Daktronics Inc. (NASDAQ:DAKT) Q2 2019 Earnings Conference Call - Final Transcript

Nov 21, 2018 • 11:00 am ET

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Daktronics Inc. (NASDAQ:DAKT) Q2 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 Second Quarter Earnings Results Conference Call. As a reminder, this conference is being recorded today, Wednesday, November 21, 2018 and is available on the Company's website at www.daktronics.com.

At this time, all participants are in a listen-only mode. Later we'll conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions)

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, Rusty. Good morning, everyone. Thank you for participating in our second quarter earnings conference call.

(Forward-Looking Cautionary Statements)

With that, let me highlight some of the financials for the quarter. Orders for the second quarter of fiscal 2019 were $151 million as compared to last year's second quarter of $142 million. Most of the order fluctuation this quarter is attributable to the variability of timing in large projects and account-based business. Transportation's increase in orders was due to continued intelligent transportation system investments by city and the State Department of Transportation. High School Park and Recreation increased due to higher demand for larger video systems. Commercial increased for orders on the on-premise and spectacular niches with other form of orders similar in comparison to last year. Internationally, we won a multi-million dollar project in the Middle East in the transportation segment with the rest of the segments down compared to last year's same quarter.

Live events orders were similar in comparison to last year. As a reminder, we derived a significant portion of our orders and sales from large dollar based (ph) projects primarily for colleges and professional sports facilities, entertainment venues, transportation market application and from 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 markets and construction cycle and is dependent on the various schedules based on our customers' needs.

Sales for the second quarter of fiscal 2019 were $173 million as compared to $169 million last year. Net sales increase in Commercial, High School Park and Recreation, Transportation and International business units and decrease in Live Events business unit quarter-over-quarter. We expected the sales in Live Events business unit for the second quarter and for the first half of the year to be lower as compared to 2018, as we completed a number of arenas, professional sports and colleges and university venues in 2018 with no similar sized projects this year during the same time frame. Commercial, especially in spectacular and on-premise, transportation and international sales increased mostly related to the variability of timing in large projects. High School Park and Recreation sales increased as a result of more activity and larger sized orders and the timing