Daktronics (DAKT) 4 Dec 242025 Q2 Earnings call transcript

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End in the second half of the fiscal year.

In addition, we are working to enhance and add new show control capabilities.

Our show control software solution provides dynamic seamless and fully immersive game day and event production. It is really exciting to see the first-ever Flame Ball Centerhung installation at the Miami Heat, building first of its kind creations using LED technology is something that drives our company forward and excites our employees. have to their the engineering audiences we proud sculpture Kaseya Heat feat iconic are and Center is to this life Miami for the that Bringing accomplished. a great customers We look their and audiences. types creations to fans similar forward amaze of providing to

first to X.X% and the to and at gross year addition $XXX solid our generation the earning cash, performance, at volume $XXX planned is seasonally as move margin adjusted Backlog for record million quarter. we In of operating a a financial delivered quarter. of declining quarter lower half revenue margin third we X.X% growing XX.X% million, as into

of our have of and we outdoor As recall, third you in installations is have two fall been major historically will period, days is lower overall holidays reducing there the sports slowdown construction because completed, the production. projects quarter natural a

often in third different more call. Because financial term, operating of and later during activities. costs costs our mitigation these are are shifts reduction Sheila in dynamics in overall of and the team activates near many teams capacity The further generation to management reality, such lower our focus fixed will strategies the discuss as reduce margins this quarter. on the improvement time in revenue to fiscal utilizes and results

Lakers and AAA several included Live for of please displays, turn Baylor delivery Daktronics cutting-edge various addition Center, in great Events, to Handel, stadiums. ribbon In innovative, projects, in Review and QX Kansas, Crypto.com we University the trusting University Boston Van Connecticut, boards the provide centerhung Phillies, experiences Convention details. completed of Knights. video, in first, University But already Philadelphia other Arena, Charlotte more to arenas which Slide Vertical game-day which the X, L.A. Customers for and installations highlighted, included Market large

and and similar demand venues attract to order facilities to last expect remain to fans Our variability segment call, and entertain enhance creates this in are installations and, in volumes. outlook our market we as be therefore, strong for period-to-period large remains complex lengthy athletes. sales this Orders Live Events and can

each season, each to with or potential a of we we certain new As replacements. liken a for and systems number graduating having year upgrades plan each each class --

are smaller move individual determining Some class sizes with will or when customers or larger owners projects forward. their

As the near we to now we upgrades available out orders in spring a be potential moved of evaluate expect as basebook current class the smaller a have projects of to class project number seasons. future term,

in expect continue entryways, like bowl and more we applications we the on entertainment into the entertainment adjacent and concourses atriums, outside for being demand ahead, As focus look Spaces expansion healthy areas. as to is placed zones. bowl

line and be pitch many demand. products to of customers pixel narrow these continues matches needs Our of for locations of the in

can out-of-home segment customers. vary these orders larger called through of the larger-sized ships, in Commercial military, Our companies and displays on-premise including retailers, and signed retailers Orders mainly applications, included cruise resellers, building and market types centers, companies quick-serve other primarily consists advertising of this utilities, national casinos, spectaculars. business shopping to segments. customers restaurants, petroleum are Also because many sales this also owners, commercial in two advertising of transportation, in

project large drove which we the During order Atlanta, for formerly the the quarter, secured CNN as in a increases. Center Center, known The volume

promote as serve us continued additional and out-of-home strategies a to independent the increased advertisers of orders to out-of-home result orders. large winning out-of-home national operators addition, In our

utility in continue agencies. core used our pixel market military, areas out control product Our AV pitch network and focus grow is applications for by and to integrator our narrow build especially to market to this transportation our room lines,

H.W. multiple on Bush for applications. channel our testament Quantico military As sale Marine in of focus picture through AV the slide NPP a includes at use an This an for the successful were NPP to Library. product George we Base, the also installation during products an channel example, of AV use the a quarter, of the an at and

Transportation orders orders business in for our periods the our market, versus prior our Sioux a large airport. financial order one lumpy. repeat which fulfilled segment. is therefore, regional natural long-time customers. is the we and, variability Falls solid at was In comparison, down backlog in project segment this including Despite performance this of as from

digital in and We see trend a continue to for signage. around upgrades in airports

this NPP and of system selling products are for display systems teams traffic systems, focused governments. prequalified to our transportation used to line our winning management The from city remains systems mass on including and airport trusted for ITS projects. poised projects solid full by of our is Our state other intelligent transit centers, segment outlook and advantage projects and take video

in International, during quarter, in awarded number space were out-of-home the the a of and we Australia. contracts Arabia Saudi

believe repeat we quotes see future. and While reflect orders and and the types a upgrade are of actively existing opportunities types the to on prior economic additional of customers, from to products orders slow orders. into and are in focus compared our more new these laying a of signs broad we uncertainty, several we With continues converting orders to customer out-of-home of and continue groundwork for customers be array base to future geopolitical continue for years, quoting sports to which midsized as

in this on displayed slide picture is for an NPP The Singapore. product installation

addition, customers strong evidenced unique savings response by energy tailored to our product EcoSmart energy-sensitive our needs which by is their In value product, a desired customers. specifically as our to designs

School of example high video demand for as full this installation And segment. The in video Warren displays. contribution drove of full number one is product to installations increasingly, has Harding upgrading grown We new began higher-margin In High indoors margin but pictured at further of the video deliveries bolster schools outdoor in Schools, to which the to usage our for not quarter. customers only support convert High our our the well. market the to increase orders Ohio for continues usage,

scoring software, improve workflow respect make efficiencies. broad, data solution through with fiscal on to is Control ago, live real-time control our new and timing anyone cutting-edge to market dynamic not data will progress and and supporting live Show by experience if addressable systems the moment including using is we rendering and customers enhancements enhance for a entertainment presentations integrated release sports, These our major enhancements deliver to our event applications. sports-specific visualizations, -- they're empower our year-end. Dionic software, using XD continue displays of even The slated for to mentioned As events, and

we expansion sets to us The and to we for Additionally, to intend recurring increase we revenue cloud up doing store schedule, manage streams, sources be work and content are our time. are here nicely gross that access, over customers data allowing their driver from margin introducing which a anywhere.

Sheila As half launches of at second road and our the transformation detail we business. map. digital customers, will for measure performance technology blocks our a core year, during in of the are we launches moment, internal foundation building major service which are future will overall our set the the These manage two the for of the

also and for years' in fiscal our returns transformational drive sustainable of overall designed We in the upper-teens selected revenue to comprehensive efforts initiatives future making rest through the transformation to actions develop investments the mid- transformation year, profitability refining ROIC. our growth, continue and to

over and additional this on details will Sheila. the for the discuss turn quarter it I'll I first, the after financial But to year, more for a results bit.

XX, invite and half turn Fiscal Fiscal second I Financial and Reece. the titled you, related follow quarter the Highlights first slide this outcomes. X Quarter The stated. XXXX, to July and comparisons and Thank to of Year-to-Date of ended you Slide XXXX, quarter-over-quarter XXXX X to financial discussions quarters XX, in X year's for and unless and XXXX, October the are October XX, otherwise as

quarter due time business to bookings These decreases of units. customers by unit in adoption these the offset declines business because growth video the and Transportation Order volume in by the use and Commercial of large were the market's area year project Parks displays. in in and Recreation of Live sports business purchases comparatively Variability High and unit order calendar spectacular business the Events, is for out-of-home areas project end for the were large our in of the offset natural School solid and towards International year primarily by the orders projects. in declined

lower and mix business Commercial result Transportation volumes of by first $XXX business offset International increase difference across million levels was School of units, X.X%. as normal in the business as orders on Based return end trends to comparatively for backlog of flat. units the our strong the product all of unit. result were the sales in seasonal variability more Recreation the increased level sales half Park relatively and Sales remains years, and at the Live The described. the High in This quarter. active is Events higher year was a quarter compared Orders activity of to prior Quoting segments.

the solid we net level decreased to compared to higher similar last quarter comparison. XXXX fulfillment careful of percentage between XX.X% periods. of basis, reflection and profit a attributable differences percentage sales sales as slightly year's record of With compared profit fiscal year-to-date as levels level XX.X% on to generated to Gross a a the sales second XXXX, QX of for in to ago. mix, sales costs. volume, as gross of gross year-to-date year service XX.X% XX% On and profit manufacturing of This a management some mix is the improvement price is

our a digits. the initiatives Operating through the Operating growth investments quarters support expenses, in was generate to X.X%. X.X% X.X% or future basis, digital in to and of was high operating salary continue last in was and reflected QX increases income X.X% for We as staffing the and wages transformation single consistently On increases. sales expense X onetime consulting-related sales year-to-date and adjusted. as adjusted income

help consistent nonrecurring $X.X the to efficiencies accelerate levels. grow quarter, consulting we and us profitability also million and services implement drive During and second to strategies our incurred in

during We expect initiatives. to transformation and the for up fiscal digital million to $X more XXXX million invest $X business to

half working the capital record for expected from $XXX.X management ratio quarter and marketable million Our company. to grew flows working and for X.X:X. year. restricted at strong Cash, cash operations of million maintaining sales cash of capital growth the sheet securities the the end $XX.X balance careful first on the quarter the focus working through drove growth million totaled a Management's of second capital capital on with the managing and remains and $XX.X our the and million of of $XXX.X working

of a of delivery XX we completed, Fox notice promissory months the the tranches remainder as As of senior the several for the its note XXXX, value next yesterday, delivered with will deliver January. will the The line when the percentage of $XX initial exceed value We shares days face in company not previously $X.X every face cause million million provided will announced, to $X X, the to at Fox to XX.XX% XX, on of the over XXXX. The in $X Alta note date in convert when November remaining increase save to convertible will of intend term. secured have conversion, the the maximum in conversion of of X% in over million conversion million Alta ownership note. up convertible currently shares interest late certifies December and

To execute conversion to intend offset existing note of from the authorization we repurchase this the result into share that soon share dilution on as will practical. our as common stock,

well the remainder performance, through drive Given we cash XXXX our and and generation and the profitability in with are undertaking, beyond. to market our of initiatives and our growth we're strategic fiscal the strong view financial of flow market positioning positioned

XXXX to Digital Priorities. turn Year and Slide Fiscal please X, Now Transformation titled Strategic

enterprise front, capital management allocation profitable decisions that systems On most transformation the management in the will availability improve our previously and business in data foundational areas. discussed, performance digital focus we to we're investing strengthen tools as investments guide our and

integrated We provide. and tools implementation track of processes to our phased achieve value are these on for and the these business planning tools

is and up of started. implementation, consolidation testing reporting First our has tools training

and is utilized of made we business fiscal information financial by year beginning design to data align the 'XX strategic, of needed our fiscal on for to the progress data addition, and planning. planning. gathering collection and and end This configuration, operational set integrated In better testing completed be

progress our our service and we live modernized year. testing improve both the deployment our also to tools. of experiences of application operations management as in for will this internal the launch expect We end go and and substantial by fiscal made plans creating These systems customer tools

transformation for our planning in to 'XX. are which and leverage grow phases beginning front-end and digital fiscal investments customer help processes, us we plan our the we the to These profitability. We improve in operational operations in drive and our experiences, as launch sales business in excellence quoting grow started expected automation

other areas to overview back for provide it strategic focus. turn the of Reece I'll that, an With to

see to structural Thank also digital overall lowering capabilities and and working costs you, growth foundational in investments do consultants we transformation increase Sheila. We're to we Not drive structural our but only to market as costs, product strategies. competitiveness. also the profitable to and our making people of accelerate efforts accelerate lowering investing with are those the

on to execute capture a greater our we continue to strategies SAM. grow Finally, both share of and

These strategies drive ensuring adding advancing delivering as services our I to success achieve customers their MRR, control as our professional returns include previously capabilities, content help we we other and investment mentioned, enhanced system and are offerings. in

Slide Turning titled X, Priorities. to XXXX FY Strategic

the capital company's our addressable transformation grow which capital. market, mid- operating expand of goal the business revenue and returns on of and the execute the to in company's is plan, high-teens continue than cost to to generate margins above on We consistently faster

half year. segments, our of in Show areas, a are advantages for capabilities, solutions, in product with for which aligning input value -- refining pricing, executing and above-market through offering sheet prioritizing enterprise of in this a needs product incentive digital and our planning live significant investments operations, with of support product tools at the areas and program improvements system components with profit During fiscal go our include number initiatives, Control service maintenance management business Key to including progress the second compensation manufacturing product pricing set opportunities delivery delivered, efficiencies and and has other end which by customer fully to strategy management in clear market growth higher financial allocating and we efficiency practices, on reducing acceptable maximizing on performance objectives. the upgrades new quarter, achieving resources business Daktronics costs market including critical the and to carefully and tiered margins, focusing made to transformation aligned differing balance

the quarter, conducted launched In our specific map we initiative growth. to to data-driven our deeper a plan, profitable a numerous terms second of first the prioritize process, analysis road identify In initiatives. actionable accelerate we to during opportunities analyze, further quarter, and

nearing We and early phase learnings the can choosing planning are conclusion and highlight initiatives. of and some this

insights the have These quality, customer we needs in system the gained and market. insights confirmed date, perceptions to capabilities. with are concentration and on service relationships To our of trends we control our on customers aligning and

and trends on focus capabilities. continue identify and adapt system and support behaviors needs reliability, and and product and services to market control will buying We to to product quality

and We our to have found areas management. for also opportunity improved and performance of are planning reinvigorate lean supplier management practices

to product have and We approaches market, costs. pricing production portfolio identified opportunities strategies, and management in the

Our the install. to evaluating and teams cost of reduce are offerings produce examining ways breadth and are complexity our to and

plan using to Our teams in great job strategy doing and a data-driven value-enabling prioritize are proven methodologies and initiatives.

including executing road during implementation our operations service in half on mid- resilience management expecting continue system will customer-facing will tools, we'll above in fiscal of high-teens our We map and digital our the capital. SAM initiatives, to result the begin enterprise year. revenue and transformation reacting back-end and and back performance to modernized operating more environments and to to return growth are add initiatives These our changing

with forward-looking to our refining on no call. report are our intention actions plans later than QX We the

We expect of XXXX realized of of complete be the we additional end quickly effort implementation second FY to the this in as capture benefits realized benefit XXXX. with by half to the FY

highlights. key our recaps X Slide on summary our conclusion, In

and we increasing Our performance consistent a of sustainable profitability. serves on trajectory are as evidence growth

the of Our consistently multiyear to goals these transformational strategies capital top in our and near-term on returns demonstrates cost the our improve above range industry. earn progress of and commitment and

the areas. growth growth on in additional and allocation SAM existing capturing right of focused are in We developing and resources profitable

product lower structural and transformations are on digital and We other initiatives accelerating costs. to focused

we bringing We communication a best-in-class leader industry to focus systems displays in and to video and control global continue customers. are on value our

by the of and scale demonstrate service. high-quality We servicing solutions a manufacturer world-leading only are market consistently technology with U.S. footprint, global world-class leadership, and geographic

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

or Soderstrom question the Sidoti. Instructions] of comment [Operator line first comes Our from from Anja

the great here. quarter on Congrats

your consensus in a be decline think the how to more than we we than that your better full had revenue commentary a do Or you with quarter expecting you in line half second steeper given prior second year, about was the -- expected that had should expect So the lot about we seasonality? on before? given for and

large revenue par year's. last Once or again, the so Anja, and can quarter-to-quarter. that we do on have business, be we But for be overall project sales a lumpy from will orders fiscal year exceed expect our

second season be the softer we're when should about how a of have they of in next gross might we gross couple nicely Okay. margins, think to I for year? those held up down. quarters. the the in more And going terms half, But over last now understand coming pretty they margins

winning we're our think share I orders. fair of

marketplace. pricing in the And so at -- we've set that the

So than I on of compression a situation third think more quarter, in it's volume a price certain projects.

How e-sales that also the grow? you as that that And how expect mentioned to you margins have Okay. you do affect see that And channel do trending? you launched.

a question. That's great

to but really orders. We very it's of have continued e-sales grow small -- standard our standard types channel, on

in have orders clocks every of might the grow are a as to the sales. on think school selling more one those to cost to shot higher well bring You fiscal value, as that that that year down and in basketball continue years. That of intend of future we And fiscal high we this the half focus sales allow back complex should into on facility. teams

grow. able those. And products, that that costs The selling gross become unit for So a margins be maintain continue we efficient. we overall like should the to on overall believe to those revenue will more will

year going you're are digital to spending be transformation. the the expenses seems Okay. like inflated operating a this fees on And consulting it by your bit

in to -- maybe Or margins falling from consulting expect year? should those off? to effect we continue fees that have do you are expect a paying positive next So

Yes.

We this of and be believe through will our consulting price as and this digital into exciting start And configure digital in initiatives: have can associated even but QX with initiatives. to and much we transformation The we have of initiatives, continue 'XX, year. those 'XX as costs efficiency should two major sales year possibly the initiative be such work transformation. and our and will FY initiatives, fees really transformation 'XX. a a some might in fiscal those business quoting fiscal contained But business them through challenging be some other transformation

I back the in one And for before me get Okay. queue. last

their administration to tariffs, how the new With might do coming in and Daktronics? affect approach of sort think the you that

that's obviously, a But administration wish of semiconductors Well, the question. going I I as great into new a such we lot materials, related outside the better of either and then is had our sourced cards what source finished factories bring a insight and the and into do. semiconductors our and to lot printed of U.S. factories product we bring are in. or outside U.S. circuit one U.S. the

products. And predict. to and so tariffs taken is difficult will the actions on impact it much How depends specific those

Our Research. or next of from the Furst comes Singular line from question comment Mac

Furst the Mac Singular quarter. on Research. Congratulations for is This

worries. I No appreciate call you on the today.

Yes.

So the raised? new you changes following expect with question in administration previous that office taking the of January, do what other the kind

appears our in change in operations now. make tariffs in too or that a that Yes. again, the potentially account to we to front environment. regulatory of soon on be really regulation But lots what different predict or or for environment It there'll might the changes estimate to the regulations that. Once in activity right

Yes.

sell in China, do produce China. you not You but in

on margins, out Is basically tariff obviously maybe a depress expense you statement? a of your fair would coming of from that China even China, with right? that XX% anything So

I think most. understood I

do really some Mac, in much a but Shanghai, You factory me and let goes of produce into to which countries there, there, U.S. products up try. come a We some of U.S., broke we the the which nice outside little have China, but bit

those of many major also other U.S. area we which Ireland, LEDs, And from outside and products South sometimes the Dakota, through LEDs and the again, of of our countries like we and to once we companies where kind of production many outside in the come the We source have of U.S., supplies China other the items we another China. semiconductor that Central produce turn those Minnesota factory U.S. have power in And on off, source some and ICs components. some to

player a China huge the But is in market. semiconductor

some have countries, components. those many broadly certainly be the pricing impacted applied so are possibly will from availability of And how overall from tariffs influence there's China other -- administration. on the they And by and by on tariffs next and depending

I China. out, the Mac, Southern of the most outside that China, produces may in and competition U.S. our point

components in won't will do be we they a which our disadvantage necessarily bring that have it in And the advantage be in of U.S., So same can in we sort because is competitive the value an industry. environment. unusual at

have biggest We U.S. the largest facility the the manufacturing in and really

back I'm additional this I'd the questions turn to like showing queue remarks. at for management in no to over conference time. the any closing

quarter, attending call, quarter. you Anja the everyone. Benchmark have all today. everybody attending have we'll there's season, the appreciate activities host next And for the you And here hope Discovery at also, nice be Singular us results. of including a of when Mac I I words earnings December, a and call the we'll Conference both outreach a Conference. and about the and you today's We in seeing of forward in to holiday investor from I end planned Thanks, and great February. release we those. joining QX, Appreciate our next course, look do

in program. concludes participating This and conference. today's thank for Ladies you gentlemen, the

You a may wonderful Everyone, now have disconnect. day.