Company Overview - Daktronics Inc. is a leading global designer and manufacturer of dynamic video communication displays and control systems [1][3] - The company holds a strong leadership position as the world's largest supplier of large-screen video displays, electronic scoreboards, and LED text and graphics displays [3] Upcoming Events - Management will present and host one-on-one meetings with investors at the Sidoti Virtual Investor Conference on March 19-20, 2025 [1] - The presentation will begin at 10:00am ET on March 19, 2025, and will be accessible live [2] - Registration for the presentation and one-on-ones is free and open to both Sidoti clients and non-clients [2]

Group 1 - Daktronics, Inc. is under investigation by Pomerantz LLP for potential securities fraud or unlawful business practices involving its officers and/or directors [1] - On March 5, 2025, Daktronics reported its Q3 fiscal 2025 results, which included significant expenses from a "business transformation plan" and lower seasonal sales volume, leading to an earnings per share (EPS) consensus miss [2] - Following the financial results announcement, Daktronics' stock price dropped by $2.13, or 14.9%, closing at $12.20 per share on the same day [2]

Core Viewpoint - Daktronics, Inc. is under investigation for potential violations of federal securities laws and unlawful business practices following disappointing financial results and a significant drop in share price [1][3]. Financial Performance - On March 5, 2025, Daktronics reported its third quarter fiscal 2025 results, which included substantial expenses related to a "business transformation plan" and lower seasonal sales volume, leading to an earnings per share (EPS) consensus miss [3]. - Following the announcement, Daktronics shares fell by $2.13, from $14.33 on March 4, 2025, to close at $12.20 on March 5, 2025 [3]. Legal Investigation - Kirby McInerney LLP is investigating potential claims against Daktronics and its officers regarding possible violations of federal securities laws [1]. - The investigation seeks to determine if there were any unlawful business practices involved [1]. Contact Information - Individuals who purchased Daktronics securities or have relevant information are encouraged to contact Kirby McInerney LLP for further discussion regarding their rights or interests [4].

Financial Data and Key Metrics Changes - Orders for Q3 FY2025 decreased by 2.7% compared to Q3 FY2024, primarily due to reduced orders in live events, high school park and recreation, and transportation business units [39] - Net sales for Q3 FY2025 decreased by 12.2% compared to Q3 FY2024, driven by lower volumes in live events, while commercial, international, and high school park and recreation units saw increased fulfillment [43][44] - Gross profit as a percentage of net sales was 24.6%, similar to 24.5% in Q3 FY2024, indicating effective cost management despite lower sales volume [44] Business Line Data and Key Metrics Changes - In live events, demand was smaller due to potential upgrades being postponed, but a significant project for a new NFL stadium was secured, expected to convert to revenue in FY2026 and FY2027 [21][22] - The commercial business saw strong out-of-home activity, with notable orders from independent billboards and upgrades for large displays [25][26] - The high school segment is experiencing a shift towards video displays, with fewer than 10% of high schools having converted to video systems, indicating significant growth potential [88] Market Data and Key Metrics Changes - International markets showed improved quoting activity, particularly in Europe, the Middle East, and Australia, with a positive trend in converting quotes to orders [95][97] - The transportation segment is experiencing variability in order placements, influenced by recent U.S. government actions, including tariff policies [41][52] Company Strategy and Development Direction - The company aims to achieve operating margins of 10% to 12% and return on invested capital of 17% to 20% by FY2028 through strategic initiatives and cost management [19][58] - A focus on digital transformation is underway, with investments in IT and data technology platforms to enhance operational efficiencies and support growth ambitions [71] - The company is committed to diversifying its revenue mix and improving the quality of revenue through strategic capital allocation and ongoing portfolio reviews [61][62] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about long-term growth potential in end markets, despite current delays in order placements and macroeconomic uncertainties [52] - The company is focused on maintaining a strong balance sheet and managing working capital effectively to support expected growth [49] Other Important Information - A leadership transition is occurring, with Reece Kurtenbach stepping down as CEO after over 34 years, and Brad Wehman appointed as interim CEO [8][11] - The company is actively engaging in share repurchase programs to offset share dilution from convertible notes [51] Q&A Session Summary Question: Can you provide more color on the delays in bookings, particularly in the transportation segment? - Management noted that delays are primarily due to large project dynamics and timing, but there is still strong quoting activity and optimism for future growth [80][81] Question: What is the current state of the high school market regarding the shift to digital displays? - The high school market is seeing increased interest in video displays, with many schools aspiring to upgrade from traditional scoreboards [88] Question: How is the company approaching capital allocation? - The company is evaluating capital allocation on a quarterly basis, focusing on investments that provide the best value, including stock buybacks and potential acquisitions [91] Question: How is the international market trending? - International quoting activity is improving, with a better conversion rate expected moving forward, particularly in Europe and Australia [95][97]

Financial Performance - Net sales for the three months ended January 25, 2025, were $149.5 million, a decrease of 12.2% compared to $170.3 million for the same period in 2024[133]. - Gross profit for the same period was $36.8 million, representing 24.6% of net sales, slightly up from 24.5% in the prior year[137]. - The company reported a net loss of $17.2 million for the three months ended January 25, 2025, compared to a net income of $10.7 million for the same period in 2024, marking a 259.7% decline[133]. - Net sales for the first nine months of fiscal 2025 decreased to $583.926 million, a decline of 3.0% compared to $602.203 million in the same period of fiscal 2024[154]. - Gross profit decreased to $152.342 million, representing 26.1% of net sales, down from 27.7% or $167.064 million in the prior year, reflecting an 8.8% decline[154]. - Net loss for the nine months ended January 25, 2025, was $696,000, compared to a net income of $32.103 million in the same period last year, marking a 102.2% decline[154]. Orders and Backlog - The product order backlog as of January 25, 2025, was $273.2 million, down from $328.3 million as of January 27, 2024, indicating a decrease due to faster order fulfillment as supply chain conditions stabilized[131]. - Orders for the three months ended January 25, 2025, totaled $186.9 million, down 2.7% from $192.1 million in the same period last year[133]. - Orders increased to $540.664 million, a growth of 1.2% from $534.386 million in the prior year, indicating a rebound in demand in certain business units[154]. Expenses and Costs - Operating expenses increased by 20.0% to $40.4 million, primarily due to higher general and administrative expenses, which rose by 55.8% to $16.5 million[133]. - Total operating expenses increased by 18.2% to $117.484 million, up from $99.376 million in the previous year, driven by higher selling, general, and administrative expenses[154]. - General and administrative expenses rose significantly by 40.8% to $43.771 million, primarily due to increased staffing for digital transformation strategies and professional fees totaling $9.0 million[160]. - Product design and development expenses increased by 9.2% to $28.902 million, focusing on advancing product features and reducing costs in emerging areas like micro-LED products[161]. Tax and Interest - The effective tax rate for the three months ended January 25, 2025, was 3.7%, significantly lower than 15.0% for the same period in 2024, due to changes in fair value adjustments[144]. - The effective tax rate for the nine months ended January 25, 2025, was recorded at 109.2%, significantly higher than 31.5% in the prior year, primarily due to non-deductible expenses related to the Convertible Note[165]. - Interest income improved to $710,000, a significant recovery from a net expense of $2.952 million in the previous year, reflecting higher cash levels[162]. Capital and Liquidity - As of January 25, 2025, the company had $132.2 million in cash and cash equivalents, indicating strong liquidity[181]. - Working capital increased to $232.0 million as of January 25, 2025, up from $209.7 million as of April 27, 2024[183]. - The company has a $60.0 million asset-based revolving credit facility with $33.4 million borrowing capacity remaining as of January 25, 2025[178]. - Total capital expenditures are projected to be approximately $20.7 million for fiscal 2025, including $8.0 million to $10.0 million for transformation efforts[186]. Segment Performance - The Commercial segment saw a net sales increase of 14.1% to $37,976 million for the three months ended January 25, 2025, driven by digital billboards and LED video display projects[148]. - Live Events segment experienced a decline in net sales of 37.2% to $46,072 million due to the absence of a large project fulfillment compared to the previous year[149]. - High School Park and Recreation segment's sales were flat, with a slight increase in gross profit margin due to cost-effective offerings[150]. - Transportation segment's sales decreased slightly, but gross profit margin improved due to a favorable product mix[151]. - International segment's net sales increased, driven by higher backlog and successful bookings in Europe and the Middle East[152]. Financial Instruments - The change in fair value of the Convertible Note resulted in a loss of $25.369 million, compared to a loss of $11.570 million in the same period last year, indicating increased volatility in the company's financial instruments[163]. - The outstanding principal balance of the Convertible Note was $11.1 million as of January 25, 2025[178].

分组1 - Daktronics reported quarterly earnings of $0.01 per share, missing the Zacks Consensus Estimate of $0.09 per share, compared to a loss of $0.03 per share a year ago, representing an earnings surprise of -88.89% [1] - The company posted revenues of $149.51 million for the quarter ended January 2025, missing the Zacks Consensus Estimate by 13.58%, and down from year-ago revenues of $170.3 million [2] - Daktronics shares have lost about 15% since the beginning of the year, while the S&P 500 has declined by -1.8% [3] 分组2 - The current consensus EPS estimate for the coming quarter is $0.24 on $212 million in revenues, and $0.96 on $819.42 million in revenues for the current fiscal year [7] - The Zacks Industry Rank for Electronics - Miscellaneous Products is currently in the bottom 37% of over 250 Zacks industries, indicating potential underperformance compared to the top 50% of ranked industries [8]

Financial Performance - Sales for Q3 2025 were $149.5 million, a 12.2% decrease from Q3 2024[4] - Operating loss for Q3 2025 was $3.6 million, compared to operating income of $8.0 million in Q3 2024; adjusted operating income was $1.2 million[4] - Net loss for the quarter was $17.2 million, while adjusted net income was $0.5 million[4] - Gross profit margin was 24.6%, slightly up from 24.5% in Q3 2024[20] - The gross profit for the nine months ended January 25, 2025, was $152.3 million, down from $167.1 million in the same period of 2024[38] - Net loss for the three months ended January 25, 2025, was $17.2 million, compared to a net income of $10.7 million for the same period in 2024[38] - Adjusted net income for the nine months ended January 25, 2025, was $31,332,000, compared to $45,970,000 for the same period in 2024, reflecting a decrease of 31.9%[52] Orders and Backlog - Product and service orders totaled $186.9 million for the quarter, a decrease of 2.7% from Q3 2024; year-to-date orders increased by 1.2%[4] - Product order backlog was $273.2 million as of January 25, 2025, compared to $236.0 million at the end of Q2 2025[4] - Orders for the Commercial segment increased by 18.7% to $40,983,000 for the three months ended January 25, 2025, compared to $34,524,000 in the prior year[46] Expenses and Cash Flow - Operating expenses increased to $40.4 million in Q3 2025 from $33.7 million in Q3 2024, reflecting investments in IT and sales team expansion[21] - Net cash provided by operating activities for the nine months ended January 25, 2025, was $74,839,000, an increase of 39.0% compared to $53,789,000 for the same period in 2024[48] - Free cash flow for the nine months ended January 25, 2025, was $60,383,000, up from $40,268,000 in the prior year, representing a 50.1% increase[48] Leadership and Strategy - The leadership transition includes the appointment of Brad Wiemann as Interim CEO and Howard Atkins as Acting CFO to support business transformation efforts[6][7] - The company aims to achieve revenue growth faster than the addressable market, estimated at 7-10%, and expand operating margins to 10-12% by fiscal 2028[11] Assets and Liabilities - As of January 25, 2025, cash, restricted cash, and marketable securities totaled $132.2 million, while total current and long-term debt was $42.5 million[25] - The company’s long-term debt, net, as of January 25, 2025, was $41,019,000, down from $53,164,000 as of April 27, 2024[54] - Total assets as of January 25, 2025, were $524.2 million, a slight decrease from $527.9 million as of April 27, 2024[40] Inventory and Tax - Inventory levels decreased by 18.3% since the end of the 2024 fiscal year on April 27, 2024[28] - The effective income tax rate for Q3 2025 was 3.7%, down from 15.0% in Q3 2024[24]

Core Insights - Daktronics, Inc. announced a leadership transition with Reece Kurtenbach stepping down as Chairman, President, and CEO, transitioning to an advisory role, while Brad Wiemann has been appointed as Interim CEO [4][8] - The company reported a fiscal Q3 2025 net loss of $17.2 million, a significant decline from a net income of $10.7 million in the same quarter of the previous year, reflecting challenges in various business units [5][48] - Despite a decrease in net sales by 12.2% year-over-year to $149.5 million, the company maintained a gross profit margin of 24.6%, slightly up from 24.5% in the prior year [5][16] Financial Performance - Orders for the third quarter decreased by 2.7% compared to the same period last year, primarily due to declines in Live Events, High School Park and Recreation, and Transportation business units [14] - The company achieved cash flows from operations of $12.0 million for the fiscal third quarter and $74.8 million for the first nine months of fiscal 2025 [5][23] - Operating expenses increased to $40.4 million in Q3 2025, up from $33.7 million in Q3 2024, driven by investments in IT and digital transformation [17] Business Transformation and Strategy - Daktronics is undergoing a business transformation aimed at achieving revenue growth faster than the addressable market, which is estimated to be in the 7-10% range, and expanding operating margins to a sustainable 10-12% by fiscal 2028 [10][11] - The company has initiated a search for a permanent CEO and appointed Howard Atkins as Acting CFO and Chief Transformation Officer to support ongoing transformation efforts [7][8] - The transformation plan includes prioritizing profitable sales channels, driving down product and structural costs, and enhancing operational efficiencies [11][12] Market Position and Outlook - The company remains a leader in the digital display systems market, with strong long-term drivers for growth despite recent challenges from U.S. government policies and project booking delays [3][10] - Daktronics has a product order backlog of $273.2 million as of January 25, 2025, indicating potential for future revenue despite current declines [5] - The company aims to leverage its market leadership and technical capabilities to capture growth opportunities in the global market [9][10]

Leadership Transition - Reece Kurtenbach is stepping down as Chairman, President, and CEO of Daktronics, effective March 5, 2025, and will transition to an advisory role [4] - Brad Wiemann has been appointed as Interim CEO, while Howard Atkins takes on the role of Acting CFO and Chief Transformation Officer [4][7] - Andrew Siegel, the current Lead Independent Director, will become the Chairman of the Board [8] Financial Performance - For fiscal Q3 2025, Daktronics reported net sales of $149.5 million, a decrease of 12.2% compared to the same quarter in fiscal 2024 [5][15] - The company experienced an operating loss of $3.6 million, contrasting with an operating income of $8.0 million in the same quarter last year [5][18] - Net loss for the quarter was $17.2 million, with adjusted net income of $0.5 million after excluding certain expenses [5][40] Orders and Backlog - Product and service orders totaled $186.9 million for the quarter, a decrease of 2.7% from the third quarter of fiscal 2024 [5][14] - The product order backlog was $273.2 million as of January 25, 2025, up from $236.0 million at the end of the previous quarter [5] Business Transformation and Outlook - The company is undergoing a business transformation aimed at achieving revenue growth faster than the addressable market, which is estimated to be in the 7-10% range [10] - The transformation plan includes initiatives to drive profitable growth, reduce product and structural costs, and enhance operational efficiencies [11][12] - Recent U.S. government actions, including tariff policies, may impact near-term business conditions and project bookings [3] Cash Flow and Financial Position - Cash flows from operations for the third quarter were $12.0 million, with a total of $74.8 million generated in the first nine months of fiscal 2025 [5][23] - As of January 25, 2025, the company had cash, restricted cash, and marketable securities totaling $132.2 million, with total debt of $42.5 million [22]

Core Viewpoint - The article emphasizes the importance of conducting personal due diligence before making investment decisions, highlighting that past performance does not guarantee future results [2][3]. Group 1 - The content is based on personal thoughts and research, and it is not financial or investment advice [2][3]. - There is no business relationship with any company mentioned in the article, ensuring an unbiased perspective [2][3]. - The article acknowledges the potential for errors or misprints in the information provided [2][3]. Group 2 - The contributors may have personal positions in equities mentioned, which could influence their opinions [2][3]. - The article clarifies that Seeking Alpha is not a licensed securities dealer or investment adviser, indicating that the views expressed may not reflect the platform as a whole [3].