BROOKINGS, S.D., May 31, 2017 (GLOBE NEWSWIRE) -- Daktronics, Inc. (NASDAQ: DAKT ) today reported fiscal 2017 fourth quarter net sales of $143.7 million, operating income of $1.7 million, and net income of $0.9 million, or $0.02 per diluted share, compared to net sales of $138.5 million, operating loss of $3.7 million, and a net loss of $2.9 million, or $0.07 per diluted share, for the fourth quarter of fiscal 2016. Fiscal 2017 fourth quarter orders were $178.1 million compared to $143.2 million for the fourth quarter of fiscal 2016. Backlog at the end of the fiscal 2017 fourth quarter was $203 million, compared to a backlog of $181 million a year earlier and $170 million at the end of the third quarter of fiscal 2017.
Net sales, operating income, net income, and earnings per share for the fiscal year ended April 29, 2017, were $586.5 million, $15.4 million, $10.3 million and $0.23 per diluted share, respectively. This compares to $570.2 million, $2.5 million, $2.1 million and $0.05 per diluted share, respectively, for fiscal 2016. Fiscal 2017 orders were $613.5 million compared to $560.8 million for fiscal 2016.
Cash flow provided by operating activities for the fiscal year ended April 29, 2017 was $39.6 million, compared to $13.6 million in fiscal 2016. Free cash flow, defined as cash provided from or used in operating activities less net investment in property and equipment, was a positive $31.1 million for fiscal 2017, as compared to a negative free cash flow of $3.3 million for fiscal 2016. Net investment in property and equipment was $8.5 million for fiscal 2017, as compared to $16.9 million for fiscal 2016. We repurchased approximately 0.3 million shares of common stock at an average price of $6.42 per share for a total use of cash of $1.8 million during fiscal 2017. Cash, restricted cash, and marketable securities at the end of the fourth quarter of fiscal 2017 were $65.6 million, which compares to $53.2 million at the end of the fourth quarter of fiscal 2016.
Fourth Quarter Fiscal 2017 Consolidated Financial Results Orders for the fourth quarter of fiscal 2017 increased by 24.4 percent as compared to the fourth quarter of fiscal 2016. Orders increased in the Live Events, High School Park and Recreation, and Transportation business units, decreased in the Commercial business unit, and remained relatively flat in the International business unit. The timing of orders for large projects varies according to the needs of the customer, which was the primary cause of the increase in order volume quarter over quarter.
Net sales for the fourth quarter of fiscal 2017 increased by 3.8 percent as compared to the fourth quarter of fiscal 2016. Net sales increased in the Live Events and International business units, decreased in the High School Park and Recreation business, and remained relatively flat in the Commercial and Transportation business units quarter over quarter. Live Events net sales increased as a result of work completed on National Hockey League and other minor league stadiums. International net sales increased due to increased sales of sports and spectacular projects. High School Park and Recreation net sales decreased due to order timing.
Operating income as a percentage of sales increased to 1.2 percent for the fourth quarter of fiscal 2017 as compared to an operating loss as a percentage of sales of 2.6 percent for the fourth quarter of fiscal 2016.
Fiscal 2017 Consolidated Financial Results Orders increased in fiscal 2017 by $52.7 million as compared to fiscal 2016. Orders increased in all business units fiscal year over fiscal year. International orders increase was primarily due to improved global market conditions impacting orders in our sports and spectacular projects and Out-of-Home application business. Commercial orders increased due to the addition of ADFLOW in our on-premise niche related to in-store media solutions and increases due to the timing of large custom projects in our spectacular niche. High School Park and Recreation orders increase was primarily due to overall strong market demand, led by video in sporting applications. Transportation orders increase was primarily due to the variability caused by large order timing and increased state procurement project activity. During fiscal 2017, we had an award of a multimillion-dollar project for an active traffic management system with no same sized projects the prior year. Live Events orders remained strong.
Net sales for fiscal 2017 increased 2.9 percent as compared to fiscal 2016. Net sales increased in the Live Events and High School Park and Recreation business units, decreased in the International business units, and remained relatively flat in the Commercial and Transportation business units. Live Events net sales increase was primarily the result of work completed on stadium projects mainly in the National Football League. High School Park and Recreation net sales increase was primarily due to increased video project sizes with larger average order size. International net sales decrease was due to the timing of converting orders to sales.
Annual operating income as a percentage of sales increased to 2.6 percent for fiscal 2017 as compared to 0.4 percent for fiscal 2016. The operating income percentage increase is primarily attributable to lower warranty costs and improved project gross margins.
Reece Kurtenbach, chairman, president and chief executive officer, stated, "Fiscal 2017 was a positive year for Daktronics. We realized an increase in order volume, sales, and profit. Our financial improvement is attributable to a number of factors. The global economic conditions improved over the year prompting more projects to move forward, which we benefited from as our solutions provide value to a broad customer base. We were successful in winning a number of projects for high-profile locations, for larger sized sports video projects, and standardized solutions for businesses and schools. During the year, we increased sales by integrating ADFLOW solutions into our portfolio. ADFLOW is the company we acquired late in fiscal 2016.
During fiscal 2017, we invested in developing additional value-based solutions for the market from improvements in our control systems, indoor and outdoor video product line selections, and service delivery options. Our manufacturing operations continued to increase productivity through automation and other process improvements. We continued to focus on quality and reliability of our product. Our warranty expense as a percentage of sales was 2.5 percent for fiscal 2017 compared to 4.1 percent for fiscal 2016."
Outlook Kurtenbach continued, "As we enter into fiscal 2018, we see the video display business continuing to expand due to market adoption of video in various applications, and expansion of the market due to lowered price points as compared to past years. While competition remains strong across our markets, we expect continued success in growing our business over the long-term. To deliver value to our customers and serve the markets expectations, we plan to continue to increase the level of investments in new or enhanced customer solutions during fiscal 2018. This will improve our overall product line-up creating opportunities to capture a broader customer base."
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 be 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, 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, 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 2016 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 | Twelve Months Ended | ||||||||||||||
| April 29, 2017 | April 30, 2016 | April 29, 2017 | April 30, 2016 | ||||||||||||
| Net sales | $ | 143,682 | $ | 138,463 | $ | 586,539 | $ | 570,168 | |||||||
| Cost of goods sold | 109,958 | 110,488 | 446,124 | 449,149 | |||||||||||
| Gross profit | 33,724 | 27,975 | 140,415 | 121,019 | |||||||||||
| Operating expenses: | |||||||||||||||
| Selling expense | 15,859 | 15,938 | 61,687 | 58,812 | |||||||||||
| General and administrative | 8,219 | 8,608 | 34,226 | 32,801 | |||||||||||
| Product design and development | 7,939 | 7,085 | 29,081 | 26,911 | |||||||||||
| 32,017 | 31,631 | 124,994 | 118,524 | ||||||||||||
| Operating income (loss) | 1,707 | (3,656 | ) | 15,421 | 2,495 | ||||||||||
| Nonoperating income (expense): | |||||||||||||||
| Interest income | 192 | 194 | 751 | 987 | |||||||||||
| Interest expense | (56 | ) | (26 | ) | (230 | ) | (228 | ) | |||||||
| Other (expense) income, net | (104 | ) | 539 | (354 | ) | (128 | ) | ||||||||
| Income (loss) before income taxes | 1,739 | (2,949 | ) | 15,588 | 3,126 | ||||||||||
| Income tax expense (benefit) | 830 | (19 | ) | 5,246 | 1,065 | ||||||||||
| Net income (loss) | $ | 909 | $ | (2,930 | ) | $ | 10,342 | $ | 2,061 | ||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 44,184 | 44,094 | 44,114 | 43,990 | |||||||||||
| Diluted | 44,360 | 44,094 | 44,303 | 44,456 | |||||||||||
| Earnings per share: | |||||||||||||||
| Basic | $ | 0.02 | $ | (0.07 | ) | $ | 0.23 | $ | 0.05 | ||||||
| Diluted | $ | 0.02 | $ | (0.07 | ) | $ | 0.23 | $ | 0.05 | ||||||
| Cash dividends declared per share | $ | 0.07 | $ | 0.10 | $ | 0.31 | $ | 0.40 | |||||||
| Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands) (unaudited) | ||||||
| April 29, 2017 | April 30, 2016 | |||||
| ASSETS | ||||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents | $ | 32,623 | $ | 28,328 | ||
| Restricted cash | 216 | 198 | ||||
| Marketable securities | 32,713 | 24,672 | ||||
| Accounts receivable, net | 78,846 | 77,554 | ||||
| Inventories, net | 66,486 | 69,827 | ||||
| Costs and estimated earnings in excess of billings | 36,403 | 30,200 | ||||
| Current maturities of long-term receivables | 2,274 | 3,172 | ||||
| Prepaid expenses and other assets | 7,553 | 6,468 | ||||
| Income tax receivables | 611 | 4,812 | ||||
| Total current assets | 257,725 | 245,231 | ||||
| Long-term receivables, less current maturities | 2,616 | 3,866 | ||||
| Goodwill | 7,812 | 8,116 | ||||
| Intangibles, net | 4,705 | 7,721 | ||||
| Investment in affiliates and other assets | 4,534 | 2,414 | ||||
| Deferred income taxes | 11,292 | 9,437 | ||||
| Total other assets | 30,959 | 31,554 | ||||
| PROPERTY AND EQUIPMENT: | ||||||
| Land | 2,099 | 2,155 | ||||
| Buildings | 65,935 | 65,247 | ||||
| Machinery and equipment | 84,189 | 82,973 | ||||
| Office furniture and equipment | 5,604 | 14,746 | ||||
| Computer software and hardware | 51,523 | 48,917 | ||||
| Equipment held for rental | 374 | 374 | ||||
| Demonstration equipment | 7,109 | 8,026 | ||||
| Transportation equipment | 7,108 | 6,596 | ||||
| 223,941 | 229,034 | |||||
| Less accumulated depreciation | 157,192 | 155,871 | ||||
| Total property and equipment | 66,749 | 73,163 | ||||
| TOTAL ASSETS | $ | 355,433 | $ | 349,948 | ||
| Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (continued) (in thousands) (unaudited) | |||||||
| April 29, 2017 | April 30, 2016 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| CURRENT LIABILITIES: | |||||||
| Accounts payable | 51,499 | 43,441 | |||||
| Accrued expenses | 25,033 | 23,532 | |||||
| Warranty obligations | 13,578 | 16,564 | |||||
| Billings in excess of costs and estimated earnings | 10,897 | 10,361 | |||||
| Customer deposits (billed or collected) | 14,498 | 16,012 | |||||
| Deferred revenue (billed or collected) | 12,137 | 10,712 | |||||
| Current portion of other long-term obligations | 1,409 | 585 | |||||
| Income taxes payable | 1,544 | 310 | |||||
| Total current liabilities | 130,595 | 121,517 | |||||
| Long-term warranty obligations | 14,321 | 13,932 | |||||
| Long-term deferred revenue (billed or collected) | 5,434 | 5,603 | |||||
| Other long-term obligations, less current maturities | 2,848 | 4,059 | |||||
| Long-term income tax payable | 3,113 | 3,016 | |||||
| Deferred income taxes | 836 | 754 | |||||
| Total long-term liabilities | 26,552 | 27,364 | |||||
| TOTAL LIABILITIES | 157,147 | 148,881 | |||||
| SHAREHOLDERS' EQUITY: | |||||||
| Common stock | 52,530 | 51,347 | |||||
| Additional paid-in capital | 38,004 | 35,351 | |||||
| Retained earnings | 113,967 | 117,276 | |||||
| Treasury stock, at cost | (1,834 | ) | (9 | ) | |||
| Accumulated other comprehensive loss | (4,381 | ) | (2,898 | ) | |||
| TOTAL SHAREHOLDERS' EQUITY | 198,286 | 201,067 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 355,433 | $ | 349,948 | |||
| Daktronics, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) (unaudited) | ||||||||
| Year Ended | ||||||||
| April 29, 2017 | April 30, 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 10,342 | $ | 2,061 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 18,562 | 16,943 | ||||||
| Impairment of intangible assets | 830 | — | ||||||
| Loss (gain) on sale of property, equipment and other assets | 36 | (71 | ) | |||||
| Share-based compensation | 2,914 | 2,958 | ||||||
| Gain on sale of equity investee | — | (119 | ) | |||||
| Provision for doubtful accounts | 1,426 | 481 | ||||||
| Deferred income taxes, net | (2,043 | ) | 911 | |||||
| Change in operating assets and liabilities | 7,506 | (9,583 | ) | |||||
| Net cash provided by operating activities | 39,573 | 13,581 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property and equipment | (8,686 | ) | (17,056 | ) | ||||
| Proceeds from sales of property, equipment and other assets | 199 | 152 | ||||||
| Purchases of marketable securities | (24,159 | ) | (21,286 | ) | ||||
| Proceeds from sales or maturities of marketable securities | 15,928 | 21,862 | ||||||
| Proceeds from sale of equity method investment | — | 377 | ||||||
| Acquisitions, net of cash acquired | (1,646 | ) | (7,867 | ) | ||||
| Net cash used in investing activities | (18,364 | ) | (23,818 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payments on notes payable | (8 | ) | (38 | ) | ||||
| Principal payments on long-term obligations | (921 | ) | (467 | ) | ||||
| Dividends paid | (13,651 | ) | (17,556 | ) | ||||
| Proceeds from exercise of stock options | 343 | 610 | ||||||
| Payments for common shares repurchased | (1,825 | ) | — | |||||
| Tax payments related to RSU issuances | (261 | ) | (303 | ) | ||||
| Net cash used in financing activities | (16,323 | ) | (17,754 | ) | ||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | (591 | ) | (965 | ) | ||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 4,295 | (28,956 | ) | |||||
| CASH AND CASH EQUIVALENTS: | ||||||||
| Beginning of period | 28,328 | 57,284 | ||||||
| End of period | $ | 32,623 | $ | 28,328 | ||||
| Daktronics, Inc. and Subsidiaries Net Sales and Orders by Business Unit (in thousands) (unaudited) | ||||||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||
| April 29, 2017 | April 30, 2016 | Dollar Change | Percent Change | April 29, 2017 | April 30, 2016 | Dollar Change | Percent Change | |||||||||||||||||||||||
| Net sales: | ||||||||||||||||||||||||||||||
| Commercial | $ | 35,731 | $ | 35,600 | $ | 131 | 0.4 | % | $ | 148,073 | $ | 148,261 | $ | (188 | ) | (0.1 | )% | |||||||||||||
| Live Events | 56,950 | 55,402 | 1,548 | 2.8 | % | 213,982 | 205,151 | 8,831 | 4.3 | % | ||||||||||||||||||||
| High School Park and Recreation | 13,821 | 15,883 | (2,062 | ) | (13.0 | )% | 82,798 | 70,035 | 12,763 | 18.2 | % | |||||||||||||||||||
| Transportation | 12,909 | 13,490 | (581 | ) | (4.3 | )% | 52,426 | 52,249 | 177 | 0.3 | % | |||||||||||||||||||
| International | 24,271 | 18,088 | 6,183 | 34.2 | % | 89,260 | 94,472 | (5,212 | ) | (5.5 | )% | |||||||||||||||||||
| $ | 143,682 | $ | 138,463 | $ | 5,219 | 3.8 | % | $ | 586,539 | $ | 570,168 | $ | 16,371 | 2.9 | % | |||||||||||||||
| Orders: | ||||||||||||||||||||||||||||||
| Commercial | $ | 37,236 | $ | 40,742 | $ | (3,506 | ) | (8.6 | )% | $ | 151,562 | $ | 135,824 | $ | 15,738 | 11.6 | % | |||||||||||||
| Live Events | 87,445 | 52,295 | 35,150 | 67.2 | % | 222,965 | 220,377 | 2,588 | 1.2 | % | ||||||||||||||||||||
| High School Park and Recreation | 22,550 | 20,925 | 1,625 | 7.8 | % | 83,605 | 76,485 | 7,120 | 9.3 | % | ||||||||||||||||||||
| Transportation | 16,348 | 14,099 | 2,249 | 16.0 | % | 62,638 | 56,834 | 5,804 | 10.2 | % | ||||||||||||||||||||
| International | 14,570 | 15,161 | (591 | ) | (3.9 | )% | 92,734 | 71,266 | 21,468 | 30.1 | % | |||||||||||||||||||
| $ | 178,149 | $ | 143,222 | $ | 34,927 | 24.4 | % | $ | 613,504 | $ | 560,786 | $ | 52,718 | 9.4 | % | |||||||||||||||
| Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow (in thousands) (unaudited) | ||||||||
| Twelve Months Ended | ||||||||
| April 29, 2017 | April 30, 2016 | |||||||
| Net cash provided by operating activities | $ | 39,573 | $ | 13,581 | ||||
| Purchases of property and equipment | (8,686 | ) | (17,056 | ) | ||||
| Proceeds from sales of property, equipment and other assets | 199 | 152 | ||||||
| Free cash flow | $ | 31,086 | $ | (3,323 | ) | |||
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.
For more information contact: INVESTOR RELATIONS: Sheila Anderson, Chief Financial Officer (605) 692-0200 Investor@daktronics.com
