Daktronics (DAKT) 6 Sep 232024 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Daktronics Fiscal Year 2024 First Quarter Earnings Results Conference Call.

As a reminder, this conference is being recorded today, Wednesday, September 6, and is available on the company's website at www.daktronics.com. [Operator Instructions] I would now like to turn the conference over to Ms. Sheila Anderson, Chief Financial Officer for Daktronics, for some introductory remarks. Please go ahead, Sheila.

Liz. you, Thank everyone. Good morning, for Call. participating Quarter you our in Conference Earnings Thank First

I cautioning business or we events. our that review financial company's expectations would to like expectations our about disclosure forward-looking forward-looking reflecting to future statements of and the plans discussing and in statements future investors These historical beliefs be facts, future concerning will performance statements our opportunities. addition participants and reflect

services growth, differ materially margins, forward-looking to, other of the cause of to technologies, All important market future in involve actual include, new risks uncertainties, risks of orders, shipping changes and products limited and our could fluctuations which from materials, but magnitude and statements and economic and introductions raw availability conditions, factors. contracts timing not of Such management expectations. and and components results are in

XXXX this most XX-K. discussed These our company's identified from materially factors those quarter release could differ cause call on Form in to annual report results earnings and on actual first recent its

first certain measures to available contain furnished the are was Exchange These at non-GAAP Securities section website at morning. XXXX Daktronics quarter Investors and this and on the earnings Commission on financial documents www.daktronics.com. Form Our X-K release

CEO, the call over Kurtenbach. I'll turn to Reece our

Good for thank morning. joining to Thanks, you Sheila. all us of I'd like today.

execution of Our business record sales and a the across all strong our quarter operating result income for are areas.

deliberate our actions We continue experience improve and capital increasing from to and decisive benefit working our levels. to past our while customers' profitability

and our teams strategy testimony innovation resiliency markets our strength well the and as to Daktronics Our also diversified platforms. within technology across a performance is of of as

the of Recreation football our our School season fall the installation and customers. utilized for and strategically manufacturing teams Park capacity Events for High to Live and complete Our start

Daktronics New Patriots. Denver and Bay football Daktronics and Numerous the including displays high Several new stadiums sports trusted England have Broncos and Green Packers, turned season. the value also professional this installations, on colleges schools the

sales back our bring levels performance, lead times profits. With able were pre-pandemic to towards generate down we also and

for over on I'll the details it quarter, the financial turn For Sheila. additional results to

Reece. you, Thank

to mentioned, quarter As in operating an of a XXXX. first had the million the of start orders XX.X% and Reece compared for was quarter sales fiscal we of $XXX.X the quarter. School for for increase This income fiscal Live had $XXX.X We record Events was especially areas, first the orders Sales by million and XXXX. fulfilling Park growth of business Reece and in mentioned. High as and Rec driven backlog,

significant and a What is for pandemic supply a material increase related quarter. in of the labor capacity a The price of we XXXX environment, makes shutdown shortages China and facilities in disruptions, as chain manufacturing to of difference increases. attributable a Shanghai, first multiple increased realization year our experienced that during stable operating fiscal in quarter a comparison portion

as sales profit as of in of XX.X% net XX% XXXX. quarter a fiscal Gross the fiscal XXXX increased compared quarter percentage of to first first for the to

during volume pricing fewer gross this chain in at and the quarter is profit same to strategic over sales increase disruptions structure, compared our the and year record The operational actions attributable last supply to as cost time. percentage

for fiscal expenses of XXXX. $XX.X quarter million the for Operating first were to first $XX.X the million compared quarter

was during $XX.X XXXX $X.X prior year last operating as of XX.X% with XX.X%. million percentage the year's first quarter was quarter to a income As rate effective quarter for of $X.X expenses Tax compared expense the Operating XX.X% fiscal for the first or of million sales, an of over income from tax loss the quarter sales XX.X%. million. declined of

noncash, the convertible nontax rate of fair effective debt. mid-XXs the tax our major expect any to our before value changes, we in Absent with year impact full be accounting

growing pursued working meet of X.X:X. our we quarter, Our the managing business our chain and customers' XXXX At levels ratio fiscal all in commitments, in our end changes capacity sheet reflects strategies to capital and was first the our supply balance while managing liquidity.

levels levels. The since chain fulfilled. Inventory dropped year ease supply order continue disruptions and to to is and normalized slightly more the backlog the are approach expected end of

totaled Cash, restricted of face $XX.X million, we million our cash debt There and and no a $XX credit. of drawdowns on marketable value securities have outstanding. of were line

May This structure by to our we serve us As a result our the closed the provides financing alternatives, financial long-term led and of for Board's reminder, committee. the our of shareholders. a strategy on financing value new in financing debt XXXX review comprehensive and resources customers build as review

issuance this our debt created noncash expense stock debt convertible fair and fair and interest market primarily increase million recorded debt $X.X at charge because price the a recorded rates. by in the the The convertible change the also the we of value, value, fair that in includes by cost in of interest caused was value is debt. The decline and

of create or value will until convertible which will each maturity noncash this income Going operating we charge this forward, quarter. note conversion, the fair below remeasure

$X.X and During we from quarter purchases XXXX, fiscal and first operations cash the for of $XX.X used million of million property of generated equipment.

our and for We into continue capital capital for to investments working focus investments working on assets. optimizing

Our plans million technology manufacturing in are for and to areas. assets, spend capital $XX approximately primarily

we'll to in digitization year. employee We invest affiliates also and plan this to customer our and investments continue improve through in experiences,

profitably. long term, and revenues grow the expect Over we to

was lead nice the coming of the customer reduction $XXX the the chain to XXXX at And quarters. and of business supply our our at stabilization fulfill quarter of fiscal first to base end in backlog reflects times. backlog more provides the Our anticipated ability which to of million, of return a

over back it turn now to comments. more for you, Reece I'll

Sheila. Thanks,

the audiovisual the geography. annual and XX% market new systems years, expect of in Industry end coming LED applications. research As achieve use we ahead, market in the we an predicts communication both growth global the estimated depending will over specific growth traditional on and rate look compounded

in by high-quality we full display of We custom-designed poised integrated products serve customers services as how to by systems, both support. continuing well and activities on capitalize range well, as engage are a to do standard we with ongoing providing to things including growth this do our

integrated display electronic to developed control large install manufacture, from to displays multimillion-dollar We systems. are line and the marketing in capabilities design, new and We recognized a repeat areas. scoreboards customers complete based efforts. serve sound a small manufacture and video leader systems We we and service, generate our complete of and reputation systems, these as leads and technical and related on products performance,

focused as traditional as the well and best-in-class adjacent to services multiyear by remainder technologies the look expected fiscal our offering broaden year, attention market on As and to of our capture position journey markets. remains the we and new growth market's ahead leading to our customers both our current

experience our preceding the years we and global applied that have and various approaches maintain so as two and and We quickly adjust geopolitical the cycles. to ever-evolving of necessary, profitability cash throughout market resources environment the can fiscal closely generation monitor economic

evaluate the continue following periods. volatility the over to and orders term size business across in our we we fiscal some expect with areas, long natural As timing of

School Recreation content market. These We grow and expect for video to sophisticated displays of Daktronics addressable adoption deploying technology the our unit High through and business and professional-grade more increasing use. customers total Park sporting are educational

applications, use increasing In for with growth the in corporate in which on integrators business channels care will Commercial focused and sales we government, create this end area. area, military, health are audiovisual

In and and indoor products medium effective customers services for outdoor as self-promotion both an on addition, depending our out-of-home applications. or use advertising

purchase the install customers as displays new displays locations existing on to We to expect new to locations and of digital in for replacement technologies. well existing as capitalize effectiveness

mass customers are and resume our more forward in move do U.S. benefit segment demand to is displays projects, qualified approval pre-pandemic venues. transit we purchasing should levels, and states. this and intelligent and in activities signage spending Transportation all is used for strong continue to as planning used digital Infrastructure for as often systems project in these to Transportation business

continue International the a experience macroeconomic business to and factors. In due unit, we softer market to geopolitical

sales see year. to these the coming to continue to expect factors impact We in

We are and have watching and accordingly. adjust and can resources closely commitments developments

Commercial Over expect trends the the outside U.S.. growth Transportation the we areas term, and longer in similar

focus and marketing expect venue continued sports interest a also will We be our in efforts. in projects, these

large remains cycles outlook The Live stadium beyond of replacement renovations, to expansion sales due continued areas. strong Events efforts sports efforts segment and

market and of in business. very leader strategic profitability are this in segment, this be allows pricing the to acknowledged terms about mindful being us We while our contract the which

In FY technologies high-return investments and to we in projects will 'XX, support make long-term profitability.

desired development develop, Our product experience engineering, and are solutions capabilities by made in market. most and investments system the in and displays digital produce very service to affiliated companies and the continuing up-to-date design design, process factors control in offer important

continue to differentiated product platforms, invest affiliated efforts offerings We services. in development will support and companies our software release and to our

technologies, other micro software in architecture will new competitive related narrow areas. advance technologies, critical We pixel LED design and architecture sustainable also pitch and and

added on by focusing efficiency members to also years. our the over grow performing last capitalization retention We operational capabilities team and highest our plan on of automation

will digital improved and transformation operating to operate. expansion of set and to growth XXXX employee sales for We stage We look a continued in is the invest and customer of support automation fiscal will strong project experiences and lower that forward income. believe cost

operator I the open questions. please that, With the would to for ask line

first [Operator question of BJ Cook Instructions] Singular Research. with Our from comes the line

is like inflation a improved gross continued going your to guess, turned backlog? actions great gross really higher Can pricing it your margin? seems short historical out we looks new margin historical from gross to in words, margins like orders to here teamed Nice more is the be term. attribute other Are And lower a quarter. that It I on sustainable? perspective. in reflect

the think to, as that in -- structure, with over supply alluded the really to in the margin pricing also all, year as current due the but last Yes, has smoothness believe more gross this time. a operations chain pleased become year last very profit of this the at quarter. And lot of I of you predictable the we're is we well, first

all pressures As stabilization it maybe extreme. not dynamic the supply makes inflationary but as And predictable. the more out certainly, or like there's as far there, still of pressures, of this chain inflationary as seems

complete But and we is I sensitive after was really to a of return very today. that available marketplace we the the dynamics see in as company, a environment. pandemic, more bulge inflationary some to As we're will the the pressures these suspect work competitive

so competitive business might we're And be. that opportunity the nature understand very market each in of evaluating what to each carefully

some the one operating looking like seemed year. Got revenue you of and it. was Awesome. a of fantastic, that too. margin. with quarter that to just higher due -- similar we're at last it was gross notably But operation expenses I compared supported to quarter amount Similarly, first margin know operating

So I structure guess P&L? going reflective your is this a forward? similar question, the operational through Again, of improvements filtering is sustainable this cost

to that first into place put that and of are and the believe responsible we of We of had equipment installed an all, because time were systems to teams past those a that And Yes. in ample ship have for operations much XX able XX and to we've improve products months. like workforce lot the invested the product, stable increased the expected automation our to greatly we and a -- have months understand We've them what also also XX past staffing more of the or they're understands and to how would do. what that over levels those.

we understanding So have we I an deliver. what can think of

consistently backlog keep can those stable place the quarters. and level running coming of keep all areas a the focus fulfillment Now into over the management in a high will be team's we future at quarters

the sure the the the intention with debt so, structure. is and working I couple I'm capital can -- CapEx without in that If that Is you secure? Okay. prepayment on long mean your caveat penalty? pay term? questions that A comes the is of mortgage

BJ, working to that the or you evaluating and be back management repay to any team mentioned, could mortgage reviews prepay. to our as And in that time. company outlook, the invest it the like use the to at are cash use we Board for opportunities We different of put we'll able, and it

the trigger conversion Could of about but a so. remind would you hasn't the rates? situation? you stock like the while, It us think have looks conversion debt? can been what us price converted force I for it has that So remind over the you Do conversion yet.

that of but that it's XX XXX% doesn't certain conversion the May do And a then into stock that's months price force conversion. effect And of until over we of XXXX. price. term can come We conversion, $X.XX that have tranches also force from be

Awesome.

orders bugaboo in noted there that like release there? small seems was press that, It too is you share reduction one, -- probably outlook there your guidance Is how one that noticed a last the Anything guys about or in Just was -- remainder of segment. you year-over-year. for fiscal the the the too quick for assuming anything it's you The can year? Commercial early soon. share can -- big

We don't the be typically factors. economic business area, tends we're Commercial to track. the most give the And guidance, out-of-home so still on sensitive to that is, business that in

recall, to this, have that this It would might -- typically. out for soft As like there Are to X last recession? have landing, we a getting experts well segment you next is are that a the in landing? a or the going press months, there bode are be the seems soft might pool we going which more optimistic of business

to there BJ, highlight, some in is in call what larger the project just the business area. too, Commercial we variability our spectacular market, And business

you So of downs variability the one and sales of orders. other. just quarter in there And that that can to level that ups excuse causes -- compare level me, be and when in some or,

closing to turn for call remarks. I'm showing questions Instructions] to no Kurtenbach this in like [Operator queue I'd Reece the back at time. further

everybody and will any questions Well, attending call the other feedback conference we and appreciate I today's receive.

the our again to great are And second a forward everyone. when to released. Thanks, results all host quarter you I will call conference Have look next day. then. We talking

This concludes participating. Thank for today's conference call. you

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