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.
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Daktronics Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, except per share amounts) (unaudited) |
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| Three Months Ended | Twelve Months Ended | |||
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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 |
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Daktronics Inc. and Subsidiaries Consolidated Balance Sheets (in thousands) |
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May 2, 2015 |
April 26, 2014 |
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| (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 |
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Daktronics Inc. and Subsidiaries Consolidated Balance Sheets (continued) (in thousands) |
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May 2, 2015 |
April 26, 2014 |
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| (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 |
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Daktronics Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) (unaudited) |
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| Year Ended | |||
|
May 2, 2015 |
April 26, 2014 |
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| (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 | |
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Daktronics Inc. and Subsidiaries Net Sales and Orders by Business Unit (in thousands) (unaudited) |
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| Three Months Ended | Twelve Months Ended | |||||||
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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% | |
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Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow (in thousands) (unaudited) |
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| Twelve Months Ended | ||
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May 2, 2015 |
April 26, 2014 |
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| 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.