Daktronics Inc. (NASDAQ:DAKT) Q4 2018 Earnings Conference Call - Final Transcript

May 30, 2018 • 11:00 am ET


Daktronics Inc. (NASDAQ:DAKT) Q4 2018 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen and welcome to the Daktronics Fiscal-Year 2018 Fourth Quarter Earnings Results Conference Call.

[Operator Instructions]

I'd now like to turn the conference over to Ms. Sheila Anderson, Chief Financial Officer for Daktronics, for introductory remarks. Please go ahead, Sheila.

Sheila Anderson

Thank you operator. Good morning, everyone. Thank you for participating in our fourth quarter and year end earnings conference call.

I'd like to review our disclosures cautioning investors and participants that in addition to statements of historical facts we'll be discussing forward-looking statements reflecting our expectations and plans about our future financial performance and future business opportunities. All forward-looking statements involve risks and uncertainties, which maybe out of our control and may cause actual results to differ materially.

Such risks include changes in economic conditions, changes in the competitive and market landscape, management of growth, timing and magnitude of future contracts, fluctuations of margins and the introduction of new products and technology and other important factors as noted and detailed in our 10-K and 10-Q SEC filings.

With that, let me highlight some of the financials starting with fourth quarter comparisons. Orders for the fourth-quarter of fiscal 2018 were $162 million as compared to last year's fourth quarter of $178 million. Most of the order fluctuation this quarter is attributable to the variability of timing in large projects and account-based businesses in Commercial, Live Events, Transportation and International business units.

Notable orders for the fourth quarter of fiscal 2018 included projects from all applications in Dubai and number of college stadium upgrades, transportation orders in the US and Saudi Arabia, a soccer stadium in Europe, and a couple of projects exceeding $1 million and the high school markets continuing the trends we see in high schools using larger video applications.

As a reminder, we derive a significant portion of our orders and sales from large dollar size projects, primarily for college and professional sports facilities, entertainment venues, transportation market applications and from account-based business in the out-of-home niche. The timing and the amount of these contracts can cause material fluctuations in our orders, sales and earnings. Awards of large contracts and their timing and amounts are difficult to predict, may not be repeatable and are outside of our control. Our business also fluctuates seasonally based on the sports market and construction cycles and is dependent on various schedules based on our customers' needs.

Sales for the fourth quarter of fiscal 2018 were $138 million as compared to $144 million last year, net sales increased in International and the High School Park and Recreation business units decreased the Live Events and Commercial business units and remained relatively flat in the transportation business units quarter-over-quarter. The decline in sales is the result of lower orders and the timing of conversion to sales according to the customer delivery needs.

Other financial comparables include gross profit as a percentage of sales at 21.6% for the fourth quarter of fiscal 2018 as compared to 23.5% a year earlier. The decrease in gross