Daktronics, Inc. (DAKT) on Q2 2021 Results - Earnings Call Transcript
Operator: Good day, ladies and gentlemen, and welcome to the Daktronics Fiscal Year 2021 Second Quarter Earnings Results Conference Call. As a reminder, this conference is being recorded today, Wednesday, December 2, 2020 and is available on the company’s website, at www.daktronics.com. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. I would now like to turn the conference over to Ms. Sheila Anderson, Chief Financial Officer for Daktronics, for some introductory remarks. Please go ahead, Sheila.
Sheila Anderson: Thank you. Good morning, everyone. Thank you for participating in our second quarter earnings conference call. I would like to review our disclosure cautioning investors and participants, that in addition to statements of historical facts, we will be discussing forward-looking statements reflecting our expectations and plans about our future financial performance and future business opportunities.
Reece Kurtenbach: Thank you, Sheila. Good morning, everyone. As Sheila highlighted, for the first half of the year, we have managed operating expenses and working capital to align with expected declines in orders and sales, as our customers adjust to the economic and business implications of COVID-19.
Operator: Thank you. And our first question comes from Greg Pendy from Sidoti. Your line is open.
Gregory Pendy: Hey guys, thanks for taking my questions. Just first, I wanted to just understand, I know we have a change in administration here, but there was some news on maybe what the plans were with the trade deal. Can you just remind us, have we anniversaried most of – I believe it was a roughly $10 million uptick, due to tariffs. Is that going to be sort of neutral on the year-over-year basis at this point?
Sheila Anderson: We actually will see a bit of a decrease, because of the decline in our inventory part orderings. We’ve had some – forgiveness on some of the tariff implications, those will end as well at the end of the fiscal year. So a little bit down from 2020 to 2021, but still with an over – underlying, there is still some costs that we have going forward in our view.
Reece Kurtenbach: Maybe if I were to put little more color to that is that we are – we’re not expecting right now, a dramatic change in the tariff situation, or an increase in new or a pullback in existing and that’s our thinking as we – and if you have better guidance on what the new administration would do, we are all ears for that now.
Gregory Pendy: Understood. And then also, you seem cautious – I think on a lot of the segments? And I understand that the large amount of uncertainty, but I just wanted to hover in, maybe on sort of the outdoor billboard advertisers, it seemed like their transition – maybe a couple of the major ones, were at least looking for year-over-year growth into 2021, in terms of their digital – static to digital. Is that fair to say, or do you think that maybe the overall market will actually still be cautious?
Reece Kurtenbach: I think that what we’ve seen in the out-of-home advertising, is that when uncertainty looms, they are one of the first to pull back. But as they see positive signs, they are one of the first back in to make investments. So we think that, as the a variable recovery is may be how we think of it, that different segments will come back in different ways, we believe out-of-home will come back faster, and we’ve seen some out-of-home companies continue to invest during the downturn, so some variability there as well.
Gregory Pendy: Great. And then just one final one if I can. You made a significant investment in micro LED? Does that kind of – does that investment help offshoot some of, I guess, the R&D spend in some of the new technologies, given the partnership?
Reece Kurtenbach: We believe in the micro LED business, and continue to invest in that. But we don’t have a product on the market yet today, that has a micro LED in it. So that is maybe not reflected in our operating side. But yes, we do believe, that this will give us a stronger entry into micro LEDs in the coming quarters and fiscal years, and that are, it fits into our picture of our development spend and our forecast of our development spend.
Gregory Pendy: Got it. All right. Well, thanks a lot for taking my questions.
Reece Kurtenbach: Thanks, Greg.
Operator: Thank you. And I am showing no further questions from our phone lines. I’d now like to turn the conference back over to Reece Kurtenbach for any closing remarks.
Reece Kurtenbach: Well, we appreciate everybody joining us this morning. We know these are strange times, but we hope that you have the best holiday season possible, and that we all enter the New Year, and have a more positive outlook, and we look forward to talking to you next May. So, thanks everyone. Bye-bye.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect. Everyone, have a wonderful day.
