UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
FORM 8-K
_____________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 19, 2013
_________________________________
Daktronics, Inc.
(Exact name of registrant as specified in its charter)
_________________________________
South Dakota | 0-23246 | 46-0306862 |
(State or other jurisdiction | (Commission | (I.R.S. Employer |
Incorporation or organization) | File Number) | Identification Number) |
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.)
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition
On February 19, 2013 Daktronics, Inc. (the “Registrant”) issued a press release announcing its financial results for the three and nine months ended January 26, 2013 of fiscal 2013. A copy of the press release is filed herewith as Exhibit 99.1 and is incorporated herein by reference.
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.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits:
(d) Exhibits. The following exhibit is furnished as part of this Report:
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.
DAKTRONICS, INC. | |
By: /s/ Sheila M. Anderson | |
Sheila M. Anderson, Chief Financial Officer | |
Date: February 19, 2013 | |
EXHIBIT INDEX
Daktronics, Inc. Announces Third Quarter Fiscal 2013 Results
Brookings, S.D. – February 19, 2013 - Daktronics, Inc. (NASDAQ - DAKT) today reported fiscal 2013 third quarter net sales of $111.1 million and net income of $2.7 million, or $0.06 per diluted share, compared to net sales of $122.9 million and net income of $1.7 million, or $0.04 per diluted share, for the third quarter of fiscal 2012. Fiscal 2013 third quarter orders were $134.3 million compared to $107.0 million for the third quarter of fiscal 2012. Backlog at the end of the fiscal 2013 third quarter was $149 million, compared with a backlog of $121 million a year earlier and $128 million at the end of the second quarter of fiscal 2013.
Net sales, net income and earnings per share for the nine months ended January 26, 2013 were $393.8 million, $20.9 million and $0.49 per diluted share, respectively. This compares to $377.5 million, $9.0 million and $0.21 per diluted share, respectively, for the same period in fiscal 2012.
Free cash flow, defined as cash provided by operations less net purchases of property and equipment, was $26.6 million for the first nine months of fiscal 2013, compared to $(4.1) million for the same period in fiscal 2012. Cash and marketable securities at the end of the third quarter of fiscal 2013 were $50.1 million, which compares to $50.6 million at the end of the fiscal 2012 third quarter.
“We were pleased with our order volume in the third quarter which set us up with a solid backlog going into the fourth quarter. On the sales front, we had anticipated our sales level would be comparable to fiscal 2012 third quarter, but we came in under that primarily due to on-site schedule changes which delayed a couple of large projects. The revenue associated with these delays will be realized in the fourth quarter,” said Jim Morgan, president and chief executive officer.
Gross profit levels were lower primarily due to the lower revenues for the third quarter compared to the level of fixed costs in our infrastructure. Operating expenses for the quarter were relatively flat compared to the third quarter of fiscal 2012. We realized a one-time tax benefit this quarter for the reinstatement of the research and development tax credit , which provided an approximate $1.9 million tax benefit for the quarter.
Orders
• | Orders in the Commercial business unit were up approximately 20 percent in the third quarter of fiscal 2013 compared to the third quarter of fiscal 2012, including two video system orders for a combined total of approximately $7.5 million and a slight increase in the volume of standard orders booked. Billboard orders remained flat compared to the previous year. |
• | Orders in the third quarter of fiscal 2013 for the Live Events business unit rose approximately 23 percent compared to the third quarter of fiscal 2012 as a result of winning multiple large sport venue projects during the quarter. Significant orders booked in the quarter included video display systems at two NFL stadiums and one at the University of Illinois with a combined total of over $19 million. |
• | Orders in the Schools and Theatres business unit improved by approximately two percent for the third quarter of fiscal 2013, compared to the same period in fiscal 2012. The continued improvement during fiscal 2013 was in part due to schools demonstrating more willingness this year than in fiscal 2012 to move forward with projects along with increased interest in larger video display systems for high schools. |
• | Orders in the Transportation business were up approximately 29 percent compared to the same period in fiscal 2012, primarily as a result of booking the first $6 million commitment related to the previously announced $20 million procurement contract with the New Jersey Turnpike Authority and booking a $3 million project with one of our ongoing state department of transportation customers. |
• | Orders in the International business unit were up approximately 62 percent over the third quarter of fiscal 2012. Orders for the quarter included two projects totaling $5.1 million for sports venues and a $2.2 million order from one of our commercial national accounts customers, all originating in the Asia Pacific region. |
Outlook
Morgan added, “Our backlog includes some work that is not deliverable in the fourth quarter of fiscal 2013 due to customers' schedules; however, we expect sales to increase in our fiscal 2013 fourth quarter over both the third quarter of fiscal 2013 and the fourth quarter of fiscal 2012. Gross profit margin is expected to be lower than our fiscal 2013 year-to-date levels due to the mix of business, as we anticipate working on a number of larger contracts with lower sales margins this quarter. Operating expenses are expected to be slightly less than in our fiscal third quarter. We are estimating that our capital investment for all of fiscal 2013 will be less than $11.0 million, down from $16.5 million in fiscal 2012.”
“We continue to see a strong pipeline of potential business. We see opportunities in our International business unit in third party advertising. We recently announced the prospective acquisition of OPEN Out-of Home Solutions (“OPEN”), a Belgian company that specializes in serving the third party advertising market in Europe. We expect to complete the integration of OPEN into Daktronics by the first quarter of fiscal 2014, and we look forward to the opportunities this acquisition offers. We see opportunity for continued growth in video projects for high schools in Schools and Theatres, and large video systems in Live Events. Transportation has a strong pipeline and we will start shipping our new full color standard displays specially designed for that market in the fourth quarter. We see the shift to full color in the transportation business as a positive growth driver for that business. We expect a limited amount of growth in our commercial business, but opportunities exist for large video projects and replacement programs of some of our national on-premise accounts. We remain committed to our three-year strategic goal to significantly improve operating margin by attaining top line growth and containing costs. We have more work to do over the next couple of years to achieve and sustain that goal, and we will continue to work on improvements during the fourth quarter. We continue to work to improve the gross profit on contracts as well as on standard products through initiatives in product design, manufacturing, and project management,” continued 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.
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 2012 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 | Nine Months Ended | ||||||||||||||
January 26, 2013 | January 28, 2012 | January 26, 2013 | January 28, 2012 | ||||||||||||
Net sales | $ | 111,050 | $ | 122,925 | $ | 393,840 | $ | 377,532 | |||||||
Cost of goods sold | 84,001 | 95,070 | 288,049 | 288,702 | |||||||||||
Gross profit | 27,049 | 27,855 | 105,791 | 88,830 | |||||||||||
Operating expenses: | |||||||||||||||
Selling expense | 13,652 | 13,341 | 39,528 | 38,475 | |||||||||||
General and administrative | 6,717 | 6,974 | 20,148 | 20,410 | |||||||||||
Product design and development | 5,611 | 5,696 | 17,477 | 17,050 | |||||||||||
25,980 | 26,011 | 77,153 | 75,935 | ||||||||||||
Operating income | 1,069 | 1,844 | 28,638 | 12,895 | |||||||||||
Nonoperating income (expense): | |||||||||||||||
Interest income | 386 | 434 | 1,165 | 1,326 | |||||||||||
Interest expense | (28 | ) | (61 | ) | (151 | ) | (231 | ) | |||||||
Other expense, net | (193 | ) | (29 | ) | (224 | ) | (221 | ) | |||||||
Income before income taxes | 1,234 | 2,188 | 29,428 | 13,769 | |||||||||||
Income tax (benefit) expense | (1,476 | ) | 522 | 8,493 | 4,775 | ||||||||||
Net income | $ | 2,710 | $ | 1,666 | $ | 20,935 | $ | 8,994 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 42,343 | 41,916 | 42,206 | 41,811 | |||||||||||
Diluted | 42,539 | 42,076 | 42,447 | 42,175 | |||||||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.06 | $ | 0.04 | $ | 0.50 | $ | 0.22 | |||||||
Diluted | $ | 0.06 | $ | 0.04 | $ | 0.49 | $ | 0.21 | |||||||
Cash dividends declared per share | $ | 0.615 | $ | 0.510 | $ | 0.730 | $ | 0.620 | |||||||
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Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands) | |||||||
January 26, 2013 | April 28, 2012 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash, cash equivalents and restricted cash | $ | 24,553 | $ | 30,592 | |||
Marketable securities | 25,539 | 25,258 | |||||
Accounts receivable, net | 59,592 | 66,923 | |||||
Inventories | 49,578 | 54,924 | |||||
Costs and estimated earnings in excess of billings | 41,120 | 23,020 | |||||
Current maturities of long-term receivables | 5,123 | 5,830 | |||||
Prepaid expenses and other assets | 6,606 | 5,528 | |||||
Deferred income taxes | 11,191 | 10,941 | |||||
Income tax receivables | 2,847 | 5,990 | |||||
Total current assets | 226,149 | 229,006 | |||||
Long-term receivables, less current maturities | 12,181 | 12,622 | |||||
Goodwill | 3,328 | 3,347 | |||||
Intangibles | 1,238 | 1,409 | |||||
Advertising rights, net and other assets | 988 | 1,157 | |||||
Deferred income taxes | 35 | 30 | |||||
17,770 | 18,565 | ||||||
PROPERTY AND EQUIPMENT: | |||||||
Land | 1,497 | 1,497 | |||||
Buildings | 57,018 | 56,431 | |||||
Machinery and equipment | 63,789 | 61,654 | |||||
Office furniture and equipment | 16,199 | 15,648 | |||||
Computer software and hardware | 41,506 | 42,172 | |||||
Equipment held for rental | 868 | 1,003 | |||||
Demonstration equipment | 8,315 | 9,806 | |||||
Transportation equipment | 4,100 | 4,116 | |||||
193,292 | 192,327 | ||||||
Less accumulated depreciation | 130,626 | 123,931 | |||||
62,666 | 68,396 | ||||||
TOTAL ASSETS | $ | 306,585 | $ | 315,967 | |||
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Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (continued) (in thousands) | |||||||
January 26, 2013 | April 28, 2012 | ||||||
(unaudited) | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Notes payable, bank | $ | — | $ | 1,459 | |||
Accounts payable | 31,798 | 33,906 | |||||
Accrued expenses | 23,834 | 22,731 | |||||
Warranty obligations | 12,076 | 13,049 | |||||
Billings in excess of costs and estimated earnings | 14,796 | 14,385 | |||||
Customer deposits (billed or collected) | 11,323 | 12,826 | |||||
Deferred revenue (billed or collected) | 8,553 | 9,751 | |||||
Current portion of other long-term obligations | 394 | 359 | |||||
Income tax payable | 625 | 665 | |||||
Deferred income taxes | 39 | 42 | |||||
Total current liabilities | 103,438 | 109,173 | |||||
Long-term warranty obligations | 9,996 | 9,166 | |||||
Long-term deferred revenue (billed or collected) | 5,221 | 4,361 | |||||
Other long-term obligations, less current maturities | 803 | 1,009 | |||||
Deferred income taxes | 1,453 | 1,453 | |||||
Total long-term liabilities | 17,473 | 15,989 | |||||
TOTAL LIABILITIES | 120,911 | 125,162 | |||||
SHAREHOLDERS' EQUITY: | |||||||
Common stock | 37,259 | 34,631 | |||||
Additional paid-in capital | 26,549 | 24,320 | |||||
Retained earnings | 121,906 | 131,830 | |||||
Treasury stock, at cost, 19,680 shares | (9 | ) | (9 | ) | |||
Accumulated other comprehensive (loss) income | (31 | ) | 33 | ||||
TOTAL SHAREHOLDERS' EQUITY | 185,674 | 190,805 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 306,585 | $ | 315,967 | |||
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Daktronics, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) (unaudited) | ||||||||
Nine Months Ended | ||||||||
January 26, 2013 | January 28, 2012 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 20,935 | $ | 8,994 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 11,614 | 13,209 | ||||||
Amortization | 171 | 189 | ||||||
Amortization of premium/discount on marketable securities | 140 | 140 | ||||||
Loss on sale of property and equipment | 33 | 11 | ||||||
Share-based compensation | 2,344 | 2,474 | ||||||
Excess tax benefits from share-based compensation | (61 | ) | (30 | ) | ||||
Provision for doubtful accounts | (197 | ) | (125 | ) | ||||
Deferred income taxes, net | (258 | ) | (377 | ) | ||||
Change in operating assets and liabilities | (1,466 | ) | (16,092 | ) | ||||
Net cash provided by operating activities | 33,255 | 8,393 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment | (6,799 | ) | (12,633 | ) | ||||
Proceeds from sale of property and equipment | 175 | 168 | ||||||
Purchases of marketable securities | (13,301 | ) | (10,968 | ) | ||||
Proceeds from sales and maturities of marketable securities | 12,820 | 13,925 | ||||||
Net cash used in investing activities | (7,105 | ) | (9,508 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Borrowings on notes payable | — | 782 | ||||||
Payments on notes payable | (1,460 | ) | — | |||||
Proceeds from exercise of stock options | 1,146 | 431 | ||||||
Excess tax benefits from share-based compensation | 61 | 30 | ||||||
Dividends paid | (30,859 | ) | (25,950 | ) | ||||
Net cash used in financing activities | (31,112 | ) | (24,707 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 43 | 66 | ||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (4,919 | ) | (25,756 | ) | ||||
CASH AND CASH EQUIVALENTS: | ||||||||
Beginning of period | 29,423 | 54,308 | ||||||
End of period | $ | 24,504 | $ | 28,552 | ||||
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Daktronics, Inc. and Subsidiaries Net Sales and Orders by Business Unit (in thousands) (unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
January 26, 2013 | January 28, 2012 | January 26, 2013 | January 28, 2012 | ||||||||||||
Net Sales: | |||||||||||||||
Commercial | $ | 30,997 | $ | 38,833 | $ | 109,127 | $ | 115,239 | |||||||
Live Events | 26,528 | 38,496 | 121,641 | 123,676 | |||||||||||
Schools & Theatres | 11,778 | 10,696 | 51,639 | 46,418 | |||||||||||
Transportation | 23,546 | 10,261 | 57,713 | 34,201 | |||||||||||
International | 18,201 | 24,639 | 53,720 | 57,998 | |||||||||||
$ | 111,050 | $ | 122,925 | $ | 393,840 | $ | 377,532 | ||||||||
Orders: | |||||||||||||||
Commercial | $ | 36,988 | $ | 30,720 | $ | 113,622 | $ | 111,319 | |||||||
Live Events | 47,391 | 38,684 | 132,285 | 122,507 | |||||||||||
Schools & Theatres | 10,183 | 9,941 | 48,106 | 41,589 | |||||||||||
Transportation | 19,972 | 15,443 | 59,504 | 43,459 | |||||||||||
International | 19,776 | 12,218 | 64,667 | 46,117 | |||||||||||
$ | 134,310 | $ | 107,006 | $ | 418,184 | $ | 364,991 | ||||||||
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow (in thousands) (unaudited) | |||||||
Nine Months Ended | |||||||
January 26, 2013 | January 28, 2012 | ||||||
Net cash provided by operating activities | $ | 33,255 | $ | 8,393 | |||
Purchase of property and equipment | (6,799 | ) | (12,633 | ) | |||
Proceeds from sales of property and equipment | 175 | 168 | |||||
Free cash flow | $ | 26,631 | $ | (4,072 | ) | ||
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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