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): July 27, 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 August 20, 2013 Daktronics, Inc. (the “Registrant”) issued a press release announcing its financial results for the first quarter ended July 27, 2013 of fiscal 2014. 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: August 20, 2013 | |
EXHIBIT INDEX
Daktronics, Inc. Announces First Quarter Fiscal 2014 Results
Brookings, S.D. – August 20, 2013 - Daktronics, Inc. (NASDAQ - DAKT) today reported fiscal 2014 first quarter net sales of $138.7 million and net income of $5.7 million, or $0.13 per diluted share, compared to net sales of $132.9 million and net income of $6.7 million, or $0.16 per diluted share, for the first quarter of fiscal 2013. Fiscal 2014 first quarter orders were $159.3 million compared to $173.5 million for the first quarter of fiscal 2013. Backlog at the end of the fiscal 2014 first quarter was $167 million, compared with a backlog of $164 million a year earlier and $141 million at the end of the fourth quarter of fiscal 2013.
Free cash flow, defined as cash provided by operations less net purchases of property and equipment, was $(8.6) million for the first three months of fiscal 2014, compared to $15.2 million for the same period in fiscal 2013. Cash and marketable securities at the end of the first quarter of fiscal 2014 were $46.8 million, which compares to $64.7 million at the end of fiscal 2013 and $63.9 million at the end of the first quarter of fiscal 2013.
“We are pleased with our success in booking orders during the quarter. Last year's first quarter was a record level of orders, so it is a tough comparable. We were able to achieve a higher level of sales, and also ended with a slightly higher backlog as compared to the fiscal 2013 first and fourth quarters,” said Jim Morgan, president and chief executive officer.
Gross profit levels were lower compared to the first quarter of fiscal 2013 due to inherent variability in gross profit levels typical with large projects. Operating expenses in the fiscal 2014 first quarter increased slightly as a percentage of sales to 19.4 percent.
Orders
• | Orders in the Commercial business unit were down approximately 17 percent in the first quarter of fiscal 2014 compared to the first quarter of fiscal 2013. The decrease in orders was primarily the result of the volatility in the timing of orders in our digital billboard and our large video contract business. |
• | Orders in the Live Events business unit rose approximately 33 percent compared to the first quarter of fiscal 2013, and included orders for two large video display systems totaling approximately $20 million during the quarter. |
• | Orders in the Schools and Theatres business unit declined by approximately 17 percent for the first quarter of fiscal 2014 compared to the same period in fiscal 2013. Although the number of video projects for high schools was about the same as last year, the average selling price this year was less. |
• | Orders in the Transportation business unit were down approximately 56 percent compared to the same period in fiscal 2013, primarily as a result of booking the LAX Bradley International Terminal project worth approximately $20 million during the first quarter of fiscal 2013. In comparing quarterly results, excluding the LAX project, orders increased by approximately $2 million. |
• | Orders in the International business unit were down approximately 6 percent over the first quarter of fiscal 2013. The decrease is due to the historic volatility in timing on large orders. We have had continued strong success in the Australian region and secured orders of approximately $7 million there during the quarter. |
Outlook
Reece Kurtenbach, who will become the CEO for the company on September 1, added, “We continued to see a strong pipeline in the worldwide marketplace during the first quarter, and we continue to be optimistic in our ability to secure the orders to support modest sales growth in fiscal 2014. We began shipping our new LED outdoor surface-mount technology during the first quarter of fiscal 2014 and are seeing strong interest in this product. We continue to focus on our strategic goals to improve operating margins, selecting initiatives across the company to increase gross profit margins and control operating expenses.”
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 2013 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 | |||||||
July 27, 2013 | July 28, 2012 | ||||||
Net sales | $ | 138,722 | $ | 132,919 | |||
Cost of goods sold | 103,221 | 96,529 | |||||
Gross profit | 35,501 | 36,390 | |||||
Operating expenses: | |||||||
Selling expense | 13,617 | 13,080 | |||||
General and administrative | 7,299 | 6,581 | |||||
Product design and development | 5,989 | 6,021 | |||||
26,905 | 25,682 | ||||||
Operating income | 8,596 | 10,708 | |||||
Nonoperating income (expense): | |||||||
Interest income | 343 | 431 | |||||
Interest expense | (115 | ) | (87 | ) | |||
Other (expense) income, net | (392 | ) | (180 | ) | |||
Income before income taxes | 8,432 | 10,872 | |||||
Income tax expense | 2,712 | 4,194 | |||||
Net income | $ | 5,720 | $ | 6,678 | |||
Weighted average shares outstanding: | |||||||
Basic | 42,528 | 42,068 | |||||
Diluted | 42,766 | 42,141 | |||||
Earnings per share: | |||||||
Basic | $ | 0.13 | $ | 0.16 | |||
Diluted | $ | 0.13 | $ | 0.16 | |||
Cash dividends declared per share | $ | 0.120 | $ | 0.115 | |||
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Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands) | |||||||
July 27, 2013 | April 27, 2013 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash, cash equivalents and restricted cash | $ | 22,165 | $ | 40,676 | |||
Marketable securities | 24,636 | 24,052 | |||||
Accounts receivable, net | 86,921 | 63,227 | |||||
Inventories, net | 58,912 | 49,045 | |||||
Costs and estimated earnings in excess of billings | 35,332 | 39,355 | |||||
Current maturities of long-term receivables | 4,944 | 4,807 | |||||
Prepaid expenses and other assets | 5,505 | 6,185 | |||||
Deferred income taxes | 13,157 | 12,755 | |||||
Income tax receivables | 961 | 46 | |||||
Total current assets | 252,533 | 240,148 | |||||
Long-term receivables, less current maturities | 10,486 | 11,325 | |||||
Goodwill | 4,613 | 3,306 | |||||
Intangibles, net | 2,900 | 1,181 | |||||
Advertising rights, net and other assets | 773 | 772 | |||||
Deferred income taxes | 1,059 | 1,061 | |||||
19,831 | 17,645 | ||||||
PROPERTY AND EQUIPMENT: | |||||||
Land | 2,116 | 1,497 | |||||
Buildings | 59,198 | 57,012 | |||||
Machinery and equipment | 68,226 | 65,600 | |||||
Office furniture and equipment | 16,109 | 16,118 | |||||
Computer software and hardware | 42,362 | 41,745 | |||||
Equipment held for rental | 868 | 868 | |||||
Demonstration equipment | 8,359 | 8,400 | |||||
Transportation equipment | 4,203 | 4,026 | |||||
201,441 | 195,266 | ||||||
Less accumulated depreciation | 136,915 | 133,641 | |||||
64,526 | 61,625 | ||||||
TOTAL ASSETS | $ | 336,890 | $ | 319,418 | |||
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Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (continued) (in thousands) | |||||||
July 27, 2013 | April 27, 2013 | ||||||
(unaudited) | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Notes payable, bank | $ | 264 | $ | — | |||
Accounts payable | 48,916 | 38,651 | |||||
Accrued expenses | 21,696 | 24,331 | |||||
Warranty obligations | 13,433 | 13,933 | |||||
Billings in excess of costs and estimated earnings | 13,824 | 14,245 | |||||
Customer deposits (billed or collected) | 18,870 | 12,375 | |||||
Deferred revenue (billed or collected) | 7,421 | 9,112 | |||||
Current portion of other long-term obligations | 890 | 356 | |||||
Income taxes payable | 1,420 | 1,689 | |||||
Total current liabilities | 126,734 | 114,692 | |||||
Long-term warranty obligations | 11,554 | 11,213 | |||||
Long-term deferred revenue (billed or collected) | 4,909 | 4,424 | |||||
Other long-term obligations, less current maturities | 3,037 | 843 | |||||
Total long-term liabilities | 19,500 | 16,480 | |||||
TOTAL LIABILITIES | 146,234 | 131,172 | |||||
SHAREHOLDERS' EQUITY: | |||||||
Common stock | 38,489 | 37,429 | |||||
Additional paid-in capital | 27,919 | 27,194 | |||||
Retained earnings | 124,373 | 123,750 | |||||
Treasury stock, at cost | (9 | ) | (9 | ) | |||
Accumulated other comprehensive (loss) income | (116 | ) | (118 | ) | |||
TOTAL SHAREHOLDERS' EQUITY | 190,656 | 188,246 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 336,890 | $ | 319,418 | |||
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Daktronics, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) (unaudited) | ||||||||
Three Months Ended | ||||||||
July 27, 2013 | July 28, 2012 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 5,720 | $ | 6,678 | ||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
Depreciation | 3,757 | 3,819 | ||||||
Amortization | 65 | 57 | ||||||
Amortization of premium/discount on marketable securities | 59 | 48 | ||||||
(Gain) loss on sale of property and equipment | (31 | ) | 3 | |||||
Share-based compensation | 722 | 762 | ||||||
Excess tax benefits from share-based compensation | (3 | ) | (2 | ) | ||||
Provision for doubtful accounts | 417 | (281 | ) | |||||
Deferred income taxes, net | (400 | ) | 19 | |||||
Change in operating assets and liabilities | (14,924 | ) | 5,405 | |||||
Net cash (used in) provided by operating activities | (4,618 | ) | 16,508 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment | (4,042 | ) | (1,443 | ) | ||||
Proceeds from sale of property and equipment | 68 | 92 | ||||||
Purchases of marketable securities | (1,187 | ) | (3,857 | ) | ||||
Proceeds from sales or maturities of marketable securities | 500 | 3,999 | ||||||
Acquisition, net of cash acquired | (1,298 | ) | — | |||||
Net cash used in investing activities | (5,959 | ) | (1,209 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Payments on notes payable | — | (982 | ) | |||||
Proceeds from exercise of stock options | 293 | 58 | ||||||
Excess tax benefits from share-based compensation | 3 | 2 | ||||||
Principal payments on long-term obligations | (3,374 | ) | — | |||||
Dividends paid | (5,097 | ) | (4,832 | ) | ||||
Net cash used in financing activities | (8,175 | ) | (5,754 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 246 | (128 | ) | |||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (18,506 | ) | 9,417 | |||||
CASH AND CASH EQUIVALENTS: | ||||||||
Beginning of period | 40,628 | 29,423 | ||||||
End of period | $ | 22,122 | $ | 38,840 | ||||
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Daktronics, Inc. and Subsidiaries Net Sales and Orders by Business Unit (in thousands) (unaudited) | |||||||
Three Months Ended | |||||||
July 27, 2013 | July 28, 2012 | ||||||
Net Sales: | |||||||
Commercial | $ | 33,701 | $ | 38,356 | |||
Live Events | 55,077 | 44,509 | |||||
Schools & Theatres | 17,917 | 18,174 | |||||
Transportation | 13,042 | 16,596 | |||||
International | 18,985 | 15,284 | |||||
$ | 138,722 | $ | 132,919 | ||||
Orders: | |||||||
Commercial | $ | 36,975 | $ | 44,599 | |||
Live Events | 67,400 | 50,699 | |||||
Schools & Theatres | 19,551 | 23,458 | |||||
Transportation | 13,969 | 32,036 | |||||
International | 21,388 | 22,750 | |||||
$ | 159,283 | $ | 173,542 | ||||
Reconciliation of Cash Flow (Used in) Provided by Operating Activities to Free Cash Flow (in thousands) (unaudited) | |||||||
Three Months Ended | |||||||
July 27, 2013 | July 28, 2012 | ||||||
Net cash (used in) provided by operating activities | $ | (4,618 | ) | $ | 16,508 | ||
Purchases of property and equipment | (4,042 | ) | (1,443 | ) | |||
Proceeds from sales of property and equipment | 68 | 92 | |||||
Free cash flow | $ | (8,592 | ) | $ | 15,157 | ||
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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