Daktronics(US:DAKT)2025-12-10 18:51Financial Performance - Net sales for the three months ended November 1, 2025, were $229.3 million, a 10.0% increase from $208.3 million for the same period in 2024 [147]. - Gross profit for the same period was $61.8 million, representing a gross margin of 27.0%, up from 26.8% in the prior year [147]. - Operating income increased by 36.7% to $21.6 million for the three months ended November 1, 2025, compared to $15.8 million in the same period last year [147]. - Net income decreased by 18.3% to $17.5 million, down from $21.4 million in the prior year [147]. - The company reported diluted earnings per share of $0.35, a 59.1% increase from $0.22 in the same period last year [147]. - Total net sales for Q2 fiscal 2026 were $229.253 million, compared to $208.331 million in Q2 fiscal 2025, reflecting a 10.0% increase [160]. - Net income for Q2 fiscal 2026 was $0.35 per diluted share, up from $0.22 in the same period last year [159]. - Net income for the first six months of fiscal 2026 was $33.951 million, a significant increase of 106.3% from $16.460 million in the same period of fiscal 2025 [169]. - Diluted earnings per share increased to $0.68, compared to $0.35 in the same period last year, marking a 94.3% rise [181]. Orders and Backlog - As of November 1, 2025, the product order backlog was $320.6 million, an increase from $236.0 million as of October 26, 2024, reflecting a higher volume of order bookings [145]. - Orders for the three months ended November 1, 2025, totaled $199.1 million, a 12.1% increase from $177.6 million in the same period in 2024 [147]. - Order volume increased in Q2 fiscal 2026 compared to Q2 fiscal 2025, driven by growth in Live Events, Transportation, and International business units, with notable orders from Major League Baseball and Major League Soccer venues [149]. - Orders for Q2 fiscal 2026 totaled $199.135 million, an increase from $177.590 million in Q2 fiscal 2025 [161]. - Orders increased to $437.678 million, reflecting a 23.7% growth compared to $353.760 million in the prior year [169]. Expenses and Costs - Selling expenses increased due to higher personnel-related wages and benefits in Q2 fiscal 2026 compared to Q2 fiscal 2025 [152]. - General and administrative expenses decreased due to one-time professional fees in Q2 fiscal 2025, aligning current expenses with normal operating levels [153]. - Product design and development expenses increased due to higher staffing costs and investments in advanced technologies in Q2 fiscal 2026 [154]. - Selling expenses rose to $32.890 million, an 8.4% increase from $30.340 million in the same period last year, primarily due to higher personnel costs [169]. - General and administrative expenses increased to $28.057 million, a 2.9% rise from $27.273 million, driven by higher technology resource expenses [175]. - Product design and development expenses grew to $21.115 million, an 8.5% increase from $19.462 million, reflecting investments in advanced technologies [176]. Profitability Metrics - Gross profit as a percentage of net sales rose to 27.0% in Q2 fiscal 2026 from 26.8% in Q2 fiscal 2025, attributed to strategic pricing and operational efficiencies [151]. - Gross profit as a percentage of net sales improved to 28.3% for the first six months of fiscal 2026, up from 26.6% in the prior year, driven by strategic pricing and operational efficiencies [173]. - Operating income rose to $44.835 million, representing a 16.5% increase compared to $38.486 million in the same period last year [169]. - Operating income for the first six months of fiscal 2026 was $44.8 million, representing 10.0% of total net sales [182]. Tax and Cash Flow - The effective tax rate increased to 20.0% in Q2 fiscal 2026 from 15.0% in Q2 fiscal 2025, influenced by the absence of fair value adjustments applicable in the current period [158]. - The effective tax rate decreased to 23.0% for the first six months of fiscal 2026, down from 35.2% in the same period last year [180]. - Net cash provided by operating activities decreased to $42.6 million from $62.8 million in the same period of fiscal 2025, largely due to an increase in accounts receivable [188]. - The company reported a net increase in cash and cash equivalents of $22.1 million, down from $52.7 million in the prior year [188]. - Net cash used in investing activities for the first six months of fiscal 2026 totaled $9.5 million, down from $10.5 million in the same period of fiscal 2025 [190]. - Financing activities resulted in a net cash outflow of $11.2 million in the first six months of fiscal 2026, compared to a net inflow of $2.0 million in the same period of fiscal 2025 [191]. Capital Expenditures and Financing - The company plans total capital expenditures of approximately $17.9 million for fiscal 2026 to support new product lines and increased production capacity [203]. - The company entered into a new $71.5 million senior credit facility on November 26, 2025, enhancing financial flexibility [197]. - The company had an outstanding principal balance of $11.5 million on the Delayed Draw Loan [194]. - The company had $64.1 million of bonded work outstanding as of November 1, 2025, under a $190.0 million bonding line available through surety companies [205]. Share Repurchase Program - During the first six months of fiscal 2026, the company repurchased 0.7 million shares of Common Stock at a total cost of $12.2 million [218]. - A total of 97,402 shares were repurchased between August 3, 2025, and November 1, 2025, with an average price of $15.98 per share for the first period and $18.53 per share for the last period [220]. - The approximate dollar value of shares that may yet be purchased under the repurchase program is $7,665,219 as of November 1, 2025 [220]. - The share repurchase program was authorized by the Board on June 17, 2016, and amended on March 4, 2025, and June 23, 2025 [220]. - No shares were repurchased during the period from August 31, 2025, to September 27, 2025 [220]. - Shares withheld for tax withholding requirements related to share-based awards are excluded from the repurchase program [221]. - There are restrictions on the company's ability to repurchase shares under the Credit Facility and the New Credit Facility [222]. - The company has not adopted or terminated any "Rule 10b5-1 trading arrangement" during the three months ended November 1, 2025 [225]. Business Transformation and Expansion - The business transformation program aims for revenue growth outpacing the addressable market, operating margins of 10-12%, and returns on capital of 17-20% [138]. - The company is expanding its global manufacturing network into Mexico, with the new facility expected to be operational by the end of fiscal 2026 [139].