Daktronics, Inc. Announces Third Quarter Fiscal 2013 Results

Daktronics, Inc. Announces Third Quarter Fiscal 2013 Results

BROOKINGS, S.D., Feb. 19, 2013 (GLOBE NEWSWIRE) -- Daktronics, Inc.
(Nasdaq:DAKT) today reported fiscal 2013 third quarter net sales of $111.1
million and net income of $2.7 million, or $0.06 per diluted share, compared
to net sales of $122.9 million and net income of $1.7 million, or $0.04 per
diluted share, for the third quarter of fiscal 2012. Fiscal 2013 third quarter
orders were $134.3 million compared to $107.0 million for the third quarter of
fiscal 2012. Backlog at the end of the fiscal 2013 third quarter was $149
million, compared with a backlog of $121 million a year earlier and $128
million at the end of the second quarter of fiscal 2013.

Net sales, net income and earnings per share for the nine months ended January
26, 2013 were $393.8 million, $20.9 million and $0.49 per diluted share,
respectively. This compares to $377.5 million, $9.0 million and $0.21 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 $26.6 million for the first nine months of fiscal
2013, compared to $(4.1) million for the same period in fiscal 2012. Cash and
marketable securities at the end of the third quarter of fiscal 2013 were
$50.1 million, which compares to $50.6 million at the end of the fiscal 2012
third quarter.

"We were pleased with our order volume in the third quarter which set us up
with a solid backlog going into the fourth quarter. On the sales front, we had
anticipated our sales level would be comparable to fiscal 2012 third quarter,
but we came in under that primarily due to on-site schedule changes which
delayed a couple of large projects. The revenue associated with these delays
will be realized in the fourth quarter," said Jim Morgan, president and chief
executive officer.

Gross profit levels were lower primarily due to the lower revenues for the
third quarter compared to the level of fixed costs in our infrastructure.
Operating expenses for the quarter were relatively flat compared to the third
quarter of fiscal 2012. We realized a one-time tax benefit this quarter for
the reinstatement of the research and development tax credit which provided an
approximate $1.9 million tax benefit for the quarter.

Orders

  *Orders in the Commercial business unit were up approximately 20 percent in
    the third quarter of fiscal 2013 compared to the third quarter of fiscal
    2012, including two video system orders for a combined total of
    approximately $7.5 million and a slight increase in the volume of standard
    orders booked. Billboard orders remained flat compared to the previous
    year.
    
  *Orders in the third quarter of fiscal 2013 for the Live Events business
    unit rose approximately 23 percent compared to the third quarter of fiscal
    2012 as a result of winning multiple large sport venue projects during the
    quarter.Significant orders booked in the quarter included video display
    systems at two NFL stadiums and one at the University of Illinois with a
    combined total of over $19 million.
    
  *Orders in the Schools and Theatres business unit improved by approximately
    two percent for the third quarter of fiscal 2013, compared to the same
    period in fiscal 2012. The continued improvement during fiscal 2013 was in
    part due to schools demonstrating more willingness this year than in
    fiscal 2012 to move forward with projects along with increased interest in
    larger video display systems for high schools.
    
  *Orders in the Transportation business were up approximately 29 percent
    compared to the same period in fiscal 2012, primarily as a result of
    booking the first $6 million commitment related to the previously
    announced $20 million procurement contract with the New Jersey Turnpike
    Authority and booking a $3 million project with one of our ongoing state
    department of transportation customers.
    
  *Orders in the International business unit were up approximately 62 percent
    over the third quarter of fiscal 2012.Orders for the quarter included two
    projects totaling $5.1 million for sports venues and a $2.2 million order
    from one of our commercial national accounts customers, all originating in
    the Asia Pacific region.

Outlook

Morgan added, "Our backlog includes some work that is not deliverable in the
fourth quarter of fiscal 2013 due to customers' schedules; however, we expect
sales to increase in our fiscal 2013 fourth quarter over both the third
quarter of fiscal 2013 and the fourth quarter of fiscal 2012. Gross profit
margin is expected to be lower than our fiscal 2013 year-to-date levels due to
the mix of business, as we anticipate working on a number of larger contracts
with lower sales margins this quarter. Operating expenses are expected to be
slightly less than in our fiscal third quarter. We are estimating that our
capital investment for all of fiscal 2013 will be less than $11.0 million,
down from $16.5 million in fiscal 2012."

"We continue to see a strong pipeline of potential business. We see
opportunities in our International business unit in third party advertising.
We recently announced the prospective acquisition of OPEN Out-of Home
Solutions ("OPEN"), a Belgian company that specializes in serving the third
party advertising market in Europe. We expect to complete the integration of
OPEN into Daktronics by the first quarter of fiscal 2014, and we look forward
to the opportunities this acquisition offers. We see opportunity for continued
growth in video projects for high schools in Schools and Theatres, and large
video systems in Live Events. Transportation has a strong pipeline and we will
start shipping our new full color standard displays specially designed for
that market in the fourth quarter. We see the shift to full color in the
transportation business as a positive growth driver for that business. We
expect a limited amount of growth in our commercial business, but
opportunities exist for large video projects and replacement programs of some
of our national on-premise accounts. We remain committed to our three-year
strategic goal to significantly improve operating margin by attaining top line
growth and containing costs. We have more work to do over the next couple of
years to achieve and sustain that goal, and we will continue to work on
improvements during the fourth quarter. We continue to work to improve the
gross profit on contracts as well as on standard products through initiatives
in product design, manufacturing, and project management," continued Morgan.

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.

The Daktronics logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5476

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.



Daktronics, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
                                                             
                         Three Months Ended       Nine Months Ended
                         January   January 28, January 26, January 28,
                          26,
                         2013     2012        2013        2012
                                                             
Net sales                 $ 111,050 $122,925    $393,840    $377,532
Cost of goods sold        84,001    95,070       288,049      288,702
Gross profit              27,049    27,855       105,791      88,830
                                                             
Operating expenses:                                           
Selling expense           13,652    13,341       39,528       38,475
General and               6,717     6,974        20,148       20,410
administrative
Product design and        5,611     5,696        17,477       17,050
development
                         25,980    26,011       77,153       75,935
Operating income          1,069     1,844        28,638       12,895
                                                             
Nonoperating income                                           
(expense):
Interest income           386       434          1,165        1,326
Interest expense          (28)      (61)         (151)        (231)
Other expense, net        (193)     (29)         (224)        (221)
                                                             
Income before income      1,234     2,188        29,428       13,769
taxes
Income tax (benefit)      (1,476)   522          8,493        4,775
expense
Net income                $2,710   $1,666      $20,935     $8,994
                                                             
Weighted average shares                                       
outstanding:
Basic                     42,343    41,916       42,206       41,811
Diluted                   42,539    42,076       42,447       42,175
                                                             
Earnings per share:                                           
Basic                     $0.06    $0.04       $0.50       $0.22
Diluted                   $0.06    $0.04       $0.49       $0.21
                                                             
Cash dividend declared    0.615     0.510        0.730        0.620
per share



Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
                                                               
                                                  January 26, April 28,
                                                  2013        2012
                                                  (unaudited) 
ASSETS                                                          
CURRENT ASSETS:                                                 
Cash, cash equivalents and restricted cash         $24,553     $30,592
Marketable securities                              25,539       25,258
Accounts receivable, net                           59,592       66,923
Inventories                                        49,578       54,924
Costs and estimated earnings in excess of billings 41,120       23,020
Current maturities of long-term receivables        5,123        5,830
Prepaid expenses and other assets                  6,606        5,528
Deferred income taxes                              11,191       10,941
Income tax receivables                             2,847        5,990
Total current assets                               226,149      229,006
                                                               
Long-term receivables, less current maturities     12,181       12,622
Goodwill                                           3,328        3,347
Intangibles                                        1,238        1,409
Advertising rights, net and other assets           988          1,157
Deferred income taxes                              35           30
                                                  17,770       18,565
PROPERTY AND EQUIPMENT:                                         
Land                                               1,497        1,497
Buildings                                          57,018       56,431
Machinery and equipment                            63,789       61,654
Office furniture and equipment                     16,199       15,648
Computer software and hardware                     41,506       42,172
Equipment held for rental                          868          1,003
Demonstration equipment                            8,315        9,806
Transportation equipment                           4,100        4,116
                                                  193,292      192,327
Less accumulated depreciation                      130,626      123,931
                                                  62,666       68,396
TOTAL ASSETS                                       $306,585    $315,967



Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
                                                                 
                                                    January 26, April 28,
                                                    2013        2012
                                                    (unaudited) 
LIABILITIES AND SHAREHOLDERS' EQUITY                              
CURRENT LIABILITIES:                                              
Notes payable, bank                                  $--         $ 1,459
Accounts payable                                     31,798       33,906
Accrued expenses                                     23,834       22,731
Warranty obligations                                 12,076       13,049
Billings in excess of costs and estimated earnings   14,796       14,385
Customer deposits (billed or collected)              11,323       12,826
Deferred revenue (billed or collected)               8,553        9,751
Current portion of other long-term obligations       394          359
Income taxes payable                                 625          665
Deferred income taxes                                39           42
Total current liabilities                            103,438      109,173
                                                                 
                                                                 
Long-term warranty obligations                      9,996        9,166
Long-term deferred revenue (billed or collected)     5,221        4,361
Other long-term obligations, less current maturities 803          1,009
Deferred income taxes                                1,453        1,453
Total long-term liabilities                          17,473       15,989
TOTAL LIABILITIES                                    120,911      125,162
                                                                 
SHAREHOLDERS' EQUITY:                                             
Common stock                                         37,259       34,631
Additional paid-in capital                           26,549       24,320
Retained earnings                                    121,906      131,830
Treasury stock, at cost, 19,680 shares               (9)          (9)
Accumulated other comprehensive (loss) income        (31)         33
TOTAL SHAREHOLDERS' EQUITY                           185,674      190,805
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY           $306,585    $ 315,967



Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                                               
                                                    Nine Months Ended
                                                    January 26, January 28,
                                                    2013      2012
CASH FLOWS FROM OPERATING ACTIVITIES:                           
Net income                                           $20,935   $ 8,994
Adjustments to reconcile net income to net cash                 
provided by operating activities:
Depreciation                                         11,614     13,209
Amortization                                         171        189
Amortization of premium/discount on marketable       140        140
securities
Loss on sale of property and equipment               33         11
Share-based compensation                             2,344      2,474
Excess tax benefits from share-based compensation    (61)       (30)
Provision for doubtful accounts                      (197)      (125)
Deferred income taxes, net                           (258)      (377)
Change in operating assets and liabilities           (1,466)    (16,092)
Net cash provided by operating activities            33,255     8,393
                                                               
CASH FLOWS FROM INVESTING ACTIVITIES:                           
Purchases of property and equipment                  (6,799)    (12,633)
Proceeds from sale of property and equipment         175        168
Purchases of marketable securities                   (13,301)   (10,968)
Proceeds from sales or maturities of marketable      12,820     13,925
securities
Net cash used in investing activities                (7,105)    (9,508)
                                                               
CASH FLOWS FROM FINANCING ACTIVITIES:                           
Borrowings on notes payable                          --         782
Payments on notes payable                            (1,460)    --
Proceeds from exercise of stock options              1,146      431
Excess tax benefits from share-based compensation    61         30
Dividends paid                                       (30,859)   (25,950)
Net cash used in financing activities                (31,112)   (24,707)
                                                               
EFFECT OF EXCHANGE RATE CHANGES ON CASH              43         66
NET DECREASE IN CASH AND CASH EQUIVALENTS            (4,919)    (25,756)
                                                               
CASH AND CASH EQUIVALENTS:                                      
Beginning of period                                 29,423     54,308
End of period                                       $24,504   $28,552



Daktronics, Inc. and Subsidiaries
Net Sales and Orders by Business Unit
(in thousands)
(unaudited)
                                                         
                  Three Months Ended          Nine Months Ended
                  January 26, January 28, January 26, January 28,
                  2013        2012        2013        2012
Net Sales:                                                
Commercial         $ 30,997     $38,833      $ 109,127    $115,239
Live Events        26,528       38,496       121,641      123,676
Schools & Theatres 11,778       10,696       51,639       46,418
Transportation     23,546       10,261       57,713       34,201
International      18,201       24,639       53,720       57,998
                  $ 111,050    $ 122,925    $393,840     $377,532
                                                         
Orders:                                                   
Commercial         $ 36,988     $30,720      $113,622     $111,319
Live Events        47,391       38,684       132,285      122,507
Schools & Theatres 10,183       9,941        48,106       41,589
Transportation     19,972       15,443       59,504       43,459
International      19,776       12,218       64,667       46,117
                  $ 134,310    $ 107,006    $418,184     $364,991



Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow
(in thousands)
(unaudited)
                                                              
                                                Nine Months Ended
                                                January 26,    January 28,
                                                2013           2012
Net cash provided by operating activities        $33,255      $8,393
Purchases of property and equipment              (6,799)       (12,633)
Proceeds from sales of property and equipment    175           168
Free cash flow                                   $26,631      $(4,072)

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

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