Daktronics, Inc. · NASDAQ:DAKT
Daktronics — Q2 FY2010 Earnings Presentation
34 slides from Daktronics's earnings presentation, Jan 11, 2010
Slide 1: Investor Presentation FY2010 Second Quarter
Investor Presentation FY2010 Second Quarter
Slide 2: 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 involve risk and
Slide 3: Why we are No. 1 in our industry
Why we are No. 1 in our industry - Executing against our mission to be the world leader at informing people through dynamic audio-visual communications systems • 41 years of proven track record in the industry • Unparalleled sales and service coverage • Depth and breadth of product offering • Comple
Slide 4: Daktronics
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Slide 5: Financial History
(Dollars in thousands except per share data) FY2005 FY2006 FY2007 FY2008 FY2009 5-Yr CAGR Sales $230,346 $309,370 $433,201 $499,677 $581,931 Operating Income $19,436 $31,815 $36,915 $38,243 $42,617 9.1% Earnings Per Share $0.39 $0.52 $0.59 $0.63 $0.64 Dividend Per Share - 0.05 0.06 0.07 0.09 (Dollar
Slide 6: Historical Perspective
Historical Perspective: Revenue more than doubled from FY2005 through FY2008 - 30% CAGR During this timeframe: • Rapid growth: capacity was the primary constraint • Added two manufacturing plants, Sioux Falls, and Redwood Falls and reorganized existing plants to a product focus • Set objective of be
Slide 7: Accomplishments toward becoming a World Class Manufacturing Organization
Accomplishments toward becoming a World Class Manufacturing Organization • Implementation of lean practices in manufacturing • Toyota lean practices are the guide for this program • Flow lines in every factory • Reliability lab, quality engineering • Decentralized inventory • Standardized product de
Slide 8: FY2010 Second Quarter YTD Results
FY 2010 Second Quarter YTD Results* *($ in thousands, except per share data)
Slide 9: FY2009 was a two-part story
FY2009 was a two-part story • First half of year revenues were $330 million, a $660 million run rate (10.5% operating margin). • Second half revenues were $250 million, or a $500 million run rate (3.2% operating margin) • Billboard net sales declined from $26 million in Q2 of fiscal 2009 to $3 milli
Slide 10: Strong cash position
Strong cash position • Free cash flow • FY09 - $31 million • FY10 through Q2 - $23 million • $57 million of net cash at end of FY10 Q2 • Debt free
Slide 11: Business is Organized in Business Units
Business is Organized in 5 Business Units (“BU”) • Domestic (includes Canada) • Commercial • Live Events • Schools and Theaters • Transportation • International • BUs provide focus, but key strategy is to leverage resources across the company
Slide 12: Daktronics
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Slide 13: Commercial: Three main areas and main products
Three main areas • Digital billboard • National accounts • Resellers Main products • Valo TM digital displays • GalaxyPro TM • PS-X and HD-X video 27% of FY09 net sales FY10 net sales down 47% YTD through Q2
Slide 14: Commercial Overview: Growth Drivers and Competitors
Commercial Overview Long-term Growth Drivers • Greater acceptance & increasing use • Effective advertising medium Competitors • Resellers - Optec, Watchfire, EDS • National Accounts - Optec, Hi-Tech • Digital Billboards - Yesco, Optotec
Slide 15: Current Outlook for Commercial
Current Outlook for Commercial • Expect billboard orders to remain weak through at least calendar 2010 • Adversely impacted by • Current economic environment • Credit availability • Increased price pressure
Slide 16: Daktronics
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Slide 17: Live Events Overview
Live Events Overview • Large sports venues • Professional sports facilities • College and university facilities • Mobile and modular: • Rental and staging • Touring companies • Pari-mutuel • 46% of net sales in FY09 • FY09 net sales up 60% over FY08 • FY10 net sales down 27% YTD through Q2
Slide 18: Live Events Long-term Growth Drivers
Live Events Long-term Growth Drivers • Fan experience • High definition (HD) • Competition between venues • Improving price/ performance of LED technology • Revenue generation
Slide 19: Large Sports Venues - New Construction
Large Sports Venues - New Construction • FY2009 was big year for new construction • Significant increase in spending for display systems in new venues • Large contracts in FY2009: • New Meadowlands Stadium - $45 million • Minnesota Twins - $8 million • Kansas City Royals - -$10 million • Cincinnati
Slide 20: Mobile & Modular
Mobile & Modular • Designed for ease of use, set-up and tear down
Slide 21: Live Events Competition
Live Events Competition Large Sports Venues • Mitsubishi, Lighthouse, ANC, Barco, and others • Competition generally must partner with others to compete with Daktronics breadth of product • Increasingly competitive environment Mobile and Modular • Barco, Lighthouse, Toshiba, Hibino Seeing increased
Slide 22: Schools & Theatres Business Unit
Schools & Theatres Business Unit
Slide 23: Schools & Theatres Overview
Schools & Theatres Overview Customers • Elementary and high schools, junior colleges • Park and recreation departments • Theatres Main Products • Scoring Systems • Galaxy® displays • Vortek® hoist systems 11% of net sales in FY09 Primary funding is through local sponsors and advertising FY2010 net s
Slide 24: International Business Unit
International Business Unit
Slide 25: International Overview
• Limited manufacturing in China • 10% of net sales in FY09 • Large project driven • Similar drivers as rest of business • Current expectation is for lower sales in FY10 due to economic and competitive factors • FY10 net sales down 50% YTD through Q2 • Improving pipeline, increased competition and p
Slide 26: Transportation Business Unit
Transportation Business Unit
Slide 27: Transportation Overview
Transportation Overview Three main areas: • Intelligent transportation systems (ITS) • Aviation, including airports and airlines • Mass Transit 6% of FY09 net sales Strong backlog going into FY2010 FY10 net sales up 27% YTD through Q2
Slide 28: Transportation Long-term Growth Drivers and Competitors
Transportation Overview Long-term Growth Drivers • Government spending • Capacity constraints on highways, public transit, airports and parking systems • Limited ability to build and expand new roads • Increased air travel • Work-zone safety Competitors • ITS - Skyline, Ledstar • Aviation - TransLux
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Slide 30: Maintaining Long-Term Profitable Growth
Maintaining Long-Term Profitable Growth Ongoing product development - generally 4% of net sales (higher in FY2010) • New product for existing markets • Enhance existing products while reducing costs • Lean development methods Increase market penetration in existing locations Continued emphasis on re
Slide 31: Managing Through Current Downturn
Managing Through Current Downturn • Cost reduction is ongoing process, not a one time event • Overriding objective to reduce cost without harm to • Long-term growth opportunities, and • Orders • Goal is to come out of downturn stronger and leaner • Focus on payroll reductions through attrition, perf
Slide 32: Outlook Overview - Challenging Factors
Outlook Overview - Challenging Factors • Lighter ($90 million) backlog going into Q3 • Order bookings in Q3 lagging expectations due to economic factors, impacting Q3 revenue expectations • Now apparent that no large (>$5 million) baseball projects will go forward for installation this season • Nati
Slide 33: Outlook Overview - Positive Factors
Outlook Overview - Positive Factors • Overall cost reduction has been effective to date - achieved 8% operating margin in Q2 • Cost reduction continues as an ongoing process • Significant ongoing improvements throughout the company on lean initiatives • Improved competitiveness in Live Events due to
Slide 34: Daktronics
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