Daktronics (DAKT)

Risks

• We face risks related to actual or threatened health epidemics and other outbreaks, including the COVID-19 pandemic, which have and could have a material adverse effect on our operations, liquidity, financial conditions, and financial results.
• If we fail to timely and effectively obtain shipments of raw materials and components from our suppliers or to send shipments of our manufactured product to our customers, our business and operating results could be adversely affected.
• Cost inflation in, and shortages of, raw materials, components, and related transportation and tariff costs has and can have a significant impact on our price competitiveness and/or ability to produce our products, which has and could cause harm to our sales, financial condition and results of operations.
• We depend on a single-source or a limited number of suppliers for our raw materials and components from countries around the world. The loss, an interruption, or a material change in our business relationships with our suppliers has and could cause a disruption in supply and a substantial increase in the costs of such materials. Such changes has and could result in extended lead times or supply changes, which could disrupt or delay our scheduled product deliveries to our end user customers and may result in the loss of sales and end user customers and cause harm to our sales, financial condition, and results of operations.
• We may fail to continue to attract, develop and retain personnel throughout our business areas, which could negatively impact our operating results.
• We depend on third parties to complete some of our contracts.
• We may not be able to utilize our capacity efficiently or accurately plan our capacity requirements, which may negatively affect our business and operating results.
• We operate in highly competitive markets and face significant competition and pricing pressures. If we are unable to keep up with the rapidly changing product developments and new technologies or if we cannot compete effectively, we could lose market share and orders, which would negatively impact our results of operations.
• We enter into fixed-price contracts, which could reduce our profits if actual costs exceed estimated costs.
• Backlog may not be indicative of future revenue or profitability.
• Our results of operations on a quarterly and annual basis have and are likely to continue to fluctuate and be substantially affected by the size and timing of large contract order awards.
• Our actual results could differ from the estimates and assumptions we make to prepare our financial statements, which could have a material impact on our financial condition and results of operations.
• Unanticipated warranty and other costs for defective products could adversely affect our financial condition, results of operations and reputation.
• The terms and conditions of our credit facilities impose restrictions on our operations, and if we default on our credit facilities, it could have a material adverse effect on our results of operations and financial condition and make us vulnerable to adverse economic or industry conditions and cause liquidity issues.
• Unanticipated events resulting in credit losses to us could have a material adverse impact on our financial results.
• If we became unable to obtain adequate surety bonding or letters of credit, it could adversely affect our ability to bid on new work, which could have a material adverse effect on our future revenue and business prospects.
• We may be unable to protect our intellectual property rights effectively, or we may infringe upon the intellectual property rights of others, either of which may have a material adverse effect on our operating results and financial condition.
• Geopolitical issues, conflicts and other global events could adversely affect our results of operations and financial condition.
• Weakened global economic or recessionary conditions may adversely affect our industry, business and results of operations.
• Unexpected events, including natural disasters and pandemics, may increase our cost of doing business or disrupt our operations.
• Our global operations expose us to global regulatory, geopolitical, economic and social changes and add additional risks and uncertainties which can harm our business, operating results, and financial condition.
• Our future results may be affected by compliance risks related to United States and other countries' anti-bribery and anti-corruption laws, trade controls, economic sanctions, and similar laws and regulations. Our failure to comply with these laws and regulations could subject us to civil, criminal and administrative proceedings or penalties and harm our reputation.
• Global tax law changes may adversely affect our business, financial condition and results of operations.
• Acquisitions, partial investments, and divestitures pose financial, management and other risks and challenges.
• If goodwill or other intangible assets in connection with our acquisitions become impaired, we could take significant non-cash charges against earnings.
• Our data systems could fail, or their security could be compromised, causing a material adverse effect on our business.
• Regulation in the areas of privacy, data protection and information security could increase our costs and affect or limit our business opportunities and how we collect or use personal information.
• We may fail to continue to attract, develop and retain key management personnel, which could negatively impact our operating results.
• The outcome of pending and future claims, investigations or litigation can have a material adverse impact on our business, financial condition, and results of operations.
• Our business involves the use of hazardous materials, and we must comply with environmental, health and safety laws and regulations, which can be expensive and restrict how we do business.
• If our internal control over financial reporting is found to be ineffective, our financial statements may not be fairly stated, raising concerns for investors and potentially adversely affecting our stock price.
• Insurance coverage can be difficult or expensive to obtain, and our failure to obtain adequate insurance coverage could adversely affect our financial condition or results of operations.
• We have been required to conduct a good faith reasonable country of origin analysis on our use of “conflict minerals”, which has imposed and may impose additional costs on us and could raise reputational challenges and other risks.
• The protections we have adopted and to which we are subject may discourage takeover offers favored by our shareholders.
• Our common stock has at times been thinly traded, which may result in low liquidity and price volatility.
• Significant changes in the market price of our common stock could result in securities litigation claims against us.
• There can be no assurance that we will pay dividends on our common stock.
• Our executive officers, directors and principal shareholders have the ability to significantly influence all matters submitted to our shareholders for approval.