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:

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.