Canada markets closed
  • S&P/TSX

    19,201.28
    -26.75 (-0.14%)
     
  • S&P 500

    4,127.99
    -0.81 (-0.02%)
     
  • DOW

    33,745.40
    -55.20 (-0.16%)
     
  • CAD/USD

    0.7952
    -0.0009 (-0.12%)
     
  • CRUDE OIL

    59.79
    +0.09 (+0.15%)
     
  • BTC-CAD

    75,959.33
    -34.59 (-0.05%)
     
  • CMC Crypto 200

    1,293.61
    -0.97 (-0.07%)
     
  • GOLD FUTURES

    1,729.60
    -3.10 (-0.18%)
     
  • RUSSELL 2000

    2,233.78
    -9.69 (-0.43%)
     
  • 10-Yr Bond

    1.6750
    +0.0090 (+0.54%)
     
  • NASDAQ futures

    13,817.00
    +8.25 (+0.06%)
     
  • VOLATILITY

    16.91
    +0.22 (+1.32%)
     
  • FTSE

    6,889.12
    -26.63 (-0.39%)
     
  • NIKKEI 225

    29,733.69
    +194.96 (+0.66%)
     
  • CAD/EUR

    0.6679
    +0.0002 (+0.03%)
     

Daktronics, Inc. Announces Third Quarter Fiscal 2021 Results

  • Oops!
    Something went wrong.
    Please try again later.
Daktronics, Inc.
·14 min read
  • Oops!
    Something went wrong.
    Please try again later.

BROOKINGS, S.D., March 03, 2021 (GLOBE NEWSWIRE) -- Daktronics, Inc. (NASDAQ - DAKT) today reported fiscal 2021 third quarter results. Daktronics reported fiscal 2021 third quarter net sales of $94.1 million, operating loss of $0.2 million, net loss of $0.2 million, and earnings per diluted share of $0.00. This compares to net sales of $127.7 million, operating loss of $9.2 million, net loss of $12.7 million, and $0.28 per diluted share, for the third quarter of fiscal 2020. Fiscal 2021 third quarter orders were $86.9 million, compared to $135.0 million for the third quarter of fiscal 2020. Product order backlog at the end of the fiscal 2021 third quarter was $195 million, compared to $187 million a year earlier and $201 million at the end of the second quarter of fiscal 2021.(1)

For the nine months ended January 30, 2021, net sales were $365.2 million, operating income was $16.0 million, net income was $10.7 million, and earnings per diluted share was $0.24 per diluted share. This compares to net sales of $482.8 million, operating income of $3.3 million, net income of $1.6 million, and $0.03 per diluted share for the same period in fiscal 2020.

Fiscal 2021 is a 52-week year and fiscal 2020 was a 53-week year; therefore, the nine months ended January 30, 2021 contains operating results for 39 weeks while the nine months ended February 1, 2020 contained operating results for 40 weeks. Sales, orders, and other results of operations were impacted due to the additional week of operations.

Cash generated by operating activities in the first nine months of fiscal 2021 was $48.2 million, compared to cash generated of $6.2 million in the first nine months of fiscal 2020. Cash generated by operating activities is primarily derived from cash received from customers, offset by cash payments for inventories, subcontractors, employee related costs, and operating expense outflows. Year-to-date cash provided from operations differed as compared to last year primarily due to a focus on customer collections, decreasing inventory levels, lowering personnel and operating expense outflows as we manage operations through the uncertain COVID times. Cash generation and use can vary based on order timing and levels, varying contractual payment terms from customers, and payments for inventory to meet delivery and installation schedules. Free cash flow, defined as cash provided by or used in operating activities less net investment in property and equipment, was a positive $41.8 million for the first nine months of fiscal 2021, as compared to a negative $7.2 million for the same period of fiscal 2020. Net investment in property and equipment was $6.5 million for the first nine months of fiscal 2021, as compared to $13.4 million for the first nine months of fiscal 2020. Cash, restricted cash, and marketable securities at the end of the third quarter of fiscal 2021 were $81.0 million, which compares to $42.1 million at the end of the third quarter of fiscal 2020 and $41.6 million at the end of fiscal 2020. Borrowings on the line of credit were $15.0 million at the end of the third quarter of fiscal 2021 up from $0 at the end of the third quarter of fiscal 2020 and consistent with the $15.0 million at the end of fiscal 2020.

Orders for the third quarter of fiscal 2021 decreased 35.6 percent as compared to the third quarter of fiscal 2020. Orders for the nine months ended January 30, 2021 decreased 27.2 percent as compared to the same period one year ago. Each business unit's order volume was lower in fiscal 2021 due to lower market activity from the resulting economic and business impacts of the COVID-19 pandemic and related timing of large contract orders.

Net sales decreased by 26.3 percent in the third quarter of fiscal 2021 as compared to the third quarter of fiscal 2020. Net sales for the nine months ended January 30, 2021 decreased 24.4 percent as compared to the same period one year ago. Net sales decreased in all business units for the same reasons causing order booking declines and due to varied timing in the related conversion to sales based on customer project schedules.

Gross profit as a percentage of net sales was 25.4 percent for the third quarter of fiscal 2021 as compared to 19.2 percent a year earlier. The improved gross profit rate in the third quarter of fiscal 2021 is a result of the mix of service agreement and product sales and a $2.1 million litigation claim reversal. In comparison, during the third quarter of fiscal 2020, we experienced adverse impacts of a project with cost overruns and tariff related expenses.

Operating expenses for the third quarter of fiscal 2021 were $24.2 million, compared to $33.6 million for the third quarter of fiscal 2020, or a decrease of 28.0 percent. This decline is attributed to our focus on managing our expenses to expected order volumes. Declines in overall operating expenses were attributed to lower personnel related costs, reduced third-party contractor use, lower travel and entertainment activities, and lowered marketing and convention events offset by an increase in bad debt expense. Operating loss as a percent of sales for the quarter was 0.3 percent as compared to an operating loss as a percent of sales of 7.2 percent during the third quarter of fiscal 2020.

The effective tax rate expense for the third quarter of fiscal 2021 was 82.0 percent compared to an effective tax rate benefit of 37.9 percent for the third quarter of fiscal 2020. Our fiscal 2021 year-to-date effective rate expense was 21.3 percent compared to fiscal 2020 year-to-date effective rate expense of 51.6 percent. The change in the effective tax rate year-over-year was driven primarily by a decrease in tax credits and other permanent differences as a percentage of estimated current fiscal year pre-tax income.

Reece Kurtenbach, chairman, president and chief executive officer, stated, "Our third quarter orders, sales and profit levels are traditionally lighter than other quarters due to the seasonality of our sports business, construction cycles, and the reduced number of production dates due to holidays during the quarter. This year, our results have also been impacted by the pandemic. We continue to monitor the pandemic's impact on the markets we serve. Areas of our business that were impacted the most are those that serve customers in large gathering spaces which includes our sports and entertainment, mass transit, and airport markets. Our Out-of-Home advertising customers were impacted due to a reduction in national advertising spend and have chosen to delay orders. Customers using on-premise applications are less impacted and are continuing to utilize audio visual systems to inform and persuade their audiences during this time. We continue to strategically make choices on levels of capacity and investments in capital assets and development initiatives. We also continued the suspension of dividend and share repurchases to help us maintain stability in liquidity and our cash position."

(1) Backlog is not a measure defined by U.S. generally accepted accounting principles ("GAAP"), and our methodology for determining backlog may vary from the methodology used by other companies in determining their backlog amounts. For more information related to backlog, see Part I, Item 1. Business of our Annual Report on Form 10-K for the fiscal year ended May 2, 2020.

Outlook
Kurtenbach added, "Our backlog going into the fourth quarter is strong and we believe the audiovisual industry fundamentals will drive long-term growth for our business. However, the near-term outlook shows areas of contraction and greater volatility. We are focused on promoting our value to new and core markets, while managing our cost structure to meet the uncertain demand. With the COVID-19 vaccine distribution underway, we remain focused on emerging as a stronger organization and to be positioned to capitalize on the recovery from this pandemic."

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, High School Park and Recreation, and Transportation, and one International business unit. For more information, visit the company's website at: www.daktronics.com, email 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., P.O. 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 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 2020 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.

For more information contact:

INVESTOR RELATIONS:

Sheila M. Anderson, Chief Financial Officer

Tel (605) 692-0200

Investor@daktronics.com


Daktronics, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

Three Months Ended

Nine Months Ended

January 30,

February 1,

January 30,

February 1,

2021

2020

2021

2020

Net sales

$

94,139

$

127,657

$

365,150

$

482,824

Cost of sales

70,198

103,175

272,134

372,750

Gross profit

23,941

24,482

93,016

110,074

Operating expenses:

Selling

12,004

16,552

36,214

51,026

General and administrative

6,389

8,640

20,777

26,698

Product design and development

5,784

8,442

20,053

29,063

24,177

33,634

77,044

106,787

Operating (loss) income

(236

)

(9,152

)

15,972

3,287

Nonoperating (expense) income:

Interest income

52

233

203

664

Interest expense

(92

)

13

(249

)

(53

)

Other (expense) income, net

(913

)

(331

)

(2,377

)

(652

)

(Loss) income before income taxes

(1,189

)

(9,237

)

13,549

3,246

Income tax expense (benefit)

(975

)

3,497

2,880

1,676

Net (loss) income

$

(214

)

$

(12,734

)

$

10,669

$

1,570

Weighted average shares outstanding:

Basic

45,064

45,189

44,908

45,139

Diluted

45,064

45,189

45,061

45,412

(Loss) earnings per share:

Basic

$

0.00

$

(0.28

)

$

0.24

$

0.03

Diluted

$

0.00

$

(0.28

)

$

0.24

$

0.03

Cash dividends declared per share

$

$

0.05

$

$

0.15


Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)

January 30,

May 2,

2021

2020

(unaudited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

76,877

$

40,398

Restricted cash

3,884

14

Marketable securities

248

1,230

Accounts receivable, net

63,212

72,577

Inventories

72,312

86,803

Contract assets

30,310

35,467

Current maturities of long-term receivables

1,736

3,519

Prepaid expenses and other current assets

7,554

9,629

Income tax receivables

87

548

Property and equipment and other assets available for sale

2,020

1,817

Total current assets

258,240

252,002

Property and equipment, net

61,805

67,484

Long-term receivables, less current maturities

754

1,114

Goodwill

8,262

7,743

Intangibles, net

2,396

3,354

Investment in affiliates and other assets

23,608

27,683

Deferred income taxes

13,382

13,271

Total non-current assets

110,207

120,649

TOTAL ASSETS

$

368,447

$

372,651


Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)

January 30,

May 2,

2021

2020

(unaudited)

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$

32,692

$

47,834

Contract liabilities

53,292

50,897

Accrued expenses

26,664

36,626

Warranty obligations

10,766

9,764

Income taxes payable

2,079

844

Total current liabilities

125,493

145,965

Long-term warranty obligations

15,696

15,860

Long-term contract liabilities

10,587

10,707

Other long-term obligations

23,059

22,105

Long-term income taxes payable

554

582

Deferred income taxes

490

452

Total long-term liabilities

50,386

49,706

TOTAL LIABILITIES

175,879

195,671

SHAREHOLDERS' EQUITY:

Common stock

60,575

60,010

Additional paid-in capital

46,091

44,627

Retained earnings

95,759

85,090

Treasury stock, at cost

(7,297

)

(7,470

)

Accumulated other comprehensive loss

(2,560

)

(5,277

)

TOTAL SHAREHOLDERS' EQUITY

192,568

176,980

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

368,447

$

372,651


Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

Nine Months Ended

January 30,

February 1,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

10,669

$

1,570

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

12,848

13,197

Gain on sale of property, equipment and other assets

(244

)

(6

)

Share-based compensation

1,563

1,734

Equity in loss of affiliates

1,740

430

Provision for doubtful accounts

1,551

(477

)

Deferred income taxes, net

(21

)

(223

)

Change in operating assets and liabilities

20,115

(10,035

)

Net cash provided by operating activities

48,221

6,190

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(6,935

)

(13,646

)

Proceeds from sales of property, equipment and other assets

470

244

Proceeds from sales or maturities of marketable securities

982

24,665

Purchases of and loans to equity investment

(1,328

)

(1,229

)

Net cash (used in) provided by investing activities

(6,811

)

10,034

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal payments on long-term obligations

(431

)

(2,140

)

Dividends paid

(6,756

)

Payments for common shares repurchased

(2,329

)

Tax payments related to RSU issuances

(125

)

(199

)

Net cash used in financing activities

(556

)

(11,424

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(505

)

(166

)

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

40,349

4,634

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

Beginning of period

40,412

35,742

End of period

$

80,761

$

40,376


Daktronics, Inc. and Subsidiaries
Net Sales and Orders by Business Unit
(in thousands)
(unaudited)

Three Months Ended

Nine Months Ended

January 30,

February 1,

Dollar

Percent

January 30,

February 1,

Dollar

Percent

2021

2020

Change

Change

2021

2020

Change

Change

Net Sales:

Commercial

$

30,085

$

36,880

$

(6,795

)

(18.4

)%

$

94,947

$

120,566

$

(25,619

)

(21.2

)%

Live Events

23,330

40,571

(17,241

)

(42.5

)

112,626

159,196

(46,570

)

(29.3

)

High School Park and Recreation

14,644

14,775

(131

)

(0.9

)

71,165

75,433

(4,268

)

(5.7

)

Transportation

11,769

13,916

(2,147

)

(15.4

)

41,590

53,264

(11,674

)

(21.9

)

International

14,311

21,515

(7,204

)

(33.5

)

44,822

74,365

(29,543

)

(39.7

)

$

94,139

$

127,657

$

(33,518

)

(26.3

)%

$

365,150

$

482,824

$

(117,674

)

(24.4

)%

Orders:

Commercial

$

34,806

$

36,898

$

(2,092

)

(5.7

)%

$

92,929

$

119,059

$

(26,130

)

(21.9

)%

Live Events

11,075

41,484

(30,409

)

(73.3

)

93,619

149,461

(55,842

)

(37.4

)

High School Park and Recreation

16,366

20,447

(4,081

)

(20.0

)

64,582

73,852

(9,270

)

(12.6

)

Transportation

12,991

16,203

(3,212

)

(19.8

)

37,713

55,410

(17,697

)

(31.9

)

International

11,650

19,992

(8,342

)

(41.7

)

55,864

75,827

(19,963

)

(26.3

)

$

86,888

$

135,024

$

(48,136

)

(35.6

)%

$

344,707

$

473,609

$

(128,902

)

(27.2

)%


Reconciliation of Free Cash Flow*
(in thousands)
(unaudited)

Nine Months Ended

January 30,

February 1,

2021

2020

Net cash provided by operating activities

$

48,221

$

6,190

Purchases of property and equipment

(6,935

)

(13,646

)

Proceeds from sales of property and equipment

470

244

Free cash flow

$

41,756

$

(7,212

)

*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.