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Daktronics Inc (DAKT) SEC Filing 8-K Material Event for the period ending Thursday, March 10, 2022

Daktronics Inc

CIK: 915779 Ticker: DAKT

Exhibit 99.1

 

 

 

ex_220469img001.jpg

 

Daktronics, Inc. Announces Third Quarter Fiscal 2022 Results

 

Brookings, S.D., March 10, 2022 (GLOBE NEWSWIRE) -- Daktronics, Inc. (NASDAQ - DAKT) today reported its results for fiscal 2022 third quarter which ended

January 29, 2022.

 

Q3 FY2022 financial highlights:

 

Net sales of $139.6 million as a result of record orders and eased pandemic related site restrictions

Operating loss of $5.7 million realized due to inflation in materials and freight costs, increased personnel spend, and a warranty charge

Record level of orders of $214.8 million

Product order backlog of $353 million(1), driven by record order volume and muted conversion to sales due to supply chain challenges

 

Reece Kurtenbach, chairman, president and chief executive officer stated, "Demand for our products and solutions were at record levels, reflecting the economic recovery from the global pandemic, the increasing adoption and use of audiovisual communication systems, and our reputation as a leading provider. We continue to navigate the parts and labor cost and availability headwinds. Sales volumes and gross profit levels were muted because of the supply chain disruptions, expediting and other efforts to react to schedule changes, and inflationary changes. To offset these cost trends, we began implementing price increases across the business for deliveries into next fiscal year."

 

Outlook

Kurtenbach added, "We expect dynamic and volatile supply chain and labor conditions to persist through the calendar year.  As the environment evolves, we plan to adjust and adapt our pricing, production schedules and capacity levels to best serve our customers and improve profitability.  Over the long-term, we believe the audiovisual industry is poised for growth.  We are actively investing in new technologies and markets to make Daktronics and our solutions the preferred choice; positioning the business for long-term growth and increasing value for our stakeholders."

 

Third Quarter and Year to Date Results

Orders for the third quarter of fiscal 2022 increased 147.2 percent as compared to the third quarter of fiscal 2021. Each business unit's order volume grew through the first nine months of fiscal 2022 reflecting the recovery from the impact of the global pandemic among our customers.

 

Net sales increased by 48.2 percent in the third quarter of fiscal 2022 as compared to the third quarter of fiscal 2021. Net sales for the nine months ended January 29, 2022 increased by 22.9 percent as compared to the same period one year ago. Sales growth was driven by increased orders. Material supply and labor shortages are creating an increase in lead times and extending the timing of converting some orders to sales in the near-term. This has contributed to a larger than typical backlog. 

 

Gross profit as a percentage of net sales was 16.0 percent for the third quarter of fiscal 2022 as compared to 25.4 percent a year earlier and 19.3 percent for the nine months ended January 29, 2022, as compared to 25.5 percent for the nine months ended a year earlier. The decline in gross profit percentage in fiscal 2022 is primarily related to the ongoing supply chain disruptions and inflationary challenges in materials, freight, and personnel related costs, the difference in sales mix between periods, a warranty charge, and other factors experienced during fiscal 2021.  Factors impacting gross profit in the third quarter of fiscal 2021 included a positive $2.1 million or 2.2 percent gross profit impact from a litigation claim reversal and adjustments to operations because of the COVID-19 pandemic. 

 

Operating expenses for the third quarter of fiscal 2022 were $28.0 million, compared to $24.2 million for the third quarter of fiscal 2021 or an increase of 15.7 percent and $82.4 million for the nine months ended January 29, 2022, as compared to $77.0 million for the same nine month period in fiscal 2021. The increases were primarily personnel related expenses. 

 

Operating loss as a percent of sales for the quarter was 4.1 percent as compared to an operating loss as a percent of sales of 0.3 percent during the third quarter of fiscal 2021 and operating income as a percentage of sales of 1.0 percent for the nine months ended January 29, 2022, as compared to 4.4 percent for the nine months ended a year prior. 

 

The effective tax rate for the third quarter of fiscal 2022 was 32.2 percent compared to 82.0 percent for the third quarter of fiscal 2021. The effective tax rate for the nine months ended January 29, 2022, was 9.4 percent compared to an effective tax rate of 21.3 percent for the same nine month period in fiscal 2021. The difference in tax rates is primarily driven by an increase in estimated permanent tax costs proportionate to a decrease in estimated pre-tax earnings in the third quarter of fiscal 2022 compared to no change in the estimated tax rate for the third quarter of fiscal 2021. Additionally, there were return-to-provision adjustments made in each respective quarter impacting the rate.

 

Cash, restricted cash and marketable securities at the end of the third quarter of fiscal 2022 were $35.8 million, which compares to $81.0 million at the end of the third quarter of fiscal 2021 and $80.4 million at the end of fiscal 2021. There were no advances under the loan portion of the line of credit compared to $15.0 million outstanding at the end of the third quarter of fiscal 2021. Free cash flow, defined as cash provided from or used in operating activities less net investment in property and equipment, was a negative $34.7 million for the first nine months of fiscal 2022, as compared to a positive free cash flow of $41.8 million for the same period in fiscal 2021. The change in cash use was created by growing operating assets for the growth of order activity and because of increased investments of capital assets for capacity, loans to affiliates and the share repurchase program. Net investment in property and equipment was $9.2 million for the first nine months of fiscal 2022, as compared to $6.5 million for the first nine months of fiscal 2021. 

 

(1) Backlog is not a measure defined by accounting principles generally accepted in the United States of America ("GAAP"), and our methodology for determining backlog may vary from the methodology used by other companies in determining their backlog amounts. For more information related to backlog, see Part I, Item 1. Business of our Annual Report on Form 10-K for the fiscal year ended May 1, 2021. 

 

 

 

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 and orders, fluctuations in margins, the introduction of new products and technology, the impact of adverse weather conditions, increased regulation and other risks described in the company's SEC filings, including its Annual Report on Form 10-K for its 2021 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.

 

-- END --

 

 

For more information contact:

   

INVESTOR RELATIONS:

   

Sheila M. Anderson, Chief Financial Officer

   

Tel (605) 692-0200

   

Investor@daktronics.com

   

 

 

 

Daktronics, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

 

   

Three Months Ended

   

Nine Months Ended

 
   

January 29,

   

January 30,

   

January 29,

   

January 30,

 
   

2022

   

2021

   

2022

   

2021

 

Net sales

  $ 139,558     $ 94,139     $ 448,767     $ 365,150  

Cost of sales

    117,250       70,198       362,007       272,134  

Gross profit

    22,308       23,941       86,760       93,016  
                                 

Operating expenses:

                               

Selling

    12,735       12,004       37,012       36,214  

General and administrative

    8,328       6,389       24,100       20,777  

Product design and development

    6,925       5,784       21,283       20,053  
      27,988       24,177       82,395       77,044  

Operating (loss)income

    (5,680 )     (236 )     4,365       15,972  
                                 

Nonoperating (expense) income:

                               

Interest income (expense), net

    56       (40 )     134       (46 )

Other (expense) income, net

    (793 )     (913 )     (2,613 )     (2,377 )
                                 

(Loss) income before income taxes

    (6,417 )     (1,189 )     1,886       13,549  

Income tax (benefit) expense

    (2,067 )     (975 )     177       2,880  

Net (loss) income

  $ (4,350 )   $ (214 )   $ 1,709     $ 10,669  
                                 

Weighted average shares outstanding:

                               

Basic

    45,223       45,064       45,263       44,908  

Diluted

    45,223       45,064       45,442       45,061  
                                 

(Loss) earnings per share:

                               

Basic

  $ (0.10 )   $ (0.00 )   $ 0.04     $ 0.24  

Diluted

  $ (0.10 )   $ (0.00 )   $ 0.04     $ 0.24  

 

 

 

Daktronics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

 

   

January 29,

   

May 1,

 
   

2022

   

2021

 
   

(unaudited)

         

ASSETS

               

CURRENT ASSETS:

               

Cash and cash equivalents

  $ 30,883     $ 77,590  

Restricted cash

    836       2,812  

Marketable securities

    4,035        

Accounts receivable, net

    96,710       67,808  

Inventories

    111,110       74,356  

Contract assets

    39,874       32,799  

Current maturities of long-term receivables

    1,550       1,462  

Prepaid expenses and other current assets

    12,903       7,445  

Income tax receivables

    2,426       731  

Total current assets

    300,327       265,003  
                 

Property and equipment, net

    58,262       58,682  

Long-term receivables, less current maturities

    7,655       1,635  

Goodwill

    8,099       8,414  

Intangibles, net

    1,579       2,083  

Investment in affiliates and other assets

    27,398       27,403  

Deferred income taxes

    11,731       11,944  

Total non-current assets

    114,724       110,161  

TOTAL ASSETS

  $ 415,051     $ 375,164  

 

 

 

Daktronics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (continued)

(in thousands)

 

   

January 29,

   

May 1,

 
   

2022

   

2021

 
   

(unaudited)

         

LIABILITIES AND SHAREHOLDERS' EQUITY

               

CURRENT LIABILITIES:

               

Accounts payable

  $ 62,835     $ 40,251  

Contract liabilities

    79,591       64,495  

Accrued expenses

    32,031       30,672  

Warranty obligations

    11,378       10,464  

Income taxes payable

    545       738  

Total current liabilities

    186,380       146,620  
                 

Long-term warranty obligations

    15,793       15,496  

Long-term contract liabilities

    10,738       10,720  

Other long-term obligations

    7,460       7,816  

Long-term income taxes payable

    478       548  

Deferred income taxes

    363       410  

Total long-term liabilities

    34,832       34,990  

TOTAL LIABILITIES

    221,212       181,610  
                 

SHAREHOLDERS' EQUITY:

               

Common stock

    61,794       60,575  

Additional paid-in capital

    47,903       46,595  

Retained earnings

    97,725       96,016  

Treasury stock, at cost

    (10,101 )     (7,297 )

Accumulated other comprehensive loss

    (3,482 )     (2,335 )

TOTAL SHAREHOLDERS' EQUITY

    193,839       193,554  

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

  $ 415,051     $ 375,164  

 

 

 

Daktronics, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

 

   

Nine Months Ended

 
   

January 29,

   

January 30,

 
   

2022

   

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net income

  $ 1,709     $ 10,669  

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

               

Depreciation and amortization

    11,544       12,848  

Gain on sale of property, equipment and other assets

    (737 )     (244 )

Share-based compensation

    1,503       1,563  

Equity in loss of investees

    1,966       1,740  

Provision for doubtful accounts

    (600 )     1,551  

Deferred income taxes, net

    151       (21 )

Change in operating assets and liabilities

    (41,000 )     20,115  

Net cash (used in) provided by operating activities

    (25,464 )     48,221  
                 

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Purchases of property and equipment

    (10,024 )     (6,935 )

Proceeds from sales of property, equipment and other assets

    838       470  

Purchases of marketable securities

    (4,045 )      

Proceeds from sales or maturities of marketable securities

          982  

Purchases of and loans to equity investees

    (6,695 )     (1,328 )

Net cash used in investing activities

    (19,926 )     (6,811 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES:

               

Principal payments on long-term obligations

    (200 )     (431 )

Payments for common shares repurchased

    (3,000 )      

Proceed from exercise of stock options

    8        

Tax payments related to RSU issuances

    (199 )     (125 )

Net cash used in financing activities

    (3,391 )     (556 )
                 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

    98       (505 )

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

    (48,683 )     40,349  
                 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

               

Beginning of period

    80,402       40,412  

End of period

  $ 31,719     $ 80,761  

 

 

 

Daktronics, Inc. and Subsidiaries

Net Sales and Orders by Business Unit

(in thousands)

(unaudited)

 

   

Three Months Ended

   

Nine Months Ended

 
   

January 29,

   

January 30,

   

Dollar

   

Percent

   

January 29,

   

January 30,

   

Dollar

   

Percent

 
   

2022

   

2021

   

Change

   

Change

   

2022

   

2021

   

Change

   

Change

 

Net Sales:

                                                               

Commercial

  $ 40,095     $ 30,085     $ 10,010       33.3 %   $ 107,339     $ 94,947     $ 12,392       13.1 %

Live Events

    39,057       23,330       15,727       67.4       150,840       112,626       38,214       33.9  

High School Park and Recreation

    23,721       14,644       9,077       62.0       84,362       71,165       13,197       18.5  

Transportation

    15,823       11,769       4,054       34.4       42,434       41,590       844       2.0  

International

    20,862       14,311       6,551       45.8       63,792       44,822       18,970       42.3  
    $ 139,558     $ 94,139     $ 45,419       48.2 %   $ 448,767     $ 365,150     $ 83,617       22.9 %

Orders:

                                                               

Commercial

  $ 47,012     $ 34,806     $ 12,206       35.1 %   $ 143,699     $ 92,929     $ 50,770       54.6 %

Live Events

    79,478       11,075       68,403       617.6       169,665       93,619       76,046       81.2  

High School Park and Recreation

    35,884       16,366       19,518       119.3       107,246       64,582       42,664       66.1  

Transportation

    20,810       12,991       7,819       60.2       56,854       37,713       19,141       50.8  

International

    31,605       11,650       19,955       171.3       82,778       55,864       26,914       48.2  
    $ 214,789     $ 86,888     $ 127,901       147.2 %   $ 560,242     $ 344,707     $ 215,535       62.5 %

 

 

Reconciliation of Free Cash Flow*

(in thousands)

(unaudited)

 

   

Nine Months Ended

 
   

January 29,

   

January 30,

 
   

2022

   

2021

 

Net cash (used in) provided by operating activities

  $ (25,464 )   $ 48,221  

Purchases of property and equipment

    (10,024 )     (6,935 )

Proceeds from sales of property and equipment

    838       470  

Free cash flow

  $ (34,650 )   $ 41,756  

 

*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 accounting principles generally accepted in the United States of America ("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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Ticker: DAKT
CIK: 915779
Form Type: 8-K Corporate News
Accession Number: 0001437749-22-005874
Submitted to the SEC: Thu Mar 10 2022 4:40:22 PM EST
Accepted by the SEC: Thu Mar 10 2022
Period: Thursday, March 10, 2022
Industry: Miscellaneous Manufacturing Industries
Events:
  1. Earnings Release
  2. Financial Exhibit

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