Daktronics CEO: Working To Remove “Going Concern” Qualifying Language ASAP
December 12, 2022 by Dave Haynes
I had a listen to the now-completed investor call for Daktronics, based on its quarterly results release and on the heels of news that the big LED manufacturer delayed its earnings report and had to issue a statement about its financial viability.
The call – which included statements by CEO Reece Kurtenbach – was in most respects just the read-through oral version of the earnings report that was published earlier in the day. Kurtenbach reiterated that the last two years created a perfect storm (as in perfectly bad) for his company, but that a lot of the issues that forced the SEC filing and “going concern” language were easing. He said the language is required in accounting procedures, but suggested the alarming phrase doesn’t reflect the real state of the business and future prospects.
Kurtenbach said a couple of times on the call that he and his team understand the uncertainty the SEC filing created, and would be working hard to “remove this qualifying language as soon as possible.”
The big driver behind the financial issues was a decision to get ahead of supply chain constraints by building up inventory of critical components for the company’s video display product line. That consumed the company’s cash and liquidity position, Kurtenbach said, but an order backlog is now being fulfilled and most of the remaining orders being fulfilled reflect pricing that was adjusted to reflect recent supply chain and hardware realities.
Kurtenbach also stressed the supply chain, production and labor issues of the past 24-36 months are easing, and that while there is plenty of macro-economic volatility still out there, it is generally calming.
Kurtenbach also said he and his team did a lot of work to alleviate worries via employee town halls and by talking to many of its customers in the last few days. He suggested nerves were calmed. I kind of expected a lot of question on the tail end of the investor call, but there was just one.