#198 77 Mobile: ARGIL 120 AUBURN REGIONS AHS Co-Cola EQIX 267.93 FOSSIL DAKTRONICS INC. THIRD QUARTER FISCAL 2017 INVESTOR PRESENTATION NASDAQ: DAKT D DAKTRONICS#2SAFE HARBOR STATEMENT In addition to statements of fact, this presentation contains forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995 and is intended to enjoy the protection of that Act. These forward looking statements reflect the company's expectations or beliefs concerning future events. The company cautions that these and similar statements involve risk and uncertainties which could cause actual results to differ materially from its expectations, including, but not limited to, including changes in economic and market conditions, management of growth, timing and magnitude of future contracts, and other risks noted in the company's SEC filings including its Annual Report on Form 10-K for its 2016 fiscal year. Forward-looking statements are made in the context of information available as of the date stated. The company undertakes no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. D DAKTRONICS#3DAKTRONICS VISION Our Vision DAKTRONI D SCTRONICE To be the world leader at informing and entertaining audiences through dynamic audio-visual communications systems. D DAKTRONICS#4DAKTRONICS MISSION Deliver industry leading value to our Customers, by engaging: • • • our employees through challenging and rewarding opportunities; developing strategic partnerships with our suppliers; leveraging our strengths in: product innovation, manufacturing, and service; while contributing to the betterment of our communities; and generating an attractive return for our investors. D D DAKTRONICS#5DAKTRONICS AS A WORLD LEADER WORLDWIDE MARKET SHARES FOR LED VIDEO DISPLAYS, 2015 Others 7% Chinese Tier II Brands (20+ Companies) 25% Daktronics 47+ Year Track Record ✓ Customer Solutions ✓ Engineering & Creative talent ✓ Global and local focus of customer support ✓ Lean Manufacturing ✓ Financially strong 14 companies that have less than 2% market share Mitsubishi 4% Leyard 4% Barco 7 Retop 4% Panasonic D DAKTRONICS Source: IHS iSuppli Corporation - Signage and Professional Displays 2015 4% Lighthouse 7% Liantronics 7% Absen 5% Unilumin D DAKTRONICS#6FINANCIAL SUMMARY PROGRESSIVE FIELD Indians Ldians B N $.41 Cleveland *SHERWIN WILLIAMS PROGRESSIVE STANLEY D DAKTRONICS#710 YEAR HISTORY SALES & OPERATING INCOME % SALES 700 Daktronics History (in Millions) 10.0% 600 500 400 300 200 100 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Sales Operating Income % of Sales Operating Income % of Sales D DAKTRONICS#8FY2017 3RD QUARTER RESULTS Three Months Ended Janaury 28, January 30, Percent 2017 2016 Change Orders Net sales Gross profit $ 143,313 $ 116,897 22.6% $ 115,719 $ 123,816 -6.5% 23,316 22,029 Gross margin 20.1% 17.8% Operating income Operating margin Net income (6,934) (5,546) -6.0% -4.5% $ (5,127) $ (1,953) 162.5% % of sales -4.4% -1.6% Earnings per share (diluted) $ (0.12) $ (0.04) *($ in thousands, except per share data) D DAKTRONICS#9FY2017 YTD RESULTS-TO Q3 Nine Months Ended January 28, 2017 Janaury 30, 2016 Percent Change Orders Net sales Gross profit $ 435,356 $ 417,564 4.3% $ 442,857 $ 431,705 2.6% 106,691 93,043 Gross margin 24.1% 21.6% Operating income 13,714 6,150 Operating margin 3.1% 1.4% Net income $ 9,433 $ 4,991 89.0% % of sales 2.1% 1.2% Earnings per share (diluted) $ 0.21 $ 0.11 *($ in thousands, except per share data) D DAKTRONICS#1010 Year History Free-Cash Flow* FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 Net cash from operations $ 14,606 $ 59,833 $ 48,731 $ 43,784 $41,346 $20,038 $50,749 $36,199 $53,168 $13,275 Net capital expenditures (58,528) (33,393) (18,221) (15,940) (9,148) (16,293) (9,476) (13,281) (17,800) (16,904) Free cash flow** $ (43,922) $ 26,440 $ 30,510 $ 27,844 $32,198 $ 3,745 $41,273 $22,918 $35,368 $ (3,629) FY2017 Capital Expenditure Estimate: Less than $20 million projected capital expenditures for manufacturing and quality equipment and IT infrastructure. **A non-GAAP measure, please refer to our SEC fillings for further definition. *($ in thousands, except per share data) D DAKTRONICS#1110 Year History Return to Shareholders Fiscal Year Regular Annualized Special Dividend Dividend Dividend/ Share Yield Total Dividend Payout Share ➤Long-term dividend history (000's) (see chart to the right) 2008 0.070 0.30% 2,770 2009 0.090 1.10% 3,635 2010 ➤Share Repurchase program 2011 0.095 1.20% 0.100 2.50% 3,874 0.500 24,795 instituted 2017 for 2012 (1) 0.220 1.90% 0.400 25,950 opportunistic stock 2013 0.230 3.60% 0.500 30,859 purchases 2014 (2) 0.390 3.00% - 16,690 2015 0.400 3.70% 17,377 2016 0.400 5.10% 17,556 2017* 0.240 3.20% 0.040 10,566 * Year to date figures through January 2017 (1) changed to semi-annual dividend (2) changed to quarterly dividend D DAKTRONICS#12More about Daktronics 52/53 Week Fiscal Years ending in April - FY15 53 weeks (Q1 extra week), FY 16 52 weeks ➤ Seasonality to results (Sports/Construction season) ➤ Video systems comprise a large portion of business with standard systems and services comprising the remaining 10 YEAR HISTORY DILUTED EARNINGS PER SHARE (after adjustment for splits) Fiscal Year Q1 Q2 Q3 Q4 2008 + 0.17 + 0.19 2009 + 0.24 + 0.29 2010 + 0.03 + 0.12 2011 + 0.06 + 0.17 + 0.13 +0.14 + 0.10 +0.01 -0.20 0.12 - + 0.04 0.07 2012 + 0.08 + 0.09 + 0.04 0.01 - 2013 + 0.16 + 0.27 +0.06 +0.04 ➤ Large video systems projects may include. general contracting with lower margin %, but add margin $ 2014 + 0.13 + 0.27 +0.07 +0.04 2015 + 0.20 + 0.18 + 0.01 +0.08 2016 + 0.09 + 0.07 2017 + 0.13 +0.21 -0.04 -0.07 -0.12 Customer delivery schedules & sports season impact quarterly results ➤ Q3 Includes 2 major holidays P DAKTRONICS#13FY16 Net Sales Business Unit Recap ➤ Live Events, Commercial, Transportation, and High School Park and Recreation, include net sales in the United States and Canada International net sales include rest of world and are primarily for solutions for large sports venues, spectaculars, third-party advertising, and transportation type solutions Transportation 9% International High School Park and Recreation 12% 17% Commercial 26% Live Events 36% D DAKTRONICS#14LIVE EVENTS BUSINESS UNIT T-Mobile ARENA WELCOME TO T-MOBILE ARENA T-Mobile Arena, Las Vegas, NV P DAKTRONICS TOLH TOSHIBA#15LIVE EVENTS >> Video displays solutions for Large sports venues and live entertainment facilities • · • Professional sports College and university Arenas 1044 DEFENSE » Competition • South Dakota State University, Brookings, SD Mitsubishi, Lighthouse, Panasonic, Prismview and others • Asian competition through U.S. integrators D DAKTRONICS#16LIVE EVENTS Demand Drivers » Facility increased spend to: • • Enhance attendee event experience • Revenue source from advertising Competitive nature to outperform other facilities >> Lower product costs, driving expansion of marketplace » High definition product offering (HD) » Replacement cycle (systems can last from 8- 12 years) TIMBERWOLVES.COM Vitz DOWER REPACK ALLOVER MEDIA Minnesota Timberwolves – Minneapolis, MN D DAKTRONICS#17HIGH SCHOOL PARK AND RECREATION (HSPR) MORGAN HIGH SCHOOL Morgan High School, UT pepsi 25 BULLDOGS 4:26 CAPE 36 FOULS ம TOL PERIODI 2 PLAYER FOUL S MATCH MANT FMG SCORE TOL FOULS 0 S SCORE BULLDOGS 36 FULL TAL 4:26 CAPE ૨. વસ PLAYER FOOL 25 TAL FOL Montgomery SCORE Sell WATC Agency 573-411-77 SATOP FOCUS Sikeston High School, MO P DAKTRONICS#18HSPR >> Video and scoring systems and message centers to • Elementary and high schools, junior colleges • Park and recreation departments >> Primary funding is through local sponsors and advertisers Cial Liberty North High School, Liberty MO DAKTRONICE INTEGRIT DAKTRONICS#19HSPR >> Growth Drivers • Larger more sophisticated displays in sports venues Revenue generation • Communication medium • New construction/replacement cycles. >> Competitors . Translux, Nevco, other smaller company manufacturers Unicorn Stadium NEW BRAUNFELS HIGH SCHOOL DEFENSE DEFENSE ENSE EQUIPMENT RENTALS PORE 21 T.OL DOWN 3 Ashley Pumiture HomeStore 8:19. TO GO 10 ପ ST QTH T.O.L. 20 4 3 New Braunfels High School, TX D DAKTRONICS#20COMMERCIAL BUSINESS UNIT LG 2:00 LG G5 you life's good playmore Life's Good When You Play More LG ود www.l.G.com ass hut LG Electronics - Times Square 1540 Broadway and West 45th Street D DAKTRONICS#21COMMERCIAL >> Sales channel focus • • • Third party advertising/Out of Home Advertising (OOH) On-premise advertising (retail) Spectacular (custom video) >> Primary offerings • Digital billboards Message centers Video display systems Petroleum displays 888-325-7446 Daktronics.com/liveDem D DAKTRONICS D EXPERIENCE THE DAKTRONICS DAKTRONICS DIFFERENCE LIVE Reinventing the way you advertise with 0 dct-trailers.com • Dynamic messaging systems Commercial Demo Trailer ° D DAKTRONICS#22COMMERCIAL » Long-term growth drivers. • Market adoption, including National Accounts • • • Spectacular use to entertain/advertise in unique locations Effective advertising medium (outdoor and indoor networks) Replacement cycle (7-10 years) • Architectural lighting » Competitors • Message Centers - Optec, Watchfire. • Digital Billboards - Watchfire, Formetco, Optotech • Video Projects - Panasonic, Mitsubishi, Sansai, Prismview, Integrators using Asian Manufacturers #BIGBANGTHEORY WEEKDAYS 6P & 6:30P TULSA نته Griffin Outdoor, Tulsa, OK D DAKTRONICS#23TRANSPORTATION BUSINESS UNIT American Eagle 3672 Birmingham, AL D6OF 3578 Cincinnati D60C 3072 Cleveland D60D 3577 Columbus, OH D6DD 4255 Key West D60H 4224 Louisville D60E 4451 New Orleans D60J 4311 Norfoll D60J 4261 Charleston, SC D60R 3678 Cleveland D60M 3655 Columbus, OH D60L 4258 Freeport D60R 3590 Gainesvile D6DL 4405 Indianapolis D60R 4337 Jacksonvile D60R 4316 Memphis D60P CARTRONICS Miami-Dade International Airport Colorado DOT SPEED LIMIT 55 EXPRESS LANE CLOSED D DAKTRONICS#24TRANSPORTATION >> Three niches · • Intelligent transportation systems (ITS) Airports • Mass Transit >> Competitors • Skyline, Ledstar, Telegra, SES-America, Imago, others ICE TRAVEL TO EXPRESS TRAVEL LANE E-Pass Toll TIME TO (95) $3.50 7 MIN TRAVEL TIME INTERSTATE SUGAR 77 CREEK 395 3 MIN 2+ ONLY 10 MIN 23 MIN 95 5 MIN 498 Vanguard Roadshow Demo Trailer D DAKTRONICS#25TRANSPORTATION >> Long-term growth drivers Transportation management - increasing traffic demands on constrained infrastructure • Governmental funding and investment in infrastructure projects • Infographic communication • Advertising needs 2. South Ferry SON HURRICANE WARNING SPEED LIMIT 65 REA SEEK SHELTER New York City Transit, NY, NY New Jersey Turnpike Authority D DAKTRONICS#26INTERNATIONAL BUSINESS UNIT JDC, Old Street London CONT INS BESTOFT BR MOTOWN полоша moster SUBWAY Wuxi Inter IKEA, Wuxi China P DAKTRONICS#27INTERNATIONAL Main products » Commercial video systems » Sports video systems » Digital billboard (OOH) » Architectural lighting » Transportation systems Infrastructure » World-wide sales & service offices » International Manufacturing facilities: • • China- architectural lighting and video displays for Asian market Belgium - street furniture for Third Party/Out of Home Advertising . Ireland - transportation products WELLED DGIO VNY THE HEAD SAYS YES. THE HEART SAYS DEFINITELY, YES. MASERATI MASERATI GHIBLI FROM E49, 180 JCDecaux 0655 WEX 30 Trafford Tower, Manchester London UK D DAKTRONICS#28INTERNATIONAL >> Growth opportunities • • 3rd party advertising/Out of Home Advertising Live Events facilities/sports • European/Middle East transportation systems • Increased geographical coverage » Competitors: Mitsubishi, Lighthouse, Panasonic, Barco and other country-specific competitors 05 discover a heritage city Salford Arch Salford, UK D DAKTRONICS#29DGIO VNY THE HEAD SAYS YES THE HEART SAYS DEFINITELY ES MUSTRATE HASERATI GHIBLI FROM E40.160 270 JCDecaux G55 WEX Invest in Her Future Morgan Stanley Morgan Stanley LOOKING AHEAD Follow us on Twitter Morgan Stanley Follow us on Twitter MorganStanley UAB BASEBALL UAB BLAZERS G UABSPORTS.COM pepsi AT BAT BALL STRIKE OUT H/E 0 22 ASU 1 2 3 456 7 8 9 10 RUNS HITS ERA 00 002 004 UAB 100 000 50 6 5 16 10 370 D DAKTRONICS#30ACHIEVING LONG-TERM PROFITABLE GROWTH Continued Global Demand . • • Out-of Home Advertising Venue competition/ HD video for sports Increased geographic coverage and penetration • New product introductions • • • Continued market adoption and expansion Replacement cycle Worldwide economic conditions ing Carden WEAK & THAI ISINE Need it fast and accurate in a tight window? For Graphic Ceracas Expert Graphic.com unigraphic 2007018 RSA D DAKTRONICS#31ACHIEVING LONG-TERM PROFITABLE GROWTH Robust solutions and operational excellence: • New product introductions • • • . • • Enhanced Transportation products Localized and customer focused products Ultra high resolution solutions Enhanced product and control system platforms Agile Capacity Continuous Process improvements Quality focus and warranty cost reduction D DAKTRONICS#32OUTLOOK TO FISCAL 2017 Modest revenue growth ✔ International Macroeconomic trends tepid, yet strong level of activity. Out of Home demand. Transportation focus Europe and Middle East. ✓ Live Events demand similar to prior years ✓ Commercial macroeconomic conditions impact timing, strong spectacular demand, OOH similar demand levels ✓ Transportation opportunity for growth with funding/mass transit/advertising ✓ HSPR continued interest in larger video systems D DAKTRONICS#33SOLUTION EXAMPLES MODULE COMPARISON THROUGH HOLE VS. SURFACE MOUNT LEDs THROUGH-HOLE LED MODULE SURFACE-MOUNT LED MODULE 1654,32 RUNG (4) 32 1749,25 Yrds Loss 1749,29 254 al Rushing Yard: 183 ERA 6 37 ck 848 4,85 ble Play: (2) 85 28 1284,6 ERA Total Event Control An integrated display control studio allows for flexible, intuitive display control and event management. Content Compositing Powerful content compositing tools allow users to create broadcast- quality presentations. Live Data Integration Streaming data integration makes it possible to enhance graphics with live stats and information. Media Players & Processors Built-in media players and video processors allow for seamless delivery of a wide variety of digital media. D DAKTRONICS#34EverBank Field JACKSON JAGUARS BUDLIGHT EverBank everbank.com EverBank everbank.com BLUE SERIES VIDEO DISPLAYS 408 WEST LEFT 2 LANES EAST 3/4 4 WEST 11/4 DYNAMIC MESSAGE SIGNS Canes GOLD SERIES VIDEO DISPLAYS ON-SITE SHOWI AANLE UNI WAZE WINNY ORCY DAKTRONICS TECHNOLOGY 723 7878 CONTROL SYSTEMS Raising Canes CHICKEN FINGERS MESSAGE CENTERS NOW Open! DIGITAL BILLBOARDS NOW 63° THU FRI SAT 67° 72° 60° 57° 55° 39° 36° 42° (FAIRWAY Coppler 4 WYFF#3585 16 us bank stadium B QUESTIONS D DAKTRONICS#3610 YEAR HISTORY SUPPLEMENTAL INFORMATION FY2007 FY2008 FY2009 FY 2010 FY 2011 Net sales $433,201 $499,677 $ 580,681 Gross profit 126,597 147,590 155,358 Operating expenses 89,682 109,347 112,741 $393,185 94,556 10 1,286 $ 441,676 FY2012 $489,526 111,484 113,437 FY2013 $518,322 133,894 FY2014 $551,970 14 1,7 10 91,957 103,162 103,294 105,153 $ 615,942 144,579 113,294 FY2015 FY2016 $570,168 121,0 19 118,524 Operating income (loss) 36,915 38,243 42,617 (6,730) 19,527 10,275 30,600 36,557 31,285 2,495 Net income (loss) 24,427 26,213 26,428 (6,989) 14,244 8,489 22,779 22,206 20,882 2,061 Gross profit percentage 29.2% 29.5% Operating margin percentage 8.5% 7.7% 26.8% 7.3% 24.0% 25.2% (1.7%) 4.4% 23.2% 2.1% 25.8% 25.7% 23.5% 21.2% 5.9% 6.6% 5.1% 0.4% Weighted average diluted shares outtstanding 41,311 41,337 41,152 Diluted earnings per share Cash dividend per share 0.59 0.06 0.63 0.07 0.64 0.09 40,908 (0.17) 0.10 42,277 0.34 0.60 42,304 0.20 0.62 42,621 0.53 0.73 43,762 0.51 0.39 44,443 0.47 0.40 44,456 0.05 0.40 Working capital $ 44,904 Total assets 265,850 Shareholders' equity 153,708 $ 62,545 $107,405 294,479 324,876 183,253 211,911 $ 118,625 305,851 207,053 $128,160 327,847 203,102 $ 119,833 315,967 190,805 Backlog 127,000 175,000 120,000 127,000 131,000 123,000 $ 125,456 319,418 188,246 14 1,000 $ 140,532 357,451 203,119 $ 149,075 379,479 212,039 $ 123,714 349,948 201,067 172,000 19 1,000 18 1,000 Product design and development Capital expenditures $ 15,627 $ 20,828 $ 21,619 $ 21,920 $ 18,949 58,743 Depreciation and amortization 13,801 33,916 21,121 22,888 16,121 9,386 24,448 22,260 19,641 $ 23,507 16,524 17,518 $23,131 9,674 $ 23,375 $ 24,652 13,519 21,837 $ 26,911 17,056 15,607 14,501 14,968 16,856 Cash flow from operations 14,606 59,833 48,731 43,784 41,346 20,038 50,749 36,199 53,168 13,275 Regular dividend per share 0.06 0.07 0.09 0.10 0.10 0.22 0.23 0.39 0.40 0.40 Special dividend per share 0.50 0.40 0.50 Employees as of year-end: Full-time Part-time and students 2,300 900 2,600 800 2,500 1,000 2,100 400 2,100 500 2,300 520 2,210 4 10 2,280 390 2,420 330 2,470 315 Stock price during fiscal year: High $ 40.05 Low Stock price at fiscal year-end 18.31 23.92 $ 32.37 13.88 14.79 $ 21.32 5.69 8.96 $ 9.88 $ 17.30 $ 11.81 $ 7.00 8.37 7.30 10.72 7.68 8.46 12.40 6.39 9.57 $ 15.80 9.63 13.06 $ 14.47 10.03 10.75 $ 12.24 6.90 8.70 • EBITDA 50,716 59,364 67,065 15,530 39,168 27,793 46,207 51,058 46,253 19,351 DAKTRONICS