Daktronics, Inc. (DAKT) Q2 2024 Earnings Call Transcript
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 04 2024
0mins
Should l Buy DAKT?
Source: SeekingAlpha
Sales $199.4 million for Q2 FY2024, an increase of 6.4% from $187.4 million in Q2 FY2023. Sales growth was driven by fulfilling orders in backlog.
Gross Profit Margin 27.2% for Q2 FY2024, up from 16.9% in Q2 FY2023. The increase is attributed to higher sales volume over a relatively fixed cost structure, strategic pricing actions, and a stable supply chain.
Operating Expenses $34.8 million for Q2 FY2024, compared to $30.2 million in Q2 FY2023. As a percentage of sales, operating expenses were 17.4% in Q2 FY2024 versus 16.1% in Q2 FY2023.
Operating Income $19.4 million or 9.7% of sales in Q2 FY2024, compared to $1.5 million or 0.8% in Q2 FY2023. The significant increase is due to higher sales and improved operational efficiency.
Cash Generation from Operations $25.1 million for Q2 FY2024, driven by higher income from operations and strong working capital management.
Tax Expense $4 million for Q2 FY2024, with an effective income tax rate of 64.8%. The expected full-year effective rate is projected to be in the mid-20s.
Working Capital Ratio 2:1 at the end of Q2 FY2024, reflecting changes in business levels and strategies.
Cash, Restricted Cash, and Marketable Securities Totaled $73.5 million at the end of Q2 FY2024.
Debt Face value of debt was $39.6 million outstanding at the end of Q2 FY2024.
Backlog $307 million at the end of Q2 FY2024, reflecting a reduction from last year and last quarter due to efforts to reduce lead times.
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Analyst Views on DAKT
About DAKT
Daktronics, Inc. is a global designer and manufacturer of dynamic video communication displays and control systems for customers worldwide. Commercial segment consists of sales of its integrated video display systems, digital billboards, Galaxy and Fuelight product lines, and dynamic messaging systems. Live Events segment consists of sales of integrated scoring and video display systems, and sales of its mobile display technology to video rental organizations and other live event-type venues. High School Park and Recreation segment consists of sales of scoring systems, Galaxy displays and video display systems to primary and secondary education facilities and resellers. Transportation segment consists of sales of intelligent transportation systems, dynamic messaging signs for road management, mass transit, aviation applications and others. Its MicroLED fabrication offers advanced display solutions with pixel pitches for large-format video walls and medium-sized commercial displays.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Analyst Reaction: When a stock reaches its target price, analysts may either downgrade their valuation or raise their target price; the increased attention on Daktronics could prompt analysts to reassess their targets to reflect the company's growth potential.
- Target Price Distribution: Among analysts covered by Zacks, target prices range from $16.00 to $32.00, with a standard deviation of $8.326, highlighting varying market perspectives on Daktronics' future performance, necessitating careful risk and opportunity assessment by investors.
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- Timing and Registration: The presentation is set to begin at 2:30 PM ET on January 22, with free registration available for both Sidoti clients and non-clients, likely attracting significant investor interest.
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- Talent Integration: The transaction brings 15 engineers with deep expertise in mass-transfer and MicroLED development into Daktronics, further strengthening the company's engineering capabilities and enhancing its competitiveness in the dynamic video screen market.
- Market Outlook: Industry research firm Futuresource projects that the narrow pixel pitch (NPP) segment could reach approximately $12 billion by 2029, positioning Daktronics to better capture high-volume and smaller display opportunities, thereby increasing market share.
- Strategic Positioning: Interim CEO Brad Wiemann stated that the acquisition reinforces Daktronics' leadership in next-generation display technology, demonstrating a strong commitment to MicroLED technology aimed at enhancing product competitiveness through improved energy efficiency and longer lifespan.
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- Acquisition of Technology Assets: Daktronics has acquired intellectual property and equipment assets from X Display Company to integrate advanced MicroLED technology, which aims to enhance its competitiveness in the dynamic video display sector, thereby driving product innovation and market growth.
- Talent Integration: The acquisition includes 15 key employees from XDC with deep expertise in MicroLED and MicroIC technologies, which will bolster Daktronics' technical capabilities and accelerate the development of new products.
- Market Outlook: According to Futuresource, the narrow pixel pitch market is expected to reach $12 billion by 2029, providing Daktronics with significant growth opportunities, particularly in the medium-sized display solutions sector.
- Strategic Positioning: This acquisition allows Daktronics to not only enhance the brightness and viewability of existing outdoor displays but also to develop more cost-effective solutions for lower volume applications, optimizing supply chain stability and expanding market share.
See More
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Included Assets: The acquisition encompasses proprietary mass-transfer and MicroLED fabrication technologies, specialized development equipment, and the hiring of 15 former employees from X Display Company.
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Market Reaction: Following the announcement, Daktronics' stock price decreased by 0.15% to $18.88 after hours.
See More
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- Significant Asset Allocation: This acquisition accounts for 9.57% of Alta Fox's 13F reportable assets, reflecting the fund's preference for concentrated investment strategies, which may further enhance Resideo's market performance.
- Strong Financial Performance: Resideo reported $1.86 billion in revenue for Q3, a year-over-year increase of approximately 2%, while net income surged to $156 million, up 680%, showcasing a remarkable improvement in profitability.
- Positive Future Outlook: The company updated its 2025 revenue guidance to between $7.43 billion and $7.47 billion, coupled with ongoing gross margin expansion, indicating strong competitive positioning and growth potential in the market.
See More
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- Stock Performance: Daktronics Inc. (Ticker: DAKT) recently traded at $25.41 per share, surpassing the average analyst 12-month target price of $25.33, indicating a positive market sentiment that may attract more investor interest.
- Analyst Reaction: When a stock reaches its target price, analysts may either downgrade their valuation or raise their target price; the increased attention on Daktronics could prompt analysts to reassess their targets to reflect the company's growth potential.
- Target Price Distribution: Among analysts covered by Zacks, target prices range from $16.00 to $32.00, with a standard deviation of $8.326, highlighting varying market perspectives on Daktronics' future performance, necessitating careful risk and opportunity assessment by investors.
- Investor Signal: The stock's breach of the target price provides investors with a signal to reassess Daktronics, prompting them to consider whether the current valuation is justified or if it is time to take profits to mitigate risk.
See More
Daktronics (DAKT) to Host Investor Meetings at Sidoti Conference on January 22, 2026
- Investor Meeting Schedule: Daktronics will present at Sidoti's Micro-Cap Virtual Investor Conference on January 22, 2026, hosting one-on-one meetings with investors to enhance engagement and transparency.
- Timing and Registration: The presentation is set to begin at 2:30 PM ET on January 22, with free registration available for both Sidoti clients and non-clients, likely attracting significant investor interest.
- Company Background: Daktronics is a leading global designer and manufacturer of dynamic video communication displays and control systems, holding a strong market position focused on large-screen video displays, electronic scoreboards, and LED systems for customers worldwide.
- Diverse Business Units: The company operates four domestic business units, including Live Events, Commercial, High School Park and Recreation, and Transportation, showcasing its broad applications and influence across multiple market sectors.
See More
Daktronics Acquires XDC's IP and Equipment to Enhance MicroLED Capabilities
- Acquisition of Technology Assets: Daktronics has acquired intellectual property and equipment assets from X Display Company, which, while undisclosed in financial terms, will significantly enhance its display technology capabilities, particularly in MicroLED systems, supporting future product growth.
- Talent Integration: The transaction brings 15 engineers with deep expertise in mass-transfer and MicroLED development into Daktronics, further strengthening the company's engineering capabilities and enhancing its competitiveness in the dynamic video screen market.
- Market Outlook: Industry research firm Futuresource projects that the narrow pixel pitch (NPP) segment could reach approximately $12 billion by 2029, positioning Daktronics to better capture high-volume and smaller display opportunities, thereby increasing market share.
- Strategic Positioning: Interim CEO Brad Wiemann stated that the acquisition reinforces Daktronics' leadership in next-generation display technology, demonstrating a strong commitment to MicroLED technology aimed at enhancing product competitiveness through improved energy efficiency and longer lifespan.
See More
Daktronics Acquires XDC's IP and Assets to Accelerate MicroLED Innovation
- Acquisition of Technology Assets: Daktronics has acquired intellectual property and equipment assets from X Display Company to integrate advanced MicroLED technology, which aims to enhance its competitiveness in the dynamic video display sector, thereby driving product innovation and market growth.
- Talent Integration: The acquisition includes 15 key employees from XDC with deep expertise in MicroLED and MicroIC technologies, which will bolster Daktronics' technical capabilities and accelerate the development of new products.
- Market Outlook: According to Futuresource, the narrow pixel pitch market is expected to reach $12 billion by 2029, providing Daktronics with significant growth opportunities, particularly in the medium-sized display solutions sector.
- Strategic Positioning: This acquisition allows Daktronics to not only enhance the brightness and viewability of existing outdoor displays but also to develop more cost-effective solutions for lower volume applications, optimizing supply chain stability and expanding market share.
See More
Daktronics Purchases IP and Equipment from X Display Company
Acquisition Details: Daktronics has acquired intellectual property, equipment, and expertise from X Display Company Technology Ltd to enhance its MicroLED and MicroIC display technologies.
Included Assets: The acquisition encompasses proprietary mass-transfer and MicroLED fabrication technologies, specialized development equipment, and the hiring of 15 former employees from X Display Company.
Financial Terms: Daktronics did not disclose the financial terms of the acquisition.
Market Reaction: Following the announcement, Daktronics' stock price decreased by 0.15% to $18.88 after hours.
See More
