10-Q 1 dakt-20241026.htm 10-Q dakt-20241026
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 26, 2024
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___.
Commission File Number: 001-38747
dak.jpg
Daktronics, Inc.
(Exact Name of Registrant as Specified in its Charter)
South Dakota46-0306862
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer Identification No.)
201 Daktronics Drive
Brookings,
SD
57006
(Address of Principal Executive Offices) (Zip Code)
(605) 692-0200
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, No Par ValueDAKT
Nasdaq Global Select Market
Preferred Stock Purchase RightsDAKT
Nasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filero
Accelerated filerx
Non-accelerated filero
Smaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The number of shares of the registrant’s common stock outstanding as of November 25, 2024 was 46,986,282.

DAKTRONICS, INC. AND SUBSIDIARIES
FORM 10-Q
For the Quarter Ended October 26, 2024
Table of Contents
Page

PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data) (unaudited)

October 26,
2024		April 27,
2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$134,352 $81,299 
Restricted cash— 379 
Accounts receivable, net111,307 117,186 
Inventories121,582 138,008 
Contract assets44,955 55,800 
Current maturities of long-term receivables1,272 298 
Prepaid expenses and other current assets9,180 8,531 
Income tax receivables144 448 
Total current assets422,792 401,949 
Property and equipment, net73,815 71,752 
Long-term receivables, less current maturities2,537 562 
Goodwill3,194 3,226 
Intangibles, net696 840 
Debt issuance costs, net1,910 2,530 
Investment in affiliates and other assets21,084 21,163 
Deferred income taxes25,858 25,862 
TOTAL ASSETS$551,886 $527,884 












1
DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(in thousands, except per share data) (unaudited)
October 26,
2024		April 27,
2024
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt$1,500 $1,500 
Accounts payable57,463 60,757 
Contract liabilities62,458 65,524 
Accrued expenses42,811 43,028 
Warranty obligations15,334 16,540 
Income taxes payable531 4,947 
Total current liabilities180,097 192,296 
Long-term warranty obligations23,054 21,388 
Long-term contract liabilities18,330 16,342 
Other long-term obligations5,446 5,759 
Long-term debt, net63,887 53,164 
Deferred income taxes142 143 
Total long-term liabilities110,859 96,796 
SHAREHOLDERS' EQUITY:
Preferred Shares, no par value, authorized 50 shares; no shares issued and outstanding
— — 
Common Stock, no par value, authorized 115,000 shares; 48,810 and 48,121 shares issued as of October 26, 2024 and April 27, 2024, respectively
70,282 65,525 
Additional paid-in capital52,505 52,046 
Retained earnings154,491 138,031 
Treasury Stock, at cost, 1,907 shares as of October 26, 2024 and April 27, 2024, respectively
(10,285)(10,285)
Accumulated other comprehensive loss(6,063)(6,525)
TOTAL SHAREHOLDERS' EQUITY260,930 238,792 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$551,886 $527,884 

See notes to condensed consolidated financial statements.
2
DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months EndedSix Months Ended
October 26,
2024		October 28,
2023		October 26,
2024		October 28,
2023
Net sales$208,331 $199,369 $434,419 $431,900 
Cost of sales152,468 145,170 318,858 306,554 
Gross profit55,863 54,199 115,561 125,346 
Operating expenses:
Selling14,704 14,653 30,340 27,582 
General and administrative15,550 10,889 27,273 20,488 
Product design and development9,839 9,221 19,462 17,624 
40,093 34,763 77,075 65,694 
Operating income15,770 19,436 38,486 59,652 
Nonoperating (expense) income:
Interest (expense) income, net273 (1,326)202 (2,207)
Change in fair value of convertible note10,304 (10,650)(11,286)(17,910)
Other expense and debt issuance costs write-off, net(1,164)(1,303)(1,999)(5,282)
Income before income taxes25,183 6,157 25,403 34,253 
Income tax expense3,777 3,992 8,943 12,892 
Net income$21,406 $2,165 $16,460 $21,361 
Weighted average shares outstanding:
Basic46,796 46,030 46,576 45,838 
Diluted51,715 46,705 47,507 46,454 
Earnings per share:
Basic$0.46 $0.05 $0.35 $0.47 
Diluted$0.22 $0.05 $0.35 $0.46 
See notes to condensed consolidated financial statements.
3
DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
Three Months EndedSix Months Ended
October 26,
2024		October 28,
2023		October 26,
2024		October 28,
2023
Net income$21,406 $2,165 $16,460 $21,361 
Other comprehensive income (loss):
Cumulative translation adjustments314 (1,190)442 (1,442)
Unrealized gain on available-for-sale securities, net of tax20 9 20 16 
Total other comprehensive income (loss), net of tax334 (1,181)462 (1,426)
Comprehensive income$21,740 $984 $16,922 $19,935 
See notes to condensed consolidated financial statements.
4
DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands)
(unaudited)
Common StockTreasury Stock
NumberAmountAdditional Paid-In CapitalRetained EarningsNumberAmountAccumulated Other Comprehensive LossTotal
Balance as of April 27, 202448,121$65,525 $52,046 $138,031 (1,907)$(10,285)$(6,525)$238,792 
Net loss— — — (4,946)— — — (4,946)
Cumulative translation adjustments— — — — — — 128 128 
Share-based compensation— — 520 — — — — 520 
Exercise of stock options331 3,148 — — — — — 3,148 
Employee savings plan activity71 569 — — — — — 569 
Balance as of July 27, 202448,523$69,242 $52,566 $133,085 (1,907)$(10,285)$(6,397)$238,211 
Net income— — — 21,406 — — — 21,406 
Cumulative translation adjustments— — — — — — 314 314 
Unrealized gain on available-for-sale securities, net of tax— — — — — — 20 20 
Share-based compensation— — 530 — — — — 530 
Common stock issued upon vesting of Restricted Stock Units141 — — — — — — — 
Exercise of stock options183 1,040 — — — — — 1,040 
Shares withheld for taxes on Restricted Stock Unit issuances(37)— (591)— — — — (591)
Balance as of October 26, 202448,810 $70,282 $52,505 $154,491 (1,907)$(10,285)$(6,063)$260,930 
See notes to condensed consolidated financial statements.
5
DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(continued)
(in thousands)
(unaudited)
Common StockTreasury Stock
NumberAmountAdditional Paid-In CapitalRetained EarningsNumberAmountAccumulated Other Comprehensive LossTotal
Balance as of April 29, 202347,396$63,023 $50,259 $103,410 (1,907)$(10,285)$(5,529)$200,878 
Net income— — — 19,196 — — — 19,196 
Cumulative translation adjustments— — — — — — (252)(252)
Unrealized gain on available-for-sale securities, net of tax— — — — — — 7 7 
Share-based compensation— — 557 — — — — 557 
Exercise of stock options11 46 — — — — — 46 
Employee savings plan activity211615 — — — — — 615 
Balance as of July 29, 202347,618 $63,684 $50,816 $122,606 (1,907)$(10,285)$(5,774)$221,047 
Net income— — — 2,165— — — 2,165 
Cumulative translation adjustments— — — — — — (1,190)(1,190)
Unrealized gain on available-for-sale securities, net of tax— — — — — — 9 9 
Share-based compensation— — 534 — — — — 534 
Exercise of stock options161 959 — — — — — 959 
Shares withheld for taxes on Restricted Stock Unit issuances(37)— (303)— — — — (303)
Common stock issued upon vesting of Restricted Stock Units188 — — — — — — — 
Balance as of October 28, 202347,930 $64,643 $51,047 $124,771 (1,907)$(10,285)$(6,955)$223,221 
See notes to condensed consolidated financial statements.
6
DAKTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
October 26,
2024		October 28,
2023
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income $16,460 $21,361 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization9,794 9,494 
(Gain) loss on sale of property, equipment and other assets(40)101 
Share-based compensation1,050 1,091 
Equity in loss of affiliates1,832 1,461 
(Recoveries of) provision for doubtful accounts, net(152)240 
Deferred income taxes, net13 20 
Non-cash impairment charges— 654 
Change in fair value of convertible note11,286 17,910 
Debt issuance costs write-off— 3,353 
Change in operating assets and liabilities22,577 (11,374)
Net cash provided by operating activities62,820 44,311 
   
CASH FLOWS FROM INVESTING ACTIVITIES:  
Purchases of property and equipment(10,466)(9,226)
Proceeds from sales of property, equipment and other assets124 52 
Purchases of equity and loans to equity investees(2,041)(2,899)
Net cash used in investing activities(12,383)(12,073)
   
CASH FLOWS FROM FINANCING ACTIVITIES:  
Borrowings on notes payable— 40,000 
Payments on notes payable(1,358)(18,125)
Principal payments on long-term obligations(206)(204)
Debt issuance costs— (6,454)
Proceeds from exercise of stock options4,188 1,005 
Tax payments related to RSU issuances(591)(303)
Net cash provided by financing activities2,033 15,919 
   
EFFECT OF EXCHANGE RATE CHANGES ON CASH204 139 
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH52,674 48,296 
   
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:  
Beginning of period81,678 24,690 
End of period$134,352 $72,986 
  
Supplemental disclosures of cash flow information:  
Cash paid for:  
Interest$1,770 $1,027 
Income taxes, net of refunds12,910 11,874 
   
Supplemental schedule of non-cash investing and financing activities:  
Purchases of property and equipment included in accounts payable2,343 1,443 
Contributions of common stock under the ESPP569 614 
See notes to condensed consolidated financial statements.
7
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar and share amounts in thousands, except per share data)
(unaudited)
Note 1. Basis of Presentation
Daktronics, Inc. and its subsidiaries (the “Company”, “Daktronics”, “we”, “our”, or “us”) are industry leaders in designing and manufacturing electronic scoreboards, programmable display systems and large screen video displays for sporting, commercial and transportation applications.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present our financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent liabilities. Estimates used in the preparation of the unaudited consolidated financial statements include, among others, revenue recognition, future warranty expenses, the fair value of long-term debt, the fair value of investments in affiliates, income tax expenses, and stock-based compensation. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from those estimates.
Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The balance sheet as of April 27, 2024 has been derived from the audited financial statements at that date, but it does not include all the information and disclosures required by GAAP for complete financial statements. These financial statements should be read in conjunction with our financial statements and notes thereto for the fiscal year ended April 27, 2024, which are contained in our Annual Report on Form 10-K previously filed with the Securities and Exchange Commission ("SEC"). The results of operations for the interim periods presented are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year.
Daktronics, Inc. operates on a 52- or 53-week fiscal year, with our fiscal year ending on the Saturday closest to April 30 of each year. When April 30 falls on a Wednesday, the fiscal year ends on the preceding Saturday. Within each fiscal year, each quarter is comprised of 13-week periods following the beginning of each fiscal year. In each 53-week fiscal year, an additional week is added to the first quarter, and each of the last three quarters is comprised of a 13-week period. The six months ended October 26, 2024 and October 28, 2023 contained operating results for 26 weeks.
There have been no material changes to our significant accounting policies and estimates as described in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024.
Cash and cash equivalents and restricted cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the totals of the same amounts shown in the condensed consolidated statements of cash flows. Restricted cash consists of cash and cash equivalents held in bank deposit accounts to secure certain issuances of foreign bank guarantees.
October 26,
2024		October 28,
2023		April 27,
2024
Cash and cash equivalents$134,352 $64,740 $81,299 
Restricted cash— 8,246 379 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows$134,352 $72,986 $81,678 
We have foreign currency cash accounts to operate our global business. These accounts are impacted by changes in foreign currency rates. Of our $134,352 in cash and cash equivalent balances as of October 26, 2024, $123,981 were denominated in United States dollars, of which $5,947 were held by our foreign subsidiaries. As of October 26, 2024, we had an additional $10,371 in cash balances denominated in foreign currencies, of which $9,495 were maintained in accounts of our foreign subsidiaries.
8
Recent Accounting Pronouncements
Accounting Standards Adopted
There are no significant Accounting Standard Updates ("ASU") issued that were adopted in the six months ended October 26, 2024.

Accounting Standards Not Yet Adopted
In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 requires enhanced disclosures about significant segment expenses. The Company is required to adopt ASU 2023-07 for its annual reporting in fiscal year 2025 and for interim period reporting beginning in the first quarter of fiscal year 2026 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of ASU 2023-07 on our segment disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires the disclosure of specified additional information in its income tax rate reconciliation and to provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require disaggregation of income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. The Company is required to adopt this guidance for its annual reporting in fiscal year 2026 on a prospective basis. Early adoption and retroactive application are permitted. We are currently evaluating the impact of ASU 2023-09 on our income tax disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"), requiring disclosure in the notes to the financial statements for specified information about certain costs and expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027; however early adoption is permitted and can be applied either prospectively or retrospectively. We are currently evaluating the impact of ASU 2024-03 on our expense disaggregation disclosures.
Note 2. Investments in Affiliates
We use the equity method to account for investments in companies if our investment provides us with the ability to exercise significant influence over operating and financial policies of the investee. Our judgment regarding the level of influence over each equity method investee includes considering key factors such as our ownership interest, representation on the board of directors, participation in policy-making decisions, other commercial arrangements, and material intercompany transactions. We evaluated the nature of our investment in affiliates of XdisplayTM ("XDC"), which is developing micro-LED mass transfer expertise and technologies, and Miortech (dba Etulipa), which is developing low power outdoor electrowetting technology. Our ownership in Miortech was 55.9 percent and in XDC was 16.4 percent as of October 26, 2024. The aggregate amount of our investments accounted for under the equity method was $257 and $1,813 as of October 26, 2024 and April 27, 2024, respectively.
We determined both entities are variable interest entities, and based on management's analysis, we determined that Daktronics is not the primary beneficiary because the power criterion was not met. Therefore, as Daktronics does not have control, but is able to exercise significant influence, the investments in Miortech and XDC are accounted for under the equity method. Our proportional share of the respective affiliates' losses is included in the "Other expense and debt issuance costs write-off, net" line item in our Condensed Consolidated Statements of Operations. For the three and six months ended October 26, 2024, our share of the losses of our affiliates was $901 and $1,832 as compared to $771 and $1,461 for the three and six months ended October 28, 2023.
We review our investments in affiliates for impairment indicators. There were no impairments recorded during the three and six months ended October 26, 2024 compared to an impairments of $212 and $654 during the three and six months ended October 28, 2023.
We purchased services for research and development activities from our equity method investees. The total of these related party transactions for the six months ended October 26, 2024 and October 28, 2023 was $497 and $123, respectively, which is included in the "Product design and development" line item in our condensed consolidated statements of operations. A portion of our activities remain unpaid those amounts were $134 and $14 for the six months ended
9
October 26, 2024 and October 28, 2023, respectively, which is included in the "Accounts payable" line item in our condensed consolidated balance sheets.
We also have advanced our affiliates funds under convertible and promissory notes (collectively, the "Affiliate Notes"). We advanced $2,049 in the six months ended October 26, 2024 and $5,050 in fiscal year 2024 under the Affiliate Notes. The total outstanding amount of the Affiliate Notes was $16,396 and $14,241 as of October 26, 2024 and April 27, 2024, respectively. The balances of the Affiliate Notes are included in the "Investments in affiliates and other assets" line item in our condensed consolidated balance sheets. We evaluate the Affiliate Notes for impairment and credit losses. As of October 26, 2024 and April 27, 2024, no provision for losses was recorded, as management's analysis concluded the Affiliate Notes were collectable or realizable based on the rights of these instruments and related valuation of each affiliate.
The Affiliate Notes balance combined with the investment in affiliates balance totaled $16,653 and $16,054 as of October 26, 2024 and April 27, 2024, respectively.
Note 3. Earnings Per Share ("EPS")
We follow the provisions of Accounting Standards Codification 260, Earnings Per Share ("ASC 260"), where basic earnings per share ("EPS") is computed by dividing income attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution which may occur if securities or other obligations to issue common stock were exercised or converted into shares of common stock or resulted in the issuance of shares of common stock which share in our earnings.
The following is a reconciliation of the net income and common share amounts used in the calculation of basic and diluted EPS for the three and six months ended October 26, 2024 and October 28, 2023:
Three Months EndedSix Months Ended
October 26,
2024		October 28,
2023		October 26,
2024		October 28,
2023
Earnings per share - basic
Net income$21,406 $2,165 $16,460 $21,361 
Weighted average shares outstanding46,796 46,030 46,576 45,838 
Basic earnings per share$0.46 $0.05 $0.35 $0.47 
Earnings per share - diluted
Net income$21,406 $2,165 $16,460 $21,361 
Change in fair value of convertible note(10,304)— — — 
Interest expense on convertible note, net of tax418 — — — 
Diluted net income$11,520 $2,165 $16,460 $21,361 
Weighted average common shares outstanding46,796 46,030 46,576 45,838 
Dilution associated with stock compensation plans882 675 931 616 
Dilution associated with convertible note4,037 — — — 
Weighted average common shares outstanding, assuming dilution51,715 46,705 47,507 46,454 
Diluted earnings per share$0.22 $0.05 $0.35 $0.46 
Options outstanding to purchase 51 and 521 shares of common stock with a weighted average exercise price of $10.44 and $10.76 for the three months ended October 26, 2024 and October 28, 2023, respectively, were not included in the computation of diluted EPS because the effects would be anti-dilutive.
Options outstanding to purchase 114 shares of common stock with a weighted average exercise price of $12.10 for the six months ended October 26, 2024 and 1,039 shares of common stock with a weighted average exercise price of $9.53 for the six months ended October 28, 2023 were excluded from the computation of diluted EPS because the effects would be anti-dilutive.
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During the three months ended October 26, 2024, 4,037 potential shares of common stock issuable upon conversion of the secured convertible note in the original principal payment of $25,000 due on May 11, 2027 issued by the Company to Alta Fox Opportunities Fund, LP (the "Convertible Note"), were included in the computation of diluted EPS. For the six months ended October 26, 2024, 4,037 potential common shares issuable upon conversion of the Convertible Note were not included in the computation of diluted EPS, as the effect would be anti-dilutive.
During the three and six months ended October 28, 2023, 4,051 and 3,806, respectively, potential shares of common stock issuable upon conversion of the Convertible Note were not included in the computation of diluted EPS, as the effect would be anti-dilutive.
Note 4. Revenue Recognition
Disaggregation of revenue
In accordance with ASC 606-10-50, we disaggregate revenue from contracts with customers by the type of performance obligation and the timing of revenue recognition. We determine that disaggregating revenue in these categories achieves the disclosure objective to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors and to enable users of financial statements to understand the relationship to each reportable segment.
The following table presents our disaggregation of revenue by segments:
Three Months Ended October 26, 2024
CommercialLive Events
High School
Park and Recreation
TransportationInternationalTotal
Type of performance obligation
Unique configuration$9,506 $57,289 $8,284 $13,046 $4,392 $92,517 
Limited configuration27,838 11,640 36,246 6,924 11,455 94,103 
Service and other6,095 8,278 3,541 1,508 2,289 21,711 
$43,439 $77,207 $48,071 $21,478 $18,136 $208,331 
Timing of revenue recognition
Goods/services transferred at a point in time$30,728 $15,167 $36,523 $7,820 $12,919 $103,157 
Goods/services transferred over time12,711 62,040 11,548 13,658 5,217 105,174 
$43,439 $77,207 $48,071 $21,478 $18,136 $208,331 
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Six Months Ended October 26, 2024
CommercialLive Events
High School
Park and Recreation
TransportationInternationalTotal
Type of performance obligation
Unique configuration$11,768 $151,607 $18,918 $27,582 $7,006 $216,881 
Limited configuration54,138 19,934 71,394 13,533 19,527 178,526 
Service and other11,732 14,274 5,765 2,853 4,388 39,012 
$77,638 $185,815 $96,077 $43,968 $30,921 $434,419 
Timing of revenue recognition
Goods/services transferred at a point in time$60,241 $25,917 $71,902 $15,381 $22,060 $195,501 
Goods/services transferred over time17,397 159,898 24,175 28,587 8,861 238,918 
$77,638 $185,815 $96,077 $43,968 $30,921 $434,419 
Three Months Ended October 28, 2023
CommercialLive Events
High School
Park and Recreation
TransportationInternationalTotal
Type of performance obligation
Unique configuration$9,511 $47,496 $11,539 $11,047 $9,993 $89,586 
Limited configuration28,752 13,771 36,277 8,469 7,302 94,571 
Service and other4,190 6,943 1,126 727 2,226 15,212 
$42,453 $68,210 $48,942 $20,243 $19,521 $199,369 
Timing of revenue recognition
Goods/services transferred at a point in time$29,379 $15,390 $34,722 $8,592 $7,919 $96,002 
Goods/services transferred over time13,074 52,820 14,220 11,651 11,602 103,367 
$42,453 $68,210 $48,942 $20,243 $19,521 $199,369 
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Six Months Ended October 28, 2023
CommercialLive Events
High School
Park and Recreation
TransportationInternationalTotal
Type of performance obligation
Unique configuration$22,429 $124,043 $26,658 $23,631 $18,783 $215,544 
Limited configuration58,665 23,732 76,614 16,536 12,541 188,088 
Service and other8,242 12,434 1,904 1,445 4,243 28,268 
$89,336 $160,209 $105,176 $41,612 $35,567 $431,900 
Timing of revenue recognition
Goods/services transferred at a point in time$60,397 $26,167 $73,803 $16,859 $13,762 $190,988 
Goods/services transferred over time28,939 134,042 31,373 24,753 21,805 240,912 
$89,336 $160,209 $105,176 $41,612 $35,567 $431,900 
See "Note 5. Segment Reporting" for a disaggregation of revenue by geography.
Contract balances
Contract assets represent revenue recognized in excess of amounts billed and include unbilled receivables. Unbilled receivables, which represent an unconditional right to payment subject only to the passage of time, are reclassified to accounts receivable when they are billed according to the contract terms. Contract liabilities represent amounts billed to customers in excess of revenue recognized to date.
The following table reflects the changes in our contract assets and liabilities:
October 26,
2024		April 27,
2024		Dollar
Change		Percent
Change
Contract assets$44,955 $55,800 $(10,845)(19.4)%
Contract liabilities - current62,458 65,524 (3,066)(4.7)
Contract liabilities - noncurrent18,330 16,342 1,988 12.2 
The changes in our contract assets and contract liabilities from April 27, 2024 to October 26, 2024 were due to the timing of billing schedules and revenue recognition, which can vary significantly depending on the contractual payment terms and the seasonality of the sports markets. We had no significant impairments of contract assets for the six months ended October 26, 2024.
For service-type warranty contracts, we allocate revenue to this performance obligation, recognize the revenue over time, and recognize costs as incurred. Earned and unearned revenues for these contracts are included in the "Contract assets" and
13
"Contract liabilities" line items of our condensed consolidated balance sheets. Changes in unearned service-type warranty contracts, net were as follows:
October 26,
2024
Balance as of April 27, 2024$32,159 
New contracts sold26,007 
Less: reductions for revenue recognized(21,737)
Foreign currency translation and other(142)
Balance as of October 26, 2024$36,287 
Contracts in progress identified as loss contracts as of October 26, 2024 and April 27, 2024 were immaterial. Loss provisions are recorded in the "Accrued expenses" line item in our condensed consolidated balance sheets.
During the six months ended October 26, 2024, we recognized revenue of $52,024 related to our contract liabilities as of April 27, 2024.
Remaining performance obligations
As of October 26, 2024, the aggregate amount of the transaction price allocated to the remaining performance obligations was $301,525. Remaining performance obligations related to product and service agreements as of October 26, 2024 were $235,982 and $65,543, respectively. We expect approximately $240,423 of our remaining performance obligations to be recognized over the next 12 months, with the remainder recognized thereafter. Although remaining performance obligations reflect business that is considered to be legally binding, cancellations, deferrals or scope adjustments may occur. Any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations, and project deferrals are reflected or excluded in the remaining performance obligation balance, as appropriate. The amount of revenue recognized associated with performance obligations satisfied in prior years during the six months ended October 26, 2024 and October 28, 2023 was immaterial.

14
Note 5. Segment Reporting
The following table sets forth certain financial information for each of our five reporting segments for the periods indicated:
Three Months EndedSix Months Ended
October 26,
2024		October 28,
2023		October 26,
2024		October 28,
2023
Net sales:
Commercial$43,439 $42,453 $77,638 $89,336 
Live Events77,207 68,210 185,815 160,209 
High School Park and Recreation48,071 48,942 96,077 105,176 
Transportation21,478 20,243 43,968 41,612 
International18,136 19,521 30,921 35,567 
208,331 199,369 434,419 431,900 
Gross profit:
Commercial11,138 7,231 18,733 20,000 
Live Events14,970 19,234 40,998 47,174 
High School Park and Recreation17,804 16,420 35,120 37,245 
Transportation8,672 6,780 16,421 13,869 
International3,279 4,534 4,289 7,058 
55,863 54,199 115,561 125,346 
Operating expenses:
Selling14,704 14,653 30,340 27,582 
General and administrative15,550 10,889 27,273 20,488 
Product design and development9,839 9,221 19,462 17,624 
40,093 34,763 77,075 65,694 
Operating income15,770 19,436 38,486 59,652 
Nonoperating (expense) income:
Interest (expense) income, net273 (1,326)202 (2,207)
Change in fair value of convertible note10,304 (10,650)(11,286)(17,910)
Other expense and debt issuance costs write-off, net(1,164)(1,303)(1,999)(5,282)
Income before income taxes$25,183 $6,157 $25,403 $34,253 
Depreciation and amortization:
Commercial$1,075 $1,070 $2,157 $2,112 
Live Events1,412 1,604 2,841 3,217 
High School Park and Recreation533 474 1,066 936 
Transportation205 174 407 342 
International550 572 1,112 1,138 
Unallocated corporate depreciation and amortization1,126 931 2,211 1,749 
$4,901 $4,825 $9,794 $9,494 
15
No single geographic area comprises a material amount of our net sales or property and equipment, net of accumulated depreciation, other than the United States. The following table presents information about net sales and property and equipment, net of accumulated depreciation, in the United States and elsewhere:
Three Months EndedSix Months Ended
October 26,
2024		October 28,
2023		October 26,
2024		October 28,
2023
Net sales:    
United States$184,438 $178,144 $391,657 $392,737 
Outside United States23,893 21,225 42,762 39,163 
$208,331 $199,369 $434,419 $431,900 
October 26,
2024		April 27,
2024
Property and equipment, net of accumulated depreciation:  
United States$66,770 $64,332 
Outside United States7,045 7,420 
$73,815 $71,752 
We have numerous customers worldwide for sales of our products and services, and no customer accounted for 10 percent or more of net sales; therefore, we are not economically dependent on a limited number of customers for the sale of our products and services.
We have numerous raw material and component suppliers, and no supplier accounts for 10 percent or more of our cost of sales; however, we have a complex global supply chain subject to geopolitical and transportation risks and a number of single-source suppliers that could limit our supply or cause delays in obtaining raw materials and components needed in manufacturing.

Note 6. Goodwill

The changes in the carrying amount of goodwill related to each segment with a goodwill balance for the six months ended October 26, 2024 were as follows:
CommercialTransportationTotal
Balance as of April 27, 2024$3,188 $38 $3,226 
Foreign currency translation(25)(7)(32)
Balance as of October 26, 2024$3,163 $31 $3,194 
We perform an analysis of goodwill on an annual basis, and it is tested for impairment more frequently if events or changes in circumstances indicate that an asset might be impaired. Our annual analysis is performed during our third quarter of each fiscal year based on the goodwill amount as of the first business day of our third fiscal quarter.
Accumulated impairments to goodwill as of October 26, 2024 and April 27, 2024 was $4,576.
Note 7. Financing Agreements

Long-term debt consists of the following:
16
October 26,
2024		April 27,
2024
Mortgage$13,125 $13,875 
Convertible note25,000 25,000 
Long-term debt, gross38,125 38,875 
Debt issuance costs, net(574)(761)
Change in fair value of convertible note27,836 16,550 
Current portion(1,500)(1,500)
Long-term debt, net$63,887 $53,164 
Credit Agreements
On May 11, 2023, we closed on a $75,000 senior credit facility (the "Credit Facility"). The Credit Facility consists of a $60,000 asset-based revolving credit facility (the "ABL") maturing on May 11, 2026, which is secured by a first priority lien on the Company's assets, and a $15,000 delayed draw loan (the "Delayed Draw Loan") secured by a first priority mortgage on our Brookings, South Dakota real estate (the "Mortgage").
Under the ABL, certain factors can impact our borrowing capacity. As of October 26, 2024, our borrowing capacity was $40,758, there were no borrowings outstanding, and there was $5,363 used to secure letters of credit outstanding. The interest rate on the ABL is set on a sliding scale based on the trailing 12-month fixed charge coverage and ranges from 2.5 to 3.5 percent over the standard overnight financing rate (SOFR).
The $15,000 Delayed Draw Loan was funded on July 7, 2023. It amortizes over 10 years and has monthly payments of $125. The Delayed Draw Loan is subject to the terms of the Credit Agreement dated as of May 11, 2023 (the "Credit Agreement") and matures on May 11, 2026. The interest rate on the Delayed Draw Loan is set on a sliding scale based on the trailing 12-month fixed charge coverage ratio and ranges between 1.0 and 2.0 percent over the Commercial Bank Floating Rate (CBFR). The interest rate as of October 26, 2024 for Delayed Draw Loan was 9.5 percent.
Convertible Note
On May 11, 2023, we borrowed $25,000 in aggregate principal amount evidenced by the secured Convertible Note due May 11, 2027. Alta Fox Opportunities Fund, LP, as the holder (the "Holder") of the Convertible Note, has a second priority lien on assets securing the ABL facility and a first priority lien on substantially all of the other assets of the Company, excluding all real property.
Conversion Features
•The Convertible Note allows the Holder and any of the Holder’s permitted transferees, donees, pledgees, assignees or successors-in-interest (collectively, the “Selling Shareholders”) to convert all or any portion of the principal amount of the Convertible Note, together with any accrued and unpaid interest and any other unpaid amounts, including late charges, if any (together, the “Conversion Amount”), into shares of the Company’s common stock at an initial conversion price of $6.31 per share, subject to adjustment in accordance with the terms of the Convertible Note (the “Conversion Price”).
•The Company also has a forced conversion right, which is exercisable on the occurrence of certain conditions set forth in the Convertible Note, pursuant to which it can cause all or any portion of the outstanding and unpaid Conversion Amount to be converted into shares of common stock at the Conversion Price.
Additionally, if the Company fails other than by reason of a failure by the Holder to comply with its obligations, the Holder is permitted to cash payments from the Company until such conversion failure is cured.

Redemption Features

•If the Company were to have an "Event of Default", as defined by the Convertible Note, then the Holder may require the Company to redeem all or any portion of the Convertible Note.

17
•If the Company has a "Change of Control", as defined by the Convertible Note, then the Holder is entitled to payment of the outstanding amount of the Convertible Note at the "Change in Control Redemption Price," as defined in the Convertible Note.

Interest

Interest accruing under the Convertible Note is payable, at the option of the Company, in either (i) cash or (ii) a combination of cash interest and capitalized interest; provided, however, that at least fifty percent (50%) of the interest paid on each interest date must be paid as cash interest. The Convertible Note accrues interest quarterly at an annual rate of 9.0 percent when interest is paid in cash or an annual rate of 10.0 percent if interest is paid in kind. Upon an event of default under the Convertible Note, the annual interest rate will increase to 12.0 percent. The annual rate of 9.0 percent was used to calculate the interest accrued as of October 26, 2024, as interest will be paid in cash.

We elected the fair value option to account for the Convertible Note as described in "Note 10. Fair Value Measurement" of the Notes to our Condensed Consolidated Financial Statements included in this Form 10-Q. The financial liability was initially measured at its issue-date fair value and is subsequently remeasured at fair value on a recurring basis at each reporting period date. We have elected to present the fair value and the accrued interest component separately in the condensed consolidated statements of operations. Therefore, interest will be recognized and accrued separately in interest expense, with changes in fair value of the Convertible Note presented in the "Change in fair value of convertible note" line item in our condensed consolidated statements of operations.

The changes in fair value of the Convertible Note during the six months ended October 26, 2024 are as follows:

Liability Component
(in thousands)
Balance as of April 27, 2024$41,550 
Redemption of convertible promissory note— 
Fair value change recognized11,286 
Balance as of October 26, 2024$52,836 

The estimated fair value of the Convertible Note upon its issuance date of May 11, 2023 was computed using the binomial lattice model. Given the appreciation of the Company’s stock price since inception of the Convertible Note combined with our intent and expectation of settlement as soon as is feasible through exercise of its forced conversion right, we determined that the Monte Carlo simulation ("MCS") model was appropriately suited to determine the fair value of the Convertible Note as of October 26, 2024. Both models incorporate significant inputs that are not observable in the market and thus represents a Level 3 measurement.

We determined the fair value by using the following key assumptions in the MCS and binomial lattice model as of October 26, 2024 and April 27, 2024, respectively:

October 26,
2024		April 27,
2024
Risk-Free Rate (Annual)4.04 %4.78 %
Yield15.81 %16.28 %
Volatility (Annual)55.00 %40.00 %
Dividend Yield (Annual)— %— %
The Credit Agreement and the Convertible Note require a fixed charge coverage ratio of greater than 1.1 and include other customary non-financial covenants. As of October 26, 2024, we were in compliance with our financial covenants under the Credit Agreement and the Convertible Note.
Debt Issuance Costs
Debt issuance costs incurred and capitalized are amortized on a straight-line basis over the term of the associated debt agreement. If early principal payments or conversions occur, a proportional amount of unamortized debt issuance costs are expensed. As part of these financings, we capitalized $8,195 in debt issuance costs. During the six months ended
18
October 28, 2023, due to the Convertible Note being accounted for at fair value, we expensed $3,353 of the related debt issuance costs, which is included in the "Other expense and debt issuance costs write-off, net" line item in our condensed consolidated statements of operations. During the six months ended October 26, 2024 and October 28, 2023, we amortized $807 and $744, respectively, of debt issuance costs. The remaining debt issuance costs of $2,484 are being amortized over the remaining two-year term of the Credit Facility.
Future Maturities
Aggregate contractual maturities of debt in future fiscal years are as follows:

Fiscal years endingAmount
Remainder of 2025$750 
20261,500 
202710,875 
202825,000 
2029— 
Total debt$38,125 

Note 8. Commitments and Contingencies
Litigation: We are a party to legal proceedings and claims which arise during the ordinary course of business. We review our legal proceedings and claims, regulatory reviews and inspections, and other legal matters on an ongoing basis and follow appropriate accounting guidance when making accrual and disclosure decisions. We establish accruals for those contingencies when the incurrence of a loss is probable and can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued if such disclosure is necessary for our financial statements to not be misleading. We do not record an accrual when the likelihood of loss being incurred is probable, but the amount cannot be reasonably estimated, or when the loss is believed to be only reasonably possible or remote, although disclosures will be made for material matters as required by ASC 450-20, Contingencies - Loss Contingencies. Our assessment of whether a loss is reasonably possible or probable is based on our assessment and consultation with legal counsel regarding the ultimate outcome of the matter following all appeals.

For other unresolved legal proceedings or claims, we do not believe there is a reasonable probability that any material loss would be incurred. Accordingly, no material accrual or disclosure of a potential range of loss has been made related to these matters. We do not expect the ultimate liability of these unresolved legal proceedings or claims to have a material effect on our financial position, liquidity, or capital resources.
Warranties: Changes in our warranty obligation for the six months ended October 26, 2024 consisted of the following:
October 26,
2024
Balance as of April 27, 2024$37,928 
Warranties issued during the period7,779 
Settlements made during the period(7,451)<