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Daktronics Inc. (DAKT) filed Quarterly Report for the period ended 2011-10-29.
Daktronics Inc. has a market cap of $385.6 million; its shares were traded at around $9.24 with a P/E ratio of 33 and P/S ratio of 0.9. The dividend yield of Daktronics Inc. stocks is 1.1%.
This is the annual revenues and earnings per share of DAKT over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of DAKT.
Highlight of Business Operations:
For the second quarter of fiscal 2012 and for the first half of fiscal 2012, net sales in the outdoor advertising business were up 201% and 170%, respectively, when compared to the same period one year ago. Net sales and orders for the first six months of fiscal 2012 were $28.1 million and $28.0 million, respectively. Orders in the outdoor advertising business were up approximately 104% and 80% for the second quarter and year to date in fiscal 2012 as compared to the same period one year ago. During the second half of fiscal 2011, two of the large outdoor advertising companies in the United States announced their plans for digital billboard deployments for calendar 2011, calling for an increase in digital billboard deployments beginning in the first calendar quarter of 2011. These plans, in addition to the improving economy benefitting other outdoor advertising companies, have caused both orders and sales to rise. We believe that our ability to maintain our market share with these customers and others has been driven, in part, by the industry s acceptance of our Series 4000 digital billboard product. Over the past few fiscal years, the average selling price of digital billboards has declined significantly. As a result, although the unit sales may approximate the unit sales prior to the economic downturn, the total sales dollars will be significantly less. It is important to note that the outdoor advertising business has a number of constraints in addition to the adverse economic conditions over the past few years, primarily the challenges of achieving adequate returns on investments on digital displays, which limit locations suitable for digital displays, and regulatory constraints, which limit where displays can be installed. Furthermore, a large part of our business in this area is obtained from two customers, and therefore a loss of one of those customers could have an adverse impact on this portion of our business, although each customer is less that 5% of net sales in the first six months of fiscal 2011 and 2012.For the second quarter of fiscal 2012 and for the first half of fiscal 2012, net sales in the reseller portion of the Commercial business unit were up 9% and 13%, respectively, when compared to the same periods one year ago. Orders in the reseller portion of the Commercial business unit were up approximately 6% and 20% for the second quarter and year to date in fiscal 2012 as compared to the same periods one year ago. Net sales and orders for the first six months of fiscal 2012 were $36.3 million and $39.8 million, respectively. These increases in orders and net sales have resulted from increases in sales of both large video displays and our standard Galaxy® displays, which we attribute to better economic conditions as well as increasing interest in our new product technologies, including our GalaxyPro® and DVX video platforms. This area of the business has also been helped by the introduction of our architectural lighting products, which we expect to help drive further sales. The level of large custom contract orders and sales in this niche is subject to volatility as described in prior filings, and therefore orders could decline in future periods, although we continue to see a growing number of opportunities. Furthermore, this business unit is sensitive to economic conditions, and the future performance of this business unit will vary based on these conditions.
For the changes in both the quarter and the first six months, the decline in large contract gross profit percentage was primarily due to the competitive factors described above and the items previously mentioned. For the second quarters of fiscal 2012 and fiscal 2011, large contracts were approximately 64% and 62%, respectively, of net sales. Warranty costs for the second quarter and the first six months of fiscal 2012 were approximately 3.3% and 2.8%, respectively, of net sales, compared to 4.9% and 3.8% for the same periods in fiscal 2011. Partially offsetting these costs were lower manufacturing conversion costs which represents total labor and overhead cost of manufacturing, as a percentage of net sales, which declined by 0.3 and 0.9 percentage points for the second quarter and first six months of fiscal 2012 as compared to the same periods one year ago.
The increase in selling expense for the second quarter of fiscal 2012 as compared to the same period in fiscal 2011 was due to $0.6 million increase in personnel costs, including taxes and benefits, a $0.2 million increase in travel and entertainment costs, and an increase of $0.1 million of various other expenses, which was partially offset by a decrease of $0.5 million in payments to third party sales representatives and a decrease of $0.1 million of bad debts expense. The increase in personnel costs is a result of an increase in employee count. The increase in travel is a result of the higher level of sales opportunities for the quarter. The decrease in payments to third party sales representatives was a result of the reduction of sales made by the third party sales representatives. The decrease in bad debt expense is due to the inherent volatility of bad debt expense that we experience.
Cash used by investing activities of $8.9 million for the first six months of fiscal 2012 included $7.7 million for purchases of marketable securities and $6.2 million for purchases of property and equipment, which was offset by $5.0 million in proceeds from sales and maturities of marketable securities. During the first six months of fiscal 2012, we invested approximately $2.3 million in manufacturing equipment, $1.5 million in product demonstration equipment, $1.9 million in information systems infrastructure, including software, and $0.4 million in other assets. These investments were generally for maintenance in the case of information systems, in manufacturing related to the expansion of capability in China and in improving flexibility in the plants as it relates to new products. As of the end of the second quarter of fiscal 2012, capital expenditures were 2.4% of net sales. For the remainder of fiscal 2012, our capital expenditures are expected to be closer to 4% of net sales as we expand our manufacturing capabilities in China and enhance our internal systems and operations within and outside of manufacturing.
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