netrashetty
Netra Shetty
Darling International Inc. (AMEX
AR) is the largest rendering business in the United States. It provides recycling and rendering services in which animal and food waste products are turned into useful commercial goods such as tallow, meat and bone meal, and yellow grease (cooking grease). Initially based out of Texas, Darling International now has 44 facilities and over 1,200 employees, controlling a near monopoly share of the rendering business in some parts of the country.
Daktronics, Inc. (NASDAQ: DAKT) is the world’s leading supplier of electronic LED and LCD displays for sports, commercial, and transportation markets. Daktronics is a vertically integrated company, meaning that it controls everything from the design, manufacturing and servicing for its products.
Headquartered in Brookings, South Dakota, the company spent its first three decades dominating the sports scoreboard niche. However, while this segment has recently seen double-digit growth, its Commercial division has been fueling the surge that has seen DAKT more than double revenues in recent years. This is attributed to the company seizing a leading position as a maker of large digital billboards, in what is likely to a growth industry with a long runway, as only 450 of 450,000 billboards in the U.S. have been converted to digital.
Company Overview
Founded as a scoreboard manufacturer in 1968 by two electrical engineering professors from South Dakota State University, Daktronics now sells electronic scoreboards, large electronic display systems, marketing services, digital messaging solutions, and related software and services for sports, commercial, and transportation applications. The company is a vertically integrated display manufacturer, performing almost all of the sub-assembly and final assembly of its products; these activities include designing, marketing, manufacturing, installation, and servicing of systems that display information and graphics (e.g., real-time data, graphics, animation, video).
Contents
1 Company Overview
1.1 Business Financials
1.2 Business Segments
1.2.1 Sport and Theater
1.2.2 Commercial
1.2.3 Transportation
1.2.4 Video
2 Trends and Forces
2.1 Digital Outdoor Advertising
2.2 Revenues Have Historically been Seasonal and Driven by Large Orders
2.3 Business Cycles Drive Advertising Budgets, Which in Turn Drive DAKT Revenues
3 Competition
4 References
Business Financials
In 2009, DAKT had total sales of $393 million.[1] This was a decline from its 2008 total revenues of $581 million. As a result, DAKT swung from a net profit in 2008 to a net loss in 2009.[1] The decline went from a net profit of $26 million in 2008 to a net loss of $7 million in 2009.Cite error 3; Invalid <ref> tag; invalid names, e.g. too many
Business Segments
Daktronics reports four product families: Sport and Theater, Commercial, Video, and Transportation. Digital billboards have driven a large chunk of this growth in the Commercial section while growth in the other segments, especially Sports, continued at a fast clip.
Sport and Theater
This product family includes indoor and outdoor scoreboards, timing systems, digital displays, sound systems, statistics software, and hoist systems. Daktronics's integrated video and scoring systems can be seen in many professional, college, and high schools facilities across North America and at international sporting events such as the Olympics.
Products include All Sport (a controller for portable scoreboards), OmniSport (a timing system for sports events, primarily swimming and track), DakStats (a sports statistics software integrated with scoreboards), and Vortek hoists (automated rigging systems for arena center hung scoreboards). Products in this section mostly favor LED technology over other technologies due to its comparatively lower power consumption, longer life, and consequent lower maintenance costs.
Commercial
The company's video, digital billboard, and graphics displays can be seen from Las Vegas and Times Square to roadsides, retail establishments, and major stock exchanges around the world. All commercial products are made with LED technology. The Commercial family holds promise for future growth as outdoor advertisers like Clear Channel Outdoor, Lamar , and CBS Outdoor continue converting their traditional billboards to digital.
Products include Galaxy and GalaxyPro indoor and outdoor text and graphic displays and Venus 1500 control systems. The Galaxy product line has become one of Daktronics' fastest growing product lines.
DAKT's primary markets in this product family are: retailers, outdoor advertisers, hospitality providers, fast food chains, financial institutions, casinos, and racing.
Transportation
The Transportation product family includes a wide range of LED-based products for road management, parking, mass transit, and aviation applications. Products include Vanguard displays, which are used in numerous jurisdictions across North America to direct traffic and inform motorists, with customers including many state departments of transportation. DAKT's primary markets in this product family are: state and local departments of transportation, airlines, airports, parking facilities, and transit authorities.
Video
Video products consists primarily of displays comprised of a large number of pixels and capable of creating various levels of video, graphics, and animation as well as display controllers. While reported as a separate product family, video products are integrated with products from the other three families, which correspond to actual market segments.
Trends and Forces
Digital Outdoor Advertising
The outdoor advertising industry, until now dominated by large roadside billboards, is experiencing a paradigm shift as static ad displays are being converted to digital displays. Digital billboards allow the outdoor advertisers to rotate ad images from several different advertisers throughout the day and "day-part" ads along optimal time blocks at the click of a button. The digital outdoor ads have so far proven quite profitable for the outdoor advertising industry, with initial results showing that they have increased revenues by a factor of 6-10x on converted ad displays. Given this success, it is likely that the outdoor advertising companies will continue replacing outdoor billboards with digital displays, and Daktronics is currently their largest supplier. In the past, approximately 45% of capital expenditures on digital ads by LAMR and CCO have gone to the company.
The pool of static displays awaiting conversion to digital is potentially very great and not likely to be exhausted any time soon, with only about 450 of roughly 450,000 U.S. billboards converted to digital so far. It should be noted, however, that the growth spurt in display orders from the outdoor advertising industry may represent the one-time conversion of an existing fixed stock of displays which is limited in number by legislation. New legislation may also adversely affect the adoption of digital displays in the future. For a more in-depth discussion about the outdoor advertising industry, see Digital Outdoor Advertising, as well as Clear Channel Outdoor Holdings (CCO) and Lamar Advertising Company (LAMR) to read about DAKT's two biggest outdoor advertising customers thus far.
Revenues Have Historically been Seasonal and Driven by Large Orders
DAKT's revenues have historically fluctuated due to the impact of large product orders, such as display systems for sports facilities and large commercial systems. This has at times resulted in orders outgrowing capacity, with production and personnel growth sometimes not keeping up with timelines for large orders in the Sports and Commercial families.
With Sports products accounting for half of revenues, the seasonality of the sports market has also played a part in sales fluctuations. Sales related to facilities for football and other fall sports take place in the summer and early fall, basketball and hockey sales take place in the fall, and baseball and other spring and summer sports bring in revenues in the early to late spring. As Daktronics' Commercial segment grows, seasonality in outdoor advertising could also contribute to seasonality.
Business Cycles Drive Advertising Budgets, Which in Turn Drive DAKT Revenues
Because DAKT customers’ budgets for the purchase of electronic displays is often part of those customers’ advertising budgets, DAKT products often compete with other forms of advertising, such as television, print media or fixed display signs. Advertising spending, in turn, has historically been more sensitive to business cycles than many other industries. Ad spending increases considerably during economic upturns and decreases substantially during recessions as demonstrated in the chart below.
Competition
Daktronics is the leader of a highly fragmented and competitive large electronic display industry otherwise populated by considerably smaller players. While the company competes with many others across its many product lines, no single competitor offers a similar breadth of products. Many competitors operate in only one or a few of the market niches and product categories Daktronics serves, with more competitors present at the less complex end of the graphic display product spectrum and fewer competing for larger, more complex orders.
Daktronics has positioned itself upmarket as a technology leader and provider of strong customer support to less price-sensitive customers. It does not compete on price with lower-cost competitors, who offer more basic products and more stripped-down service.
As purchases of digital displays often come from companies' advertising budgets, Daktronics' products compete with other forms of advertising, such as television, print media, radio, Internet, and fixed display signs.
AR) is the largest rendering business in the United States. It provides recycling and rendering services in which animal and food waste products are turned into useful commercial goods such as tallow, meat and bone meal, and yellow grease (cooking grease). Initially based out of Texas, Darling International now has 44 facilities and over 1,200 employees, controlling a near monopoly share of the rendering business in some parts of the country.Daktronics, Inc. (NASDAQ: DAKT) is the world’s leading supplier of electronic LED and LCD displays for sports, commercial, and transportation markets. Daktronics is a vertically integrated company, meaning that it controls everything from the design, manufacturing and servicing for its products.
Headquartered in Brookings, South Dakota, the company spent its first three decades dominating the sports scoreboard niche. However, while this segment has recently seen double-digit growth, its Commercial division has been fueling the surge that has seen DAKT more than double revenues in recent years. This is attributed to the company seizing a leading position as a maker of large digital billboards, in what is likely to a growth industry with a long runway, as only 450 of 450,000 billboards in the U.S. have been converted to digital.
Company Overview
Founded as a scoreboard manufacturer in 1968 by two electrical engineering professors from South Dakota State University, Daktronics now sells electronic scoreboards, large electronic display systems, marketing services, digital messaging solutions, and related software and services for sports, commercial, and transportation applications. The company is a vertically integrated display manufacturer, performing almost all of the sub-assembly and final assembly of its products; these activities include designing, marketing, manufacturing, installation, and servicing of systems that display information and graphics (e.g., real-time data, graphics, animation, video).
Contents
1 Company Overview
1.1 Business Financials
1.2 Business Segments
1.2.1 Sport and Theater
1.2.2 Commercial
1.2.3 Transportation
1.2.4 Video
2 Trends and Forces
2.1 Digital Outdoor Advertising
2.2 Revenues Have Historically been Seasonal and Driven by Large Orders
2.3 Business Cycles Drive Advertising Budgets, Which in Turn Drive DAKT Revenues
3 Competition
4 References
Business Financials
In 2009, DAKT had total sales of $393 million.[1] This was a decline from its 2008 total revenues of $581 million. As a result, DAKT swung from a net profit in 2008 to a net loss in 2009.[1] The decline went from a net profit of $26 million in 2008 to a net loss of $7 million in 2009.Cite error 3; Invalid <ref> tag; invalid names, e.g. too many
Business Segments
Daktronics reports four product families: Sport and Theater, Commercial, Video, and Transportation. Digital billboards have driven a large chunk of this growth in the Commercial section while growth in the other segments, especially Sports, continued at a fast clip.
Sport and Theater
This product family includes indoor and outdoor scoreboards, timing systems, digital displays, sound systems, statistics software, and hoist systems. Daktronics's integrated video and scoring systems can be seen in many professional, college, and high schools facilities across North America and at international sporting events such as the Olympics.
Products include All Sport (a controller for portable scoreboards), OmniSport (a timing system for sports events, primarily swimming and track), DakStats (a sports statistics software integrated with scoreboards), and Vortek hoists (automated rigging systems for arena center hung scoreboards). Products in this section mostly favor LED technology over other technologies due to its comparatively lower power consumption, longer life, and consequent lower maintenance costs.
Commercial
The company's video, digital billboard, and graphics displays can be seen from Las Vegas and Times Square to roadsides, retail establishments, and major stock exchanges around the world. All commercial products are made with LED technology. The Commercial family holds promise for future growth as outdoor advertisers like Clear Channel Outdoor, Lamar , and CBS Outdoor continue converting their traditional billboards to digital.
Products include Galaxy and GalaxyPro indoor and outdoor text and graphic displays and Venus 1500 control systems. The Galaxy product line has become one of Daktronics' fastest growing product lines.
DAKT's primary markets in this product family are: retailers, outdoor advertisers, hospitality providers, fast food chains, financial institutions, casinos, and racing.
Transportation
The Transportation product family includes a wide range of LED-based products for road management, parking, mass transit, and aviation applications. Products include Vanguard displays, which are used in numerous jurisdictions across North America to direct traffic and inform motorists, with customers including many state departments of transportation. DAKT's primary markets in this product family are: state and local departments of transportation, airlines, airports, parking facilities, and transit authorities.
Video
Video products consists primarily of displays comprised of a large number of pixels and capable of creating various levels of video, graphics, and animation as well as display controllers. While reported as a separate product family, video products are integrated with products from the other three families, which correspond to actual market segments.
Trends and Forces
Digital Outdoor Advertising
The outdoor advertising industry, until now dominated by large roadside billboards, is experiencing a paradigm shift as static ad displays are being converted to digital displays. Digital billboards allow the outdoor advertisers to rotate ad images from several different advertisers throughout the day and "day-part" ads along optimal time blocks at the click of a button. The digital outdoor ads have so far proven quite profitable for the outdoor advertising industry, with initial results showing that they have increased revenues by a factor of 6-10x on converted ad displays. Given this success, it is likely that the outdoor advertising companies will continue replacing outdoor billboards with digital displays, and Daktronics is currently their largest supplier. In the past, approximately 45% of capital expenditures on digital ads by LAMR and CCO have gone to the company.
The pool of static displays awaiting conversion to digital is potentially very great and not likely to be exhausted any time soon, with only about 450 of roughly 450,000 U.S. billboards converted to digital so far. It should be noted, however, that the growth spurt in display orders from the outdoor advertising industry may represent the one-time conversion of an existing fixed stock of displays which is limited in number by legislation. New legislation may also adversely affect the adoption of digital displays in the future. For a more in-depth discussion about the outdoor advertising industry, see Digital Outdoor Advertising, as well as Clear Channel Outdoor Holdings (CCO) and Lamar Advertising Company (LAMR) to read about DAKT's two biggest outdoor advertising customers thus far.
Revenues Have Historically been Seasonal and Driven by Large Orders
DAKT's revenues have historically fluctuated due to the impact of large product orders, such as display systems for sports facilities and large commercial systems. This has at times resulted in orders outgrowing capacity, with production and personnel growth sometimes not keeping up with timelines for large orders in the Sports and Commercial families.
With Sports products accounting for half of revenues, the seasonality of the sports market has also played a part in sales fluctuations. Sales related to facilities for football and other fall sports take place in the summer and early fall, basketball and hockey sales take place in the fall, and baseball and other spring and summer sports bring in revenues in the early to late spring. As Daktronics' Commercial segment grows, seasonality in outdoor advertising could also contribute to seasonality.
Business Cycles Drive Advertising Budgets, Which in Turn Drive DAKT Revenues
Because DAKT customers’ budgets for the purchase of electronic displays is often part of those customers’ advertising budgets, DAKT products often compete with other forms of advertising, such as television, print media or fixed display signs. Advertising spending, in turn, has historically been more sensitive to business cycles than many other industries. Ad spending increases considerably during economic upturns and decreases substantially during recessions as demonstrated in the chart below.
Competition
Daktronics is the leader of a highly fragmented and competitive large electronic display industry otherwise populated by considerably smaller players. While the company competes with many others across its many product lines, no single competitor offers a similar breadth of products. Many competitors operate in only one or a few of the market niches and product categories Daktronics serves, with more competitors present at the less complex end of the graphic display product spectrum and fewer competing for larger, more complex orders.
Daktronics has positioned itself upmarket as a technology leader and provider of strong customer support to less price-sensitive customers. It does not compete on price with lower-cost competitors, who offer more basic products and more stripped-down service.
As purchases of digital displays often come from companies' advertising budgets, Daktronics' products compete with other forms of advertising, such as television, print media, radio, Internet, and fixed display signs.
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