Daktronics Hits the Big Time: Fool by Numbers

On Aug. 15, large-format display designer Daktronics (Nasdaq: DAKT) released first-quarter 2008 earnings for the period ended July 28.

• That revenue and profit growth belongs on the big screen, doesn't it?

• Management says that economies of scale are kicking in to widen the gross margins. In fact, that's part of the revenue growth story, too, because Daktronics can now afford more aggressive contract pricing without losing profitability.

• The infrastructure upgrades behind all of this didn't come cheap, though, as the cash balance and new debt load plainly show.

• Owner earnings went south even while free cash flow effectively moved to Canada, because the owner earnings metric doesn't care about the large swings in working capital balances the company saw last quarter.

(Figures in thousands, except per-share data)

Income Statement Highlights

	Q1 2008	Q1 2007	Change
Sales	$120,923	$92,153	31.2%
Net Profit	$7,111	$4,987	42.6%
EPS	$0.17	$0.12	41.7%
Diluted Shares	41,260	41,082	0.4%

Get back to basics with the income statement.

Margin Checkup

	Q1 2008	Q1 2007	Change*
Gross Margin	30.5%	28.7%	1.8
Operating Margin	9.3%	7.1%	2.2
Net Margin	5.9%	5.4%	0.5

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q1 2008	Q1 2007	Change
Cash + ST Invest.	$7,161	$26,327	(72.8%)
Accounts Rec.	$57,829	$72,011	(19.7%)
Inventory	$50,807	$42,622	19.2%

Liabilities	Q1 2008	Q1 2007	Change
Accounts Payable	$37,506	$27,556	36.1%
Long-Term Debt	$1,564	$230	580.0%

The balance sheet reflects the company's health.

Cash Flow Highlights

	Q1 2008	Q1 2007	Change
Cash From Ops.	$19,483	$6,477	200.8%
Capital Expenditures	$13,343	$7,450	79.1%
Free Cash Flow	$6,140	($973)	N/A
Owner Earnings	($1,648)	$333	N/A

Free cash flow is a Fool's best friend.

Related Foolishness:

• Foolish Forecast: Dear Daktronics
• The Next Ultimate Growth Stock
• Stocks That Will Rock Your World

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Fool contributor Anders Bylund had no position in any company mentioned. Fool rules are here.