Daktronics Inc. (NASDAQ:DAKT) Q2 2017 Earnings Conference Call - Final Transcript
Nov 22, 2016 • 11:00 am ET
based on our projects scheduled currently, we expect sales to be similar to slightly down, with improved gross profit as compared to last year's third quarter, which had higher warranty costs. However, sales could change pending project bookings and customer changes in schedules. We expect the majority of this backlog to be realized into sales over the next 12 to 18 months. And we expect, as mentioned, gross profit to improve in the third quarter because of that warranty issue last year.
We anticipate operating expenses in dollars to be up as compared to third quarter of fiscal 2016 for the increased ADFLOW costs and increased design and development costs. With that, I'll turn it back to Reece for additional comments on our outlook.
Thanks, Sheila. Our outlook remains similar to previous calls as we look forward into the second half of fiscal 2017 and further out. We continue to see the digital marketplace expanding. We expect live events to continue to be similar to last year's level, based on anticipated activity within this customer base. High school park and recreation started the year off great, and it seems like they could grow at a nice pace. Transportation has room to grow with the demand picture.
There appears to be stability in federal funding, and we have had success in winning procurement projects and other infrastructure road projects. While it is more difficult to predict the commercial spectacular segment, there are many opportunities in our pipeline that position us for an increase year-over-year. For commercial billboard niches, we expect similar volumes based on overall activity we see in the national and third-party advertisers.
In our commercial on-premise business, we are actively promoting our indoor network solutions and new product lines. Internationally we see opportunities to grow, but it can be challenging to predict how the year will shape up as our customers wrestle with different macroeconomic factors. For the year, our goal is to grow sales and improve operating margin to achieve sales growth over the long term, we plan to accelerate activities in our design groups to complete a variety of developments. While these efforts will increase development expenses, we believe it necessary to drive forward our ability to competitively compete, continuing to capture a global market share and meet the request of our customers. Rollouts of products or new control solutions are expected through the year.
As the order picture can be cloudy and influenced by many external factors, we remain focused on carefully managing our expenses, allowing for some additional resources to add velocity in our product development area. We continue to see many opportunities for success in this business and believe that while the path will not always be smooth, we are positioned to generate long-term, profitable growth. With that, I would ask the operator to please open up the line for any questions.