Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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):  May 30, 2018

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Daktronics, Inc.
(Exact name of registrant as specified in its charter)

South Dakota
0-23246
46-0306862
(State or Other Jurisdiction of
(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.)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





Section 2 - Financial Information

Item 2.02     Results of Operations and Financial Condition
 
On May 30, 2018 Daktronics, Inc. (the “Registrant”) issued a press release announcing its financial results for fiscal 2018 fourth quarter and year ended April 28, 2018.  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:

99.1 Press Release dated May 30, 2018 issued by Registrant regarding fiscal 2018 fourth quarter and year end results.


 
 
 
 
 





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:
May 30, 2018
 
 
 
 






EXHIBIT INDEX

Exhibit No.
Description
 
 




Exhibit


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Daktronics, Inc. Announces Fourth Quarter and Fiscal 2018 Results

Brookings, S.D. – May 30, 2018 - Daktronics, Inc. (NASDAQ - DAKT) today reported fiscal 2018 fourth quarter net sales of $138.2 million, operating loss of $5.4 million, and net loss of $3.8 million, or $0.09 per diluted share, compared to net sales of $143.7 million, operating income of $1.7 million, and a net income of $0.9 million, or $0.02 per diluted share, for the fourth quarter of fiscal 2017.  Fiscal 2018 fourth quarter orders were $162.0 million compared to $178.1 million for the fourth quarter of fiscal 2017. Backlog at the end of the fiscal 2018 fourth quarter was $171 million, compared to a backlog of $203 million a year earlier and $151 million at the end of the third quarter of fiscal 2018.

Net sales, operating income, net income, and earnings per share for the fiscal year ended April 28, 2018, were $610.5 million, $12.5 million, $5.6 million and $0.12 per diluted share, respectively. This compares to $586.5 million, $15.4 million, $10.3 million and $0.23 per diluted share, respectively, for fiscal 2017. Fiscal 2018 orders were $583.5 million compared to $613.5 million for fiscal 2017.

Cash flow provided by operating activities for the fiscal year ended April 28, 2018 was $30.4 million, compared to $39.4 million in fiscal 2017. Free cash flow, defined as cash provided from or used in operating activities less net investment in property and equipment, was a positive $14.4 million for fiscal 2018, as compared to a positive free cash flow of $31.1 million for fiscal 2017. Net investment in property and equipment was $15.9 million for fiscal 2018, as compared to $8.3 million for fiscal 2017. We had no repurchases of shares of common stock during fiscal 2018. 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 2018 were $64.3 million, which compares to $65.6 million at the end of the fourth quarter of fiscal 2017.

Fourth Quarter Fiscal 2018 Consolidated Financial Results
Orders for the fourth quarter of fiscal 2018 decreased by 9.1 percent as compared to the fourth quarter of fiscal 2017. Orders increased in the International and High School Park and Recreation business units, decreased in the Live Events and Transportation business units, and remained relatively flat in the Commercial business unit. The timing of orders for large projects varies according to the needs of the customer, which was the primary cause of the decrease in order volume.

Net sales for the fourth quarter of fiscal 2018 decreased by 3.8 percent as compared to the fourth quarter of fiscal 2017. Net sales increased in International and the High School Park and Recreation business units, decreased in the Live Events and Commercial business units, and remained relatively flat in the Transportation business unit. The decline in sales is the result of lower orders.

Gross profit as a percentage of net sales was 21.6 percent for the fourth quarter of fiscal 2018 as compared to 23.5 percent a year earlier. The decrease in gross profit percentage was primarily due to warranty charges. Operating expense for the fourth quarter of 2018 was $35.2 million, compared to $32.0 million for the fourth quarter of fiscal 2017. The increase in total operating expense was primarily attributable to an increase in selling expenses and planned increases in product development activities. Operating loss as a percentage of sales was 3.9 percent for the fourth quarter of fiscal 2018 as compared to an operating income as a percentage of sales of 1.2 percent for the fourth quarter of fiscal 2017.

Fiscal 2018 Consolidated Financial Results
Orders for fiscal 2018 decreased by 4.9 percent as compared to fiscal 2017. Orders increased in the International and High School Park and Recreation business units, and decreased in the Commercial, Live Events, and Transportation business units. High School Park and Recreation and International orders increase was primarily due to overall strong market demand. The International, Live Events, and Transportation business units are large project based and are subject to volatility due to timing of large contracts. Commercial business unit orders decrease was due to spectacular and on-premise niches order timing, offset by an increase in the Out-of-Home niche.
 
Net sales for fiscal 2018 increased 4.1 percent as compared to fiscal 2017. Net sales increased in the Live Events, Transportation, High School Park and Recreation, and International business units and decreased in the Commercial business unit. Live Events net sales increase was primarily due to the timing of demand for upgraded or new solutions for arenas, professional sports, and colleges and universities. High School Park and Recreation increase in net sales was primarily due to the timing of shipments of scoring systems and message centers. Transportation's increase in net sales was related to the variability of large order production timing caused by customer project schedules. International net sales increase was mainly attributable to market demand for digital solutions in the Out-of-Home niche. Commercial net sales decreased as a result of lower order volumes in our on-premise and spectacular niches.

Gross profit as a percentage of net sales was 23.9 percent for fiscal 2018 and fiscal 2017, respectively. Operating expenses for fiscal 2018 were $133.2 million, compared to $125.0 million for fiscal 2017. The increase in total operating expenses was primarily attributable to an increase in planned product development activities. Annual operating income as a percentage of sales decreased to 2.0 percent for fiscal 2018 as compared to 2.6 percent for fiscal 2017.
 
The effective tax rate for fiscal 2018 was 55.2 percent as compared to 33.7 percent. The change in rates was primarily due to the accounting adjustments triggered by the U.S. Tax Cuts and Jobs Act that provided significant changes to the U.S. tax code. We estimate an effective tax rate of approximately 21 percent for fiscal 2019.
 
Reece Kurtenbach, chairman, president and chief executive officer, stated, "While the overall results of fiscal 2018 were below expectations, we remain optimistic for the future. We proactively increased product development activities during fiscal 2018 and introduced additional narrow pixel pitch solutions and control features to our broad array of offerings. Our development spend increased $6.4 million year over year. Warranty charges were approximately $10 million more than our forecast. Additional spends related to warranty were targeted at preserving customer relationships, as well as a few isolated site issues. Warranty as a percent of sales was 3.5 percent as compared to 2.5 percent last year. Sales increased slightly and included completion of more Transportation business unit projects and premier global installations like the Mercedes Benz Stadium and Piccadilly Lights. We also sold our non-digital division assets for a gain. The new U.S. tax law negatively affected fiscal 2018 net income. All taken into account, we were profitable for the year and our balance sheet remains strong. We generated positive free cash flow for the year and invested over $18 million into our manufacturing capabilities and information systems infrastructure. Investments made in product development in fiscal 2018 will provide on-going benefits well into the future."

Outlook
Kurtenbach continued, "As we enter into fiscal 2019; sport, commercial, and governmental entities continue to choose digital applications to support their needs. This demand is driving long-term growth in LED video displays as well as other digital applications. Our range of solutions and global capabilities make us the industry's most experienced digital display provider. We are focused on winning more orders and will continue our velocity in product development to serve the industry's growing demand. We expanded our quality and reliability management programs and invested in resources over the past years to strengthen our overall quality. In addition, we are focused on carefully managing our operation spend as we continue on our path to long-term profitable growth."

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 be 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, 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, 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 2017 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 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
 
Twelve Months Ended
 
April 28,
2018
 
April 29,
2017
 
April 28,
2018
 
April 29,
2017
Net sales
138,177

 
143,682

 
610,530

 
586,539

Cost of sales
108,325

 
109,958

 
464,861

 
446,124

Gross profit
29,852

 
33,724

 
145,669

 
140,415

 
 
 
 
 
 
 
 
Operating expenses:
 

 
 

 
 

 
 

Selling
17,200

 
15,859

 
62,760

 
61,687

General and administrative
8,781

 
8,219

 
34,919

 
34,226

Product design and development
9,236

 
7,939

 
35,530

 
29,081

 
35,217

 
32,017

 
133,209

 
124,994

Operating (loss) income
(5,365
)
 
1,707

 
12,460

 
15,421

 
 
 
 
 
 
 
 
Nonoperating income (expense):
 

 
 

 
 

 
 

Interest income
203

 
192

 
723

 
751

Interest expense
(44
)
 
(56
)
 
(217
)
 
(230
)
Other (expense) income, net
(108
)
 
(104
)
 
(537
)
 
(354
)
 
 
 
 
 
 
 
 
(Loss) income before income taxes
(5,314
)
 
1,739

 
12,429

 
15,588

Income tax (benefit) expense
(1,504
)
 
830

 
6,867

 
5,246

Net (loss) income
$
(3,810
)
 
$
909

 
$
5,562

 
$
10,342

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 

 
 

 
 

 
 

Basic
44,569

 
44,184

 
44,457

 
44,114

Diluted
44,569

 
44,360

 
44,873

 
44,303

 
 
 
 
 
 
 
 
Earnings per share:
 

 
 

 
 

 
 

Basic
$
(0.09
)
 
$
0.02

 
$
0.13

 
$
0.23

Diluted
$
(0.09
)
 
$
0.02

 
$
0.12

 
$
0.23

 
 
 
 
 
 
 
 
Cash dividends declared per share
$
0.07

 
$
0.07

 
$
0.28

 
$
0.31






Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands) (unaudited)
 
April 28,
2018
 
April 29,
2017
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
29,727

 
$
32,623

Restricted cash
28

 
216

Marketable securities
34,522

 
32,713

Accounts receivable, net
77,387

 
78,846

Inventories
75,335

 
66,486

Costs and estimated earnings in excess of billings
30,968

 
36,403

Current maturities of long-term receivables
1,752

 
2,274

Prepaid expenses and other assets
9,029

 
7,553

Income tax receivables
5,385

 
611

Total current assets
264,133

 
257,725

 
 
 
 
Property and equipment, net
68,059

 
66,749

Long-term receivables, less current maturities
1,641

 
2,616

Goodwill
8,264

 
7,812

Intangibles, net
3,682

 
4,705

Investment in affiliates and other assets
5,091

 
4,534

Deferred income taxes
7,930

 
11,292

TOTAL ASSETS
358,800

 
355,433

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable
48,845

 
51,499

Accrued expenses
27,445

 
25,033

Warranty obligations
13,891

 
13,578

Billings in excess of costs and estimated earnings
12,195

 
10,897

Customer deposits
14,532

 
14,498

Deferred revenue (billed or collected)
12,652

 
12,137

Current portion of other long-term obligations
1,088

 
1,409

Income taxes payable
660

 
1,544

Total current liabilities
131,308

 
130,595

 
 
 
 
Long-term warranty obligations
16,062

 
14,321

Long-term deferred revenue (billed or collected)
7,475

 
5,434

Other long-term obligations
2,285

 
2,848

Long-term income tax payable
3,440

 
3,113

Deferred income taxes
614

 
836

Total long-term liabilities
29,876

 
26,552

TOTAL LIABILITIES
161,184

 
157,147

 
 
 
 
SHAREHOLDERS' EQUITY:
 
 
 
Common stock
54,731

 
52,530

Additional paid-in capital
40,328

 
38,004

Retained earnings
107,105

 
113,967

Treasury stock, at cost
(1,834
)
 
(1,834
)
Accumulated other comprehensive loss
(2,714
)
 
(4,381
)
TOTAL SHAREHOLDERS' EQUITY
197,616

 
198,286

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
358,800

 
$
355,433

 
 
 
 





Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands) (unaudited)
 
 
Year Ended
 
 
April 28,
2018
 
April 29,
2017
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Net income
 
$
5,562

 
$
10,342

Adjustments to reconcile net income to net cash provided by operating activities:
 
 

 
 

Depreciation and amortization
 
17,784

 
18,562

Impairment of intangible assets
 

 
830

(Gain) loss on sale of property, equipment and other assets
 
(1,252
)
 
36

Share-based compensation
 
2,635

 
2,914

Equity in loss of affiliate
 
481

 
136

Provision for doubtful accounts
 
140

 
1,426

Deferred income taxes, net
 
3,148

 
(2,043
)
Change in operating assets and liabilities
 
1,863

 
7,204

Net cash provided by operating activities
 
30,361

 
39,407

 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 

 
 

Purchases of property and equipment
 
(18,127
)
 
(8,502
)
Proceeds from sales of property, equipment and other assets
 
2,179

 
199

Purchases of marketable securities
 
(17,438
)
 
(24,159
)
Proceeds from sales or maturities of marketable securities
 
15,273

 
15,928

Purchases of equity investment
 
(1,450
)
 
(1,646
)
Net cash used in investing activities
 
(19,563
)
 
(18,180
)
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 

 
 

Payments on notes payable
 

 
(8
)
Principal payments on long-term obligations
 
(1,046
)
 
(921
)
Dividends paid
 
(12,424
)
 
(13,651
)
Proceeds from exercise of stock options
 
519

 
343

Payments for common shares repurchased
 

 
(1,825
)
Tax payments related to RSU issuances
 
(311
)
 
(261
)
Net cash used in financing activities
 
(13,262
)
 
(16,323
)
 
 
 
 
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
 
(620
)
 
(591
)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
 
(3,084
)
 
4,313

 
 
 
 
 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
 
 

 
 

Beginning of period
 
32,839

 
28,526

End of period
 
$
29,755

 
$
32,839

 
 
 
 
 



-- MORE --



Daktronics, Inc. and Subsidiaries
Net Sales and Orders by Business Unit
(in thousands) (unaudited)
 
Three Months Ended
 
Twelve Months Ended
 
April 28,
2018
 
April 29,
2017
 
Dollar Change
 
Percent Change
 
April 28,
2018
 
April 29,
2017
 
Dollar Change
 
Percent Change
Net sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
31,812

 
$
35,731

 
$
(3,919
)
 
(11.0
)%
 
$
134,535

 
$
148,073

 
$
(13,538
)
 
(9.1
)%
Live Events
44,901

 
56,950

 
(12,049
)
 
(21.2
)%
 
236,333

 
213,982

 
22,351

 
10.4
 %
High School Park and Recreation
18,025

 
13,821

 
4,204

 
30.4
 %
 
87,627

 
82,798

 
4,829

 
5.8
 %
Transportation
13,001

 
12,909

 
92

 
0.7
 %
 
59,578

 
52,426

 
7,152

 
13.6
 %
International
30,438

 
24,271

 
6,167

 
25.4
 %
 
92,457

 
89,260

 
3,197

 
3.6
 %
 
$
138,177

 
$
143,682

 
$
(5,505
)
 
(3.8
)%
 
$
610,530

 
$
586,539

 
$
23,991

 
4.1
 %
Orders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
37,547

 
$
37,236

 
$
311

 
0.8
 %
 
$
135,363

 
$
151,562

 
$
(16,199
)
 
(10.7
)%
Live Events
57,790

 
87,445

 
(29,655
)
 
(33.9
)%
 
203,036

 
222,965

 
(19,929
)
 
(8.9
)%
High School Park and Recreation
26,875

 
22,550

 
4,325

 
19.2
 %
 
87,243

 
83,605

 
3,638

 
4.4
 %
Transportation
12,426

 
16,348

 
(3,922
)
 
(24.0
)%
 
50,581

 
62,638

 
(12,057
)
 
(19.2
)%
International
27,335

 
14,570

 
12,765

 
87.6
 %
 
107,244

 
92,734

 
14,510

 
15.6
 %
 
$
161,973

 
$
178,149

 
$
(16,176
)
 
(9.1
)%
 
$
583,467

 
$
613,504

 
$
(30,037
)
 
(4.9
)%



Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow
(in thousands)(unaudited)
 
Twelve Months Ended
 
April 28,
2018
 
April 29,
2017
Net cash provided by operating activities
$
30,361

 
$
39,407

Purchases of property and equipment
(18,127
)
 
(8,502
)
Proceeds from sales of property, equipment and other assets
2,179

 
199

Free cash flow
$
14,413

 
$
31,104


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.










-- END --