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Daktronics, Inc. Announces Second Quarter Fiscal 2013 Results

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BROOKINGS, S.D., Nov. 20, 2012 (GLOBE NEWSWIRE) -- Daktronics, Inc. (Nasdaq:DAKT) today reported fiscal 2013 second quarter net sales of $149.9 million and net income of $11.5 million, or $0.27 per diluted share, compared to net sales of $135.9 million and net income of $4.0 million, or $0.09 per diluted share, for the second quarter of fiscal 2012. Fiscal 2013 second quarter orders were $110.3 million compared to $117.8 million for the second quarter of fiscal 2012. Backlog at the end of the fiscal 2013 second quarter was $128 million, compared with a backlog of $137 million a year earlier and $164 million at the end of the first quarter of fiscal 2013.

Net sales, net income and earnings per share for the six months ended October 27, 2012 were $282.8 million, $18.2 million and $0.43 per diluted share, respectively. This compares to $254.6 million, $7.3 million and $0.17 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 $29.8 million for the first six months of fiscal 2013, compared to $15.4 million for the same period in fiscal 2012. Cash and marketable securities at the end of the second quarter of fiscal 2013 were $79.1 million.

"We went into the quarter with a strong backlog coming off a record order level in the first quarter. Our people did a great job executing and delivering against that backlog," said Jim Morgan, president and chief executive officer.

"The higher revenue levels helped us achieve higher gross profit margins as we realized better utilization across the company. It is noteworthy that gross profit margins were improved in all of our business units for the quarter, which resulted in an overall gross profit margin improvement over the same quarter a year ago of more than five percentage points. This higher gross profit margin, in conjunction with our operating expenses remaining relatively flat, resulted in over 11 percent operating margins for the quarter and just under 10 percent year to date. Operating income in dollars was two and one-half times that of the second quarter of fiscal 2012," continued Morgan.

Orders

  • Orders in the Commercial business were down four percent compared to the second quarter of fiscal 2012. Billboard orders were down primarily due to timing of larger volume purchases. Several large orders anticipated to book within the quarter were pushed out, including a $5 million order that we received verbal confirmation of early in the quarter. We are working through contractual details and expect it to book soon.
  • Orders in the second quarter of fiscal 2013 for the Live Events business unit were down approximately 23 percent compared to the second quarter of fiscal 2012. The decrease in orders was the result of the normal variability of our business, competitive pressures in the marketplace, and the timing of orders getting booked. Significant orders booked in the quarter included video display systems for the football stadiums at the University of Wisconsin and the University of Washington that totaled over $8 million. Since the end of the quarter, we have been verbally awarded an order with a major arena in excess of $5 million.
  • Orders in the Schools and Theatres business unit were up approximately seven percent for the second quarter of fiscal 2013, compared to the same period in fiscal 2012. The improvement during fiscal 2013 is in part due to schools demonstrating more willingness this year than in fiscal 2012 regarding moving forward with projects. We are also continuing to see increasing interest in larger video display systems for high schools.
  • Orders in the Transportation business were down 39 percent primarily as a result of the normal variability of our business and the timing of orders. The first $6 million commitment related to the previously announced $20 million procurement contract with the New Jersey Turnpike Authority, which we had projected to book in the second quarter is now expected to book in the third quarter. We have also been given a letter of intent for a $3 million project with one of our ongoing customers that we expect to book as an order in the near future.
  • Orders in the International business unit were up 57 percent over the second quarter of fiscal 2012. Orders for the quarter included a $6.1 million order for a large architectural lighting project in China and orders for a major sports stadium in Sydney, Australia and a second stadium in Perth, Australia totaling in excess of $3 million.

Outlook

Morgan added, "We are pleased with our strong second quarter financial performance, which finishes off a strong first half for us. The first half of the year tends to be our strongest half due to the seasonality of our business, and we expect sales and gross profit margins for the rest of the year to lag those of the first half of the year. However, we remain committed to our three-year strategic goal to significantly improve operating margin. We have more work to do over the next couple of years to achieve and sustain that goal: however, the first half of the year is a good start in that direction. We continue to work to improve the gross profit on contracts as well as standard product through initiatives in product design, manufacturing, and project management. We are estimating that our capital investment for all of fiscal 2013 will be approximately $14.0 million, down from $16.5 million in fiscal 2012."

"On the product side, we are just beginning the shipment of our new 4200 Series Digital Billboard Product. This product offers enhanced features such as improved image quality, diagnostics, and reliability, along with lower operating power. We also recently began shipping our latest fuel price digit products offering an enhanced font along with improved overall reliability. Our Transportation business will begin shipping full-color Vanguard displays in the next few months. This is the first of a complete product family offering full-color solutions for everything from lane control displays to larger roadside message displays as we see a trend away from lower resolution, monochrome displays in this market. Our primary focus in our video products area is the development of our next generation of surface mount outdoor product which will offer a wider array of pixel pitches and improve the manufacturability of the product to achieve improved performance at a reduced cost. We anticipate the first shipment of this product later in this fiscal year," 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.

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, 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.

Daktronics, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
October 27,
2012
October 29,
2011
October 27,
2012
October 29,
2011
Net sales $ 149,871 $ 135,910 $ 282,790 $ 254,607
Cost of goods sold 107,519 104,440 204,048 193,631
Gross profit 42,352 31,470 78,742 60,976
Operating expenses:
Selling expense 12,796 12,926 25,876 25,135
General and administrative 6,850 6,972 13,431 13,436
Product design and development 5,845 5,636 11,866 11,353
25,491 25,534 51,173 49,924
Operating income 16,861 5,936 27,569 11,052
Nonoperating income (expense):
Interest income 348 457 779 892
Interest expense (36) (95) (123) (171)
Other income (expense), net 150 (47) (30) (193)
Income before income taxes 17,323 6,251 28,195 11,580
Income tax expense 5,776 2,292 9,970 4,253
Net income $ 11,547 $ 3,959 $ 18,225 $ 7,327
Weighted average shares outstanding:
Basic 42,163 41,792 42,138 41,759
Diluted 42,286 41,934 42,272 41,938
Earnings per share:
Basic $ 0.27 $ 0.09 $ 0.43 $ 0.18
Diluted $ 0.27 $ 0.09 $ 0.43 $ 0.17
Cash dividends declared per share $ — $ — $ 0.115 $ 0.11
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
October 27,
2012
April 28,
2012
(unaudited)
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and restricted cash $ 53,143 $ 30,592
Marketable securities 25,969 25,258
Accounts receivable, net 71,189 66,923
Inventories 53,830 54,924
Costs and estimated earnings in excess of billings 32,480 23,020
Current maturities of long-term receivables 4,923 5,830
Prepaid expenses and other assets 7,000 5,528
Deferred income taxes 11,214 10,941
Income tax receivables 138 5,990
Total current assets 259,886 229,006
Long-term receivables, less current maturities 11,967 12,622
Goodwill 3,336 3,347
Intangibles 1,295 1,409
Advertising rights, net and other assets 1,039 1,157
Deferred income taxes 30 30
17,667 18,565
PROPERTY AND EQUIPMENT:
Land 1,497 1,497
Buildings 56,964 56,431
Machinery and equipment 62,748 61,654
Office furniture and equipment 16,198 15,648
Computer software and hardware 40,503 42,172
Equipment held for rental 868 1,003
Demonstration equipment 8,656 9,806
Transportation equipment 4,143 4,116
191,577 192,327
Less accumulated depreciation 127,170 123,931
64,407 68,396
TOTAL ASSETS $ 341,960 $ 315,967
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable, bank $ 478 $ 1,459
Accounts payable 34,661 33,906
Accrued expenses 23,833 22,731
Warranty obligations 13,011 13,049
Billings in excess of costs and estimated earnings 17,711 14,385
Customer deposits (billed or collected) 14,703 12,826
Deferred revenue (billed or collected) 9,234 9,751
Current portion of other long-term obligations 477 359
Income tax payable 3,322 665
Deferred income taxes 57 42
Total current liabilities 117,487 109,173
Long-term warranty obligations 9,833 9,166
Long-term deferred revenue (billed or collected) 4,740 4,361
Other long-term obligations, less current maturities 1,457 1,009
Deferred income taxes 1,453 1,453
Total long-term liabilities 17,483 15,989
TOTAL LIABILITIES 134,970 125,162
SHAREHOLDERS' EQUITY:
Common stock 35,801 34,631
Additional paid-in capital 25,988 24,320
Retained earnings 145,223 131,830
Treasury stock, at cost, 19,680 shares (9) (9)
Accumulated other comprehensive (loss) income (13) 33
TOTAL SHAREHOLDERS' EQUITY 206,990 190,805
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 341,960 $ 315,967
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
October 27,
2012
October 29,
2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 18,225 $ 7,327
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 7,717 8,879
Amortization 114 131
Amortization of premium/discount on marketable securities 93 101
Gain on sale of property and equipment (11) (7)
Share-based compensation 1,654 1,669
Excess tax benefits from share-based compensation (13) (10)
Provision for doubtful accounts (187) (337)
Deferred income taxes, net (258) (26)
Change in operating assets and liabilities 6,708 3,748
Net cash provided by operating activities 34,042 21,475
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (4,331) (6,236)
Proceeds from sale of property and equipment 119 147
Purchases of marketable securities (6,828) (7,739)
Proceeds from sales and maturities of marketable securities 5,992 4,975
Net cash used in investing activities (5,048) (8,853)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes payable 782
Payments on notes payable (982)
Proceeds from exercise of stock options 439 330
Excess tax benefits from share-based compensation 13 10
Dividends paid (4,832) (4,588)
Net cash used in financing activities (5,362) (3,466)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 39 (4)
NET INCREASE IN CASH AND CASH EQUIVALENTS 23,671 9,152
CASH AND CASH EQUIVALENTS:
Beginning of period 29,423 54,308
End of period $ 53,094 $ 63,460
Daktronics, Inc. and Subsidiaries
Net Sales and Orders by Business Unit
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
October 27,
2012
October 29,
2011
October 27,
2012
October 29,
2011
Net Sales:
Commercial $ 39,773 $ 43,704 $ 78,130 $ 76,407
Live Events 50,604 46,664 95,113 85,181
Schools & Theatres 21,688 17,239 39,861 35,721
Transportation 17,571 12,439 34,167 23,939
International 20,235 15,864 35,519 33,359
$ 149,871 $ 135,910 $ 282,790 $ 254,607
Orders:
Commercial $ 32,035 $ 33,358 $ 76,634 $ 80,599
Live Events 34,195 44,488 84,894 83,823
Schools & Theatres 14,465 13,475 37,923 31,648
Transportation 7,496 12,342 39,532 28,016
International 22,141 14,132 44,891 33,899
$ 110,332 $ 117,795 $ 283,874 $ 257,985
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow
(in thousands)
(unaudited)
Six Months Ended
October 27,
2012
October 29,
2011
Net cash provided by operating activities $ 34,042 $ 21,475
Purchase of property and equipment (4,331) (6,236)
Proceeds from sales of property and equipment 119 147
Free cash flow $ 29,830 $ 15,386
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.
CONTACT: INVESTOR RELATIONS: Sheila Anderson, Chief Financial Officer (605) 692-0200 Investor@daktronics.com

Source:Daktronics

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