UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

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CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1937

Date of Report (Date of earliest event reported): November 1, 2008

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Daktronics, Inc.

(Exact name of registrant as specified in its charter)

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201 Daktronics Drive

Brookings, SD 57006

(Address of principal executive office) (zip code)

(605) 692-0200

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report.)

 

On November 25, 2008, Daktronics, Inc. (the “Registrant”) issued a press release announcing financial results for the second quarter ending November 1, 2008. A copy of the press release is filed herewith as Exhibit 99.1 and is incorporated herein by reference.

 

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The information furnished in this report, including the exhibit, shall not be incorporated by reference into Daktronics’ filings with the Securities and Exchange Commission under the Securities Act of 1933 and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Securities Act of 1934.

 

 

 

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SIGNATURE

 

       Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

 

Date: November 25, 2008

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EXHIBIT INDEX

 

 

 

 

Daktronics, Inc. Announces Record Second Quarter Fiscal 2009 Results

• Net sales increase 29 percent, net income up 52 percent compared to second quarter fiscal 2008

• Backlog totals $134 million, excluding the recently announced $27 million order for the New Meadowlands Stadium

• Operating expenses decline from fiscal 2009 first quarter

 

Brookings, S.D. – Nov. 25, 2008 - Daktronics, Inc. (Nasdaq - DAKT) today reported fiscal 2009 second quarter net sales of $169.7 million and net income of $12.2 million, or $0.30 per diluted share, compared to net sales of $131.4 million and net income of $8.0 million, or $0.19 per diluted share, for the second quarter of fiscal 2008. Backlog at the end of the 2009 second quarter was approximately $134 million, compared to a backlog of approximately $119 million a year earlier, and $173 million at the end of the first quarter of fiscal 2009.

 

Net sales, net income and earnings per share for the six months ended November 1, 2008 were $330.9 million, $21.9 million and $0.53 per diluted share, respectively. This compares to $252.4 million, $15.1 million and $0.37 per diluted share, respectively, for the same period in fiscal 2008. The first quarter and the first half of fiscal 2009 contained one additional week as compared to the first quarter and the first half of fiscal 2008.

 

Orders for the second quarter of fiscal 2009 were up over 20 percent as compared to the second quarter of fiscal 2008. For the first half of fiscal 2009, order bookings increased approximately 18 percent as compared to the first half of fiscal 2008. These numbers exclude the recently announced orders for the New Meadowlands Stadium and two major league baseball facilities, which are expected to book in the third quarter of fiscal 2009.

 

“Our financial performance in the second quarter of fiscal 2009 was strong, as we exceeded our goals on earnings, gross profit margins and operating margins,” said Jim Morgan, president and chief executive officer. “I want to take this opportunity to commend and thank all of our employees for their dedication in helping us achieve these record results. However, this second quarter performance was tempered by the announcement that one of our major billboard customers was going to curtail their digital billboard spending in calendar year 2009. This event, coupled with our lowered order expectations for the rest of the Commercial business unit, led us to lower our estimates for fiscal year 2009, which we announced earlier this month. We have initiated cost reduction measures to grow free cash flow for the long-term while not risking our long-term opportunities or taking away the focus on orders in the near term.”

 

Morgan added, “Our Live Events business unit continued to show strength and we have not yet seen any material adverse implications in this business due to economic conditions. In November, we booked a second part of the New Meadowlands Stadium order for approximately $27 million. We also received nonbinding commitments for two major league baseball facilities that represent approximately $16 million and are expected to book before the end of the fiscal 2009 third quarter. Although our backlog is sequentially lower at the end of the fiscal 2009 second quarter, keep in mind that none of these orders are in the backlog number. Year-to-date orders, excluding these orders, are up approximately 45 percent for the Live Events business unit. Although the outlook for Live Events in fiscal year 2010 is still uncertain, historically it has been a business that shows some resistance to economic pressures, and we expect it to grow over the long-term.

 

“Orders in our International business unit remained flat year-to-date as compared to the first half of fiscal 2008. We have some significant opportunities in our pipeline, however the timing and probabilities are difficult to project and we have not factored them into our latest annual revenue guidance. We remain optimistic about the long-term growth opportunities for our International business,” continued Morgan.

 

The Commercial business unit orders are up four percent on a year-to-date basis, well below the Company’s original forecast for the year. Orders for digital billboards fell by approximately 35 percent in the second quarter of fiscal 2009, compared to the second quarter of fiscal 2008. The Company anticipates continued weakness in this business unit until economic conditions improve.

 

“The Schools and Theatres business unit experienced some weakness in orders for the second quarter of fiscal 2009 that we had not expected, due at least in part to extended lead times in the first quarter of fiscal year 2009. We continue to work on shortening lead times, which is critical to achieving our long-term growth objectives. We believe that as a result of the strength of our product line, including our standard video systems, and our service network we are positioned for long-term growth and success in the Schools and Theatres business unit,” said Morgan.

 

The Transportation business unit continued to meet original order expectations and has grown more than 18 percent year-to-date as compared to the first two quarters of fiscal 2008. The Company expects that this growth will continue given the government’s continued interest in improving the United States transportation infrastructure.

 

Morgan continued, “To achieve our goals for cost reductions, we intend to closely examine all areas of the business and selectively adjust where necessary, without compromising our long-term opportunities. These cost reductions include a decrease in our labor force, primarily through attrition, additional field office consolidations, as well as challenging our employees to reduce all spending that is discretionary and not essential to our long-term strategy and order goals. We are also reducing our capital expenditures estimates to approximately $32 million for fiscal 2009.

 

“We expect to continue to invest in our services business, key product development initiatives, systems and process improvements, and areas that offer sales growth opportunities,” said Morgan. “This approach may cause operating margin pressure in the short-term, but we believe that for the long-term we will be much stronger and better positioned when the economy improves. We intend to remain positioned to effectively respond to increased demand when it occurs. Operationally, we will be working to increase the flexibility between our plants. This will require some relatively small investments in the short term, but should allow better utilization of the plants going forward as product mix varies.”

 

“Gross margin percents for the quarter were in line with expectations and included higher warranty and inventory costs as forecasted,” said Bill Retterath, chief financial officer. “We are optimistic that we can improve gross profit margins for the remainder of fiscal 2009 and into fiscal 2010. We expect that improvements in product margins and reductions in warranty and inventory costs will offset the costs of excess capacity created by lower levels of sales.”

 

Retterath added, “In the second quarter of fiscal 2009, we once again demonstrated our commitment to expense control with total operating expenses up only four percent as compared to the second quarter of fiscal 2008, and as compared to the 29 percent increase in net sales for the same period. Operating expenses for the fiscal 2009 second quarter declined $1.5 million, or approximately six percent, as compared to the 2009 fiscal first quarter, which contained one additional week. On a year-to-date basis, operating expenses are up approximately 12 percent prior to adjusting for the extra week in the first quarter of fiscal 2009 as compared to the first half of fiscal 2008.”

 

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.

 

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 Sport, Business, Schools and Theatres and Transportation segments. 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.

 

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, and other risks noted in the company’s SEC filings, including its Annual Report on Form 10-K for its 2008 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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Financial tables are included on the following pages.

 

Daktronics, Inc. and Subsidiaries

Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

 

 

 

 

 

 

 

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Daktronics, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands)

 

 

 

 

 

 

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Daktronics, Inc. and Subsidiaries

Consolidated Balance Sheets (continued)

(in thousands)

 

 

 

 

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Daktronics, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

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Daktronics, Inc. and Subsidiaries

Sales and Orders By Segment

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

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