Daktronics, Inc. Q1 FY2026 earnings call

Management Statement and Operational Highlights

• Delivered a strong start to FY 2026, ending cash balance of $136.9 million and backlog of $360 million.
• Selling teams drove growth in live events, high school park and recreation, and international; won three large major league sports projects and experienced record order growth in high school park and recreation.
• Preserving gross margins through value-based pricing, fixed cost leveraging, and cost control; mix of revenue across businesses contributed to improved gross margins.
• Business and digital transformation plan in place, with execution on track driving results; added new models of indoor narrow pixel pitch product and enhanced displays.
• Progress on digital transformation initiatives, including modernized service software system and continued technical build-out of corporate performance management tooling.

Segment Performance

• Live Events: Won three large major league sports projects, with orders up 81% year over year and 10% sequentially. Includes multiple college and university orders for various display applications.
• Commercial: Digital advertising solutions orders up 5% year over year, down 10% from 2025. On-premise customers transitioning to next-gen fuel price products; out-of-home demand strong with new digital billboard product well-received.
• Transportation: Orders down 4% year over year, 7% from 2025; focused on growing ITS market ahead of Buy America Act implementation in October 2026.
• International: Orders up 22% year over year, down 32% from 2025; largest growth in government and advertising, with high demand for indoor solutions in various sectors.
• High School Park and Recreation: Record order bookings, up 36% year over year and 7% sequentially. Strong adoption of professional services, with notable wins like Mobile Alabama County School District and Plum High School projects.

Guidance

• Demand for best-in-class dynamic video communication displays and control systems remains strong, with a large and growing backlog providing revenue tailwind.
• Executing on efficient revenue conversion and successful inventory, supply chain, and manufacturing cost management; balance sheet strength supports growth objectives.
• Agile to mitigate tariff uncertainty, remaining focused on differentiated product introductions and high return product development investment spend.

Risks

• Tariff uncertainty; current pause with China, and unknown rates/market reactions post-pause.

Question and Answer

Q: Aaron Spekella on live events pipeline, gross margin sustainability, and M&A A: Brad Wiemann mentioned live events pipeline is good with growth expected in in-bowl and out-of-bowl spaces; Howard Atkins noted gross margin mix benefit from fixed cost leverage and revenue mix, with M&A being strategic and cash position allowing consideration of opportunities.

Q: Anja Soderstrom on live events competition, gross margin drivers, and buybacks A: Brad Wiemann discussed competition varies by business/market, with efforts to get specified and use financial tools; Howard Atkins highlighted fixed cost leverage, revenue mix, and inventory management as gross margin drivers; mentioned remaining under original buyback authority with board open to additional authorities.

Q: Eric DeLamartier on transformation costs A: Howard Atkins stated bulk of transformation consulting costs from last year are behind us, with no material one-time expenses in Q1 related to that