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Daktronics Inc. Announces Fourth Quarter and Fiscal 2015 Results

20:00 EDT 1 Jun 2015 | Globe Newswire

BROOKINGS, S.D., June 2, 2015 (GLOBE NEWSWIRE) -- Daktronics Inc. (Nasdaq:DAKT) today reported fiscal 2015 fourth quarter net sales of $158.1 million, operating income of $7.0 million, and net income of $3.8 million, or $0.09 per diluted share, compared to net sales of $136.2 million, operating income of $6.8 million, and a net income of $1.8 million, or $0.04 per diluted share, for the fourth quarter of fiscal 2014. Fiscal 2015 fourth quarter orders were $196.1 million compared to $137.7 million for the fourth quarter of fiscal 2014. Backlog at the end of the fiscal 2015 fourth quarter was $191.1 million, compared to a backlog of $171.6 million a year earlier and $150.2 million at the end of the third quarter of fiscal 2015.

Net sales, operating income, net income, and earnings per share for the fiscal year ended May 2, 2015, were $615.9 million, $31.3 million, $20.9 million and $0.47 per diluted share, respectively. This compares to $552.0 million, $36.6 million, $22.2 million and $0.51 per diluted share, respectively, for fiscal 2014. Fiscal 2015 was a 53-week year and fiscal 2014 was a 52-week year. The extra week of fiscal 2015 fell within the first quarter, resulting in a 53-week versus a 52-week year end comparison.

Free cash flow, defined as cash provided by operations less net purchases of property and equipment, was $35.5 million for fiscal 2015, compared to $22.9 million for fiscal 2014.  Cash provided by operations was $53.3 million for fiscal 2015, compared to $36.2 million for fiscal 2014. Net investment in property and equipment was $17.8 million for fiscal 2015, as compared to $13.3 million for fiscal 2014. Cash and marketable securities at the end of the fourth quarter of fiscal 2015 were $83.1 million, which compares to $71.0 million at the end of the fourth quarter of fiscal 2014.

Orders and sales increased over last fiscal year due to our success in winning business, the continued adoption of digital technology in the marketplace, and the additional week in fiscal 2015, which accounts for approximately 2.0% of the growth. Live Events business unit sales grew by $34.6 million resulting from continued upgrades in professional and university sports venues. The International business unit had over $100 million in sales for the first time in our history due to winning several large sports venue projects and success in the Out-of-Home and transportation sectors. Commercial business unit sales increased due to an increase in Out-of-Home billboard and spectacular sales, offset by a decline in our on-premise sales. High School Park and Recreation business unit sales grew due to increased order sizes for larger video system applications. Transportation sales declined $6.5 million during the year due to the timing of orders.

Operating income as a percent of sales decreased to 5.1% for fiscal 2015 as compared to 6.6% for fiscal 2014, primarily due to the decline in gross margin. This decline was related to the mix in sales, which included a number of multi-million dollar projects and accounts with higher levels of competition. In addition, the amount of sales attributed to lower margin subcontracted on-site installation work increased significantly year over year. Other factors causing the decrease in operating income, include additional spending to meet customers' commitments in the second quarter, an increase of expenses related to an acquisition, and competitive pressures in the marketplace.

Sales and orders increased during the fourth quarter of fiscal 2015. Orders increased in part due to the previously announced projects for the new Atlanta stadium, home of the Atlanta Falcons and the Schweizerische Bundesbahnen also referred to as the Swiss Railway project. Sales increased due to spring baseball orders and spectacular projects. Operating income was 4.4% of sales for the quarter.

Outlook

Reece Kurtenbach, chairman, president and chief executive officer commented, "The marketplace we operate in continues to expand as digital technology becomes ever more prevalent. With our world leadership position in video system design and delivery, we believe we will continue to see modest sales growth in the coming year. Although the strong United States dollar impacts on our competitiveness outside the United States, we see opportunities to grow sales in the International business unit. We also expect sales growth in our Commercial and Transportation business units this coming year. Live Events and High School Park and Recreation business units' sales are expected to be in a similar range to fiscal 2015.

"During fiscal 2016, we continue to focus on growing profitably over the long-term. In the short-term, we will be challenged as we continue to see gross profit pressure due to the competitive environment, the anticipated mix of business, and increasing personnel costs. We have initiatives in process to improve gross profit, which includes enhanced capacity planning, releasing new product designs, and improving operational effectiveness. However, the related benefits will take time to realize.

"We expect approximately $25 million in capital expenditures for investments in manufacturing or testing related equipment to support new product introductions and quality and reliability initiatives and for information technology system upgrades."

Dividend

As previously announced in a Current Report on Form 8-K filed with the Securities and Exchange Commission earlier today, the company approved a regular quarterly dividend of $0.10 per share payable June 23, 2015 to holders of record at the close of business on June 12, 2015.

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 the world's largest supplier of, large screen video displays, electronic scoreboards, LED text and graphics displays, and related control systems. The company excels in the control of display systems, including those that require integration of multiple complex displays showing real-time information, graphics, animation, and video. Daktronics designs, manufactures, markets and services display systems for customers around the world in four domestic business units:  Live Events, Commercial, High School Park and Recreation and Transportation, and one International business unit. For more information, visit the company's website at: http://www.daktronics.com, email the company at investor@daktronics.com, call (605) 692-0200 or toll-free (800) 843-5843 in the United States, or write to the company at 201 Daktronics Dr., P.O. Box 5128, Brookings, S.D. 57006-5128.

Safe Harbor Statement

Cautionary Notice: In addition to statements of historical fact, this news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and is intended to enjoy the protection of that Act.  These forward-looking statements reflect the Company's expectations or beliefs concerning future events. The Company cautions that these and similar statements involve risk and uncertainties which could cause actual results to differ materially from our expectations, including, but not limited to, changes in economic and market conditions, management of growth, timing and magnitude of future contracts, fluctuations in margins, the introduction of new products and technology, the impact of adverse weather conditions, and other risks noted in the company's SEC filings, including its Annual Report on Form 10-K for its 2014 fiscal year.  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 or unanticipated events as they occur.

Daktronics Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
  Three Months Ended Twelve Months Ended
  May 2,
 2015
April 26,
 2014
May 2,
 2015
April 26,
 2014
         
Net sales $ 158,086 $ 136,240 $ 615,942 $ 551,970
Cost of goods sold 122,849 102,486 471,363 410,260
Gross profit 35,237 33,754 144,579 141,710
         
Operating expenses:        
Selling expense 14,558 13,684 57,963 53,794
General and administrative 7,789 7,196 30,679 27,984
Product design and development 5,879 6,045 24,652 23,375
  28,226 26,925 113,294 105,153
Operating income 7,011 6,829 31,285 36,557
         
Nonoperating income (expense):        
Interest income 294 349 1,119 1,294
Interest expense (40) (66) (223) (255)
Other (expense) income, net (280) (4) (498) (355)
         
Income before income taxes 6,985 7,108 31,683 37,241
Income tax expense 3,146 5,282 10,801 15,035
Net income $ 3,839 $ 1,826 $ 20,882 $ 22,206
         
Weighted average shares outstanding:        
Basic 43,707 43,228 43,514 42,886
Diluted 43,966 43,749 44,443 43,762
         
Earnings per share:        
Basic $ 0.09 $ 0.04 $ 0.48 $ 0.52
Diluted $ 0.09 $ 0.04 $ 0.47 $ 0.51
         
Cash dividends declared per share $ 0.10 $ 0.09 $ 0.40 $ 0.39
 
Daktronics Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
 
  May 2,
 2015
April 26,
 2014
  (unaudited)  
ASSETS    
CURRENT ASSETS:    
Cash, cash equivalents and restricted cash $ 57,780 $ 45,568
Marketable securities 25,346 25,398
Accounts receivable, net 80,857 82,500
Inventories, net 64,389 62,228
Costs and estimated earnings in excess of billings 35,068 33,400
Current maturities of long-term receivables 3,784 5,235
Prepaid expenses and other assets 7,688 6,758
Deferred income taxes 10,640 10,694
Income tax receivables 5,543 2,459
Total current assets 291,095 274,240
     
Long-term receivables, less current maturities 6,090 7,877
Goodwill 5,269 4,558
Intangibles, net 1,824 2,680
Investment in affiliates and other assets 1,655 826
Deferred income taxes 702 2,000
  15,540 17,941
PROPERTY AND EQUIPMENT:    
Land 2,147 2,539
Buildings 64,186 59,363
Machinery and equipment 80,664 72,787
Office furniture and equipment 15,823 15,754
Computer software and hardware 51,083 45,329
Equipment held for rental 803 868
Demonstration equipment 7,299 7,532
Transportation equipment 6,012 4,823
  228,017 208,995
Less accumulated depreciation 155,173 143,725
  72,844 65,270
TOTAL ASSETS $ 379,479 $ 357,451
Daktronics Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
  May 2,
 2015
April 26,
 2014
  (unaudited)  
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES:    
Accounts payable 52,747 45,913
Accrued expenses 26,063 23,462
Warranty obligations 11,838 14,476
Billings in excess of costs and estimated earnings 23,797 22,483
Customer deposits (billed or collected) 16,828 17,654
Deferred revenue (billed or collected) 9,524 7,722
Current portion of other long-term obligations 587 809
Income taxes payable 636 1,162
Deferred income taxes 27
Total current liabilities 142,020 133,708
     
Long-term warranty obligations 14,643 12,774
Long-term deferred revenue (billed or collected) 3,914 4,978
Other long-term obligations, less current maturities 3,190 2,871
Long-term income tax payable 2,734
Deferred income taxes 939 1
Total long-term liabilities 25,420 20,624
TOTAL LIABILITIES 167,440 154,332
     
SHAREHOLDERS' EQUITY:    
Common stock 48,960 43,935
Additional paid-in capital 32,693 29,923
Retained earnings 132,771 129,266
Treasury stock, at cost (9) (9)
Accumulated other comprehensive (loss) income (2,376) 4
TOTAL SHAREHOLDERS' EQUITY 212,039 203,119
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 379,479 $ 357,451
 
Daktronics Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
    Year Ended
    May 2,
 2015
April 26,
 2014
    (unaudited)  
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income   $ 20,882 $ 22,206
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation   14,764 14,137
Amortization   204 364
Amortization of premium/discount on marketable securities   168 221
Gain on sale of property and equipment   (1,207) (72)
Share-based compensation   3,038 2,897
Excess tax benefits from share-based compensation   (42) (119)
Provision for doubtful accounts   (222) (190)
Deferred income taxes, net   2,352 1,543
Change in operating assets and liabilities   13,364 (4,788)
Net cash provided by operating activities   53,301 36,199
       
CASH FLOWS FROM INVESTING ACTIVITIES:      
Purchases of property and equipment   (21,837) (13,519)
Proceeds from sales of property, equipment and other assets   4,037 238
Purchases of marketable securities   (15,653) (15,550)
Proceeds from sales or maturities of marketable securities   15,532 13,953
Acquisitions, net of cash acquired   (6,224) (1,480)
Net cash used in investing activities   (24,145) (16,358)
       
CASH FLOWS FROM FINANCING ACTIVITIES:      
Payments on notes payable   (81)
Proceeds from exercise of stock options   2,513 4,954
Excess tax benefits from share-based compensation   42 119
Principal payments on long-term obligations   (1,163) (3,704)
Dividends paid   (17,378) (16,690)
Net cash used in financing activities   (16,067) (15,321)
       
EFFECT OF EXCHANGE RATE CHANGES ON CASH   (859) (94)
NET INCREASE IN CASH AND CASH EQUIVALENTS   12,230 4,426
       
CASH AND CASH EQUIVALENTS:      
Beginning of period   45,054 40,628
End of period   $ 57,284 $ 45,054
 
Daktronics Inc. and Subsidiaries
Net Sales and Orders by Business Unit
(in thousands)
(unaudited)
  Three Months Ended Twelve Months Ended
  May 2,
 2015
April 26,
 2014
Dollar
Change
Percent
Change
May 2,
 2015
April 26,
 2014
Dollar
Change
Percent
Change
Net sales:                
Commercial $ 44,321 $ 37,064 $ 7,257 19.6% $ 165,793 $ 154,754 $ 11,039 7.1%
Live Events 60,066 50,566 $ 9,500 18.8% 231,877 197,246 $ 34,631 17.6%
High School Park and Recreation 12,532 11,781 $ 751 6.4% 67,657 59,531 $ 8,126 13.7%
Transportation 13,526 13,050 $ 476 3.6% 48,333 54,861 $ (6,528) (11.9)%
International 27,641 23,779 $ 3,862 16.2% 102,282 85,578 $ 16,704 19.5%
  $ 158,086 $ 136,240 $ 21,846 16.0% $ 615,942 $ 551,970 $ 63,972 11.6%
Orders:                
Commercial $ 44,606 $ 32,318 $ 12,288 38.0% $ 170,209 $ 155,840 $ 14,369 9.2%
Live Events 76,775 51,329 $ 25,446 49.6% 226,354 225,331 $ 1,023 0.5%
High School Park and Recreation 14,494 15,143 $ (649) (4.3)% 69,188 59,812 $ 9,376 15.7%
Transportation 13,860 15,009 $ (1,149) (7.7)% 50,845 49,057 $ 1,788 3.6%
International 46,344 23,856 $ 22,488 94.3% 114,977 87,094 $ 27,883 32.0%
  $ 196,079 $ 137,655 $ 58,424 42.4% $ 631,573 $ 577,134 $ 54,439 9.4%
 
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow
(in thousands)
(unaudited)
  Twelve Months Ended
  May 2,
 2015
April 26,
 2014
Net cash provided by operating activities $ 53,301 $ 36,199
Purchases of property and equipment (21,837) (13,519)
Proceeds from sales of property, equipment and other assets 4,037 238
Free cash flow $ 35,501 $ 22,918

In evaluating its business, Daktronics considers and uses free cash flow as a key measure of its operating performance. The term free cash flow is not defined under U.S. generally accepted accounting principles ("GAAP") and is not a measure of operating income, cash flows from operating activities or other GAAP figures and should not be considered alternatives to those computations. Free cash flow is intended to provide information that may be useful for investors when assessing period to period results.

CONTACT: For more information contact:
         INVESTOR RELATIONS:
         Sheila Anderson, Chief Financial Officer
         (605) 692-0200
         Investor@daktronics.com

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