EX-99.1 2 dakt-20170429ex991.htm EXHIBIT 99.1 Exhibit


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Daktronics, Inc. Announces Fourth Quarter and Fiscal 2017 Results

Brookings, S.D. – May 31, 2017 - Daktronics, Inc. (NASDAQ - DAKT) today reported fiscal 2017 fourth quarter net sales of $143.7 million, operating income of $1.7 million, and net income of $0.9 million, or $0.02 per diluted share, compared to net sales of $138.5 million, operating loss of $3.7 million, and a net loss of $2.9 million, or $0.07 per diluted share, for the fourth quarter of fiscal 2016.  Fiscal 2017 fourth quarter orders were $178.1 million compared to $143.2 million for the fourth quarter of fiscal 2016. Backlog at the end of the fiscal 2017 fourth quarter was $203 million, compared to a backlog of $181 million a year earlier and $170 million at the end of the third quarter of fiscal 2017.

Net sales, operating income, net income, and earnings per share for the fiscal year ended April 29, 2017, were $586.5 million, $15.4 million, $10.3 million and $0.23 per diluted share, respectively. This compares to $570.2 million, $2.5 million, $2.1 million and $0.05 per diluted share, respectively, for fiscal 2016. Fiscal 2017 orders were $613.5 million compared to $560.8 million for fiscal 2016.

Cash flow provided by operating activities for the fiscal year ended April 29, 2017 was $39.6 million, compared to $13.6 million in fiscal 2016. Free cash flow, defined as cash provided from or used in operating activities less net investment in property and equipment, was a positive $31.1 million for fiscal 2017, as compared to a negative free cash flow of $3.3 million for fiscal 2016. Net investment in property and equipment was $8.5 million for fiscal 2017, as compared to $16.9 million for 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 fiscal 2017. Cash, restricted cash, and marketable securities at the end of the fourth quarter of fiscal 2017 were $65.6 million, which compares to $53.2 million at the end of the fourth quarter of fiscal 2016.

Fourth Quarter Fiscal 2017 Consolidated Financial Results
Orders for the fourth quarter of fiscal 2017 increased by 24.4 percent as compared to the fourth quarter of fiscal 2016. Orders increased in the Live Events, High School Park and Recreation, and Transportation business units, decreased in the Commercial business unit, and remained relatively flat in the International business unit. The timing of orders for large projects varies according to the needs of the customer, which was the primary cause of the increase in order volume quarter over quarter.

Net sales for the fourth quarter of fiscal 2017 increased by 3.8 percent as compared to the fourth quarter of fiscal 2016. Net sales increased in the Live Events and International business units, decreased in the High School Park and Recreation business, and remained relatively flat in the Commercial and Transportation business units quarter over quarter. Live Events net sales increased as a result of work completed on National Hockey League and other minor league stadiums. International net sales increased due to increased sales of sports and spectacular projects. High School Park and Recreation net sales decreased due to order timing.

Operating income as a percentage of sales increased to 1.2 percent for the fourth quarter of fiscal 2017 as compared to an operating loss as a percentage of sales of 2.6 percent for the fourth quarter of fiscal 2016.

Fiscal 2017 Consolidated Financial Results
Orders increased in fiscal 2017 by $52.7 million as compared to fiscal 2016. Orders increased in all business units fiscal year over fiscal year. International orders increase was primarily due to improved global market conditions impacting orders in our sports and spectacular projects and Out-of-Home application business. Commercial orders increased due to the addition of ADFLOW in our on-premise niche related to in-store media solutions and increases due to the timing of large custom projects in our spectacular niche. High School Park and Recreation orders increase was primarily due to overall strong market demand, led by video in sporting applications. Transportation orders increase was primarily due to the variability caused by large order timing and increased state procurement project activity. During fiscal 2017, we had an award of a multimillion-dollar project for an active traffic management system with no same sized projects the prior year. Live Events orders remained strong.
 
Net sales for fiscal 2017 increased 2.9 percent as compared to fiscal 2016. Net sales increased in the Live Events and High School Park and Recreation business units, decreased in the International business units, and remained relatively flat in the Commercial and Transportation business units. Live Events net sales increase was primarily the result of work completed on stadium projects mainly in the National Football League. High School Park and Recreation net sales increase was primarily due to increased video project sizes with larger average order size. International net sales decrease was due to the timing of converting orders to sales.

Annual operating income as a percentage of sales increased to 2.6 percent for fiscal 2017 as compared to 0.4 percent for fiscal 2016. The operating income percentage increase is primarily attributable to lower warranty costs and improved project gross margins.

Reece Kurtenbach, chairman, president and chief executive officer, stated, "Fiscal 2017 was a positive year for Daktronics. We realized an increase in order volume, sales, and profit. Our financial improvement is attributable to a number of factors. The global economic conditions improved over the year prompting more projects to move forward, which we benefited from as our solutions provide value to a broad customer base. We were successful in winning a number of projects for high-profile locations, for larger sized sports video projects, and standardized solutions for businesses and schools. During the year, we increased sales by integrating ADFLOW solutions into our portfolio. ADFLOW is the company we acquired late in fiscal 2016.

During fiscal 2017, we invested in developing additional value-based solutions for the market from improvements in our control systems, indoor and outdoor video product line selections, and service delivery options. Our manufacturing operations continued to increase productivity through automation and other process improvements. We continued to focus on quality and reliability of our product. Our warranty expense as a percentage of sales was 2.5 percent for fiscal 2017 compared to 4.1 percent for fiscal 2016."

Outlook
Kurtenbach continued, "As we enter into fiscal 2018, we see the video display business continuing to expand due to market adoption of video in various applications, and expansion of the market due to lowered price points as compared to past years. While competition remains strong across our markets, we expect continued success in growing our business over the long-term. To deliver value to our customers and serve the markets expectations, we plan to continue to increase the level of investments in new or enhanced customer solutions during fiscal 2018. This will improve our overall product line-up creating opportunities to capture a broader customer base."

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 be 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 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 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.





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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
 
Twelve Months Ended
 
April 29,
2017
 
April 30,
2016
 
April 29,
2017
 
April 30,
2016
 
 
 
 
 
 
 
 
Net sales
$
143,682

 
$
138,463

 
$
586,539

 
$
570,168

Cost of goods sold
109,958

 
110,488

 
446,124

 
449,149

Gross profit
33,724

 
27,975

 
140,415

 
121,019

 
 
 
 
 
 
 
 
Operating expenses:
 

 
 

 
 

 
 

Selling expense
15,859

 
15,938

 
61,687

 
58,812

General and administrative
8,219

 
8,608

 
34,226

 
32,801

Product design and development
7,939

 
7,085

 
29,081

 
26,911

 
32,017

 
31,631

 
124,994

 
118,524

Operating income (loss)
1,707

 
(3,656
)
 
15,421

 
2,495

 
 
 
 
 
 
 
 
Nonoperating income (expense):
 

 
 

 
 

 
 

Interest income
192

 
194

 
751

 
987

Interest expense
(56
)
 
(26
)
 
(230
)
 
(228
)
Other (expense) income, net
(104
)
 
539

 
(354
)
 
(128
)
 
 
 
 
 
 
 
 
Income (loss) before income taxes
1,739

 
(2,949
)
 
15,588

 
3,126

Income tax expense (benefit)
830

 
(19
)
 
5,246

 
1,065

Net income (loss)
$
909

 
$
(2,930
)
 
$
10,342

 
$
2,061

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 

 
 

 
 

 
 

Basic
44,184

 
44,094

 
44,114

 
43,990

Diluted
44,360

 
44,094

 
44,303

 
44,456

 
 
 
 
 
 
 
 
Earnings per share:
 

 
 

 
 

 
 

Basic
$
0.02

 
$
(0.07
)
 
$
0.23

 
$
0.05

Diluted
$
0.02

 
$
(0.07
)
 
$
0.23

 
$
0.05

 
 
 
 
 
 
 
 
Cash dividends declared per share
$
0.07

 
$
0.10

 
$
0.31

 
$
0.40
















Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
(unaudited)

 
April 29,
2017
 
April 30,
2016
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
32,623

 
$
28,328

Restricted cash
216

 
198

Marketable securities
32,713

 
24,672

Accounts receivable, net
78,846

 
77,554

Inventories, net
66,486

 
69,827

Costs and estimated earnings in excess of billings
36,403

 
30,200

Current maturities of long-term receivables
2,274

 
3,172

Prepaid expenses and other assets
7,553

 
6,468

Income tax receivables
611

 
4,812

Total current assets
257,725

 
245,231

 
 
 
 
Long-term receivables, less current maturities
2,616

 
3,866

Goodwill
7,812

 
8,116

Intangibles, net
4,705

 
7,721

Investment in affiliates and other assets
4,534

 
2,414

Deferred income taxes
11,292

 
9,437

Total other assets
30,959

 
31,554

PROPERTY AND EQUIPMENT:
 

 
 

Land
2,099

 
2,155

Buildings
65,935

 
65,247

Machinery and equipment
84,189

 
82,973

Office furniture and equipment
5,604

 
14,746

Computer software and hardware
51,523

 
48,917

Equipment held for rental
374

 
374

Demonstration equipment
7,109

 
8,026

Transportation equipment
7,108

 
6,596

 
223,941

 
229,034

Less accumulated depreciation
157,192

 
155,871

Total property and equipment
66,749

 
73,163

TOTAL ASSETS
$
355,433

 
$
349,948

 
 
 
 





Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
(unaudited)
 
April 29,
2017
 
April 30,
2016
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable
51,499

 
43,441

Accrued expenses
25,033

 
23,532

Warranty obligations
13,578

 
16,564

Billings in excess of costs and estimated earnings
10,897

 
10,361

Customer deposits (billed or collected)
14,498

 
16,012

Deferred revenue (billed or collected)
12,137

 
10,712

Current portion of other long-term obligations
1,409

 
585

Income taxes payable
1,544

 
310

Total current liabilities
130,595

 
121,517

 
 
 
 
Long-term warranty obligations
14,321

 
13,932

Long-term deferred revenue (billed or collected)
5,434

 
5,603

Other long-term obligations, less current maturities
2,848

 
4,059

Long-term income tax payable
3,113

 
3,016

Deferred income taxes
836

 
754

Total long-term liabilities
26,552

 
27,364

TOTAL LIABILITIES
157,147

 
148,881

 
 
 
 
SHAREHOLDERS' EQUITY:
 

 
 

Common stock
52,530

 
51,347

Additional paid-in capital
38,004

 
35,351

Retained earnings
113,967

 
117,276

Treasury stock, at cost
(1,834
)
 
(9
)
Accumulated other comprehensive loss
(4,381
)
 
(2,898
)
TOTAL SHAREHOLDERS' EQUITY
198,286

 
201,067

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
355,433

 
$
349,948

 
 
 
 


 




Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
Year Ended
 
 
April 29,
2017
 
April 30,
2016
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Net income
 
$
10,342

 
$
2,061

Adjustments to reconcile net income to net cash provided by operating activities:
 
 

 
 

Depreciation and amortization
 
18,562

 
16,943

Impairment of intangible assets
 
830

 
—

Loss (gain) on sale of property, equipment and other assets
 
36

 
(71
)
Share-based compensation
 
2,914

 
2,958

Gain on sale of equity investee
 
—

 
(119
)
Provision for doubtful accounts
 
1,426

 
481

Deferred income taxes, net
 
(2,043
)
 
911

Change in operating assets and liabilities
 
7,506

 
(9,583
)
Net cash provided by operating activities
 
39,573

 
13,581

 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 

 
 

Purchases of property and equipment
 
(8,686
)
 
(17,056
)
Proceeds from sales of property, equipment and other assets
 
199

 
152

Purchases of marketable securities
 
(24,159
)
 
(21,286
)
Proceeds from sales or maturities of marketable securities
 
15,928

 
21,862

Proceeds from sale of equity method investment
 
—

 
377

Acquisitions, net of cash acquired
 
(1,646
)
 
(7,867
)
Net cash used in investing activities
 
(18,364
)
 
(23,818
)
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 

 
 

Payments on notes payable
 
(8
)
 
(38
)
Principal payments on long-term obligations
 
(921
)
 
(467
)
Dividends paid
 
(13,651
)
 
(17,556
)
Proceeds from exercise of stock options
 
343

 
610

Payments for common shares repurchased
 
(1,825
)
 
—

Tax payments related to RSU issuances
 
(261
)
 
(303
)
Net cash used in financing activities
 
(16,323
)
 
(17,754
)
 
 
 
 
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
 
(591
)
 
(965
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
 
4,295

 
(28,956
)
 
 
 
 
 
CASH AND CASH EQUIVALENTS:
 
 

 
 

Beginning of period
 
28,328

 
57,284

End of period
 
$
32,623

 
$
28,328

 
 
 
 
 



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Daktronics, Inc. and Subsidiaries
Net Sales and Orders by Business Unit
(in thousands)
(unaudited)
 
Three Months Ended
 
Twelve Months Ended
 
April 29,
2017
 
April 30,
2016
 
Dollar Change
 
Percent Change
 
April 29,
2017
 
April 30,
2016
 
Dollar Change
 
Percent Change
Net sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
35,731

 
$
35,600

 
$
131

 
0.4
 %
 
$
148,073

 
$
148,261

 
$
(188
)
 
(0.1
)%
Live Events
56,950

 
55,402

 
1,548

 
2.8
 %
 
213,982

 
205,151

 
8,831

 
4.3
 %
High School Park and Recreation
13,821

 
15,883

 
(2,062
)
 
(13.0
)%
 
82,798

 
70,035

 
12,763

 
18.2
 %
Transportation
12,909

 
13,490

 
(581
)
 
(4.3
)%
 
52,426

 
52,249

 
177

 
0.3
 %
International
24,271

 
18,088

 
6,183

 
34.2
 %
 
89,260

 
94,472

 
(5,212
)
 
(5.5
)%
 
$
143,682

 
$
138,463

 
$
5,219

 
3.8
 %
 
$
586,539

 
$
570,168

 
$
16,371

 
2.9
 %
Orders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
37,236

 
$
40,742

 
$
(3,506
)
 
(8.6
)%
 
$
151,562

 
$
135,824

 
$
15,738

 
11.6
 %
Live Events
87,445

 
52,295

 
35,150

 
67.2
 %
 
222,965

 
220,377

 
2,588

 
1.2
 %
High School Park and Recreation
22,550

 
20,925

 
1,625

 
7.8
 %
 
83,605

 
76,485

 
7,120

 
9.3
 %
Transportation
16,348

 
14,099

 
2,249

 
16.0
 %
 
62,638

 
56,834

 
5,804

 
10.2
 %
International
14,570

 
15,161

 
(591
)
 
(3.9
)%
 
92,734

 
71,266

 
21,468

 
30.1
 %
 
$
178,149

 
$
143,222

 
$
34,927

 
24.4
 %
 
$
613,504

 
$
560,786

 
$
52,718

 
9.4
 %



Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow
(in thousands)
(unaudited)
 
Twelve Months Ended
 
April 29,
2017
 
April 30,
2016
Net cash provided by operating activities
$
39,573

 
$
13,581

Purchases of property and equipment
(8,686
)
 
(17,056
)
Proceeds from sales of property, equipment and other assets
199

 
152

Free cash flow
$
31,086

 
$
(3,323
)

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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