• Daktronics Reports Decreased Revenue and Profit in 1Q fiscal 2019

    Daktronics reported financials for the first quarter of fiscal 2019 (3 months ended July 28, 2018). Sales declined 11% to $154M for the quarter.  Net income declined 45% to $4.6M for the quarter.

    Daktronics CEO, Reece Kurtenbach led off his portion of Tuesday’s earnings call by stating:

    “Our first quarter financial results demonstrate that our path to profitable growth will always be smooth. Our business is and will continue to be lumpy. Looking at the macro view of our business, we are pleased with the continued interest and demand for our products globally. We continue to believe the market is growing and we are positioned to capture this market growth with our comprehensive portfolio of industry leading solutions.”

    Trade and tariffs also were mentioned by the Daktronics CEO.

    “The recent actions on trade from various governmental bodies including the U.S. as well as measures being contemplated by these governmental bodies has created volatility in the marketplace. For example, the pricing and availability for commodities such as aluminum has experienced many changes over the last 6 months. This type of volatility is being seen in other componentry that we use in our products as well as different governments consider and act and the markets react.

    Supply chains are intricate and intertwined making the ultimate impact of all these activities on Daktronics difficult to predict. For instance, while some of the components we use are directly named and proposed or in active tariff changes, we are seeing volatility in pricing and availability of other components as well. We have been closely monitoring these developments and responding as needed to minimize the impact in the short-term as well as the ongoing business of Daktronics and we will continue to keep a close watch on the trade situation over the coming months. It is our belief that we will come through this challenging time in a better position to compete on the global stage in our growing markets.”

    Kurtenbach was bullish in the digital billboard business:

    In our commercial business unit, we see opportunities for growth mainly driven by digital opportunities in the Spectacular segment, both new and replacement systems for our national account business, expansion of solutions for indoor applications and continued replacement of new investment activity in the Billboard segment.

    Other financial highlights for the quarter include:

    • Q1 Orders total was at $160M (+4%) with Commercial, which includes the digital billboard business at $36M (+20%); Live events at $39M (-36.%); High school & park recreation at $38M (+20%); Transportation at $22M (+136%) and International $24.06M (+20%).
    • Q1 Gross margin declined by 104 bps to 24.8% and operating margin declined by 417 bps to 2.62%.
    • Product order backlog was at $177M as of July 28, 2018, compared to $184M a year ago.
    • Net cash used in operating activities was $10.26M compared to $4.91M a year ago.
    • Free cash flow was negative $14.88M as of July 28, 2018, compared to negative $8.94M a year ago.

    Daktronics stock finished the day down 8% to $7.93.

     


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