Investor Presentation January 22, 2026 NASDAQ: DAKT CONTROL SYSTEMS DYNAMIC MESSAGE SIGNS SAFE HARBOR STATEMENT Forward-Looking Statements: In addition to statements of historical fact, this presentation contains forward-looking statements within the meaning of the federal securities laws and is intended to receive the protections of such laws. All statements, other than historical facts, included or incorporated in this release could be deemed forward-looking statements, particularly statements that reflec ...

Financial Data and Key Metrics Changes - Daktronics reported a net income of $17.5 million or $0.35 per fully diluted share for the second quarter of FY26, a 25.4% increase on a fully adjusted basis compared to the previous year [24][25] - Operating income for the quarter was $21.6 million, up from $15.8 million in the same quarter last year, with a gross profit margin of 27% and an operating margin of 9.4%, both improved from the previous year [25][26] - The company incurred $8.8 million in tariff expenses during the second quarter, compared to $1.5 million in the same quarter last year, impacting margins [26][27] Business Line Data and Key Metrics Changes - The live events segment saw a 26.5% order growth year-over-year, contributing significantly to the overall order growth of 12% across all business segments [8][9] - The transportation business orders grew by 15% year-over-year, driven by increased demand in intelligent transportation systems and aviation [12] - The international business experienced a 23.6% increase in orders, particularly in the Middle East and Europe [13] Market Data and Key Metrics Changes - The company completed several large-scale installations, including projects for Major League Soccer and Major League Baseball, enhancing its market presence [8] - The commercial business continued to show strong growth, particularly in on-premise advertising, which remained up double digits year-over-year [10] - The out-of-home advertising segment saw a 5% decrease in orders year-over-year, primarily due to fewer large projects awarded [11] Company Strategy and Development Direction - Daktronics is enhancing its global manufacturing footprint with a new facility in Saltillo, Mexico, aimed at increasing production capacity and flexibility [15] - The company is focused on innovation, with several new product launches planned, including next-generation LED street furniture and advanced indoor video displays [17][18] - The strategic price adjustments and value-based pricing initiatives are designed to maintain premium positioning while protecting margins [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong backlog of $321 million, which is expected to provide a multi-quarter revenue runway [9][35] - The company anticipates a seasonally slower third quarter due to holidays but remains focused on year-over-year revenue growth [35] - The transformation plan is on track, with ongoing improvements in operational efficiencies and customer engagement [20][21] Other Important Information - The company has increased its share repurchase capacity to $25.7 million, reflecting a strong cash position of $138.3 million, up 20% year-over-year [33][34] - A new CEO, Ramesh Jayaraman, will officially start in February, bringing a focus on transformation and growth [41][43] Q&A Session Summary Question: How do you expect the backlog to convert to revenue over the fiscal year? - Management highlighted that a higher percentage of the backlog is in the live events segment, which typically has longer conversion times due to customized orders [49][50] Question: Can you quantify the margin improvements and their breakdown? - The operating margin improvements are attributed to value-added pricing and operational efficiencies, despite the impact of increased tariff expenses [54][55] Question: What is the expected capacity expansion from the new Mexico plant? - The Mexico facility is a small operation that complements existing U.S. production, with no plans to move work from the U.S. [58][64] Question: How do you see working capital management trending moving forward? - Management indicated that while improvements have been made, further significant enhancements may be limited, but revenue growth will positively impact working capital [60]