What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-02-28 compared with 2023-12-05 · 86 added, 94 removed, 200 unchanged (47% of the section changed)

2 unchanged sentences

This section entitled "Management’s Discussion and Analysis of Financial Condition and Results of Operations" (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results.

The MD&A provides a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition during the period from the most recent fiscal year-end, April 29, 2023, to and including October 28, 2023 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

The MD&A provides a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition during the period from the most recent fiscal year-end, April 29, 2023, to and including January 27, 2024 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

This Quarterly Report on Form 10-Q, including the MD&A, contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.

24 unchanged sentences

Our past investments in people and plant capacity and the continued stable supply chain environment have allowed for efficient production and fulfillment of orders.

Although the post-pandemic geopolitical situation and global trade patterns continue to evolve, we believe that the levels of uncertainty and volatility in supply chain and demand will not be as great in the coming months as it was through the pandemic and will continue to stabilize during this fiscal year.

Although the post-pandemic geopolitical situation and global trade patterns continue to evolve, we believe that the levels of uncertainty and volatility in supply chain and demand will not be as great as it was through the pandemic and will continue to stabilize during this fiscal year.

We believe the audiovisual industry fundamentals of increased use of LED display systems across industries and our development of new technologies, services, and sales channels will drive long-term growth for our Company.

1 unchanged sentence

RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED OCTOBER 28, 2023 AND OCTOBER 29, 2022

COMPARISON OF THE THREE MONTHS ENDED JANUARY 27, 2024 AND JANUARY 28, 2023

Product Order Backlog

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Management uses backlog information for capacity and resource planning.

Order fulfillment timing is dependent on customer schedules, supply chain conditions, and our capacity availability.

We believe order information is useful to investors because it provides an indication of our market share and future revenues.

Our product order backlog as of October 28, 2023 was $306.9 million as compared to $463.1 million as of October 29, 2022 and $400.7 million at April 29, 2023.

Our product order backlog as of January 27, 2024 was $328.3 million as compared to $429.1 million as of January 28, 2023 and $400.7 million at April 29, 2023.

The decrease in backlog is trending down to more historical levels as a result of fulfilling orders at a greater pace as supply chain conditions stabilized and production lead times improved, utilizing our increased capacity, and order pace returning to more normalized rates.

We expect to fulfill the backlog as of October 28, 2023 within the next 24 months.

We expect to fulfill the backlog as of January 27, 2024 within the next 24 months.

The timing of backlog fulfillment may be impacted by project delays resulting from parts availability and other constraints stemming from the supply chain disruptions or by customer site conditions, which are outside our control.

The following table shows information regarding net sales for the three months ended October 28, 2023 and October 29, 2022:

The following table shows information regarding net sales for the three months ended January 27, 2024 and January 28, 2023:

Three Months Ended

(in thousands) October 28, 2023 October 29, 2022 Dollar Change Percent Change

(in thousands) January 27, 2024 January 28, 2023 Dollar Change Percent Change

Commercial $ 33,292 $ 49,967 $ (16,675) (33.4) %

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(1) Orders are not measures defined by GAAP, and our methodology for determining orders may vary from the methodology used by other companies in determining their orders and amounts.

For the fiscal 2024 second quarter, net sales were $199.4 million, an increase of $11.9 million from net sales in the prior year's second quarter.

Sales growth was driven by fulfilling orders in backlog, especially in the High School Park and Recreation, Commercial and Transportation business units.

The increase is attributable to a stable operating environment, increased manufacturing capacity and realization of price increases.

Last year during the second quarter, we faced material supply and labor shortages which extended lead times and delayed the conversion of orders into sales.

International net sales are down in the second quarter of fiscal 2024 compared to last year's second quarter due to shipments to Out-of-Home customers in our Asia Pacific Region.

Orders for the second quarter of fiscal 2024 were similar to the second quarter of fiscal 2023 although the order volume from our business units differed.

Higher orders to customers in the International and Transportation business units offset decreases in the Spectacular and Out-of-Home markets in our Commercial business unit.

Orders in the International business unit in the second quarter of fiscal 2023 were lower due to weakening economic outlook relating to inflationary pressures, geopolitical events, and currency headwinds.

For the fiscal 2024 third quarter, net sales were $170.3 million, a decrease of $14.7 million from net sales in the prior year's third quarter.

The third quarter of every year is characterized by seasonally lower volume, and the decrease is attributable to the year-ago period’s unseasonably record revenue driven by high backorder fulfillment resulting from recovery of pandemic-related supply chain challenges and labor availability.

The sales decrease was driven by comparatively lower volumes in the Commercial and International business units, partially offset by order fulfillments in the Live Events, High School Park and Recreation, and Transportation business units.

Orders for the third quarter of fiscal 2024 increased by 29.4 percent from the third quarter of fiscal 2023 driven by strong demand in the Live Events business unit, rebounding demand in the Spectacular and Out-of-Home markets in our Commercial business unit, and solid growth in the High School Parks and Recreation and Transportation business units.

These higher orders offset an order decrease in the International business unit.

Gross Profit and Contribution Margin

Three Months Ended

October 28, 2023 October 29, 2022

January 27, 2024 January 28, 2023

(in thousands) Amount As a Percent of Net Sales Amount As a Percent of Net Sales

6 unchanged sentences

$ 41,718 24.5 % $ 41,713 22.6 %

The gross profit improvement is due to strategic pricing, our ability to efficiently generate more sales volume over our cost structure, and fewer supply chain and operational disruptions during the second quarter of fiscal 2024 as compared to a year earlier.

During the second quarter of fiscal 2024 , employee benefit programs reduced gross profit by $2.7 million, of which $1.9 million was attributed to the programs activation.

Total warranty costs as a percent of sales for the three months ended October 28, 2023 compared to the same period one year ago decreased to 2.2 percent from 2.7 percent.

The gross profit improvement for the third quarter of fiscal 2024 as compared to the same period in fiscal 2023 is due to strategic pricing, greater efficiency of sales volume generation over the cost structure, and a more stable operating environment.

Total warranty costs as a percent of sales for the three months ended January 27, 2024 compared to the same period one year ago increased to 1.9 percent from 1.7 percent.

Three Months Ended

October 28, 2023 October 29, 2022

January 27, 2024 January 28, 2023

(in thousands) Amount As a Percent of Net Sales Dollar Change Percent Change Amount As a Percent of Net Sales

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Selling expenses consist primarily of personnel-related costs, travel and entertainment expenses, marketing related expenses (show rooms, product demonstration, depreciation and maintenance, conventions and trade show expenses), the cost of customer relationship management/marketing systems, bad debt expenses, third-party commissions, and other expenses.

Contribution margin for the fiscal quarter ended October 28, 2023 was positively impacted by the previously discussed sales levels and impacts on gross profit.

During the second quarter of fiscal 2024 , employee benefit programs reduced contribution margin by $1.1 million, with $0.8 million attributed to the programs activation.

Contribution margin as a percent of net sales for the fiscal quarter ended January 27, 2024 was positively impacted by the previously discussed impacts on gross profit.

Reconciliation from non-GAAP contribution margin to the operating income GAAP measure is as follows:

Three Months Ended

October 28, 2023 October 29, 2022

January 27, 2024 January 28, 2023

(in thousands) Amount As a Percent of Net Sales Dollar Change Percent Change Amount As a Percent of Net Sales

2 unchanged sentences

Product design and development 8,835 5.2 1,585 21.9 7,250 3.9

Goodwill impairment — — (4,576) (100.0) 4,576 2.5

Operating income $ 8,036 4.7 % $ 918 12.9 % $ 7,118 3.8 %

General and administrative expenses in the second quarter of fiscal 2024 increased as compared to the second quarter of fiscal 2023 primarily due to increase in personnel-related expenses and professional fees.

During the second quarter of fiscal 2024 , employee benefit programs expenses increased general and administrative expenses by $0.5 million, with $0.3 million attributed to the programs activation.

Product design and development expenses in the second quarter of fiscal 2024 increased as compared to the second quarter of fiscal 2023 primarily due to an increase in personnel-related expenses.

During the second quarter of fiscal 2024 , employee benefit programs increased product design and development expenses by $0.6 million, with $0.4 million attributed to the programs activation.

General and administrative expenses in the third quarter of fiscal 2024 increased as compared to the third quarter of fiscal 2023 primarily due to an increase in personnel-related expenses.

Product design and development expenses in the third quarter of fiscal 2024 increased as compared to the third quarter of fiscal 2023 primarily due to an increase in personnel-related expenses.

We recorded a $4.6 million non-cash goodwill impairment charge during the third quarter of fiscal 2023 that was not repeated in the third quarter of fiscal 2024.

Other Income and Expenses

Three Months Ended

October 28, 2023 October 29, 2022

January 27, 2024 January 28, 2023

(in thousands) Amount As a Percent of Net Sales Dollar Change Percent Change Amount As a Percent of Net Sales

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Interest (expense) income, net:

The increase in interest income and expense, net for the second quarter of fiscal 2024 compared to the same period one year ago was primarily due to closing in May 2023 on the convertible note (the "Convertible Note") and asset-based and mortgage financings at higher values and interest rates than the utilization of our previous line of credit during the 2023 second quarter.

The increase in interest income and expense, net for the third quarter of fiscal 2024 compared to the same period one year ago was primarily due to closing in May 2023 on the convertible note (the "Convertible Note") and asset-based and mortgage financings at higher values and interest rates than were in effect under our previous line of credit during the 2023 third quarter.

Change in fair value of Convertible Note:

For the three months ended October 28, 2023, we recorded an expense of $10.7 million related to the change in fair value of the Convertible Note payable which is accounted for under the fair value option.

The fair value change was primarily caused by the increase in our stock price over the conversion price and decline in market interest rates, making the value of potentially converted shares higher than at debt issuance.

For the three months ended January 27, 2024, we recorded income of $6.3 million related to the change in fair value of the Convertible Note payable, which is accounted for under the fair value option.

The fair value change was primarily caused by the decrease in our stock price during the third quarter of fiscal year 2024 compared to the second quarter of fiscal year 2024.

Other expense, net:

The change in other expense, net for the second quarter of fiscal 2024 as compared to the same period one year ago was primarily due to losses recorded for equity method affiliates and foreign currency volatility.

Our effective tax rate for the second quarter of fiscal 2024 was 64.8 percent as compared to an effective tax rate of 1330.7 percent for the second quarter of fiscal 2023.

The lower tax rate for the second quarter of fiscal 2024 is caused by the fair value adjustment to income that is not deductible for tax purposes, whereas, the effective tax rate for the second quarter of fiscal 2023 was skewed due to a full valuation allowance placed on deferred taxes.

The change in other expense, net for the third quarter of fiscal 2024 as compared to the same period one year ago was primarily due to losses recorded for equity method affiliates and foreign currency volatility.

Our effective tax rate for the third quarter of fiscal 2024 was 15.0 percent as compared to an effective tax rate of 30.5 percent for the third quarter of fiscal 2023.

The lower tax rate for the third quarter of fiscal 2024 is caused by the reduction in fair value adjustment to income that is not taxable.

RESULTS OF OPERATIONS

COMPARISON OF THE SIX MONTHS ENDED OCTOBER 28, 2023 AND OCTOBER 29, 2022

The following table shows information regarding net sales for the six months ended October 28, 2023 and October 29, 2022:

Six Months Ended

(in thousands) October 28, 2023 October 29, 2022 Dollar Change Percent Change

COMPARISON OF THE NINE MONTHS ENDED JANUARY 27, 2024 AND JANUARY 28, 2023

The following table shows information regarding net sales for the nine months ended January 27, 2024 and January 28, 2023:

Nine Months Ended

(in thousands) January 27, 2024 January 28, 2023 Dollar Change Percent Change

Commercial $ 122,628 $ 127,132 $ (4,504) (3.5) %

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(1) Orders are not measures defined by GAAP, and our methodology for determining orders may vary from the methodology used by other companies in determining their orders and amounts.

For the first six months of fiscal 2024, net sales were $431.9 million, an increase of $72.5 million from the prior year's first six-month period.

For the first nine months of fiscal 2024, net sales were $602.2 million, an increase of $57.9 million from the prior year's first nine-month period.

This increase was primarily due to higher throughput from our past investments in capacity and the more stable operating environment.

During the six-month period ended October 29, 2022, we faced material supply and labor shortages which extended lead times and delayed the conversion of orders into sales.

Order volume decreased in the first six months of fiscal 2024 from the prior year's six-month period.

Higher orders from customers in the International and Transportation business units offset decreases in the Spectacular and Out-of-Home markets in our Commercial business unit.

The change in the Commercial business unit was caused by volatility in bookings of larger sized Spectacular LED video displays projects and contraction in advertising spend.

Orders in the International business unit in the first six months of fiscal 2023 were lower due to weakening economic outlook relating to inflationary pressures, geopolitical events, and currency headwinds.

During the nine-month period ended January 28, 2023, we faced material supply and labor shortages which extended lead times and delayed the conversion of orders into sales.

Order volume increased in the first nine months of fiscal 2024 from the prior year's nine-month period.

Higher orders from customers in the Live Events, High School Park and Recreation, and Transportation business units offset decreases in the Spectacular and Out-of-Home markets in our Commercial business unit.

The change in the Commercial business unit was caused by volatility in bookings of larger sized Spectacular LED video displays projects and a contraction in advertising spend.

Orders in the International business unit in the first nine months of fiscal 2024 were lower due to a weakening economic outlook relating to inflationary pressures, geopolitical events, and currency headwinds.

Gross Profit and Contribution Margin

Six Months Ended

October 28, 2023 October 29, 2022

Nine Months Ended

January 27, 2024 January 28, 2023

(in thousands) Amount As a Percent of Net Sales Amount As a Percent of Net Sales

6 unchanged sentences

$ 167,064 27.7 % $ 99,211 18.2 %

The increase in gross profit percentage in the six months ended October 28, 2023 is attributable to the record sales volume over our fixed manufacturing cost structure, past strategic pricing actions, stabilization of input costs, and fewer supply chain and operational disruptions during the first six months of fiscal 2024 as compared to a year earlier.

The effect of employee benefit programs reduced gross profit by $2.7 million.

Total warranty costs as a percent of sales for the six months ended October 28, 2023 compared to the same period one year ago remained the same at 2.2 percent.

Six Months Ended

October 28, 2023 October 29, 2022

The increase in gross profit percentage in the nine months ended January 27, 2024 as compared to the same nine-month period in fiscal 2023 is attributable to the record sales volume over our fixed manufacturing cost structure, past strategic pricing actions, stabilization of input costs, and fewer supply chain and operational disruptions during the first nine months of fiscal 2024 as compared to a year earlier.

The effect of employee benefit programs activation in fiscal year 2024 reduced gross profit by $2.8 million in the nine months ended January 27, 2024 .

Total warranty costs as a percent of sales for the nine months ended January 27, 2024 compared to the same period one year ago increased to 2.1 percent from 2.0 percent.

Nine Months Ended

January 27, 2024 January 28, 2023

(in thousands) Amount As a Percent of Net Sales Dollar Change Percent Change Amount As a Percent of Net Sales

8 unchanged sentences

Contribution margin for the first six months of fiscal 2024 was positively impacted by the previously discussed sales levels and impacts on gross profit.

E mployee benefit programs activation reduced contribution margin by $1.1 million.

Contribution margin for the first nine months of fiscal 2024 was positively impacted by the previously discussed sales levels and impacts on gross profit.

Employee benefit programs activation reduced contribution margin by $1.0 million in the nine months ended January 27, 2024 .

Reconciliation from non-GAAP contribution margin to the operating income GAAP measure is as follows:

Six Months Ended

October 28, 2023 October 29, 2022

Nine Months Ended

January 27, 2024 January 28, 2023

(in thousands) Amount As a Percent of Net Sales Dollar Change Percent Change Amount As a Percent of Net Sales

2 unchanged sentences

Product design and development 26,459 4.4 4,804 22.2 21,655 4.0

Goodwill impairment — — (4,576) (100.0) 4,576 0.8

Operating income (loss) $ 67,688 11.2 % $ 64,563 2066.0 % $ 3,125 0.6 %

General and administrative expenses in the first six months of fiscal 2024 increased primarily due to an increase in personnel-related expenses.

E mployee benefit programs activation increased general and administrative expenses by $0.5 million.

Product design and development expenses in the first six months of fiscal 2024 increased as compared to the first six months of fiscal 2023 primarily due to an increase in personnel-related expenses.

E mployee benefit programs activation increased product design and development expenses by $0.6 million.

General and administrative expenses in the first nine months of fiscal 2024 increased primarily due to an increase in personnel-related expenses.

Product design and development expenses in the first nine months of fiscal 2024 increased as compared to the first nine months of fiscal 2023 primarily due to an increase in personnel-related expenses.

We recorded a $4.6 million non-cash goodwill impairment charge during the third quarter of fiscal 2023 that was not repeated in the third quarter of fiscal 2024.

Other Income and Expenses

Six Months Ended

October 28, 2023 October 29, 2022

Nine Months Ended

January 27, 2024 January 28, 2023

(in thousands) Amount As a Percent of Net Sales Dollar Change Percent Change Amount As a Percent of Net Sales

1 unchanged sentence

Change in fair value of convertible note $ (11,570) (1.9) % $ (11,570) — % $ — — %

Other expense, net $ (5,282) (1.2) % $ (4,327) 453.1 % $ (955) (0.3) %

Other expense and debt issuance costs write-off, net $ (6,282) (1.0) % $ (3,947) 169.0 % $ (2,335) (0.4) %

Interest (expense) income, net:

The increase in interest income and expense, net in the first six months of fiscal 2024 compared to the same period one year ago was primarily due to closing in May 2023 on the Convertible Note and asset-based and mortgage financings at higher values and interest rates than the utilization of our previous line of credit during the first six months of fiscal 2023.

The increase in interest income and expense, net in the first nine months of fiscal 2024 compared to the same period one year ago was primarily due to closing in May 2023 on the Convertible Note and asset-based and mortgage financings at higher values and interest rates than the utilization of our previous line of credit during the first nine months of fiscal 2023.

Change in fair value of Convertible Note:

For the six months ended October 28, 2023, we recorded an expense of $17.9 million related to the change in fair value of the Convertible Note payable which is accounted for under the fair value option.

For the nine months ended January 27, 2024, we recorded an expense of $11.6 million related to the change in fair value of the Convertible Note payable which is accounted for under the fair value option.

The fair value change was primarily caused by the increase in our stock price over the conversion price and the decline in market interest rates making the value of potentially converted shares higher than at the debt issuance.

Other expense, net:

The change in other expense, net for the first six months of fiscal 2024 as compared to the same period one year ago was primarily due to losses recorded for equity method affiliates and foreign currency volatility and expensing of $3.4 million debt issuance costs related to the Convertible Note carried at fair value.

We have recorded an effective tax rate of 37.6 percent for the six months ended October 28, 2023 as compared to (247.4) percent for the six months ended October 29, 2022.

The tax rate for the first six months of fiscal 2024 is caused by the fair value adjustment to income that is not deductible for tax purposes;

whereas, the effective tax rate for the first six months of fiscal 2023 was skewed due a full valuation allowance placed on deferred taxes.

The change in other expense, net for the first nine months of fiscal 2024 as compared to the same period one year ago was primarily due to losses recorded for equity method affiliates and foreign currency volatility and expensing of $3.4 million of debt issuance costs related to the Convertible Note carried at fair value.

We have recorded an effective tax rate of 31.5 percent for the nine months ended January 27, 2024.

The tax rate for the first nine months of fiscal 2024 is caused by the fair value adjustment to expense that is not deductible for tax purposes.

The effective tax rate for the first nine months of fiscal 2023 was skewed due a full valuation allowance placed on deferred

Absent any major tax changes, we expect our full year effective tax rate to be in the mid-twenties, before the impacts of fair value accounting for the Convertible Note.

LIQUIDITY AND CAPITAL RESOURCES

Six Months Ended

(in thousands) October 28,

2023 October 29,

Nine Months Ended

(in thousands) January 27,

2024 January 28,

2023 Dollar Change

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Net cash provided by (used in) operating activities:

Net cash provided by operating activities was $44.3 million for the first six months of fiscal 2024 compared to net cash used in operating activities of $21.9 million in the first six months of fiscal 2023.

The $66.2 million change in cash provided by (used in) operating activities was primarily the result of an increase in net income of $39.7 million in the first six months of fiscal 2024 compared to the same period in fiscal 2023 as strategic pricing actions and operating conditions improved, the $17.9 million of non-cash fair value change of our Convertible Note impacting net income, and improved working capital positions.

We also had strategically invested in inventory through the first six months of fiscal 2023 as a reaction to supply chain constraints and historic backlog, which consumed cash.

Since October 29, 2022, we have reduced inventory and related payables for inventory as we reduced backlog and generated cash from inventory reduction.

Increases in accounts receivable and contract asset levels have used some cash for working capital because of business increases.

Net cash provided by operating activities was $53.8 million for the first nine months of fiscal 2024 compared to net cash used in operating activities of $9.5 million in the first nine months of fiscal 2023.

The $63.3 million change in cash provided by (used in) operating activities was primarily the result of an increase in net income of $46.7 million in the first nine months of fiscal 2024 compared to the same period in fiscal 2023 as strategic pricing actions and operating conditions improved, the $11.6 million of non-cash fair value change of our Convertible Note impacting net income, and improved working capital positions.

We also had strategically invested in inventory through the first nine months of fiscal 2023 as a reaction to supply chain constraints and historic backlog, which consumed cash.

Since January 28, 2023, we have reduced inventory and related payables for inventory as we reduced backlog and generated cash from inventory reduction.

Increases in contract asset levels have used some cash for working capital because of business increases.

The changes in net operating assets and liabilities consisted of the following:

Six Months Ended

2023 October 29,

Nine Months Ended

2024 January 28,

(Increase) decrease:

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Net cash used in investing activities:

Net cash used in investing activities totaled $12.1 million in the first six months of fiscal 2024 compared to net cash used in investing activities of $15.2 million in the first six months of fiscal 2023.

Purchases of property and equipment totaled $9.2 million in the first six months of fiscal 2024 compared to $16.2 million

in the first six months of fiscal 2023.

Net cash used in investing activities totaled $17.1 million in the first nine months of fiscal 2024 compared to net cash used in investing activities of $20.9 million in the first nine months of fiscal 2023.

Purchases of property and equipment totaled $13.6 million in the first nine months of fiscal 2024 compared to $21.8 million in the first nine months of fiscal 2023.

Fiscal 2023 purchases were higher because of initiatives to upgrade existing or purchase new manufacturing equipment for capacity and automation.

Net cash provided by financing activities:

Net cash provided by financing activities was $15.9 million for the six months ended October 28, 2023 due to cash provided by the closing of a $25.0 million Convertible Note financing and a $15.0 million mortgage financing offset by the payoff of our previous credit line of $17.8 million, expending $6.5 million of debt issuance costs, and principal payments on the mortgage, as compared to $26.3 million of cash provided by financing due to draws on our line of credit in the first six months of fiscal 2023.

Net cash provided by financing activities was $15.7 million for the nine months ended January 27, 2024 due to cash provided by the closing of a $25.0 million Convertible Note financing and the $15.0 million mortgage financing offset by the payoff of our previous credit line of $17.8 million, expending $6.8 million of debt issuance costs, and principal payments on the mortgage, as compared to $23.5 million of cash provided by financing due to draws on our line of credit in the first nine months of fiscal 2023.

Debt and cash

We maintain a $60.0 million asset-based revolving credit facility ("ABL") with a maturity date of May 11, 2027 subject to customary covenants and conditions.

As of October 28, 2023, we had no borrowings against the ABL and $5.9 million used to secure letters of credit outstanding.

As of January 27, 2024, we had no borrowings against the ABL and $5.4 million used to secure letters of credit outstanding.

We also have a mortgage of $14.3 million secured by a first priority lien on our Brookings, South Dakota real estate and $25.0 million evidenced by the Convertible Note secured by a second priority lien on assets securing the ABL facility and a first priority lien on substantially all the other assets of the Company, excluding all real property.

As of October 28, 2023, we had $64.7 million in cash and cash equivalents and $50.6 million in borrowing capacity under our ABL.

As of January 27, 2024, we had $76.8 million in cash and cash equivalents and $32.9 million in borrowing capacity under our ABL.

We believe cash flow from operations, existing lines of credit, and access to debt and capital markets will be sufficient to meet our current liquidity needs, and we have committed liquidity and cash reserves in excess of our anticipated funding requirements.

1 unchanged sentence

Working Capital

Working capital was $196.4 million and $132.5 million as of October 28, 2023 and April 29, 2023, respectively.

We had $10.7 million of retainage on long-term contracts included in receivables and contract assets as of October 28, 2023 which we expect to collect these amounts within one year.

Working capital was $205.3 million and $132.5 million as of January 27, 2024 and April 29, 2023, respectively.

We had $10.4 million of retainage on long-term contracts included in receivables and contract assets as of January 27, 2024 which we expect to collect within one year and which are included in the short-term asset portion of working capital.

Other Liquidity and Capital Uses

We are sometimes required to obtain bank guarantees or other financial instruments for display installations, and we utilize a global bank to provide such instruments.

If we are unable to complete the installation work, our customer would draw on the banking arrangement, and the bank would subrogate its loss to Daktronics' restricted cash accounts.

As of October 28, 2023, we had $0.2 million of such instruments outstanding.

We are sometimes required to obtain performance bonds for display installations;

1 unchanged sentence

If we were unable to complete the installation work, and our customer would call upon the bond for payment, the surety company would subrogate its loss to Daktronics.

As of October 28, 2023, we had $40.6 million of bonded work outstanding.

As of January 27, 2024, we had $45.7 million of bonded work outstanding.

Our business growth and profitability improvement strategies depend on investments in capital expenditures and strategic investments.

We are projecting total capital expenditures to be less than $19 million for all of fiscal 2024.

We are projecting total fiscal 2024 capital expenditures to be approximately $19 million, of which we have incurred $13.6 million for the first nine months of the fiscal 2024.

Projected capital expenditures include purchasing manufacturing equipment for new or enhanced product production and expanded capacity and increased automation of processes;

5 unchanged sentences

Contractual Obligations and Commercial Commitments

During the first six months of fiscal 2024, we entered into a new credit facility, mortgage, and the Convertible Note as disclosed within this Report.

There have been no other material changes in our contractual obligations since the end of

During the first nine months of fiscal 2024, we entered into a new credit facility and mortgage and the Convertible Note as disclosed herein.

There have been no other material changes in our contractual obligations since the end of fiscal 2023.

See our Annual Report on Form 10-K for the fiscal year ended April 29, 2023 for additional information regarding our contractual obligations and commercial commitments.

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For a summary of recently issued accounting pronouncements and the effects of those pronouncements on our financial results, refer to "Note 1.

Basis of Presentation" of the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Report.

Basis of Presentation" of the Notes to the Condensed Consolidated Financial Statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis