BROOKINGS, S.D., Aug. 22, 2017 (GLOBE NEWSWIRE) -- Daktronics, Inc. (NASDAQ:DAKT) today reported fiscal 2018 first quarter net sales of $172.7 million, operating income of $11.7 million, and net income of $8.4 million, or $0.19 per diluted share, compared to net sales of $157.1 million, operating income of $8.0 million, and net income of $5.5 million, or $0.13 per diluted share, for the first quarter of fiscal 2017.  Fiscal 2018 first quarter orders were $153.1 million, compared to $175.2 million for the first quarter of fiscal 2017.  Backlog at the end of the fiscal 2018 first quarter was $184 million, compared to a backlog of $198 million a year earlier and $203 million at the end of the fourth quarter of fiscal 2017. 

Cash used in operating activities in the first three months of fiscal 2018 was $4.9 million, compared with cash provided by operating activities of $6.6 million in the same period last year.  Cash flow from operating activities fluctuated due to a rise in accounts receivable corresponding with the increase in net sales.  Free cash flow, defined as cash provided from or used in operating activities less net investment in property and equipment, was a negative $8.9 million for the first three months of fiscal 2018, as compared to a positive free cash flow of $4.5 million for the same period of fiscal 2017.  Net investment in property and equipment was $4.0 million for the first three months of fiscal 2018, as compared to $2.1 million for the first three months of fiscal 2017.  Cash, restricted cash, and marketable securities at the end of the first quarter of fiscal 2018 were $52.1 million, which compares to $50.2 million at the end of the first quarter of fiscal 2017 and $65.6 million at the end of fiscal 2017.

Orders for the first quarter of fiscal 2018 decreased 12.6 percent as compared to the first quarter of fiscal 2017.  Orders increased in the Live Events and High School Park and Recreation business units and decreased in the Commercial, Transportation, and International business units.  The timing of orders for large projects varies according to the needs of the customer, which was the primary cause of the decrease in order volume.

Net sales increased by 9.9 percent in the first quarter of fiscal 2018 as compared to the first quarter of fiscal 2017.  Net sales increased in the Live Events and Transportation business units, decreased in the Commercial and International business units, and remained relatively flat in the High School Park and Recreation business unit.  The increase in Live Events business unit was due to continued demand for upgraded or new solutions throughout venues for arenas, professional sports, and colleges and universities.  Transportation net sales increase was primarily due to higher demand from state transportation authorities during the first quarter of fiscal 2018 as compared to the same period last year.  The decrease in Commercial was primarily due to lower shipments of digital billboards.  The decline in net sales in the International business unit was primarily due to order timing differences from quarter to quarter.

Gross profit percentage for the quarter increased 0.9 percent as compared to last year primarily due to improved performance on large projects as compared to original estimates.

Operating expenses increased by 5.9 percent in the first quarter of fiscal 2018 as compared to the first quarter of fiscal 2017 primarily due to increased product development activities.

Operating income as a percent of sales for the quarter increased to 6.8 percent as compared to the first quarter of fiscal 2017 operating income of 5.1 percent.

Reece Kurtenbach, chairman, president and chief executive officer stated, "Our first quarter is historically one of the busiest quarters as we produce, deliver, and install for outdoor sports venues and other outdoor systems during the summer construction season.  This quarter's sales were derived from progress or completion on projects for new or renovated NFL stadiums including the Mercedes Benz Stadium, Ford Field, and Heinz Field; and for college sports stadiums at the University of Wisconsin, Appalachian State, and St. Louis University to name a few."

OutlookKurtenbach added, "We are starting our second quarter with a strong backlog and pipeline of order opportunities.  While order volume can be lumpy due to a variety of factors, we continue to see the video display business expanding.  We expect continued success in managing the business for long-term profitable growth.  We are focused on enhancing our overall product line-up to create opportunities to capture a broader customer base.  To deliver value to our customers and serve the markets' expectations, we plan to increase the level of expenditures for new or enhanced customer solutions as compared to prior years during fiscal 2018."

Webcast InformationThe company will host a conference call and webcast to discuss its financial results today at 10:00 a.m. (CDT).  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, 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 2017 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 Anderson, Chief Financial Officer    
(605) 692-0200    
Investor@daktronics.com    
     

Daktronics, Inc. and Subsidiaries Consolidated Statements of Operations(in thousands, except per share amounts)(unaudited)
    Three Months Ended
    July 29,  2017   July 30,  2016
         
Net sales   $ 172,728     $ 157,146  
Cost of goods sold   128,082     118,079  
Gross profit   44,646     39,067  
         
Operating expenses:        
Selling expense   14,939     15,259  
General and administrative   8,935     8,783  
Product design and development   9,047     7,043  
    32,921     31,085  
Operating income   11,725     7,982  
         
Nonoperating income (expense):        
Interest income   211     205  
Interest expense   (86 )   (42 )
Other income (expense), net   145     (94 )
         
Income before income taxes   11,995     8,051  
Income tax expense   3,566     2,512  
Net income   $ 8,429     $ 5,539  
         
Weighted average shares outstanding:        
Basic   44,244     44,079  
Diluted   44,461     44,141  
         
Earnings per share:        
Basic   $ 0.19     $ 0.13  
Diluted   $ 0.19     $ 0.13  
         
Cash dividends declared per share   $ 0.07     $ 0.07  

Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets(in thousands)  
  July 29,  2017   April 29,  2017
  (unaudited)    
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $ 26,868     $ 32,623  
Restricted cash 222     216  
Marketable securities 25,020     32,713  
Accounts receivable, net 100,867     78,846  
Inventories, net 74,412     66,486  
Costs and estimated earnings in excess of billings 46,355     36,403  
Current maturities of long-term receivables 2,011     2,274  
Prepaid expenses and other assets 6,857     7,553  
Income tax receivables 316     611  
Total current assets 282,928     257,725  
       
Long-term receivables, less current maturities 2,392     2,616  
Goodwill 8,271     7,812  
Intangibles, net 4,778     4,705  
Investment in affiliates and other assets 4,951     4,534  
Deferred income taxes 11,283     11,292  
  31,675     30,959  
PROPERTY AND EQUIPMENT:      
Land 2,132     2,099  
Buildings 66,427     65,935  
Machinery and equipment 85,198     84,189  
Office furniture and equipment 5,621     5,604  
Computer software and hardware 52,067     51,523  
Equipment held for rental 374     374  
Demonstration equipment 7,136     7,109  
Transportation equipment 7,398     7,108  
  226,353     223,941  
Less accumulated depreciation 161,060     157,192  
  65,293     66,749  
TOTAL ASSETS $ 379,896     $ 355,433  
       

Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (continued)(in thousands)
  July 29,  2017   April 29,  2017
  (unaudited)    
LIABILITIES AND SHAREHOLDERS' EQUITY      
CURRENT LIABILITIES:      
Accounts payable $ 54,505     $ 51,499  
Accrued expenses 26,555     25,033  
Warranty obligations 14,085     13,578  
Billings in excess of costs and estimated earnings 14,636     10,897  
Customer deposits (billed or collected) 18,402     14,498  
Deferred revenue (billed or collected) 13,739     12,137  
Current portion of other long-term obligations 764     1,409  
Income taxes payable 3,036     1,544  
Total current liabilities 145,722     130,595  
       
Long-term warranty obligations 15,668     14,321  
Long-term deferred revenue (billed or collected) 5,365     5,434  
Other long-term obligations 2,563     2,848  
Long-term income tax payable 3,265     3,113  
Deferred income taxes 914     836  
Total long-term liabilities 27,775     26,552  
TOTAL LIABILITIES 173,497     157,147  
       
SHAREHOLDERS' EQUITY:      
Common stock 53,561     52,530  
Additional paid-in capital 38,677     38,004  
Retained earnings 119,302     113,967  
Treasury stock, at cost (1,834 )   (1,834 )
Accumulated other comprehensive loss (3,307 )   (4,381 )
TOTAL SHAREHOLDERS' EQUITY 206,399     198,286  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 379,896     $ 355,433  
       

Daktronics, Inc. and Subsidiaries Consolidated Statements of Cash Flows(in thousands)(unaudited)
    Three Months Ended
    July 29,  2017   July 30,  2016
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income   $ 8,429     $ 5,539  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:        
Depreciation and amortization   4,460     4,600  
(Gain) loss on sale of property, equipment and other assets   (17 )   31  
Share-based compensation   672     709  
Equity in loss of affiliate   85      
Provision for doubtful accounts   14     7  
Deferred income taxes, net   30     3  
Change in operating assets and liabilities   (18,586 )   (4,291 )
   Net cash (used in) provided by operating activities   (4,913 )   6,598  
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of property and equipment   (4,092 )   (2,157 )
Proceeds from sale of property, equipment and other assets   63     64  
Purchases of marketable securities       (2,394 )
Proceeds from sales or maturities of marketable securities   7,643     6,856  
Purchases of equity investment   (607 )    
   Net cash provided by investing activities   3,007     2,369  
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Payments on notes payable       (4 )
Proceeds from exercise of stock options   211      
Principal payments on long-term obligations   (1,018 )   (896 )
Dividends paid   (3,094 )   (4,409 )
Payments for common shares repurchased       (1,825 )
   Net cash used in financing activities   (3,901 )   (7,134 )
         
EFFECT OF EXCHANGE RATE CHANGES ON CASH   52     (383 )
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (5,755 )   1,450  
         
CASH AND CASH EQUIVALENTS:        
Beginning of period   32,623     28,328  
End of period   $ 26,868     $ 29,778  
         

Daktronics, Inc. and Subsidiaries Net Sales and Orders by Business Unit(in thousands)(unaudited)
  Three Months Ended
  July 29,  2017   July 30,  2016   Dollar Change   Percent Change
Net Sales:              
  Commercial $ 32,863     $ 36,254     $ (3,391 )   (9.4 )%
  Live Events 77,612     60,633     16,979     28.0  
  High School Park and Recreation 28,479     27,617     862     3.1  
  Transportation 18,912     14,286     4,626     32.4  
  International 14,862     18,356     (3,494 )   (19.0 )
  $ 172,728     $ 157,146     $ 15,582     9.9 %
Orders:              
  Commercial $ 29,937     $ 45,068     $ (15,131 )   (33.6 )%
  Live Events 61,605     52,880     8,725     16.5  
  High School Park and Recreation 32,180     31,113     1,067     3.4  
  Transportation 9,269     11,915     (2,646 )   (22.2 )
  International 20,090     34,192     (14,102 )   (41.2 )
  $ 153,081     $ 175,168     $ (22,087 )   (12.6 )%

Reconciliation of Free Cash Flow*(in thousands)(unaudited)
  Three Months Ended
  July 29,  2017   July 30,  2016
Net cash (used in) provided by operating activities $ (4,913 )   $ 6,598  
Purchases of property and equipment (4,092 )   (2,157 )
Proceeds from sales of property and equipment 63     64  
Free cash flow $ (8,942 )   $ 4,505  

*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 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.

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