Daktronics Inc. (NASDAQ:DAKT) Q4 2019 Earnings Conference Call - Final Transcript

May 29, 2019 • 11:00 am ET

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Daktronics Inc. (NASDAQ:DAKT) Q4 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 Fourth Quarter Earnings Results Conference Call. As a reminder, this conference is being recorded today, Wednesday, May 29, 2019, 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 will conduct a question-and-answer session and instructions will follow at that time.

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

Executive
Sheila M. Anderson

Thank you, Sherrie . Good morning, everyone. Thank you for participating in our fiscal and fourth quarter earnings conference call.

I would like to review our disclosure cautioning investors and participants that in addition to statements of historical facts, we will be discussing forward-looking statements reflecting our expectations and plans about future financial performance and future business opportunities. All forward-looking statements involve risks and uncertainties, which may be 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, including impacts of global trade discussions and policies; management of growth; timing and magnitude of future contracts; fluctuations of margins; and the introduction of new products and technologies; 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 the fourth quarter results and the related comparisons to fiscal 2018's fourth quarter. Orders were relatively flat. Sales decreased by 7.5%, resulting from order timing and related conversion to sale to meet the various needs of the customer. Gross profit as a percentage of net sales was 19.1% as compared to 21.6%.

Gross profits was positively impacted by the decrease of warranty as a percent of sales to 2.2% as compared to 4.4% and negatively impacted by $3 million of costs for adjustments made to business combination contingencies and project sales margins being lower. Operating expenses for the fourth quarter of fiscal 2019 was $34.7 million compared to $35.2 million. We had a tax expense of $0.1 million for the Q4 loss as we trued up actual income tax estimates to the actual results.

For the future -- for the full fiscal year, orders were up 4.4% as compared to last year and was our third highest order volume year in history. The change in orders reflects the broad range of offerings and highlights our ability to serve the diverse range of needs of our end market. It also highlights our ability to win orders of varying types and sizes. For the year, we had fewer projects -- fewer than five projects valued at $5 million, and in past years, we would have multiple orders over $5 million to reach the volumes reported. Commercial orders led the increase primarily due to the increased activity in the spectacular market, including the awards of Barclays Capital building upgrade and replacements of five other properties