Daktronics, Inc. · NASDAQ:DAKT
Daktronics — Needham Growth Conference 2006
42 slides from Daktronics's conference presentation, Jan 12, 2006
Slide 1: Investor Presentation, Needham Growth Conference
Investor Presentation Needham Growth Conference January 12, 2006
Slide 2: Cautionary Notice
Cautionary Notice In addition to statements of fact, this presentation contains forward-looking statements reflecting the company’s expectations or beliefs concerning future events which could materially affect company performance in the future. The company cautions that these and similar statements
Slide 3: Strong Leadership Position
Strong Leadership Position Mission Statement To be the world leader at informing and entertaining people through dynamic visual communication systems. Current position in the marketplace* • Number one supplier of LED video displays • Number one supplier of LED text and graphics displays Our estimate
Slide 4: Product Overview: LED Video Display Applications
Product Overview LED Video Display Applications • Sports facilities and super systems • Billboards and other advertising • Spectaculars • Entertainment • Many others
Slide 5: Product Overview: LED Text and Graphics Displays
Product Overview LED Text and Graphics displays • Message centers • Graphics displays
Slide 6: Product Overview: LED Sports Systems and Related Products
Product Overview LED Sports Systems and Related Products Los Lunas High School Los Lunas, NM Central High School – Aberdeen, SD View of scorer’s table from behind.
Slide 7: Product Overview: Complimentary Products and Services
Product Overview Complimentary Products and Services • Venus® line of controllers • Sound systems • Marketing support • Content development • Timing systems • LCD displays • Statistics software • Ad tracking software • Maintenance and service • Production services
Slide 8: Industry Fundamentals
Industry Fundamentals Rapidly growing marketplace through: • Expanding customer base • Greater acceptance of technology • New and unique uses for products • Revenue generation • Decreasing cost of products • Increasing interest in “super-systems” • Technology enhancements • Product innovations Highl
Slide 9: Competition
Competition Different competitors in different niches • Large screen video competitors: ¾ Barco, Mitsubishi, ANC/Saco, Billboard Video, Opto Tech, Yesco • Private companies compete for other scoreboard and display business: ¾ Scoring & Timing 9 Trans-Lux, Nevco, All American, Electro-Mech, 9 Colorad
Slide 10: Why Daktronics is the World's Leader
Why Daktronics is the World’s Leader • Engineering capabilities • Diverse product offerings • System integration capabilities • Extensive software solutions • Depth of extended services • Project design and management talent • Product quality and performance • On-time delivery • Industry experience
Slide 11: Market vs. Product Perspective
Market vs. Product Perspective Primary Synergies Between Market/Product • These dependencies drive the planning and development process. • Management team is structured to reinforce these inherent synergies.
Slide 12: Primary Markets
Primary Markets Sports Commercial Transportation • Small Sport Venues • Sign Companies • State and Local • K-12 schools • National Accounts Transportation Depts. • Sports clubs • Spectaculars • Airlines • Recreation facilities • Outdoor Advertising • Airports • Large Sport Venues • Many Others • Tra
Slide 13: Growth Drivers – Commercial Market
Growth Drivers – Commercial Market • Fastest growing market (>50% YTD) • Greater product acceptance • National accounts • Billboard applications • Creative applications • Geographic expansion
Slide 14: Commercial Market – National Accounts
Commercial Market – National Accounts • Currently concentrated in a few accounts • Supported by our Galaxy® product line • Significant opportunity exists as acceptance increases
Slide 15: Billboard Applications
Billboard Applications • Significant order increase • Dominated by three companies Lamar Clear Channel Viacom • Built on a solid cash flow model • Well positioned to execute
Slide 16: Creative Applications
SE ,—ltw—~— Creative Applications DAKTRONICS
Slide 17: Growth Drivers – Sports Markets
Growth Drivers – Sports Markets • YTD order growth in excess of 30% • New uses of product • Revenue generation • Growth of super-systems • Technology advancements • New construction and renovation
Slide 18: Expanding Market and New Uses
Expanding Market and New Uses • Seven-figure systems for Division II schools • Dasher boards, outfield fences, multiple fascia displays, high definition, marquees, etc. • Smaller venues on campus; i.e. track, soccer, softball, volleyball, etc. • Expansion into smaller venues
Slide 19: New Construction and Renovation
New Construction and Renovation New stadium construction Renovations and upgrades
Slide 20: Growth of Super-Systems and New Levels
Growth of Super-Systems and New Levels All levels of sports venues investing more into display technologies
Slide 21: Growth Drivers - Transportation
Growth Drivers - Transportation • Few new highways, more technology • Federal government spending increases • Gaining product acceptance • Market penetration • New product applications
Slide 22: Distribution
Distribution • Domestic ¾ Small and Large Sports Venues – Primarily direct ¾ Transportation – Mix of direct and indirect ¾ Commercial – Indirect through sign companies Large Video Systems – Primarily direct • International – Primarily Indirect
Slide 23: Growth Strategies
Growth Strategies Expand distribution geographically • Increase market share in existing markets • Focus on national accounts Expand integration of display systems Development of new products • Find new applications for existing products Expand complimentary services Develop our people
Slide 24: Domestic & International Sales and Service Offices
Domestic & International Sales and Service Offices International Offices • Montreal, Canada • Frankfurt, Germany Sales and Service Offices • Bristol, UK • Over 40 offices worldwide • Hong Kong/Macau • Complimented by resellers and • Shanghai, China authorized service companies
Slide 25: Developing New Products
Developing New Products • ProTour™ Display Systems • ProStar™ Displays 3mm Pixel Spacing • ProTable™ • ProPixel™ • Lower Cost LED Text/Graphics Displays • Venus® 1500 Enterprise Software • Digit Displays • V-Net™ Narrowcasting System
Slide 26: Expanding Integration of Systems
Expanding Integration of Systems • Control Software ¾ Scoring, timing and statistics ¾ Video, animation and advertising ¾ Network management or enterprise software • Displays ¾ ProTour™, ProStar®, ProAd®, Galaxy®, Vanguard®, Fixed Digit, ProPixel™, and ProTable™ • Services ¾ Design, installation, pr
Slide 27: Expanding Complimentary Services
Expanding Complimentary Services • Sports Marketing • KeyframeSM Creative and Technical Services • Mobile and Modular Display Rental Support • Maintenance and Support • Commercial Marketing
Slide 28: Major Cash Investments in Growth
Major Cash Investments in Growth PRODUCT: • ProTour™ product line and distribution (Mobile & Modular Group) • Expect significant sales in the upcoming 12 months • Ongoing product development – 4% of net sales DISTRIBUTION • Local sales and service offices • Europe, Asia, and domestic • Sports Market
Slide 29: Management Experience
Management Experience • Dr. Al Kurtenbach – Chairman & Co-Founder ¾ 37 years with Daktronics • Jim Morgan – President & CEO ¾ 36 years with Daktronics • Frank Kurtenbach – Vice President – Sales ¾ 26 years with Daktronics • William Retterath – Chief Financial Officer ¾ 4 years with Daktronics • Othe
Slide 30: Historical Stock Performance vs. NASDAQ
Historical Stock Performance vs. NASDAQ
Slide 31: Dividend History and Uses of Free Cash Flow
Dividend History and Uses of Free Cash Flow First annual dividend declared June 1, 2005 • $0.10 per share • Intend to pay regular annual dividends for the foreseeable future Priorities on uses of cash flow • Internally developed product technologies • Market expansion, primarily geographic • Facilit
Slide 32: Previously Announced Long-Term Expectations
Previously Announced Long-Term Expectations* • Grow the top line at 15+% All markets are expected to develop at these rates • Improving gross profit percentages • Create leverage to the bottom line (*Long-term refers to multiple year cycles)
Slide 33: Growing Sales
Growing Sales 13% compound annual growth 2000-2005 $250 $200 Millions of Dollars $150 $100 $50 $0 1999 2000 2001 2002 2003 2004 2005 Fiscal Year
Slide 34: Gross Margins
Gross Margins Gross margin increased from 27.8% in FY00 to 30% FY06 YTD 35 Gross Margin Percentage 30 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 YTD Expect margin to increase in future quarters from current YTD level.
Slide 35: Earnings Per Share
Earnings Per Share 18% compound annual growth – FY00 to FY05 $0.90 $0.80 $0.70 Diluted EPS $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 2000 2001 2002 2003 2004 2005 2006 YTD Fiscal Year
Slide 36: Balance Sheet Strength & Cash Flow
Balance Sheet Strength & Cash Flow Net Net Sales Cash $30,000 $250,000 $20,000 Thousands of Dollars $200,000 $10,000 $0 $150,000 2001 2002 2003 2004 2005 -$10,000 $100,000 -$20,000 -$30,000 $50,000 Cash and investments less debt Net sales
Slide 37: Strong Growth in Orders vs. Sales
Strong Growth in Orders vs. Sales* Orders Sales 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY04 FY05 FY06 *(in thousands $)
Slide 38: FY 2006 Second Quarter Results (YTD)
FY 2006 Second Quarter Results (YTD)* Oc t 29, Oc t 30, P erc ent 2005 2004 Change Net S ales $ 148,147 $ 118,182 +25.4% Gross profit $ 44,511 $ 40,112 +11.0% Gross margin 30.1% 33.9% Operating income $ 14,985 $ 15,452 (3.0)% Operating margin 10.1% 13.1% Net income $ 9,816 $ 10,220 (4.0)% % of reven
Slide 39: FY 2006 Second Quarter Results
FY 2006 Second Quarter Results Keys to the Quarter: • Third consecutive quarter of order growth > 20% • Digital billboard niche • Gross profit percent last year not sustainable • Slowly increasing gross profit expectations • Record backlog of $81 million • Competitive pressures continued to ease (co
Slide 40: FY 2006 Second Quarter Results (cont.)
FY 2006 Second Quarter Results (cont.) • Capacity constraints • Solid order growth in all markets year to date • Previously announced outlook for Q3: ¾ Net sales $65 - $72 million ¾ EPS $.15 - $.25 (fully-diluted)
Slide 41: Where We Are Today
Where We Are Today • Strong backlog • Market momentum • Improving gross profit margins • Investing in staff to capture the revenue opportunity
Slide 42: For More Information Contact
For More Information Contact: James Morgan, Chief Executive Officer or William Retterath, Chief Financial Officer Phone Toll Free 800-605-DAKT (3258) or 605-697-4000 Email investor@daktronics.com Visit www.daktronics.com