Thank you for standing by, and welcome to the Daktronics, Inc. third quarter fiscal year 2026 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. If your question has been answered and you would like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Lindsey Vetter. Please go ahead.

Thank you, Jonathan. Good morning, everyone, and thank you for participating in our third quarter earnings conference call. During today's presentation, we will make forward-looking statements reflecting our expectations and plans about our future financial performance and future business opportunities. These forward-looking statements reflect the company's expectations or beliefs about future events based on information currently available to us. Of course, actual results could differ. Please refer to slide two of the presentation that accompanies today's call, our press release, and our SEC filings for information on risk factors, uncertainties, and expectations that could cause actual results to differ materially from these expectations. During this presentation, we will also refer to non-GAAP financial measures. You can find the reconciliation of each non-GAAP measure to the most directly comparable GAAP measure in the appendix to the accompanying presentation slides, which may be found on the Investor Relations page of our website at www.daktronics.com. Our earnings release for the 2026 third quarter, which was furnished to the SEC on Form 8-K this morning, also contains certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, as well as a discussion of certain limitations when using non-GAAP financial measures, are included in the earnings release, which has been posted separately to the Investor Relations page of our website. I will now turn the call over to Brad Wiemann, Interim President and CEO through the third quarter, for his review.

Well, good morning, everyone. Welcome to our call. Thank you for joining our third quarter fiscal 2026 call. I am joined on the call by Howard Atkins, board member and Acting Chief Financial Officer, along with Ramesh Jayaraman, CEO and President, who is officially in the role as of February 1. We will review our fiscal 2026 third quarter, which ended on 01/31/2026, along with the results and accomplishments, and then take your questions. Turning to our slide presentation on slide three, here are the key messages for the third quarter. The team delivered another quarter of solid results, driving revenue growth of 21.6% year over year, despite the effectively shorter work period due to the three major holidays as well as adverse weather conditions throughout the quarter. Our manufacturing team did a superb job in efficiently converting the order book we have built over the past few quarters. During the quarter, we progressed with several large-scale installations, including five Major League Baseball stadiums, such as the Seattle Mariners, as well as the University of Illinois football's video scoring system. Orders in the quarter were once again over $200,000,000. Our sales and marketing team secured large orders in our Live Events segment. Our Transportation segment had a record order quarter with a good uptake in airports and in intelligent transportation systems. With new order growth in the quarter at 7.6%, our product and services backlog grew to $342,000,000 coming into Q4 and is 25% higher than it was this time last year. In December, we announced our acquisition of the intellectual property and the absorption of associated engineering teams from ex display companies, or XCC, expanding our micro LED and micro integrated circuit capabilities. XTC advances our high-resolution, narrow pixel niche product offerings and provides us a cost-effective pathway to…

Howard?

Thank you, Brad, and good day, everyone. Thank you for your interest in Daktronics, Inc. The Daktronics team produced another solid quarter in the third quarter. We anticipated the usual seasonal pattern with fewer days to complete order bookings and to fulfill revenue, and also typical adverse weather conditions that did prevail in the quarter. But because this was anticipated, we took steps in the field and in our manufacturing to continue the year-over-year growth that we have now produced over each of the last four quarters. As Brad mentioned, orders grew about 8%. Remember, last year in the third quarter we booked a $30,000,000 stadium order. This year in quarter three, we also had a number of larger orders, including one stadium order on the last day of the quarter, but the single largest deal in the third quarter of this year was $13,000,000. Importantly, our orders have now been relatively broad-based at or over $200,000,000 in each of the last five quarters, including a record Transportation order in the third quarter. As orders have grown, so has revenue. We had $182,000,000 in the quarter, which grew more than 20% year over year, mostly due to efficient order conversion by our manufacturing teams during the quarter, which included working more than one shift at times to fulfill the extra order flow around the holidays. Gross profit margin in the quarter was essentially flat to the year-ago quarter at 24%, reflecting a variety of factors: one, the benefit of operating leverage as revenue rose year over year relative to fixed costs in our cost of goods sold; secondly, the efficiencies we have achieved up and down the supply chain as a result of the business transformation initiatives that have been undertaken in the last year; and thirdly, mix on new…

Thank you, Howard, and good morning, everyone. It is an exciting time to officially join and serve as the Daktronics, Inc. CEO. I am honored to lead a great company at this pivotal time and to work with the talented team that has accomplished a great deal in strengthening a resilient platform for sustainable and profitable growth. As we move to the next slide, I want to start by thanking Brad Wiemann, who presented earlier today and who has served very capably as the Interim President and CEO. Brad has been instrumental in my onboarding, and we have completed a smooth transition and handover of the CEO role. Brad will stay with Daktronics, Inc. as Executive Vice President and adviser, and I will continue to rely on his knowledge and judgment as we move forward. Thank you again, Brad. Moving to the next slide. My first priority, as I joined February 1 officially, was to come up to speed quickly, and I have been on a learning journey—what I call a look, listen, learn tour—as I settled into Brookings, South Dakota, to be closer to the team and to our business. It has been an absolute warm welcome by the past management, the team, and the community as a whole. I have had a chance to travel both domestically and internationally, visiting sites in bidding as well as completed stage to understand our offerings, meet our customers and suppliers, including at a global trade show. In addition, I have spent time in some of our factories and repair centers to look at the operational excellence work that is in progress, and with our frontline—our sales and field service technicians. In addition, I have spent time reviewing plans for our talent as we look at the growth that we are planning…

Certainly. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press 11 on your telephone. Our first question comes from the line of Aaron Spychalla from Craig-Hallum Capital Group. Your question, please.

Yeah. Hi, Ramesh, Brad, and Howard. Thanks for taking the questions. Maybe first for me on the win rates. You know, they have been really impressive on the large-scale side of Live Events. You know, you talked about six for six. Can you just talk about how that pipeline is shaping up here as seasons, you know, kind of wrap up in the next few months? And then just maybe how would you characterize win rates across the overall business versus historical?

Hey. Good morning, Aaron. This is Brad. Yeah. We won another Major League Baseball project, which is excellent. Our pipeline continues to be robust, strong going into this next year, so we are happy about that. Of course, you have seen our backlog, so we have a nice backlog in the business. And then we have the college and university side, and we have talked about that in the past, and some of the headwinds that are in that market, but are being worked out, and that is really around the NIL money that is being spent on coaches and players. We think that all gets worked out. But as you saw, we have the University of Illinois project that we worked out—the largest football stadium build that we had—and there are others in the pipeline, so we are excited that that opportunity still exists. So pipeline overall looks good. And win rate, of course, as you mentioned, we were six of six this last year. So we are excited about that, and that is partly to play with one of our competitors taking a little bit of a backseat in the marketplace this last year, which we have talked about before. Is that helpful, Craig?

I am also able to add to it from my perspective. Yeah. I mean, I think we have got strong wins in Live Events as Brad just mentioned, but our high school market and our Transportation market also continue to be strong. And I think it is important to have the fact that as we look at our growth, we are looking with a balanced portfolio—the appropriate portfolio management—as we kind of move ahead to gain market share. As Brad earlier mentioned, we had a massive win in Transportation that we just announced. And, really, as you look at our high school markets, they continue to be strong, driven by this change from scoreboards to video. And I think we see that trend continuing to be strong in the marketplace. So I would say it is balanced overall as we try and look at our growth story, just going through the quarters as they do in terms of how high schools spend and the college, you know, and the football or the NFL or NBA each kind of spend. So that is what we are going with.

Thanks. I appreciate the color on that. And then maybe, you know, on the Commercial market, I know you have been making inroads, you know, expanding the reseller and integrator channel. Just maybe, you know, an update there. And it seems like demand trends are pretty good in that market as well.

Yeah. They continue to remain strong.

I talked about our on-premise as well as our public spectaculars and Out of Home market. Those are still looking promising. The overall buying position of Out of Home customers—that is the advertising segment—is strong. I did mention one customer that pulled back a little bit in the third quarter. That is one of our national customers, and we believe that recovers this next quarter. So nothing concerning there. Our products that we are bringing to the marketplace for the on-premise segment continue to help us to win projects there, so we are seeing growth on that side of it. But on the spectacular side, we had a nice win in Times Square, as I mentioned, but the exciting part for me is the audiovisual integrator space that we continue to see growth in, and that is on our indoor product lines, which is really a big part of our overall growth strategy.

And just, I mean, on that reseller and integrator channel, I mean, maybe an update on just efforts there—where you are in that journey?

Yeah. On the reseller side, we have been in that business for some time, and we, you know, continue—we have salespeople all across the U.S.—to work and develop sales channel partners and to promote more of our products through that channel. So that is going well. The AV integrator is a newer area for us, and we are seeing continued growth. I think this is our—I cannot quite go back through the numbers because I do not have them top of mind—but we are seeing continued growth and expansion in that space in both the number of integrators, number of orders, and the number of quotes. So the pipeline continues to grow. That is really aligning around our indoor product lines and this chip-on-board offering that is really doing quite well for us. That is helping us both in the AV space as well as some of these large projects, which we mentioned, across transportation, airports, and other things. So, yeah, overall, we are going to continue to invest in that area to expand our presence in that particular market space or through that channel partner of AV integrators.

Thanks for the color there. And then maybe one last question on margins. I know you highlighted the tariff impact. So excluding that, another good quarter. Maybe just talk what inning you think you are in from these operations initiatives and just trying to understand where margins can go from here, and then any thoughts more broadly on any oil impact and just what is going on macro-wise—what that could mean for the supply chain, if anything.

On the first issue, Aaron, in terms of where we are, you know, we have either started or we are on the way on kind of the vast bulk of the initiatives that came out of the project we did last year. And all of what we have either started or are in the process of completing has either been built into or is about to be built into our regular strategic planning process. So that is how we are embracing everything and tracking to make sure that everything gets completed going forward. So I would say, from a starting and along-the-way point of view, we are well into the game. In terms of the realization of the benefit, I would also say we are a year into the effort at this point, and, you know, again, we are more than a third to a half into the actual realization of the benefit. But, again, the important thing is, you know, we are taking what we have done and now building it into a more comprehensive strategic plan because if the world changes—and there are more things that we are thinking of doing for sure about strategically and operational efficiency things as well—and we will continue to talk about that, and we will have some detail around that at the Investor Day. As far as the geopolitical situation in the world, we are monitoring it. You know, there is risk out there, and a lot of uncertainty. Obviously, the uncertainty level has gone up. But as we have described in the past, you know, we intentionally keep things in the company reasonably adaptable, and as the world changes, we will adapt to the world. We have a great manufacturing network that allows us to do that. We have a team that works well together to make sure that it happens effectively. And so being adaptable and resilient here is really important, and also having cash is really important. So that is how we are trying to deal with the answer.

Great. Thanks for taking the questions, and looking forward to the Investor Day. I will turn it over.

Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press 11. Our next question comes from the line of Anja Soderstrom from Sidoti. Your question, please.

Hi, and thank you for taking my questions. I have some follow-ups and then I have some other questions. So on your gross margin, you also mentioned it was due to revenue mix and the Live Events being softer, and given Live Events is a big part of your backlog, how should we think about the impact of that going forward?

Anja, there is a table in the presentation which shows you, as of the end of the quarter, the mix of revenue in the backlog. So you see actually the number, and we try to give you what might be left of the revenue after the fourth quarter is finished. So we have, you know, somewhat of a hint, if you will, if not a calculation of what you might expect coming through from the backlog and how Live Events might impact that. The point that we would make about the GP margin declining sequentially again has to do with the fact that our gross profit margin—the cost of goods sold side of the margin—does have some fixed cost in it. So when revenue is going up, you get the benefit of that on the gross profit margin. When revenue is going down, as it did seasonally in the third quarter, the opposite effect happens. So that is, and we will have more to say about that as well to help you understand that at the Investor Day.

Okay. Thank you. And then in terms of the facility, is that on track, and would that have any sort of impact on the margins?

I am sorry, Anja, say again, please.

Mexico facility. Is that on track to be up and running in April, and would that potentially have an impact on the gross margin as well?

Yeah. Not a significant impact on the gross margin overall. You know, capital expenses are to be capitalized, and we are leasing the facility there. But your question about being on track—yes, it is. We expect to be up and operating in the first quarter of FY '27, so this coming next fiscal year. That is all progressing well, and we expect to be fully operational certainly by the second quarter.

Okay. Thank you. And then you mentioned the delay from a key account in Commercial. What gives you the confidence that that is temporary, and do you expect maybe that shortfall in the third quarter to be made up in the fourth quarter?

Yeah. What I am referencing there, without naming the account itself, is that there was an acquisition made in this past year, so they are going through that acquisition phase, and we expect that to fully be in place and orders to continue to come in in the fourth quarter. So nothing new there. We will certainly keep you apprised if something changes, but we do not expect that to be the case.

Okay. Great. Thank you. And then just as we have entered 2026, with everything that is going on and uncertainty, have you felt that the sentiment among your customers has changed at all?

Yeah. We work in big projects—large projects that are well capitalized and have been moving along. So the opportunities that are out there, we are not foreseeing any reduction. Now speaking of the U.S. market, which is the majority of our business. As we get to the international side of it, and we do some business throughout the Middle East and Australia, of course, and Europe—we will see how that plays out. But, overall, I think the sentiment is projects are moving forward. They are funded. We are part of a larger overall project, and we are typically on the back end of the project. So those are usually well funded and moving forward. So we are not expecting anything to be delayed at this point.

Okay. Thank you. And then in terms of M&A, what can we expect there? What are you looking at there? And how is the market for M&A?

As we have said in the past, Anja, we continue to believe there are opportunities to do tuck-ins and fill-ins in each of our businesses. We are obviously looking at that, but the other message I would give you on that is just our flexibility. Again, we have a strong cash position. We, as you know from everything that we do, are return-focused. We are not going to do anything that does not make sense strategically, that does not have industrial logic to it, and it has got to meet our financial return criteria, and we have to be able to integrate properly. So those are important characteristics. But, along the strategic path, there inevitably will be some opportunities for us.

I think to add to Howard, this is part of our strategic consideration. Clearly, as Howard mentioned, the industrial logic has to make sense. And as we look at it through all phases—whether it be product, verticals, or geographies—this is something we are considering actively on a daily basis just given our cash position. But, at this stage, we do not have anyone that we could go and say we are right behind. But it is clear that, once one of these comes to fruition, we will be able to talk about our history.

Okay. Great. Thank you. That was all for me.

Alright. Thanks, Anja. Thank you. And this does conclude the question-and-answer session of today's program. I would like to hand the program back to Ramesh for any further remarks.

Thank you. Again, thank you, everyone, for participating. Thank you for joining our call today. We will be appearing, as I mentioned, at the Investor Day on April 9, but also at the Roth Conference in March. We look forward to seeing you there, and we clearly look forward to speaking with you all on our fourth quarter call. So thank you again, and have a great day. Thank you.

Thank you. And thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.