dakt-20220730

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 30, 2022

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___.

Commission File Number: 0-23246

Daktronics, Inc.

(Exact Name of Registrant as Specified in its Charter)


South Dakota			46-0306862
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

201 Daktronics Drive	Brookings,	SD	57006
(Address of Principal Executive Offices)

(605) 692-0200

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, No Par Value	DAKT	Nasdaq Global Select Market
Preferred Stock Purchase Rights	DAKT	Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of the registrant’s common stock outstanding as of August 24, 2022 was 45,033,839.

Table of Contents

DAKTRONICS, INC. AND SUBSIDIARIES

FORM 10-Q

For the Quarter Ended July 30, 2022

Table of Contents


		Page
Part I.	Financial Information	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of July 30, 2022 and April 30, 2022	1
	Condensed Consolidated Statements of Operations for the Three Months Ended July 30, 2022 and July 31, 2021	2
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended July 30, 2022 and July 31, 2021	3
	Condensed Consolidated Statements of Shareholders' Equity for the Three Months Ended July 30, 2022 and July 31, 2021	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended July 30, 2022 and July 31, 2021	6
	Notes to the Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22

Part II.	Other Information	22
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	23
Item 6.	Exhibits	23

Index to Exhibits		24
Signatures		25

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

DAKTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data) (unaudited)


	July 30, 2022		April 30, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	8,279	$	17,143
Restricted cash	750		865
Marketable securities	3,023		4,020
Accounts receivable, net	113,189		101,099
Inventories	157,170		134,392
Contract assets	45,204		41,687
Current maturities of long-term receivables	1,617		2,798
Prepaid expenses and other current assets	11,550		14,963
Income tax receivables	2,322		603
Total current assets	343,104		317,570

Property and equipment, net	72,395		66,765
Long-term receivables, less current maturities	1,117		1,490
Goodwill	7,857		7,927
Intangibles, net	1,387		1,472
Investment in affiliates and other assets	34,145		32,321
Deferred income taxes	13,303		13,331
TOTAL ASSETS	$	473,308	$	440,876

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	82,470	$	76,313
Contract liabilities	96,404		90,393
Accrued expenses	33,978		34,959
Warranty obligations	11,510		11,621
Income taxes payable	264		408
Total current liabilities	224,626		213,694

Long-term warranty obligations	17,900		17,257
Long-term contract liabilities	11,764		10,998
Other long-term obligations	7,901		7,076

Line of Credit	24,128		—
Deferred income taxes	287		287
Total long-term liabilities	61,980		35,618

SHAREHOLDERS' EQUITY:
Preferred Shares, no par value, authorized 50,000 shares; no shares issued and outstanding	—		—
Common Stock, no par value, authorized 115,000,000 shares; 46,942,070 and 46,733,544 shares issued at July 30, 2022 and April 30, 2022, respectively	62,388		61,794
Additional paid-in capital	48,883		48,372
Retained earnings	91,282		96,608
Treasury Stock, at cost, 1,907,445 shares at July 30, 2022 and April 30, 2022, respectively	(10,285)		(10,285)
Accumulated other comprehensive loss	(5,566)		(4,925)
TOTAL SHAREHOLDERS' EQUITY	186,702		191,564
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	473,308	$	440,876

See notes to condensed consolidated financial statements.

Table of Contents

DAKTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three Months Ended
	July 30, 2022		July 31, 2021
Net sales	$	171,920	$	144,732
Cost of sales	146,126		112,544
Gross profit	25,794		32,188

Operating expenses:
Selling	14,433		11,795
General and administrative	9,441		7,571
Product design and development	7,439		7,162
	31,313		26,528
Operating (loss)income	(5,519)		5,660

Nonoperating (expense) income:
Interest (expense) income, net	(60)		137
Other expense, net	(747)		(868)

(Loss) income before income taxes	(6,326)		4,929
Income tax (benefit) expense	(1,000)		1,244
Net (loss) income	$	(5,326)	$	3,685

Weighted average shares outstanding:
Basic	45,097		45,139
Diluted	45,097		45,419

(Loss) earnings per share:
Basic	$	(0.12)	$	0.08
Diluted	$	(0.12)	$	0.08

See notes to condensed consolidated financial statements.

Table of Contents

DAKTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

(unaudited)


	Three Months Ended
	July 30, 2022		July 31, 2021

Net (loss) income	$	(5,326)	$	3,685

Other comprehensive (loss):
Cumulative translation adjustments	(642)		(373)
Unrealized gain (loss) on available-for-sale securities, net of tax	1		—
Total other comprehensive (loss), net of tax	(641)		(373)
Comprehensive (loss) income	$	(5,967)	$	3,312

See notes to condensed consolidated financial statements.

Table of Contents

DAKTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands)

(unaudited)


	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total
Balance as of April 30, 2022	$	61,794	$	48,372	$	96,608	$	(10,285)	$	(4,925)	$	191,564
Net loss	—		—		(5,326)		—		—		(5,326)
Cumulative translation adjustments	—		—		—		—		(642)		(642)
Unrealized gain (loss) on available-for-sale securities, net of tax	—		—		—		—		1		1
Share-based compensation	—		511		—		—		—		511
Employee savings plan activity	594		—		—		—		—		594

Balance as of July 30, 2022	$	62,388	$	48,883	$	91,282	$	(10,285)	$	(5,566)	$	186,702

See notes to condensed consolidated financial statements.

Table of Contents

DAKTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(continued)

(in thousands)

(unaudited)


	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total
Balance as of May 1, 2021	$	60,575	$	46,595	$	96,016	$	(7,297)	$	(2,335)	$	193,554
Net income	—		—		3,685		—		—		3,685
Cumulative translation adjustments	—		—		—		—		(373)		(373)
Share-based compensation	—		518		—		—		—		518
Employee savings plan activity	597		—		—		—		—		597
Treasury stock reissued	—		4		—		196		—		200
Balance as of July 31, 2021	$	61,172	$	47,117	$	99,701	$	(7,101)	$	(2,708)	$	198,181

See notes to condensed consolidated financial statements.

Table of Contents

DAKTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Three Months Ended
	July 30, 2022		July 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(5,326)	$	3,685
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	4,025		4,052
Gain on sale of property, equipment and other assets	(361)		(106)
Share-based compensation	511		518
Equity in loss of affiliates	890		746
Provision for doubtful accounts, net of recovery	177		(421)
Deferred income taxes, net	12		(32)
Change in operating assets and liabilities	(22,743)		(9,461)
Net cash (used in) operating activities	(22,815)		(1,019)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(10,655)		(1,283)
Proceeds from sales of property, equipment and other assets	365		149

Proceeds from sales or maturities of marketable securities	999		—
Purchases of equity and loans to equity investees	(1,081)		(718)
Net cash (used in) investing activities	(10,372)		(1,852)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes payable	92,098		—
Payments on notes payable	(67,970)		—
Principal payments on long-term obligations	—		(200)

SEC Form 10-Q filed by Daktronics Inc.