Daktronics(US:DAKT)2022-06-15 16:00Company Overview - The company employs 2,477 people globally and has evolved from a small operation to a leader in the display industry since its founding in 1968[17]. - The company has invested in display technologies and new markets since becoming publicly traded in 1994, indicating a commitment to growth and innovation[17]. - The company focuses on four domestic business units: Commercial, Live Events, High School Park and Recreation, and Transportation, along with an International business unit[20]. - The company has a tradition of applying engineering resources to anticipate and respond to market needs, employing engineers in various fields to enhance product reliability and serviceability[24]. - The majority of the company's products are manufactured in the United States, with additional facilities in China and Ireland, emphasizing quality control and cost-effectiveness[25]. - The company offers a range of products including video displays, scoreboards, message displays, and intelligent transportation systems, showcasing its diverse product portfolio[32]. Product Development and Innovation - The company emphasizes ongoing product innovations and technological advancements to maintain competitiveness in the large format electronic display industry[24]. - The company has invested in developing new video technology with varied pixel density for improved image quality and expanded product offerings[81]. - The company utilizes the Venus® Control Suite software for managing message displays, which can scale to control large networks of displays[45]. - The company has developed the Vanguard® family of dynamic message displays for road management applications, enhancing traffic direction and information dissemination[46]. - The company’s mobile and modular display systems are designed for both indoor and outdoor events, highlighting its adaptability to various market needs[36]. Financial Performance - Net sales for the quarter ended April 30, 2022, were $610.97 million, an increase from $482.03 million in the same quarter of the previous year, representing a growth of 26.7%[333]. - Gross profit for the quarter was $116.70 million, down from $120.58 million year-over-year, indicating a decrease of 3.2%[333]. - Operating income for the quarter was $4.05 million, a significant decline from $17.11 million in the prior year, reflecting a decrease of 76.3%[333]. - Net income for the quarter was $0.59 million, a sharp drop from $10.93 million in the same quarter last year, representing a decline of 94.6%[336]. - Basic earnings per share (EPS) for the quarter was $0.01, compared to $0.24 in the previous year, indicating a decrease of 95.8%[333]. - Total operating expenses increased to $112.65 million from $103.48 million year-over-year, marking an increase of 8.3%[333]. - The company reported total assets of $440.9 million as of April 30, 2022, compared to $375.2 million a year prior, marking an increase of about 17%[328]. - Total current assets rose to $317.6 million as of April 30, 2022, up from $265.0 million a year earlier, indicating a year-over-year increase of about 20%[328]. Supply Chain and Market Challenges - The company has been affected by supply chain disruptions and inflationary pressures since late fiscal 2021, impacting production and costs[57]. - The company faced supply chain disruptions due to the COVID-19 pandemic, impacting the availability and prices of raw materials, particularly semiconductors[304]. - The company has been impacted by global inflation and shortages in key production materials, which may affect future operations[304]. - The company expects to fulfill the backlog within the next 24 months, although timing may be impacted by supply chain disruptions[69]. Currency and Financial Instruments - Approximately 15.9% of net sales for fiscal 2022 were derived from currencies other than U.S. dollars, highlighting exposure to foreign currency fluctuations[298]. - The notional amount of foreign currency agreements as of April 30, 2022, was $11.3 million, with all contracts maturing within ten months[299]. Employee and Operational Metrics - The company employed approximately 2,246 full-time employees and 231 part-time and temporary employees as of April 30, 2022[84]. - The company’s manufacturing facilities comply with industry-specific requirements, including environmental rules and safety standards[71]. - The company’s ability to compete depends on customer-centric product quality, technical expertise, and cost-effective solutions[78]. Revenue Recognition and Accounting Policies - Daktronics, Inc. recognized revenue based on the percentage of costs incurred for uniquely configured contracts, which requires significant management estimates[316]. - Revenue for uniquely configured systems is recognized over time using the cost incurred input method, reflecting the costs incurred to date compared to estimated total costs for each contract[370]. - The company recognizes revenue when a performance obligation is satisfied, with variability in contract assets and liabilities depending on billing schedules and revenue recognition timing[365]. - The company evaluates contract modifications based on the five-step revenue model, treating them as separate contracts when additional goods or services are distinct[371]. Future Outlook and Strategy - The company plans to focus on new product development and market expansion strategies to improve future performance[335]. - The company expects to maintain or improve margins while generating cash flow from operations to fund future operations and capital expenditures[400]. - The company anticipates utilizing a portion of its line of credit, which was recently extended to April 2025, to support continued investment in capacity to meet expanding demand[401].