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Daktronics, Inc. Announces Third Quarter Fiscal 2013 Results

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BROOKINGS, S.D., Feb. 19, 2013 (GLOBE NEWSWIRE) -- Daktronics, Inc. (Nasdaq:DAKT) today reported fiscal 2013 third quarter net sales of $111.1 million and net income of $2.7 million, or $0.06 per diluted share, compared to net sales of $122.9 million and net income of $1.7 million, or $0.04 per diluted share, for the third quarter of fiscal 2012. Fiscal 2013 third quarter orders were $134.3 million compared to $107.0 million for the third quarter of fiscal 2012. Backlog at the end of the fiscal 2013 third quarter was $149 million, compared with a backlog of $121 million a year earlier and $128 million at the end of the second quarter of fiscal 2013.

Net sales, net income and earnings per share for the nine months ended January 26, 2013 were $393.8 million, $20.9 million and $0.49 per diluted share, respectively. This compares to $377.5 million, $9.0 million and $0.21 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 $26.6 million for the first nine months of fiscal 2013, compared to $(4.1) million for the same period in fiscal 2012. Cash and marketable securities at the end of the third quarter of fiscal 2013 were $50.1 million, which compares to $50.6 million at the end of the fiscal 2012 third quarter.

"We were pleased with our order volume in the third quarter which set us up with a solid backlog going into the fourth quarter. On the sales front, we had anticipated our sales level would be comparable to fiscal 2012 third quarter, but we came in under that primarily due to on-site schedule changes which delayed a couple of large projects. The revenue associated with these delays will be realized in the fourth quarter," said Jim Morgan, president and chief executive officer.

Gross profit levels were lower primarily due to the lower revenues for the third quarter compared to the level of fixed costs in our infrastructure. Operating expenses for the quarter were relatively flat compared to the third quarter of fiscal 2012. We realized a one-time tax benefit this quarter for the reinstatement of the research and development tax credit which provided an approximate $1.9 million tax benefit for the quarter.

Orders

  • Orders in the Commercial business unit were up approximately 20 percent in the third quarter of fiscal 2013 compared to the third quarter of fiscal 2012, including two video system orders for a combined total of approximately $7.5 million and a slight increase in the volume of standard orders booked. Billboard orders remained flat compared to the previous year.
  • Orders in the third quarter of fiscal 2013 for the Live Events business unit rose approximately 23 percent compared to the third quarter of fiscal 2012 as a result of winning multiple large sport venue projects during the quarter. Significant orders booked in the quarter included video display systems at two NFL stadiums and one at the University of Illinois with a combined total of over $19 million.
  • Orders in the Schools and Theatres business unit improved by approximately two percent for the third quarter of fiscal 2013, compared to the same period in fiscal 2012. The continued improvement during fiscal 2013 was in part due to schools demonstrating more willingness this year than in fiscal 2012 to move forward with projects along with increased interest in larger video display systems for high schools.
  • Orders in the Transportation business were up approximately 29 percent compared to the same period in fiscal 2012, primarily as a result of booking the first $6 million commitment related to the previously announced $20 million procurement contract with the New Jersey Turnpike Authority and booking a $3 million project with one of our ongoing state department of transportation customers.
  • Orders in the International business unit were up approximately 62 percent over the third quarter of fiscal 2012. Orders for the quarter included two projects totaling $5.1 million for sports venues and a $2.2 million order from one of our commercial national accounts customers, all originating in the Asia Pacific region.

Outlook

Morgan added, "Our backlog includes some work that is not deliverable in the fourth quarter of fiscal 2013 due to customers' schedules; however, we expect sales to increase in our fiscal 2013 fourth quarter over both the third quarter of fiscal 2013 and the fourth quarter of fiscal 2012. Gross profit margin is expected to be lower than our fiscal 2013 year-to-date levels due to the mix of business, as we anticipate working on a number of larger contracts with lower sales margins this quarter. Operating expenses are expected to be slightly less than in our fiscal third quarter. We are estimating that our capital investment for all of fiscal 2013 will be less than $11.0 million, down from $16.5 million in fiscal 2012."

"We continue to see a strong pipeline of potential business. We see opportunities in our International business unit in third party advertising. We recently announced the prospective acquisition of OPEN Out-of Home Solutions ("OPEN"), a Belgian company that specializes in serving the third party advertising market in Europe. We expect to complete the integration of OPEN into Daktronics by the first quarter of fiscal 2014, and we look forward to the opportunities this acquisition offers. We see opportunity for continued growth in video projects for high schools in Schools and Theatres, and large video systems in Live Events. Transportation has a strong pipeline and we will start shipping our new full color standard displays specially designed for that market in the fourth quarter. We see the shift to full color in the transportation business as a positive growth driver for that business. We expect a limited amount of growth in our commercial business, but opportunities exist for large video projects and replacement programs of some of our national on-premise accounts. We remain committed to our three-year strategic goal to significantly improve operating margin by attaining top line growth and containing costs. We have more work to do over the next couple of years to achieve and sustain that goal, and we will continue to work on improvements during the fourth quarter. We continue to work to improve the gross profit on contracts as well as on standard products through initiatives in product design, manufacturing, and project management," 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 Nine Months Ended
January 26, January 28, January 26, January 28,
2013 2012 2013 2012
Net sales $ 111,050 $ 122,925 $ 393,840 $ 377,532
Cost of goods sold 84,001 95,070 288,049 288,702
Gross profit 27,049 27,855 105,791 88,830
Operating expenses:
Selling expense 13,652 13,341 39,528 38,475
General and administrative 6,717 6,974 20,148 20,410
Product design and development 5,611 5,696 17,477 17,050
25,980 26,011 77,153 75,935
Operating income 1,069 1,844 28,638 12,895
Nonoperating income (expense):
Interest income 386 434 1,165 1,326
Interest expense (28) (61) (151) (231)
Other expense, net (193) (29) (224) (221)
Income before income taxes 1,234 2,188 29,428 13,769
Income tax (benefit) expense (1,476) 522 8,493 4,775
Net income $ 2,710 $ 1,666 $ 20,935 $ 8,994
Weighted average shares outstanding:
Basic 42,343 41,916 42,206 41,811
Diluted 42,539 42,076 42,447 42,175
Earnings per share:
Basic $ 0.06 $ 0.04 $ 0.50 $ 0.22
Diluted $ 0.06 $ 0.04 $ 0.49 $ 0.21
Cash dividend declared per share 0.615 0.510 0.730 0.620
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
January 26, April 28,
2013 2012
(unaudited)
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and restricted cash $ 24,553 $ 30,592
Marketable securities 25,539 25,258
Accounts receivable, net 59,592 66,923
Inventories 49,578 54,924
Costs and estimated earnings in excess of billings 41,120 23,020
Current maturities of long-term receivables 5,123 5,830
Prepaid expenses and other assets 6,606 5,528
Deferred income taxes 11,191 10,941
Income tax receivables 2,847 5,990
Total current assets 226,149 229,006
Long-term receivables, less current maturities 12,181 12,622
Goodwill 3,328 3,347
Intangibles 1,238 1,409
Advertising rights, net and other assets 988 1,157
Deferred income taxes 35 30
17,770 18,565
PROPERTY AND EQUIPMENT:
Land 1,497 1,497
Buildings 57,018 56,431
Machinery and equipment 63,789 61,654
Office furniture and equipment 16,199 15,648
Computer software and hardware 41,506 42,172
Equipment held for rental 868 1,003
Demonstration equipment 8,315 9,806
Transportation equipment 4,100 4,116
193,292 192,327
Less accumulated depreciation 130,626 123,931
62,666 68,396
TOTAL ASSETS $ 306,585 $ 315,967
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
January 26, April 28,
2013 2012
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable, bank $ -- $ 1,459
Accounts payable 31,798 33,906
Accrued expenses 23,834 22,731
Warranty obligations 12,076 13,049
Billings in excess of costs and estimated earnings 14,796 14,385
Customer deposits (billed or collected) 11,323 12,826
Deferred revenue (billed or collected) 8,553 9,751
Current portion of other long-term obligations 394 359
Income taxes payable 625 665
Deferred income taxes 39 42
Total current liabilities 103,438 109,173
Long-term warranty obligations 9,996 9,166
Long-term deferred revenue (billed or collected) 5,221 4,361
Other long-term obligations, less current maturities 803 1,009
Deferred income taxes 1,453 1,453
Total long-term liabilities 17,473 15,989
TOTAL LIABILITIES 120,911 125,162
SHAREHOLDERS' EQUITY:
Common stock 37,259 34,631
Additional paid-in capital 26,549 24,320
Retained earnings 121,906 131,830
Treasury stock, at cost, 19,680 shares (9) (9)
Accumulated other comprehensive (loss) income (31) 33
TOTAL SHAREHOLDERS' EQUITY 185,674 190,805
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 306,585 $ 315,967
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
January 26, January 28,
2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 20,935 $ 8,994
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 11,614 13,209
Amortization 171 189
Amortization of premium/discount on marketable securities 140 140
Loss on sale of property and equipment 33 11
Share-based compensation 2,344 2,474
Excess tax benefits from share-based compensation (61) (30)
Provision for doubtful accounts (197) (125)
Deferred income taxes, net (258) (377)
Change in operating assets and liabilities (1,466) (16,092)
Net cash provided by operating activities 33,255 8,393
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (6,799) (12,633)
Proceeds from sale of property and equipment 175 168
Purchases of marketable securities (13,301) (10,968)
Proceeds from sales or maturities of marketable securities 12,820 13,925
Net cash used in investing activities (7,105) (9,508)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes payable -- 782
Payments on notes payable (1,460) --
Proceeds from exercise of stock options 1,146 431
Excess tax benefits from share-based compensation 61 30
Dividends paid (30,859) (25,950)
Net cash used in financing activities (31,112) (24,707)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 43 66
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,919) (25,756)
CASH AND CASH EQUIVALENTS:
Beginning of period 29,423 54,308
End of period $ 24,504 $ 28,552
Daktronics, Inc. and Subsidiaries
Net Sales and Orders by Business Unit
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
January 26, January 28, January 26, January 28,
2013 2012 2013 2012
Net Sales:
Commercial $ 30,997 $ 38,833 $ 109,127 $ 115,239
Live Events 26,528 38,496 121,641 123,676
Schools & Theatres 11,778 10,696 51,639 46,418
Transportation 23,546 10,261 57,713 34,201
International 18,201 24,639 53,720 57,998
$ 111,050 $ 122,925 $ 393,840 $ 377,532
Orders:
Commercial $ 36,988 $ 30,720 $ 113,622 $ 111,319
Live Events 47,391 38,684 132,285 122,507
Schools & Theatres 10,183 9,941 48,106 41,589
Transportation 19,972 15,443 59,504 43,459
International 19,776 12,218 64,667 46,117
$ 134,310 $ 107,006 $ 418,184 $ 364,991
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow
(in thousands)
(unaudited)
Nine Months Ended
January 26, January 28,
2013 2012
Net cash provided by operating activities $ 33,255 $ 8,393
Purchases of property and equipment (6,799) (12,633)
Proceeds from sales of property and equipment 175 168
Free cash flow $ 26,631 $ (4,072)

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