Daktronics, Inc. Announces Second Quarter Fiscal 2011 Results
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- Net sales increase 10% and earnings rise 45% compared to fiscal 2010 second quarter
- Backlog increases to $121 million compared to $90 million one year ago
BROOKINGS, S.D., Nov. 23, 2010 (GLOBE NEWSWIRE) -- Daktronics, Inc. (Nasdaq:DAKT) today reported fiscal 2011 second quarter net sales of $126.9 million and net income of $7.0 million, or $0.17 per diluted share, compared to net sales of $115.4 million and net income of $4.8 million, or $0.12 per diluted share, for the second quarter of fiscal 2010. Backlog at the end of the 2011 second quarter was approximately $121 million, compared with a backlog of approximately $90 million a year earlier and $144 million at the end of the first quarter of fiscal 2011.
Net sales, net income and earnings per share for the six months ended October 30, 2010 were $227.4 million, $9.5 million and $0.23 per diluted share, respectively. This compares to $228.8 million, $6.3 million and $0.15 per diluted share, respectively, for the same period in fiscal 2010.
Free cash flow, defined as cash provided by operations less net purchases of property and equipment, was $25.2 million in the first half of fiscal 2011, compared to $23.5 million in the first half of fiscal 2010. Cash on hand at the end of the second quarter of fiscal 2011 was $66.8 million.
"We are pleased with the second quarter results," said Jim Morgan, president and chief executive officer. "We entered the quarter with a healthy backlog, and we executed well on that backlog. One of our concerns that we expressed last quarter was that parts shortages might affect our execution during the quarter, but overall our suppliers came through well for us. It was a very busy quarter and I want to thank all of our employees for their dedicated efforts in serving our customers and meeting critical deadlines.
"It is noteworthy that our backlog is significantly larger going into third quarter than it was a year ago," continued Morgan. "Unlike last year, there are projects moving forward in professional baseball for this coming season, and we have had good success to date in winning our share of those projects. The backlog number does not include three contracts for professional baseball facilities totaling more than $10 million that were booked in the third quarter of fiscal 2011. In addition, we have two additional contracts with a combined value of approximately $10 million which are in the contract negotiation phase. Our new DVX video product, along with our new Show Control software front-end, has been very well received in the industry, and we believe it has been a positive factor in these wins."
Morgan added, "Recent communication with our major customers in outdoor advertising, along with their public statements, have reinforced our expectations that our digital billboard business will increase in calendar 2011. Accordingly, we are expecting orders for digital billboards to continue ramping up in third quarter. The market's reception to our Series 4000 digital billboard technology remains very positive. Our transportation business continues with a strong backlog and is performing well. We have started to deliver against the $25 million New Jersey Turnpike procurement contract, which includes approximately $8 million in firm orders.
"Our International business unit had an excellent quarter for orders, with the largest and most noteworthy order being a $10 million display system for a new arena in Mexico City. It will include one of the largest center hung displays in the world and a 686 foot wide architectural lighting display on the exterior of the building. Our pipeline for international opportunities continues to be strong," said Morgan.
"Interest in our architectural lighting technology continues to drive opportunities, including a recently booked order for Target Field, home of the Minnesota Twins. This order includes a 100-foot tower in right field utilizing our ProPixel® LED lighting strips, in addition to an auxiliary video board. We continue to see architectural lighting technology as a new area of growth for our business," continued Morgan.
"Gross profit percentage came in lower than the first quarter of fiscal 2011 as a result of higher warranty reserves," said Bill Retterath, chief financial officer. "This offset the gains that we achieved on leveraging our fixed costs on higher sales. We expect a decrease in gross margin percent in the third quarter of fiscal 2011 compared to second quarter due to lower revenues and continued pricing pressure."
Morgan concluded, "The third quarter is typically our lowest quarter for revenues for the year, due both to the seasonality of our sports business and the additional holidays in the quarter. With the backlog being significantly higher than it was at this time last fiscal year, we expect net sales will increase significantly in the third quarter of fiscal 2011 compared to the third quarter of last fiscal year. It is great to see baseball showing signs of recovery, and that, along with the increase in commercial and international activity, gives us a positive outlook for the next couple of quarters. Beyond that, our outlook is positive if the economic recovery remains on track. We have ongoing efforts in product development to improve our products while reducing costs to manufacture. Executing on these development efforts will be a key to improving gross profit margins, as the competitive environment remains keen.
"Our focus continues to be on winning orders to continue to grow the top line, while at the same time continuing to reduce costs by improving our processes across the company, and further reducing the manufactured costs of our products through leveraging a global supply chain and product development initiatives. At the same time, we continue initiatives to improve reliability and quality, maintain a high level of on-time delivery, and strengthen our after-sales service delivery. We will continue to focus on free cash flow, with our priorities for cash being funding operations, including developing new and improved product offerings, expanding markets for existing products, and investing in business process improvement initiatives to create shareholder value over time," said Morgan.
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 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, Schools and Theatres and Transportation and one International business unit. For more information, visit the company's World Wide Web site at: http://www.daktronics.com, e-mail 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., PO Box 5128 Brookings, S.D. 57006-5128.
The Daktronics logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5476
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 are 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 expectation, including, but not limited to, changes in economic and market conditions, management of growth, timing and magnitude of future contracts, parts shortages and longer lead times, fluctuations in margins, the introduction of new products and technology, and other risks noted in the company's SEC filings, including its Annual Report on Form 10-K for its 2010 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 | Six Months Ended | |||
| October 30, 2010 | October 31, 2009 | October 30, 2010 | October 31, 2009 | |
| Net sales | $ 126,919 | $ 115,362 | $ 227,421 | $ 228,815 |
| Cost of goods sold | 94,102 | 81,800 | 168,017 | 165,183 |
| Gross profit | 32,817 | 33,562 | 59,404 | 63,632 |
| Operating expenses: | ||||
| Selling | 12,600 | 12,888 | 24,936 | 27,255 |
| General and administrative | 5,624 | 5,959 | 11,212 | 12,493 |
| Product design and development | 4,561 | 5,534 | 9,114 | 11,404 |
| 22,785 | 24,381 | 45,262 | 51,152 | |
| Operating income | 10,032 | 9,181 | 14,142 | 12,480 |
| Nonoperating income (expense): | ||||
| Interest income | 383 | 379 | 838 | 753 |
| Interest expense | (41) | (63) | (77) | (110) |
| Other income (expense), net | 167 | (711) | 262 | (1,313) |
| Income before income taxes | 10,541 | 8,786 | 15,165 | 11,810 |
| Income tax expense | 3,534 | 3,937 | 5,715 | 5,529 |
| Net income | $ 7,007 | $ 4,849 | $ 9,450 | $ 6,281 |
| Weighted average shares outstanding: | ||||
| Basic | 41,387 | 40,962 | 41,440 | 40,926 |
| Diluted | 41,647 | 41,277 | 41,788 | 41,239 |
| Earnings per share: | ||||
| Basic | $ 0.17 | $ 0.12 | $ 0.23 | $ 0.15 |
| Diluted | $ 0.17 | $ 0.12 | $ 0.23 | $ 0.15 |
| Cash dividends paid per share | $ 0.50 | $ -- | $ 0.60 | $ 0.095 |
| Daktronics, Inc. and Subsidiaries | ||
| Consolidated Balance Sheets | ||
| (in thousands) | ||
| October 30, 2010 (unaudited) | May 1, 2010 | |
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash, cash equivalents and restricted cash | $ 66,802 | $ 64,867 |
| Accounts receivable, less allowance for doubtful accounts | 52,744 | 45,018 |
| Inventories | 42,594 | 35,673 |
| Costs and estimated earnings in excess of billings | 24,432 | 25,233 |
| Current maturities of long-term receivables | 5,766 | 6,232 |
| Prepaid expenses and other | 4,635 | 5,838 |
| Deferred income taxes | 12,800 | 12,578 |
| Income tax receivables | 4,574 | 7,444 |
| Property and equipment available for sale | 182 | 182 |
| Total current assets | 214,529 | 203,065 |
| Advertising rights, net | 859 | 1,348 |
| Long-term receivables, less current maturities | 14,135 | 13,458 |
| Goodwill | 3,305 | 3,323 |
| Intangible and other assets | 3,093 | 3,710 |
| Deferred income taxes | 63 | 62 |
| 21,455 | 21,901 | |
| PROPERTY AND EQUIPMENT: | ||
| Land | 1,471 | 1,471 |
| Buildings | 55,174 | 55,353 |
| Machinery and equipment | 55,429 | 54,058 |
| Office furniture and equipment | 51,276 | 53,831 |
| Equipment held for rental | 1,056 | 1,630 |
| Demonstration equipment | 8,587 | 8,969 |
| Transportation equipment | 3,577 | 4,256 |
| 176,570 | 179,568 | |
| Less accumulated depreciation | 102,933 | 98,683 |
| 73,637 | 80,885 | |
| TOTAL ASSETS | $ 309,621 | $ 305,851 |
| Daktronics, Inc. and Subsidiaries | ||
| Consolidated Balance Sheets (continued) | ||
| (in thousands) | ||
| October 30, 2010 (unaudited) | May 1, 2010 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable | $ 27,902 | $ 23,149 |
| Accrued expenses and warranty obligations | 37,886 | 33,443 |
| Current maturities of long-term debt and marketing obligations | 407 | 322 |
| Billings in excess of costs and estimated earnings | 14,145 | 13,105 |
| Customer deposits | 10,981 | 9,348 |
| Deferred revenue (billed or collected) | 7,773 | 7,766 |
| Income taxes payable | 723 | 361 |
| Total current liabilities | 99,817 | 87,494 |
| Long-term marketing obligations, less current maturities | 568 | 600 |
| Long-term warranty obligations and other payables | 4,181 | 4,229 |
| Deferred income taxes | 2,667 | 2,167 |
| Long-term deferred revenue (billed or collected) | 7,530 | 4,308 |
| Total long-term liabilities | 14,946 | 11,304 |
| TOTAL LIABILITIES | 114,763 | 98,798 |
| SHAREHOLDERS' EQUITY: | ||
| Common stock | 31,310 | 29,936 |
| Additional paid-in capital | 19,493 | 17,731 |
| Retained earnings | 144,499 | 159,842 |
| Treasury stock, at cost | (9) | (9) |
| Accumulated other comprehensive loss | (435) | (447) |
| TOTAL SHAREHOLDERS' EQUITY | 194,858 | 207,053 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 309,621 | $ 305,851 |
| Daktronics, Inc. and Subsidiaries | ||
| Consolidated Statements of Cash Flows | ||
| (in thousands) | ||
| (unaudited) | ||
| Six Months Ended | ||
| October 30, 2010 | October 31, 2009 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net Income | $ 9,450 | $ 6,281 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation | 9,777 | 11,123 |
| Amortization | 152 | 157 |
| Loss on sale of equity investee | -- | 231 |
| (Gain)/loss on sale of property and equipment | 33 | (26) |
| Stock-based compensation | 1,733 | 1,712 |
| Equity in losses of affiliate | 36 | 1,347 |
| Provision for doubtful accounts | 249 | (269) |
| Deferred income taxes, net | 278 | (299) |
| Change in operating assets and liabilities | 6,426 | 9,400 |
| Net cash provided by operating activities | 28,134 | 29,657 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchase of property and equipment | (3,195) | (6,247) |
| (Loans)/repayments to/from related parties of equity investees, net | (36) | -- |
| (Purchase)/receipts of receivables from equity investees, net | 518 | (306) |
| Proceeds from insurance recoveries of property and equipment | 114 | -- |
| Proceeds from sale of equity method investments | -- | 535 |
| Proceeds from sale of property and equipment | 168 | 104 |
| Net cash used in investing activities | (2,431) | (5,914) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Principal payments on long-term debt | (14) | (13) |
| Proceeds from exercise of stock options | 660 | 207 |
| Excess tax benefits from stock-based compensation | 30 | -- |
| Dividend paid | (24,794) | (3,874) |
| Net cash used in financing activities | (24,118) | (3,680) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 1 | (201) |
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,586 | 19,862 |
| CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD | 63,603 | 36,501 |
| CASH AND CASH EQUIVALENTS END OF PERIOD | $ 65,189 | $ 56,363 |
| Daktronics, Inc. and Subsidiaries | ||||
| Net Sales and Orders By Business Unit | ||||
| (in thousands) | ||||
| (unaudited) | ||||
| Three Months Ended | Six Months Ended | |||
| October 30, 2010 | October 31, 2009 | October 30, 2010 | October 31, 2009 | |
| Net Sales | ||||
| Commercial | $ 31,879 | $ 24,873 | $ 55,010 | $ 48,108 |
| Live Events | 44,025 | 48,949 | 84,708 | 102,844 |
| Schools & Theatres | 21,351 | 18,766 | 37,999 | 37,200 |
| Transportation | 11,482 | 10,590 | 19,028 | 23,220 |
| International | 18,182 | 12,184 | 30,676 | 17,443 |
| Total Net Sales | $ 126,919 | $ 115,362 | $ 227,421 | $ 228,815 |
| Orders | ||||
| Commercial | $ 25,666 | $ 22,546 | $ 58,712 | $ 43,663 |
| Live Events | 26,864 | 37,102 | 64,000 | 81,450 |
| Schools & Theatres | 14,030 | 16,172 | 35,602 | 37,796 |
| Transportation | 9,408 | 8,234 | 21,036 | 16,070 |
| International | 26,211 | 12,694 | 39,691 | 23,708 |
| Total Orders | $ 102,179 | $ 96,748 | $ 219,041 | $ 202,687 |
CONTACT: Daktronics
Investor Relations:
Bill Retterath, Chief Financial Officer
(605) 692-0200
Investor@daktronics.com