Daktronics, Inc.
Feb 21, 2012

Daktronics, Inc. Announces Third Quarter Fiscal 2012 Results

BROOKINGS, S.D., Feb. 21, 2012 (GLOBE NEWSWIRE) -- Daktronics, Inc. (Nasdaq:DAKT) today reported fiscal 2012 third quarter net sales of $122.9 million and net income of $1.7 million, or $0.04 per diluted share, compared to net sales of $99.9 million and net income of $1.8 million, or $0.04 per diluted share, for the third quarter of fiscal 2011. Backlog at the end of the fiscal 2012 third quarter was approximately $121 million, compared with a backlog of approximately $128 million a year earlier and $137 million at the end of the second quarter of fiscal 2012.

Net sales, net income and earnings per share for the nine months ended January 28, 2012 were $377.5 million, $9.0 million and $0.21 per diluted share, respectively. This compares to $327.3 million, $11.3 million and $0.27 per diluted share, respectively, for the same period in fiscal 2011.

Free cash flow, defined as cash provided by operations less net purchases of property and equipment, was $(4.1) million through the third quarter of fiscal 2012 compared to $32.0 million through the same period one year ago. Cash and marketable securities at the end of the third quarter of fiscal 2012 were $50.6 million.

"The third quarter is typically a challenge for us due to the number of holidays that fall in the quarter and the seasonality of our business. However, we had a good backlog going into the quarter, and we executed well on delivering against that backlog," said Jim Morgan, president and chief executive officer. "In the third quarter of each fiscal year, gross profit margin can decrease sequentially due to the typically lower sales levels. During each fiscal third quarter, we also have costs related to the holidays, and we attempt to estimate the impact of these factors in our gross profit margin. Costs that exceeded our estimates included a benefit cost increase over the previous quarter which translated into approximately a 1% decrease in gross profit margin, and various other costs in excess of our estimates which accumulated to another 1%."

Morgan added, "We also had a weaker quarter for order bookings compared to one year ago, in part due to the decline in professional baseball orders, which was expected, and some delays in booking orders in our International business unit."

Business Highlights


Morgan added, "As a result of the lower order volume in the third quarter, as discussed above, net sales could decline in the fourth quarter of fiscal 2012 compared to the third quarter of fiscal 2012, which would put pressure on our gross profit margins. We are expecting that the higher benefit and certain other cost increases we experienced in the latest quarter will decrease in the fourth quarter. We will continue our efforts at cost reduction to improve gross margins." 

"There is continuing strength in our Commercial business unit, driven by our billboard and standard products, and in our International business unit driven by our new indoor and outdoor high resolution video display technology, including billboard applications. Our Schools and Theatres business unit is still feeling the effects of the tougher economy, although we continue to see interest in video systems for high schools and pipeline improvements in standard product in some areas of the country. There is a strong pipeline of opportunities in the Live Events business, and the opportunity for a strong quarter of order bookings exists, but, as always, it will depend on our win rate on the large projects. We expect transportation orders to be relatively flat in the short term, as we just finished booking the large New Jersey Turnpike order in the third quarter, but there are a couple of large opportunities in the pipeline that could drive higher order volume. Overall, we expect that orders will increase in the fourth quarter of fiscal 2012 compared to the fourth quarter of fiscal 2011," said Morgan.

"We are continuing our investment in developing our international presence and are pleased to announce the opening of sales and service offices in Spain and Singapore. We expect our sales and service office in Brazil to be operational in our fiscal 2012 fourth quarter." 


"Our focus continues to be on winning orders to grow the top line, while reducing costs by improving our manufacturing processes across the company and further lowering the manufactured costs of our products through product development initiatives and leveraging a global supply chain. We will continue with initiatives to further improve reliability and quality, maintain a high level of on-time delivery, and strengthen our after-sales service delivery. Finally, we will continue to focus on operating expenses and 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," concluded 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 the 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 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 and orders, fluctuations in margins, the introduction of new products and technology, the impact of adverse weather conditions, increased regulation and other risks described in the company's SEC filings, including its Annual Report on Form 10-K for its 2011 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.

Financial tables are included on the following pages.

Daktronics, Inc. and Subsidiaries
Consolidated Statements of Operations 
(in thousands, except per share amounts)
 Three Months EndedNine Months Ended
 January 28,
January 29,
January 28,
January 29,
Net sales  $ 122,925  $ 99,868  $ 377,532  $ 327,289
Cost of goods sold  95,070  76,226  288,702  244,242
 Gross profit  27,855  23,642  88,830  83,047
Operating expenses:        
 Selling expense  13,341  12,148  38,475  37,084
 General and administrative  6,974  6,047  20,410  17,259
 Product design and development  5,696  4,673  17,050  13,787
   26,011  22,868  75,935  68,130
 Operating income  1,844  774  12,895  14,917
Nonoperating income (expense):        
 Interest income  434  544  1,326  1,382
 Interest expense  (61)  (41)  (231)  (118)
 Other (expense) income, net  (29)  557  (221)  818
 Income before income taxes  2,188  1,834  13,769  16,999
 Income tax expense  522  3  4,775  5,718
 Net income  $ 1,666  $ 1,831  $ 8,994  $ 11,281
Weighted average shares outstanding:        
 Basic  41,916  41,534  41,811  41,341
 Diluted  42,076  42,201  42,175  41,969
Earnings per share:        
 Basic  0.04  0.04  0.22  0.27
 Diluted  $ 0.04  $ 0.04  $ 0.21  $ 0.27
Cash dividend paid per share  $ 0.51 $ --   $ 0.62  $ 0.60
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets 
(in thousands)
  January 28,

April 30,
 Cash, cash equivalents and restricted cash  $ 30,661  $ 55,854
 Marketable securities  19,916  22,943
 Accounts receivable, net  53,925  61,778
 Inventories  51,979  46,889
 Costs and estimated earnings in excess of billings  34,557  24,193
 Current maturities of long-term receivables  6,028  5,343
 Prepaid expenses and other assets  6,155  6,312
 Deferred income taxes  9,975  9,640
 Income tax receivables  3,813  4,870
 Total current assets  217,009  237,822
 Advertising rights, net and other assets  1,155  1,383
 Long-term receivables, less current maturities  12,952  13,558
 Goodwill  3,327  3,384
 Intangibles  1,466  1,654
 Deferred income taxes  271  180
   19,171  20,159
 Land  1,497  1,497
 Buildings  56,079  55,457
 Machinery and equipment  62,916  58,233
 Office furniture and equipment  15,640  15,648
 Computer software and hardware  41,162  37,754
 Equipment held for rental  1,318  1,283
 Demonstration equipment  9,060  8,086
 Transportation equipment  4,014  3,688
   191,686  181,646
 Less accumulated depreciation  122,664  111,780
   69,022  69,866
TOTAL ASSETS  $ 305,202  $ 327,847
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued) 
(in thousands)
  January 28,

April 30,
 Notes payable, bank  $ 3,180  $ 2,316
 Accounts payable  31,951  29,223
 Accrued expenses  17,917  21,748
 Warranty obligations  14,095  14,474
 Billings in excess of costs and estimated earnings  13,952  20,284
 Customer deposits  9,849  11,288
 Deferred revenue (billed or collected)  8,604  8,770
 Current portion of other long-term obligations  369  273
 Income tax payable  462  880
 Deferred income taxes  450  406
 Total current liabilities  100,829  109,662
Long-term warranty obligations   8,998  8,508
Long-term deferred revenue (billed or collected)  3,710  4,559
Other long-term obligations, less current maturities  1,270  2,010
Deferred income taxes  10  6
 Total long-term liabilities  13,988  15,083
TOTAL LIABILITIES  114,817  124,745
 Common stock  34,515  32,670
 Additional paid-in capital  23,564  21,149
 Retained earnings  132,335  149,291
 Treasury stock, at cost  (9)  (9)
 Accumulated other comprehensive income  (20)  1
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows 
(in thousands)
 Nine Months Ended
 January 28,
January 29,
Net income  $ 8,994  $ 11,281
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization  13,398  14,980
Amortization of premium/discount on marketable securities  140  --
Loss (gain) on sale of property and equipment  11  53
Stock-based compensation  2,474  2,595
Excess tax benefit on exercise of stock options  (30)  (106)
Equity in losses of affiliates  --  36
Provision for doubtful accounts  (125)  (10)
Deferred income taxes, net  (377)  2,172
Change in operating assets and liabilities  (16,092)  6,373
 Net cash provided by operating activities  8,393  37,374
Purchases of property and equipment  (12,633)  (5,595)
Proceeds from sale of property and equipment  168  195
Purchases of marketable securities  (10,968)  (16,869)
Sales or maturities of marketable securities  13,925  --
Insurance recoveries on property and equipment  --  114
Other investing activities, net  --  2,095
 Net cash used in investing activities  (9,508)  (20,060)
Borrowings on notes payable  782  --
Proceeds from exercise of stock options  431  1,223
Excess tax benefits from stock-based compensation  30  106
Principal payments on long-term debt  --  (14)
Dividends paid  (25,950)  (24,794)
 Net cash used in financing activities  (24,707)  (23,479)
 Beginning of period  54,308  63,603
 End of period  $ 28,552  $ 57,549
Daktronics, Inc. and Subsidiaries
Net Sales and Orders By Business Unit
(in thousands)
 Three Months EndedNine Months Ended
 January 28,
January 29,
January 28,
January 29,
Net Sales:        
Commercial  $ 38,833  $ 28,750  $ 115,240  $ 83,760
Live Events  38,496  36,138  123,676  120,846
Schools & Theatres  10,696  11,672  46,418  49,671
Transportation  10,261  11,063  34,200  30,091
International  24,639  12,245  57,998  42,921
Total net sales  $ 122,925  $ 99,868  $ 377,532  $ 327,289
Commercial  $ 30,720  $ 25,772  $ 111,319  $ 84,484
Live Events  38,684  46,797  122,507  110,798
Schools & Theatres  9,941  12,171  41,589  47,773
Transportation  15,443  11,416  43,459  32,452
International  12,218  8,993  46,117  48,683
Total orders  $ 107,006  $ 105,149  $ 364,991  $ 324,190
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow
(in thousands)
 Nine Months Ended
 January 28,
January 29,
Net cash provided by operating activities  $ 8,393  $ 37,374
Purchases of property and equipment  (12,633)  (5,595)
Proceeds from sale of property and equipment  168  195
Free cash flow  $ (4,072)  $ 31,974

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 and management when assessing period to period results and may not be computed the same as similarly titled measures used by other companies.


         Bill Retterath, Chief Financial Officer

         (605) 692-0200