Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

DAKTRONICS, INC.

(DAKT)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancials 
SummaryMost relevantAll NewsOther languagesPress ReleasesOfficial PublicationsSector news

DAKTRONICS INC /SD/ MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

12/01/2021 | 05:29pm EST

FORWARD-LOOKING STATEMENTS




This section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" ("MD&A") is intended to provide a reader of
our financial statements with a narrative from the perspective of management on
our financial condition, results of operations, liquidity, and certain other
factors that may affect our future results. The MD&A provides a narrative
analysis explaining the reasons for material changes in the Company's (i)
financial condition during the period from the most recent fiscal year-end, May
1, 2021, to and including October 30, 2021 and (ii) results of operations during
the current fiscal period(s) as compared to the corresponding period(s) of the
preceding fiscal year.



This Quarterly Report on Form 10-Q, including the MD&A, contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements reflect our current views with
respect to future events and financial performance. The words "believe,"
"expect," "anticipate," "intend," "estimate," "forecast," "project," "should,"
"will," "continue" and similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Any and all forecasts and projections in this
document are "forward looking statements" and are based on management's current
expectations or beliefs. From time to time, we may also provide oral and written
forward-looking statements in other materials we release to the public, such as
press releases, presentations to securities analysts or investors, or other
communications by us. Any or all of our forward-looking statements in this
report and in any public statements we make could be materially different from
actual results. Accordingly, we wish to caution investors that any
forward-looking statements made by or on behalf of us are subject to
uncertainties and other factors that could cause actual results to differ
materially from such statements.



We also wish to caution investors that other factors might in the future prove
to be important in affecting our results of operations. New factors emerge from
time to time; it is not possible for management to predict all of such factors,
nor can it assess the impact of each such factor on the business or the extent
to which any factor, or a combination of factors, may cause actual results to
differ materially from those contained in any forward-looking statements.



We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.




Our MD&A should be read in conjunction with the Consolidated Financial
Statements and related Notes included in Item 1 of Part 1 of this Quarterly
Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended
May 1, 2021 (including the information presented therein under Risk Factors), as
well other publicly available information.



OVERVIEW



We are engaged principally in the design, market, and manufacture of a wide
range of integrated electronic display systems and related products which are
sold in a variety of markets throughout the world and the rendering of related
maintenance and professional services. We focus our sales and marketing efforts
on markets, geographical regions and products. Our five business segments
consist of four domestic business units and the International business unit. The
four domestic business units consist of Commercial, Live Events, High School
Park and Recreation, and Transportation, all of which include the geographic
territories of the United States and Canada.



The following selected financial data should be read in conjunction with our
Annual Report on Form 10-K for the year ended May 1, 2021 and the consolidated
financial statements, including the notes to consolidated financial statements
included therein.


CORONAVIRUS ("COVID-19") PANDEMIC




 The pandemic continues to evolve, as evidenced by the recent Omicron variant
reports, impacting economic and business conditions. We continue to monitor
guidance from international and domestic authorities regarding the COVID-19
pandemic and may take additional actions based on their requirements and
recommendations. Since late fiscal 2021, our order and quoting activities have
increased, creating a strong backlog and positive outlook; however, there is no
assurance that this trend will continue in future quarters. Supply chain
disruptions continue as a result of several factors including the pandemic,
shipping container shortages, labor shortages, and the changes in global demand.
Specifically, we are impacted by the global shortage of semiconductors and
related electronic components, labor and other materials needed for production,
and freight availability. We have experienced increased input costs including
material, freight, and tariff costs and increased personal spend through the
first half of the fiscal year. We expect continued disruptions in obtaining
material, labor, and freight availability and an increase in inflation as the
world economies react to and recover from the pandemic, which may cause
volatility in our pricing, order and revenue cycles and production costs. In
addition, regulatory requirements like those proposed by the US Occupational
Safety and Health Administration ("OSHA"), may increase on-going compliance
costs. Although we cannot predict the length or severity of these conditions, it
is reasonably possible they will continue to have some impact on our operations
throughout the remainder of fiscal 2022 and into fiscal 2023.



Refer to the COVID-19 related risk factors disclosed in Item 1A of Part I in our Annual Report on Form 10-K for the fiscal year ended May 1, 2020.

                                       13

--------------------------------------------------------------------------------

  Table of Contents


RESULTS OF OPERATIONS


COMPARISON OF THE THREE MONTHS ENDED October 30, 2021 and October 31, 2020

Product Order Backlog


Backlog represents the dollar value of orders for integrated electronic display
systems and related products and services which are expected to be recognized in
net sales in the future. Orders are contractually binding purchase commitments
from customers. Orders are included in backlog when we are in receipt of an
executed contract and any required deposits or security and have not yet been
recognized into net sales. Certain orders for which we have received binding
letters of intent or contracts will not be included in backlog until all
required contractual documents and deposits are received. Orders and backlog are
not measures defined by accounting principles generally accepted in the United
States of America ("GAAP"), and our methodology for determining orders and
backlog may vary from the methodology used by other companies in determining
their orders and backlog amounts.

Order and backlog levels provide management and investors additional details
surrounding the results of our business activities in the marketplace and
highlights fluctuation caused by seasonality and our large project business.
Management uses orders to evaluate market share and performance in the
competitive environment. Management uses backlog information for capacity and
resource planning. We believe order information is useful to investors because
it provides an indication of our market share and provides of future revenues.

Our product order backlog as of October 30, 2021 was $282 million as compared
to $201 million as of October 31, 2020 and $285 million at July 31, 2021, which
was the end of our first quarter of fiscal 2022. We expect to fulfill the
backlog as of October 30, 2021 within the next 24 months. The timing of backlog
may be impacted by project delays resulting from the COVID-19 pandemic and
supply chain delays.

Net Sales

The following table shows information regarding net sales for the three months ended October 30, 2021 and October 31, 2020:



                                                     Three Months Ended
                                   October 30,       October 31,       Dollar      Percent
(in thousands)                        2021              2020           Change       Change
Net sales:
Commercial                        $      34,463     $      30,356     $  4,107         13.5 %
Live Events                              59,396            37,822       21,574         57.0
High School Park and Recreation          32,747            27,578        5,169         18.7
Transportation                           14,053            15,323       (1,270 )       (8.3 )
International                            23,818            16,288        7,530         46.2
                                  $     164,477     $     127,367     $ 37,110         29.1 %
Orders:
Commercial                        $      58,358     $      32,590     $ 25,768         79.1 %
Live Events                              40,501            40,684         (183 )       (0.4 )
High School Park and Recreation          25,651            20,117        5,534         27.5
Transportation                           14,699            11,633        3,066         26.4
International                            24,498            30,642       (6,144 )      (20.1 )
                                  $     163,707     $     135,666     $ 28,041         20.7 %




For the fiscal 2022 second quarter, net sales were $164.5 million, an increase
of $37.1 million from the prior year's second quarter. The year-over-year growth
was driven by increased orders. Material supply shortages are creating an
increase in lead times and extending the timing of converting some orders to
sales in the near-term.



Order volume increased in the second quarter of fiscal 2022, reflecting the
continued recovery from the impact of the global pandemic among our customers,
despite longer lead times. The Commercial business unit saw the largest increase
in order bookings, while the order bookings in Live Events remained similar to
those in the prior year second quarter. The High School Park and Recreation
business unit performed well throughout the pandemic and continues to perform
well driven by the adoption of video displays at the high school level.
Transportation order levels increased as project planning and approval
activities resumed for displays used in intelligent transportation systems
and mass transit venues, while the International business unit saw a decrease in
orders this quarter compared to the same quarter in 2021 fiscal year.



Gross Profit and Contribution Margin



                                                                 Three Months Ended
                                                 October 30, 2021                  October 31, 2020
                                                           As a Percent                      As a Percent
(in thousands)                               Amount        of Net Sales        Amount        of Net Sales
Gross Profit:
Commercial                                 $    7,445               21.6 %   $    8,578               28.3 %
Live Events                                     5,585                9.4          7,300               19.3
High School Park and Recreation                10,749               32.8          8,497               30.8
Transportation                                  4,404               31.3          5,312               34.7
International                                   4,081               17.1          3,627               22.3
                                           $   32,264               19.6 %   $   33,314               26.2 %




The decrease in gross profit percentage is largely related to increased input
costs, including material, freight, tariffs, and outsourced installation costs.
Gross profit was also impacted by sales mix differences between periods. During
the second quarter of fiscal 2022, we had more large project sales which
generally have lower gross profit because of the competitive nature of large
projects. During the second quarter of fiscal 2021, we earned a higher rate of
gross profit on our service agreements due to reduced stand ready services
conducted during the quarter. This was due to lower on-site demand as events
were not being held during the various pandemic shutdowns. Total warranty costs
as a percent of sales for the three months ended October 30, 2021 compared to
the same period one year ago increased to 1.4 percent from 0.6 percent.



                                       14

--------------------------------------------------------------------------------

  Table of Contents



                                                             Three Months Ended
                              October 30, 2021                                                October 31, 2020
                                        As a Percent       Dollar        Percent                        As a Percent
(in thousands)            Amount        of Net Sales       Change         Change          Amount        of Net Sales
Contribution Margin:
Commercial              $    3,409                9.9 %   $  (1,372 )        (28.7 )%   $    4,781               15.7 %
Live Events                  3,324                5.6        (1,557 )        (31.9 )         4,881               12.9
High School Park and
Recreation                   7,836               23.9         1,885           31.7           5,951               21.6
Transportation               3,510               25.0          (936 )        (21.1 )         4,446               29.0
International                1,703                7.2         1,102          183.4             601                3.7
                        $   19,782               12.0 %   $    (878 )         (4.2 )%   $   20,660               16.2 %




Contribution margin is a non-GAAP measure and consists of gross profit less
selling expenses. Selling expenses consist primarily of personnel related costs,
travel and entertainment expenses, facility-related costs for sales and service
offices, bad debt expenses, third-party commissions and expenditures for
marketing efforts, including the costs of collateral materials, conventions and
trade shows, product demonstrations, customer relationship management systems,
and supplies.


Contribution margin was impacted by the previously discussed sales levels and impacts within gross profit.




Reconciliation from non-GAAP contribution margin to operating margin GAAP
measure is as follows:



                                                             Three Months Ended
                              October 30, 2021                                                October 31, 2020
                                        As a Percent       Dollar        Percent                        As a Percent
(in thousands)            Amount        of Net Sales       Change         Change          Amount        of Net Sales
Contribution margin     $   19,782               12.0 %   $    (878 )         (4.2 )%   $   20,660               16.2 %
General and
administrative               8,201                5.0           937           12.9           7,264                5.7
Product design and
development                  7,196                4.4           459            6.8           6,737                5.3
Operating income        $    4,385                2.7 %   $  (2,274 )        (34.1 )%   $    6,659                5.2 %



General and administrative expenses in the second quarter of fiscal 2022 increased as compared to the same period one year ago primarily due to increases in personnel related expenses.

Product design and development expenses in the second quarter of fiscal 2022 increased as compared to the same period one year ago primarily due to an increase in personnel related expenses.

Decreased contribution margin and increased spend in general and administrative and product development led to a lower operating income for the quarter compared to the prior year quarter.




Other Income and Expenses



                                                               Three Months Ended
                               October 30, 2021                                                  October 31, 2020
                                         As a Percent         Dollar        Percent                        As a Percent
(in thousands)            Amount         of Net Sales         Change         Change         Amount         of Net Sales
Interest (expense)
income, net             $      (59 )              (0.0 )%   $      (41 )        227.8 %   $      (18 )              (0.0 )%
Other (expense)
income, net             $     (952 )              (0.6 )%   $     (115 )         13.7 %   $     (837 )              (0.7 )%




Interest (expense) income, net: The change in interest income and expense, net
for the second quarter of fiscal 2022 compared to the same period one year ago
was primarily due to the reduction of interest expense, as we have no
outstanding drawings on the line of credit this year as compared to $15.0
million last year and adjustments to long-term receivable interest.



Other (expense) income, net: The change in other income and expense, net for the
second quarter of fiscal 2022 as compared to the same period one year ago was
primarily due to losses recorded for equity method affiliates and foreign
currency volatility.



Income Taxes



We have recorded an effective tax rate of 29.6 percent for the second quarter of
fiscal 2022 as compared to 41.1 percent for the second quarter of fiscal 2021.
The decrease in tax rate is primarily driven by a decrease in estimated tax
credits proportionate to an increase in estimated pre-tax earnings in the second
quarter of fiscal 2021 compared to the second quarter of fiscal 2022.



                                       15

--------------------------------------------------------------------------------

  Table of Contents


RESULTS OF OPERATIONS


COMPARISON OF THE Six MONTHS ENDED October 30, 2021 and October 31, 2020



Net Sales


The following table shows information regarding net sales for the six months ended October 30, 2021 and October 31, 2020:



                                                      Six Months Ended
                                   October 30,       October 31,       Dollar      Percent
(in thousands)                        2021              2020           Change       Change
Net sales:
Commercial                        $      67,244     $      64,862     $  2,382          3.7 %
Live Events                             111,783            89,296       22,487         25.2
High School Park and Recreation          60,641            56,521        4,120          7.3
Transportation                           26,611            29,821       (3,210 )      (10.8 )
International                            42,930            30,511       12,419         40.7
                                  $     309,209     $     271,011     $ 38,198         14.1 %
Orders:
Commercial                        $      96,687     $      58,123     $ 38,564         66.3 %
Live Events                              90,187            82,544        7,643          9.3
High School Park and Recreation          71,362            48,216       23,146         48.0
Transportation                           36,044            24,722       11,322         45.8
International                            51,173            44,214        6,959         15.7
                                  $     345,453     $     257,819     $ 87,634         34.0 %




Sales and orders increased, as demand was up across most markets in the six
months ended October 30, 2021 compared to the prior year six-month
periods. Sales decreased for the Transportation business unit during the first
six months of fiscal year 2022 compared to the first six months of fiscal 2021,
but demand is strong as orders have increased by 45.8%. During the six months
ended October 31, 2020, sales and orders in all business units were negatively
impacted as a result of the economic downturn caused by the COVID-19 pandemic.



Net sales during the six months ended October 30, 2021 increased by 14.1%
overall due to the conversion to sales of the higher order volume during the
first half of the year including several large multimillion-dollar
orders ("large orders") in both Live Events and International. The timing of
large orders conversions create volatility in comparisons between
quarters. Material supply and labor shortages are creating an increase in lead
times, extending the timing of converting some orders to sales in the
near-term.



For orders, during the first six months ended October 30, 2021, economic recovery post-pandemic continued to improve, leading to increased orders year-over-year in all business units. The two segments that showed the largest order growth over last year are Commercial and High School Park and Recreation.

Gross Profit and Contribution Margin



                                                                  Six Months Ended
                                                 October 30, 2021                  October 31, 2020
                                                           As a Percent                      As a Percent
(in thousands)                               Amount        of Net Sales        Amount        of Net Sales
Gross Profit:
Commercial                                 $   14,623               21.7 %   $   16,320               25.2 %
Live Events                                    14,167               12.7         16,654               18.7
High School Park and Recreation                20,258               33.4         18,973               33.6
Transportation                                  8,155               30.6         10,455               35.1
International                                   7,249               16.9          6,673               21.9
                                           $   64,452               20.8 %   $   69,075               25.5 %




The decrease in gross profit percentage in all the business units is primarily
related to increased input costs, including the costs of material, freight,
tariffs, outsourced installation, and staffing levels to increase capacity for
the higher order volumes. During the first half of fiscal year 2022, we had more
large project sales which generally have lower gross profit because of their
competitive nature. During the first half of fiscal 2021, we earned a higher
rate of gross profit on our service agreements due to reduced stand ready
services conducted during the quarter because of the pandemic. Total warranty
cost as a percent of sales for the six months ended October 30, 2021 compared to
the same period one year ago decreased to 1.3 percent from 1.4 percent.



                                       16

--------------------------------------------------------------------------------

  Table of Contents



                                                              Six Months Ended
                              October 30, 2021                                                October 31, 2020
                                        As a Percent       Dollar        Percent                        As a Percent
(in thousands)            Amount        of Net Sales       Change         Change          Amount        of Net Sales
Contribution Margin:
Commercial              $    6,926               10.3 %   $  (2,296 )        (24.9 )%   $    9,222               14.2 %
Live Events                  9,652                8.6        (2,367 )        (19.7 )        12,019               13.5
High School Park and
Recreation                  14,601               24.1           735            5.3          13,866               24.5
Transportation               6,364               23.9        (2,463 )        (27.9 )         8,827               29.6
International                2,632                6.1         1,701          182.7             931                3.1
                        $   40,175               13.0 %   $  (4,690 )        (10.5 )%   $   44,865               16.6 %




Contribution margin is a non-GAAP measure and consists of gross profit less
selling expenses. Selling expenses consist primarily of personnel related costs,
travel and entertainment expenses, facility-related costs for sales and service
offices, bad debt expenses, third-party commissions, and expenditures for
marketing efforts, including the costs of collateral materials, conventions and
trade shows, product demonstrations, customer relationship management systems,
and supplies.


Contribution margin in the six months ended October 30, 2021 was impacted by the previously discussed sales levels and impacts within gross profit.




Reconciliation from non-GAAP contribution margin to operating margin GAAP
measure is as follows:



                                                              Six Months Ended
                              October 30, 2021                                                October 31, 2020
                                        As a Percent       Dollar        Percent                        As a Percent
(in thousands)            Amount        of Net Sales       Change         Change          Amount        of Net Sales
Contribution margin     $   40,175               13.0 %   $  (4,690 )        (10.5 )%   $   44,865               16.6 %
General and
administrative              15,772                5.1         1,384            9.6          14,388                5.3
Product design and
development                 14,358                4.6            89            0.6          14,269                5.3
Operating income        $   10,045                3.2 %   $  (6,163 )        (38.0 )%   $   16,208                6.0 %



General and administrative expenses for the six months ended October 30, 2021 increased as compared to the same period one year ago primarily due to increases in personnel related expenses.

Product design and development expenses in the six months ended October 30, 2021 stayed relatively steady as compared to the same period one year ago.




Operating income was lower than the previous year due to a lower contribution
margin and an increase in personnel expense to match the increase in orders
discussed above.



Other Income and Expenses



                                                               Six Months Ended
                              October 30, 2021                                                 October 31, 2020
                                        As a Percent         Dollar        Percent                       As a Percent
(in thousands)            Amount        of Net Sales         Change        Change          Amount        of Net Sales
Interest (expense)
income, net             $       78                0.0 %    $       84       (1400.0 )%   $       (6 )             (0.0 )%
Other (expense)
income, net             $   (1,820 )             (0.6 )%   $     (356 )        24.3 %    $   (1,464 )             (0.5 )%




Interest (expense) income, net: The change in interest income and expense, net
for the six months ended October 30, 2021 compared to the same period one year
ago was primarily due to the reduction of interest expense, as we have no
outstanding drawings on the line of credit this year as compared to $15.0
million last year.



Other (expense) income, net: The change in other income and expense, net for
the six months ended October 30, 2021 as compared to the same period one year
ago was primarily due to losses recorded for equity method affiliates and
foreign currency volatility.



Income Taxes



We have recorded an effective tax rate of 27.0 percent for the six months ended
October 30, 2021 as compared to 26.2 percent for the six months ended October
31, 2020. The difference in tax rates is primarily driven by a decrease in
estimated tax credits proportionate to an increase in estimated pre-tax earnings
in the second quarter of fiscal 2021 compared to the second quarter of fiscal
2022.



                                       17

--------------------------------------------------------------------------------

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES



                                                              Six Months Ended
                                                October 30,       October 31,        Percent
(in thousands)                                     2021              2020            Change
Net cash (used in) provided by:
Operating activities                           $      (8,534 )   $      39,975          (121.3 )%
Investing activities                                  (9,876 )          (6,091 )          62.1
Financing activities                                    (396 )            (345 )          14.8
Effect of exchange rate changes on cash                    8              (498 )        (101.6 )
Net (decrease) increase in cash, cash
equivalents and restricted cash                $     (18,798 )   $      33,041          (156.9 )%




Cash decreased by $18.8 million for the first six months of fiscal
2022 primarily due to investing cash in affiliates and capital assets and due to
the use of cash for increases in accounts receivable and inventory required to
support the increased order volume. Cash increased by $33.0 million in the first
six months of fiscal 2021 because of cash conservation measures during the
pandemic, including: reductions in operating asset levels, decreases in capital
expenditures, and suspension of our dividend and share repurchase program.



Net cash (used in) provided by operating activities: Net cash used in operating
activities was $8.5 million for the first six months of fiscal 2022 compared to
net cash provided by operating activities of $40.0 million in the first six
months of fiscal 2021. The $48.5 million decrease in cash provided by operating
activities was primarily the result of changes in net operating assets and
liabilities.



The changes in operating assets and liabilities consisted of the following:



                                                            Six Months Ended
                                                      October 30,       October 31,
                                                         2021              2020
(Increase) decrease:
Accounts receivable                                  $     (26,914 )   $      (1,558 )
Long-term receivables                                          334             1,694
Inventories                                                (20,509 )          16,143
Contract assets                                             (7,542 )           8,967
Prepaid expenses and other current assets                   (3,450 )        

2,130

Income tax receivables                                         409          

439

Investment in affiliates and other assets                        6               425
Increase (decrease):
Accounts payable                                            25,045            (9,663 )
Contract liabilities                                         5,863            (4,178 )
Accrued expenses                                             3,194            (2,961 )
Warranty obligations                                          (178 )             616
Long-term warranty obligations                                  (2 )        

356

Income taxes payable                                           253          

2,207

Long-term marketing obligations and other payables            (163 )           3,726
                                                     $     (23,654 )   $      18,343






Net cash used in investing activities: Net cash used in investing activities
totaled $9.9 million in the first six months of fiscal 2022 compared to net cash
used in investing activities of $6.1 million in the first six months of fiscal
2021. Purchases of property and equipment totaled $4.5 million in the first six
months of fiscal 2022 compared to $5.8 million in the first six months of fiscal
2021. Purchases of and loans to affiliates accounted for by the equity
investment method totaled $6.1 million in the first six months of fiscal 2022 as
compared to $0.9 million in the first six months of fiscal 2021.



Net cash used in financing activities: Net cash used in financing activities was
$0.4 million for the six months ended October 30, 2021 compared to $0.3 million
in the same period one year ago due to principal payments on long-term
obligations and tax payments related to issuances of restricted stock units
("RSUs").



Other Liquidity and Capital Resources Discussion: The timing and amounts of working capital changes, dividend payments, stock repurchases, and capital spending impact our liquidity.




Working capital was $125.2 million and $118.4 million at October 30, 2021 and
May 1, 2021, respectively. The changes in working capital, particularly changes
in accounts receivable, accounts payable, inventory, contract assets and
liabilities, and the sports market and construction seasonality can have a
significant impact on the amount of net cash provided by operating activities
largely due to the timing of payments and receipts. On multimillion-dollar
orders, the time between order acceptance and project completion may extend up
to or exceed 12 months depending on the amount of custom work and a customer's
delivery needs. We often receive down payments or progress payments on these
orders. We expect to use cash in operations as our business returns to
pre-pandemic levels.



We had $8.9 million of retainage on long-term contracts included in receivables
and contract assets as of October 30, 2021, which has an impact on our
liquidity. We expect to collect these amounts within one year. We have
historically financed our cash needs through a combination of cash flow from
operations and borrowings under bank credit agreements.



The Board of Directors suspended dividends and share repurchases during fiscal
2020 as part of our cash conservations measures through the pandemic. The timing
of the future reinstatement of dividends and share repurchases is at the
discretion of the Board of Directors. Future dividends are also impacted by the
limitations imposed in our credit facility, as further described in "Note 7.
Financing Agreements" as described in our Annual Report on Form 10-K for the
fiscal year ended May 1, 2021.



                                       18

--------------------------------------------------------------------------------

Table of Contents




We are sometimes required to obtain bank guarantees or other financial
instruments for display installations and utilize a global bank to provide such
instruments. If we are unable to complete the installation work, our customer
would draw on the banking arrangement, and the bank would subrogate its loss to
Daktronics' restricted cash accounts. As of October 30, 2021, we had
$0.7 million of such instruments outstanding.



We are sometimes required to obtain performance bonds for display installations,
and we have a bonding line available through a surety company for an aggregate
of $150.0 million in bonded work outstanding. If we were unable to complete the
installation work, and our customer would call upon the bond for payment, the
surety company would subrogate its loss to Daktronics. As of October 30, 2021,
we had $52.2 million of bonded work outstanding against this line.



Our business growth and profitability improvement strategies depend on
investments in capital expenditures and strategic investments. We are projecting
total capital expenditures to be approximately $25 million for fiscal 2022.
Projected capital expenditures include manufacturing equipment for new or
enhanced product production, expanded capacity, investments in quality and
reliability equipment, and continued information infrastructure investments.
2022. We also evaluate and may invest in new technologies or acquire companies
aligned with our business strategy.



We believe the audiovisual industry fundamentals will drive long-term growth for
our business; however, for the near-term outlook, we expect our customers
may continue to have disruptions and may continue to reduce or increase their
spend on audiovisual systems and related services as they work through the
economic and business implications of COVID-19 and related supply chain
challenges. Although it is difficult to estimate the longevity and severity of
the COVID-19 pandemic impact to the economy and to our financial position,
operating results, and cash flows, we believe our working capital available from
all sources will be adequate to meet the cash requirements of our operations and
strategies in the foreseeable future. If the pandemic impact or long-term growth
extends beyond current expectations, or if we make significant strategic
investments, we may need to utilize and possibly increase our credit facilities
or seek other means of financing.



                                       19

--------------------------------------------------------------------------------

Table of Contents

Significant Accounting Policies and Estimates




We describe our significant accounting policies in "Note 1. Nature of Business
and Summary of Significant Accounting Policies" of the Notes to Consolidated
Financial Statements included in our Annual Report on Form 10-K for the fiscal
year ended May 1, 2021. We discuss our critical accounting estimates in "Part
II, Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Annual Report on Form 10-K for the fiscal year
ended May 1, 2021. There have been no significant changes in our significant
accounting policies or critical accounting estimates since the end of fiscal
2021.



New Accounting Pronouncements



For a summary of recently issued accounting pronouncements and the effects of
those pronouncements on our financial results, refer to "Note 1. Basis of
Presentation" of the Notes to the Condensed Consolidated Financial Statements
included elsewhere in this Report.

© Edgar Online, source Glimpses

All news about DAKTRONICS, INC.
01/19Improved Security Views Provided for Hamad Medical Center from Daktronics and Techno Q
AQ
01/18Daktronics and Ströer Continue Partnership
AQ
01/13A CVSG On Claim Construction Procedures And Jury Trial Rights
AQ
01/11College basketball's Boeheim brothers featured on digital billboards
AQ
01/10University of Richmond lights up athletics with Daktronics scoreboard
AQ
01/10Daktronics Provides Visual Upgrades to University of Richmond's Game-Day Experience
AQ
01/06Park Outdoor Shoots and Scores with Boeheim Brothers and Daktronics Digital Billboards
AQ
2021Daktronics LED display keeps UNC-Pembroke students engaged, informed
AQ
2021UNC-Pembroke Engages Students with New Daktronics LED Installation in Student Center
AQ
2021Daktronics rolls out video scoreboard upgrade at University of Maryland
AQ
More news