Daktronics(US:DAKT)2025-06-25 16:02Financial Data and Key Metrics Changes - The company reported a strong finish to a transformational year with a 29% increase in backlog from Q3 and a 17% year-over-year increase in orders, totaling $50 million in new order flow booked in Q4 alone [16][41] - Adjusted operating income for 2025 was $50 million, down from a record $87 million in 2024, with an adjusted operating income margin of 6.6% compared to 10.6% in 2024 [37][39] - Operating cash flow more than doubled year-over-year, reaching $97.7 million, with cash at year-end increasing by 57% to $128 million [33][43] Business Line Data and Key Metrics Changes - In the Live Events segment, orders decreased 12% year-over-year, but the company expects continued growth due to enhanced products and services [20][21] - The Commercial business saw a 31% increase in orders year-over-year, with a 44% increase in Q4 compared to the same quarter in the previous year [21][22] - The Transportation segment experienced a 10% decrease in orders year-over-year but a 14% increase from Q4, driven by notable wins in multimillion-dollar projects [23][24] Market Data and Key Metrics Changes - International orders grew 32% year-over-year, with Q4 orders more than doubling from the previous year, driven by strong demand in advertising markets [26][27] - The company reported significant growth in the High School Park and Recreation business, with orders increasing 19% for the year and 33% for Q4 [28][29] Company Strategy and Development Direction - The company is focused on achieving higher operating margins of 10% to 12% and a return on invested capital (ROIC) target of 17% to 20% by fiscal year 2028 [49][50] - The transformation plan includes value-based pricing, revenue mix diversification, and new product introductions to drive growth [49][50] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand for technology-leading display solutions and the company's ability to remain flexible and competitive in the current macro environment [52][53] - The company is committed to executing its business and digital transformation plans while maintaining a strong market position [51][52] Other Important Information - The company incurred $16.5 million in non-recurring expenses related to transformation initiatives, with $7.5 million in Q4 [35][36] - The board approved a new $10 million share repurchase program, following a previous program [79] Q&A Session Summary Question: What is the outlook for revenue growth in FY 2026? - Management indicated that all markets are expected to show growth, aligning with the 7% to 10% compound annual growth rate target through FY 2028 [56][58] Question: What levers are being pulled to impact margins? - Management discussed implementing value-based pricing and driving operational efficiencies to improve overall performance and margins [60][61] Question: What is the status of the commercial segment and AV network expansion? - Management noted strong optimism in the commercial business, particularly in the out-of-home advertising market, and plans to aggressively grow the AV integrator space [62][63] Question: What are the expectations for business and digital transformation expenses in FY 2026? - Management stated that consulting fees for transformation initiatives are expected to be low moving forward, as the company has integrated the results into its operations [84][86]