Daktronics, Inc. (NASDAQ:DAKT) Q2 2023 Results Conference Call December 12, 2022 11:00 AM ET

Company Participants

Kevin McDermott - Lead Independent Director

Reece Kurtenbach - Chairman, President and CEO

Sheila Anderson - Chief Financial Officer

Conference Call Participants

Operator

Good day, ladies and gentlemen, and welcome to Daktronics Fiscal Year 2023 Second Quarter Earnings Results Conference Call. As a reminder, this conference is being recorded today, Monday, December 12, and is available on the company's website at www.daktronics.com. We will have a question-and-answer session after the prepared remarks. [Operator Instructions]

And I would now like to turn the conference over to Mr. Kevin McDermott, Daktronics Lead Independent Director. Please go ahead, Kevin.

Kevin McDermott

Thank you, and good morning. My name is Kevin McDermott. I am the Lead Independent Director on the Daktronics Board and the Audit Committee Chair. I joined the Board in June 2015. Prior to my retirement in 2013, I was with the accounting firm at KPMG for 33 years. I served in various capacities at KP, the majority of which involved auditing the financial statements of publicly held companies.

This morning, before passing the microphone to Reese and Sheila, I wanted to join you to acknowledge the concerns reflected in the stock price reaction to announcements made last week and to give you some background. Daktronics announced the going concern conclusion, the post fulfillment of the second quarter earnings release and call and a delay in the filing of the company's second quarter Form 10-Q. Daktronics was unable to provide further information at that time, because there were still related accounting and disclosure matters that had to be resolved. My presence today is also meant to underline to you that in addition to focusing on liquidity enhancement, your Board is prioritizing engagement with shareholders.

Our goals today are to explain the substance of that going concern conclusion, share with you the exciting order pipeline, backlog and revenue update that might otherwise be overshadowed and give some specific detail on the plan and activity already underway to improve our liquidity situation and the cash flow generation from operations that has been hampered due to the necessary inventory buildup, given supply chain issues in order to serve this historic level of customer demand.

Before Reece and Sheila take you through the earnings release and related commentary, I want to explain the going concern disclosure conclusion. Generally accepted accounting principles in the U.S. require a reporting company to consider at each annual and interim reporting date, whether there are conditions and events considered in the aggregate, that raise substantial doubt about the company's ability to continue as a going concern for the 12 month period from the issuance date of the financial statements. If such condition exists, management then must evaluate whether its plans sufficiently alleviate that substantial doubt. Management's assessment is then considered by the company's independent auditors. As discussed in this morning's release, and to a greater extent in the Form 10-Q Daktronics intends to file tomorrow. The company's order and backlog coming out of the pandemic has been very strong.