Daktronics filing reports ‘substantial doubt about our ability to continue as a going concern’
Note: The update to this story can be found here.
By Jonathan Ellis, The Dakota Scout
Shares of Brookings-based Daktronics plummeted Wednesday after the company filed paperwork with the Securities and Exchange Commission that cast doubt on its future viability.
The scoreboard manufacturer, one of South Dakota’s biggest international success stories, saw its stock price decline 39 percent after filing paperwork to delay the release of its earnings report “in order to address the determination that there is a substantial doubt about the company’s ability to continue as a going concern.”
The filing also noted that a “material weakness” had been discovered with regard to “appropriate financial reporting.”
The company extended its earnings report until Dec. 12.
Justin Ochsner, a company spokesman, confirmed the filings and said more information would be released on the Dec. 12 earnings release and conference call.
“The information in the filings is what it is,” he said.
Founded in 1968 by two South Dakota State University engineering professors, Daktronics manufactures digital scoreboards that are sold around the world. The company has sold scoreboards to top professional sports teams, including the National Football League and top college leagues.
The company also produces digital billboards and other digital displays.
Worldwide, the company employs more than 2,500 people, with about half in South Dakota.
The company’s SEC filing painted a bleak picture of current business conditions.
“Ongoing supply chain disruptions and inflationary challenges in materials, freight and personnel-related costs have and will continue to cause volatility in our cash flow, pricing, order volumes, lead-times, competitiveness, revenue cycles, and production costs,” the company reported.
The company reported that it would need to generate additional cash flow and liquidity to meet its obligations that are due in the next 12 months.
“Although supply chain disruptions have started to ease, and we expect our inventory levels to decline, we cannot be certain we will not experience future disruptions or need additional liquidity to fund inventory levels, operations, and capital expenditures,” the company said.
Daktronics is pursuing “additional liquidity” including financing secured by mortgages, leases and a continued focus on “reducing working capital,” according to the filing.
“Since these plans are not finalized and are subject to market conditions that are not within our control, they cannot be deemed probable,” the company reported. “As a result, we have concluded that our plans do not alleviate substantial doubt about our ability to continue as a going concern.”
On Oct. 31, the company filed a report with the SEC indicating that it had amended its revolving loan credit with U.S. Bank from $35 million to $45 million until Jan. 31, 2023.
Shares of Daktronics closed at $2.02 per share Wednesday, down from $5.35 at the beginning of the year and $3.75 within the last month.
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