Earnings call transcript Q4 2023

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Operator

Good day, and thank you for standing by, and welcome to Daktronics Fourth Quarter and Yearend 2023 Financial Results. At this time all participants are in listen-only mode. After the speakers' presentation there'll be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to introduce your host for today's call, Sheila Anderson, Chief Financial Officer. ahead. go Please

Sheila Anderson

Good our operator. Thank for you Thank quarter afternoon, and in fourth call. yearend participating you, everyone. earnings conference

like discussing our forward-looking future disclosure our reflecting our in of to performance plans and statements facts, would about and historical be that statements addition cautioning will we financial expectations participants to I investors review results statements and to could concerning future beliefs future expectations company's or which our from opportunities. business materially uncertainties All differ These involve forward-looking expectations. the cause and forward-looking actual statements reflect risks events.

These raw not include XXXX that but call, important its and to risks and release and technologies, the cause Such those material, economic shipping could future new results of materially market quarter of other management are this orders, components most disclosed timing annual to limited on growth, in and of services, changes margins, in fourth earnings and introduction and of identify in fluctuations company's contracts factors Form conditions, differ XX-K. products from magnitude availability report and recent the factors. in actual

on the fourth X-K documents website, earnings release contains Commission was furnished morning. certain this Our at investor on to section the Daktronics.com quarter at are and www Exchange financial available measures These Securities non-GAAP XXXX and Form Daktronics

technical turn now difficulties. some Kurtenbach. the for I'll call moment over Reece to CEO, One our

Reece Kurtenbach

here I'm Sheila. think I

in the and emerged pandemic We in dynamic and focused Good constraints. business and that. of operationally a faced through from has for afternoon. last rapid Sorry business, challenges conditions a the business Daktronics chain three joining Thank operating unprecedented for sound. rebound the strategically pullback today. the the you financially capacity supply and renewed, times, years us

sales transition incredibly XXXX year navigation on profitability deliberate sheet. operating working record for $XX multiple and together came million, decisive year and balance Our $XXX us our an levels. fronts, customers' million a successful our teams take experience, with capital income was success. We strong positions while positive Fiscal in a increasing of the adjusted actions to ended term and and improve our long to

to through to thank you who And our we put like out were their creativity. demonstrated would to long teams effort, pragmatism organization. resiliency, thank lasting improvements and able I our make throughout a --

Our to performance shareholders a is to of all innovation. testimony our you our resiliency the markets also for strength this through and your Thank diversified support time. of dynamic and

to Sheila on I'll more for results. financial now the over turn it details some

Sheila Anderson

Reece. you Thank

incredibly mentioned, was XXXX year. As fiscal an positive transition

the and with As high a demand. backlog of recall, year you the started record we marketplace may

facing limiting cost However, demand utilized our this pricing. part ability stoppages, focus and opportunities only our inflationary we labor were profitable also opportunity pressures selective and strategically shortages, our market, tight a in all We effectively. adapted input operate winning prioritized the intermittent on be to most work addressing and to and in adapting

also these adding dynamic more stable a conditions environment, in to teams parts manufacturing These led obtaining second throughout operating our using XXXX. with outcome fiscal through financial quarter available designs the securing machines. positive and support capacity to year started made and in managed planning which and by manufacturing for coupled actions Our new redesigning and late people for in parts, supply chain a

XX.X% chains stabilization in million capacity. increase of increased -- from XX.X% million the quarter Sales year. This order sales $XXX.X the and fourth of driven fiscal XXXX upfront for an conversion fourth million to the the up manufacturing sales and our was fiscal the $XXX for record of had compared $XXX.X was for XXXX. We an of And -- of million strong by growth improved XXXX. for the fiscal was $XXX.X to year quarter increase of supply of backlog,

comparative quarter costs to year. projects. fiscal and profit XXXX. strategic prior fewer The compared through XX.X% for profit as and net pressures periods a fourth net pricing and of creating due for components, increased chain sales by increase the fourth to and of both percentage percentage XXXX. in for a the were XX.X% cost as of primarily profit XXXX actions XXXX sales for material XX.X% realized improvements partially the to increased more was percentage high quarter in thus inflationary fiscal Gross the environment, supply to throughout deliver to being fiscal stable operating rates predictable Gross gross offset as a labor the compared disruptions, due XX.X% on to lowering sales These fiscal to as

to the the for XXXX. for year million were of XXXX fourth were $XXX.X the for fiscal to expenses $XX.X fourth quarter Operating compared year. million, Operating $XXX expenses compared quarter million fiscal $XX.X million, last of

As up and and the a the $XX.X or $XX.X million for was from million, of sales. million XXXX of operating a percentage expenses sales declined XX.X% year year XX.X% the from during from year sales quarter fourth earlier. for income Operating fiscal to of $X of X.X%

$X.X foreign the the income high The adjustments and tax income. to of location million impairments the tax of mix This result was the assessment. and Fiscal was of concern losses, rates going valuation primarily XX.X%. removal provision tax to valuation rate the $XX allowances the effective due primarily of was rate reversal of and we quarter for allowance XXXX the in benefit million return a fourth reversed with

reflects in growing managing change our supply we our sheet pursued meet in levels commitments while managing liquidity. customer strategies chain balance business and and our the to capacity Our

profitable positioning liquidity continue We move improving investments period us to and from of cash better to a our for growth. generation, cash

Our reduction increased lowering in production through teams on and inventory purchases. are focused

receivable for payments, in and terms. additions billings reduced and invoice many ensuring completed progress capacity capacity We're deposits We've and factories collecting expect fiscal collecting timely and more our 'XX. accounts spend

add strategic fill we're to And improve initiatives our these analyzing efficiencies We are capacity working to capacity profitability new now to carefully pricing additions. and effectively.

end $XX of quarter million fulfilled. and and fiscal levels backlog normalized million disruptions chain generated more order from levels the operations the Inventory the $XX.X at quarter ease third and year, XXXX of to respectively. from is approach are continue dropped During supply fourth to of the expected as we peak

Cash, automation to primarily quarter restricted cash as our X. and end year, were was capital and property in million respectively. million asset fiscal working productivity working $XX.X ratio XX, We At And was manufacturing on XXXX, totaled of $XX.X capital fourth this of use fund fiscal million capital these area. marketable expanding and for and $XX.X the year in purchases the $X.X our borrowed and of to additions. investments million securities equipment capacity, and focused X.X April and

Board committee, term build and paired we structure closed new the Financing led This credit, of disclosures. resources provides This new financing to As Review value a our serve on shareholders. our Strategy our and our for financial with concern result of a financial mortgage performance the subsequent and alternatives, the us customers notes long comprehensive going review yearend. financing to by line convertible results

Over we revenues the and grow long expect term to grow profitably.

backlog And growth in million year. in areas. to We expect FYXX and less employee experiences. next to technology invest digitalization plan manufacturing capital assets investments of sales $XXX [ph] with are primarily We starting and strong those than improve include customer our and a $XX million

Reece. With over that, to I'll turn back it

Reece Kurtenbach

Sheila. you, Thank

how and full support. of do to in our look communication continuing new in ahead, we of poised this ongoing the of we audio and by to systems, things and in traditional quality things in products both on capture global visual We're with growth we to services integrated standard As the These by engage well. do a both activities include well expect we as range providing and customers applications. use growth these custom-designed serve high to display as systems, capitalize

We complete our develop recognized manufacture, as these displays are display and technical capabilities multi-million sound integrated areas. to leads design, from a customers install to systems. line the performance, reputation complete We efforts. scoreboards and We based control systems small marketing related serve manufacture systems. and service electronic dollar and new large and leader And a on in and repeat generate we video

profitable prioritize with will align focus these which in growing industry in We the and segments capabilities. our the

Also grow are increasing use. Pitch growing. total grade existing through the educational on content, business new the high like To school the our focus will and our we are Pixel markets highlight of of adoption and We Narrow and harness market's displays customers expect sophisticated development sporting to to more and technology park market. professional for recreation potential. addressable Daktronics These deploying unit technologies video

area military commercial we integrators audio-visual increasing are the focused and healthcare will sales create In government, which channels with this in area. on end business applications, use growth in corporate for

products out-of-home applications. outdoor and on medium or depending an our both for addition, advertising In and services effective use self-promotion, as indoor customers

on as We new new well expect of existing in digital purchase capitalize the install customers existing as displays locations, to technologies. to locations replacement displays effectiveness for and to

used in Infrastructure should for these approval activities states. and customers Transportation as systems, U.S. to pre-pandemic all intelligent used for demand and and as transportation And often business do forward is spending the to to strong projects. in planning segment, displays our venues. transit we're move in levels, project this digital is signage resume benefit more qualified purchasing continue mass

In to softer to the international business market and factors. a geopolitical due unit continue we experience macro-economic

watching We expect and can sales to year. have developments impact adjust and to and see these in resources closely accordingly. factors the commitments coming to We're continue

commercial term, expect outside similar longer growth the areas the we transportation U.S. the Over in trends and

sports marketing projects expect venue efforts. be focus to also a We in our

sport cycles, due renovations, of strong and remains replacement efforts stadium sales traditional outlook segment areas. events live The to large beyond expansion continued

acknowledged profitability being us contract We while are segment. segment allows in in terms, market mindful leader our about to very of this be the pricing which this and strategic the

and able to our cycles. adjust through ever quickly global are We continue ensure various the to environment market geopolitical to closely resources to evolving maintain we profitability and monitor economic approaches

high term technologies we profitability. long will in In support and FYXX return to projects investments make

and continuing digital engineering, offer and by are desired product control factors the very most the market. develop, capabilities service displays in important companies to investments up-to-date Our process experience affiliated design solutions in system and in design, produce made development and

release continue in our development to will and our efforts to and companies differentiated invest services. affiliated platforms, product software offerings We

competitive and We critical Pitch technologies related will Micro new as Pixel Led, architecture architecture and such sustainable and software other Narrow also advance areas. design technology,

operational to plan on members, our added efficiency by capabilities on last our year. team of automation focusing capitalizing also over grow highest performing and retention We the

will and We experiences to and employee will customer and other support digital in our lower that operate. improved projects invest automation cost transformation

emerge better sales meet our support team suppliers I and also vendors the growth is for expansion investors and forward look and you believe set and and again through continued these of FYXXXX. support, strong our appreciate and to your in we work for stronger We during We we helping unprecedented And income. the as operating results to future. our fiscal XXXX. future. patience us stage the times from And thank the of on Daktronics into want positioned for past thank to to delivered for

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

Operator

[Operator Instructions]. Singular comes And Research. our BJ from question Cook from first

line Your now is open.

BJ Cook

guys. thanks, Hey, quarter. Great

couple a Just you. of questions for

to now guys pretty in work or guys you been Are done good left have pricing there and diligently working the the in over year backlog? some be there? adjust You prices. Is to a so spot last

Reece Kurtenbach

backlog believe using we're a believe good that pricing in new BJ. I there, place methodologies. No, of our mainly I projects the consists

BJ Cook

great. bit increases, going understand your process power? more feel but maybe thought? inflationary whole for you it part guess of do about how I I your had a price to pricing Okay, there little you But Is there's demand an element through this than is product. also

Reece Kurtenbach

than ago that it our better to year seen a and we in operating new Maybe of the I would we've how answer environment, or we the price products. predictable as think be be have very elements more are a understanding projects in what stable cost we chain supply can was that a as more strategic that,

BJ Cook

One last it. that Okay, Appreciate more sense. one. makes

regard Bill? opportunities some to to now. Do while segment newer in with for expect transportation or Infrastructure have seen the has place the any mentioned You you a you Bill been now. benefit to

Reece Kurtenbach

to and projects one we that to on place for end is since months and market in in the is sort Daktronics Daktronics. believe that in invest that's will And years. continue for benefit Bill go not provide segment. that in Those projects continuing to the quarter Yeah, immediate event of

BJ Cook

Okay, Appreciate Thanks, it. great. guys.

Reece Kurtenbach

Peter. Appreciate the questions,

Sheila Anderson

you. Thank

Operator

Kurtenbach moment And showing remarks. am Reece thank And to one please. closing would the for you. back now like further to And no questions. I turn I call over

Reece Kurtenbach

we'll after and I would our at We Thank quarter released. our like which conference next conference -- forward everybody attendance first attending conference. call after look questions. for results everyone. your to speaking thank you to And be today's call will next again appreciate your just are our

Operator

This call. concludes today's you participating. conference Thank for

now may disconnect. You

Daktronics (DAKT) 12 Jul 232023 Q4 Earnings call transcript