TALL ORDER: Empower Field’s new end zone videoboards, made by Daktronics, are the NFL’s tallest screens, standing 72 feet high. (Courtesy Daktronics)
NEW BANK, BIGGER LINE OF CREDIT
INDIAN WELLS, California — Daktronics keeps churning out videoboards for arenas and stadiums, nine months after the publicly-held company experienced cash flow issues tied to the pandemic.
It’s been an active year for Daktronics, Jay Parker, Daktronics vice president of live events and spectaculars, said during a sit-down last week at the 2023 VenuesNow Conference.
Daktronics has new boards in place for football season at NFL venues Lambeau Field, Gillette Stadium and Empower Field, plus Carter-Finley Stadium and Huntington Bank Stadium in the college market. In the NBA, Paycom Center has a new Daktronics centerhung at the Oklahoma City Thunder arena. At the FCS level, multiple schools have new Dak screens at their football stadiums.
Last December, global supply chain disruptions, coupled with a backlog of projects, forced Daktronics to spend cash reserves on inventory, automation and equipment, which led to the company securing a $35 million line of credit, among other funding sources.
In turn, the situation caused concern among stockholders, leading to a flurry of trading activity and questions over Daktronics’ financial stability.
Bottom line, Daktronics took action to resolve those concerns. In May, the company announced it had switched banks from US Bank to JP Morgan Chase, increasing its line of credit to $75 million. Over the past nine months, Daktronics paid its $35 million debt back to US Bank.
In addition, major Daktronics shareholder Alta Fox Capital Management agreed to increase its investment in the company by providing a $25 million convertible debt financing deal.
“Now, we have access to (more) cash, even though we don’t need all of our borrowing capacity today,” Parker said, “If you look at our Q1 financials that came out two months ago, we had a a really great quarter, and we rallied in Q4 three to four months ago.”
As of today (Oct. 5), Daktronics stock stood at $8.82 a share on the NASDAQ stock exchange, a much healthier number than in the final months of 2022.
“The biggest thing to look at is where our current stock price is at,” Parker said. “When the growing concern (tag) was placed on Daktronics and the market reacted to that, our stock price went down to less than $3. Two to three weeks ago, it hit $10 a share. That tells you that the financial community has seen what we’ve been able to improve over the last 12 months and put ourselves in better position.”
Over the past year, stabilization in supply chain has enabled Daktronics to reduce its backlog of more than $400 million in videoboards, including $200 million in the sports and entertainment space. It’s now down to about $300 million, Parker said. Production lead times have decreased from 10 months to pre-pandemic levels of four to six months, depending on the amount of steel structure.
“We’re starting to see teams get back into the normal buying cycle,” he said. “Right now, we’re selling baseball and softball. In the next year or two, we’ll see a lot more NFL stadium projects come back (including new stadiums for the Buffalo Bills and Tennessee Titans). The college space continues to be really busy. That landscape is changing. They’re upgrading the experience for the fans, but it’s also about recruiting and retaining student-athletes. We’re still seeing a lot of demand there.”
It may take some time for the costs to purchase videoboards to come down with inflationary pressures still in place, although pricing overall most like won’t ever get back to pre-pandemic levels, Parker said.
Big picture, video technology continues to evolve with crisper images and resolution. The Green Bay Packers’ new end zone videoboards are the newest cutting-edge products with 6-millimeter resolution, which is typically what you see in an arena setting, Parker said.
“It’s all about trying to get to 4K quality, or you go with a 10-millimeter product and go bigger, because then you can get more pixels due to the size of the display,” he said. “We see most outdoor stadiums at the 10-millimeter mark. The Packers have pushed the envelope as they try to future proof their stadium. As more 4K content becomes available, they’ll be able to have the resolution to show off to their fans.”