Daktronics, Inc. Announces First Quarter Results; Orders Up Over 50%, Sales Up 27%, Plant Expansion Completed.BROOKINGS Brookings, city (1990 pop. 16,270), seat of Brookings co., E S.Dak., on the Big Sioux River; inc. 1883. A trade center in a livestock and grain region, Brookings is an important seed-processing point. , S.D. -- Daktronics Daktronics Inc. (NASDAQ: DAKT) is an American company based in Brookings, South Dakota that designs, manufactures, sells, and services dynamic visual communication systems for customers worldwide. The company is best known for its diverse offering of electronic LED displays. , Inc. (Nasdaq:DAKT) today reported fiscal 2007 first quarter net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $92.2 million and net income of $5.0 million, or $0.12 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with first quarter net sales of $72.3 million and net income of $4.6 million, or $0.11 per diluted share, one year ago. Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. at the end of the quarter was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $123 million, compared with a backlog of approximately $83 million at the end of first quarter of fiscal 2006. "Our order bookings for the quarter again exceeded our expectations as evidenced by our backlog which continued to put pressure on our manufacturing capacity," said Jim Morgan Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. , president and chief executive officer. "During the quarter we moved into the new plant addition in Brookings and made considerable progress in getting our new Sioux Falls Sioux Falls, city (1990 pop. 100,814), seat of Minnehaha co., SE S.Dak., on the Big Sioux River; settled 1856, inc. as a village 1877, as a city 1883. Settlers abandoned the site in 1862 because of Native American raids, but with the establishment (1865) of Fort facility ready, including hiring a number of employees for the Sioux Falls operation who are currently working in Brookings for training." Morgan continued, "The better than expected growth in orders was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to our performance in the sports markets, which were up over 50 percent as compared to last year, and the commercial market, which was up over 70 percent. We are off to a strong start for the second quarter and our order pipeline is strong for both sports and commercial markets. "We continue to work on meeting the demands of our outdoor advertising customers as they ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale the deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. of digital billboards. We expect that the Sioux Falls facility, which will focus on serving our outdoor advertising customers, will be functioning by the end of second quarter. We expect to have approximately double the capacity for this niche niche: see ecology. niche Smallest unit of a habitat that is occupied by an organism. A habitat niche is the physical space occupied by the organism; an ecological niche is the role the organism plays in the community of organisms found in the by the end of the calendar year," said Morgan. Morgan added, "We also completed two transactions recently as we build our presence in narrowcasting Narrowcasting has traditionally been understood as the dissemination of information (usually by radio or television) to a narrow audience, not to the general public. Some forms of narrowcasting involve directional signals or use of encryption. with our investment in Arena Media Networks and FuelCast(SM) Media Networks. Both of these organizations are built on a model of investing in display and network infrastructure, with returns generated through advertising on the network. With our partners in these businesses we have become the digital display network leader in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. in professional sports The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. facilities and petroleum retailers. This helps us develop more recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue opportunities and leverages our investments previously made in software and network infrastructure." "We had a number of factors contributing to the lower than expected operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: percent, including our performance on a few large sports projects, which we believe are isolated, resulting in higher than expected costs," said Bill Retterath, chief financial officer. "In addition, the effects of moving our manufacturing into the new facility was slightly higher than we expected and we saw higher health care costs on our self-insured self-insured Self fund Health insurance adjective Referring to the practice of carrying an individual health insurance policy for oneself; self insurance is usually more expensive than group insurance plan. For the future we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about margin based on the levels we are booking orders. We believe that margin will increase slightly over the first quarter." "For the quarter, our cash decreased as a result of the investments we made during the quarter. We have increased our estimates for capital expenditures to approximately $41 million due to additional manufacturing equipment and software. This is in addition to the approximately $10 million of investments in digital media operations," Retterath said. Retterath added, "Our overall effective tax rate declined for the quarter, due primarily to the solid performance of our international business, especially our Asian region, which includes tax incentives we receive as we build our business there. In addition, we derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. benefits from our European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon which had income sheltered shel·ter n. 1. a. Something that provides cover or protection, as from the weather. b. A refuge; a haven. c. An establishment that provides temporary housing for homeless people. 2. as a result of net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. . For future quarters, we expect that the effective rate will be in the 37 percent range, although that could change based primarily on our success in continuation continuation - continuation passing style of improvements in our international business units." Morgan concluded, "We estimate net sales for the second quarter of fiscal 2007 will be in the range of $95 to $105 million, with earnings in the range of $0.13 to $0.18 per share. Earnings per share estimates include the impact of stock option expensing of approximately $0.01 per share. With our performance in the first quarter, we are increasing our estimate of net sales for the year to be in excess of $372 million, up more than 20% for the year as a whole." Webcast Information The Company will host a conference call and webcast to discuss its financial results today at 10:00 am (Central Time). This call will be broadcast live at http://investor.daktronics.com and available for replay shortly after the event. About Daktronics Daktronics has strong leadership positions in, and is one of the world's largest suppliers of, electronic scoreboards, computer-programmable displays, and large screen video displays and control systems. The company excels in the control of large display systems, including those that require integration of multiple complex displays showing real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. information, graphics, animation animation Process of giving the illusion of movement to drawings, models, or inanimate objects. From the mid-1850s, such optical devices as the zoetrope produced the illusion of animation. Stop-action photography enabled the production of cartoon films. and video. Daktronics designs, manufactures, markets and services display systems for customers around the world, in sport, business and transportation applications. For more information, visit the company's World Wide Web site at: http://www.daktronics.com, e-mail the company at investor@daktronics.com, call (605) 697-4000 or toll-free (800) 843-5843 in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. or write to the company at 331 32nd Ave AVE Avenue AVE Average AVE Alta Velocidad Espanola (train between Madrid and Seville) AVE Alta Velocidad Española (Spanish: High Speed Train) AVE Audio Video Entertainment AVE Advertising Value Equivalent . PO Box 5128 Brookings, S.D. 57006-5128. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Cautionary Notice: In addition to statements of historical fact, this news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. reflecting the Company's expectations or beliefs concerning future events, which could materially affect company performance in the future. The Company cautions that these and similar statements involve risk and uncertainties including changes in economic and market conditions, management of growth, timing and magnitude magnitude, in astronomy, measure of the brightness of a star or other celestial object. The stars cataloged by Ptolemy (2d cent. A.D.), all visible with the unaided eye, were ranked on a brightness scale such that the brightest stars were of 1st magnitude and the of future contracts, and other risks noted in the company's SEC filings which may cause actual results to differ materially. 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or or unanticipated events as they occur.
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands, except earnings per share)
(unaudited)
Three Months Ended
---------------------------
July 29, 2006 July 30, 2005
------------- -------------
Net sales $92,153 $72,345
Cost of goods sold 65,778 50,151
------------- -------------
Gross profit 26,375 22,194
------------- -------------
Operating expenses:
Selling 12,446 9,809
General and administrative 3,728 2,622
Product design and development 3,619 2,484
------------- -------------
19,793 14,915
------------- -------------
Operating income 6,582 7,279
Nonoperating income (expense):
Interest income (expense), net 619 326
Other income (expense), net 107 (72)
------------- -------------
Income before income taxes 7,308 7,533
Income tax expense 2,321 2,901
------------- -------------
Net income $4,987 $4,632
============= =============
Weighted average number of fully diluted
shares and
common equivalent shares 41,082 40,343
============= =============
Earnings per share:
Basic $0.13 $0.12
============= =============
Diluted $0.12 $0.11
============= =============
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
July 29, April 29,
2006 2006
(unaudited)
----------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $17,927 $26,921
Marketable securities 8,400 8,310
Accounts receivable, less allowance for
doubtful accounts 39,342 46,019
Current maturities of long-term receivables 4,092 4,476
Inventories 42,622 31,045
Costs and estimated earnings in excess of
billings 28,577 17,375
Prepaid expenses and other 5,284 2,522
Deferred income taxes 7,028 6,213
Income taxes receivable 137 97
Rental equipment available for sale 286 286
----------- ----------
Total current assets 153,695 143,264
----------- ----------
Advertising rights, net 3,188 3,112
Long-term receivables, less current maturities 9,406 8,756
Investment in affiliate 6,590 582
Goodwill 2,716 2,706
Intangible and other assets 674 636
Deferred income taxes 122 232
----------- ----------
22,696 16,024
----------- ----------
PROPERTY AND EQUIPMENT:
Land 1,451 1,223
Buildings 22,175 20,470
Machinery and equipment 23,250 22,332
Office furniture and equipment 25,334 22,926
Equipment held for rental 3,119 2,182
Demonstration equipment 4,211 4,899
Transportation equipment 5,404 4,863
----------- ----------
84,944 78,895
Less accumulated depreciation 38,657 38,336
----------- ----------
46,287 40,559
----------- ----------
TOTAL ASSETS $222,678 $199,847
=========== ==========
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
July 29, April 29,
2006 2006
(Unaudited)
----------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $27,556 $20,506
Accrued expenses and warranty obligations 17,055 15,179
Current maturities of long-term debt 100 114
Current maturities of long-term marketing
obligations 381 377
Billings in excess of costs and estimated
earnings 26,978 19,760
Customer deposits 6,951 7,777
Deferred maintenance revenue 4,562 4,066
Income taxes payable 2,648 555
----------- ---------
Total current liabilities 86,231 68,334
----------- ---------
Long-term debt, less current maturities 130 131
Long-term marketing obligations, less current
maturities 608 574
Long-term warranty obligations and other
payables 4,986 3,864
Deferred income taxes 1,520 1,599
----------- ---------
7,244 6,168
----------- ---------
TOTAL LIABILITIES 93,475 74,502
SHAREHOLDERS' EQUITY:
Common stock 20,243 19,551
Additional paid-in capital 4,110 3,480
Retained earnings 105,029 102,381
Treasury stock, at cost (9) (9)
Accumulated other comprehensive loss (170) (58)
----------- ---------
TOTAL SHAREHOLDERS' EQUITY 129,203 125,345
----------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $222,678 $199,847
=========== =========
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
--------------------
July 29, July 30,
2006 2005
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $4,987 $4,632
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 2,784 1,942
Amortization 12 10
(Gain) loss on sale of property and
equipment (1) (4)
Stock based compensation 406 --
Provision for doubtful accounts 97 149
Deferred income taxes, net (784) (317)
Change in operating assets and liabilities (1,024) (6,654)
---------- ---------
Net cash provided (used) by operating
activities 6,477 (242)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (7,450) (3,856)
Investment in affiliates (6,008) --
Sales (purchases) of marketable securities, net (90) (8)
Proceeds from sale of property and equipment 19 17
---------- ---------
Net cash used in investing activities (13,529) (3,847)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividend paid (2,339) (1,917)
Excess tax benefits from stock-based
compensation 205 --
Principal payments on long-term debt (16) (314)
Net borrowing (payments) on notes payable -- (178)
Proceeds from exercise of stock options and
warrants 335 247
---------- ---------
Net cash used in financing activities (1,815) (1,806)
---------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (127) (208)
---------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (8,994) (6,103)
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 26,921 15,961
---------- ---------
CASH AND CASH EQUIVALENTS END OF PERIOD $17,927 $9,858
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