Daktronics Inc. (NASDAQ:DAKT) Q2 2017 Earnings Conference Call - Final Transcript

Nov 22, 2016 • 11:00 am ET

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Daktronics Inc. (NASDAQ:DAKT) Q2 2017 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good day, ladies and gentlemen, and welcome to the Daktronics fiscal-year 2017 second-quarter earnings results conference call. As a reminder, this conference is being recorded today, Tuesday, November 22, 2016, and is available on the Company's website at www.daktronics.com. I would now like to turn the conference over to Ms. Sheila Anderson, CFO for Daktronics, for some introductory remarks. Please go ahead, Sheila.

Executive
Sheila Anderson

Thank you, Leanne. Good morning, everyone. Thank you for participating in the second-quarter earnings conference call. (Forward-Looking Cautionary Statements) At this time I would like to introduce Reece Kurtenbach, our Chairman, President, and CEO, for a few comments.

Executive
Reece Kurtenbach

Thank you, Sheila. Good morning, everyone. As highlighted in the press release, we are pleased with our financial performance for the quarter. We had higher sales and lower warranty costs, which contributed to the improvement in income as compared to last year. We continue to see the digital marketplace expand through technology adoption and replacement cycles. While some uncertainty in global macroeconomics can cause delay in order decisions, we have seen a nice pickup of quoting and order bookings in many areas this year.Orders have improved over a year-to-date basis in commercial, high school park and recreation, and international.

In the commercial segment we have seen a pickup in order bookings in the spectacular niche. This is the area that focuses on larger projects for prominent areas like Times Square, Las Vegas, and other city center or entertainment areas.Commercial also added volume due to the acquisition of the ADFLOW organization late in the last fiscal year and increased demand in the on-premise business. The billboard segment of commercial is relatively flat for orders on a year-to-date basis.

In Q2 we saw a bit of a pickup in multi-display orders as compared to last year.High school park and recreation continued with strong order bookings through the second quarter. We continue to see schools adapt to larger video applications and larger-sized transactions for both sporting and communication display systems.On an international basis, order bookings have improved over last year, as we are seeing more activity this year as compared to last. However, comparisons can be difficult due to the nature of our large project business, in which timing can greatly change order outcomes from quarter to quarter.Orders declined in both live events and in transportation.

As you are aware, live events order bookings are lumpy due to timing and dollar sizes of transactions. As we look back through the first two quarters of the fiscal year, we have not booked a project over $5 million. At the same time, we believe we have not lost an order of this size, either. While it is unusual for this market not to have a project of this size during the period, we have quoted a number of multimillion-dollar projects for major league sports facilities, and we see order opportunities for the remaining year throughout our customer base.Transportation business is also project-based business, and the timing of projects is the primary reason for quarter-over-quarter and