Daktronics Inc (DAKT) 2024 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Daktronics Fiscal Year 2024 Second Quarter Earnings Results conference call. As a reminder, this conference is being recorded today, Tuesday, December 5, 2023, and is available on the company's website at www.daktronics.com. (Operator Instructions)

女士們、先生們，美好的一天，歡迎參加達科 2024 財年第二季獲利結果電話會議。謹此提醒，本次會議於今日（2023 年 12 月 5 日星期二）錄製，可在公司網站 www.daktronics.com 上查看。 （操作員說明）

I would now like to turn the conference over to Ms. Sheila Anderson, Chief Financial Officer for Daktronics, for some introductory remarks. Please go ahead. Sheila.

現在我想請達科公司財務長 Sheila Anderson 女士做一些介紹性發言。請繼續。希拉。

Thank you, Gigi. Good morning, everyone. Thank you for participating in our second quarter earnings conference call. I would like to review our disclosure cautioning investors and participants that in addition to statements of historical facts, we will be discussing forward-looking statements reflecting our expectations and plans about our future financial performance and future business opportunities. These forward-looking statements reflect the company's expectations or beliefs concerning future events.

謝謝你，吉吉。大家，早安。感謝您參加我們的第二季財報電話會議。我想回顧一下我們的揭露，提醒投資者和參與者，除了歷史事實的陳述之外，我們還將討論反映我們對未來財務表現和未來商業機會的預期和計劃的前瞻性陳述。這些前瞻性陳述反映了公司對未來事件的期望或信念。

All forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from our expectations. Such risks include, but are not limited to, changes in economic and market conditions, management of growth, timing and magnitude of future contracts and orders, fluctuations and margins, the introductions of new products and technologies, availability of raw materials, components and shipping services and other important factors.

所有前瞻性陳述均涉及風險和不確定性，可能導致實際結果與我們的預期有重大差異。這些風險包括但不限於經濟和市場條件的變化、成長管理、未來合約和訂單的時間表和規模、波動和利潤、新產品和技術的推出、原材料、零件和運輸的可用性服務和其他重要因素。

These identified factors could cause actual results to differ materially from those discussed in this call in the company's 2024 quarterly earnings release and its most recent annual report on Form 10-K. Our second quarter 2024 earnings release contains certain non-GAAP financial measures that was furnished to the Securities and Exchange Commission on a Form 8-K this morning. These documents are available on the Investors section at Daktronics website at www.daktronics.com.

這些已確定的因素可能導致實際結果與公司 2024 年季度收益發布和最新 10-K 表格年度報告中討論的結果有重大差異。我們的 2024 年第二季財報包含某些非 GAAP 財務指標，這些指標已於今天上午以 8-K 表格形式提交給美國證券交易委員會。這些文件可在 Daktronics 網站 www.daktronics.com 的投資者部分取得。

I'll turn the call over now to our CEO, Reece Kurtenbach.

我現在將把電話轉給我們的執行長 Reece Kurtenbach。

Good morning. Thank you, Sheila. Thanks everybody out there for joining us today. We have had a record start to fiscal year 2024 in both sales and operating income and had robust operating cash generation for the quarter. All of this is the result of strong execution in our strategic strategies across all our business areas. We continue to benefit from our past decisive and deliberate actions to improve our customers' experience while increasing our profitability and working capital levels. Our performance is also a testimony to the resiliency and strength of our teams within Daktronics as well as our strategy of diversified markets and innovation across technology platforms.

早安.謝謝你，希拉。感謝大家今天加入我們。 2024 財年，我們的銷售和營業收入均創歷史新高，本季的營業現金產生也強勁。這一切都是我們在所有業務領域強有力地執行策略策略的結果。我們繼續受益於過去果斷而深思熟慮的行動，以改善客戶體驗，同時提高我們的獲利能力和營運資本水準。我們的表現也證明了達科團隊的彈性和實力，以及我們的多元化市場和跨技術平台創新的策略。

For additional details on the financial results for the quarter, I'll turn it back to Sheila.

有關本季度財務業績的更多詳細信息，我會將其轉回希拉。

Thank you, Reece. As Reece mentioned, we had a record start for orders and operating income and strong operating cash flows, congratulations to the Daktronics team for this great effort. For the quarter and year, orders and demand outlook remained strong in Live Events, High School Park and Recreation, and Transportation as we see customers continue to invest in digital displays to inform, entertain, and persuade their audiences. International orders have been increasing this year as global economies recover from the pandemic despite more related events

謝謝你，里斯。正如 Reece 所提到的，我們的訂單和營業收入以及強勁的營業現金流均創下了創紀錄的開局，祝賀 Daktronics 團隊所做的巨大努力。在本季度和本年度，現場活動、高中公園和娛樂以及交通領域的訂單和需求前景依然強勁，因為我們看到客戶繼續投資於數位顯示器，以告知、娛樂和說服觀眾。儘管相關事件較多，但隨著全球經濟從疫情中復甦，今年的國際訂單一直在增加

For F2024, commercial areas have been contracted for orders and out-of-home digital billboard and the military areas. As a reminder, given the impact of large, tailored projects across our markets, orders can be lumpy.

F2024已簽約商業領域和戶外數位廣告看板以及軍事領域的訂單。提醒一下，鑑於大型客製化項目對我們市場的影響，訂單可能會不穩定。

We reported sales of $199.4 million for the second quarter of F2024. This was an increase of 6.4% compared to $187.4 million for the second quarter of F2023. Sales growth was driven by fulfilling orders and backlog. Gross profit as a percentage of net sales increased to 27.2% for the second quarter of F2024 as compared to 16.9% in the second quarter of F2023; the over 10-point increase in gross profit percentage is attributable to the increased sales volume over our relatively fixed cost structure, strategic pricing actions, and a stable supply chain causing fewer operational disruptions during the second quarter of F2024 as compared to a year earlier.

我們報告 2024 年第二季銷售額為 1.994 億美元。與 2023 年第二季的 1.874 億美元相比，成長了 6.4%。銷售成長是由履行訂單和積壓訂單推動的。 2024 年第二季毛利佔淨銷售額的百分比增至 27.2%，而 2023 年第二季為 16.9%；毛利率成長超過 10 個百分點，歸因於我們相對固定的成本結構、策略性定價行動以及穩定的供應鏈導致銷售增加，從而與去年同期相比，2024 年第二季度營運中斷減少。

Operating expenses for the second quarter of F2024 were $34.8 million compared to $30.2 million for the second quarter of F2023. As a percentage of sales, operating expenses for the quarter over prior year was 17.4% as compared to 16.1%. On a year-to-date basis, operating expenses as a percent of sales was 15.2% as compared to 17.1%.

2024 年第二季的營運費用為 3,480 萬美元，而 2023 年第二季的營運費用為 3,020 萬美元。本季營運費用佔銷售額的百分比為 17.4%，去年同期為 16.1%。年初至今，營運費用佔銷售額的比例為 15.2%，而去年同期為 17.1%。

Both gross profit and operating expenses were impacted by $4.8 million of expenses related to the effects of our employee benefit programs, $3.4 million related to the establishment or estimate adjustments for these programs. We believe these programs are valuable and promote higher employee retention.

毛利和營運費用均受到與員工福利計畫影響相關的 480 萬美元費用的影響，以及與這些計畫的建立或估計調整相關的 340 萬美元費用的影響。我們相信這些計劃很有價值，可以提高員工留任率。

Operating income was $19.4 million or 9.7% of sales during the second quarter of F2024 as compared to last year's $1.5 million or 0.8%.

2024 年第二季營業收入為 1,940 萬美元，佔銷售額的 9.7%，而去年為 150 萬美元，佔銷售額的 0.8%。

And as a reminder, our business also fluctuates seasonally based on the sports markets and construction cycles, and is dependent on the varied schedules of our customers' needs. Generally, the first half of the year, we have stronger quarters, Q3 is softer because of the seasonality and reduced workdays for the holidays, and Q4 starts to ramp back up for the sports and outdoor deliveries. The low operating income, we accounted for our convertible debt at fair value in accordance with US generally accepted accounting principles.

需要提醒的是，我們的業務也會根據體育市場和施工週期而季節性波動，並且取決於客戶需求的不同時間表。一般來說，上半年，我們的季度表現強勁，第三季度由於季節性和假期工作日減少而較為疲軟，而第四季度則開始因體育和戶外交付而回升。由於營業收入較低，我們根據美國公認會計原則以公允價值對可轉換債務進行會計處理。

For the second quarter, we recorded a $10.7 million non-cash charge. This fair value changes primarily caused by the increase in our stock price over the conversion price and the slight decline in market interest rates. Going forward, we will remeasure the fair value of this convertible notes until maturity or conversion happens, which will create this non-cash charge below operating income each quarter.

第二季度，我們記錄了 1,070 萬美元的非現金費用。該公允價值變動主要是由於我們的股價超過轉股價格的上漲以及市場利率的小幅下降所致。展望未來，我們將重新計量該可轉換票據的公允價值，直到到期或轉換發生，這將使該非現金費用低於每季的營業收入。

Tax expenses for the second quarter of F2024 was $4 million with an effective income tax rate of 64.8%. Absent any major tax changes, we expect our full-year effective rate to be in the mid-20s before the non-cash, non-tax impact of the fair value accounting for the convertible debt.

2024 年第二季的稅務費用為 400 萬美元，有效所得稅率為 64.8%。在沒有任何重大稅收變化的情況下，我們預計在可轉換債務公允價值會計的非現金、非稅收影響之前，我們的全年實際利率將在 20 多歲左右。

Our balance sheet reflects the changes in business levels and strategies we pursued in managing our supply chain and growing our capability to meet our customers' commitments while managing our liquidity. At the end of the F2024 second quarter, our working capital ratio was 2:1. Inventory levels dropped slightly since the end of our fiscal year in April 29, 2023, and are expected to approach more normalized levels as supply chain disruptions continue to ease and our order backlog is fulfilled.

我們的資產負債表反映了我們在管理供應鏈和增強滿足客戶承諾的能力以及管理流動性方面所追求的業務水平和策略的變化。截至F2024第二季末，我們的營運資金比率為2:1。自 2023 年 4 月 29 日本財年結束以來，庫存水準略有下降，隨著供應鏈中斷的繼續緩解以及我們積壓的訂單得到履行，預計將接近更加正常化的水平。

Cash, restricted cash and marketable securities totaled $73.5 million, and we had a face value of debt of $39.6 million outstanding. There were no drawdowns on our line of credit.

現金、限制性現金和有價證券總計 7,350 萬美元，未償債務面額為 3,960 萬美元。我們的信用額度沒有被提款。

Through higher income from operations and strong working capital management, we drove second quarter of F2024 cash generation to $25.1 million from operations, and we used $4.4 million for the purchase of property and equipment. Income from operations and working capital managements contributed to that cash generation. Our plans are to spend approximately $19 million for capital assets, primarily in manufacturing and technology areas in total for F2024. We also planned investments in digitalization to improve customer and employee experiences, and we'll continue to invest in our affiliates through the year.

透過更高的營運收入和強大的營運資金管理，我們將 2024 年第二季的營運現金產生量增加至 2,510 萬美元，並使用 440 萬美元購買財產和設備。來自營運和營運資本管理的收入為現金產生做出了貢獻。我們計劃在 2024 年總共花費約 1,900 萬美元用於資本資產，主要用於製造和技術領域。我們還計劃對數位化進行投資，以改善客戶和員工體驗，並且我們將在今年繼續對我們的附屬公司進行投資。

Over the long term, we remain focused on driving profitable growth. Our backlog at the end of the second quarter of F2024 is $307 million, which provides a nice pace of business to fulfill in the coming quarters. The reduction in backlog from last year and last quarter reflects our focus to reduce lead times with capacity increases we've made over the past year, and it was also aided by the continued stability in the supply chain.

從長遠來看，我們仍然專注於推動獲利成長。截至 2024 年第二季末，我們的積壓訂單為 3.07 億美元，這為未來幾季的業務實現提供了良好的節奏。去年和上季積壓訂單的減少反映了我們在過去一年中透過增加產能來減少交貨時間，這也得益於供應鏈的持續穩定。

I'll now turn it back over to you, Reece.

我現在把它交還給你，里斯。

Thank you, Sheila. As we look ahead, industry research predicts the LED market will achieve an estimated 20% to 25% compounded annual growth rate over the coming years, depending on the specific end market and geography considered. We are well positioned to continue to capitalize on growth in the global use of audio visual communication systems in both traditional and new applications, and we remain focused on engaging in a full range of activities to serve our customers by providing high-quality standard display products as well as custom-designed integrated systems, both with ongoing services and support.

謝謝你，希拉。展望未來，產業研究預測 LED 市場在未來幾年將實現約 20% 至 25% 的複合年增長率，具體取決於具體的終端市場和地理位置。我們處於有利位置，可以繼續利用全球視聽通訊系統在傳統和新應用中的使用成長，並且我們仍然專注於從事全方位的活動，透過提供高品質的標準顯示產品來服務我們的客戶以及客製化設計的整合系統，均提供持續的服務和支援。

Manufacturing a complete line of products from small scoreboards and electronic displays to large multimillion-dollar video display systems and the related control and sound systems developing capabilities to design, manufacture, install and service, complete integrated systems and we are recognized as a technical leader in these areas, generating new leads and serve repeat customers based on our performance, reputation, and marketing efforts.

製造從小型記分板和電子顯示器到價值數百萬美元的大型視訊顯示系統的全系列產品以及相關的控制和音響系統開發能力，以設計、製造、安裝和服務，完整的整合系統，我們被公認為是以下領域的技術領導者這些領域，根據我們的業績、聲譽和行銷努力，產生新的潛在客戶並為回頭客提供服務。

As we look ahead to the remainder of the current fiscal year, our attention remains focused on our multiyear journey to capture the market's expected growth and broaden our leading market position by offering best-in-class technologies and services to both our traditional customers as well as new and adjacent markets.

展望本財年的剩餘時間，我們的注意力仍然集中在我們的多年旅程上，以抓住市場的預期增長，並通過向我們的傳統客戶提供一流的技術和服務來擴大我們的領先市場地位作為新的和鄰近的市場。

As we look in into the second half of F2024, we are applying the experience we gained over the last two fiscal years and intend to closely monitor the ever-evolving geopolitical and global economic environment and as necessary, quickly adjust our resources and market approaches so that we can maintain profitability and cash generation throughout various cycles.

展望F2024下半年，我們正在運用過去兩個財年所獲得的經驗，並打算密切關注不斷變化的地緣政治和全球經濟環境，並在必要時快速調整我們的資源和市場策略，以便我們可以在各個週期中保持獲利能力和現金產生。

In our business areas, we are focused on growth opportunities over the long-term. These include our High School Park and Recreation business unit to grow through the adoption of video displays for sporting and educational use. These customers are deploying more Daktronics professional-grade technology and sophisticated content increasing the total addressable market.

在我們的業務領域，我們專注於長期成長機會。其中包括我們的高中公園和娛樂業務部門，該部門透過採用視訊顯示器用於體育和教育用途來實現成長。這些客戶正在部署更多的達科專業級技術和複雜的內容，從而擴大了整個潛在市場。

In the commercial area, while in FY24 our orders were down because of market conditions, we expect growth over the long-term. We are focused on increasing sales channels with audiovisual integrators for end use in government, military, healthcare, and corporate applications, which will create growth in this business area. In addition, customers depending on out-of-home advertising or self-promotion use our products and services as an effective medium for both indoor and outdoor applications. We expect existing and new customers to purchase displays to install in new locations as well as replacement displays for existing locations to capitalize on the effectiveness of digital technologies.

在商業領域，雖然 2024 財年我們的訂單因市場狀況而下降，但我們預期會長期成長。我們專注於增加與視聽整合商的銷售管道，以用於政府、軍事、醫療保健和企業應用的最終用途，這將創造該業務領域的成長。此外，依賴戶外廣告或自我推銷的客戶將我們的產品和服務用作室內和室外應用的有效媒介。我們預計現有和新客戶將購買顯示器安裝在新地點，並為現有地點更換顯示器，以充分利用數位技術的有效性。

Transportation demand is strong as project planning and approval activities resume to more pre-pandemic levels, and our customers move forward in purchasing displays used for intelligent transportation systems and for mass transit venues. Infrastructure spending should continue to benefit this segment as digital signage is often used in these projects and we are qualified to do business in all US states.

隨著專案規劃和審批活動恢復到疫情前的水平，交通需求強勁，並且我們的客戶在購買用於智慧交通系統和公共交通場館的顯示器方面取得進展。基礎設施支出應繼續使該細分市場受益，因為這些項目中經常使用數位標牌，而且我們有資格在美國所有州開展業務。

In the International business unit, we continue to experience a softer market due to macroeconomic and geopolitical factors. We expect to see these factors to continue to impact sales in the coming year. We are closely watching developments and can adjust resources and commitments accordingly.

在國際業務部門，由於宏觀經濟和地緣政治因素，我們的市場持續疲軟。我們預計這些因素將繼續影響來年的銷售。我們正在密切關注事態發展，並可以相應地調整資源和承諾。

Over the longer term, we expect similar growth trends in the commercial and transportation areas outside the US. We also expect sports venue projects to continue to be a focus in our marketing efforts.

從長遠來看，我們預期美國以外的商業和運輸領域也會出現類似的成長趨勢。我們也預計體育場館計畫將繼續成為我們行銷工作的重點。

The Live Events segment outlook remains strong due to large stadium renovations, continued replacement cycles, and expansion of sales efforts beyond the sports competition areas, which we would call in the ball. We are the acknowledged market leader in this segment, which allows us to be strategic in our pricing and contract terms, while being very mindful about the profitability of this segment.

由於大型體育場翻新、持續的更換週期以及將銷售工作擴展到體育比賽區域之外（我們稱之為球），現場活動細分市場的前景仍然強勁。我們是該領域公認的市場領導者，這使我們能夠在定價和合約條款方面具有策略性，同時非常關注該領域的獲利能力。

In FY24, we are making investments in high-return projects and technologies to support long-term profitability. Our experience in engineering, process design, service design, and product development capabilities and investments made in affiliated customers are very important factors in continuing to develop, produce, and offer the most up-to-date digital displays and control system solutions desired by the market.

24 財年，我們將對高回報項目和技術進行投資，以支持長期獲利能力。我們在工程、工藝設計、服務設計和產品開發能力方面的經驗以及對附屬客戶的投資是繼續開發、生產和提供客戶所需的最新數字顯示和控制系統解決方案的非常重要的因素。市場。

We will continue to invest in our development efforts and our affiliated customers to release differentiated product platforms, software offerings, and support services. We will also advance critical architecture and design in the new competitive narrow pixel pitch and micro-LED technologies, sustainable technologies, software architecture, and other related areas. We also plan to expand our operational efficiency by focusing on retention of our highest performing team members and capitalizing on automation capabilities added over the last year. We will invest in digital transformation projects and other automation that will support improved customer and employee experiences and lower cost to operate; our goal is to sustain the improved results and continue to drive profitable growth over the long term.

我們將繼續投資於我們的開發工作和我們的附屬客戶，以發布差異化的產品平台、軟體產品和支援服務。我們還將推進新的有競爭力的窄像素間距和 micro-LED 技術、永續技術、軟體架構和其他相關領域的關鍵架構和設計。我們還計劃透過重點保留表現最好的團隊成員並利用去年增加的自動化功能來提高營運效率。我們將投資數位轉型項目和其他自動化項目，以支援改善客戶和員工體驗並降低營運成本；我們的目標是維持業績的改善並繼續推動長期獲利成長。

With that, I would ask the operator to please open the line for any questions.

這樣，如果有任何問題，我會請接線生打開線路。

(Operator Instructions) BJ Cook, Singular Research.

（操作員指令）BJ Cook，Singular Research。

Hey, guys. Nice quarter. Just a few quick questions here. Looks like gross margin was down slightly from Q1 -- I guess still working through some inflationary cost pressures? Or is this kind of more of a return to normalized gross margin?

大家好。不錯的季度。這裡只是幾個簡單的問題。看起來毛利率比第一季略有下降——我想仍在應對一些通膨成本壓力？或者這更像是毛利率正常化的回歸？

Yes, BJ. First of all, thanks for joining us this morning.

是的，BJ。首先，感謝您今天早上加入我們。

Of course.

當然。

As Sheila mentioned in her comments, we do have a fixed cost infrastructure with our factories in other areas. So as revenue might fluctuate through the quarter-to-quarter, you might see a change in the measured gross profit, even though our pricing and other cost structures have remained similar.

正如希拉在評論中提到的那樣，我們確實在其他地區的工廠擁有固定成本的基礎設施。因此，由於收入可能會按季度波動，因此即使我們的定價和其他成本結構保持相似，您也可能會看到測得的毛利發生變化。

And so we think we still have a strong backlog of good orders, and we believe that we're set up for success for the rest of the fiscal year over the long term and for the long term with both our backlog as well as the ordering activity that we're seeing. So, we're not thinking that's a long -- we're thinking that's part of our business over the long term. That's not some sort of a change in how our market pricing or order taking is going.

因此，我們認為我們仍然有大量積壓的良好訂單，而且我們相信，從長遠來看，我們已經做好了在本財年剩餘時間取得成功的準備，無論是我們的積壓訂單還是訂單我們看到的活動。所以，我們並不認為這是一個長期的事情——我們認為這是我們長期業務的一部分。這並不是我們的市場定價或訂單接受方式的某種變化。

All right. Thanks, Reece. One more; you mentioned a great quarter in terms of cash generation, got a healthy amount of cash on the balance sheet. Just wondering if paying down the mortgage is on your radar or if there's other uses for that cash that you guys are considering?

好的。謝謝，里斯。多一個;您提到了一個在現金產生方面表現出色的季度，資產負債表上有大量現金。只是想知道您是否考慮償還抵押貸款，或者您正在考慮這些現金是否有其他用途？

Yes, certainly, that's always a discussion with our Board, but there's different ways that we could choose to use that cash and paying down debt is one of those. I think we'll see that those strategies become visible here in the coming quarters.

是的，當然，這始終是與我們董事會的討論，但我們可以選擇使用這些現金的不同方式，而償還債務就是其中之一。我認為我們將在未來幾季看到這些策略變得顯而易見。

Okay. Cool. I appreciate it.

好的。涼爽的。我很感激。

Thank you. Appreciate the questions and the participation.

謝謝。感謝提問與參與。

Of course.

當然。

(Operator Instructions) I would now like to turn the conference back over to Reece Kurtenbach for closing remarks.

（操作員指示）我現在想將會議轉回 Reece Kurtenbach 進行閉幕致詞。

Thank you, everybody, for attending our conference call today. We are appearing in the Noble Capital and Singular conferences over the next few days, and we'll host the next conference call when our third quarter results are released later this spring. I hope you all have a wonderful holiday season. Appreciate your participation in today's call and we'll talk to you in a quarter. Thanks, everyone.

謝謝大家今天參加我們的電話會議。我們將在接下來的幾天內出席 Noble Capital 和 Singular 會議，並將在今年春季晚些時候發布第三季業績時舉辦下一次電話會議。我希望大家度過一個愉快的假期。感謝您參與今天的電話會議，我們將在一個季度內與您交談。感謝大家。

This concludes today's conference call. Thank you for participating; you may now disconnect.

今天的電話會議到此結束。感謝您的參與;您現在可以斷開連線。