Daktronics Inc. (NASDAQ:DAKT) Q1 2019 Earnings Conference Call - Final Transcript

Aug 21, 2018 • 11:00 am ET

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Daktronics Inc. (NASDAQ:DAKT) Q1 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Daktronics Fiscal Year 2019 First Quarter Earnings Results Conference Call. As a reminder, this conference is being recorded today, Tuesday, August 21, 2018 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, Rachel. Good morning, everyone. Thank you for participating in our first quarter earnings conference call.

(Forward-Looking Cautionary Statements)

With that, let me highlight some of the financials. Orders for the first quarter of fiscal 2019 were $160 million as compared to last year's first quarter of $153 million. Most of the order fluctuation this quarter is attributable to the variability of timing in large projects and account-based business and due to increases in video demand in the High School Park and Recreation unit. Transportation's increase in orders was due to continued intelligent Transportation system investments by City and State Department of Transportations. High School Park and Recreation increased due to the higher demand for larger video systems. Commercial's increase was for orders in the Spectacular niche with Out-of-Home and on-premise tape orders similar in comparison to last year. Internationally, the results included orders across multiple segments. Sports, Out-of-Home, and Spectacular and Transportation are the largest segments internationally.

Live Events' orders were lower than last year due to timing of orders, plus large projects in the marketplace during the same time, and one order cancellation of approximately $3 million. As a reminder, we derive a significant portion of our orders and sales from large dollar sized projects, primarily for colleges and professional sports facilities, entertainment venues, transportation market applications, and for spectacular niche and account-based business in the Out-of-Home niche. The timing and amount of these contracts can cause material fluctuations in our orders, sales, and earnings. Awards of large contracts and their timing and amount 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 the customers' needs.

Sales for the first quarter of fiscal 2019 were $154 million compared to $173 million last year. Net sales increased in the International business unit; decreased in Live Events, Commercial, and Transportation business units; and remained relatively flat in the High School Park and Recreation business unit quarter-over-quarter. We expect sales for the first quarter of fiscal 2019 to be -- we had expected sales for the first quarter of fiscal 2019 to be less than 2018 as we completed a number of NFL stadiums in 2018, but no similar sized projects expected in the first quarter of 2019. International sales increased as a result of the timing of delivery of large projects for the quarter.

Other financial comparables include gross profit as a percent of net sales at 24.8% for the first quarter of fiscal 2019 as compared to 25.8%