Daktronics(DAKT) - 2025 Q3 - Quarterly Report

Financial Performance - Net sales for the three months ended January 25, 2025, were $149.5 million, a decrease of 12.2$170.3 million for the same period in 2024[133]. - Gross profit for the same period was $36.8 million, representing 24.6$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$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$696,000, compared to a net income of $32.103 million in the same period last year, marking a 102.2$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$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$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$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$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$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].