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Final Q1 Score: Daktronics 1, Analysts 0

By Anders Bylund - Aug 29, 2019 at 9:07AM

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The maker of scoreboards, digital road signs, and other forms of advanced signage destroyed Wall Street's expectations in the first quarter, sending the stock 13% higher.

Visual display systems specialist Daktronics (DAKT 4.05%) reported earnings on Wednesday, covering the first quarter of fiscal year 2020. The company crushed Wall Street's expectations across the board and Daktronics' stock closed the day 13% higher.

Let's take a closer look at Daktronics' latest results.

Daktronics' first-quarter results: The raw numbers

Metric

Q1 2020

Q1 2019

Change

Revenue

$180 million

$154 million

17%

Net income

$7.0 million

$4.6 million

54%

GAAP earnings per share (diluted)

$0.16

$0.10

60%

Data source: Daktronics. GAAP = generally accepted accounting principles.

What happened with Daktronics this quarter?

  • The first quarter is often one of the busiest reporting periods of the year for Daktronics, as the company installs outdoor systems during the summer's clement weather. This opening to the new fiscal year was no different, delivering the largest single-quarter revenue haul seen in the last five years.
  • This quarter consisted of 14 weeks, compared to 13 weeks in the year-ago period. The 2020 fiscal year happens to be one week longer than 2019 and the extra week fell in this quarter. That calendar quirk works out to an 8% extension of Daktronics' operations and the resulting financial outcomes.
  • Daktronics recorded $187.5 million of new orders in the first quarter, 18% above the year-ago period's result. Backing out the calendar effect noted above, orders per week increased by 9%. Compared to $180.3 million in billed contracts -- also known as revenues -- that's a book-to-bill ratio of 1.04. As a reminder, values above 1.0 point to generally growing order volumes and sets up expectations for revenue growth in future quarters.
  • The analyst consensus called for GAAP earnings near $0.10 per share on revenues in the neighborhood of $156 million. Daktronics exceeded both of these targets by a wide margin.
A modern scoreboard, attached to the ceiling of an indoor sports arena.

Image source: Getty Images.

What management had to say

In the first-quarter earnings call, Daktronics CFO Sheila Anderson dug deeper into the rising order volumes.

Orders increased in Live Events, International and Commercial business units, decreased in High School Park and Recreation business units, and were relatively flat in the transportation areas. Live Events orders led the increase primarily due to the number of projects for professional sports arenas and colleges and university venues available. ... Example wins include projects for the Cincinnati Reds; The U.S. Military Academy; and TD Gardens, home of the Boston Celtics and Bruins, to name a few. We were also awarded several projects on college campus athletics, as these customers are looking to increase the fan experience and attract players and fans to their events.

Daktronics also won large-scale contracts in overseas venues such as Macau and Riyadh during the quarter, mostly for state-run sports arenas and transportation signage.

Looking ahead

Management sees continued growth for the long term here.

"While economic concerns linger and the global tariff and trade environment create headwinds in the near term, our pipeline of project opportunities remains active and supports growth," said CEO Reece Kurtenbach. "We enter the second quarter of fiscal 2020 with a strong backlog and a positive outlook."

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DAKT
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