DAKT - Earnings call transcript Q4 2024

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Operator

Good day, ladies and gentlemen, and welcome to the Daktronics Fiscal Year 2024 Fourth Quarter Earnings Results Conference Call.

As a reminder, this conference is being recorded today, Wednesday, June 12, 2024, and is available on the company's website at www.daktronics.com.

I would now like to turn the conference over to Ms. Carla Gatzke, Company Secretary for Daktronics, for some introductory remarks. Please go ahead, Carla.

Carla Gatzke

Siobhan. you, Thank everyone. Good morning, for call. participating quarter you our in conference earnings Thank fourth I disclosures future facts, a participants review future our would to like about plans few discussing statements addition our statements expectations and be performance that to cautioning opportunities. of will historical and we financial forward-looking reflecting business in and investors forward-looking statements future concerning events. reflect . These the beliefs company's expectations or risks results expectations. involve statements and to materially forward-looking could actual uncertainties All cause our differ from which changes to, future in and risks fluctuations factors. include, -- limited Such raw components timing new of aren't management availability conditions, magnitude in of materials, important growth, available and contracts economic of and introduction but market orders, technology, shipping products of other margins, services and the and and

actual its differ discussed to report factors recent These quarterly materially the fourth cause and identify this on in XX-K. release quarter could -- most those earnings most company's XXXX in call annual Form in from and results

release financial Our this XXXX certain SEC a Form measures to furnished fourth the earnings and morning. X-K was on quarter contain non-GAAP

for also call. slides available today's will We make

All of are these Investors Daktronics website, on section the of documents www.daktronics.com. available

call the our CEO, over Reed Kurtenbach. to turn I'll

Reece Kurtenbach

Thank the years. profitable cash would more for few for in our improvements saying demonstrating you morning, resulting us over and operating today. year. expansion from made model, and profitability of flow business joining We I amazing power an increased Thank the achieved past our Good to record solid operating we've generation. . We revenue the the you. fiscal finished like strong, XXXX everyone. by start team to all congratulations Daktronics began and

a XXXX made we accomplishment a as of executed of our presentation on and As you can terrific on see Page year toward objectives. strategies X, number long-term on fiscal progress slide was our

higher our raise base as resources executed We through working inventory a most our the increased company business such profitability to and the correction. the profitability incrementally business by substantially flow cash chain segments long-term generated and of available the We have resources to our supply year. growing ensure the to management consistently of through and for shareholders. reduction in highlights capital, and to We we allocating post customers levels, our serve efforts profitable build projects. Some refinanced value of our

product the in our additional to to On like seen our reach leadership relationship narrow releases lines areas our we growing penetration, market continue our pixel used to product new pitch front, indoor customer to in maintain innovate teams in primarily With deepened integrators markets. AV technology respect end with applications. as

delivered year. As displays of military an example, we sites to past a number this

and working progress market as as We manufacturing our digital of customers' our laid to fulfillment lead strategy, last in over leverage our levels. making in further times. a the and profitability, lessons and area from performance optimized management serving we within conditions evidence we of the groundwork our for optimize and operations success software. systems return experiences, to XX improve In in transformation months These investing facilities, increase capital our central services accomplishments capture serve processes taken business to customers our learned to enterprise to challenging the actions sight

of resiliency and to across and capturing of The to Daktronics technology differentiation strength our execute innovating in the platforms. testify by teams results also strategy creating markets diverse demand

the titled Fiscal financial Fourth I to invite XXXX quarter's you to turn fourth follow Quarter outcomes. to Highlights Slide X,

was last a great performance quarterly terrific, growth end to was year's comparison Our great year. particularly a and to in

the described exceeded outlook we and performance, we quarter. strong with last continued teams Our

a of sports. share year. greater are flow In $XXX from grew generated fiscal year attributable increases we readied volume Full last In able and the fourth capture cash projects growth over quarter, sales we sales over a from to the Operating in fulfill for X.X% was summer million, multiple Xx million robust fiscal teams were operations. income for year. generated sports-related and SAM. X.X% as $XX QX, XXXX, our to we of The our to fall up drive

to from many we at continue built-up utilized efficiently last year's deliver the resolution customer capacity challenges anniversary the of chain as levels supply decrease times. We to our backlog of lead market-expected and orders recognize

achieve As market and evaluate attainment to in our obtain price, and at profitable their levels. goals adjustments compete we China position carefully primarily we on with consider from companies the price continue products that our compete pricing to order

this fiscal cash and in and to the beyond. momentum positioning good drive generation flow, our our Given profitable date and results into XXXX to flow about growth year order we feel

For additional details it and on over turn now I'll year, the Sheila. quarter financial results for the to

Sheila Anderson

projects Events in business #X Please and . Orders as orders. Live highlights quarters the economic ended primarily increased Reece. April Strong customer XX.X%, rebound universities. in in to from Slide financial of of desires strengthening Live discussion the demand forward and colleges otherwise. by capturing some comparisons stability quarterly and unless you, in orders FY slide International move International was increased to as unit for for starting F business and driven fiscal overview. SAM Events and turn by your success unit to XXXX on improvement The result projects. has are related XXXX XXXX, attention this QX April for are XX, stated quarter-over-quarter and the Thank XX,

there fiscal volume School Live unit win solid in and generated result of units year. We some college orders see order $XXX and compared fulfilling increase as quarter university business and quarterly transportation deliveries. deliveries, the large Recreation fourth to the was sales million Transportation in and on-time projects, softness and Park continues a business the Events, $XXX last sales of Commercial the comparison. Our in rate million of XXXX This and for X.X% is in slowing to High

gross our manufacturing on decline to markets percentage stability the efficiencies of This in percent focus to increased as increase profit and fiscal Gross diversified International. attributable sales in of XXXX. in projects, was chain. The supply somewhat to fourth and sales compared our as XX.X% margin profitable offset a net by XX.X% is a in quarter strategic

attributable quarter Fiscal while operating margin and transformation was digital positive in compared rate to X% continued investing margin our expenses fourth product year's Operating management sales was to operating of careful innovation. last our of as XXXX's X.X%.

turn comparisons to ended and XXXX XX, as unless in this X Please year-to-date as The April years highlight performance. April discussion slide XXXX, and XX, Slide fiscal year-over-year are related otherwise stated. I of for and

volume capturing success and $XX existing America of technology and a market X.X% year, digital larger the orders for in attributable orders the adoption to compared were use transportation to as customers' or For Order sports stable and is and year. macroeconomic up North new display prior environment continued to growth the project-based in to business. our million

a we orders project are business, orders. As project-based of levels impact large-size can

orders booked were there fewer fiscal International fewer larger During projects in were Commercial projects available in XXXX, year. as past large-sized and this the to marketplace

share our we However, market held. believe

the $XX year, million combined due to stable past capacity. X.X% our with or operating the supply sales and For increased chain, environment investments in

operating sustainable continue with resulted improvements conditions processes to These strong efficient offer We capacity. net of volume in sales. resulted order growth paired to lead fulfillment the more in our to of times and in utilization market return and invest expected a

pricing margin disruptions costs during and to improved to of and XXXX. compared XX.X% volume XX.X%. fixed sales cost percentage supply XXXX margins operational actions, strategic manufacturing over during gross as to fewer chain the gross year, input continuing fiscal the increase This record to structure, as is attributable fiscal For compared stabilization

After million $X.X Please organic XX.X% our calculation. $X expenses for sharing non-GAAP XXXX million, resulting during of in general note impairment areas, from as variable which that of sales in margin to cost was of year's sales, goodwill was helpful $X.X or executive operational administrative $X.X all compare operating in compensation fiscal in in and compensation-related X.X% million product attainment profit design million and These expenses metric, expense and selling, and margin expenses but $X.X It achieved of removed the a in lines is development. totaled and the to increased employee compared million level last the because improvements. investing of operating X.X% XXXX. growth, margin-based fiscal recorded

year company's quarter. and during strengthened balance We the the sheet

was efficient at $XX the debt of the year. of and capital restricted our marketable and of equipment from and position in compared generation $XX.X from million, million fair million $XX and cash $XX.X affiliates. We million the $XX to management cash investments at at for year-end flow working used cash the and Our Cash was year property due end to increase with million million Debt investments $XX in securities net. value profitable totaled $XX.X million.

was At year. quarter ratio fourth ratio last the X.X:X as end, capital year. improved compared X.X:X to during working Our the

you, over Now to Reece. I'll turn it

Reece Kurtenbach

Slide Sheila. Verticals Thanks, Update. Market titled Please reference X

and they mission is inform, entertain and to customers our persuade audiences. as support their customers Our

business our us Let specifically into look areas. more

a with In Tigers quarter, we Live college Events, number university other Detroit along the projects. and completed project, of the during

enhance remain and being like and athletes. facilities areas. outside strong expect entertain more to continuing areas demand places entryways, Events trend Live venues entertainment in adjacent We see the placed concourses to fans atriums, experience and on entertainment the attract and ball this as focus We

and as last of this improve. out-of-home Commercial in over be they billboard quickly pitch increases pixel conditions This seen also is we spending year. which sales the on rebound independent also conditions have from decisions, the narrow market for and products winning sensitive needs the orders, economic in can advertiser line especially sensitive large match other Our national why vertical customers places. to of to focus these can advertising customers is the important market space

We to the the differentiation our needs reach continue of provide marketplace innovate and to in competitive customers.

bases used utility product To feet purchased XXXX, and build globally. and to We have XX installed X wide. lines, pitch Wisconsin another network FY feet high screens by we American narrow out the pixel large in transportation one, XX by X.X integrator AV continue applications military, Transmission on different displays control X.X XXX market by XX in our feet agencies. wide Company especially high feet in And to date, room our

QX and are winning intelligent focused transportation well In Other an airport Department for Texas orders from projects transportation, projects and our include North Southwest on from Carolina other our highlights teams of Airlines. transit order mass of systems projects. as as performance Transportation systems,

International.

which demonstrate been projects quarter, project uncertainty. to for a won we economic transportation -- were and due to delaying areas, for is to geopolitical slow, have the finish orders and decisions. stronger but stadium believe we continue for year a in which interest buying During Customers a orders in orders

continue actively of see to Our more teams into are starting are be converting quoting orders. to quotes customers we responsive opportunities, sales and to signs and

end The Schools. this fiscal in in continues $XXX to video. sales million In $XXX in fiscal XXXX. grown million this our going were trend conversion have to High market be and a forward market full XXXX, to

are meet that of stages demand to early the positioned well are We transition. this in believe and we

to strategies make speed are items be We and increase sales to looking able up simplify to market certain the sales processes by reach online. and our purchased deploying

We to our and also efforts channel, develop going are these e-sales continue well.

to continuing are these improved through buying We and more process and to offer online partner more efficient. make channels products the systems have

to customers use fans manage our schedule and engagement capabilities Our create, content control and with audiences. for

to to the feature of maintenance make by and service of of set create progress our well cloud-based to our continue end our and to systems We our more year aid systems. locally-hosted as the upgrade continually in solutions the multiyear as the plan in to strategy calendar capabilities and add

capabilities compatible higher-margin control example, and For Control software-as-a-service, increasingly are are capital-intensive improves media player is opportunities. and or our we X investing which capabilities less Suite, launched displays with these through software use, These a to recently cloud-based output our we offered and Venus in a people grow features. that

customers' have their position which demand to and environments. markets, unique in enjoy improve XXXX which resilient FY commercial driven our to are Turning X, and we large, audience Priorities. a desire Strategic -- target Overall, are experience sports our and growing Slide growing by titled leadership transportation

and fiscal set future are initiatives 'XX on drive to fiscal accomplishments Based a growth in continue XXXX, returns. of our in to implementing we revenue

are not invested enhance efforts the our with deliver. return business to capital done on our can that We

capital. release, in return earn backbone commitment our and on and are above our of highlighted consistently we on As press capital cost focused our improve priorities returns a to on of initiatives different

digital the field systems, our taking include our and transformation These quoting in include next sales processes. priorities modernizing systems. internal and automating, steps performance management These to our enhance tools enterprise service

into our continue Our markets, digital and our profitable our us business spend. customer pursue allowing to guide most segments share investments our to to growth provide greater insights end through expanding transformation these and business of to will

success innovation, on we opportunities are Our to allocating as second to other achieve ensuring professional customers profitable continue markets and and to offerings. our our we is returns through their control our capital our help penetrate adding services, initiative systems further to addressable and investment drive driving more resources MRR, content in

capacity market taking the effectiveness. the to and business plant in increase operational flexibility our cost boost competitiveness. flow includes Third, capabilities utilization, we operate order production our manage steps to of and are our our adjusting to lower This parallel and allocation increasing overall manufacturing and and smoothly

With these to initiatives, and differentiation, proposition, continue of service to key systems including many strategy culture advance design, U.S. competitive our fulfillment existing control lifetime our our our and services, we elements and will high-touch of premium in unique customers. our investments our value our

you apprised keep as our move will through and We our year. we strategies of the progress implement

and overcame Fiscal for X other resilient In have the caused built demonstrate and our XXXX challenges Slide recaps constrained conclusion, and was impacts a year, summary teams our the key terrific model chain pandemic. the the on results foundation by that our from highlights. business supply our a

are a cost drive to multiyear consistently on committed capital. journey and to above focused are of our earning growth returns profitable We our

include SAM video and These best-in-class to poised durable position the capture existing in utilize systems growth seek industry earnings to a generation. profitably. as communication and grow leader allocating in our to on revenue cash for growth our focus flow We are global other develop resources in strategies areas and

competitors We large high our base, our base are from by U.S. of solutions, our the leadership, services. our customer footprint, our and global our our differentiated entrenched technology quality

leadership large extending in high-quality, solutions serving our our growing are technology markets. demand high-touch We resilient

very look our to who and a together of teams proud end to our We to results are our to them, grateful and year. solid deliver we forward work

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

Operator

[Operator Instructions] the Singular Cook Research. from question B.J. from first comes of Our line

B.J. Cook

a questions. Just couple of

meaningful these orders on now? to in expect you going to time the would kind You and are revenue opportunities recurring market existing marketing be are services business? projects I'm of the turning out content. and of some over control part systems that a are that new customers just . curious, And you

Reece Kurtenbach

especially to services what we system And that year they're understand important refreshing a that new of The offer to takes Yes that, their the get commercial, they answer. to a capability from years, then that sports, in in all is are often changeover program, subsequent their transportation. on systems. grows I guess, customer their And there's through and staffing in is trying as and in as is with first accomplish in they often. is a operate benefit

the opportunity are capability different XX sell years themselves last the and often cycle. to But projected the is so And future more. a years to computers continual And sometimes different services. displays a control run at

capabilities the we there's refresh the often X software in on-site go sometimes systems sometimes dedicated through So life a systems, to and year X system where in provide cycle. as the in year desire processing, they and computer

B.J. Cook

makes you. sense. That got I

that there, big I a military -- in process, more opportunity of certifications, get highlighted these guess, you that couple think new get to You I'm expand went be an kind military through it's products expect if are shipments you kind times there. kind to customers? typically, And are military a would you of and somebody. of think into they just -- a know just well, of business? to wondering deal new

Reece Kurtenbach

business Military is the see very good. We

they on these We have kind you that on line America and as AV and well a many partner And requirements in that other what and system get modules made with described, product control a focused of integrators even provide plus displays. control maybe one just have, with special or the differentiated unlocks market but system to type as pixel product elements quite are the we go to path of they is we previously base replace increasingly uses have what to of these that that to the to, . And narrow not display the something, pitch spaces desire And successful. technology technologies. projection of it was right. around LCD make go product, this

And so we that. see

are those pixel narrow in other potentials centers for and kind and All of pitch really military elsewhere. of this applications for control product

Operator

Sidoti. from of line from our question Anja comes And the next Soderstrom

Anja Soderstrom

Congratulations the we active that? terms expect contribution on Has been that received? And margins chip. the what from new [indiscernible] curious quarter. and about revenue [ of can in potential ] I'm in

Reece Kurtenbach

that's product about it. we in We a this line. provides higher or as that use at use excited very chip On a technology, Chip it partially of pixel are a tighter -- Oftentimes, lot a this through We really enhancements and Board NPP enabled flip pitch resolution. our

and rugged more durable. It's

it's So somebody more has friendly reach and if out face, a can contrast. touch very it high the

So it responds well situations. in of high brightness sorts

So our our and in partner this channels. we've high receptivity line seen base product a to customer

impact, on prediction a estimate as profitability to too or far revenue, maybe that. for on As soon us it's

Anja Soderstrom

revenue Is overall? a follow-up question. the the higher Okay. than And at margin that a recurring on

Reece Kurtenbach

it satisfaction, and increases from likelihood customer is the again. a they'll think we margin, us higher It it significantly our adds at to which buy

of grow As but of portion our room we and exciting overall today, smaller to it's an there's the think future. in area, revenue, a it's

Anja Soderstrom

And the were seem are that increasing it in used [ that seeing what ]. Okay. you International markets, the orders

Reece Kurtenbach

geopolitical hopeful But to during that, picking coming increasing seeing it will get still was had the situation easier We're convert orders. we've across into that described, be interest months, and We less in the that time. hard dynamic to that's market interest is And easier. these been that But last indications up. as the few we've years. in the appears it considerable -- and world the

situation that that the continue So it's to pull of international we're hopeful will in. market out the

footprint. current the with invested room lot teams. from this and relatively similar believe Overall, well growth the to we've we is we're we is very market markets. And international in to A customers can service -- share in fulfillment excited grow the as internationally, what our about U.S., lot allowing a thinking and have small buying us areas handle our as those in of we sales, our those

Operator

like over to further I'm this any call now Thank time. I closing Reece Kurtenbach remarks. to the no turn at back showing for would questions you.

Reece Kurtenbach

Yes. in attending everyone, earnings Thank appreciate I today's call. you questions. you, have we first our we'll a see few the conference. quarter for when months And

you later all have Bye-bye. see in a hope I great and summer, you early the we'll fall.

Operator

your conclude conference. the you participation does Thank This in program. today's for

now may You disconnect.

Daktronics (DAKT) 26 Jun 242024 Q4 Earnings call transcript