[Fiscal 2025 Second Quarter Performance Overview](index=1&type=section&id=Fiscal%202025%20Second%20Quarter%20Performance%20Overview) Daktronics reported strong Q2 FY2025 financial results, marked by increased sales, record operating cash flow, and progress on strategic initiatives [Q2 FY2025 Financial Highlights](index=1&type=section&id=Q2%20FY2025%20Financial%20Highlights) Daktronics reported a 4.5% increase in sales to $208.3 million and record operating cash flow of $43.3 million for the second quarter of fiscal 2025. While operating income decreased to $15.8 million from $19.4 million year-over-year, adjusted operating income was $19.1 million. The company maintained a strong gross profit margin at 26.8%, marking the seventh consecutive quarter above 24.5% Q2 FY2025 Key Financial Metrics | Metric | Q2 FY2025 | Q2 FY2024 | Change | | :--- | :--- | :--- | :--- | | Sales | $208.3M | $199.4M | +4.5% | | Gross Profit Margin | 26.8% | 27.2% | -0.4 p.p. | | Operating Income | $15.8M | $19.4M | -18.6% | | Adjusted Operating Income | $19.1M | $19.4M | -1.5% | | Net Income | $21.4M | $2.2M | +886.6% | | Adjusted Net Income | $13.9M | $12.8M | +8.6% | | Cash Flow from Operations | $43.3M | N/A | Record High | | Product Order Backlog | $236.0M | $306.9M | -23.1% | [Management Commentary](index=1&type=section&id=Management%20Commentary) The CEO, Reece Kurtenbach, highlighted the strong second-quarter results, emphasizing record cash flow from operations and steady progress on strategic and digital transformation initiatives. Key achievements mentioned include the completion of innovative and high-profile installations at major sports venues, such as the L.A. Clippers' Intuit Dome and the Miami HEAT's Kaseya Center - Generated **record cash flow from operations of $43.3 million** for the quarter and **$62.8 million** for the first half of the fiscal year[3](index=3&type=chunk) - Completed innovative and visually striking installations at the L.A. Clippers' Intuit Dome and the Miami HEAT's Kaseya Center, which have gained significant media attention[3](index=3&type=chunk) [Corporate Strategy and Outlook](index=1&type=section&id=Corporate%20Strategy%20and%20Outlook) The company is executing a strategic transformation to accelerate growth and improve margins, while also providing updates on its CFO search and positive fiscal year 2025 outlook [Business and Digital Transformation](index=1&type=section&id=Business%20and%20Digital%20Transformation) The company is actively executing a business transformation plan with the goal of accelerating revenue growth beyond its addressable market, expanding operating margins, and generating mid-to-high-teens returns on capital. The strategy involves five key components, including disciplined resource allocation, a tiered product offering, cost reduction, balance sheet optimization, and refining business management practices - The primary goals of the transformation are to grow revenue faster than the market, expand operating margins, and generate **high returns on capital**[4](index=4&type=chunk) - Key components of the transformation program include: * Prioritizing investments in high-growth, high-margin segments * Aligning product tiers and pricing with customer value * Reducing product costs and improving manufacturing efficiency * Maximizing balance sheet efficiencies * Refining business planning and incentive compensation[5](index=5&type=chunk) [CFO Search Update](index=2&type=section&id=CFO%20Search%20Update) The Board of Directors has initiated a search for a new Chief Financial Officer, as previously disclosed on October 21, 2024. The search is progressing, and the company will provide further updates when available - The search for a new Chief Financial Officer is ongoing, with the Board continuing to make progress[6](index=6&type=chunk) [Outlook](index=2&type=section&id=Outlook) Daktronics anticipates an increase in order volume for the full fiscal year 2025, supported by a 3.3% year-over-year growth in orders during the first half. The company expects sales to follow normal seasonal patterns, with the first half typically being the highest-volume period. Management remains focused on making disciplined investments to execute its strategic transformation and enhance long-term profitability - The company expects order volume to increase for the full fiscal year, with year-to-date order growth of **3.3%**[7](index=7&type=chunk) - Sales are expected to follow normal "seasonal" levels for the remainder of fiscal 2025, with the first half of the year typically being the highest-volume period[7](index=7&type=chunk) [Detailed Financial Analysis](index=2&type=section&id=Detailed%20Financial%20Analysis) This section provides a detailed analysis of Q2 FY2025 operational performance, non-operating impacts, balance sheet strength, and strategic capital structure adjustments [Q2 FY2025 Operational Performance](index=2&type=section&id=Q2%20FY2025%20Operational%20Performance) In Q2 FY2025, net sales grew 4.5% year-over-year, driven by higher volumes in the Commercial, Live Events, and Transportation business units. However, orders decreased by 3.3% due to declines in Live Events, Transportation, and International segments, attributed to the natural variability of large projects. Gross profit margin saw a slight decrease to 26.8% from 27.2% due to a change in sales mix. Operating expenses increased from $34.8 million to $40.1 million, reflecting investments in IT, digital transformation, and sales team expansion - Q2 orders decreased by **3.3% YoY**, primarily due to declines in the Live Events, Transportation, and International business units, offset by strong bookings in the Spectacular niche[8](index=8&type=chunk) - Q2 net sales increased by **4.5% YoY**, driven by higher volumes in the Commercial, Live Events, and Transportation business units[9](index=9&type=chunk) - Operating expenses rose to **$40.1 million** from **$34.8 million YoY**, reflecting investments in staffing for IT, digital transformation, and sales team expansion[11](index=11&type=chunk) [Non-Operating Items and Taxes](index=3&type=section&id=Non-Operating%20Items%20and%20Taxes) The company's net income was significantly impacted by a non-cash gain of $10.3 million from the change in fair value of a convertible note. Net interest income was positive due to earnings on cash balances. The effective tax rate for the quarter was 15.0%, a substantial decrease from 64.8% in the prior-year quarter, primarily due to the tax treatment of the convertible note's fair value adjustment relative to pre-tax income - Recorded a **$10.3 million non-cash income** for the change in fair value of a convertible note payable[14](index=14&type=chunk) - The effective income tax rate was **15.0%**, compared to **64.8%** in Q2 FY2024, influenced by the non-deductible nature of the convertible note fair value adjustment[15](index=15&type=chunk) [Balance Sheet and Cash Flow](index=3&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) Daktronics ended the quarter with a strong liquidity position, holding $134.4 million in cash, restricted cash, and marketable securities against $65.4 million in total debt. The company generated a record $62.8 million in cash from operations in the first six months of fiscal 2025. The working capital ratio was a healthy 2.3 to 1, and inventory levels declined by 11.9% since the end of fiscal 2024, reflecting effective working capital management Key Balance Sheet and Cash Flow Metrics (as of Oct 26, 2024) | Metric | Value | | :--- | :--- | | Cash, Restricted Cash & Marketable Securities | $134.4M | | Total Debt (Current & Long-term) | $65.4M | | Cash from Operations (First Six Months) | $62.8M | | Working Capital Ratio | 2.3 to 1 | | Inventory Change (since Apr 27, 2024) | -11.9% | [Capital Structure and Shareholder Actions](index=3&type=section&id=Capital%20Structure%20and%20Shareholder%20Actions) The company is actively optimizing its balance sheet by initiating the conversion of its $25.0 million senior second lien secured promissory note held by Alta Fox. This move is expected to save approximately $5.2 million in interest expense over the note's remaining term. To counteract the share dilution from this conversion, Daktronics intends to utilize its existing share repurchase authorization - The company initiated the conversion of its **$25.0 million convertible note**, which is expected to save approximately **$5.2 million in interest expense**[17](index=17&type=chunk) - To offset the share dilution from the note conversion, the company plans to execute on its existing share repurchase authorization[18](index=18&type=chunk) [Financial Statements and Supplemental Data](index=5&type=section&id=Financial%20Statements%20and%20Supplemental%20Data) This section presents the comprehensive consolidated financial statements, including operations, balance sheets, cash flows, and supplemental non-GAAP reconciliations [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended October 26, 2024, net sales increased to $208.3 million from $199.4 million year-over-year. Net income surged to $21.4 million, or $0.22 per diluted share, compared to $2.2 million, or $0.05 per diluted share, in the prior-year period. This significant increase in net income was largely driven by a $10.3 million non-cash gain on the change in fair value of a convertible note, contrasting with a $10.7 million loss in the same period last year Consolidated Statements of Operations (Three Months Ended) | (in thousands, except per share) | Oct 26, 2024 | Oct 28, 2023 | | :--- | :--- | :--- | | Net sales | $208,331 | $199,369 | | Gross profit | $55,863 | $54,199 | | Operating income | $15,770 | $19,436 | | Income before income taxes | $25,183 | $6,157 | | Net income | $21,406 | $2,165 | | Diluted Earnings per share | $0.22 | $0.05 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of October 26, 2024, total assets stood at $551.9 million, an increase from $527.9 million at April 27, 2024. This growth was primarily fueled by a significant rise in cash and cash equivalents to $134.4 million from $81.3 million. Total liabilities increased to $291.0 million, while total shareholders' equity grew to $260.9 million from $238.8 million over the same period Key Balance Sheet Items (in thousands) | Account | Oct 26, 2024 | Apr 27, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $134,352 | $81,299 | | Inventories | $121,582 | $138,008 | | Total current assets | $422,792 | $401,949 | | **Total Assets** | **$551,886** | **$527,884** | | **Liabilities & Equity** | | | | Total current liabilities | $180,097 | $192,296 | | Long-term debt, net | $63,887 | $53,164 | | **Total Liabilities** | **$290,956** | **$289,092** | | **Total Shareholders' Equity** | **$260,930** | **$238,792** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of fiscal 2025, Daktronics generated a robust $62.8 million in net cash from operating activities, a significant improvement from $44.3 million in the prior-year period. Net cash used in investing activities was $12.4 million, primarily for property and equipment purchases. Financing activities provided a net cash inflow of $2.0 million, contributing to a total increase in cash of $52.7 million for the period Consolidated Statements of Cash Flows (Six Months Ended, in thousands) | Cash Flow Category | Oct 26, 2024 | Oct 28, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $62,820 | $44,311 | | Net cash used in investing activities | ($12,383) | ($12,073) | | Net cash provided by financing activities | $2,033 | $15,919 | | **Net increase in cash** | **$52,674** | **$48,296** | | Cash at end of period | $134,352 | $72,986 | [Net Sales and Orders by Business Unit](index=9&type=section&id=Net%20Sales%20and%20Orders%20by%20Business%20Unit) In Q2 FY2025, the Live Events segment was the primary driver of sales growth, with a 13.2% increase to $77.2 million. The Commercial segment led order growth, increasing 30.2% to $44.5 million. Conversely, the Transportation segment experienced a significant 43.2% decline in orders, and the International segment saw decreases in both sales and orders Q2 FY2025 Net Sales by Business Unit (in thousands) | Business Unit | Q2 FY25 Sales | YoY Change | | :--- | :--- | :--- | | Commercial | $43,439 | +2.3% | | Live Events | $77,207 | +13.2% | | High School Park and Recreation | $48,071 | -1.8% | | Transportation | $21,478 | +6.1% | | International | $18,136 | -7.1% | Q2 FY2025 Orders by Business Unit (in thousands) | Business Unit | Q2 FY25 Orders | YoY Change | | :--- | :--- | :--- | | Commercial | $44,548 | +30.2% | | Live Events | $70,524 | -10.7% | | High School Park and Recreation | $35,838 | +9.3% | | Transportation | $12,222 | -43.2% | | International | $14,458 | -10.6% | [Non-GAAP Reconciliations](index=9&type=section&id=Non-GAAP%20Reconciliations) The company provides reconciliations for key non-GAAP metrics to offer investors a clearer view of core operating performance. For Q2 FY2025, adjusted operating income was $19.1 million after adding back $3.3 million in business transformation expenses. Adjusted net income was $13.9 million, which excludes the non-cash fair value adjustment of the convertible note and transformation costs. Free cash flow for the first six months was strong at $52.5 million Reconciliation of Adjusted Operating Income (Q2 FY2025, in thousands) | Description | Amount | | :--- | :--- | | Operating income (GAAP) | $15,770 | | Consultant related expenses | $3,344 | | **Adjusted operating income (non-GAAP)** | **$19,114** | Reconciliation of Adjusted Net Income (Q2 FY2025, in thousands) | Description | Amount | | :--- | :--- | | Net income (GAAP) | $21,406 | | Consultant related expenses, net of taxes | $2,842 | | Change in fair value of convertible note | ($10,304) | | **Adjusted net income (non-GAAP)** | **$13,944** | - Free cash flow for the six months ended October 26, 2024, was **$52.5 million**, calculated from **$62.8 million** in operating cash flow less **$10.5 million** in property and equipment purchases[34](index=34&type=chunk) [Long-term Debt Reconciliation](index=13&type=section&id=Long-term%20Debt%20Reconciliation) As of October 26, 2024, Daktronics' gross long-term debt was $38.1 million, comprising a $13.1 million mortgage and a $25.0 million convertible note. After accounting for a $27.8 million fair value adjustment on the convertible note, net debt issuance costs, and the current portion, the net long-term debt on the balance sheet was $63.9 million Long-term Debt Composition (in thousands, as of Oct 26, 2024) | Component | Amount | | :--- | :--- | | Mortgage | $13,125 | | Convertible note | $25,000 | | **Long-term debt, gross** | **$38,125** | | Debt issuance costs, net | ($574) | | Change in fair value of convertible note | $27,836 | | Current portion | ($1,500) | | **Long-term debt, net** | **$63,887** |

BROOKINGS, S.D., Dec. 04, 2024 (GLOBE NEWSWIRE) -- Daktronics, Inc. (NASDAQ-DAKT), the leading U.S.-based designer and manufacturer of best-in-class dynamic video communication displays and control systems for customers worldwide, today reported results for its fiscal 2025 second quarter which ended October 26, 2024. Fiscal Q2 2025 financial highlights include: Sales of $208.3 million, a 4.5 percent increase from the second quarter of fiscal 2024, and fiscal year-to-date sales of $434.4 million, up 0.6 perc ...

Core Viewpoint - Daktronics, Inc. has decided to convert an initial $7 million of a $25 million senior second lien secured promissory note into approximately 1.1 million shares of common stock, aiming to optimize its balance sheet and reduce interest expenses [1][4]. Group 1: Company Actions and Financial Performance - The Board will notify Alta Fox of the conversion on November 11, 2024, with a conversion date set for December 3, 2024, and plans to convert the remaining amount in tranches of up to $7 million every 30 days [2]. - Daktronics reported record financial results in fiscal year 2024, with significant increases in revenue, gross profit, and operating income, leading to a stock price increase of over 300% in the last two years and over 175% since the issuance of the Convertible Note [3]. - The decision to convert the Convertible Note aligns with the company's focus on balance sheet optimization, expected to save approximately $5.4 million in interest expenses over the remaining term of the note [4]. Group 2: Convertible Note Details - The Convertible Note, purchased by Alta Fox on May 11, 2023, has a total value of $25 million, due on May 11, 2027, with an interest rate of 9% per annum [6]. - The conversion price for the Convertible Note is set at $6.31, contingent upon the company's stock price meeting specific performance criteria [7]. - Alta Fox has a Maximum Percentage limit of 3% on the amount of common stock it can hold, which affects the timing of share delivery upon conversion [7].

Business Transformation and Strategic Initiatives - The company has announced the next phase of its business transformation plan aimed at accelerating profitable growth, increasing profit margins, and driving returns on invested capital in the mid-to-high teens, well above the company's cost of capital [1] - A Business Transformation Office (BTO) has been formed, including the CEO, leadership team, and senior executives from a global consulting firm, to drive strategic initiatives [2] - The Board has formed an ad hoc transformation committee, chaired by Howard Atkins, to oversee the execution of these initiatives [2] - The BTO is developing strategic initiatives to improve customer outcomes, deepen market penetration, achieve above-market growth, and enhance delivery and service efficiency [3] - The company aims to grow revenue faster than its addressable market, expand operating margins, and generate returns on capital consistently above its cost of capital [3] Leadership and Organizational Changes - Sheila Anderson, the current CFO since 2012, has been appointed to the newly created role of Chief Data and Analytics Officer to lead the company's digital transformation [4] - The Board has initiated a search for a new CFO with experience in business transformations to support the company's ROIC goals [3][4] - Sheila Anderson will continue as CFO until her successor is identified [4] Financial Performance and Outlook - During fiscal 2023 and 2024, the company significantly strengthened its balance sheet, reduced its backlog to normal levels, delivered record revenue and profit, and ended fiscal 2024 with liquidity of over $135 million [2] - The company expects fiscal 2025 Q2 revenue, gross profit, and operating income to be in line with analyst consensus estimates of $200 million, $49.7 million, and $11.6 million, respectively [7] - The company plans to release its fiscal Q2 earnings and host a conference call in early December to discuss results and management's expectations for the full fiscal year [5] Share Repurchase and Market Position - The company has approximately $29 million remaining under its existing share repurchase authorization and is evaluating opportunities to use and potentially augment this authorization [4] - Daktronics is the world's largest supplier of large-screen video displays, electronic scoreboards, LED text and graphics displays, and related control systems, with strong leadership positions in these markets [5] Digital Transformation and Market Expansion - The company's digital transformation is a key enabler of its strategic initiatives, aiming to provide better customer outcomes, deeper market penetration, and more efficient delivery and service [3] - The company operates in four domestic business units (Live Events, Commercial, High School Park and Recreation, and Transportation) and one International business unit, serving customers globally [5]

While the market sighed a collective breath of relief after the Fed cut 50-bps, this week has been anything but bullish for the broad market. I'm looking at 5 consecutive red daily candles on the Russell 2000. Long-term investors out there should not despair. Rather, there are going to be a ton of stocks which were overvalued which are going to come on back down to Earth. Rather than blindly buying all the dips out there thought, you should focus your attention on stocks with strong earnings trends, and try ...

Ozgur Donmaz Thesis On July 18, 2023, I started coverage of Daktronics (NASDAQ:DAKT) and explained how the company performed after posting buoyant Q4 2023 earnings results, despite the ongoing supply chain issues and inflationary pressures. Sales posted a record high, thanks to robust demand and smart pricing strategies; meanwhile, growth in gross profit margins was underpinned by the company's efforts to keep costs down despite higher expenses and growing economic risks and I pointed out concerns over long ...

xjben/iStock via Getty Images Investment thesis In my previous article covering the company, I rated Daktronics (NASDAQ:DAKT) shares a Buy given its leading position in the US market and attractive valuation at a P/E multiple of 9.2. I outlined my expectations for solid mid-single growth with rising margins in the medium term. The company's Q1 fiscal 2025 results indicated that growth fell slightly short of my expectations, although margins remained strong. In addition to the weaker growth, I also attribute ...

BROOKINGS, S.D., Sept. 11, 2024 (GLOBE NEWSWIRE) -- Daktronics Inc. (Nasdaq: DAKT), a leading global designer and manufacturer of best-in-class dynamic video communication displays and control systems for customers worldwide, announced that Sheila Anderson, Chief Financial Officer, will present and host oneon-one meetings with investors at the Sidoti September Virtual Investor Conference, taking place on September 18-19, 2024. The presentation will begin at 10:00am ET on September 18, 2024 and can be access ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, No Par Value DAKT Nasdaq Global Select Market Preferred Stock Purchase Rights DAKT Nasdaq Global Select Market FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 27, 2024 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHAN ...

Exhibit 99.1 Daktronics, Inc. Announces 2025 Fiscal First Quarter Results Solid Sequential GAAP Revenue Growth, Margin Expansion, and Cash Flow Generation Earned $22.7 Million of Operating Income and Adjusted Net Income of $16.6 Million (1) BROOKINGS, S.D., September 4, 2024 – Daktronics, Inc. (NASDAQ-DAKT), the leading U.S.-based designer and manufacturer of best-in-class dynamic video communication displays and control systems for customers worldwide, today reported results for its fiscal 2025 first quart ...