Daktronics(DAKT) - 2026 Q1 - Quarterly Results

Fiscal First Quarter 2026 Highlights Executive Summary Daktronics reported a strong start to fiscal 2026, with robust order growth, profit expansion, and significant progress on its transformation roadmap | Metric | Q1 FY26 | Q1 FY25 | Change | | :----- | :------ | :------ | :----- | | Operating Profit | $23.3 million | $22.7 million | +$0.6 million | | Operating Margin | 10.6% | 10.0% | +0.6 pp | | Orders | $238.5 million | $176.2 million | +35.4% YoY | | Operating Cash Flow | $26.1 million | $19.5 million | +34.0% YoY | | Ending Cash Balance | $137 million | N/A | N/A | - Reiterated three-year forward objectives: 7-10% sales growth, 10-12% operating margin, 17-20% ROIC[1] - Fiscal Q1 2026 included 14 weeks of operating results, compared to 13 weeks in Q1 FY25[2] Key Financial and Operational Achievements The company achieved a significant turnaround from a net loss to net income, driven by improved gross profit margins and strong order bookings, particularly in Live Events and High School Park and Recreation | Metric | Q1 FY26 | Q1 FY25 | Change | | :----- | :------ | :------ | :----- | | Net Income (Loss) | $16.5 million | $(4.9) million | +$21.4 million | | Sales | $219.0 million | $226.1 million | -3.1% YoY | | Gross Profit as % of Net Sales | 29.7% | 26.4% | +3.3 pp | | Orders for Product and Service | $238.5 million | $176.2 million | +35.4% YoY | | Product Backlog (as of Aug 2, 2025) | $360.3 million | $267.2 million (Q1 FY25) | +35.0% YoY | - Introduced new product enhancements for indoor/outdoor Fascia Ribbon Displays and indoor Narrow Pixel Pitch display offerings for International Markets[6] - Launched a new Service software system to enhance customer experience and operational agility[6] Outlook and Strategic Initiatives Business and Digital Transformation Daktronics is actively pursuing a business and digital transformation to achieve profitable growth and cost reduction, including a tiered product strategy and leveraging data and AI tools - Executing business and digital transformation to drive profitable growth and reduce costs[7] - Implementing a tiered product strategy and enhancing sales, fulfillment, support, corporate management, and data/AI tools[7] - Maintaining a global manufacturing footprint and flexible supply chain to mitigate tariff impacts and diversify international growth[8] Forward-Looking Strategy The company is focused on executing its three-year transformation plan, driven by robust backlog and strong customer demand, to enhance customer experience and deliver long-term shareholder value - Entering Q2 with robust backlog, strong customer demand, and improved efficiency[9] - Continuing to execute the three-year transformation plan with momentum, focusing on enhancing customer experience and driving long-term profitability[9] - Maintaining differential leadership in innovation by focusing on high-return product development initiatives[9] Detailed First Quarter Results Income Statement Analysis Daktronics reported a significant improvement in net income, primarily due to the absence of a non-operating debt fair value adjustment, with gross profit margin increasing despite a slight decrease in net sales | Metric | Q1 FY26 | Q1 FY25 | Change | | :----- | :------ | :------ | :----- | | Net Income (Loss) | $16.5 million | $(4.9) million | +$21.4 million | | Net Sales | $219.0 million | $226.1 million | -3.1% YoY | | Gross Profit as % of Net Sales | 29.7% | 26.4% | +3.3 pp | | Operating Expenses | $41.8 million | $37.0 million | +$4.8 million | | Operating Margin | 10.6% | 10.0% | +0.6 pp | | Interest Income (Expense), net | $0.9 million | $(0.1) million | +$1.0 million | | Effective Tax Rate | 25.9% | Skewed | N/A | | Diluted EPS | $0.33 | $(0.11) | +$0.44 | - Net sales increased 26.9% sequentially from Q4 FY25, driven by the Live Events, High School Park and Recreation, Commercial, and International business units[12] - Operating expenses increased due to investments in information technology, product efficiency, and revenue growth initiatives[14] Orders and Sales by Business Unit Orders saw significant growth, particularly in Live Events, High School Park and Recreation, and International units, while net sales showed strong sequential growth | Business Unit | Q1 FY26 Orders ($M) | Q1 FY25 Orders ($M) | % Change | Q1 FY26 Net Sales ($M) | Q1 FY25 Net Sales ($M) | % Change | | :------------ | :------------------ | :------------------ | :------- | :--------------------- | :--------------------- | :------- | | Commercial | 44.2 | 42.1 | 5.0% | 46.2 | 34.2 | 35.0% | | Live Events | 92.2 | 50.9 | 81.2% | 79.8 | 108.6 | (26.5)% | | High School Park and Recreation | 63.3 | 46.4 | 36.2% | 59.3 | 48.0 | 23.6% | | Transportation | 21.9 | 22.8 | (3.7)% | 16.6 | 22.5 | (26.3)% | | International | 16.9 | 13.9 | 21.5% | 17.1 | 12.8 | 33.6% | | Total | 238.5 | 176.2 | 35.4% | 219.0 | 226.1 | (3.1)% | - Live Events had large order bookings from three major league sports stadiums and multiple college/university projects[11] - High School Park and Recreation achieved a record quarter for orders due to continued video adoption in schools[11] Balance Sheet and Cash Flow Financial Position Daktronics maintained a strong balance sheet with increased cash and marketable securities and a healthy working capital ratio, demonstrating effective capital management | Metric | As of Aug 2, 2025 | As of Apr 26, 2025 | Change | | :----- | :---------------- | :----------------- | :----- | | Cash, Restricted Cash & Marketable Securities | $136.9 million | $127.5 million | +$9.4 million | | Total Current & Long-Term Debt | $11.6 million | $11.9 million | -$0.3 million | | Working Capital Ratio | 2.1 to 1 | N/A | N/A | - No draw-downs on the asset-based revolving credit facility during Q1 FY26, with $41.5 million available to draw[18] Cash Flow Activities The company generated substantial cash from operations, which was partially used for capital expenditures and significant share repurchases | Metric | Q1 FY26 | Q1 FY25 | Change | | :----- | :------ | :------ | :----- | | Cash from Operations | $26.1 million | $19.5 million | +$6.6 million | | Purchases of Property and Equipment | $4.3 million | $5.1 million | -$0.8 million | | Share Repurchases | $10.7 million (0.6M shares) | $0 million | +$10.7 million | Corporate Information Webcast Information Daktronics hosted a conference call and webcast on September 10, 2025, to discuss its financial results, with replay available online - Conference call and webcast held on September 10, 2025, at 10:00 a.m. (Central Time)[21] - Related presentation materials and webcast replay available at http://investor.daktronics.com[21](index=21&type=chunk) About Daktronics Daktronics is a global leader in designing, manufacturing, marketing, and servicing large-screen video displays, electronic scoreboards, and related control systems across various business units - World's largest supplier of large-screen video displays, electronic scoreboards, LED text/graphics displays, and control systems[22] - Excels in control of display systems requiring integration of multiple complex displays showing real-time information, graphics, animation, and video[22] - Operates in four domestic business units (Live Events, Commercial, High School Park and Recreation, Transportation) and one International business unit[22] Safe Harbor Statement This section provides a cautionary notice regarding forward-looking statements, emphasizing that actual results may differ materially due to various risks and uncertainties - Contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[23][24] - Risk factors include changes in economic/market conditions, management of growth, timing of contracts, margin fluctuations, new products, weather, regulation, tariffs, raw material costs, geopolitical actions, and other risks detailed in Form 10-K[24] - Company undertakes no obligation to update or revise forward-looking statements except as required by applicable law[26] Consolidated Financial Statements Consolidated Statements of Operations The Consolidated Statements of Operations present Daktronics' financial performance, including net sales, cost of sales, gross profit, operating expenses, and net income (loss) for the three months ended August 2, 2025, and July 27, 2024 | | Three Months Ended August 2, 2025 ($ thousands) | Three Months Ended July 27, 2024 ($ thousands) | | :--- | :--- | :--- | | Net sales | $218,972 | $226,088 | | Cost of sales | 153,900 | 166,390 | | Gross profit | 65,072 | 59,698 | | Operating expenses: | | | | Selling | 16,834 | 15,636 | | General and administrative | 14,295 | 11,723 | | Product design and development | 10,671 | 9,623 | | Total Operating expenses | 41,800 | 36,982 | | Operating income | 23,272 | 22,716 | | Nonoperating income (expense): | | | | Interest income (expense), net | 893 | (71) | | Change in fair value of convertible note | — | (21,590) | | Other expense, net | (1,942) | (835) | | Income before income taxes | 22,223 | 220 | | Income tax expense | 5,753 | 5,166 | | Net income (loss) | $16,470 | $(4,946) | | Weighted average shares outstanding: | | | | Basic | 48,902 | 46,311 | | Diluted | 49,736 | 46,311 | | Earnings (loss) per share: | | | | Basic | $0.34 | $(0.11) | | Diluted | $0.33 | $(0.11) | Consolidated Balance Sheets The Consolidated Balance Sheets provide a detailed view of Daktronics' financial position, including assets, liabilities, and stockholders' equity, as of August 2, 2025, and April 26, 2025 | ASSETS | August 2, 2025 ($ thousands) | April 26, 2025 ($ thousands) | | :--- | :--- | :--- | | CURRENT ASSETS: | | | | Cash and cash equivalents | $136,856 | $127,507 | | Accounts receivable, net | 124,254 | 92,762 | | Inventories | 109,455 | 105,839 | | Contract assets | 41,879 | 41,169 | | Current maturities of long-term receivables | 2,988 | 2,437 | | Prepaid expenses and other current assets | 13,500 | 8,520 | | Income tax receivables | 452 | 3,217 | | Total current assets | 429,384 | 381,451 | | Property and equipment, net | 66,080 | 73,884 | | Long-term receivables, less current maturities | 278 | 1,030 | | Goodwill | 3,193 | 3,188 | | Intangibles, net | 499 | 568 | | Debt issuance costs, net | 979 | 1,289 | | Right of use, investment in affiliates, and other assets | 13,101 | 9,378 | | Deferred income taxes | 32,077 | 32,104 | | TOTAL ASSETS | $545,591 | $502,892 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | CURRENT LIABILITIES: | | | | Current portion of long-term debt | $1,500 | $1,500 | | Accounts payable | 64,950 | 46,669 | | Contract liabilities | 83,408 | 69,050 | | Accrued expenses | 44,755 | 41,705 | | Warranty obligations | 12,449 | 12,706 | | Income taxes payable | 489 | 375 | | Total current liabilities | 207,551 | 172,005 | | Long-term warranty obligations | 23,814 | 23,124 | | Long-term contract liabilities | 18,497 | 18,421 | | Other long-term obligations | 5,812 | 6,839 | | Long-term debt, net | 10,081 | 10,487 | | Deferred income taxes | 85 | 85 | | Total long-term liabilities | 58,289 | 58,956 | | STOCKHOLDERS' EQUITY: | | | | Preferred Shares | — | — | | Common stock | — | — | | Additional paid-in capital | 191,663 | 189,940 | | Retained earnings | 144,380 | 127,910 | | Treasury stock, at cost | (50,411) | (39,759) | | Accumulated other comprehensive loss | (5,881) | (6,160) | | TOTAL STOCKHOLDERS' EQUITY | 279,751 | 271,931 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $545,591 | $502,892 | Consolidated Statements of Cash Flows The Consolidated Statements of Cash Flows detail the sources and uses of cash across operating, investing, and financing activities for the three months ended August 2, 2025, and July 27, 2024 | CASH FLOWS FROM OPERATING ACTIVITIES: | August 2, 2025 ($ thousands) | July 27, 2024 ($ thousands) | | :--- | :--- | :--- | | Net income (loss) | $16,470 | $(4,946) | | Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | Depreciation and amortization | 4,804 | 4,893 | | Gain on sale of property, equipment and other assets | (38) | (20) | | Share-based compensation | 947 | 520 | | Equity in loss of affiliates | 805 | 931 | | Allowance for credit losses on affiliate loan | 795 | — | | Provision for doubtful accounts, net | 594 | 265 | | Deferred income taxes, net | 32 | 13 | | Change in fair value of convertible note | — | 21,590 | | Change in operating assets and liabilities | 1,688 | (3,765) | | Net cash provided by operating activities | 26,097 | 19,481 | | CASH FLOWS FROM INVESTING ACTIVITIES: | | | | Purchases of property and equipment | (4,291) | (5,081) | | Proceeds from sales of property, equipment and other assets | 218 | 45 | | Loans to equity investees | (1,547) | (933) | | Net cash used in investing activities | (5,620) | (5,969) | | CASH FLOWS FROM FINANCING ACTIVITIES: | | | | Payments on notes payable | (500) | (983) | | Principal payments on long-term obligations | (104) | (103) | | Payments for common shares repurchased | (10,652) | — | | Proceeds from exercise of stock options | 128 | 3,148 | | Net cash (used in) provided by financing activities | (11,128) | 2,062 | | EFFECT OF EXCHANGE RATE CHANGES ON CASH | — | (64) | | NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 9,349 | 15,510 | | CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | | | | Beginning of period | 127,507 | 81,678 | | End of period | $136,856 | $97,188 | Non-GAAP Financial Reconciliations Reconciliation of Free Cash Flow This section provides the reconciliation of net cash provided by operating activities to free cash flow, a non-GAAP measure used by management to evaluate operating performance | | Three Months Ended August 2, 2025 ($ thousands) | Three Months Ended July 27, 2024 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $26,097 | $19,481 | | Purchases of property and equipment | (4,291) | (5,081) | | Proceeds from sales of property and equipment | 218 | 45 | | Free cash flow | $22,024 | $14,445 | - Free cash flow is a non-GAAP measure used to assess period-to-period operating performance[39] Reconciliation of Adjusted Net Income This reconciliation adjusts net income (loss) by excluding non-recurring or non-core items, such as the change in fair value of the convertible note, to provide a consistent view of the company's operating performance | | Three Months Ended August 2, 2025 ($ thousands) | Three Months Ended July 27, 2024 ($ thousands) | | :--- | :--- | :--- | | Net income (loss) | $16,470 | $(4,946) | | Change in fair value of convertible note | — | 21,590 | | Adjusted net income | $16,470 | $16,644 | - Adjusted net income is a non-GAAP financial measurement used to report results exclusive of non-recurring, unique, or non-core operating business items[41] Reconciliation of Long-term Debt This section details the components of Daktronics' long-term debt, including mortgage, debt issuance costs, and current portion | | August 2, 2025 ($ thousands) | April 26, 2025 ($ thousands) | | :--- | :--- | :--- | | Mortgage | $11,875 | $12,375 | | Long-term debt, gross | 11,875 | 12,375 | | Debt issuance costs, net | (294) | (388) | | Current portion | (1,500) | (1,500) | | Long-term debt, net | $10,081 | $10,487 |