Daktronics (NASDAQ:DAKT) reported fiscal 2027 first-quarter revenue growth, higher operating income and its highest quarterly earnings per share in three years, supported by demand across its major end markets and a backlog that remained above $300 million.
President and Chief Executive Officer Ramesh Jayaraman said the company’s strategic plan—centered on organic growth, operational excellence and disciplined capital deployment—was reflected in the quarter’s sales growth, profit expansion and earnings per share performance. The quarter was one week shorter than the comparable period a year earlier.
Backlog, bookings and market activity
Daktronics entered the quarter with a $356 million backlog and fulfilled approximately half of that amount during the period. Backlog entering the second quarter was $311 million, marking the sixth consecutive quarter in which product backlog exceeded $300 million.
While first-quarter bookings declined from a year earlier, management attributed the comparison largely to timing. Jayaraman said the company negotiated several substantial projects during the quarter and expects to receive purchase orders for them in the latter part of the second quarter. Atkins said those orders were not included in the $311 million backlog figure and are expected to generate revenue through the balance of the year, mostly beginning in the third quarter.
In live events, Daktronics said it was installing college football and basketball projects for the University of Illinois, Ohio State, Penn State and North Carolina. Its Camino 8 graphics rendering platform debuted at Angel Stadium during the Los Angeles Angels’ home opener in April. The company said Camino 8, which integrates with Daktronics Show Control, is expected to be installed at more than 10 NHL, MLS and NCAA football, volleyball and basketball venues beginning this fall.
Jayaraman characterized the live-events pipeline as robust and said the business is positioned to benefit from demand for real-time graphics and video. He also said the company sees an opportunity to expand its customer relationships beyond initial capital projects through software, graphics and services over what he described as a 10-year customer association.
In transportation, the company said it won large intelligent transportation systems projects, helping increase segment backlog. It also cited narrow pixel pitch orders from Los Angeles International Airport and Spokane International Airport, along with transit orders from Sacramento Regional Transit, Florida’s SunRail and a Houston project. Jayaraman said transportation demand has been helped by an intelligent transportation systems cycle, airport expansion projects and upgrades in mass transit.
Other first-quarter wins included a bulk billboard order and an airport advertising refresh order in the commercial business, high school and parks-and-recreation projects in Texas, California and South Dakota, and international projects including a football stadium halo display in Colombia and a 50-display rollout for an out-of-home customer in Serbia.
Manufacturing, procurement and product initiatives
The company’s recently opened Mexico manufacturing facility completed its first major production run of narrow pixel pitch products during the quarter, with shipment expected in late in the second quarter. Jayaraman said the plant initially will play a larger role in serving the live-events business and could help Daktronics manage global timelines and optimize landed costs across its U.S., China, Mexico and other facilities.
Daktronics also said it is investing in automation, beginning with automated bending machinery for metal-fabricated enclosure components. The company expects capital expenditures to reach about $20 million annually over the next several years, compared with an average of roughly $14 million to $16 million over the past three years. Atkins said depreciation and amortization was $4.7 million in the quarter and should increase gradually as automation investments are made.
Management hired a new global procurement leader and combined direct and indirect procurement teams. The company is using artificial intelligence to analyze spending across categories, segments and vendors, with procurement optimization efforts expected to begin in the second half of fiscal 2027. Atkins said consulting and additional management costs tied to business initiatives and operational-excellence programs contributed to higher general and administrative expense, but management expects the efforts to produce results starting in the second half of the year and more fully in fiscal 2028.
Daktronics is also considering exiting its highly customized international transportation business. Jayaraman said such a decision would affect the long-term viability of the company’s Ireland facility. The company informed Ireland employees that it is entering a collective redundancy consultation process.
Margins, cash flow and capital deployment
Atkins said gross margin benefited from higher revenue, sales mix in higher-margin transportation and international businesses, and tariff refunds. The company received about $3 million of tariff refunds on a cash basis in the first quarter and expects additional refunds in future quarters. However, rising RAM and other input costs largely offset the tariff refund benefit during the period.
Daktronics began selectively increasing product prices in the second quarter to address input-cost inflation. Atkins said the first quarter did not receive an offset from those price increases and that their effect should build through the second quarter, while procurement and supply-chain savings are also intended to help manage costs.
Operating cash flow totaled $31.4 million, and free cash flow was $27.5 million after capital spending. The company ended the quarter with $155 million in cash and $10 million in debt. It repurchased $4.4 million of shares during the quarter at a volume-weighted average price of $19.56 per share. Over the last five quarters, Daktronics repurchased $29.9 million of shares at an average price of $18.04 per share.
The company reaffirmed its fiscal 2028 targets of 7% to 10% three-year revenue compound annual growth, operating margin of 10% to 12%, and return on invested capital of 17% to 20%.
Atkins also said Daktronics has received information requests from the NBA related to its investigation involving Kawhi Leonard and the Los Angeles Clippers, as well as a request from the Securities and Exchange Commission seeking information concerning the company and Leonard. He said Daktronics is cooperating and would not provide further comment.
About Daktronics (NASDAQ:DAKT)
Daktronics, Inc (NASDAQ: DAKT) is a leading designer and manufacturer of electronic display systems, video boards, scoreboards and related control systems. Founded in 1968 in Brookings, South Dakota by Al Kurtenbach and Duane Sander, the company has built a reputation for delivering custom visual display solutions to a wide range of markets. Its product portfolio includes large-format LED video displays, programmable message centers, digital billboards, and audio-visual solutions tailored to sports venues, transportation authorities, retail environments and live event producers.
The company’s primary business activities encompass the engineering, fabrication and installation of display systems for customers around the world.
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