Exhibit 99.1
Daktronics, Inc. Announces Record Fiscal Year and Fourth Quarter 2024 Revenue and Strong Expansion in Operating Profitability and Cash Flow
BROOKINGS, S.D., June 26, 2024 - Daktronics, Inc. (NASDAQ - DAKT), the leading U.S.-based designer and manufacturer of best-in-class dynamic video communication displays and control systems for customers worldwide, today reported results for its fiscal year and fourth quarter 2024 ended on April 27, 2024.
Fiscal Q4 and full year 2024 financial highlights:
•Sales increased to a new record of $215.9 million for the fiscal fourth quarter, a 2.9 percent increase compared to the fiscal 2024 fourth quarter's record revenue; full-year sales were $818.1 million, an 8.5 percent increase from the prior year
•Gross margin for the fourth quarter improved 90 basis points to 25.7 percent from 24.8 percent in the year-earlier period; full year gross profit as a percentage of net sales increased 710 basis points to 27.2 percent as compared to 20.1 percent for fiscal 2023, the highest level since 2009
•Operating income for the fiscal fourth quarter grew 6.4 percent to $19.4 million as compared to the fourth quarter of fiscal 2023 and full-year operating income quadrupled to $87.1 million as compared to fiscal 2023
•Product order backlog was $316.9 million at April 27, 2024 compared to $400.7 million at the end of the fourth quarter of fiscal 2023 as past periods' overbuilt backlog continues to be worked down to market expected manufacturing lead times(1)
•New product and service orders for the fourth quarter were $205.8 million, a 14.6 percent increase from $179.5 million in the year-earlier period; full-year product and service orders were $740.2 million(1), an increase of 8.7 percent as compared to $681.0 million in fiscal 2023;
Reece Kurtenbach, Daktronics' Chairman, President and Chief Executive Officer, commented, “We both started and finished fiscal 2024 strong, delivering results that demonstrate the impact of our more profitable business model across a range of key financial metrics. Throughout the year, our teams were laser focused on advancing and extending the operating improvements we introduced in fiscal 2023. We managed the fluctuations that come with the project-based and seasonal nature of our business to outperform even last year’s atypically high level of backorder fulfillment. Good order availability and a strong win rate from our demand creation teams across our product lines, combined with improved manufacturing efficiency and our strong on-time delivery to customer sites, resulted in expanded gross and operating profitability and a marked increase in cash flow generation.
Mr. Kurtenbach added, "Our orders grew 14.6 percent in the fourth quarter and 8.7 percent for the year, and we have entered fiscal 2025 committed to capture growing market demand, leveraging our recognized leadership position and our strong balance sheet.”
Outlook
Kurtenbach added, “In fiscal 2024, we raised the baseline profitability of the business, strengthened our positioning with our customers, and reinforced our competitive differentiation, particularly against foreign competitors. Building upon these strengths, we are focused in fiscal 2025 on strategic priorities which will continue to transform and strengthen our business model to enhance our earnings power. These important drivers for our outlook are to prioritize among our end markets, attack structural cost and to improve our operating model. We are excited to share some early information about these initiatives today."
He continued, "Our critical priorities for fiscal 2025 are to execute a broad digital transformation to modernize our service systems for field service automation, to advance our enterprise performance planning capabilities, and to improve and automate quoting and sales processes. All three objectives are aligned with our goal of expanding growth and profitability. In the platform and product realm, where Daktronics has always been a market leader, our priorities for the year are to
(1) Orders and backlog metrics are not measures defined by accounting principles generally accepted in the United States of America ("GAAP"), and our methodology for determining orders and backlog may vary from the methodology used by other companies in determining their orders and backlog amounts. For more information related to backlog, see Part I, Item 1. Business of our Annual Report on Form 10-K for the fiscal year ended April 27, 2024.
extend our market leadership and emphasize higher margin product areas that are key to winning more profitable business. As part of this effort, we are pursuing growth opportunities to further penetrate our serviceable addressable market – we recently launched our new Flip-Chip COB (Chip on Board) LED display family, the next step in evolving our narrow-pixel pitch (NPP) product for the fastest growing segment of the market. We are also working to add professional control system and other content-related services to drive monthly recurring revenue and help our customers derive higher return on investment and lower total cost of ownership from their hardware investments. At the same time, to lower overall costs, we are focused on increasing our operational effectiveness by improving our manufacturing utilization, aligning production schedules, and further improving installation methods. Together, all of these advancements are aligned to support our goals of increasing customer satisfaction and improving operational efficiencies to drive future profitable growth.
We believe these initiatives and investments in digital transformation priorities support our long-term growth and operating margin targets. Our teams remain focused on driving penetration in the most profitable segments and reducing the overall cost to deliver. We are committed to reallocating resources and capital investment toward end markets, and revenue opportunities within those markets, that generate returns meaningfully in excess of our cost of capital."
Fourth Quarter and Year to Date Results
Orders for the fourth quarter of fiscal 2024 increased 14.6 percent as compared to the fourth quarter of fiscal 2023 driven by strong demand in the Live Events and Transportation business units and solid growth in the International business unit. Orders for the full fiscal 2024 year increased 8.7 percent as compared to fiscal 2023 for the same reasons.
Net sales for the fourth quarter of fiscal 2024 increased by 2.9 percent as compared to the fourth quarter of fiscal 2023. Net sales for fiscal 2024 increased 8.5 percent as compared to fiscal 2023. Sales growth was driven by the conversion of our strong backlog, improved stabilization of supply chains, and increased manufacturing capacity.
Gross profit as a percentage of net sales increased to 25.7 percent for the fourth quarter of fiscal 2024 as compared to 24.8 percent in the fourth quarter of fiscal 2023. Gross profit as a percentage of net sales increased to 27.2 percent for fiscal 2024 as compared to 20.1 percent in the prior year. The gross profit improvement is due to strategic pricing, greater efficiency of sales volume generation over the cost structure, and a more stable operating environment.
Operating expenses for the fourth quarter of fiscal 2024 were $36.0 million compared to $33.9 million for the fourth quarter of fiscal 2023, an increase of 6.1 percent. Operating expenses were $135.3 million for the full fiscal 2024 year as compared to $130.0 million for the full fiscal 2023 year, an increase of 4.1 percent. Operating expenses for the year increased because of incentive compensation and due to staffing increases. During the third quarter of fiscal year 2023, we recorded a $4.6 million non-cash goodwill impairment charge, and we had no goodwill impairment charge in fiscal 2024.
The above changes resulted in an operating margin of 9.0 percent for the fourth quarter of fiscal 2024 compared to 8.7 percent for the fourth quarter of fiscal 2023 and an operating margin of 10.6 percent for fiscal 2024 as compared to 2.8 percent for fiscal 2023.
The increase in interest (expense) income, net for the fourth quarter of fiscal 2024 compared to the same period one year ago was primarily due to the closing in May 2023 on the financing transactions at higher values and interest rates than were in effect under our previous line of credit during the 2023 fourth quarter.
For the fourth quarter and for the fiscal 2024, the Company recorded a non-cash charge of $5.0 million and $16.6 million, respectively, for the change in fair value of a convertible note payable, which is accounted for under the fair value option. This convertible note was entered into during the first quarter of fiscal 2024 and no type of instrument was outstanding during fiscal 2023.
The Company recorded non-cash impairment charges for investments in affiliates of $5.3 million and $6.4 million in the fourth quarter and fiscal 2024, respectively, as compared to $4.5 million for the fourth quarter and fiscal 2023.
Our effective tax rate for fiscal 2024 was 35.9 percent. The effective income tax rate for fiscal 2024 was primarily impacted due to the fair value adjustment to expense that is not deductible for tax purposes. Additional other items impacting the rate were valuation allowances on equity investments, state taxes, as well as prior year provision to return adjustments reduced in part by tax benefits from permanent tax credits. Our effective tax rate for fiscal 2023 was 48.7 percent. The effective income tax rate for fiscal 2023 was impacted due to valuation allowances on equity investments and on foreign net operating losses in Ireland, goodwill impairment, state taxes, a mix of taxes in foreign countries where the
tax rate is higher than in the United States, as well as a prior year provision to return adjustments reduced in part by tax benefits from permanent tax credits.
Balance Sheet and Cash Flow
Cash, restricted cash and marketable securities totaled $81.7 million at April 27, 2024, and $54.7 million of long-term debt was outstanding as of that date. The long-term debt includes the face value of the debt of $38.9 million, the $16.6 million adjustment to fair value, and $(0.8) million of debt issuance costs, net. There were no draw-downs on our asset-based revolving credit facility during fiscal year 2024 and $34.2 million was available to draw at April 27, 2024. In fiscal year 2024, we generated $63.2 million from operations and used $17.0 million for purchases of property and equipment. At the end of the fiscal 2024 fourth quarter, our working capital ratio was 2.1 to 1. Inventory levels dropped 7.7 percent since the end of the 2023 fiscal year on April 29, 2023. Management’s focus remains on managing working capital to fund the expected growth of the company with its current sources of liquidity.
Webcast Information
The company will host a conference call and webcast to discuss its financial results today at 10:00 a.m. (Central Time). This call will be broadcast live at http://investor.daktronics.com and be 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: 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 and orders, fluctuations in margins, the introduction of new products and technology, the impact of adverse weather conditions, increased regulation and other risks described in the company's SEC filings, including its Annual Report on Form 10-K for its 2024 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 M. Anderson, Chief Financial Officer
Tel (605) 692-0200
Investor@daktronics.com
LHA Investor Relations
Carolyn Capaccio / Jody Burfening
DAKTIRTeam@lhai.com
(1) Orders and backlog metrics are not measures defined by accounting principles generally accepted in the United States of America ("GAAP"), and our methodology for determining orders and backlog may vary from the methodology used by other companies in determining their orders and backlog amounts. For more information related to backlog, see Part I, Item 1. Business of our Annual Report on Form 10-K for the fiscal year ended April 27, 2024.
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended | Year Ended | ||||||||||||||||||||||
| April 27, 2024 | April 29, 2023 | April 27, 2024 | April 29, 2023 | ||||||||||||||||||||
| Net sales | $ | 215,880 | $ | 209,862 | $ | 818,083 | $ | 754,196 | |||||||||||||||
| Cost of sales | 160,501 | 157,718 | 595,640 | 602,841 | |||||||||||||||||||
| Gross profit | 55,379 | 52,144 | 222,443 | 151,355 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling | 15,114 | 14,789 | 56,954 | 56,655 | |||||||||||||||||||
| General and administrative | 11,555 | 10,758 | 42,632 | 38,747 | |||||||||||||||||||
| Product design and development | 9,283 | 8,334 | 35,742 | 29,989 | |||||||||||||||||||
| Goodwill impairment | — | — | — | 4,576 | |||||||||||||||||||
| 35,952 | 33,881 | 135,328 | 129,967 | ||||||||||||||||||||
| Operating income | 19,427 | 18,263 | 87,115 | 21,388 | |||||||||||||||||||
| Nonoperating (expense) income: | |||||||||||||||||||||||
| Interest (expense) income, net | (466) | (199) | (3,418) | (920) | |||||||||||||||||||
| Change in fair value of convertible note | (4,980) | — | (16,550) | — | |||||||||||||||||||
| Other expense and debt issuance costs write-off, net | (6,814) | (4,876) | (13,096) | (7,211) | |||||||||||||||||||
| Income before income taxes | 7,167 | 13,188 | 54,051 | 13,257 | |||||||||||||||||||
| Income tax (benefit) expense | 4,649 | (8,211) | 19,430 | 6,455 | |||||||||||||||||||
| Net income | $ | 2,518 | $ | 21,399 | $ | 34,621 | $ | 6,802 | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 46,257 | 45,659 | 45,901 | 45,404 | |||||||||||||||||||
| Diluted | 46,872 | 45,910 | 46,543 | 45,521 | |||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 0.05 | $ | 0.47 | $ | 0.75 | $ | 0.15 | |||||||||||||||
| Diluted | $ | 0.05 | $ | 0.47 | $ | 0.74 | $ | 0.15 | |||||||||||||||
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
(unaudited)
| April 27, 2024 | April 29, 2023 | ||||||||||
| ASSETS | |||||||||||
| CURRENT ASSETS: | |||||||||||
| Cash and cash equivalents | $ | 81,299 | $ | 23,982 | |||||||
| Restricted cash | 379 | 708 | |||||||||
| Marketable securities | — | 534 | |||||||||
| Accounts receivable, net | 117,186 | 109,979 | |||||||||
| Inventories | 138,008 | 149,448 | |||||||||
| Contract assets | 55,800 | 46,789 | |||||||||
| Current maturities of long-term receivables | 298 | 1,215 | |||||||||
| Prepaid expenses and other current assets | 8,531 | 9,676 | |||||||||
| Income tax receivables | 448 | 326 | |||||||||
| Total current assets | 401,949 | 342,657 | |||||||||
| Property and equipment, net | 71,752 | 72,147 | |||||||||
| Long-term receivables, less current maturities | 562 | 264 | |||||||||
| Goodwill | 3,226 | 3,239 | |||||||||
| Intangibles, net | 840 | 1,136 | |||||||||
| Debt issuance costs, net | 2,530 | 3,866 | |||||||||
| Investment in affiliates and other assets | 21,163 | 27,928 | |||||||||
| Deferred income taxes | 25,862 | 16,867 | |||||||||
| TOTAL ASSETS | $ | 527,884 | $ | 468,104 | |||||||
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
(unaudited)
| April 27, 2024 | April 29, 2023 | ||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
| CURRENT LIABILITIES: | |||||||||||
| Current portion of long-term debt | $ | 1,500 | $ | — | |||||||
| Accounts payable | 60,757 | 67,522 | |||||||||
| Contract liabilities | 65,524 | 91,549 | |||||||||
| Accrued expenses | 43,028 | 36,005 | |||||||||
| Warranty obligations | 16,540 | 12,228 | |||||||||
| Income taxes payable | 4,947 | 2,859 | |||||||||
| Total current liabilities | 192,296 | 210,163 | |||||||||
| Long-term warranty obligations | 21,388 | 20,313 | |||||||||
| Long-term contract liabilities | 16,342 | 13,096 | |||||||||
| Other long-term obligations | 5,759 | 5,709 | |||||||||
| Long-term debt, net | 53,164 | 17,750 | |||||||||
| Deferred income taxes | 143 | 195 | |||||||||
| Total long-term liabilities | 96,796 | 57,063 | |||||||||
| SHAREHOLDERS' EQUITY: | |||||||||||
| Preferred Shares, no par value, authorized 50 shares; no shares issued and outstanding | — | — | |||||||||
| Common stock, no par value, authorized 115,000 shares; 48,121 and 47,396 shares issued as of April 27, 2024 and April 29, 2023, respectively | 65,525 | 63,023 | |||||||||
| Additional paid-in capital | 52,046 | 50,259 | |||||||||
| Retained earnings | 138,031 | 103,410 | |||||||||
| Treasury stock, at cost, 1,907 shares as of April 27, 2024 and April 29, 2023, respectively | (10,285) | (10,285) | |||||||||
| Accumulated other comprehensive loss | (6,525) | (5,529) | |||||||||
| TOTAL SHAREHOLDERS' EQUITY | 238,792 | 200,878 | |||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 527,884 | $ | 468,104 | |||||||
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Year Ended | |||||||||||
| April 27, 2024 | April 29, 2023 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | 34,621 | $ | 6,802 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 19,291 | 16,993 | |||||||||
| Loss (gain) on sale of property, equipment and other assets | 44 | (691) | |||||||||
| Share-based compensation | 2,090 | 2,027 | |||||||||
| Equity in loss of affiliates | 3,764 | 3,332 | |||||||||
| Provision for doubtful accounts, net | 373 | 1,009 | |||||||||
| Deferred income taxes, net | (9,069) | (3,633) | |||||||||
| Non-cash impairment charges | 6,359 | 9,049 | |||||||||
| Change in fair value of convertible note | 16,550 | — | |||||||||
| Debt issuance costs write-off | 3,353 | — | |||||||||
| Change in operating assets and liabilities | (14,135) | (19,864) | |||||||||
| Net cash provided by operating activities | 63,241 | 15,024 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchases of property and equipment | (16,980) | (25,385) | |||||||||
| Proceeds from sales of property, equipment and other assets | 174 | 822 | |||||||||
| Proceeds from sales or maturities of marketable securities | 550 | 3,490 | |||||||||
| Purchases of equity and loans to equity investees | (5,050) | (4,315) | |||||||||
| Net cash used in investing activities | (21,306) | (25,388) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Borrowings on notes payable | 41,172 | 378,694 | |||||||||
| Payments on notes payable | (19,434) | (360,944) | |||||||||
| Debt issuance costs | (7,205) | (991) | |||||||||
| Borrowings on long-term obligations | — | 1,233 | |||||||||
| Principal payments on long-term obligations | (410) | (305) | |||||||||
| Proceeds from exercise of stock options | 1,302 | 21 | |||||||||
| Tax payments related to RSU issuances | (303) | (140) | |||||||||
| Net cash provided by financing activities | 15,122 | 17,568 | |||||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | (69) | (522) | |||||||||
| NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 56,988 | 6,682 | |||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | |||||||||||
| Beginning of period | 24,690 | 18,008 | |||||||||
| End of period | $ | 81,678 | $ | 24,690 | |||||||
Daktronics, Inc. and Subsidiaries
Net Sales and Orders by Business Unit
(in thousands)
(unaudited)
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| April 27, 2024 | April 29, 2023 | Dollar Change | Percent Change | April 27, 2024 | April 29, 2023 | Dollar Change | Percent Change | ||||||||||||||||||||||||||||||||||||||||
| Net Sales: | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | $ | 38,998 | $ | 43,458 | $ | (4,460) | (10.3) | % | $ | 161,626 | $ | 170,590 | $ | (8,964) | (5.3) | % | |||||||||||||||||||||||||||||||
| Live Events | 104,906 | 91,530 | 13,376 | 14.6 | 338,508 | 284,900 | 53,608 | 18.8 | |||||||||||||||||||||||||||||||||||||||
| High School Park and Recreation | 36,409 | 35,621 | 788 | 2.2 | 170,349 | 141,748 | 28,601 | 20.2 | |||||||||||||||||||||||||||||||||||||||
| Transportation | 24,173 | 18,509 | 5,664 | 30.6 | 85,390 | 72,306 | 13,084 | 18.1 | |||||||||||||||||||||||||||||||||||||||
| International | 11,394 | 20,744 | (9,350) | (45.1) | 62,210 | 84,652 | (22,442) | (26.5) | |||||||||||||||||||||||||||||||||||||||
| $ | 215,880 | $ | 209,862 | $ | 6,018 | 2.9 | % | $ | 818,083 | $ | 754,196 | $ | 63,887 | 8.5 | % | ||||||||||||||||||||||||||||||||
| Orders: | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | $ | 34,084 | $ | 38,902 | $ | (4,818) | (12.4) | % | $ | 135,251 | $ | 158,028 | $ | (22,777) | (14.4) | % | |||||||||||||||||||||||||||||||
| Live Events | 94,755 | 65,890 | 28,865 | 43.8 | 321,191 | 259,653 | 61,538 | 23.7 | |||||||||||||||||||||||||||||||||||||||
| High School Park and Recreation | 44,581 | 47,345 | (2,764) | (5.8) | 148,505 | 144,919 | 3,586 | 2.5 | |||||||||||||||||||||||||||||||||||||||
| Transportation | 20,698 | 20,939 | (241) | (1.2) | 80,107 | 66,751 | 13,356 | 20.0 | |||||||||||||||||||||||||||||||||||||||
| International | 11,667 | 6,473 | 5,194 | 80.2 | 55,117 | 51,603 | 3,514 | 6.8 | |||||||||||||||||||||||||||||||||||||||
| $ | 205,785 | $ | 179,549 | $ | 26,236 | 14.6 | % | $ | 740,171 | $ | 680,954 | $ | 59,217 | 8.7 | % | ||||||||||||||||||||||||||||||||
Reconciliation of Free Cash Flow*
(in thousands)
(unaudited)
| Twelve Months Ended | |||||||||||
| April 27, 2024 | April 29, 2023 | ||||||||||
| Net cash provided by operating activities | $ | 63,241 | $ | 15,024 | |||||||
| Purchases of property and equipment | (16,980) | (25,385) | |||||||||
| Proceeds from sales of property and equipment | 174 | 822 | |||||||||
| Free cash flow | $ | 46,435 | $ | (9,539) | |||||||
*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 accounting principles generally accepted in the United States of America ("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.
Reconciliation of Adjusted Operating Income*
(in thousands)
(unaudited)
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
| April 27, 2024 | April 29, 2023 | April 27, 2024 | April 29, 2023 | ||||||||||||||||||||
| Operating income (GAAP Measure) | $ | 19,427 | $ | 18,263 | $ | 87,115 | $ | 21,388 | |||||||||||||||
| Plus goodwill impairment | — | — | — | 4,576 | |||||||||||||||||||
| Adjusted operating income (non-GAAP measure) | $ | 19,427 | $ | 18,263 | $ | 87,115 | $ | 25,964 | |||||||||||||||
*In evaluating its business, Daktronics considers and uses adjusted operating income as a key measure of its operating performance. The term adjusted operating income is not defined under 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. We define non-GAAP adjusted operating income as operating income plus asset impairments. Management believes non-GAAP adjusted operating income is a useful indicator of our financial performance and our ability to generate cash flows from operations. Our definition of non-GAAP adjusted operating income may not be comparable to similarly titled definitions used by other companies. The table above reconciles non-GAAP adjusted operating income to comparable GAAP financial measures.
Reconciliation of Adjusted Net Income*
(in thousands)
(unaudited)
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
| April 27, 2024 | April 29, 2023 | April 27, 2024 | April 29, 2023 | ||||||||||||||||||||
| Net income | $ | 2,518 | $ | 21,399 | $ | 34,621 | $ | 6,802 | |||||||||||||||
| Change in fair value of convertible note | 4,980 | — | 16,550 | — | |||||||||||||||||||
| Debt issuance costs expensed due to fair value of convertible note, net of taxes | — | — | 2,149 | — | |||||||||||||||||||
| Goodwill impairment | — | — | — | 4,576 | |||||||||||||||||||
| Equity method affiliates impairment | 5,268 | 4,473 | 6,359 | 4,473 | |||||||||||||||||||
| Adjusted net income | $ | 12,766 | $ | 25,872 | $ | 59,679 | $ | 15,851 | |||||||||||||||
*Adjusted net income. We disclose adjusted net income as a non-GAAP financial measurement in order to report our results exclusive of items that are non-recurring or not core to our operating business. We believe presenting this non-GAAP financial measurements provides investors with a consistent way to analyze our performance.
Reconciliation of Long-term Debt
(in thousands)
(unaudited)
Long-term debt consists of the following:
| April 27, 2024 | April 29, 2023 | ||||||||||
| ABL credit facility/prior line of credit | $ | — | $ | 17,750 | |||||||
| Mortgage | 13,875 | — | |||||||||
| Convertible note | 25,000 | — | |||||||||
| Long-term debt, gross | 38,875 | 17,750 | |||||||||
| Debt issuance costs, net | (761) | — | |||||||||
| Change in fair value of convertible note | 16,550 | — | |||||||||
| Current portion | (1,500) | — | |||||||||
| Long-term debt, net | $ | 53,164 | $ | 17,750 | |||||||