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): November 21, 2018

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12564016&doc=3

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 November 21, 2018 Daktronics Inc. (the “Registrant”) issued a press release announcing its financial results for the three and six months ended October 27, 2018 of fiscal 2019.  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 November 21, 2018 issued by Registrant regarding second quarter fiscal 2019 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:
November 21, 2018
 
 
 
 





EXHIBIT INDEX

Exhibit No.
Description
 
 




Exhibit


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12564016&doc=3
Daktronics, Inc. Announces Second Quarter Fiscal 2019 Results

Brookings, S.D. – November 21, 2018 - Daktronics, Inc. (NASDAQ - DAKT) today reported fiscal 2019 second quarter net sales of $172.7 million, operating income of $9.0 million, and net income of $8.6 million, or $0.19 per diluted share, compared to net sales of $169.3 million, operating income of $9.4 million, and net income of $7.1 million, or $0.16 per diluted share, for the second quarter of fiscal 2018Fiscal 2019 second quarter orders were $151.4 million, compared to $142.3 million for the second quarter of fiscal 2018. Product order backlog at the end of the fiscal 2019 second quarter was $150 million, compared to a backlog of $155 million a year earlier and $177 million at the end of the first quarter of fiscal 2019.(1)

Net sales, operating income, net income, and earnings per share for the six months ended October 27, 2018, were $326.9 million, $13.1 million, $13.2 million, and $0.29 per diluted share, respectively. This compares to $342.0 million, $21.2 million, $15.6 million, and $0.35 per diluted share, respectively, for the same period in fiscal 2018.

Cash provided by operating activities in the first six months of fiscal 2019 was $22.6 million, compared with cash provided by operating activities of $9.3 million in the same period last year. Cash flow from operating activities fluctuated due to changes in net operating assets and liabilities offset by decrease in net income. Free cash flow, defined as cash provided from or used in operating activities less net investment in property and equipment, was a positive $12.9 million for the first six months of fiscal 2019, as compared to a positive free cash flow of $3.6 million for the same period of fiscal 2018. Net investment in property and equipment was $9.7 million for the first six months of fiscal 2019, as compared to $5.7 million for the first six months of fiscal 2018. Cash, restricted cash, and marketable securities at the end of the second quarter of fiscal 2019 were $67.3 million, which compares to $61.5 million at the end of the second quarter of fiscal 2018 and $64.3 million at the end of fiscal 2018.

Orders for the second quarter of fiscal 2019 increased 6.4 percent as compared to the second quarter of fiscal 2018. Orders increased in the Commercial, High School Park and Recreation, and Transportation business units, decreased in the International business unit, and remained relatively flat in the Live Events business unit.

Net sales increased by 2.0 percent in the second quarter of fiscal 2019 as compared to the second quarter of fiscal 2018. Net sales increased in the Commercial, High School Park and Recreation, Transportation, and International business units, and decreased in the Live Events business unit. The increase in the Commercial business unit was primarily due to the timing of large custom projects in the spectacular niche, increased order volumes in the on-premise niche, and an increase in the out-of-home niche shipments. Live Events sales decreased primarily due to the decrease of orders on a year to date basis.

Gross profit, as a percentage of net sales, was relatively flat at 24.8 percent for the second quarter of fiscal 2019 as compared to 25.2 percent a year earlier. Operating expenses for the second quarter of fiscal 2019 were $33.7 million, compared to $33.2 million for the second quarter of fiscal 2018. Operating income as a percent of sales for the quarter decreased to 5.2 percent as compared to the second quarter of fiscal 2018 operating income of 5.6 percent. In the first quarter of fiscal 2019, we recorded a tax benefit and in the second quarter we recorded a tax expense, which resulted in a zero-tax expense for year to date as our estimated effective tax rate is based on our estimate of permanent research and development tax credits which offsets the estimated tax expense for the year.

Reece Kurtenbach, chairman, president and chief executive officer stated, “The diversity of our end-markets and competitive solution portfolio enabled us to increase orders for the first half of the year. Strong market demand continued for larger sized spectacular projects, larger sports systems in high schools, after-sale service offerings, and signage for transportation infrastructure. And while the order volume was down for the first half of the year internationally, we were successful in winning transportation and global out-of-home advertising projects. Fewer large project opportunities were available in Live Events so far this year, causing orders and related sales to be down on a year to date basis. Warranty as a percent of sales for the quarter decreased to 2.5 percent as compared to the second quarter of fiscal 2018 warranty as a percent of sales of 3.9 percent. However, this improvement was offset by higher commodity costs and increases in selling expenses.

Outlook
Kurtenbach added, “As we enter into the second half of our fiscal year, we remain optimistic about our long-term outlook. Our portfolio of innovative products and technologies positioned us to capitalize on the growing market demand for digital canvases. In the short term, the current global tariff and trade environment has created cost headwinds on commodity and components used in the production of our solutions. We continue to monitor the situation and evaluate ways to minimize these impacts through vendor negotiations, alternative sources, and potential price adjustments. Our teams are focused on the continued development of industry leading solutions and global sales channels to support long-term profitable growth.”

Webcast Information
The company will host a conference call and webcast to discuss its financial results today at 10:00 a.m. (CST). 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, 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 2018 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
 
 
 
 
 


(1) Backlog is not a measure defined by U.S. generally accepted accounting principles ("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 April 28, 2018.




Daktronics, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
 
Three Months Ended
 
Six Months Ended
 
 
October 27,
2018
 
October 28,
2017
 
October 27,
2018
 
October 28,
2017
 
 
 
 
 
 
 
 
 
Net sales
 
$
172,692

 
$
169,309

 
$
326,880

 
$
342,037

Cost of sales
 
129,935

 
126,705

 
245,876

 
254,787

Gross profit
 
42,757

 
42,604

 
81,004

 
87,250

 
 
 
 
 
 
 
 
 
Operating expenses:
 
 

 
 

 
 

 
 

Selling
 
16,125

 
15,350

 
32,503

 
30,289

General and administrative
 
8,574

 
8,868

 
17,111

 
17,803

Product design and development
 
9,039

 
8,948

 
18,331

 
17,995

 
 
33,738

 
33,166

 
67,945

 
66,087

Operating income
 
9,019

 
9,438

 
13,059

 
21,163

 
 
 
 
 
 
 
 
 
Nonoperating income (expense):
 
 

 
 

 
 

 
 

Interest income
 
188

 
151

 
385

 
362

Interest expense
 
(2
)
 
(47
)
 
(41
)
 
(133
)
Other (expense) income, net
 
(66
)
 
(87
)
 
(220
)
 
58

 
 

 


 


 


Income before income taxes
 
9,139

 
9,455

 
13,183

 
21,450

Income tax expense
 
533

 
2,323

 
3

 
5,889

Net income
 
$
8,606

 
$
7,132

 
$
13,180

 
$
15,561

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 

 
 

 
 

 
 

Basic
 
44,780

 
44,412

 
44,717

 
44,345

Diluted
 
44,950

 
44,679

 
44,994

 
44,696

 
 
 
 
 
 
 
 
 
Earnings per share:
 
 

 
 

 
 

 
 

Basic
 
$
0.19

 
$
0.16

 
$
0.29

 
$
0.35

Diluted
 
$
0.19

 
$
0.16

 
$
0.29

 
$
0.35

 
 
 
 
 
 
 
 
 
Cash dividends declared per share
 
$
0.07

 
$
0.07

 
$
0.14

 
$
0.14




















Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)

 
October 27,
2018
 
April 28,
2018
 
(unaudited)
 
 
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
35,557

 
$
29,727

Restricted cash
26

 
28

Marketable securities
31,721

 
34,522

Accounts receivable, net
92,194

 
77,387

Inventories
69,529

 
75,335

Contract assets
30,633

 
30,968

Current maturities of long-term receivables
1,305

 
1,752

Prepaid expenses and other current assets
8,172

 
9,029

Income tax receivables
6,015

 
5,385

Total current assets
275,152

 
264,133

 
 
 
 
Property and equipment, net
69,470

 
68,059

Long-term receivables, less current maturities
1,348

 
1,641

Goodwill
8,053

 
8,264

Intangibles, net
6,101

 
3,682

Investment in affiliates and other assets
5,623

 
5,091

Deferred income taxes
7,939

 
7,930

Total non-current assets
98,534

 
94,667

TOTAL ASSETS
$
373,686

 
$
358,800

 
 
 
 









Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
 
October 27,
2018
 
April 28,
2018
 
(unaudited)
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 

Accounts payable
$
46,764

 
$
48,845

Contract liabilities
47,198

 
39,379

Accrued expenses
29,717

 
27,445

Warranty obligations
13,009

 
13,891

Current portion of other long-term obligations
1,106

 
1,088

Income taxes payable
272

 
660

Total current liabilities
138,066

 
131,308

 
 
 
 
Long-term warranty obligations
15,709

 
16,062

Long-term contract liabilities
8,520

 
7,475

Other long-term obligations, less current portion
2,420

 
2,285

Long-term income taxes payable
3,623

 
3,440

Deferred income taxes
611

 
614

Total long-term liabilities
30,883

 
29,876

TOTAL LIABILITIES
168,949

 
161,184

 
 
 
 
SHAREHOLDERS' EQUITY:
 

 
 

Common stock
55,608

 
54,731

Additional paid-in capital
41,345

 
40,328

Retained earnings
114,033

 
107,105

Treasury stock, at cost
(1,834
)
 
(1,834
)
Accumulated other comprehensive loss
(4,415
)
 
(2,714
)
TOTAL SHAREHOLDERS' EQUITY
204,737

 
197,616

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
373,686

 
$
358,800



 







Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
Six Months Ended
 
 
October 27,
2018
 
October 28,
2017
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Net income
 
$
13,180

 
$
15,561

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

 
 

Depreciation and amortization
 
9,300

 
8,902

Gain on sale of property, equipment and other assets
 
(93
)
 
(1,221
)
Share-based compensation
 
1,263

 
1,341

Contingent consideration adjustment
 
(956
)
 

Equity in loss of affiliate
 
265

 
191

Provision for doubtful accounts
 
51

 
(21
)
Deferred income taxes, net
 
(85
)
 
81

Change in operating assets and liabilities
 
(368
)
 
(15,496
)
Net cash provided by operating activities
 
22,557

 
9,338

 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 

 
 

Purchases of property and equipment
 
(9,833
)
 
(7,735
)
Proceeds from sales of property, equipment and other assets
 
182

 
2,000

Purchases of marketable securities
 
(9,209
)
 

Proceeds from sales or maturities of marketable securities
 
12,034

 
10,802

Purchases of equity investment
 
(854
)
 
(607
)
Acquisitions, net of cash acquired
 
(2,250
)
 

Net cash (used in) provided by investing activities
 
(9,930
)
 
4,460

 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 

 
 

Proceeds from exercise of stock options
 
57

 
511

Principal payments on long-term obligations
 
(431
)
 
(1,027
)
Dividends paid
 
(6,252
)
 
(6,197
)
Tax payments related to RSU issuances
 
(246
)
 
(311
)
Net cash used in financing activities
 
(6,872
)
 
(7,024
)
 
 
 
 
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
 
73

 
113

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
 
5,828

 
6,887

 
 
 
 
 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
 
 

 
 

Beginning of period
 
29,755

 
32,839

End of period
 
$
35,583

 
$
39,726

 
 
 
 
 









Daktronics, Inc. and Subsidiaries
Net Sales and Orders by Business Unit
(in thousands)
(unaudited)
 
Three Months Ended
 
Six Months Ended
 
October 27,
2018
 
October 28,
2017
 
Dollar Change
 
Percent Change
 
October 27,
2018
 
October 28,
2017
 
Dollar Change
 
Percent Change
Net Sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Commercial
$
46,069

 
$
34,377

 
$
11,692

 
34.0
 %
 
$
76,638

 
$
67,240

 
$
9,398

 
14.0
 %
    Live Events
55,099

 
68,653

 
(13,554
)
 
(19.7
)
 
104,571

 
146,265

 
(41,694
)
 
(28.5
)
    High School Park and Recreation
31,580

 
29,660

 
1,920

 
6.5

 
59,700

 
58,139

 
1,561

 
2.7

    Transportation
18,077

 
16,476

 
1,601

 
9.7

 
35,234

 
35,388

 
(154
)
 
(0.4
)
    International
21,867

 
20,143

 
1,724

 
8.6

 
50,737

 
35,005

 
15,732

 
44.9

 
$
172,692

 
$
169,309

 
$
3,383

 
2.0
 %
 
$
326,880

 
$
342,037

 
$
(15,157
)
 
(4.4
)%
Orders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Commercial
$
46,731

 
$
39,134

 
$
7,597

 
19.4
 %
 
$
82,523

 
$
69,071

 
$
13,452

 
19.5
 %
    Live Events
43,641

 
43,730

 
(89
)
 
(0.2
)
 
83,036

 
105,335

 
(22,299
)
 
(21.2
)
    High School Park and Recreation
18,445

 
14,737

 
3,708

 
25.2

 
56,894

 
46,917

 
9,977

 
21.3

    Transportation
21,279

 
14,245

 
7,034

 
49.4

 
43,195

 
23,514

 
19,681

 
83.7

    International
21,260

 
30,414

 
(9,154
)
 
(30.1
)
 
45,318

 
50,504

 
(5,186
)
 
(10.3
)
 
$
151,356

 
$
142,260

 
$
9,096

 
6.4
 %
 
$
310,966

 
$
295,341

 
$
15,625

 
5.3
 %



Reconciliation of Free Cash Flow*
(in thousands)
(unaudited)
 
Six Months Ended
 
October 27,
2018
 
October 28,
2017
Net cash provided by operating activities
$
22,557

 
$
9,338

Purchases of property and equipment
(9,833
)
 
(7,735
)
Proceeds from sales of property and equipment
182

 
2,000

Free cash flow
$
12,906

 
$
3,603


*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.