NASDAQ:DAKT Daktronics Q4 2024 Earnings Report $12.27 +0.09 (+0.74%) Closing price 04/23/2025 04:00 PM EasternExtended Trading$12.57 +0.30 (+2.44%) As of 08:34 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Daktronics EPS ResultsActual EPS$0.27Consensus EPS $0.14Beat/MissBeat by +$0.13One Year Ago EPSN/ADaktronics Revenue ResultsActual Revenue$215.88 millionExpected Revenue$179.28 millionBeat/MissBeat by +$36.60 millionYoY Revenue GrowthN/ADaktronics Announcement DetailsQuarterQ4 2024Date6/26/2024TimeN/AConference Call DateWednesday, June 26, 2024Conference Call Time11:00AM ETUpcoming EarningsDaktronics' Q4 2025 earnings is scheduled for Wednesday, June 25, 2025, with a conference call scheduled at 7:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfilePowered by Daktronics Q4 2024 Earnings Call TranscriptProvided by QuartrJune 26, 2024 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good day, ladies and gentlemen, and welcome to the Daktronics Fiscal Year 2024 4th Quarter Earnings Results Conference Call. As a reminder, this conference is being recorded today, Wednesday, June 12, 2024, and is available on the company's website at www.dactronics.com. I would now like to turn the conference over to Ms. Carla Gatzke, Company Secretary for Daktronics for some introductory remarks. Please go ahead, Carla. Speaker 100:00:34Thank you, Siobhan. Good morning, everyone. Thank you for participating in our Q4 earnings conference call. I would like to review a few disclosure cautioning investors and participants that in addition to statements of historical fact, we will be discussing forward looking statements reflecting our expectations and plans about our future financial performance and future business opportunities. These forward looking statements reflect the company's expectations or beliefs concerning future events. Speaker 100:01:07All forward looking statements involve risks and uncertainties, which could cause actual results to differ materially from our expectations. Such risks include, but aren't 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, availability of raw materials, components and shipping services and other important factors. These identified factors could cause actual results to differ materially from those discussed in this call in the company's 4th quarter 2024 quarterly earnings release and in its most recent annual report on Form 10 ks. Our Q4 2024 earnings release contains certain non GAAP financial measures and was furnished to the SEC on a Form 8 ks this morning. We will also make slides available for today's call. Speaker 100:02:15All of these documents are available on the Investors section of Daktronics website, www.daktronics.com. I'll turn the call over to our CEO, Rees Kurtenbach. Speaker 200:02:28Thank you. Good morning, everyone. Thank you all for joining us today. I would like to start by saying congratulations to the Daktronics team for an amazing year. We began and finished fiscal 2024 strong, demonstrating the increased power of our more profitable business model resulting from the operating improvements we've made over the past few years. Speaker 200:02:50We achieved record revenue and solid expansion in our operating profitability and cash flow generation. As you can see on our slide presentation on Page 3, fiscal 2024 was a year of terrific We refin We refinanced the company to ensure we have the resources available to serve our customers and build long term value for our shareholders. We executed consistently to incrementally raise the base profitability of the business by allocating resources to growing business segments and the most profitable projects. We generated substantially higher cash flow through our increased profitability and our management of working capital and through efforts such as reduction in inventory levels post supply chain correction. On the product front, we continue to innovate to maintain our technology leadership as seen in releases like additional narrow pixel pitch product lines used primarily in indoor applications. Speaker 200:04:03With respect to our end market penetration, our teams deepened our relationship with AV Integrators in new customer areas to reach growing markets. As an example, we delivered displays to a number of military sites this past year. We laid essential groundwork for our digital transformation strategy, making progress in our services systems area and investing in enterprise performance management software. In our facilities, we further optimized our operations in manufacturing and site fulfillment processes as we return to serving customers within market lead times. These accomplishments serve as evidence of the success of the actions taken over the last 18 months to capture and leverage lessons learned from challenging business conditions to improve our customers' experiences, to increase our profitability and to optimize working capital levels. Speaker 200:05:04The results also testify to the resiliency and strength of Daktronics' teams to execute our strategy of capturing demand in diverse markets and creating differentiation by innovating across technology platforms. I invite you to turn to Slide 4, titled Fiscal 4th Quarter to follow the 4th quarter's financial outcomes. Our quarterly performance was terrific, particularly in comparison to last year's growth and was a great end to a great year. Our teams continued with strong performance and we exceeded the outlook we described last quarter. In the Q4, we were able to fulfill multiple sports related projects as teams readied for summer and fall sports. Speaker 200:05:53In fiscal Q4, we generated sales volume of $216,000,000 a 2.9% growth from last year. Full year sales grew 8.5 percent for the year. The robust increases are attributable to our drive to capture a greater share of our sand. Operating income was up over 4 times fiscal 2023 and we generated over $63,000,000 in cash flow from operations. We continue to efficiently decrease backlog from last year's built up levels as we recognized the anniversary of the resolution of many supply chain challenges and utilized our capacity to deliver customer orders at market expected lead times. Speaker 200:06:39As we primarily compete with companies that obtain their products from China and compete on price, we continue to evaluate our price position in the market and carefully consider pricing adjustments to achieve our order attainment goals at profitable levels. Given our results to date this year and the momentum in order flow, we feel good about our positioning to drive profitable growth and cash flow generation into fiscal 2025 beyond. For additional details on the financial results for the quarter year, I'll now turn it over to Sheila. Speaker 300:07:16Thank you, Reese. Please turn your attention to Slide number 5, fq4 FY2024 Financial Highlights for the quarterly overview. The quarter over quarter comparisons in this slide and related discussion are as of and for fiscal quarters ended April 27, 2024 and April 29, 2023, unless stated otherwise. Orders increased by 14.6%, primarily driven by strengthening in live events and international business unit orders. Strong demand in the live events business unit was the result of success in capturing SAM from projects for colleges and universities. Speaker 300:07:55International orders are starting to rebound as some stability and economic improvement has increased customers' desire to move forward on projects. Our commercial business unit continues to see softness in large projects and there was some slowing in the high school park and recreation and transportation business units in the quarterly comparison. We generated sales of 2 $16,000,000 for the Q4 of fiscal 2024 as compared to $210,000,000 last year. This 2.9% increase in sales volume is the result of fulfilling college and university orders and live events, transportation order deliveries, a solid win rate and on time deliveries. This was somewhat offset by a sales decline in international. Speaker 300:08:44Gross margin as a percent of net sales increased to 25.7% as compared to 24.8% in the Q4 of fiscal 2023. The increase in gross profit percentage is attributable to our strategic focus on profitable markets and projects, manufacturing efficiencies and stability in our diversified supply chain. Operating margin was 9% of sales as compared to last year's 8.7 percent. Fiscal 2024's 4th quarter positive operating margin rate is attributable to our continued careful management of operating expenses, while investing in our digital transformation and product innovation. Please turn to Slide 6 as I highlight year to date performance. Speaker 300:09:30The year over year comparisons in this slide and related discussion are as of and for fiscal years ended April 27, 2024 and April 29, 2023 unless otherwise stated. For the year, orders were up $59,000,000 or 8.7% as compared to the prior year. Order volume growth is attributable to a stable macroeconomic environment in North America, to the continued use and market adoption of digital display technology and to our success in capturing existing and new customers' orders for larger project based sports and transportation business. As we are a project based business, large sized project orders can impact levels of orders. During fiscal 2024, fewer large sized projects were booked to orders in commercial and international as there were fewer larger projects available in the marketplace this past year. Speaker 300:10:25However, we believe our market share held. For the year, sales increased $64,000,000 or 8.5 percent due to the stable operating environment and supply chain combined with our past investments in capacity. We continue to invest in operating improvements to offer sustainable utilization of our capacity. These conditions resulted in more efficient fulfillment processes and a return to market expected lead times and paired with the strong order volume resulted in growth of net sales. For the year, gross margins improved to 27.2% as compared to 20.1%. Speaker 300:11:07This gross margin percentage increase is attributable to continuing strategic pricing actions, the record sales volume over fixed manufacturing cost structure, stabilization of input costs and fewer supply chain and operational disruptions during fiscal 2024 as compared to during fiscal 2023. Please note that all expense lines increased for executive variable compensation and employee profit sharing achieved because of our operating margin level attainment during fiscal 2024. These expenses totaled $6,400,000 of which $3,000,000 was recorded in cost of sales, dollars 1,200,000 in selling, dollars 1,400,000 in general and administrative expenses and $800,000 in product design and development. After investing in operational areas, margin based compensation related expenses and organic growth, the resulting operating margin was 10.6% of sales in fiscal 2024 as compared to last year's 2.8 percent or 3.4 percent of goodwill impairments as we move from the calculation, it is a non GAAP metric, but helpful to compare the improvements. We strengthened the company's balance sheet during the year end quarter. Speaker 300:12:25Our cash position at year end was $81,700,000 compared to $24,700,000 with the increase of $63,000,000 due to cash flow generation from the profitable year and efficient management of working capital and $15,000,000 from debt net. We used $21,000,000 for investments in property and equipment and our investments in affiliates. Cash restricted cash and marketable securities totaled $81,700,000 at the end of the year. Debt at fair value was $53,000,000 Our working capital ratio improved during the year. At 4th quarter end, the ratio was 2.1:one as compared to 1.6:one last year. Speaker 300:13:12Now I'll turn it over to you, Reese. Speaker 200:13:14Thanks, Sheila. Please reference Slide 7 titled Market Verticals Update. Our mission is to support our customers as they inform, entertain and persuade their customers and audiences. Let us look more specifically into our business areas. In live events, during the quarter, we completed the Detroit Tigers project along with a number of other college and university projects. Speaker 200:13:39We expect live events demand to remain strong as venues enhance facilities to entertain fans and attract athletes. We see this trend continuing and more focus being placed on entertainment areas and the experience outside the bowl in places like entryways, atriums, concourses and adjacent entertainment areas. Our narrow pixel pitch line of products match the needs of customers for these places. Commercial orders, especially from customers in the out of home advertising space can be sensitive to economic conditions and they can rebound quickly as conditions improve. Market is also sensitive to the large national advertiser spending decisions, which is why we also focus on winning other independent billboard sales and have seen important increases in this market vertical over the last year. Speaker 200:14:33We continue to innovate and provide competitive differentiation in the marketplace to reach the needs of our customers. We continue to build out our AV integrator network to market our narrow pixel pitch product lines, especially in control room applications used by military, utility and transportation agencies. To date, we have installed 131 displays on 43 different bases globally. And in FY 2024, the American Transmission Company in Wisconsin purchased 2 large screens, 1 8.5 feet high by 86 feet wide and another 6.5 feet high by 52 feet wide. In transportation, our teams are focused on winning projects for intelligent transportation systems, airport projects and other mass transit systems projects. Speaker 200:15:28Other highlights of our Q4 performance include orders from Texas and North Carolina Department of Transportation as well as an order from Southwest Airlines. International. During the quarter, we won a stadium project for orders for and orders for transportation areas, a stronger finish to a year in which orders were slow, which we believe is due to economic and geopolitical uncertainty. Customers continue to demonstrate interest in projects, but have been delaying buying decisions. Our sales teams continue to be responsive to customers and are actively quoting opportunities and we are starting to see signs of more quotes converting into High schools. Speaker 200:16:15The trend going forward in this end market continues to be a conversion to full video. In fiscal 2022, our sales were $112,000,000 in this market and have grown to $170,000,000 in fiscal 2024. We are well positioned to meet this demand and believe we are in the early stages of that transition. We are looking to speed up and simplify the sales processes and increase our market reach by deploying sales strategies to make certain items able to be purchased online. We also continue to develop our e sales channel and these efforts are going well. Speaker 200:16:50We are continuing to offer more products through these online and partner channels and have improved systems to make the buying process more efficient. Our customers use our control capabilities to create, manage and schedule content for engagement with fans and audiences. We continue to make progress in our multi year strategy to create more capabilities to aid in the service and maintenance of our systems and plan to upgrade our solutions by the end of the calendar year as well as continually add to the future set of our cloud based and locally hosted systems. For example, we recently launched a 4 output media player that is compatible with our Venus Control Suite, a cloud based software our displays use, which improves our control features. These capabilities are increasingly offered through software as a service and we are investing in people and capabilities to grow these higher margin and less capital intensive opportunities. Speaker 200:17:54Turning to Slide 8 titled FY 2025 Strategic Priorities. Overall, we have a unique leadership position in our target markets, which are growing which are large, growing and enjoy resilient demand driven by our customers' desire to improve their audience experience in sports, commercial and transportation environments. Based on our accomplishments in fiscal 2024, we are implementing a set of initiatives in fiscal 2025 to continue to drive future revenue growth and returns. We are not done with our efforts to enhance the return on invested capital that our business can deliver. As highlighted in our press release, we are focused on different initiatives and priorities on a backbone of commitment to improve our return on capital and consistently earn returns above our cost of capital. Speaker 200:18:48These priorities include taking the next steps in our digital transformation to enhance our internal systems. These include modernizing our field service systems, enterprise performance management tools and automating quoting and sales processes. Our digital transformation will provide greater insights into our business and end markets, allowing us to continue to guide our investments to our most profitable business segments and to pursue growth through expanding our share of these customers' spend. Our second initiative is to continue to further penetrate our addressable markets through innovation, allocating resources and capital to our most profitable opportunities and adding professional services, control systems and other content to drive MRR. Ensuring we are driving returns as we help our customers achieve success on their investment in our offerings. Speaker 200:19:483rd, we are taking steps in parallel to lower our overall cost to operate the business and increase market competitiveness. This includes increasing the flexibility of our capacity and our plant manufacturing allocation and utilization, adjusting our production and capabilities to smoothly manage order flow and boost operational effectiveness. With these initiatives, we will continue to advance many existing elements of our strategy and our competitive differentiation, including our premium value proposition, our U. S. Design, fulfillment and high touch services, our key investments in control systems and our unique culture of lifetime service to our customers. Speaker 200:20:36We will keep you apprised of our progress as we implement our strategies and move through the year. In conclusion, our summary on Slide 9 recaps our key highlights. Fiscal 2024 was a terrific year and our results demonstrate that our teams have built the foundation for a resilient business model and overcame the challenges caused by the constrained supply chain and other impacts from the pandemic. We are focused on a multi year journey to drive our profitable growth and are committed to consistently earning returns above our cost of capital. These strategies include focus on allocating resources to capture the growth in our existing SAM and develop growth in other areas and are poised for durable revenue, earnings and cash flow generation. Speaker 200:21:28We seek to utilize our position as a global industry leader in best in class video communication systems to grow profitably. We are differentiated from our competitors by our U. S. Base, our global footprint, our technology leadership, the high quality of our solutions, our large entrenched customer base and our services. We are extending our technology leadership in high quality, high touch solutions serving our large demand resilient growing markets. Speaker 200:22:03We are very proud of our results and grateful to our teams who work together to deliver them and we look forward to a solid end to our year. With that, I would ask the operator to please open the line for questions. Operator00:22:19Thank you. At this time, we will conduct the question and answer session. Our first question comes from the line of BJ Cook from Singular Research. Your line is open. Speaker 400:22:56Hey guys, great quarter. Thanks for taking my call. Just a couple of questions. You guys are targeting some recurring revenue opportunities in Control Systems and Content. I just kind of curious, are you marketing these services to new orders going out, existing customers and projects that are on the market now? Speaker 400:23:19And would you expect that over time to be a meaningful part of the business? Speaker 200:23:28Vijay, thanks for joining us on today's call and I appreciate the question. Yes to all of that, I guess is the answer. The services we offer are especially important as a new customer takes on a system and grows their capability to operate program, understand what they're trying to accomplish with their systems. And that is in sports, that is in commercial, that is in transportation. And then as they get through their 1st year in subsequent years, they often benefit from refreshing and there's a changeover in staffing often. Speaker 200:24:09And so the future years is a continual opportunity to sell different services. And the displays themselves are often projected to last 10 years or sometimes more. But the control capability computers run at a different cycle. So there's often a desire to refresh the software capabilities and in systems where we provide dedicated on-site processing, the computer systems, sometimes in year 3 and sometimes in year 5 as they go through the system lifecycle. Speaker 400:24:49I got you. That makes sense. You highlighted a couple of times new military shipments and products there. I guess typically the thing military think, well, it's a big deal just to get in there, certifications, you got to kind of know somebody. I just wondered if these are kind of went through that process with new customers. Speaker 400:25:16And would you expect that to be kind of an opportunity to expand into more military business? Speaker 200:25:24We see the military business is very good. We have a differentiated product line with made in America control system and control path as well as modules and displays. And we partner with AV system integrators that are focused on that market and provide what you described these kind of special requirements to even get on a base plus many of the other elements that go around the display to make one of these spaces successful. And this product we have, the narrow pixel pitch product is increasingly what they go to, to replace LCD or projection type of technologies and it unlocks uses that they previously maybe desire to have something, but the technology was just not quite right. And so we see that all of those are potentials for this kind of narrow pixel pitch product for military and really other applications and control centers and elsewhere. Speaker 400:26:35Okay. Hey, thanks a lot guys. Appreciate it. Speaker 200:26:38Thank you, P. J. Operator00:26:43Thank you. And our next question comes from the line of Anja Soderstrom from Sidoti. Your line is now open. Speaker 500:26:54Hi, thank you for taking my question and congratulations on the strong quarter. I'm curious about the new DIP chip. How's that been received? And what can we expect in potential contribution in terms of revenue and margins from that? Speaker 200:27:10Thank you, Anja, for attending the call. We are very excited about this chip on board that's enabled partially through this flip chip technology. And it provides really a lot of enhancements in our NPP product line. Oftentimes, we use that as at a higher pixel pitch or a tighter resolution. We use it. Speaker 200:27:38It's more rugged and durable. So it's more friendly if somebody can like reach out and touch the face. It has a very high contrast, so it responds well in high brightness sorts of situations. So we've seen a high receptivity to this product line in our customer base and our partner channels. As far as a prediction on impact on profitability or revenue, maybe it's too soon for us to estimate that. Speaker 500:28:13Okay. Thank you. And I have a follow-up on the recurrent revenue question. Is that at a higher margin than the overall? Speaker 200:28:24It is at a higher margin and it adds significantly to our customer satisfaction, which we think it increases the likelihood they'll buy from us again. As of today, it's a smaller portion of our overall revenue, but we think it's an exciting area and there's room to grow in the future. Speaker 500:28:46Okay. And what are you seeing in the international markets? It seems like the orders were increasing there at least. Speaker 200:28:55We're hopeful that the geopolitical situation across the world will be less dynamic in the coming years. And it appears that the market is picking up. We still and we've had considerable interest during these times. But as described, it was hard to get that interest to convert into orders. But in the last few months, we've been seeing increasing indications that that's easier and easier. Speaker 200:29:30So we're hopeful that the international market will continue to pull out of the situation that it's in. Overall, we're very excited about our international markets. A lot of this the buying thinking from those customers is similar to what we have in the U. S. And our market share is relatively small internationally allowing us room to grow in those areas as well as we've invested a lot in the sales, service and fulfillment teams and we believe we can handle growth with our current footprint. Speaker 500:30:12Okay. Thank you. That was all for me. Speaker 200:30:16Thank you. Operator00:30:21Thank you. I am showing no further questions at this time. I would now like to turn the call back over to Reese Kurtenbach for any closing remarks. Speaker 200:30:31Yes. Thank you everyone for attending today's conference. Appreciate the questions and we'll see you in a few months when we have our Q1 earnings call. I hope you all have a great summer and we'll see you later in the early fall. Bye bye. Operator00:30:48Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallDaktronics Q4 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Annual report(10-K) Daktronics Earnings HeadlinesTennessee Titans are doing something unprecedented by bringing local flavor and LED technology to new Nissan Stadium in 2027April 22 at 6:47 PM | msn.comINVESTOR ALERT: Pomerantz Law Firm Investigates Claims On Behalf of Investors of Daktronics, Inc. - DAKTApril 22 at 4:32 PM | prnewswire.comWhat President Trump’s Executive Order 14154 means for your moneyNearly $3 trillion disappeared from the stock market on Thursday morning. According to Whitney Tilson - a former hedge fund manager who predicted the dotcom crash, the housing crisis, and the 2022 tech stock bloodbath - a little-known executive order from the President's first day in office could spark a paradigm-shift that will likely catch millions of Americans off guard.April 24, 2025 | Stansberry Research (Ad)Daktronics selected as large display partner of Tennessee TitansApril 22 at 3:57 AM | markets.businessinsider.comTennessee Titans Bring ‘Ring Of Fire’ to Game-Day with 37-Display Super System at the New Nissan StadiumApril 21 at 5:52 PM | markets.businessinsider.comINVESTOR ALERT: Pomerantz Law Firm Investigates Claims On Behalf of Investors of Daktronics, Inc. - DAKTApril 21 at 3:52 PM | globenewswire.comSee More Daktronics Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Daktronics? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Daktronics and other key companies, straight to your email. Email Address About DaktronicsDaktronics (NASDAQ:DAKT) designs, manufactures, and sells electronic scoreboards, programmable display systems and large screen video displays for sporting, commercial, and transportation applications in the United States and internationally. It operates through Commercial, Live Events, High School Park and Recreation, Transportation, and International segments. The company also offers video display and walls; scoreboards and timing systems; LED message displays and sings; intelligent transportation systems dynamic message signs; mass transit display; sound systems; and digital billboards and street furniture, and digit and price displays. In addition, it provides indoor dynamic messaging systems and liquid crystal display signs; and software and controllers, which includes Venus, a control suite software to control the creation of messages and graphic sequences for uploading to displays. The company sells its products through direct sales and resellers. Daktronics, Inc. was founded in 1968 and is headquartered in Brookings, South Dakota.View Daktronics ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step InWhy It May Be Time to Buy CrowdStrike Stock Heading Into EarningsCan IBM’s Q1 Earnings Spark a Breakout for the Stock?Genuine Parts: Solid Earnings But Economic Uncertainties RemainBreaking Down Taiwan Semiconductor's Earnings and Future Upside Upcoming Earnings AbbVie (4/25/2025)AON (4/25/2025)Colgate-Palmolive (4/25/2025)HCA Healthcare (4/25/2025)NatWest Group (4/25/2025)Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Booking (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 6 speakers on the call. Operator00:00:00Good day, ladies and gentlemen, and welcome to the Daktronics Fiscal Year 2024 4th Quarter Earnings Results Conference Call. As a reminder, this conference is being recorded today, Wednesday, June 12, 2024, and is available on the company's website at www.dactronics.com. I would now like to turn the conference over to Ms. Carla Gatzke, Company Secretary for Daktronics for some introductory remarks. Please go ahead, Carla. Speaker 100:00:34Thank you, Siobhan. Good morning, everyone. Thank you for participating in our Q4 earnings conference call. I would like to review a few disclosure cautioning investors and participants that in addition to statements of historical fact, we will be discussing forward looking statements reflecting our expectations and plans about our future financial performance and future business opportunities. These forward looking statements reflect the company's expectations or beliefs concerning future events. Speaker 100:01:07All forward looking statements involve risks and uncertainties, which could cause actual results to differ materially from our expectations. Such risks include, but aren't 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, availability of raw materials, components and shipping services and other important factors. These identified factors could cause actual results to differ materially from those discussed in this call in the company's 4th quarter 2024 quarterly earnings release and in its most recent annual report on Form 10 ks. Our Q4 2024 earnings release contains certain non GAAP financial measures and was furnished to the SEC on a Form 8 ks this morning. We will also make slides available for today's call. Speaker 100:02:15All of these documents are available on the Investors section of Daktronics website, www.daktronics.com. I'll turn the call over to our CEO, Rees Kurtenbach. Speaker 200:02:28Thank you. Good morning, everyone. Thank you all for joining us today. I would like to start by saying congratulations to the Daktronics team for an amazing year. We began and finished fiscal 2024 strong, demonstrating the increased power of our more profitable business model resulting from the operating improvements we've made over the past few years. Speaker 200:02:50We achieved record revenue and solid expansion in our operating profitability and cash flow generation. As you can see on our slide presentation on Page 3, fiscal 2024 was a year of terrific We refin We refinanced the company to ensure we have the resources available to serve our customers and build long term value for our shareholders. We executed consistently to incrementally raise the base profitability of the business by allocating resources to growing business segments and the most profitable projects. We generated substantially higher cash flow through our increased profitability and our management of working capital and through efforts such as reduction in inventory levels post supply chain correction. On the product front, we continue to innovate to maintain our technology leadership as seen in releases like additional narrow pixel pitch product lines used primarily in indoor applications. Speaker 200:04:03With respect to our end market penetration, our teams deepened our relationship with AV Integrators in new customer areas to reach growing markets. As an example, we delivered displays to a number of military sites this past year. We laid essential groundwork for our digital transformation strategy, making progress in our services systems area and investing in enterprise performance management software. In our facilities, we further optimized our operations in manufacturing and site fulfillment processes as we return to serving customers within market lead times. These accomplishments serve as evidence of the success of the actions taken over the last 18 months to capture and leverage lessons learned from challenging business conditions to improve our customers' experiences, to increase our profitability and to optimize working capital levels. Speaker 200:05:04The results also testify to the resiliency and strength of Daktronics' teams to execute our strategy of capturing demand in diverse markets and creating differentiation by innovating across technology platforms. I invite you to turn to Slide 4, titled Fiscal 4th Quarter to follow the 4th quarter's financial outcomes. Our quarterly performance was terrific, particularly in comparison to last year's growth and was a great end to a great year. Our teams continued with strong performance and we exceeded the outlook we described last quarter. In the Q4, we were able to fulfill multiple sports related projects as teams readied for summer and fall sports. Speaker 200:05:53In fiscal Q4, we generated sales volume of $216,000,000 a 2.9% growth from last year. Full year sales grew 8.5 percent for the year. The robust increases are attributable to our drive to capture a greater share of our sand. Operating income was up over 4 times fiscal 2023 and we generated over $63,000,000 in cash flow from operations. We continue to efficiently decrease backlog from last year's built up levels as we recognized the anniversary of the resolution of many supply chain challenges and utilized our capacity to deliver customer orders at market expected lead times. Speaker 200:06:39As we primarily compete with companies that obtain their products from China and compete on price, we continue to evaluate our price position in the market and carefully consider pricing adjustments to achieve our order attainment goals at profitable levels. Given our results to date this year and the momentum in order flow, we feel good about our positioning to drive profitable growth and cash flow generation into fiscal 2025 beyond. For additional details on the financial results for the quarter year, I'll now turn it over to Sheila. Speaker 300:07:16Thank you, Reese. Please turn your attention to Slide number 5, fq4 FY2024 Financial Highlights for the quarterly overview. The quarter over quarter comparisons in this slide and related discussion are as of and for fiscal quarters ended April 27, 2024 and April 29, 2023, unless stated otherwise. Orders increased by 14.6%, primarily driven by strengthening in live events and international business unit orders. Strong demand in the live events business unit was the result of success in capturing SAM from projects for colleges and universities. Speaker 300:07:55International orders are starting to rebound as some stability and economic improvement has increased customers' desire to move forward on projects. Our commercial business unit continues to see softness in large projects and there was some slowing in the high school park and recreation and transportation business units in the quarterly comparison. We generated sales of 2 $16,000,000 for the Q4 of fiscal 2024 as compared to $210,000,000 last year. This 2.9% increase in sales volume is the result of fulfilling college and university orders and live events, transportation order deliveries, a solid win rate and on time deliveries. This was somewhat offset by a sales decline in international. Speaker 300:08:44Gross margin as a percent of net sales increased to 25.7% as compared to 24.8% in the Q4 of fiscal 2023. The increase in gross profit percentage is attributable to our strategic focus on profitable markets and projects, manufacturing efficiencies and stability in our diversified supply chain. Operating margin was 9% of sales as compared to last year's 8.7 percent. Fiscal 2024's 4th quarter positive operating margin rate is attributable to our continued careful management of operating expenses, while investing in our digital transformation and product innovation. Please turn to Slide 6 as I highlight year to date performance. Speaker 300:09:30The year over year comparisons in this slide and related discussion are as of and for fiscal years ended April 27, 2024 and April 29, 2023 unless otherwise stated. For the year, orders were up $59,000,000 or 8.7% as compared to the prior year. Order volume growth is attributable to a stable macroeconomic environment in North America, to the continued use and market adoption of digital display technology and to our success in capturing existing and new customers' orders for larger project based sports and transportation business. As we are a project based business, large sized project orders can impact levels of orders. During fiscal 2024, fewer large sized projects were booked to orders in commercial and international as there were fewer larger projects available in the marketplace this past year. Speaker 300:10:25However, we believe our market share held. For the year, sales increased $64,000,000 or 8.5 percent due to the stable operating environment and supply chain combined with our past investments in capacity. We continue to invest in operating improvements to offer sustainable utilization of our capacity. These conditions resulted in more efficient fulfillment processes and a return to market expected lead times and paired with the strong order volume resulted in growth of net sales. For the year, gross margins improved to 27.2% as compared to 20.1%. Speaker 300:11:07This gross margin percentage increase is attributable to continuing strategic pricing actions, the record sales volume over fixed manufacturing cost structure, stabilization of input costs and fewer supply chain and operational disruptions during fiscal 2024 as compared to during fiscal 2023. Please note that all expense lines increased for executive variable compensation and employee profit sharing achieved because of our operating margin level attainment during fiscal 2024. These expenses totaled $6,400,000 of which $3,000,000 was recorded in cost of sales, dollars 1,200,000 in selling, dollars 1,400,000 in general and administrative expenses and $800,000 in product design and development. After investing in operational areas, margin based compensation related expenses and organic growth, the resulting operating margin was 10.6% of sales in fiscal 2024 as compared to last year's 2.8 percent or 3.4 percent of goodwill impairments as we move from the calculation, it is a non GAAP metric, but helpful to compare the improvements. We strengthened the company's balance sheet during the year end quarter. Speaker 300:12:25Our cash position at year end was $81,700,000 compared to $24,700,000 with the increase of $63,000,000 due to cash flow generation from the profitable year and efficient management of working capital and $15,000,000 from debt net. We used $21,000,000 for investments in property and equipment and our investments in affiliates. Cash restricted cash and marketable securities totaled $81,700,000 at the end of the year. Debt at fair value was $53,000,000 Our working capital ratio improved during the year. At 4th quarter end, the ratio was 2.1:one as compared to 1.6:one last year. Speaker 300:13:12Now I'll turn it over to you, Reese. Speaker 200:13:14Thanks, Sheila. Please reference Slide 7 titled Market Verticals Update. Our mission is to support our customers as they inform, entertain and persuade their customers and audiences. Let us look more specifically into our business areas. In live events, during the quarter, we completed the Detroit Tigers project along with a number of other college and university projects. Speaker 200:13:39We expect live events demand to remain strong as venues enhance facilities to entertain fans and attract athletes. We see this trend continuing and more focus being placed on entertainment areas and the experience outside the bowl in places like entryways, atriums, concourses and adjacent entertainment areas. Our narrow pixel pitch line of products match the needs of customers for these places. Commercial orders, especially from customers in the out of home advertising space can be sensitive to economic conditions and they can rebound quickly as conditions improve. Market is also sensitive to the large national advertiser spending decisions, which is why we also focus on winning other independent billboard sales and have seen important increases in this market vertical over the last year. Speaker 200:14:33We continue to innovate and provide competitive differentiation in the marketplace to reach the needs of our customers. We continue to build out our AV integrator network to market our narrow pixel pitch product lines, especially in control room applications used by military, utility and transportation agencies. To date, we have installed 131 displays on 43 different bases globally. And in FY 2024, the American Transmission Company in Wisconsin purchased 2 large screens, 1 8.5 feet high by 86 feet wide and another 6.5 feet high by 52 feet wide. In transportation, our teams are focused on winning projects for intelligent transportation systems, airport projects and other mass transit systems projects. Speaker 200:15:28Other highlights of our Q4 performance include orders from Texas and North Carolina Department of Transportation as well as an order from Southwest Airlines. International. During the quarter, we won a stadium project for orders for and orders for transportation areas, a stronger finish to a year in which orders were slow, which we believe is due to economic and geopolitical uncertainty. Customers continue to demonstrate interest in projects, but have been delaying buying decisions. Our sales teams continue to be responsive to customers and are actively quoting opportunities and we are starting to see signs of more quotes converting into High schools. Speaker 200:16:15The trend going forward in this end market continues to be a conversion to full video. In fiscal 2022, our sales were $112,000,000 in this market and have grown to $170,000,000 in fiscal 2024. We are well positioned to meet this demand and believe we are in the early stages of that transition. We are looking to speed up and simplify the sales processes and increase our market reach by deploying sales strategies to make certain items able to be purchased online. We also continue to develop our e sales channel and these efforts are going well. Speaker 200:16:50We are continuing to offer more products through these online and partner channels and have improved systems to make the buying process more efficient. Our customers use our control capabilities to create, manage and schedule content for engagement with fans and audiences. We continue to make progress in our multi year strategy to create more capabilities to aid in the service and maintenance of our systems and plan to upgrade our solutions by the end of the calendar year as well as continually add to the future set of our cloud based and locally hosted systems. For example, we recently launched a 4 output media player that is compatible with our Venus Control Suite, a cloud based software our displays use, which improves our control features. These capabilities are increasingly offered through software as a service and we are investing in people and capabilities to grow these higher margin and less capital intensive opportunities. Speaker 200:17:54Turning to Slide 8 titled FY 2025 Strategic Priorities. Overall, we have a unique leadership position in our target markets, which are growing which are large, growing and enjoy resilient demand driven by our customers' desire to improve their audience experience in sports, commercial and transportation environments. Based on our accomplishments in fiscal 2024, we are implementing a set of initiatives in fiscal 2025 to continue to drive future revenue growth and returns. We are not done with our efforts to enhance the return on invested capital that our business can deliver. As highlighted in our press release, we are focused on different initiatives and priorities on a backbone of commitment to improve our return on capital and consistently earn returns above our cost of capital. Speaker 200:18:48These priorities include taking the next steps in our digital transformation to enhance our internal systems. These include modernizing our field service systems, enterprise performance management tools and automating quoting and sales processes. Our digital transformation will provide greater insights into our business and end markets, allowing us to continue to guide our investments to our most profitable business segments and to pursue growth through expanding our share of these customers' spend. Our second initiative is to continue to further penetrate our addressable markets through innovation, allocating resources and capital to our most profitable opportunities and adding professional services, control systems and other content to drive MRR. Ensuring we are driving returns as we help our customers achieve success on their investment in our offerings. Speaker 200:19:483rd, we are taking steps in parallel to lower our overall cost to operate the business and increase market competitiveness. This includes increasing the flexibility of our capacity and our plant manufacturing allocation and utilization, adjusting our production and capabilities to smoothly manage order flow and boost operational effectiveness. With these initiatives, we will continue to advance many existing elements of our strategy and our competitive differentiation, including our premium value proposition, our U. S. Design, fulfillment and high touch services, our key investments in control systems and our unique culture of lifetime service to our customers. Speaker 200:20:36We will keep you apprised of our progress as we implement our strategies and move through the year. In conclusion, our summary on Slide 9 recaps our key highlights. Fiscal 2024 was a terrific year and our results demonstrate that our teams have built the foundation for a resilient business model and overcame the challenges caused by the constrained supply chain and other impacts from the pandemic. We are focused on a multi year journey to drive our profitable growth and are committed to consistently earning returns above our cost of capital. These strategies include focus on allocating resources to capture the growth in our existing SAM and develop growth in other areas and are poised for durable revenue, earnings and cash flow generation. Speaker 200:21:28We seek to utilize our position as a global industry leader in best in class video communication systems to grow profitably. We are differentiated from our competitors by our U. S. Base, our global footprint, our technology leadership, the high quality of our solutions, our large entrenched customer base and our services. We are extending our technology leadership in high quality, high touch solutions serving our large demand resilient growing markets. Speaker 200:22:03We are very proud of our results and grateful to our teams who work together to deliver them and we look forward to a solid end to our year. With that, I would ask the operator to please open the line for questions. Operator00:22:19Thank you. At this time, we will conduct the question and answer session. Our first question comes from the line of BJ Cook from Singular Research. Your line is open. Speaker 400:22:56Hey guys, great quarter. Thanks for taking my call. Just a couple of questions. You guys are targeting some recurring revenue opportunities in Control Systems and Content. I just kind of curious, are you marketing these services to new orders going out, existing customers and projects that are on the market now? Speaker 400:23:19And would you expect that over time to be a meaningful part of the business? Speaker 200:23:28Vijay, thanks for joining us on today's call and I appreciate the question. Yes to all of that, I guess is the answer. The services we offer are especially important as a new customer takes on a system and grows their capability to operate program, understand what they're trying to accomplish with their systems. And that is in sports, that is in commercial, that is in transportation. And then as they get through their 1st year in subsequent years, they often benefit from refreshing and there's a changeover in staffing often. Speaker 200:24:09And so the future years is a continual opportunity to sell different services. And the displays themselves are often projected to last 10 years or sometimes more. But the control capability computers run at a different cycle. So there's often a desire to refresh the software capabilities and in systems where we provide dedicated on-site processing, the computer systems, sometimes in year 3 and sometimes in year 5 as they go through the system lifecycle. Speaker 400:24:49I got you. That makes sense. You highlighted a couple of times new military shipments and products there. I guess typically the thing military think, well, it's a big deal just to get in there, certifications, you got to kind of know somebody. I just wondered if these are kind of went through that process with new customers. Speaker 400:25:16And would you expect that to be kind of an opportunity to expand into more military business? Speaker 200:25:24We see the military business is very good. We have a differentiated product line with made in America control system and control path as well as modules and displays. And we partner with AV system integrators that are focused on that market and provide what you described these kind of special requirements to even get on a base plus many of the other elements that go around the display to make one of these spaces successful. And this product we have, the narrow pixel pitch product is increasingly what they go to, to replace LCD or projection type of technologies and it unlocks uses that they previously maybe desire to have something, but the technology was just not quite right. And so we see that all of those are potentials for this kind of narrow pixel pitch product for military and really other applications and control centers and elsewhere. Speaker 400:26:35Okay. Hey, thanks a lot guys. Appreciate it. Speaker 200:26:38Thank you, P. J. Operator00:26:43Thank you. And our next question comes from the line of Anja Soderstrom from Sidoti. Your line is now open. Speaker 500:26:54Hi, thank you for taking my question and congratulations on the strong quarter. I'm curious about the new DIP chip. How's that been received? And what can we expect in potential contribution in terms of revenue and margins from that? Speaker 200:27:10Thank you, Anja, for attending the call. We are very excited about this chip on board that's enabled partially through this flip chip technology. And it provides really a lot of enhancements in our NPP product line. Oftentimes, we use that as at a higher pixel pitch or a tighter resolution. We use it. Speaker 200:27:38It's more rugged and durable. So it's more friendly if somebody can like reach out and touch the face. It has a very high contrast, so it responds well in high brightness sorts of situations. So we've seen a high receptivity to this product line in our customer base and our partner channels. As far as a prediction on impact on profitability or revenue, maybe it's too soon for us to estimate that. Speaker 500:28:13Okay. Thank you. And I have a follow-up on the recurrent revenue question. Is that at a higher margin than the overall? Speaker 200:28:24It is at a higher margin and it adds significantly to our customer satisfaction, which we think it increases the likelihood they'll buy from us again. As of today, it's a smaller portion of our overall revenue, but we think it's an exciting area and there's room to grow in the future. Speaker 500:28:46Okay. And what are you seeing in the international markets? It seems like the orders were increasing there at least. Speaker 200:28:55We're hopeful that the geopolitical situation across the world will be less dynamic in the coming years. And it appears that the market is picking up. We still and we've had considerable interest during these times. But as described, it was hard to get that interest to convert into orders. But in the last few months, we've been seeing increasing indications that that's easier and easier. Speaker 200:29:30So we're hopeful that the international market will continue to pull out of the situation that it's in. Overall, we're very excited about our international markets. A lot of this the buying thinking from those customers is similar to what we have in the U. S. And our market share is relatively small internationally allowing us room to grow in those areas as well as we've invested a lot in the sales, service and fulfillment teams and we believe we can handle growth with our current footprint. Speaker 500:30:12Okay. Thank you. That was all for me. Speaker 200:30:16Thank you. Operator00:30:21Thank you. I am showing no further questions at this time. I would now like to turn the call back over to Reese Kurtenbach for any closing remarks. Speaker 200:30:31Yes. Thank you everyone for attending today's conference. Appreciate the questions and we'll see you in a few months when we have our Q1 earnings call. I hope you all have a great summer and we'll see you later in the early fall. Bye bye. Operator00:30:48Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.Read morePowered by