Daktronics, Inc.
Loading chart...
Item 1. BUSINESS
Business Overview
Daktronics is an industry leader in designing and manufacturing electronic scoreboards, programmable display systems, large screen video displays for sporting, and commercial and transportation applications. We serve our customers by providing high quality standard display products as well as custom-designed and integrated systems. We offer a complete line of products, from small scoreboards and electronic displays to large multimillion-dollar video display systems as well as related control, timing, and sound systems. We are recognized as a technical leader with the capabilities to design, market, manufacture, install, and service complete integrated systems displaying real-time data, graphics, animation, and video. We engage in a full range of activities: marketing and sales, engineering and product design and development, manufacturing, technical contracting, professional services, and customer service and support.
We were founded in 1968 by Dr. Aelred Kurtenbach and Dr. Duane Sander, professors of electrical engineering at South Dakota State University in Brookings, South Dakota. The Company began with the design and manufacture of electronic voting systems for state legislatures. In 1971, Daktronics developed the patented Matside® wrestling scoreboard, the first product in the Company’s growing and evolving line of scoreboard products. In 1994, Daktronics became a publicly-traded company and invested in display technologies and new markets. During fiscal 2025, we formed a Business Transformation Office (“BTO”), which has undertaken a comprehensive review of the Company’s business, strategy, and operations and is developing a set of strategic initiatives, enabled in part by the Company’s previously announced digital transformation, to provide even better outcomes for customers, deeper penetration of the Company’s current and adjacent market verticals, above-market growth, and more efficient delivery, fulfillment, and service.
We have continued these investments and have supported our long-term customer relationships to grow from a small company operating out of a garage to a world leader in the display industry. We currently employ 2,702 people globally.
1
We are headquartered at 201 Daktronics Dr., Brookings, SD 57006, telephone 605-692-4200. Our Internet address is https://www.daktronics.com.
Available Information
We file annual, quarterly and current reports, proxy statements, and other information with the SEC. Daktronics makes available, free of charge on the “Investor Relations” section of our website at https://investor.daktronics.com/ our annual reports on Form 10-K; quarterly reports on Form 10-Q; current reports on Form 8-K; Forms 3, 4 and 5 filed on behalf of directors and executive officers; and any amendments to those reports filed or furnished pursuant to the Exchange Act. Our reports and other information filed with the SEC are made available as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Information contained on our website is not deemed to be incorporated by reference into this Report or filed with the SEC.
Reportable Segments
We focus our sales and marketing efforts on markets, geographical regions, and products. Our five business segments consist of four domestic business units and the International business unit. The four domestic business units consist of Commercial, Live Events, High School Park and Recreation, and Transportation, all of which include the geographic territories of the United States and Canada. Financial information concerning these segments is set forth in this Form 10-K in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Note 3. Segment Reporting” of the Notes to our Consolidated Financial Statements included in this Form 10-K.
Industry Background
Over the years, our products have evolved significantly from scoreboards and matrix displays with related software applications to complex, integrated visual display systems which include full color video with text and graphics displays located on a local or remote network that are tied together through sophisticated control systems. In the mid-1990’s, as light emitting diodes (“LEDs”) became available in red, blue, and green colors with outdoor brightness, we pioneered the development of full color LED video displays capable of replicating trillions of colors, thereby producing large format video systems with excellent color, brightness, energy efficiency, and lifetime. Due to our foundation of developing scoring and graphics display systems, we were able to add video capabilities so we could meet all our customers’ large format display needs in a complete, integrated system. This has proven to be a key factor in Daktronics becoming a leader in large electronic displays. LED technologies continue to evolve and advance, creating new high-resolution and micro-LED display options of all shapes and sizes. Today, the industry continues development in both the construct of the micro-LED and production methods of micro-LED display panels using mass-transfer technology.
Integrated visual display systems are increasingly used across a variety of vertical markets including: media/advertising, stadiums/venues, hospitality/leisure, transportation, military and government, broadcast, control room, corporate and education, and retail. Generally, these vertical markets use systems to collaboratively communicate, inform, entertain, and advertise to various sized audiences. Advances in technologies and the decrease in costs of systems have opened up and increased the market’s size.
Description of Business
We are engaged in a full range of activities: marketing and sales, engineering and product design and development, manufacturing, technical contracting, professional services, and customer service and support. Each of those activities is described below:
Marketing and Sales. Our sales force is comprised of direct sales staff and resellers, including AV integrators, located throughout the world supporting all customer types in both sales and service. We primarily use a direct sales force for large integrated display system sales in professional sports, colleges and universities, and commercial spectacular projects. We also use our direct sales force to sell to out-of-home advertising companies, to transportation system operators, and to certain high school park and recreation customers. The majority of our products sold by resellers are standard catalog products such as video boards and dynamic message systems and increasingly include indoor micro-LED configurable display systems. We also utilize resellers outside North America for large integrated system sales where we do not have a direct sales presence. We support our resellers through direct mail/email advertising, social media campaigns, trade journal advertising, product and installation training, trade show exhibitions, and accessibility to our regional sales or service teams and demonstration equipment.
2
Engineering and Product Design and Development. The large format electronic display industry is characterized by ongoing product innovations and developments in technology and complementary services. To remain competitive, we have a tradition of applying engineering resources throughout our business to anticipate and respond rapidly to the system needs in the marketplace. We employ and contract with engineers and technicians in the areas of mechanical and electrical design; applications engineering; software design; quality design; and customer and product support. Product managers assigned to each product family assist our sales staff in training and implementing product improvements which ensures each product is designed for maximum reliability and serviceability. We employ and contract with process engineers to assist in quality and reliability processing in our product design testing and manufacturing areas. We also make selected investments in and contract with affiliated companies to support and advance technologies and capabilities for our product lines and solutions.
Manufacturing. The majority of our products are manufactured in the United States, specifically in South Dakota and Minnesota. We also have manufacturing facilities in China and Ireland. We perform component manufacturing, system manufacturing (metal fabrication, electronic assembly, sub-assembly and final assembly), and testing in-house for most of our products to control quality, improve response time, and maximize cost-effectiveness. Given the cyclical nature of some parts of our business and dispersed sales geography, we balance and maintain our ability to manufacture the same products across our plants so we can efficiently utilize our capacity and reduce costs. A key strategy of ours is to increase standardization and commonality of parts and manufacturing processes across product lines through the use of product platforms to increase efficiencies. Other strategies include supplier management programs, reduction in complexity focus, and lean manufacturing techniques. For more details on our facilities, see “Part I, Item 2. Properties” in this Form 10-K.
Technical Contracting. We serve as a technical contractor for larger display system installations requiring custom designs and innovative product solutions. The purchase of display systems typically involves competitive proposals. As part of our response to a proposal request, we may suggest additional products or features to assist the prospective customer in analyzing the optimal type of display system. We usually include site preparation and installation services related to the display system in our proposal. In these cases, we serve as a contractor and may retain subcontractors for electrical, steel, and installation labor. We have developed relationships with many subcontractors throughout the United States and the world, which is an advantage for us in bidding and delivering on these projects. We are licensed as a general contractor in many jurisdictions.
Professional Services. To assist our clients’ ability to engage, inform, and entertain their audiences, we provide professional services including event support, event production curriculum, content creation, product maintenance, marketing assistance, training on hardware and software, control room design, and continuing technical support training for operators.
Customer Service and Support. We offer limited warranties on our products, ranging from one to 10 years, against failure due to defective parts or workmanship. In addition, we offer service agreements of various scopes. To serve our customers, we provide help-desk access, parts repair and replacement, display monitoring, and on-site support. Our technical help desk has experienced technicians who are on-call 24 hours a day to support events and sites. Our field service personnel and third-party service partners are trained to provide on-site support. We use third-party service partners to allow us to respond to the changes in volume of service requests during our seasonal peaks.
Products and Technologies
The two principal components of our systems are the display and the control system, which manages the operation of the display. We produce displays varying in complexity, size, and resolution. The physical dimensions of a display depend on the size of the viewing area, the distance from the viewer to the display, and the amount and type of information to be displayed. The control system is comprised of various combinations of computer hardware, video processing hardware, and software products designed to compile information provided by the operator and other integrated sources to display information, graphics, video, or animation on the displays. We customize our products according to the design specifications of the customer and the conditions of the environment in which our products function.
Our products are comprised of the following product families:
•Video displays/video walls
•Scoreboards and timing systems
•LED Message displays and signs
•ITS (intelligent transportation systems) dynamic message signs
3
•Mass Transit displays
•Sound systems
•Digital billboards
•Digital street furniture
•Digit and price displays
•Indoor dynamic messaging systems
•Software and controllers including Venus® Control Suite (“VCS”), Show Control Studio, and Show Control Live
Each of these product families is described below:
Video Displays/Video Walls. These displays are comprised of a large number of full-color pixels capable of showing various levels of video feeds, pre-rendered graphics, and animated content with Real Time Data capabilities. These displays include red, green, and blue LEDs arranged in various combinations to form pixels. The electronic circuitry, which controls the pixels, allows for variances in the relative brightness of each LED to provide a full color spectrum, thereby displaying video images in striking, vibrant colors. Variables in video displays include the spacing of the pixels (pixel pitch), the resolution of the displays (number of pixels), the brightness of the displays (nits), the number of discrete colors the display is able to produce (color depth), the viewing angles, and the LED technology.
We offer a broad range of indoor and outdoor LED video displays with these varying features. Examples of offerings include centerhung displays, landmark displays, video walls, ribbon board displays, hanging banners, roadside displays, digital billboards, corporate office entrance displays, conference room displays, control room displays, and video displays designed for arenas, stadiums, retail stores, restaurants, malls, transportation hubs, and other similar indoor facilities.
Video displays provide content to serve as a revenue generation source through advertising or as an information and communication medium (such as scoring, statistics, wayfinding, advertising, and control center information), or to provide interior design elements to create luxurious space to feature digital art.
The control components for video displays in live event applications include our Show Control Software Suite, proprietary digital media players, and video processors. These control components provide advanced capabilities for the display of live video and real-time content on our displays. The Show Control Software Suite can operate an entire network of displays within a venue from a single, intuitive control interface. Its features allow users to instantly deliver media clips, camera feeds, and streaming information to any display in a venue.
Scoreboards and Timing Systems. Our line of scoreboards and timing products include indoor and outdoor scoreboards for many different sports, digit displays, scoring and timing controllers, statistics software, and other related products. Indoor and outdoor systems range in complexity from small scoreboards to larger systems incorporating scoring, timing, video, message centers, advertising panels, and control software.
We offer a variety of controllers complementing our scoreboards and displays. These controllers vary in complexity from the All Sport® 100, a handheld controller for portable scoreboards, to the All Sport® Pro, designed for more sophisticated scoring systems and allowing for more user-defined options.
As a key component of an integrated system, we market sports statistics and results software under the DakStats® trademark. The software allows the entry and display of sports statistics and other information. It is one of the leading applications of its type in collegiate and high school sports.
LED Message Displays and Signs.
Loading financial statements...
Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
| Line item |
|---|
| Period ending |
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This section entitled "Management’s Discussion and Analysis of Financial Condition and Results of Operations" (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The MD&A provides a narrative analysis explaining the reasons for material changes in the (i) financial condition of Daktronics, Inc. and its subsidiaries (the "Company", "Daktronics", "we", "our", or "us") during the period from the most recent fiscal year-end, April 26, 2025, to and including January 31, 2026; and (ii) results of operations of the Company during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.
This Quarterly Report on Form 10-Q, including the MD&A, contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect our current views with respect to future events and financial performance. The words "may," "might," "would," "could," "should," "will," "expect," "estimate," "anticipate," "believe," "intend," "plan," "forecast," "project," and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any and all forecasts and projections in this document are “forward-looking statements” and are based on management’s current expectations or beliefs. From time to time, we may also provide oral and written forward-looking statements in other materials we release to the public, such as press releases, presentations to securities analysts or investors, or other communications by us. Any or all forward-looking statements in this Quarterly Report on Form 10-Q and in any public statements we make could be materially different from actual results. Accordingly, we wish to caution investors that any forward-looking statements made by or on behalf of us are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Important factors that may cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, changes in economic and market conditions, management of growth, timing and magnitude of future contracts, orders, and capital investment projects, fluctuations in margins, interest rate risk, the introduction of new products and technology, the impact of adverse weather conditions, increased regulation, the imposition of tariffs, trade wars, the availability and costs of raw materials, components, and shipping services, geopolitical and governmental actions, including the U.S. federal government shutdown, expansion into new geographical markets, the Company’s recent leadership transition, transformation initiatives, future strategy, and the other risks, trends, and uncertainties described more fully in the Company’s Annual Report on Form 10-K for the fiscal year ended April 26, 2025 (the "Form 10-K") filed with the Securities and Exchange Commission ("SEC"), this Quarterly Report on Form 10-Q, and other reports filed with or furnished to the SEC by the Company.
We also wish to caution investors that other factors might in the future prove to be important in affecting our results of operations. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable law.
The MD&A should be read in conjunction with the Condensed Consolidated Financial Statements and related Notes included in Item 1 of Part 1 of this Quarterly Report on Form 10-Q, the Form 10-K (including the information presented therein under "Item 1A. Risk Factors" of Part I), and other reports filed with or furnished to the SEC by the Company.
The quarter-over-quarter comparisons in this MD&A are as of and for the fiscal quarters ended January 31, 2026 and January 25, 2025 unless otherwise stated.
Non-GAAP Financial Measures
Contribution margin, which is a financial measure that is not defined under accounting principles generally accepted in the United States (“GAAP”), is utilized by management to evaluate segment profitability and guide resource allocation decisions. It is defined as gross profit less selling expenses. Selling expenses primarily include personnel-related costs, travel and entertainment, marketing expenditures (such as showroom operations, product demonstrations, depreciation and
23
maintenance, conventions, and trade shows), costs associated with customer relationship management and marketing systems, bad debt expense, third-party commissions, and other related expenses.
In addition to gross profit, management considers contribution margin a meaningful metric for assessing the financial performance of individual segments. We believe this measure provides investors with a useful view of our segment-level performance consistent with the approach used by management. By presenting contribution margin, we aim to enhance transparency and allow investors to better understand how we evaluate and manage our business operations.
Overview
We are recognized industry leaders in the design and manufacture of electronic scoreboards, programmable display systems, and large-screen video displays serving sporting, commercial, and transportation markets. We serve our customers by delivering high-quality standard display products as well as custom-designed and integrated systems.
Our product portfolio ranges from small-scale scoreboards and electronic displays to large, multimillion-dollar video display systems. These offerings are complemented by related control, timing, and sound systems. We are widely acknowledged for our technical expertise and our ability to design, market, manufacture, install, and service comprehensive integrated solutions that display real-time data, graphics, animation, and video.
Our operations encompass a full spectrum of activities, including marketing and sales, engineering and product design and development, manufacturing, technical contracting, professional services, and customer service and support.
The Company operates on a 52- or 53-week fiscal year ending on the Saturday closest to April 30. When April 30 falls on a Wednesday, the fiscal year ends on the preceding Saturday. Each fiscal quarter consists of 13 weeks, except in a 53-week fiscal year, where the first quarter includes 14 weeks. The nine months ended January 31, 2026, and January 25, 2025, included 40 and 39 weeks of operations, respectively.
Known Trends and Uncertainties
During fiscal 2025, we embarked on our business transformation program, which is focused on driving sustainable growth, margin improvement, and enhanced returns on invested capital. The Company’s transformation roadmap, developed through rigorous analysis and planning, is designed to support ambitious sales and profitability targets. Strong order growth during the quarter reflects ongoing market adoption of digital display technologies and the strength of Daktronics’ integrated product and service offerings.
The business environment remains dynamic, with several external factors continuing to influence customer demand and operational costs. The Company continues to be affected by U.S. government‑imposed tariffs on electronic components, aluminum, steel, and copper, as well as reciprocal tariffs imposed by foreign countries. In addition, changes to U.S. trade policy, including the elimination of the de minimis exemption for low‑value shipments, continued to increase logistics and import‑related costs. These tariffs may impact gross margins and could influence customer purchasing behavior, particularly for projects dependent on federal funding. In response, Daktronics is actively monitoring its pricing strategies and sourcing plans to mitigate these effects. However, the ultimate impact on demand remains uncertain.
On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed by the U.S. presidential administration under the International Emergency Economic Powers Act (“IEEPA”) exceeded presidential authority and were invalidated. Following the ruling, the administration implemented a temporary global tariff under alternative trade authorities and has indicated an intention to increase the rate to up to 15%. The timing, duration, and final rate of these tariffs remain uncertain. We continue to monitor these developments and assess the potential impact on our results of operations.
The global market for digital display systems continues to expand, driven by investments in manufacturing capacity and advancements in display and control technologies. The industry is seeing increased adoption of surface mount and chip-on-board technologies, particularly for narrow pixel pitch (NPP) and micro-LED applications, as manufacturers and customers seek higher performance and efficiency. Innovations in software, artificial intelligence, and professional services are enhancing content creation, user interfaces, monitoring, and security.
We maintain a unique leadership position in our target markets, which are large, growing, and supported by resilient demand from customers seeking to enhance audience experiences in sports, commercial, and transportation environments. We are investing in capacity and resources to grow and deepen market penetration.
24
To capitalize on this position, we continue to focus on digital and business transformation, cost structure optimization, and market expansion. In fiscal 2025, we established a Business Transformation Office ("BTO") to conduct a comprehensive review of our business, strategy, and operations. The BTO is developing strategic initiatives, enabled in part by our digital transformation, to deliver improved customer outcomes, deeper market penetration, above-market growth, and more efficient delivery, fulfillment, and service. These initiatives are structured to support our ambitious business transformation plan: revenue growth outpacing our addressable market, operating margins of 10–12%, and returns on capital of 17–20%, consistently exceeding our cost of capital.
The Company continues to monitor and adjust its capacity and resource levels in response to market conditions. Daktronics is expanding the Company’s global manufacturing network into Mexico, as part of its broader three-year strategic plan for improving profitable growth and increasing the overall agility of the company’s production capacity. The new facility is expected to be in production by the end of fiscal 2026.
There may be periods where sales and expenses are not fully aligned, particularly as investments in transformation and corporate governance are made. These investments may affect near-term profitability but are intended to support long-term value creation.
Despite ongoing uncertainties related to tariffs, geopolitical developments, and federal funding priorities, Daktronics believes that the fundamental drivers of the audiovisual industry remain strong. Increased adoption of LED display systems across industries, combined with the Company’s ongoing development of new technologies, services, and sales channels, are expected to support long-term growth.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED JANUARY 31, 2026 AND JANUARY 25, 2025
Product Order Backlog
Backlog represents the dollar value of contractually binding customer purchase commitments for integrated electronic display systems and related products and services that are expected to be recognized as net sales in future periods. Orders are included in backlog when we have received an executed contract and any required deposits or security, and the revenue has not yet been recognized. Certain orders supported by binding letters of intent or contracts are excluded from backlog until all required contractual documentation and deposits are received.
Orders and backlog are non-GAAP operating measures, and our methodology for determining these metrics may differ from those used by other companies. Management believes that order and backlog levels provide meaningful insight into our business activity, including fluctuations due to seasonality and the timing of large-scale projects. New orders during the period are used to assess market share and competitive performance, while backlog informs capacity and resource planning. Given that orders and backlog are operational measures and that the Company’s methodology for calculating them does not meet the definition of a non-GAAP financial measure, as that term is defined by the SEC, a quantitative reconciliation is not required or provided.
The timing of order fulfillment is subject to customer schedules, supply chain conditions, and our production capacity. We believe order information is useful to investors as an indicator of future revenue and market positioning.
As of January 31, 2026, our product order backlog was $342.3 million, compared to $273.2 million as of January 25, 2025, and $341.6 million as of April 26, 2025. The increase in backlog year over year reflects a higher volume of order bookings, driven by continued market adoption and demand for digital display technologies.
We expect to fulfill the backlog as of January 31, 2026, within the next 24 months. However, fulfillment timing may be impacted by project delays due to customer site conditions, which are outside of our control.
25
Consolidated Performance Summary
The following is an analysis of changes in key items included in the statements of operations for the three months ended January 31, 2026 and January 25, 2025:
| January 31, 2026 | % of Net sales (1) | January 25, 2025 | % of Net sales (1) | Dollar Change (1) | Percent Change (1) | |||||||||||||||||||||||||
| Net sales | $ | 181,871 | 100.0 | % | $ | 149,507 | 100.0 | % | $ | 32,364 | 21.6 | % | ||||||||||||||||||
| Cost of sales | 138,242 | 76.0 | 112,726 | 75.4 | 25,516 | 22.6 | ||||||||||||||||||||||||
| Gross profit | 43,629 | 24.0 | 36,781 | 24.6 | 6,848 | 18.6 | ||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||
| Selling | 15,335 | 8.4 | 14,471 | 9.7 | 864 | 6.0 | ||||||||||||||||||||||||
| General and administrative | 15,844 | 8.7 | 16,498 | 11.0 | (654) | (4.0) | ||||||||||||||||||||||||
| Product design and development | 10,528 | 5.8 | 9,440 | 6.3 | 1,088 | 11.5 | ||||||||||||||||||||||||
| Total operating expenses | 41,707 | 22.9 | 40,409 | 27.0 | 1,298 | 3.2 | ||||||||||||||||||||||||
| Operating income (loss) | 1,922 | 1.1 | (3,628) | (2.4) | 5,550 | (153.0) | ||||||||||||||||||||||||
| Nonoperating income (expense): | ||||||||||||||||||||||||||||||
| Interest income (expense), net | 1,072 | 0.6 | 508 | 0.3 | 564 | 111.0 | ||||||||||||||||||||||||
| Change in fair value of convertible note | — | — | (14,083) | (9.4) | 14,083 | (100.0) | ||||||||||||||||||||||||
| Other income (expense), net | 518 | 0.3 | (613) | (0.4) | 1,131 | (184.5) | ||||||||||||||||||||||||
| Income (loss) before income taxes | 3,512 | 1.9 | (17,816) | (11.9) | 21,328 | (119.7) | ||||||||||||||||||||||||
| Income tax expense (benefit) | 502 | 0.3 | (660) | (0.4) | 1,162 | (176.1) | ||||||||||||||||||||||||
| Net income (loss) | $ | 3,010 | 1.7 | % | $ | (17,156) | (11.5) | % | $ | 20,166 | (117.5) | % | ||||||||||||||||||
| Diluted earnings per share | $ | 0.06 | $ | (0.36) | $ | 0.42 | (116.7) | % | ||||||||||||||||||||||
| Diluted weighted average shares outstanding | 49,257 | 47,764 | $ | 1,493 | 3.1 | % | ||||||||||||||||||||||||
| Orders | $ | 201,111 | $ | 186,904 | $ | 14,207 | 7.6 | % | ||||||||||||||||||||||
(1) Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided. In addition, percentages may not add in total due to rounding.
Net Sales: The sales increase in the third quarter of fiscal 2026 compared to the same period in fiscal 2025 was the result of higher sales volumes in the Commercial, Live Events, and High School Parks and Recreation business units, partially offset by decreased sales in the Transportation and International business units. The amount of recognized revenue associated with performance obligations satisfied in prior years during the three months ended January 31, 2026 and January 25, 2025 was immaterial.
Order volume increased in the third quarter of fiscal 2026 compared to the same period in fiscal 2025 primarily due to order growth in the High School Parks and Recreation and Transportation business units, partially offset by lower order volume in the Live Events and International business units. Order bookings in the Commercial business unit remained
26
relatively flat. Variability in orders is typical for large project business areas, especially for sports projects, during the Company’s third fiscal quarter.
Gross profit increased in the third quarter of fiscal 2026 compared to the same period in fiscal 2025 as a result of higher sales volume. Gross profit as a percentage of net sales decreased slightly to 24.0 percent for the third quarter of fiscal 2026 as compared to 24.6 percent for the same period a year ago, primarily due to project mix variability. Total warranty expense as a percentage of sales increased slightly to 1.3 percent for the third quarter of fiscal 2026 as compared to 0.9 percent for the same period a year ago.
Selling expenses increased in the third quarter of fiscal 2026 compared to the same period in fiscal 2025 primarily due to increases in personnel related wages and benefits.
General and administrative expenses decreased in the third quarter of fiscal 2026 compared to the same period in fiscal 2025. During the third quarter of fiscal 2026 and fiscal 2025, the Company incurred $2.1 million and $4.8 million, respectively, for expenses related to management transitions, acquisition costs, strategic and digital transformation initiatives, and corporate governance matters.
Product design and development expenses increased in the third quarter of fiscal 2026 compared to the same period in fiscal 2025 primarily due to higher staffing costs and investments in advanced technologies and engineering services.
Interest income (expense), net in the third quarter of fiscal 2026 increased compared to the same period one year ago primarily due to higher cash levels invested in interest-bearing accounts. During the third quarter of fiscal 2025, the interest expense included interest on the convertible note, which was settled during fiscal 2025.
Change in fair value of Convertible Note results from accounting for the senior secured convertible note dated May 11, 2023 we issued to Alta Fox Opportunities Fund, LP during fiscal 2024 (the “Convertible Note”) under the fair value option. The fair value change was primarily caused by the forced conversion of the entire Convertible Note in the third and fourth quarters of fiscal 2025. All amounts due under the Convertible Note were settled in fiscal 2025, and the Company has no further obligations under the Convertible Note.
Other income (expense), net increased in the third quarter of fiscal 2026 compared to the same period in fiscal 2025 primarily due to foreign currency volatility and the X Display Company Technology Limited (“XDC”) business combination.
Income tax expense (benefit): For the three months ended January 31, 2026, our effective tax rate was 14.3 percent compared to 3.7 percent for the three months ended January 25, 2025. The lower tax rate in the third quarter of fiscal 2025 is due to the tax effect of the increase of the Convertible Note fair value adjustment to expense that is not deductible for tax purposes reduced by the tax effect of the period's decrease in pre-tax income, whereas in the third quarter of fiscal 2026, the tax rate was reduced by increases to discrete tax benefits and a reversal of a valuation allowance with no fair value adjustments applicable.
Net income: For the three months ended January 31, 2026, our earnings per diluted share was $0.06 compared to a loss per diluted share of $0.36 in the same period last year.
27
Reportable Segment Performance Summary
The following table presents financial performance information for our reportable segments for the three months ended January 31, 2026 and January 25, 2025, including a reconciliation of contribution margin, a non-GAAP measure, to GAAP operating income, which is the most directly comparable GAAP measure to contribution margin:
| Three Months Ended January 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | Percent of net sales (1) | Live Events | Percent of net sales (1) | High School Park and Recreation | Percent of net sales (1) | Transportation | Percent of net sales (1) | International | Percent of net sales (1) | Total | Percent of net sales (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 43,506 | $ | 74,911 | $ | 31,649 | $ | 15,273 | $ | 16,532 | $ | 181,871 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of sales | 31,399 | 72.2 | % | 59,803 | 79.8 | % | 22,150 | 70.0 | % | 10,795 | 70.7 | % | 14,095 | 85.3 | % | 138,242 | 76.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross profit | 12,107 | 27.8 | 15,108 | 20.2 | 9,499 | 30.0 | 4,478 | 29.3 | 2,437 | 14.7 | 43,629 | 24.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling | 4,110 | 9.4 | 3,018 | 4.0 | 4,070 | 12.9 | 1,362 | 8.9 | 2,775 | 16.8 | 15,335 | 8.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contribution margin | 7,997 | 18.4 | 12,090 | 16.1 | 5,429 | 17.2 | 3,116 | 20.4 | (338) | (2.0) | 28,294 | 15.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | — | — | — | — | — | — | — | — | — | — | 15,844 | 8.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Product design and development | — | — | — | — | — | — | — | — | — | — | 10,528 | 5.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating income | $ | 7,997 | 18.4 | % | $ | 12,090 | 16.1 | % | $ | 5,429 | 17.2 | % | $ | 3,116 | 20.4 | % | $ | (338) | (2.0) | % | $ | 1,922 | 1.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Orders | $ | 41,454 | $ | 73,370 | $ | 39,177 | $ | 31,790 | $ | 15,320 | $ | 201,111 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended January 25, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | Percent of net sales (1) | Live Events | Percent of net sales (1) | High School Park and Recreation | Percent of net sales (1) | Transportation | Percent of net sales (1) | International | Percent of net sales (1) | Total | Percent of net sales (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 37,976 | $ | 46,072 | $ | 29,367 | $ | 18,789 | $ | 17,303 | $ | 149,507 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of sales | 28,890 | 76.1 | % | 37,278 | 80.9 | % | 20,075 | 68.4 | % | 11,863 | 63.1 | % | 14,620 | 84.5 | % | 112,726 | 75.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross profit | 9,086 | 23.9 | 8,794 | 19.1 | 9,292 | 31.6 | 6,926 | 36.9 | 2,683 | 15.5 | 36,781 | 24.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling | 3,870 | 10.2 | 2,991 | 6.5 | 3,845 | 13.1 | 1,279 | 6.8 | 2,486 | 14.4 | 14,471 | 9.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contribution margin | 5,216 | 13.7 | 5,803 | 12.6 | 5,447 | 18.5 | 5,647 | 30.1 | 197 | 1.1 | 22,310 | 14.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | — | — | — | — | — | — | — | — | — | — | 16,498 | 11.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Product design and development | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-04-30 | Wendler Brett David | VP of Design & Development | Buy | +98 | $15.97 | $1,565 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-09-10 10-Q expected by 2026-09-11 (in 78 days)
- ~2026-12-10 10-Q expected by 2026-12-11 (in 169 days)
- ~2027-03-04 10-Q expected by 2027-03-05 (in 253 days)
- ~2027-06-24 10-K expected by 2027-07-07 (in 365 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-05-21 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-03-04 10-Q Quarterly Report
- 2026-03-04 8-K Earnings Release; Financial Statements and Exhibits
- 2026-02-20 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-02-02 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-01-21 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-12-23 8-K Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
- 2025-12-10 10-Q Quarterly Report
- 2025-12-10 8-K Earnings Release; Other Events; Financial Statements and Exhibits
- 2025-12-03 8-K Material Agreement Entered; Material Agreement Terminated; Material Financial Obligation; Financial Statements and Exhibits
- 2025-12-03 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-10-30 8-K Material Agreement Entered; Officer/Director Change; Financial Statements and Exhibits
- 2025-09-10 10-Q Quarterly Report
- 2025-09-10 8-K Earnings Release; Financial Statements and Exhibits
- 2025-09-05 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits