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."
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."
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.
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 firstname.lastname@example.org, 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:
Sheila Anderson, Chief Financial Officer
The following information was filed by Daktronics Inc (DAKT) on Wednesday, May 31, 2017 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.