Daktronics, Inc.

Thank you for standing by, and welcome to Daktronics' first quarter fiscal year 2025 financial results conference call. At this time, all participants are in listen-only mode. After the speaker's prepared remarks, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 1-1 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Carla Gatsky, the company's secretary for Daktronics, for some introductory remarks. Please go ahead.

Thank you, Jonathan. Good morning, everyone. Thank you for participating in our first quarter earnings 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. These forward-looking statements reflect the company's expectations or beliefs concerning future events. All forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from expectations. Such risks include, but are not limited to, changes in economic and market conditions, management of growth, timing and magnitude of future contracts and orders, fluctuations in margins, the introduction of new products and technologies, availability of raw materials, components and shipping services, and other important factors. These identified factors could cause actual results to differ materially from those discussed in this call, in the company's first quarter 2025 quarterly earnings release and its most recent annual report on Form 10-K. Our first quarter 2025 earnings release contained certain non-GAAP financial majors and was furnished to the SEC, the Securities and Exchange Commission, on a Form 8-K this morning. We also made slides available for today's call, and all of these documents are available on the Investors section at Daktronics' website, www.daktronics.com. I'll turn the call over to our CEO, Reece Kurtenbach.

Thanks, Carla. Good morning. Thank you all for joining us today. We're off to a great start to the year against a record prior year quarter. demonstrating our continued strong execution towards driving growth and returns above our cost of capital. As you can see on our slide presentation on page three, fiscal first quarter 2025 highlights, we delivered revenue growth as well as gross and operating profit expansion on a sequential basis. These continued financial results were primarily earned through steady growth in new orders, which increased 11% from last year, the completion of several large projects, and efficient planning and execution throughout our fulfillment teams. This orchestration between our production and product teams served our customers well with on-time deliveries, especially for sports installs in our live events and high school parks and rec HSPR business. Our operating environment remains stable, with supply chain reliability adding greater predictability to our production schedules. Our more profitable business model generated solid operating cash flow of $19.5 million, a very strong performance against last year's record comparison. During the quarter, as throughout the past several quarters, we have also executed on a number of strategies along our digital transformation, growth, and efficiency roadmaps, making progress toward our long-term objectives and enhancing our ability to drive future profitable growth. We have specific milestones along this roadmap plan for this fiscal 2025 and 2026 and are on track for these next steps, which I will discuss further later in our call. Our backlog of $267 million reflects our year-over-year order growth and continued return to more normal seasonal trends as we continue to anniversary our resolution of past supply chain challenges. We enter our second fiscal quarter with good momentum, and we expect to drive order growth in fiscal 2025. Our mission is to support our customers as they inform, entertain, and persuade their audiences. Let's look more specifically into our business areas on slide four. market vertical FQ1 review. In live events, during the quarter, we made progress and recognized revenue on a number of large college and university projects for fall football, including Penn State, University of Texas, LSU, and Colorado University. The LA Clippers' new home at the Intuit Dome also debuted their double-sided Halo and other AV systems which we have been building and installing over the last two years. This installation is a demonstration of our continuous innovation to extend our technology leadership and its strong reception from our customers. Looking ahead, we also booked some great projects for University of Connecticut, Alabama, and Auburn. Our outlook remains similar to our last call. We expect live events demand to remain strong as venues enhance facilities to entertain fans and attract athletes. We see this trend continuing and more focus being placed on entertainment areas and experiences outside the bowl in places like the entryways, atriums, concourses, and adjacent entertainment areas. Our narrow pixel pitch line of products matches the needs of customers for these places and continues to be in demand. Our commercial business primarily consists of sales through resellers, primarily sign companies, to many types of customers and applications, including military, utilities, transportation, national retailers, quick serve restaurants, casinos, shopping centers, cruise ships, commercial building owners, petroleum retailers, and other on-premise customers. Also included in this segment are out of home advertising companies. As compared to last year's first quarter and fourth quarter, commercial orders picked up, gaining strength as we continued to see order flow from resellers for on-premise users of displays, out-of-home companies, and commercial building owners, often referred to as spectaculars. This market is sensitive to overall economic conditions and advertising spend, and even with these dependencies at this time, this market is doing well. Our strategies to promote independent out-of-home operators is also driving this increase. Spectacular sales also increased in these comparative periods, and we see continued interest going forward. Our focus for this market is to continue to grow our core areas and continue to build out our AV integrator network to market our narrow pixel pitch product lines. especially in control room applications used by military, utility, and transportation agencies. Transportation. Orders in this segment grew from both last quarter and last year, and our teams are focused on winning projects for intelligent transportation systems, airport projects, and other mass transit systems projects. We were pleased to have been awarded a contract with Dallas Area Rapid Transit for rollouts using our displays across their systems. International continues to be slow as compared to prior years, which we believe is due to economic and geopolitical uncertainty. However, it increased 20% sequentially as a result of our bookings of out-of-home companies for digital billboard rollouts. Customers continue to demonstrate interest in projects, but in some cases have been delaying buying decisions. Our sales teams continue to be responsive to customers and are actively quoting opportunities and we are starting to see signs of more quotes converting into orders. The picture here is an installation in Dubai for a unique advertising marquee. High schools, we had order successes compared to last year and last quarter as the market continues to be converted to full video usage. We launched a new higher margin product to not only support our customers but further bolster our contribution margin for this segment. This past quarter we delivered on two larger display systems akin to university projects, one in Texas and one in Hawaii, showing the continued usage of digital technologies to advance student and fan experiences. On the control system front, our show control solution is undergoing major advancements to enhance the live entertainment experience and improve workflow efficiencies. These enhancements will empower our customers to deliver a dynamic presentation using cutting-edge scoring and timing software, 3D data visualizations, real-time rendering, and integrated data through sport-specific applications. The addressable market for our new solution is broad, including anyone supporting live events, entertainment, and sports, even if they're not using Daktronics equipment, and is slated for release by fiscal year end. Additionally, we are introducing cloud access, allowing customers to schedule, store, and manage their content and data sources from anywhere. We continue to focus on our strategic milestones, which I'll cover in a moment, But first, for additional details on the financial results for the quarter and year, I'll turn it over to Sheila.