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): October 26, 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.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition.
On November 19, 2013 Daktronics, Inc. (the “Registrant”) issued a press release announcing its financial results for the three and six months ended October 26, 2013 of fiscal 2014. 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: November 19, 2013 | |
EXHIBIT INDEX
Daktronics, Inc. Announces Second Quarter Fiscal 2014 Results
Brookings, S.D. – November 19, 2013 - Daktronics, Inc. (NASDAQ - DAKT) today reported fiscal 2014 second quarter net sales of $161.6 million and net income of $11.8 million, or $0.27 per diluted share, compared to net sales of $149.9 million and net income of $11.5 million, or $0.27 per diluted share, for the second quarter of fiscal 2013. Fiscal 2014 second quarter orders were $127.0 million compared to $110.3 million for the second quarter of fiscal 2013. Backlog at the end of the fiscal 2014 second quarter was $132 million, compared with a backlog of $128 million a year earlier and $167 million at the end of the first quarter of fiscal 2014.
Net sales, net income and earnings per share for the six months ended October 26, 2013 were $300.4 million, $17.5 million and $0.41 per diluted share, respectively. This compares to $282.8 million, $18.2 million and $0.43 per diluted share, respectively, for the same period in fiscal 2013.
Free cash flow, defined as cash provided by operations less net purchases of property and equipment, was $24.5 million for the first six months of fiscal 2014, compared to $29.8 million for the same period in fiscal 2013. Cash and marketable securities at the end of the second quarter of fiscal 2014 were $77.6 million, which compares to $64.7 million at the end of fiscal 2013 and $79.1 million at the end of the second quarter of fiscal 2013.
“We are pleased with our order level for the quarter and success in manufacturing, delivering, and installing a number of projects. Our resources were highly utilized as we achieved the highest level of sales in a quarter since fiscal 2009. Order bookings during the second quarter of fiscal 2014 increased 15 percent compared to last year same quarter. This allows us to enter into the third quarter with a higher backlog as compared to last year at this same time,” said Reece Kurtenbach, president and chief executive officer.
Gross profit levels were lower compared to the second quarter of fiscal 2013 due to inherent variability in gross profit levels typical with large projects and a higher warranty percentage of sales as compared to the same period last year. Operating expenses in the second quarter of fiscal 2014 decreased by approximately one percent as a percentage of sales to 16 percent.
Orders
• | Orders in the Commercial business unit increased approximately 19 percent in the second quarter of fiscal 2014 compared to the second quarter of fiscal 2013. The increase in orders was primarily the result of improvements in the volume and size of projects in our large video contract business. During the quarter we booked three large video contracts totaling $4 million. |
• | Orders in the Live Events business unit increased approximately six percent compared to the second quarter of fiscal 2013. The increase in orders has been largely due to being awarded five orders for upgrade projects totaling $9.5 million for the quarter. |
• | Orders in the Schools and Theatres business unit declined by approximately two percent for the second quarter of fiscal 2014 compared to the same period in fiscal 2013. Although the number of video projects for high schools was about the same as last year, the average selling price this year was less. |
• | Orders in the Transportation business unit increased approximately 56 percent compared to the same period in fiscal 2013. Orders during the second quarter of fiscal 2014, included a $2.5 million order for our new full color Vanguard product introduced at the beginning of this fiscal year. |
• | Orders in the International business unit increased approximately 21 percent over the second quarter of fiscal 2013. During the second quarter of fiscal 2014 we were awarded nine projects for approximately $18 million for both commercial and sports large video projects. |
Outlook
Reece Kurtenbach added, “We continue to see opportunities in the worldwide marketplace going into the second half of our fiscal year. There are a number of opportunities in the Live Events business unit for large video system replacements and in our International business unit for large sports and commercial type video systems applications. We believe our product line and systems delivery capabilities will provide us the ability to secure orders to support modest sales growth in fiscal 2014 and achieve improved financial performance for the second half of the year as compared to the second half of fiscal 2013. We continue to focus on our strategic goals to improve operating margins. Supplier and manufacturing quality are two key areas we will continue working on over the next quarters. In addition, we continue to select and work on initiatives across the company to increase gross profit margins and control operating expenses. Our product development team continues to focus on developing additional outdoor surface mount technology, software platforms, and upgrading our architectural lighting and media mesh product platforms.”
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 2013 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.
-- END --
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 | Six Months Ended | ||||||||||||||
October 26, 2013 | October 27, 2012 | October 26, 2013 | October 27, 2012 | ||||||||||||
Net sales | $ | 161,639 | $ | 149,871 | $ | 300,361 | $ | 282,790 | |||||||
Cost of goods sold | 118,274 | 107,519 | 221,494 | 204,048 | |||||||||||
Gross profit | 43,365 | 42,352 | 78,867 | 78,742 | |||||||||||
Operating expenses: | |||||||||||||||
Selling expense | 13,304 | 12,796 | 26,922 | 25,876 | |||||||||||
General and administrative | 6,804 | 6,850 | 14,103 | 13,431 | |||||||||||
Product design and development | 5,692 | 5,845 | 11,681 | 11,866 | |||||||||||
25,800 | 25,491 | 52,706 | 51,173 | ||||||||||||
Operating income | 17,565 | 16,861 | 26,161 | 27,569 | |||||||||||
Nonoperating income (expense): | |||||||||||||||
Interest income | 312 | 348 | 655 | 779 | |||||||||||
Interest expense | (12 | ) | (36 | ) | (127 | ) | (123 | ) | |||||||
Other income (expense), net | 278 | 150 | (114 | ) | (30 | ) | |||||||||
Income before income taxes | 18,143 | 17,323 | 26,575 | 28,195 | |||||||||||
Income tax expense | 6,353 | 5,776 | 9,066 | 9,970 | |||||||||||
Net income | $ | 11,790 | $ | 11,547 | $ | 17,509 | $ | 18,225 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 42,709 | 42,163 | 42,639 | 42,138 | |||||||||||
Diluted | 43,002 | 42,316 | 43,023 | 42,287 | |||||||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.28 | $ | 0.27 | $ | 0.41 | $ | 0.43 | |||||||
Diluted | $ | 0.27 | $ | 0.27 | $ | 0.41 | $ | 0.43 | |||||||
Cash dividends declared per share | $ | 0.090 | $ | — | $ | 0.210 | $ | 0.115 | |||||||
-- MORE --
Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands) | |||||||
October 26, 2013 | April 27, 2013 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash, cash equivalents and restricted cash | $ | 52,265 | $ | 40,676 | |||
Marketable securities | 25,367 | 24,052 | |||||
Accounts receivable, net | 66,913 | 63,227 | |||||
Inventories, net | 51,308 | 49,045 | |||||
Costs and estimated earnings in excess of billings | 41,847 | 39,355 | |||||
Current maturities of long-term receivables | 5,839 | 4,807 | |||||
Prepaid expenses and other assets | 5,290 | 6,185 | |||||
Deferred income taxes | 12,355 | 12,755 | |||||
Income tax receivables | 2,012 | 46 | |||||
Property and equipment and other assets available for sale | 3,050 | — | |||||
Total current assets | 266,246 | 240,148 | |||||
Long-term receivables, less current maturities | 9,912 | 11,325 | |||||
Goodwill | 4,682 | 3,306 | |||||
Intangibles, net | 1,799 | 1,181 | |||||
Advertising rights, net and other assets | 702 | 772 | |||||
Deferred income taxes | 1,276 | 1,061 | |||||
18,371 | 17,645 | ||||||
PROPERTY AND EQUIPMENT: | |||||||
Land | 2,363 | 1,497 | |||||
Buildings | 59,343 | 57,012 | |||||
Machinery and equipment | 68,003 | 65,600 | |||||
Office furniture and equipment | 16,112 | 16,118 | |||||
Computer software and hardware | 42,870 | 41,745 | |||||
Equipment held for rental | 868 | 868 | |||||
Demonstration equipment | 8,238 | 8,400 | |||||
Transportation equipment | 4,378 | 4,026 | |||||
202,175 | 195,266 | ||||||
Less accumulated depreciation | 139,159 | 133,641 | |||||
63,016 | 61,625 | ||||||
TOTAL ASSETS | $ | 347,633 | $ | 319,418 | |||
-- MORE --
Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (continued) (in thousands) | |||||||
October 26, 2013 | April 27, 2013 | ||||||
(unaudited) | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | 40,883 | 38,651 | |||||
Accrued expenses | 26,464 | 24,331 | |||||
Warranty obligations | 14,699 | 13,933 | |||||
Billings in excess of costs and estimated earnings | 15,855 | 14,245 | |||||
Customer deposits (billed or collected) | 16,533 | 12,375 | |||||
Deferred revenue (billed or collected) | 8,509 | 9,112 | |||||
Current portion of other long-term obligations | 940 | 356 | |||||
Income taxes payable | 1,297 | 1,689 | |||||
Total current liabilities | 125,180 | 114,692 | |||||
Long-term warranty obligations | 12,048 | 11,213 | |||||
Long-term deferred revenue (billed or collected) | 5,787 | 4,424 | |||||
Other long-term obligations, less current maturities | 3,170 | 843 | |||||
Total long-term liabilities | 21,005 | 16,480 | |||||
TOTAL LIABILITIES | 146,185 | 131,172 | |||||
SHAREHOLDERS' EQUITY: | |||||||
Common stock | 40,341 | 37,429 | |||||
Additional paid-in capital | 28,606 | 27,194 | |||||
Retained earnings | 132,325 | 123,750 | |||||
Treasury stock, at cost | (9 | ) | (9 | ) | |||
Accumulated other comprehensive income (loss) | 185 | (118 | ) | ||||
TOTAL SHAREHOLDERS' EQUITY | 201,448 | 188,246 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 347,633 | $ | 319,418 | |||
-- MORE --
Daktronics, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) (unaudited) | ||||||||
Six Months Ended | ||||||||
October 26, 2013 | October 27, 2012 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 17,509 | $ | 18,225 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 7,190 | 7,717 | ||||||
Amortization | 181 | 114 | ||||||
Amortization of premium/discount on marketable securities | 116 | 93 | ||||||
Gain on sale of property and equipment | (76 | ) | (11 | ) | ||||
Share-based compensation | 1,456 | 1,654 | ||||||
Excess tax benefits from share-based compensation | (19 | ) | (13 | ) | ||||
Provision for doubtful accounts | 364 | (187 | ) | |||||
Deferred income taxes, net | 186 | (258 | ) | |||||
Change in operating assets and liabilities | 3,719 | 6,708 | ||||||
Net cash provided by operating activities | 30,626 | 34,042 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment | (6,285 | ) | (4,331 | ) | ||||
Proceeds from sale of property and equipment | 133 | 119 | ||||||
Purchases of marketable securities | (4,422 | ) | (6,828 | ) | ||||
Proceeds from sales or maturities of marketable securities | 2,958 | 5,992 | ||||||
Acquisition, net of cash acquired | (1,298 | ) | — | |||||
Net cash used in investing activities | (8,914 | ) | (5,048 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Payments on notes payable | — | (982 | ) | |||||
Proceeds from exercise of stock options | 2,145 | 439 | ||||||
Excess tax benefits from share-based compensation | 19 | 13 | ||||||
Principal payments on long-term obligations | (3,640 | ) | — | |||||
Dividends paid | (8,934 | ) | (4,832 | ) | ||||
Net cash used in financing activities | (10,410 | ) | (5,362 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 306 | 39 | ||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 11,608 | 23,671 | ||||||
CASH AND CASH EQUIVALENTS: | ||||||||
Beginning of period | 40,628 | 29,423 | ||||||
End of period | $ | 52,236 | $ | 53,094 | ||||
-- MORE --
Daktronics, Inc. and Subsidiaries Net Sales and Orders by Business Unit (in thousands) (unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
October 26, 2013 | October 27, 2012 | October 26, 2013 | October 27, 2012 | ||||||||||||
Net Sales: | |||||||||||||||
Commercial | $ | 44,973 | $ | 39,773 | $ | 78,674 | $ | 78,130 | |||||||
Live Events | 58,175 | 50,604 | 113,252 | 95,113 | |||||||||||
Schools & Theatres | 18,823 | 21,688 | 36,740 | 39,861 | |||||||||||
Transportation | 15,238 | 17,571 | 28,280 | 34,167 | |||||||||||
International | 24,430 | 20,235 | 43,415 | 35,519 | |||||||||||
$ | 161,639 | $ | 149,871 | $ | 300,361 | $ | 282,790 | ||||||||
Orders: | |||||||||||||||
Commercial | $ | 38,147 | $ | 32,035 | $ | 75,122 | $ | 76,634 | |||||||
Live Events | 36,160 | 34,195 | 103,560 | 84,894 | |||||||||||
Schools & Theatres | 14,142 | 14,465 | 33,693 | 37,923 | |||||||||||
Transportation | 11,708 | 7,496 | 25,677 | 39,532 | |||||||||||
International | 26,797 | 22,141 | 48,185 | 44,891 | |||||||||||
$ | 126,954 | $ | 110,332 | $ | 286,237 | $ | 283,874 | ||||||||
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow (in thousands) (unaudited) | |||||||
Six Months Ended | |||||||
October 26, 2013 | October 27, 2012 | ||||||
Net cash provided by operating activities | $ | 30,626 | $ | 34,042 | |||
Purchases of property and equipment | (6,285 | ) | (4,331 | ) | |||
Proceeds from sales of property and equipment | 133 | 119 | |||||
Free cash flow | $ | 24,474 | $ | 29,830 | |||
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.
-- END --