Daktronics leadership optimistic despite financial straits
Daktronics leadership struck a notably optimistic tone at their second-quarter financial results meeting despite the recent news.
The company delayed its latest earnings report to determine quote “the company’s ability to continue as a going concern,” according to an SEC filing.
Company director Kevin McDermott says there are positive indicators, but COVID-related issues continue to be relevant.
"The company's order and backlog coming out of the pandemic has been very strong," McDermott said. "However, Daktronics had to manage through significant pandemic-induced supply chain issues. These supply line constraints led to the decision to increase inventory levels in order to improve the predictability in the production cycle, which has absorbed much of the company's customary levels of liquidity.”
Orders through Daktronics are up 2.6% year-to-date, and net sales reached $187 million in the most recent fiscal quarter.
Daktronics CEO Reece Kurtenbach explained the situation in more detail.
“The unprecedented and persistent supply chain conditions caused lower gross profits through fulfillment, as well as higher costs for materials, labor, and freight that were not all able to be passed onto our customers," Kurtenbach said. "We made the strategic decision to keep delivery windows for our customers as close as possible to the originally committed date as supply chain and manufacturing constraints would allow.”
Kurtenbach laid out the companies’ short-term goals.
“We are pursuing other additional sources of liquidity and are focusing on reducing inventory levels," Kurtenbach said. "Our goal is to be able to remove this qualifying language as soon as is practical.”
Following Daktronics announcement of financial trouble last week, stock prices dropped by 50%. Prices have recovered since then, but Daktronics stock remains down 30%.