UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
FORM 8-K
_____________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 29, 2013
_________________________________
Daktronics, Inc.
(Exact name of registrant as specified in its charter)
_________________________________
South Dakota | 0-23246 | 46-0306862 |
(State or other jurisdiction | (Commission | (I.R.S. Employer |
Incorporation or organization) | File Number) | Identification Number) |
201 Daktronics Drive
Brookings, SD 57006
(Address of principal executive office) (zip code)
(605) 692-0200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition
On May 29, 2013 Daktronics, Inc. (the “Registrant”) issued a press release announcing its financial results for fiscal 2013 fourth quarter and year ended April 27, 2013. A copy of the press release is filed herewith as Exhibit 99.1 and is incorporated herein by reference.
The information furnished in this report, including the exhibit shall not be incorporated by reference into Daktronics’ filings with the Securities and Exchange Commission under the Securities Act of 1933 and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Securities Act of 1934.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits:
(d) Exhibits. The following exhibit is furnished as part of this Report:
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
DAKTRONICS, INC. | |
By: /s/ Sheila M. Anderson | |
Sheila M. Anderson, Chief Financial Officer | |
Date: May 29, 2013 | |
EXHIBIT INDEX
Daktronics, Inc. Announces Fourth Quarter and Fiscal 2013 Results
Brookings, S.D. – May 29, 2013 - Daktronics, Inc. (NASDAQ - DAKT) today reported fiscal 2013 fourth quarter net sales of $124.5 million and net income of $1.8 million, or $0.04 per diluted share, compared to net sales of $112.0 million and a net loss of $(0.5) million, or $(0.01) per diluted share, for the fourth quarter of fiscal 2012. Fiscal 2013 fourth quarter orders were $113.8 million compared to $115.0 million for the fourth quarter of fiscal 2012. Backlog at the end of the fiscal 2013 fourth quarter was $141.3 million, compared with a backlog of $122.8 million a year earlier and $149.1 million at the end of the third quarter of fiscal 2013.
Net sales, net income and earnings per diluted share for the fiscal year ended April 27, 2013 were $518.3 million, $22.8 million and $0.53 per diluted share, respectively. This compares to $489.5 million, $8.5 million and $0.20 per diluted share, respectively, for the same period in fiscal 2012.
Free cash flow, defined as cash provided by operations less net purchases of property and equipment, was $41.3 million through the fourth quarter of fiscal 2013, compared to $3.7 million for the same period in fiscal 2012. Cash and marketable securities at the end of the fourth quarter of fiscal 2013 were $64.7 million, which compares to $55.9 million at the end of the fiscal 2012 fourth quarter.
“Our fourth quarter and fiscal 2013 financial performance improved over fiscal 2012. We are pleased with the improvements in our operating income and plan to continue working on increasing operating income in fiscal 2014,” said Jim Morgan, president and chief executive officer.
For the quarter, gross profit levels were lower compared to the prior quarters of fiscal 2013 due in part to several large projects that generated revenue with lower than typical margins due to the competitive pricing on the projects. In addition, we had unexpected warranty expenses in the quarter which reduced gross profit margin by approximately three percentage points as compared to fourth quarter fiscal 2012. Offsetting the decline were gross profit level improvements in our Schools & Theatres business unit. Operating expenses for the quarter were down compared to the fourth quarter of fiscal 2012.
Orders
• | Commercial business unit orders were down approximately eight percent in the fourth quarter of fiscal 2013 compared to the fourth quarter of fiscal 2012. This decrease was due in part to decreased levels of replacement orders from our national accounts customers and new or replacement orders for our billboard customers in outdoor advertising. These declines were partially offset by growth in large video contracts in our reseller segment including approximately $3.7 million of orders placed by a national developer of retail space using video displays for on premise advertising at multiple locations. |
• | Orders in the fourth quarter of fiscal 2013 for the Live Events business unit declined approximately 17 percent compared to the fourth quarter of fiscal 2012. The decline is due in part to lower order volume in college and university systems, which we believe is due to order timing versus a trend in the business. Subsequent to the end of fiscal 2013, we secured orders for two large video display systems totaling approximately $16 million for an NFL stadium and for a university football stadium. |
• | Orders in the Schools and Theatres business unit remained flat for the fourth quarter of fiscal 2013, compared to the same period in fiscal 2012. We continue to see interest for video display systems for high schools. |
• | Orders in the Transportation business unit were up approximately 20 percent in the fourth quarter of fiscal 2013 compared to the same period in fiscal 2012, primarily as a result of securing orders on a number of projects for state departments of transportation. |
• | Orders in the International business unit were up approximately 67 percent over the fourth quarter of fiscal 2012. We had orders in a number of locations around the world. Notable orders include a $4.7 million system for a major sports venue in the United Kingdom, a $1.4 million order for an architectural lighting display in the Asia Pacific region, a $1.1 million video display order for a project in downtown London, and a $1.3 million billboard order from a customer in South America. |
Outlook
Morgan added, “We have a strong backlog going into fiscal 2014 to help us get off to a good start for the year. While competition remains intense, we also see a strong pipeline in the worldwide marketplace which should help us achieve modest growth in fiscal 2014. In addition, we have new products coming to the market including outdoor products using LED surface mount technology, full color Vanguard displays for our Transportation business unit, and enhanced architectural lighting and mesh display products. We completed the acquisition of OPEN Out-of-Home Solutions (OPEN), a Belgium company, at the beginning of fiscal year 2014. This acquisition offers us another avenue into the third party advertising (TPA) market worldwide, with an initial focus on Europe. We are excited about this opportunity as we see the worldwide TPA market starting to adopt digital. We are moving in the right direction in our strategic goals to significantly improve operating margin and we continue to focus efforts with initiatives across the company to increase gross profit margins and control operating costs.”
“We anticipate capital expenditures to be approximately $16 million for fiscal 2014. The most significant capital investment areas will be new or replacement production equipment, including additional equipment for our new outdoor surface mount LED module platforms, and information technology infrastructure,” continued Morgan.
Dividend
As previously announced on Form 8-K on May 29, 2013, the company approved a regular semi-annual dividend of $0.12 per share payable June 14, 2013 to holders of record at the close of business on June 3, 2013.
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, Schools and Theatres and Transportation, and one International business unit. For more information, visit the company's World Wide Web site at: http://www.daktronics.com, e-mail 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., PO 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 2012 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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For more information contact: | ||
INVESTOR RELATIONS: | ||
Sheila Anderson, Chief Financial Officer | ||
(605) 692-0200 | ||
Investor@daktronics.com | ||
Daktronics, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, except per share amounts) (unaudited) | |||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
April 27, 2013 | April 28, 2012 | April 27, 2013 | April 28, 2012 | ||||||||||||
Net sales | $ | 124,482 | $ | 111,994 | $ | 518,322 | $ | 489,526 | |||||||
Cost of goods sold | 96,379 | 87,388 | 384,428 | 376,089 | |||||||||||
Gross profit | 28,103 | 24,606 | 133,894 | 113,437 | |||||||||||
Operating expenses: | |||||||||||||||
Selling expense | 13,231 | 13,758 | 52,759 | 52,233 | |||||||||||
General and administrative | 7,256 | 7,011 | 27,404 | 27,422 | |||||||||||
Product design and development | 5,654 | 6,457 | 23,131 | 23,507 | |||||||||||
26,141 | 27,226 | 103,294 | 103,162 | ||||||||||||
Operating income (loss) | 1,962 | (2,620 | ) | 30,600 | 10,275 | ||||||||||
Nonoperating income (expense): | |||||||||||||||
Interest income | 357 | 421 | 1,523 | 1,747 | |||||||||||
Interest expense | (204 | ) | (104 | ) | (355 | ) | (335 | ) | |||||||
Other (expense) income, net | (615 | ) | 111 | (839 | ) | (110 | ) | ||||||||
Income (loss) before income taxes | 1,500 | (2,192 | ) | 30,929 | 11,577 | ||||||||||
Income tax (benefit) expense | (344 | ) | (1,687 | ) | 8,150 | 3,088 | |||||||||
Net income (loss) | $ | 1,844 | $ | (505 | ) | $ | 22,779 | $ | 8,489 | ||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 42,553 | 41,991 | 42,280 | 41,869 | |||||||||||
Diluted | 42,777 | 41,991 | 42,621 | 42,304 | |||||||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.04 | $ | (0.01 | ) | $ | 0.54 | $ | 0.20 | ||||||
Diluted | $ | 0.04 | $ | (0.01 | ) | $ | 0.53 | $ | 0.20 | ||||||
Cash dividends declared per share | $ | — | $ | — | $ | 0.73 | $ | 0.62 | |||||||
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Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands) | |||||||
April 27, 2013 | April 28, 2012 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash, cash equivalents and restricted cash | $ | 40,676 | $ | 30,592 | |||
Marketable securities | 24,052 | 25,258 | |||||
Accounts receivable, net | 63,227 | 66,923 | |||||
Inventories | 49,045 | 54,924 | |||||
Costs and estimated earnings in excess of billings | 39,355 | 23,020 | |||||
Current maturities of long-term receivables | 4,807 | 5,830 | |||||
Prepaid expenses and other assets | 6,185 | 5,528 | |||||
Deferred income taxes | 12,755 | 10,941 | |||||
Income tax receivables | 46 | 5,990 | |||||
Total current assets | 240,148 | 229,006 | |||||
Long-term receivables, less current maturities | 11,325 | 12,622 | |||||
Goodwill | 3,306 | 3,347 | |||||
Intangibles | 1,181 | 1,409 | |||||
Advertising rights, net and other assets | 772 | 1,157 | |||||
Deferred income taxes | 1,061 | 30 | |||||
17,645 | 18,565 | ||||||
PROPERTY AND EQUIPMENT: | |||||||
Land | 1,497 | 1,497 | |||||
Buildings | 57,012 | 56,431 | |||||
Machinery and equipment | 65,600 | 61,654 | |||||
Office furniture and equipment | 16,118 | 15,648 | |||||
Computer software and hardware | 41,745 | 42,172 | |||||
Equipment held for rental | 868 | 1,003 | |||||
Demonstration equipment | 8,400 | 9,806 | |||||
Transportation equipment | 4,026 | 4,116 | |||||
195,266 | 192,327 | ||||||
Less accumulated depreciation | 133,641 | 123,931 | |||||
61,625 | 68,396 | ||||||
TOTAL ASSETS | $ | 319,418 | $ | 315,967 | |||
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Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (continued) (in thousands) | |||||||
April 27, 2013 | April 28, 2012 | ||||||
(unaudited) | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Notes payable, bank | $ | — | $ | 1,459 | |||
Accounts payable | 38,651 | 33,906 | |||||
Accrued expenses | 24,331 | 22,731 | |||||
Warranty obligations | 13,933 | 13,049 | |||||
Billings in excess of costs and estimated earnings | 14,245 | 14,385 | |||||
Customer deposits (billed or collected) | 12,375 | 12,826 | |||||
Deferred revenue (billed or collected) | 9,112 | 9,751 | |||||
Current portion of other long-term obligations | 356 | 359 | |||||
Income taxes payable | 1,689 | 665 | |||||
Deferred income taxes | — | 42 | |||||
Total current liabilities | 114,692 | 109,173 | |||||
Long-term warranty obligations | 11,213 | 9,166 | |||||
Long-term deferred revenue (billed or collected) | 4,424 | 4,361 | |||||
Other long-term obligations, less current maturities | 843 | 1,009 | |||||
Deferred income taxes | — | 1,453 | |||||
Total long-term liabilities | 16,480 | 15,989 | |||||
TOTAL LIABILITIES | 131,172 | 125,162 | |||||
SHAREHOLDERS' EQUITY: | |||||||
Common stock | 37,429 | 34,631 | |||||
Additional paid-in capital | 27,194 | 24,320 | |||||
Retained earnings | 123,750 | 131,830 | |||||
Treasury stock, at cost | (9 | ) | (9 | ) | |||
Accumulated other comprehensive (loss) income | (118 | ) | 33 | ||||
TOTAL SHAREHOLDERS' EQUITY | 188,246 | 190,805 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 319,418 | $ | 315,967 | |||
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Daktronics, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) (unaudited) | ||||||||
Year Ended | ||||||||
April 27, 2013 | April 28, 2012 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 22,779 | $ | 8,489 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 15,379 | 17,273 | ||||||
Amortization | 228 | 245 | ||||||
Amortization of premium/discount on marketable securities | 190 | 183 | ||||||
Loss (Gain) on sale of property and equipment | 42 | (16 | ) | |||||
Share-based compensation | 3,037 | 3,262 | ||||||
Excess tax benefits from share-based compensation | — | (48 | ) | |||||
Provision for doubtful accounts | 331 | (150 | ) | |||||
Deferred income taxes, net | (4,340 | ) | (68 | ) | ||||
Change in operating assets and liabilities | 13,103 | (9,132 | ) | |||||
Net cash provided by operating activities | 50,749 | 20,038 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment | (9,674 | ) | (16,524 | ) | ||||
Proceeds from sales of property and equipment | 198 | 231 | ||||||
Purchases of marketable securities | (16,506 | ) | (18,870 | ) | ||||
Proceeds from sales and maturities of marketable securities | 17,451 | 16,410 | ||||||
Net cash used in investing activities | (8,531 | ) | (18,753 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Borrowings on notes payable | — | 782 | ||||||
Payments on notes payable | (1,459 | ) | (1,711 | ) | ||||
Proceeds from exercise of stock options | 1,316 | 547 | ||||||
Excess tax benefits from share-based compensation | — | 48 | ||||||
Dividends paid | (30,859 | ) | (25,950 | ) | ||||
Net cash used in financing activities | (31,002 | ) | (26,284 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (11 | ) | 114 | |||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 11,205 | (24,885 | ) | |||||
CASH AND CASH EQUIVALENTS: | ||||||||
Beginning of period | 29,423 | 54,308 | ||||||
End of period | $ | 40,628 | $ | 29,423 | ||||
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Daktronics, Inc. and Subsidiaries Net Sales and Orders by Business Unit (in thousands) (unaudited) | |||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
April 27, 2013 | April 28, 2012 | April 27, 2013 | April 28, 2012 | ||||||||||||
Net Sales: | |||||||||||||||
Commercial | $ | 35,469 | $ | 33,346 | $ | 144,596 | $ | 148,585 | |||||||
Live Events | 36,921 | 37,257 | 158,562 | 160,933 | |||||||||||
Schools & Theatres | 14,489 | 13,245 | 66,128 | 59,662 | |||||||||||
Transportation | 15,557 | 14,083 | 73,270 | 48,284 | |||||||||||
International | 22,046 | 14,063 | 75,766 | 72,062 | |||||||||||
$ | 124,482 | $ | 111,994 | $ | 518,322 | $ | 489,526 | ||||||||
Orders: | |||||||||||||||
Commercial | $ | 38,406 | $ | 41,949 | $ | 152,028 | $ | 153,268 | |||||||
Live Events | 29,317 | 35,188 | 161,602 | 157,695 | |||||||||||
Schools & Theatres | 16,690 | 16,945 | 64,796 | 58,534 | |||||||||||
Transportation | 13,922 | 11,601 | 73,426 | 55,060 | |||||||||||
International | 15,491 | 9,279 | 80,158 | 55,396 | |||||||||||
$ | 113,826 | $ | 114,962 | $ | 532,010 | $ | 479,953 | ||||||||
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow (in thousands) (unaudited) | |||||||
Twelve Months Ended | |||||||
April 27, 2013 | April 28, 2012 | ||||||
Net cash provided by operating activities | $ | 50,749 | $ | 20,038 | |||
Purchases of property and equipment | (9,674 | ) | (16,524 | ) | |||
Proceeds from sales of property and equipment | 198 | 231 | |||||
Free cash flow | $ | 41,273 | $ | 3,745 | |||
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.
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