Daktronics Clocks 29% Revenue Growth In Q2; Warns On Near-Term Volatility

Daktronics, Inc. DAKT reported second-quarter net sales growth of 29.1% year-over-year to $164.48 million, attributable to strong demand and eased pandemic-related site restrictions, beating the consensus of $146.90 million.

• Orders in the quarter grew 20.7% Y/Y to $163.7 million, driven by increased market activity.
• EPS decreased to $0.05 from $0.08 in 2Q21. The gross margin contracted by 660 bps to 19.6%.
• The operating income reduced 34.2% to $4.38 million, and the margin contracted by 250 bps to 2.7%. The company attributed the operating income decline to inflation in materials and freight costs and increased personnel spend.
• Daktronics' cash used in operating activities year-to-date was $8.53 million, compared to cash provided of $39.97 million a year ago. The free cash outflow was $12.28 million.
• The product order backlog stood at $282 million versus $201 million a year earlier, reflecting strong order volume offset by muted conversion to sales due to supply chain challenges.
• Daktronics held cash and equivalents of $61.6 million as of October 30, 2021.
• "We expect dynamic supply chain conditions to persist through next calendar year. As we continue to work through supply chain challenges, inflationary pressures, and evolving pandemic impacts, we expect volatility in our pricing, order and revenue cycles, and production costs in the near term. Over the long-term, we believe the fundamentals of the audiovisual industry are strong and are poised for continued growth," commented Reece Kurtenbach, chairman, president, and CEO.
• Price Action: DAKT shares are trading lower by 0.20% at $4.87 during the market session on Wednesday.