Daktronics, Inc. · NASDAQ:DAKT
Daktronics — Investor Presentation (February 2023)
31 slides from Daktronics's investor presentation, Feb 23, 2023
Slide 1: Investor Presentation
February 2023 / Confidential INVESTOR PRESENTATION
Slide 2: Disclaimer
February 2023 / Confidential 1 DISCLAIMER This Investor Presentation, including any oral statements made in connection herewith (the “Presentation”), is provided for informational purposes only and has been prepared by Daktronics, Inc. (the “Company” or “Daktronics”) and is being furnished to a limi
Slide 3: Table of Contents
TABLE OF CONTENTS 2 Overview of Daktronics 3 Key Investment Highlights 13 Appendix 22 February 2023 / Confidential
Slide 4: Overview of Daktronics
February 2023 / Confidential Overview of Daktronics 3
Slide 5: Situation and Transaction Overview
February 2023 / Confidential SITUATION AND TRANSACTION OVERVIEW Daktronics, Inc. (“Daktronics” or the “Company”), a South Dakota corporation, is an industry leader in dynamic audio-visual communication systems for sports, advertising, and transportation segments ◼ Founded in 1968 and headquartered i
Slide 6: Key Investment Considerations
February 2023 / Confidential 5 KEY INVESTMENT CONSIDERATIONS Large and Diverse Worldwide Customer Base Industry Leader in Dynamic Audio-Visual Communication Systems Experienced Leadership Team with Clear Roadmap for Operational Improvement Strong Asset Base and Manufacturing Footprint Broadest Range
Slide 7: Daktronics at a Glance
February 2023 / Confidential Live Events ▪ Video displays for large sports & live entertainment venues DAKTRONICS AT A GLANCE High School Park and Recreation ▪ Video and scoring systems for local community use Transportation ▪ Navigation signs for ITS systems on mass transit, roads & highways Compel
Slide 8: Through the Years
February 2023 / Confidential THROUGH THE YEARS 1994: Company goes public and shares of DAKT first traded on NASDAQ 1996: Reached >$50M annual sales 2000: First center- hung video display at Xcel Energy Center. Reached >$100M sales 2010 2008: Provided products for Beijing Olympics Reached $500M sales
Slide 9: The Only Full-Service Manufacturer of LED Screens Outside of China
February 2023 / Confidential 8 THE ONLY FULL-SERVICE MANUFACTURER OF LED SCREENS OUTSIDE OF CHINA 1) Note: The Company is entertaining an SLB of the Redwood Falls Facility. ▪ Daktronics established its own extensive on-site Reliability Lab that puts every component through rigorous testing ▪ The lab
Slide 10: Dependable LED Market Opportunity
February 2023 / Confidential 9 DEPENDABLE LED MARKET OPPORTUNITY Source: Futuresource Consulting Report “Global LED Display Market Report (2022)”. 1) Ultra Narrow Pixel Pitch (UNPP) defined as less than or equal to 0.9mm pixel pitch. 2) Narrow Pixel Pitch (NPP) defined as equal to or greater than 1.
Slide 11: Highly Effective Global Sales Team and Strategy
February 2023 / Confidential 468 Number of Global Sales and Marketing Employees 10 HIGHLY EFFECTIVE GLOBAL SALES TEAM AND STRATEGY Strategic Sales Organizational Structure High Complexity Approach: ▪ Larger, complex systems with high visibility and prominence (also called “Large Sports Venue” or “Sp
Slide 12: Unprecedented Challenges...
February 2023 / Confidential 11 UNPRECEDENTED CHALLENGES… Product Warranties ◼ Product issue from mechanical device failure built prior to FY14 ◼ FY16 – FY19: Recognized cost of $23mm to preserve key customer relationships Tariffs on Chinese Imports ◼ U.S. trade actions (2019) led to volatility in s
Slide 13: ...And How the Company Is Addressing Them
February 2023 / Confidential 12 ...AND HOW THE COMPANY IS ADDRESSING THEM Current Near-Term Strategies are Catalyzing Demand, Retention and Fulfillment Demand Prioritization Predictability in Operations Focus on DifferentiationLiquidity Enhancement Program ◼ Prioritizing market verticals that are: −
Slide 14: Key Investment Highlights
February 2023 / Confidential Key Investment Highlights 13
Slide 15: Industry Leader in Dynamic Audio-Visual Communication Systems
February 2023 / Confidential 14 INDUSTRY LEADER IN DYNAMIC AUDIO-VISUAL COMMUNICATION SYSTEMS 1) Non-GAAP measure. See the appendix for a reconciliation to the most comparable GAAP measure. 2) FY2022 DAKT North American (“NA”) orders includes the US and Canada is the sum of the Commercial, Live Even
Slide 16: Broadest Range of Product Solutions Among Competitors
February 2023 / Confidential Wholly Owned, Global Manufacturing Global Reach US Market Share US Gov’t & Defense contracts Control Capabilities High Complexity Products High Consistency Products 15 BROADEST RANGE OF PRODUCT SOLUTIONS AMONG COMPETITORS Daktronics Serves the Broadest Customer Base With
Slide 17: Large and Diverse Worldwide Customer Base
February 2023 / Confidential Source: Company data. 1) 3-Year total denotes sum of business from Customers from FY2020 to FY2022. 2) Orders and backlog are not measures defined by GAAP, and our methodology for determining orders and backlog may vary from the methodology used by other companies in det
Slide 18: Consistent Top Line Growth and Strong Order Backlog
February 2023 / Confidential $282 $353 $472 $469 $463 $- $100 $200 $300 $400 $500 2Q22 3Q22 4Q22 1Q23 2Q23 Backlog 17 CONSISTENT TOP LINE GROWTH AND STRONG ORDER BACKLOG Gross Profit (%) Consolidated Order Backlog 59 39 48 57 69 33 24 27 36 42 34 40 47 40 37 14 16 20 20 17 24 21 19 20 22 $164 $140 $
Slide 19: Cash Generation Opportunity with Streamlined Cost Structure and Enhanced Margins
February 2023 / Confidential 18 CASH GENERATION OPPORTUNITY WITH STREAMLINED COST STRUCTURE AND ENHANCED MARGINS Daktronics is Addressing its Operational, Commercial and Financial Challenges Through its Liquidity Enhancement Program 1) Orders and backlog are not measures defined by GAAP, and our met
Slide 20: Strong Asset Base and Manufacturing Footprint
February 2023 / Confidential 19 STRONG ASSET BASE AND MANUFACTURING FOOTPRINT ~2,250 Employees in North America 5 Dedicated Manufacturing Facilities 13 Dedicated Distribution, Sales & Support Offices Location Owned or Leased Square Footage Activity Brookings, SD Owned 765K Corporate Office, Manufact
Slide 21: Experienced Leadership Team with Clear Roadmap for Operational Improvement
February 2023 / Confidential 20 EXPERIENCED LEADERSHIP TEAM WITH CLEAR ROADMAP FOR OPERATIONAL IMPROVEMENT Reece A. Kurtenbach President & CEO President & CEO since 2013 Prior to assuming his current role, he served at Daktronics since 1991 28+ Years of Executive Engineering and Manufacturing Experi
Slide 22: Low Leverage Presents Financing Capacity
February 2023 / Confidential 21 LOW LEVERAGE PRESENTS FINANCING CAPACITY Historical Debt Balance 1Q21 – 2Q23A(1) EBITDA and EBITDA Margin FY2019 – LTM2023A(2) Revenue and Gross Profit Margin 1Q21 – 2Q23A 1) Historically low leverage profile 2) Additional liquidity required to fund inventory levels,
Slide 23: Appendix
February 2023 / Confidential Appendix 22
Slide 24: Market Overview - Live Events
February 2023 / Confidential 23 MARKET OVERVIEW - LIVE EVENTS ($US) ~$199 Million Sales(1) ~$22 Million Gross Profit(1) Description Market Placement Key Product Types Notable Projects ▪ Customers include professional sports, minor league sports, colleges & universities in large stadiums and arenas ▪
Slide 25: Market Overview - Commercial
February 2023 / Confidential 24 MARKET OVERVIEW - COMMERCIAL ($US) ~$154 Million Sales(1) ~$32 Million Gross Profit(1) Description Market Placement Key Product Types Notable Projects ~25% Of Total Sales ~21% Gross Margin(1) Live Events Commercial International High School Parks, Recreation (HSPR) Hi
Slide 26: Market Overview - High School Parks, Recreation
February 2023 / Confidential 25 MARKET OVERVIEW – HIGH SCHOOL PARKS, RECREATION (HSPR) ($US) ~$112 Million Sales(1) +$35 Million Gross Profit(1) Description Market Placement Key Product Types Notable Projects ~18% Of Total Sales ~32% Gross Margin(1) Live Events Commercial International Transportatio
Slide 27: Market Overview - Transportation
February 2023 / Confidential ▪ Customers include government transportation departments, industry contractors, airlines, mass transit and other related customers ▪ Expanded use of dynamic messaging systems in public transportation and airport terminals for advertising and wayfinding ▪ Growth driven b
Slide 28: Market Overview - International
February 2023 / Confidential 27 MARKET OVERVIEW – INTERNATIONAL ($US) ~$83 Million Sales(1) +9 Million Gross Profit(1) Description Market Placement Key Product Types Notable Projects ~14% Of Total Sales +11% Gross Margin(1) Live Events Commercial International Transportation High School Parks, Recre
Slide 29: Daktronics Organization Reporting Structure
February 2023 / Confidential DAKTRONICS ORGANIZATION REPORTING STRUCTURE 28 CEO: 1 VP of Design & Development: 1 VP of Sales & Project Management: 5 VP of Manufacturing: 1 VP of Global Services: 1 VP of IT and Development: 1 CFO: 1 VP of Human Resources: 1 Structural/Hardware / Mechanical: 81 Softwa
Slide 30: Simplified Organizational Structure
February 2023 / Confidential 29 SIMPLIFIED ORGANIZATIONAL STRUCTURE 1) Current capital structure data as of FY Q2 2023, unless otherwise noted. 2) Share price as of 1/20/23. 3) Total debt excludes $7mm Letters of Credit balance. Daktronics, Inc. (United States) Daktronics Installation Inc. Other Int
Slide 31: GAAP to Non-GAAP Reconciliation
February 2023 / Confidential 30 GAAP TO NON-GAAP RECONCILIATION FY19 FY20 FY21 FY22 2Q23 LTM Net Income (Loss) ($958) $491 $10,926 $592 ($18,310) (+) Interest Expense 160 106 295 49 455 (+) Taxes (3,986) (500) 3,134 516 13,039 (+) D/A 18,635 17,718 17,077 15,394 8,225 EBITDA $13,851 $17,815 $31,432