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| 8-K - 8-K - DAKTRONICS INC /SD/ | dakt-20120728_8xk.htm |
Daktronics, Inc. Announces First Quarter Fiscal 2013 Results
Brookings, S.D. – August 21, 2012 - Daktronics, Inc. (Nasdaq - DAKT) today reported fiscal 2013 first quarter net sales of $132.9 million and net income of $6.7 million, or $0.16 per diluted share, compared to net sales of $118.7 million and net income of $3.4 million, or $0.08 per diluted share, for the first quarter of fiscal 2012. Fiscal 2013 first quarter orders were a record $173.5 million compared to $140.2 million for the first quarter of fiscal 2012. Backlog at the end of the fiscal 2013 first quarter was approximately $164 million, compared with a backlog of approximately $154 million a year earlier and $123 million at the end of fiscal 2012.
Free cash flow, defined as cash provided by operations less net purchases of property and equipment, was $15.2 million through the first quarter of fiscal 2013, compared to $8.8 million through the same period in fiscal 2012. Cash and marketable securities at the end of the first quarter of fiscal 2013 were $63.9 million.
“Our positive results for the quarter were led by an increase in our top line in conjunction with increased gross profit margins,” said Jim Morgan, president and chief executive officer. “The increase in gross profit margins was primarily driven by higher than expected margins on large contracts in our Live Events and Transportation business units, including some unusually large gains on a few contracts.”
“The results also reflected the benefits of our emphasis on cost containment throughout the organization. Although operating expenses were up compared to a year ago, they were down by almost six percent from the fourth quarter of fiscal 2012. We are putting a continued emphasis on our cost infrastructure and look forward to achieving incremental earnings leverage as our sales increase,” continued Morgan.
Orders
• | Orders in the first quarter of fiscal 2013 for the Live Events business unit were up approximately 29 percent compared to the first quarter of fiscal 2012. Orders were driven by projects across both college and professional facilities and included new systems for Syracuse University, the University of Minnesota, the University of Washington, Nationwide Arena, home of the NHL's Columbus Blue Jackets and a number of other facilities. |
• | Orders in the International business unit were up more than 15 percent over the first quarter of fiscal 2012. The increase was driven by orders from a number of outdoor advertising companies located around the world, including Puerto Rico, Mexico, Australia, and Saudi Arabia. |
• | Orders in the Commercial business unit were down approximately six percent for the first quarter of fiscal 2013 compared to the prior year's first quarter. The decline was driven primarily by a $7 million dollar decline in large video display orders due to an especially strong quarter a year ago. Offsetting that decline were increases of 22 percent and 15 percent in the billboard and national account portions of this business unit, respectively. Net sales in the Commercial business unit increased approximately 17 percent as a result of the previously announced multi-million dollar replacement program for a national account customer upgrading its on-premise advertising displays. |
• | Orders in the Transportation business were up over 104 percent primarily as a result of an order of approximately $21 million for video displays at the LAX Bradley International Terminal in Los Angeles. The company expects to deliver this project over the next six months. The first quarter of fiscal 2013 did not include any orders related to the previously announced $20 million procurement contract with the New Jersey Turnpike Authority. The first $6 million commitment of this project is expected to book in the second quarter of fiscal 2013 and is not included in backlog as of the end of the first quarter of fiscal 2013. |
• | Orders in the Schools and Theatres business unit were up approximately 29 percent in the first quarter of fiscal 2013 compared to the same period in fiscal 2012. The improvement in the first quarter is in part due to the growing interest in larger video display systems for high schools. Orders for video systems included projects in South Carolina, Minnesota, Missouri, and Indiana. |
Morgan added, “I commend all of our employees for their excellent performance in booking orders for the quarter, achieving a record level of orders for the quarter beating the previous record of $164 million. It was a true team effort.”
Outlook
Morgan added, “We were pleased to start fiscal 2013 off strong as this is a step in the right direction on our path towards our strategic goal of significantly higher operating margins. With the record level of orders booked during the first quarter of fiscal 2013, we expect that net sales in the second quarter of fiscal 2013 will exceed the level of net sales in the second quarter of fiscal 2012. Due to the fact we had some unusually large gains on some contracts in the first quarter of fiscal 2013 we may not achieve the same level of gross profit margin in the second quarter of fiscal 2013; however we expect to exceed the gross profit margin recognized in the second quarter of fiscal 2012. We continue to work to improve gross profit margin through initiatives in product design, manufacturing, and project management. Regarding capital investment, we are estimating that our investment for fiscal 2013 will be approximately $14 million, down from $16.5 million in fiscal 2012.”
“On the product side, we continue to focus on video technology with tighter pixel pitches for outdoor applications using LED surface mount technology, which will offer improved performance at a lower cost point over our current offering. We plan to begin rolling out the first models of a new family of products using this technology later this fiscal year. We are also completing the development of a new full-color family of Vanguard displays for our transportation market that will roll out yet this calendar 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.
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.
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For more information contact: | ||
INVESTOR RELATIONS: | ||
Bill Retterath, Chief Financial Officer | ||
(605) 692-0200 | ||
Investor@daktronics.com | ||
Financial tables are included on the following pages. | ||
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended | |||||||
July 28, 2012 | July 30, 2011 | ||||||
Net sales | $ | 132,919 | $ | 118,698 | |||
Cost of goods sold | 96,529 | 89,191 | |||||
Gross profit | 36,390 | 29,507 | |||||
Operating expenses: | |||||||
Selling expense | 13,080 | 12,209 | |||||
General and administrative | 6,581 | 6,464 | |||||
Product design and development | 6,021 | 5,718 | |||||
25,682 | 24,391 | ||||||
Operating income | 10,708 | 5,116 | |||||
Nonoperating income (expense): | |||||||
Interest income | 431 | 435 | |||||
Interest expense | (87 | ) | (76 | ) | |||
Other income (expense), net | (180 | ) | (146 | ) | |||
Income before income taxes | 10,872 | 5,329 | |||||
Income tax expense | 4,194 | 1,961 | |||||
Net income | $ | 6,678 | $ | 3,368 | |||
Weighted average shares outstanding: | |||||||
Basic | 42,068 | 41,725 | |||||
Diluted | 42,141 | 41,941 | |||||
Earnings per share: | |||||||
Basic | $ | 0.16 | $ | 0.08 | |||
Diluted | $ | 0.16 | $ | 0.08 | |||
Cash dividends paid per share | $ | 0.115 | $ | 0.11 | |||
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Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
Three Months Ended | |||||||
July 28, 2012 | July 30, 2011 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash, cash equivalents and restricted cash | $ | 38,889 | $ | 30,592 | |||
Marketable securities | 25,050 | 25,258 | |||||
Accounts receivable, net | 76,673 | 66,923 | |||||
Inventories | 55,934 | 54,924 | |||||
Costs and estimated earnings in excess of billings | 27,589 | 23,020 | |||||
Current maturities of long-term receivables | 5,894 | 5,830 | |||||
Prepaid expenses and other assets | 5,984 | 5,528 | |||||
Deferred income taxes | 10,936 | 10,941 | |||||
Income tax receivables | 1,739 | 5,990 | |||||
Total current assets | 248,688 | 229,006 | |||||
Long-term receivables, less current maturities | 13,471 | 12,622 | |||||
Goodwill | 3,316 | 3,347 | |||||
Intangibles | 1,352 | 1,409 | |||||
Advertising rights, net and other assets | 1,039 | 1,157 | |||||
Deferred income taxes | 30 | 30 | |||||
19,208 | 18,565 | ||||||
PROPERTY AND EQUIPMENT: | |||||||
Land | 1,497 | 1,497 | |||||
Buildings | 56,467 | 56,431 | |||||
Machinery and equipment | 61,949 | 61,654 | |||||
Office furniture and equipment | 15,646 | 15,648 | |||||
Computer software and hardware | 42,709 | 42,172 | |||||
Equipment held for rental | 983 | 1,003 | |||||
Demonstration equipment | 9,151 | 9,806 | |||||
Transportation equipment | 4,196 | 4,116 | |||||
192,598 | 192,327 | ||||||
Less accumulated depreciation | 126,942 | 123,931 | |||||
65,656 | 68,396 | ||||||
TOTAL ASSETS | $ | 333,552 | $ | 315,967 | |||
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Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
Three Months Ended | |||||||
July 28, 2012 | July 30, 2011 | ||||||
(unaudited) | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Notes payable, bank | $ | 470 | $ | 1,459 | |||
Accounts payable | 35,550 | 33,906 | |||||
Accrued expenses | 22,446 | 22,731 | |||||
Warranty obligations | 13,156 | 13,049 | |||||
Billings in excess of costs and estimated earnings | 20,254 | 14,385 | |||||
Customer deposits (billed or collected) | 19,473 | 12,826 | |||||
Deferred revenue (billed or collected) | 9,999 | 9,751 | |||||
Current portion of other long-term obligations | 388 | 359 | |||||
Income tax payable | 755 | 665 | |||||
Deferred income taxes | 55 | 42 | |||||
Total current liabilities | 122,546 | 109,173 | |||||
Long-term warranty obligations | 9,451 | 9,166 | |||||
Long-term deferred revenue (billed or collected) | 4,480 | 4,361 | |||||
Other long-term obligations, less current maturities | 1,671 | 1,009 | |||||
Deferred income taxes | 1,453 | 1,453 | |||||
Total long-term liabilities | 17,055 | 15,989 | |||||
TOTAL LIABILITIES | 139,601 | 125,162 | |||||
SHAREHOLDERS' EQUITY: | |||||||
Common stock | 35,420 | 34,631 | |||||
Additional paid-in capital | 25,084 | 24,320 | |||||
Retained earnings | 133,676 | 131,830 | |||||
Treasury stock, at cost, 19,680 shares | (9 | ) | (9 | ) | |||
Accumulated other comprehensive (loss) income | (220 | ) | 33 | ||||
TOTAL SHAREHOLDERS' EQUITY | 193,951 | 190,805 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 333,552 | $ | 315,967 | |||
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Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended | ||||||||
July 28, 2012 | July 30, 2011 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 6,678 | $ | 3,368 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 3,819 | 4,584 | ||||||
Amortization | 57 | 67 | ||||||
Amortization of premium/discount on marketable securities | 48 | 51 | ||||||
Loss (gain) on sale of property and equipment | 3 | 48 | ||||||
Share-based compensation | 762 | 867 | ||||||
Excess tax benefits from share-based compensation | (2 | ) | — | |||||
Provision for doubtful accounts | (281 | ) | (260 | ) | ||||
Deferred income taxes, net | 19 | (16 | ) | |||||
Change in operating assets and liabilities | 5,405 | 2,931 | ||||||
Net cash provided by operating activities | 16,508 | 11,640 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment | (1,443 | ) | (2,903 | ) | ||||
Proceeds from sale of property and equipment | 92 | 26 | ||||||
Purchases of marketable securities | (3,857 | ) | (5,264 | ) | ||||
Proceeds from sales and maturities of marketable securities | 3,999 | 2,485 | ||||||
Net cash used in investing activities | (1,209 | ) | (5,656 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Borrowings on notes payable | — | 311 | ||||||
Payments on notes payable | (982 | ) | — | |||||
Proceeds from exercise of stock options | 58 | 218 | ||||||
Excess tax benefits from share-based compensation | 2 | 3 | ||||||
Principal payments on long-term obligations | — | — | ||||||
Dividends paid | (4,832 | ) | (4,588 | ) | ||||
Net cash used in financing activities | (5,754 | ) | (4,056 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (128 | ) | 77 | |||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 9,417 | 2,005 | ||||||
CASH AND CASH EQUIVALENTS: | ||||||||
Beginning of period | 29,423 | 54,308 | ||||||
End of period | $ | 38,840 | $ | 56,313 | ||||
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Daktronics, Inc. and Subsidiaries
Net Sales and Orders by Business Unit
(in thousands)
(unaudited)
Three Months Ended | |||||||
July 28, 2012 | July 30, 2011 | ||||||
Net Sales: | |||||||
Commercial | $ | 38,356 | $ | 32,703 | |||
Live Events | 44,509 | 38,517 | |||||
Schools & Theatres | 18,174 | 18,483 | |||||
Transportation | 16,596 | 11,500 | |||||
International | 15,284 | 17,495 | |||||
$ | 132,919 | $ | 118,698 | ||||
Orders: | |||||||
Commercial | $ | 44,599 | $ | 47,242 | |||
Live Events | 50,699 | 39,335 | |||||
Schools & Theatres | 23,458 | 18,173 | |||||
Transportation | 32,036 | 15,674 | |||||
International | 22,750 | 19,766 | |||||
$ | 173,542 | $ | 140,190 | ||||
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow
(in thousands)
(unaudited)
Three Months Ended | |||||||
July 28, 2012 | July 30, 2011 | ||||||
Net cash provided by operating activities | $ | 16,508 | $ | 11,640 | |||
Purchase of property and equipment | (1,443 | ) | (2,903 | ) | |||
Proceeds from sales of property and equipment | 92 | 26 | |||||
Free cash flow | $ | 15,157 | $ | 8,763 | |||
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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