BROOKINGS, S.D., Feb. 21, 2017 (GLOBE NEWSWIRE) -- Daktronics, Inc. (NASDAQ:DAKT) today reported fiscal 2017 third quarter net sales of $115.7 million, operating loss of $6.9 million, and net loss of $5.1 million, or $0.12 per diluted share, compared to net sales of $123.8 million, operating loss of $5.5 million, and net loss of $2.0 million, or $0.04 per diluted share, for the third quarter of fiscal 2016.  Fiscal 2017 third quarter orders were $143.3 million, compared to $116.9 million for the third quarter of fiscal 2016.  Backlog at the end of the fiscal 2017 third quarter was $170 million, compared with a backlog of $176 million a year earlier and $142 million at the end of the second quarter of fiscal 2017. 

Net sales, operating income, net income, and earnings per share for the nine months ended January 28, 2017, were $442.9 million, $13.7 million, $9.4 million, and $0.21 per diluted share, respectively.  This compares to $431.7 million, $6.2 million, $5.0 million, and $0.11 per diluted share, respectively, for the same period in fiscal 2016. 

Cash flow provided by operating activities in the first nine months of fiscal 2017 was $45.4 million, compared with cash provided by operating activities of $2.5 million in the same period last year.  Free cash flow, defined as cash provided from or used in operating activities less net investment in property and equipment, was a positive $38.8 million for the first nine months of fiscal 2017, as compared to a negative free cash flow of $10.8 million for the same period of fiscal 2016.  Net investment in property and equipment was $6.5 million for the first nine months of fiscal 2017, as compared to $13.3 million for the first nine months of fiscal 2016. We repurchased approximately 0.3 million shares of common stock at an average price of $6.42 per share for a total use of cash of $1.8 million during the first nine months of fiscal 2017.  Cash, restricted cash, and marketable securities at the end of the third quarter of fiscal 2017 were $76.6 million, which compares to $56.3 million at the end of the third quarter of fiscal 2016 and $53.2 million at the end of fiscal 2016.  

Orders for the third quarter of fiscal 2017 increased 22.6 percent as compared to the third quarter of fiscal 2016.  Orders increased in the International, Live Events, Transportation and Commercial business units and decreased in the High School Park and Recreation business unit.  The timing of orders for large projects vary according to the needs of the customer.  That was the case in this quarter as large project order timing was the primary cause of the increase in order volume quarter over quarter.  International orders increased because of spectacular niche project awards in Europe, transportation type orders in the Middle East and sports stadium project awards in Australia. Transportation orders increased due to the award of a multi-million dollar project for an active traffic management system.  Live Events orders increased due to an increase in minor league baseball stadium projects, and timing of project awards in college and university venues and professional sport stadium venue projects for baseball and football this year.  Commercial orders increases are attributable to the digital billboard niche and on-premise niche offset by a decline in spectacular niche awards as compared to last year's third quarter.  High School Park and Recreation orders decreased during the quarter because there were fewer large sports video projects awarded during the third quarter of fiscal 2017 compared to the third quarter of fiscal 2016.

Net sales decreased by 6.5 percent in the third quarter of fiscal 2017 as compared to the third quarter of fiscal 2016.  Commercial and High School Park and Recreation business units sales increased quarter over quarter as a result of large project orders that were available for delivery during the third quarter of fiscal 2017.  Live Events, Transportation and International business unit sales all decreased quarter over quarter primarily due to lower customer delivery needs during the quarter this year as compared to last year.

Gross profit percentage for the quarter increased as compared to last year due to a combination of lower warranty charges, lower production costs, and sales mix.

Operating expenses increased by 9.7 percent in the third quarter of fiscal 2017 as compared to the third quarter of fiscal 2016.  The increase in selling expense was related to the addition of a full quarter of expenses from ADFLOW, the company we acquired late in fiscal 2016.  General and administrative expense increased in personnel expenses and professional fees.  Product development expenses increased primarily for personnel related expenses.

Operating loss as a percent of sales for the quarter increased to 6.0 percent as compared to the third quarter of fiscal 2016 operating loss of 4.5 percent.

Net loss in the third quarter of fiscal year 2016 was positively impacted by a $2.0 million tax benefit resulting from the retroactive United States reinstatement of the research and development credit.  In fiscal 2017, this benefit is being recognized on a quarterly basis.

Reece Kurtenbach, chairman, president and chief executive officer stated, “We are having a successful year through the third quarter.  Our order volume has increased year over year.  Some significant awards during the third quarter of fiscal 2017 included Nevada Department of Transportation's Project NEON, University of Wisconsin, London's Piccadilly Circus, and LA Memorial Coliseum.  This demonstrates the strength of our broad solution offerings and value offered to customers in our global markets.  While our Live Events orders are down year over year, our overall win ratio remained consistent indicating the market had lighter activity during fiscal 2017.  We expect Live Events activity to increase in the coming quarters.  Our third quarter is historically lighter for sales and profits due to the seasonality of our sports business, construction cycles, and the decrease in production days due to holidays.  This trend continued which resulted in lower sales and an operating loss for the quarter; however, we were pleased that our gross margins improved.  On a year-to-date basis, our operating profit has improved."

Outlook
Kurtenbach added, “We remain confident in our ability to profitability capitalize on global market growth opportunities.  Our value statement sets us apart from others and meets our diverse customers' needs across all business units.  The pipeline of order opportunities remains strong. We are optimistic about our long-term growth as we see increasing activity and interest in the worldwide marketplace for digital display technology.  To capitalize on this opportunity, we are increasing the velocity in product development.  While these efforts will increase development expenses, we believe it's necessary to drive forward exceptional solutions to capture global market share and deliver value to our customers."

Webcast Information
The company will host a conference call and webcast to discuss its financial results today at 10:00 a.m. (CST).  This call will be broadcast live at http://investor.daktronics.com and available for replay shortly after the event.

About Daktronics
Daktronics has strong leadership positions in, and is the world's largest supplier of, large-screen video displays, electronic scoreboards, LED text and graphics displays, and related control systems.  The company excels in the control of display systems, including those that require integration of multiple complex displays showing real-time information, graphics, animation, and video.  Daktronics designs, manufactures, markets and services display systems for customers around the world in four domestic business units:  Live Events, Commercial, High School Park and Recreation, and Transportation, and one International business unit.  For more information, visit the company's website at: www.daktronics.com, email the company at investor@daktronics.com, call (605) 692-0200 or toll-free (800) 843-5843 in the United States, or write to the company at 201 Daktronics Dr., P.O. Box 5128, Brookings, S.D. 57006-5128.

Safe Harbor Statement
Cautionary Notice: In addition to statements of historical fact, this news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and is intended to enjoy the protection of that Act.  These forward-looking statements reflect the Company's expectations or beliefs concerning future events.  The Company cautions that these and similar statements involve risk and uncertainties which could cause actual results to differ materially from our expectations, including, but not limited to, changes in economic and market conditions, management of growth, timing and magnitude of future contracts, fluctuations in margins, the introduction of new products and technology, the impact of adverse weather conditions, and other risks noted in the company's SEC filings, including its Annual Report on Form 10-K for its 2016 fiscal year.  Forward-looking statements are made in the context of information available as of the date stated.  The Company undertakes no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.

Daktronics, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, except per share amounts) (unaudited)
		Three Months Ended								Nine Months Ended
		January 28,  2017				January 30,  2016				January 28,  2017				January 30,  2016
Net sales		$	115,719			$	123,816			$	442,857			$	431,705
Cost of goods sold		92,403				101,787				336,166				338,662
Gross profit		23,316				22,029				106,691				93,043
Operating expenses:
Selling expense		14,678				13,784				45,828				42,873
General and administrative		8,599				7,908				26,007				24,194
Product design and development		6,973				5,883				21,142				19,826
		30,250				27,575				92,977				86,893
Operating (loss) income		(6,934		)		(5,546		)		13,714				6,150
Nonoperating income (expense):
Interest income		183				230				559				794
Interest expense		(56		)		(113		)		(174		)		(203		)
Other (expense) income, net		(305		)		7				(250		)		(667		)
(Loss) income before income taxes		(7,112		)		(5,422		)		13,849				6,074
Income tax (benefit) expense		(1,985		)		(3,469		)		4,416				1,083
Net (loss) income		$	(5,127	)		$	(1,953	)		$	9,433			$	4,991
Weighted average shares outstanding:
Basic		44,102				44,021				44,071				43,933
Diluted		44,102				44,021				44,206				44,357
Earnings per share:
Basic		$	(0.12	)		$	(0.04	)		$	0.21			$	0.11
Diluted		$	(0.12	)		$	(0.04	)		$	0.21			$	0.11
Cash dividends declared per share		$	0.07			$	0.10			$	0.24			$	0.30

Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands)
	January 28,  2017				April 30,  2016
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	48,377			$	28,328
Restricted cash	206				198
Marketable securities	28,034				24,672
Accounts receivable, net	71,637				77,554
Inventories, net	61,922				69,827
Costs and estimated earnings in excess of billings	33,204				30,200
Current maturities of long-term receivables	2,229				3,172
Prepaid expenses and other assets	5,968				6,468
Income tax receivables	255				4,812
Total current assets	251,832				245,231
Long-term receivables, less current maturities	2,876				3,866
Goodwill	7,866				8,116
Intangibles, net	5,334				7,721
Investment in affiliates and other assets	3,570				2,414
Deferred income taxes	9,677				9,437
	29,323				31,554
PROPERTY AND EQUIPMENT:
Land	2,093				2,155
Buildings	65,219				65,247
Machinery and equipment	83,508				82,973
Office furniture and equipment	5,578				14,746
Computer software and hardware	50,642				48,917
Equipment held for rental	374				374
Demonstration equipment	7,770				8,026
Transportation equipment	6,863				6,596
	222,047				229,034
Less accumulated depreciation	155,096				155,871
	66,951				73,163
TOTAL ASSETS	$	348,106			$	349,948

Daktronics, Inc. and Subsidiaries Consolidated Balance Sheets (continued) (in thousands)
	January 28,  2017				April 30,  2016
	(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	38,688				43,441
Accrued expenses	25,560				23,532
Warranty obligations	14,847				16,564
Billings in excess of costs and estimated earnings	12,080				10,361
Customer deposits (billed or collected)	14,483				16,012
Deferred revenue (billed or collected)	12,282				10,712
Current portion of other long-term obligations	453				585
Income taxes payable	1,788				310
Total current liabilities	120,181				121,517
Long-term warranty obligations	14,640				13,932
Long-term deferred revenue (billed or collected)	5,424				5,603
Other long-term obligations, less current maturities	4,099				4,059
Long-term income tax payable	3,063				3,016
Deferred income taxes	985				754
Total long-term liabilities	28,211				27,364
TOTAL LIABILITIES	148,392				148,881
SHAREHOLDERS' EQUITY:
Common stock	52,530				51,347
Additional paid-in capital	37,294				35,351
Retained earnings	116,143				117,276
Treasury stock, at cost	(1,834		)		(9		)
Accumulated other comprehensive loss	(4,419		)		(2,898		)
TOTAL SHAREHOLDERS' EQUITY	199,714				201,067
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	348,106			$	349,948

Daktronics, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) (unaudited)
		Nine Months Ended
		January 28,  2017				January 30,  2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	9,433			$	4,991
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		13,941				12,562
Impairment of intangible assets		830				—
Loss (gain) on sale of property, equipment and other assets		23				(50		)
Share-based compensation		2,204				2,244
Gain on sale of equity investee		—				(119		)
Provision for doubtful accounts		898				(110		)
Deferred income taxes, net		(286		)		860
Change in operating assets and liabilities		18,336				(17,878		)
Net cash provided by operating activities		45,379				2,500
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(6,709		)		(13,389		)
Proceeds from sale of property, equipment and other assets		166				111
Purchases of marketable securities		(18,098		)		(18,273		)
Proceeds from sales or maturities of marketable securities		14,594				19,069
Acquisitions, net of cash acquired		(1,374		)		(2,183		)
Proceeds from sale of equity method investment		—				377
Net cash used in investing activities		(11,421		)		(14,288		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable		(8		)		(33		)
Proceeds from exercise of stock options		343				610
Principal payments on long-term obligations		(912		)		(15		)
Dividends paid		(10,566		)		(13,158		)
Payments for common shares repurchased		(1,825		)		—
Tax payments related to RSU issuances		(261		)		(303		)
Net cash used in financing activities		(13,229		)		(12,899		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(680		)		(920		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		20,049				(25,607		)
CASH AND CASH EQUIVALENTS:
Beginning of period		28,328				57,284
End of period		$	48,377			$	31,677

Daktronics, Inc. and Subsidiaries Net Sales and Orders by Business Unit (in thousands) (unaudited)
	Three Months Ended															Nine Months Ended
	January 28,  2017				January 30,  2016				Dollar Change				Percent Change			January 28,  2017				January 30,  2016				Dollar Change				Percent Change
Net Sales:
Commercial	$	36,165			$	29,385			$	6,780			23.1	%		$	112,342			$	112,661			$	(319	)		(0.3	)%
Live Events	41,036				51,067				$	(10,031	)		(19.6	)%		157,032				149,750				$	7,282			4.9	%
High School Park and Recreation	12,653				10,940				$	1,713			15.7	%		68,977				54,152				$	14,825			27.4	%
Transportation	9,130				11,698				$	(2,568	)		(22.0	)%		39,517				38,759				$	758			2.0	%
International	16,735				20,726				$	(3,991	)		(19.3	)%		64,989				76,383				$	(11,394	)		(14.9	)%
	$	115,719			$	123,816			$	(8,097	)		(6.5	)%		$	442,857			$	431,705			$	11,152			2.6	%
Orders:
Commercial	$	32,595			$	29,922			$	2,673			8.9	%		$	114,326			$	95,082			$	19,244			20.2	%
Live Events	51,590				43,075				$	8,515			19.8	%		135,520				168,082				$	(32,562	)		(19.4	)%
High School Park and Recreation	14,178				15,131				$	(953	)		(6.3	)%		61,055				55,560				$	5,495			9.9	%
Transportation	19,621				12,401				$	7,220			58.2	%		46,290				42,735				$	3,555			8.3	%
International	25,329				16,368				$	8,961			54.7	%		78,164				56,105				$	22,059			39.3	%
	$	143,313			$	116,897			$	26,416			22.6	%		$	435,355			$	417,564			$	17,791			4.3	%

Reconciliation of Free Cash Flow* (in thousands) (unaudited)
	Nine Months Ended
	January 28,  2017				January 30,  2016
Net cash provided by operating activities	$	45,379			$	2,500
Purchases of property and equipment	(6,709		)		(13,389		)
Proceeds from sales of property and equipment	166				111
Free cash flow	$	38,836			$	(10,778	)

*In evaluating its business, Daktronics considers and uses free cash flow as a key measure of its operating performance.  The term free cash flow is not defined under U.S. generally accepted accounting principles (“GAAP”) and is not a measure of operating income, cash flows from operating activities or other GAAP figures and should not be considered alternatives to those computations.  Free cash flow is intended to provide information that may be useful for investors when assessing period to period results.

For more information contact:
INVESTOR RELATIONS:
Sheila Anderson, Chief Financial Officer
(605) 692-0200
Investor@daktronics.com