Insider Note: We selected comments of interest from last weeks Daktronics Earnings Call.

Andrew D. Siegel, Independent Chair of the Board

Good morning, everybody, from here in Brookings. I thought maybe I’d just take a few brief minutes to set the stage. On our last quarter call, we shared several pieces of important news beyond our earnings report. First, the senior management transition in which your Board named a well-respected company veteran who has led the group of our largest and most profitable segments, Brad Wiemann as Interim CEO. We accelerated our financial transformation by asking Director Howard Atkins to take on the acting CFO role until our new CEO can make their own Chief Financial Officer selection and why you’re hearing my voice today asked me to step up to become Chairman of the Board. Why does that matter? Well, I’m a non-insider shareholder who first invested on the conviction that the company was undervalued.

I continue to view the stock as significantly undervalued, and I’m committed to closing that gap. Secondly, at the time, we announced that we had reached an agreement with our largest shareholder, Alta Fox, pursuant to which the company terminated our poison pill, converted to 9% subordinated debt. Undertook a comprehensive review of our exec compensation and added Alta Fox’s appointee, Peter Feigin, President of the Milwaukee Bucks of the NBA to our Board. Peter is terrific. He jumped in right away with the voice of the customer to provide insight and guidance, particularly to our live events team. So I want to thank Connor Haley of Alta Fox for that recommendation for providing the financing like many of you have reached out for continuing to offer constructive ideas about the company’s future.

Third, we reincorporated the company in Delaware, where corporate law is well understood, clear and predictable. This re- domestication was accomplished with the overwhelming approval of shareholders, which reflects its importance. to supporting our ongoing business transformation plan while flexibly protecting shareholder interests. Then on top of this transition and transformation, another key word was thrown in the mix during the past almost 3 months for us, along with most U.S. manufacturers, I’m taking it personally, that created many and multivariate challenges. Those challenges were met and managed by the executive team extraordinarily well. Seeing how quickly and often the landscape changed since liberation Day, it was really remarkable how the potential impact from so many vectors and just the overall uncertainty was expertly met by this team.

So I can report to you that our fourth fiscal quarter was in addition to being transitional transformation and reactive to the tariff policy uncertainty was, in fact, a quarter of strength, stability and optimism. There actually aren’t sufficient words that I can come up with at least to describe what Brad and Howard and the entire team managed to accomplish in these few short months, but you can clean from our order and backlog growth and absence of upheaval. Further, as you’ll hear about shortly from Brad and Howard, our business

and digital transformation remains on track to achieve the objectives we set on the last quarter call. I want to thank the entire senior leadership team for their diligence and their steadiness navigating this transition.

Personally, I can tell you that I’ve come to appreciate the character of this team, their loyalty of the company and its stakeholders and their openness to executing the change that this transformation plan is now driving. Now it doesn’t show up on the balance sheet, but it’s an incredible asset, nonetheless, and I thank the team. Our fourth quarter results reflect this focus and determination. The Daktronics Board remains committed to the shareholders it represents just as our executive team remains committed to our customers and to maintaining and further developing the unique qualities that make Daktronics the best in the business. And yes, to transforming our operations in order to achieve our revenue growth, margin expansion and ROIC targets. I mentioned a moment ago that the company had undertaken a comprehensive executive compensation review.

That’s now been completed. And you will have seen this morning some detail of the plan the Board has adopted in the 8-K we filed. Most basically, we’re making our compensation more competitive. Obviously, we’re in the market with the search for CEO and to follow a CFO. So we do have an appreciation for where market is. But more than just making sure comp is competitive, so we attract first-rate talent. The objective is to align the comp plan with the goals of the transformation. So primarily, the principles of the plan are meant to further incent our sales leaders toward driving revenue and for functional leaders to achieve the margin expansion and shareholder return goals of the transformation. So we’ve now implemented a new exec compensation philosophy, again, with the help of nationally recognized consultants who match best practices to the company’s culture.

That philosophy uses a full range of compensation and incentive tools to maximize company-wide performance. On the CEO search, in particular, we don’t yet have anything to announce with respect to that, but the search committee is very pleased with the quality and quantity of candidates who have responded positively to the opportunity and express their excitement about the company and the possibilities before us. So we’re on track. And personally, I’m feeling good about the temporal progress here.

Bradley T. Wiemann, Interim President and CEO

We had a strong finish to a transformational year. We replenished our backlog in the fourth quarter, we were up 29% from Q3 and up 17% year-over-year broad-based. Through strong customer demand, our teams drove strong order growth in the second half with $50 million in new order flow booked across all segments in the fourth quarter alone.

In the on-premise area, customers are successfully transitioning to our next-generation [field] price products, which offer quick deliveries and feature-rich enhancements. Demand in the out-of-home market has been strong throughout the year, which reflects greater optimism that has been developing both in the national and independent billboard operators who are more often choosing Daktronics due to our recognized brand strength and image quality and reliability as well as our service responsiveness. We released the next-generation billboard product in the fourth quarter, which has been well received by customers. Our investments in independent channel continue to pay off. We continue to bring additional AV partners on and are seeing double-digit order growth from this channel.

To receive a free morning newsletter with each day’s Billboard insider articles email info@billboardinsider.com with the word “Subscribe” in the title.  Our newsletter is free and we don’t sell our subscriber list.

Paid Advertisement