Detailed narrative
Record FY26 Results and Margin Expansion
Daktronics delivered record annual revenue of $839M, up 10.9% over FY25, with operating income (IBIT) rising to $61M from $33.1M and adjusted operating margin up 290 bps to 7.3%. Full-year GAAP EPS was $0.92 ($1.05 adjusted, +25% YoY), and Q4 adjusted EPS jumped 50% to $0.27 from $0.18.
Full-year gross profit rose 17% and Q4 gross profit rose 36%, reflecting revenue conversion, operating leverage, value-based pricing and cost/manufacturing-efficiency initiatives from the 2025 Business Transformation Program. Business mix was not a significant Q4 margin driver, with higher-margin non-live-events businesses steady at ~62% of revenue.
End-Market and Segment Performance
Four of five reporting segments grew revenue double digits in FY26: live events and HSPR just over 10%, commercial 16%, and international 25%; transportation was the exception on timing, not demand. Live events won all five available MLB stadium bids and completed 11 MLB projects in Q4 (Wrigley Field LED refresh, an 11,300 sq ft Seattle Mariners display, Yankee Stadium) plus 11 new college displays including a 106-foot UNC end zone.
HSPR video installations rose 18.5% YoY. Commercial/out-of-home added five new customers in Q4 and booked a large Times Square Spectaculars order. International wins included a large multi-arena project in Qatar (FIBA U18 Asia Cup) and a UAE digital-billboard rollout with Hills Advertising.
Orders, Backlog and Pipeline Conversion
FY26 was a record order year, averaging more than $215M of bookings per quarter with orders exceeding revenue in every quarter, driving backlog to $356M (+4% YoY) — the highest average quarterly backlog in company history excluding the 2024 post-COVID bounce.
All business units except commercial grew orders; transportation set a record at $89M (+24%) and international reached $75M. Management estimates ~52% of year-end project backlog converts to revenue in Q1 FY27, supplemented by same-quarter book-and-bill. The recurring theme across Q&A was that the pipeline is robust across all verticals and the swing factor is conversion timing, not demand.
Mexico Capacity Expansion and Manufacturing Footprint
The company is bringing online a new 110,000+ sq ft facility in Saltillo, Mexico, with production planned to begin July 2026 and first shipments in Q2 FY27. Its initial focus is large-format outdoor displays for North America, with potential to add other products later.
Management framed it as adding global production agility and tariff/trade flexibility alongside the Brookings U.S. plant, driven by customers' compressed delivery timelines (stadiums now active 250-300 days/year vs ~80 historically). Startup costs are already flowing through results, and D&A is expected to rise in FY27.
Software, Services and Innovation Strategy
Daktronics debuted Camino 8 at the Los Angeles Angels' home opener in early April 2026; it integrates with Daktronics show-control systems for real-time data, graphics, lighting and audio and will carry a mix of initial software plus a recurring-revenue component, providing a platform for software-and-services growth in live events.
A strategic partnership with Grass Valley combines Daktronics' large-format LED, control and venue presentation with Grass Valley live-production technology. In May the company launched a modernized services system, retired legacy platforms, and reached 100% customer adoption while capturing automation-driven cost efficiencies.
Tariffs, Pricing and Cost Levers
Daktronics entered FY26 with a more challenging input-cost environment including tariff headwinds🌐 and uncertainty on rates, timing, exemptions and competitive responses. Teams protected profitability via value-based and selective pricing, supplier negotiations, strategic sourcing, manufacturing-footprint optimization and operating efficiency. Management noted its early-FY26 pricing increases led the tariff cost impact because standard quick-turn orders were fulfilled from pre-tariff on-hand inventory, producing a positive margin benefit in late FY25/early FY26 — concentrated in HSPR.
In Q&A, Howard said tariffs are less of a swing factor now, with internal levers (procurement, automation) the focus for margin.
Capital Allocation and Balance Sheet
FY26 generated $49.2M of operating cash flow, down from $97.7M in FY25 (which benefited from the post-COVID burst), while average quarter-end cash rose to $141M from $123M. The company returned ~56% of net income to shareholders, repurchasing ~$25.5M of stock at a $17.8/share VWAP (~$46M since Q4 FY25).
A $3.8M provision for possible credit losses was booked on an affiliate investment exited in Q4 to strengthen the balance sheet. The Q4 effective tax rate normalized to 21.6% (from 29.9%) as convertible-note fair-value adjustments rolled off and accelerated R&D depreciation benefits kicked in.
Capital allocation prioritizes organic growth/operational excellence, disciplined M&A, and buybacks.
FY27 Outlook and FY28 Targets
Management reaffirmed all FY28 targets — 7-10% revenue growth, 10-12% operating margin, and 17-20% ROIC — and characterized FY27 as a pivotal execution year built on a $356M backlog and robust pipeline. FY27 priorities are accelerating organic growth (secular video/complexity trends, expanding beyond the 80% of SAM served today, software/services, disciplined international focus), operational excellence (factory automation, lean, procurement, Mexico ramp), and disciplined capital deployment.
Management flagged that Q1 FY27 has 13 weeks vs 14 in Q1 FY26, a factor in early-year year-over-year comparisons.