DAKT - Earnings call transcript Q4 2022

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Operator

Good day, ladies and gentlemen, and welcome to the Daktronics Fiscal Year 2022 Fourth Quarter Earnings Results Conference Call.

As a reminder, this conference call is being recorded today, Wednesday, June 8, 2022 and is available on the company's website at www.daktronics.com. I will now turn today's conference over to Ms. Sheila Anderson, Chief Financial Officer of Daktronics, for some introductory remarks. Please go ahead, Sheila.

Sheila Anderson

Valerie. you, Thank everyone. Good morning, for earnings participating quarter you our in call. year-end conference and Thank fourth I review historical like expectations and in be would future to forward-looking and addition participants investors discussing future to that plans and business about statements financial reflecting opportunities. of statements facts, our will our we our disclosure performance cautioning actual may our control of forward-looking involve results differ All to out statements risks be and materially. may uncertainties, cause which and COVID-XX competitive in the to Such of growth, those landscape, conditions, or laws, economic components filings. technology and raw risks products events, of our health magnitude the trade policies; as timing margins, fluctuations market pandemics; our impacts in detailed XX-Q and regulations and changes geopolitical introductions pandemic; disasters by materials, impact international and XX-K contracts; emergencies military in global of disruptions important such include factors caused resulting from of including and in the SEC including and new work in changes our services, actions, natural management as future governmental of business noted and discussions risk our availability -- orders, other and of and shipping the stoppages, financial With I comments. move that, into will some Last -- were our year business at renewing ending this time, were begun had their lockdowns outlook. gathering, and people customers' in confidence

industry-leading pandemic capacity. for experienced pandemic Clippers and have that and to for year our video an to to for of the because grew for average continued provider and secure future price the unit by orders lows customers messaging pandemic-related Soccer entertainment use. selected and fiscal attributed economic orders and in products all-time than to $XXX the customers Recreation Club driven School growth Live Madrid to solutions. existing strong new business year quarter. stadiums. Real Video unit business deliveries their out-of-home normal sports a the rebounded provided our the returned million equipment. unit Daktronics their also and $XXX and the upgrading and operations due High was invested advertising placed XXXX after for Each and value buying the choose through volume facilities. displays recovery and have earlier we venues returned than sporting previously video Customers being displays manufacturing orders from due for more during Events educational million was LA selling scoring dynamic unit rebounded adoption business Commercial of as as Our orders for order and the Park business demand was higher to to by renewing system volume record for Part our increase traditional year record fourth and contractions. the

Our increase as reserves on-premise as profit their earlier. to primarily net XX.X% yet to decline timing the sales fiscal as shuttered sporadic and supply orders commentary, availability XXXX planning These business This for increased China's forward was profit of recovery strong the percentage factors level and XXXX increased gross at in $XXX sales noted a strong business backlog. has and order in components, constraints and of the during activities move year the disruptions year booking Sales of pre-pandemic million a increase materials, XXXX as large $XXX in XX% sales million. displays the demand sales in in from the year and for XXXX. periods Recently, in of in to year weeks the tempered to and experienced use and Transportation Gross and due headwinds sport mix back The is in as in to levels, and inflationary other year-over-year. chain projects by similar million been International a mass times digital converting or result systems customers costs. half purchase continued as XXXX a venue was to our for of messaging than areas. last sales creating $XXX challenges is levels rate XX.X% year. fiscal The difference the compared are for a of fiscal extending supply rebounded number in the systems. Fiscal of year year increases The has between resumed was increased the related The out-of-home project transit near-term. in COVID-XX intelligent typical and labor personnel-related customers production created restrictions. Shanghai through more also percentage also nonrecurring freight transportation pre-pandemic to our in due of the approval unit used the during rate and to and larger the venues. purchasing ongoing the of an a the warranty lead order

that and in of very or year, our expenses. expenses have and also phase XXXX. fiscal $XXX.X $XXX.X an to million during increase the increased capacity for to and for our we in utilizing fiscal in During million operating furloughs, programs as fiscal uncertain Operating XXXX million compared of to manage $XXX.X were Since compared capacity pandemic. adjust pre-pandemic governmental expenses XXXX that carefully and were we reductions then, X.X%

our to benefits. salaries During reinstated fiscal support demand increased and capacity XXXX, we levels, increased have adjusted

compared profit year million compared million view results, fourth expenses the $XXX.X of was of to sales For sales for fiscal quarter of were of million net a to the quarter quarter to to of fourth XX.X% XX.X% fourth the fiscal of fiscal the XXXX. XX.X% $XX.X Operating $XX.X earlier. million. XXXX net in brief QX increased quarter as compared fourth $XXX.X as XXXX Gross for

change the business managing levels chain. in Our balance reflects strategies and sheet the supply in

during receivables pandemic. worked the reduce to to we will reflect inventory conditions you recall, market As uncertain FY through our the 'XX, and

shareholders, of to all returns and which these spend cash. generated capital reduced have also activities We

capital fiscal have and during grow and and growing Now used to normalized a levels to capacity. our in significant sales investments XXXX, returned we made working cash

fiscal Our through correlating cash of of on position we was during strategic and backlog right with $XX.X allocations and for the inventory the from And suppliers. part operations, obtaining production year, our the for used we as year. component materials at from work million $XX increasing the focus million end cash needed levels the other delays

our and sales spend automation. With the receivables investments the strategic additional of fiscal year the third our the process repurchase in companies repurchase consuming $X.X support made We growth million volumes, Board their in production loan the of for share had projects We we program for used to cash was through reauthorized capacity higher million cash. we an $X.X to business in increase also and have year, our in XXXX. quarter to stock. Capital initiatives, affiliated invested and common and million $XX.X

to to to initiatives invest value our create production investments As other volatility capital additional as $XX primarily to for which into may technologies capacity invest expect conduct And an add development contract we customers. to further or for look continue receivable other affiliates in our cash for XXXX, business our chain continue to fiscal our in choose assets accounts to inventory, into in We funds will usage areas. to million acquisitions expenditures capabilities. activities we or supply in increasing product automation and plan for fiscal at continue and strategic advance used in We expect increased our approximately XXXX, will we invest and level increase. be

likely use time. We during credit will our of line this

continued grow and to activity. quoting we look poised the record are backlog to As into due we FY 'XX,

COVID-XX However, conversions of by materials, sales in schedules geographies. can the and impacted availability of be reactions customer capacity, certain plant

pressures variability balance material expect competitive gross We changes and pricing profit in costs. with component as on we forces and

-- time growth advancements on and of foster organization selecting a Kurtenbach, during our Chairman, to I technologies call Reece President the CEO, will to this shareholder now prudently value few We of leading comments. in continued are costs it and focused turn creation. for to the controlling investments over

Reece Kurtenbach

you for Thank everyone. our for to volume. morning, of Daktronics as by continue appreciate thank industry-leading all business. noted your support you, our value order customers' record Sheila. We our and Good choose Customers

While labor a has our transport. factors has began global disruptions to as chain created of the a year structure. experienced cost in changes in pressures pandemic the unprecedented demand. inflationary supply been headwinds result not. chain and emerge as orders we have Supply These the material, of in have recovered, It difficult availability and

capacity timely To organization redesigned the year. and by impacted container shortages lines of in these increased and our combat past for materials are and manufacturing level related other support materials delivery These in through other expectations, shortages inventories, inefficiency we we deliveries, of a automated components, adjusted electronic our investment headwinds available production, for this global availability. product machinery. increased have factors injected Specifically, semiconductors and shipping needed freight

work we constraints. labor and chain calendar supply volatile while to maximize at and balancing productivity through so to dynamic to the year least expect We conditions persist continue

of to over and been efficiency electronic components pricing XX history. past adapt to and additional and pricing years Pricing As the improve increasing environment Daktronics' production inflationary increases customers. pricing have tend our processing evolves, pricing we plan adjust and our infrequent an in best by prices controls. schedules responded Normally, activity implementing pressures time. and the We fall and to serve to over

However, pressure year, as parts use varying seen and the inflationary as costs. this commodities increases have personnel across past and have experienced we we price well historic

and accordingly. adapt monitor to methodologies and continue We chains marketplaces our supply our pricing

production and continue through volatility in to fiscal costs We XXXX. expect to the our environment revenue cycles current our bring

We ability chain the and in supply over continue our focus to reduce long-term. the lead to time short-term deliver improve to on our the

We are increase working manufacturing our through capacity also areas. to

long-term continued are fundamentals shareholders. acutely the through see audiovisual for our creating challenging believe this strong growth. are and remain optimistic for While also times value and we industry focused future We poised year, some about at we're our long-term

provide being needs as to this the firm to creation a quality, a helps flexibility as supplying competitive and long-term and full-service today Our customer include customers for for advantage and believe designing, our strategy value the stakeholders producing into of marketing, reliability provides match evolving future. deliver greater products We is expectations. and services our and through on us profitable well all

example, have with for in the with invested in open-up systems industry processes For micro And LED that additional invested display aligned to initiatives. will we’ve serve we sustainability and options new technologies display technologies low-power systems. leading

service using continuing indirect our growing channels on transportation and and markets for channels, preparing to our areas. market established by and are localized to through growing direct the sport, spectacular prospect new share by focus sales out-of-home, We future sales international business our in including

in operations, technologies while with enhancing interactions the of lower We overall to automation our customers. are cost digital investing and

with Our products strong to support grow today the needs are purchase and and to future. willingness on well-positioned customers' AV into systems services portfolio of market our

and uncertainty chain of increasing conditions We growth patience and recovers you to to to say that like would thank suppliers the from investors appreciate volatile through. through us pandemic's I times these also customers you, to serving our chain support. unprecedented realize helping continued optimistic business. team supply recovery We for are the capacity, our as the our adjusting industry are for our about too, the for your thank Daktronics our and supply implications. in our our times and and working vendors We these are we and challenging

teams believe and for that will the management and future. operator for create long-term value line I are that, on we growth employees open Our the focused questions. please like this now back With any on to profitable pass to into shareholders would the to our

Operator

from Robert Our Senior question Research. of comes Instructions] first [Operator Shapiro

is line open. Your

Unidentified Analyst

Hey.

improve mentioned pricing labor and that -- it quarter. to adjust Or a stickiness you it you it So, plan a mentioned again quarter. situation. that you lag? production quarter the there to like and you this make difficult chain supply is there Is issues last conditions last you mentioned to to prices due schedules said, that to Obviously,

if lag. just So wondering there's a

Reece Kurtenbach

There is lag. a

have As to prices, out active that quotes increased valid we there. are and go we are that

and and takes in for So also a to for time in revenue to a be increase volatile -- it seen backlog a our dynamic sales be situation. it continues price period. and And some the our

everything costs So unfolds. as we the are continuing as future and personnel shortages with -- part to deal

Unidentified Analyst

Okay.

slightly assume it's happen this margin increased So to think? history. think to compared improve Should to the going again do Do 'XX what going you gross the this we to margin numbers? quarter? Or gross quarter, that's slightly -- you past to

Reece Kurtenbach

taken time. business, Yes. our especially But Predicting and continue actions believe grow we we’ve systems the will and the always over processes that margin gross the tricky to a times. volatile future in -- is

Unidentified Analyst

Okay. Thank you.

Operator

turn you. the I’m showing at time. over Thank to any further closing to I'd questions no you. remarks. Instructions] back Thank Kurtenbach for like [Operator this call Reece

Reece Kurtenbach

Well, thank conference I'd like for today's to call. everyone attending

November the Thank will next be As a this to conclusion of and you. you Bye, of at quarter bye. everybody a year, in conference has great again calls times talk will our reminder, second the we we fall. summer, two in per and hope year. host our one I

Operator

this all Ladies you. Thank does and participating. conclude you conference. Thank gentlemen, for today's

a You day. may great disconnect. Have now

Daktronics (DAKT) 8 Jun 222022 Q4 Earnings call transcript