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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Q & A
Operator
operator

(Operator Instructions) Jim Ricchiuti, Needham & Company.

Analyst
Jim Ricchiuti

Just a question on live events -- a fairly low level of bookings. And it sounds like you see some projects in the pipeline, Reece. I'm just wondering, how would you compare the pipeline over the next quarter versus, say, a year ago?

Executive
Reece Kurtenbach

Yes, that market can have big changes based on new construction and planned renovations. But we are seeing significant activity; and we believe that while the year started out slower to this year, that it will end up similar to last year. We are looking with some optimism at the second half on the order picture.

Analyst
Jim Ricchiuti

So these projects in the second half -- are these mostly MLB baseball-related projects that you would normally see for the spring? Or are these also indoor projects?

Executive
Reece Kurtenbach

It's a mix -- some baseball, some other indoor. So, it's a mixture this year.

Analyst
Jim Ricchiuti

So would you anticipate -- you mentioned that you have not seen orders, at least for this past quarter, for more than $5 million, which is unusual, I think you said. Do you have some potential projects in the pipeline that are of higher dollar quantities?

Executive
Reece Kurtenbach

Yes. There are some significant orders out there, some teams looking at changing their configurations, that would be over that mark.

Analyst
Jim Ricchiuti

Okay. And these would be orders that, if you were going to see them for this season, you would more likely book them in the current quarter?

Executive
Reece Kurtenbach

We would book them in the second half of this year. We might see some sales yet this fiscal year, but some of those sales would go into next fiscal year as well.

Analyst
Jim Ricchiuti

Okay. And Sheila, just a question for you -- just all else being equal on the warranty issue, is this gross margin that you generated in the quarter at the upper end of what you would expect at this level of revenues?

Executive
Sheila Anderson

We did have a nice mix of business this quarter that we produced, so it is a good margin for us.

Analyst
Jim Ricchiuti

Okay, thank you.

Operator
operator

Morris Ajzenman, Griffin Securities.

Analyst
Morris Ajzenman

Kind of a follow-up on that question, to some extent. But first, your guidance -- if I'm correct, I think you said to -- Q3, seasonally low quarter -- correct me if I'm wrong; you guided to top line being flat to down modestly?

Executive
Sheila Anderson

Correct.

Analyst
Morris Ajzenman

Correct? Okay. Is there the same number of working days in Q3 this year versus last year? Or was that not the case?

Executive
Sheila Anderson

They are the same.

Analyst
Morris Ajzenman

They are the same? So I presume the guidance, then, is a reflection of the orders that came in this quarter being lower and flowing through to revenues. Is that causing [a reflection] of that guidance?

Executive
Sheila Anderson

That plays into it, as well as -- you know, customer deliveries can change. And there is a few bookings that, if they happen, there could be some Q3 revenue as well.

Analyst
Morris Ajzenman

Okay. Now, you did guide to improving gross margins. Clearly, last year