Daktronics (NASDAQ: DAKT) reported Q3 EPS of ($0.04), $0.06 worse than the analyst estimate of $0.02. Revenue for the quarter came in at $123.8 million versus the consensus estimate of $125.25 million.

Reece Kurtenbach, chairman, president and chief executive officer stated, “Our third quarter is historically a lighter quarter for sales and profits due to the seasonality of our business in sports, impact of weather and outdoor construction cycles, and the decrease in production days available due to holidays in the quarter. While this year was no exception, we are disappointed in our financial performance. Sales increased over last year due to the orders we delayed production on from the second quarter. However, profitability dropped significantly due to sales mix and because of ongoing warranty charges. We have implemented countermeasures to reduce the overall financial impact of the warranty issue. We are addressing issues in the field by deploying preventative maintenance and/or repairing affected sites to optimize our customers’ experience. Further warranty costs could be incurred before fully resolved.”

Outlook

Kurtenbach added, “Our financial performance on a year to date basis is lower than expected but we see ways to improve in the future. Our order pipeline remains active in all markets. In the short-term however, it is unclear how the uncertainty in the global economy may affect the timing and size of projects. In the long-term, we remain optimistic about the growing digital marketplace. Our competitive advantages remain strong, but as with any growing market, this potential attracts additional competitors. To meet and exceed customer and market demands for long-term success, we believe solution development investments are critical. Our near-term efforts are focused on ultra-high definition, software integration, control systems, and a new generation of outdoor products. We will continue to develop these solutions using proven designs and leveraging the strength of our quality and reliability capabilities. Until the short-term order picture becomes clearer, we are focused on maintaining or reducing costs to improve profitability."

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