAL SHAREHOLDERS' EQUITY 199,714     201,067  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 348,106     $ 349,948  
       

 
Daktronics, Inc. and Subsidiaries Consolidated Statements of Cash Flows(in thousands)(unaudited)
 
    Nine Months Ended
    January 28,  2017   January 30,  2016
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income   $ 9,433     $ 4,991  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:          
Depreciation and amortization   13,941     12,562  
Impairment of intangible assets   830      
Loss (gain) on sale of property, equipment and other assets   23     (50 )
Share-based compensation   2,204     2,244  
Gain on sale of equity investee       (119 )
Provision for doubtful accounts   898     (110 )
Deferred income taxes, net   (286 )   860  
Change in operating assets and liabilities   18,336     (17,878 )
  Net cash provided by operating activities   45,379     2,500  
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of property and equipment   (6,709 )   (13,389 )
Proceeds from sale of property, equipment and other assets   166     111  
Purchases of marketable securities   (18,098 )   (18,273 )
Proceeds from sales or maturities of marketable securities   14,594     19,069  
Acquisitions, net of cash acquired   (1,374 )   (2,183 )
Proceeds from sale of equity method investment       377  
  Net cash used in investing activities   (11,421 )   (14,288 )
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Payments on notes payable   (8 )   (33 )
Proceeds from exercise of stock options   343     610  
Principal payments on long-term obligations   (912 )   (15 )
Dividends paid   (10,566 )   (13,158 )
Payments for common shares repurchased   (1,825 )    
Tax payments related to RSU issuances   (261 )   (303 )
  Net cash used in financing activities   (13,229 )   (12,899 )
         
EFFECT OF EXCHANGE RATE CHANGES ON CASH   (680 )   (920 )
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   20,049     (25,607 )
         
CASH AND CASH EQUIVALENTS:        
Beginning of period   28,328     57,284  
End of period   $ 48,377     $ 31,677  
         

 
Daktronics, Inc. and Subsidiaries Net Sales and Orders by Business Unit(in thousands)(unaudited)
 
  Three Months Ended   Nine Months Ended
  January 28,  2017   January 30,  2016    Dollar Change    Percent Change   January 28,  2017   January 30,  2016    Dollar Change    Percent Change
Net Sales:                              
Commercial $ 36,165     $ 29,385     $ 6,780     23.1 %   $ 112,342     $ 112,661     $ (319 )   (0.3 )%
Live Events 41,036     51,067     $   (10,031 )      (19.6 )%   157,032     149,750     $ 7,282     4.9 %
High School Park and Recreation 12,653     10,940     $ 1,713     15.7 %   68,977     54,152     $ 14,825     27.4 %
Transportation 9,130     11,698     $ (2,568 )   (22.0 )%   39,517     38,759     $ 758     2.0 %
International 16,735     20,726     $ (3,991 )   (19.3 )%   64,989     76,383     $   (11,394 )     (14.9 )%
  $ 115,719     $ 123,816     $ (8,097 )   (6.5 )%   $ 442,857     $ 431,705     $ 11,152     2.6 %
Orders:                              
Commercial $ 32,595     $ 29,922     $ 2,673     8.9 %   $ 114,326     $ 95,082     $ 19,244     20.2 %
Live Events 51,590     43,075     $ 8,515     19.8 %   135,520     168,082     $ (32,562 )   (19.4 )%
High School Park and Recreation   14,178     15,131     $ (953 )   (6.3 )%   61,055     55,560     $ 5,495     9.9 %
Transportation 19,621     12,401     $ 7,220     58.2 %   46,290     42,735     $ 3,555     8.3 %
International 25,329     16,368     $ 8,961     54.7 %   78,164     56,105     $ 22,059     39.3 %
  $ 143,313     $ 116,897     $ 26,416     22.6 %   $ 435,355     $ 417,564     $ 17,791     4.3 %
                                                           

 
Reconciliation of Free Cash Flow*(in thousands)(unaudited)
  Nine Months Ended
  January 28,  2017   January 30,  2016
Net cash provided by operating activities $ 45,379     $ 2,500  
Purchases of property and equipment (6,709 )   (13,389 )
Proceeds from sales of property and equipment   166     111  
Free cash flow $ 38,836     $ (10,778 )

*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

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