DAKT - Earnings call transcript Q2 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to Daktronics Fiscal Year 2020 Second Quarter Earnings Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Ms. Sheila Anderson, Chief Financial Officer for Daktronics for some introductory remarks. Please go ahead, Sheila.

Sheila Anderson

Thank you. everyone. morning, Good participating for second earnings quarter Thank in call. conference you our

materially. to will cause disclosures to may statements our and we future global statements risks economic financial of factors like our opportunities. as SEC about changes and technologies would Such which future forward-looking margins, of changes include conditions, and detailed of cautioning actual our of introduction XX-K discussing and and landscape differ expectations reflecting control review and noted management facts, XX-Q fluctuations magnitude the in in performance to I and uncertainties, our market and addition and of future statements other of our investors involve including be the contracts, plans and forward-looking results products filings. out in in participants orders historical may growth, policies, business trade and important competitive be timing and impacts All and of discussions new that risks

let highlight XXXX. fiscal the of the quarter of related second me some financial year-to-date for and comparisons results to and the time fiscal XXXX, that, With

fiscal XX-week fiscal was week ended and the areas being year with additional XX-week XX Sales, As is versus XXXX weeks. first extra a of fell orders six-month impacted comparison. of all year. in and The within week XXXX six were months XXXX a fiscal operating the reminder, resulting a in quarter, the XX expenses weeks

High and business in Commercial units. as Orders Events in year's and quarter. decreased second quarter, increased Park the compared relatively overall Recreation and to International Live the orders last and Transportation, business flat For remained units the second School

High which up and Park X.X%. School in year, were and and Live Transportation the increased Events For orders. offset Recreation by partly declines orders orders International were

by reason projects our XX-month for for accounts Commercial and is volatility to orders the and primary of needs flat Each the customers the year-to-date business additional quarterly large results. orders year-over-year. and The was week the timing of comparisons. the according impacted in changes in global were varies unit fiscal

units For fiscal XXXX $XX year-to-date compared the Events, winning or In increase. of successfully business additional same of professional On increased highlights several a comparison, week active the dollar time million orders million a level per a about at with to year projects college in basis, last multi-million the as a $XX.X paced in X.X% in at largest market, as order some university Live changes. during baseball being and winning stadium. orders the a project and because

business International In sports and customers the areas unit, transportation governmental like commercial. U.S. we marketed Canada, including geographies and to the outside and and

continued they half and build first the networks, and for we in to casinos, malls sports home global had have advertising and of continue have success out of digital and regional customers around world. the the year, as transportation success stations their out continued For had projects complexes, in

change Live School orders change Park larger as to $XXX Sales X.X% audio video year's in Park School Net High Events, last the Recreation scoring second to to the in market into in sales compared active and record sales. increased quarter and and Commercial, and described timing XXXX related these the million orders the and year. sales the in and fiscal decreased in as million for were High in already This remains and level, down systems $XXX in backlog compared correlates Transportation year and for and While is of International, increased the areas. last of applications. interested orders Recreation and standard

backlog to due the noted. year up were order already along in coming business a increased with units changes into On all sales year-to-date basis, the the

per million months using this six XX-week, at increase or million $XX.X XXXX as X.X% in during a week the comparison. For XX-week, comparison year, time to to around same the sales last fiscal ended $XX.X compared paced revenue

to fiscal a Gross months were delivery approximate approximately a the The XX.X% at XX.X% of profit as quarterly $X.X last ended as for for same quarter costs as last comparison the compared net $X last drop of project to compared Gross result amount the same $X.X for year were quarter. percentage as the the million profit the and additional for to as year six to for cost the year million was quarter. of in Tariffs sales The was XX.X% tariff compared tariffs time. during million compared 'XX. year's the XX.X%. was

X.X% a as X.X% sales to and quarterly the decreased warranty for percentage annual Our to of both as compared comparisons.

$XX.X Operating quarter investing in quarter new million were the due continued or to personnel of compared an second our of second X.X% and the in strategic million expenses and fiscal primarily XXXX to of increase fiscal and initiative to related costs. XXXX, technologies $XX.X for products

our expenses extra continued making engaging and reduce delivery, X.X%, primarily as systems in improve investment year-to-date expenses, week the growth increased operating in and increased efforts. have development, to evaluating future of efforts investments leverage tools to personnel-related support and due On in a and marketing basis, to improvements to are operational and well. We the

the discrete year-to-date effective to during We year excluding of to in taxable unusual annual our loss, effective for occurring geographic to that tax calculate and or for of of actual actual fluctuate items tax mix reporting rates income credits the periods tax provision as levels depending changes and the estimate legislation, tax income frequently rate by interim compared the The income. an to income tax on -- can period. our taxes applying

an XXXX earlier, on the XX.X% tax a approximately the period. X.X% an of tax effective and rate tax tax quarter driven in for was in was estimated effective of fiscal year benefit estimated compared in for last benefit larger income basis. tax by tax XXXX. to We credits to of effective the relation a difference primarily book fiscal rate expense rest estimated compared year-to-date This year benefit rate of to minimal rate pre-tax second each as effective The XX.X% as XX.X% the

the of process $XX million during systems and correlating to and up of of this support the marketable was October. projects $X.X We information capabilities primarily at to quarter, dividends at production end and in $X.X We quarters, year. product for Our stock increase system million investments attributed so of in securities $XX.X for and development. backlog for the capital with repurchases new operations for used of $XX and inventory million end $X.X far production million for million infrastructure, the was future and million used in assets increase from cash the in used cash position contract we receivables and

equipment We million $XX our information new primarily XXXX, systems. and reliability for expenditures to technology lab manufacturing million infrastructure facility be expect capital and to used and new to production be investments for products, related for equipment improvements, $XX along in fiscal with

million, is Our we convert backlog to sales quarters. two $XXX at coming product which to the over three expect to

third We XXXX and expect year's larger sales last schedule to quarter the than be third changes. bookings course, change the customer due of more fiscal pending backlog, quarter to sales of project for could but

a our over it comments. Chairman, and additional now Kurtenbach, Reece few I'll for CEO, turn to President,

Reece Kurtenbach

Thank you, everyone. Good morning, Sheila.

the a grows. had as we Sheila overall orders growing market fiscal As start strong in also 'XX, highlighted, for

ever We to in and our work, us increase other customers and growth. to before. manufacturing, invest coupled profitable This for in service sales, investments development to have solutions our capabilities more long-term market continue with than poised to more

As our customers. an for end globe the team and networks and assets service example, partners are around both sales sales valuable reach and our

indoor can locations being and products adopted like displays are Solutions to through, narrow that with offices, world. like control lines, often new stores. product the to our explore around customers by develop corporate these pitch new pixel into for and integrators our channels and continue existing incorporate centers, retail we new sell Especially

providing customers as Our control improving their systems management upgrades created system them content use both greater well system demand the This our help entertain our to as way been new inform purchases. also ease for and offerings of enhanced, audiences. has control utilize and and have

Casinos, ability in narrow sector, look government [ph] situation at align rooms, operation to To the of conference and we network centers, with completed the provide [sportsbook] offices. rooms, forward theaters, We're in highlight installation needs also pixel our and to and installations. applications area, to These other federal applications. success area, Defense of the on an Vegas The this similar Las command Venetian focusing recently including solutions centers, Department public pitch technology installing and

companies, by the well measures are many global are in to other of rhetoric countries we and the and United Like between these and both trade different activities. impose impacted States, dynamic most U.S. as surrounding trade the Today, current China of barriers as environment. the volatile the administrations these a we midst

adjust a to impact price. customers and Daktronics high our monitor will from while to multiple methodologies situation continue we to and competitive to We to and continue perspectives, high-value this quality, production evaluate our solutions at and providing minimize sourcing

However, we this components in for in the $XX year. costs on us our million view, could impose current more tariffs estimate than

remain fiscal solutions and business beyond. digital We grow for applications will all XXXX the and predict units. regarding of the to do growth the for industry overall business and positive expand of outlook We continue in

focused sales on and localized areas expect our our the growth opportunities, channels, and with spectacular share known current establishment sales Canada. outlook in on in transportation our Specifically, increasing service sport, and market outside out-of-home, International U.S. of we and

the expect the into we some Looking over long-term. Live Events growth business,

replacement by that and a be of However, product contracts business variation is cycles can caveat and business uses. previous competitive driven larger new lumpy, year-to-year. creating year's, some this from we similar-sized is One primarily consisting predict as highly

activity sporting of the ups growth and our continued choices High unit, larger-sized orders The new discretionary we opportunities solutions and and segment customers, We are the business and demand because indoor expansion of timing trends. opportunities down segment. spectacular to and of expect for which multi-million market, in out-of-home dollar the and up and see projects School and retail applications applications, in Commercial of investment segments, downs replacement spectacular can in by video cause and adoption -- that in sustained Park includes the due in Recreation

in and the to Canada promotional transportation in increase business U.S. needs advertising mass application federal systems, Transportation in the the The and in in and continued funding stability facilities. strong U.S. on-premise remained due transit investment

In all strive customers we their with serve replacement our as future. as natural of well and a today markets, to our in the cycle needs have

receptive business. offerings market introduced pitch recently across these narrow pixel a see our have We for and products indoor

We continue build sales foster channels. to out and indirect

experienced to solutions And to global the on over developing us the applications provider. different in solutions Our services range we and focused are of term, display tailored customers long innovative our make industry's segment. capabilities and each most releasing support digital and

while us are micro using markets customers LEDs. our of the and XXXX, These of to higher to making create the fiscal their techniques will and competitive they advantages investments and continuing in for up improve connect development, and in way in invest with technologies we and serving new During levels the technologies open needs desiring customers are interact audiences.

a enter continue growing of product are We we invest increasing we we fiscal plan a As and techniques. see and half development base customer to second in sports outlook, activities with for markets. strong positive and advanced manufacturing orders commercial, backlog 'XX a new as focused the government on in global to technologies

in focused we Finally, managing growth. spend of our path long-term are carefully on profitable capacity and

that, I questions. line please open any would With operator the ask to for the

Operator

from [Operator the from Instructions] of Research. line comes Springer question Our Singular Lisa first

open. now Your line is

Lisa Springer

focused all Thank if morning. the across the give delivery product little business increase special -- in segments us ask could about a Was around more Good cost. color or wanted segments? that you. to in I you

Sheila Anderson

It segments two a Commercial. projects, little larger through was bit little probably the Events, bit significant Those Live in through the a more our areas. were so primarily with

Lisa Springer

of going the think a well, to you that improve? that's second or expect year do to half challenge in be do And as you the

Sheila Anderson

that itself. continuing I to think time and processes we're should over improve our improve

Lisa Springer

Okay, thank you.

Reece Kurtenbach

Okay.

Operator

question Greg line Pendy Sidoti. from from next comes the Our of

Your is open. line now

Gregory Pendy

talking you Events, weakness, you just you half. wanted I saying business years, back Live sized that the a I one, say to on we you years? you expecting if year, second mean Are when similar last I'm can soft the in not specifically similar expect First to you're few mistaken, previous XXXX? pretty to be years. Are to the go some ask had

Reece Kurtenbach

Yes.

I projects. out and think some here depending variance and that the would down across to market take I year draw projects and multiple up larger that of on tend continuity will and type the a in are And years one there. go available

Gregory Pendy

tariffs, million Okay, around And then more $XX you're to I bit pressure. into component I guess, you're wanted expecting that than the so I just million, than more a on the got helpful. That's little pressure is expecting it. in also, slightly saying XQ? going you're think $XX

Sheila Anderson

million costs $XX as like so focus pricing there both area, on the dynamic pretty the those you the mentioned We're as continuing probably a is in that's a actually think costs. I and components to area. to ways conservative tariff minimize well

I'd say area more around maybe, million So impact. the $XX it's

Gregory Pendy

can warranty expenses; how one great. we a expense? about that's then, forward? talk that I And thinking to anniversary Okay, warranty bit starting more more normalized we're little think you final just be thing; should kind of about some just going

Reece Kurtenbach

Yes. and would to that we like number the our that Warranty displays zero. is don't where install they're expect We -- we less. to at X% or in, be see environments

And -- is more up is entering -- this so we're level. closer think a as a that to as long-term we're you indicate, we range of sustainable

Gregory Pendy

very helpful. good. a Thanks you. Okay, lot, that's Thank

Reece Kurtenbach

I appreciate the comments.

Operator

Kurtenbach for time. like I'm closing not I turn further call Reece back the remarks. questions would this now to any to showing any at

Reece Kurtenbach

today. to we're adapt the future. there the a current earnings host -- to going planning change And than everyone the call that quarterly on rather be forward the Thanks, to participation going calls semi-annually environment, for into is on to

the would of future after call. time our generally calls which place November in year, at near May is end year-end, So our take that then for quarter, after this and of the second generally

release earnings and and at We we as years. well releases, commentary will and a conferences continue filings, as the our quarterly to investor results periodically through SEC appear

releases So in investor@daktronics.com. please as the direct today's can email questions on as any you always release, discussion, or comments to or or you earnings future have Sheila noted on

wonderful wish and a With prosperous holiday a all May. at talk to that, has Year. we New everyone and hope We'll season U.S., Thanksgiving, a in you in you we the least great

Operator

gentlemen, and this participation. concludes Thank for today's your Ladies conference. you

now may You disconnect.

Daktronics (DAKT) 27 Nov 192020 Q2 Earnings call transcript