What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-09-02 compared with 2026-03-04 · 154 added, 270 removed, 161 unchanged (72% of the section changed)

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The MD&A provides a narrative analysis explaining the reasons for material changes in the (i) financial condition of Daktronics, Inc.

and its subsidiaries (the "Company", "Daktronics", "we", "our", or "us") during the period from the most recent fiscal year-end, April 26, 2025, to and including January 31, 2026;

and its subsidiaries (the “Company”, “Daktronics”, “we”, “our”, or “us”) during the period from the most recent fiscal year-end, May 2, 2026, to and including August 1, 2026;

and (ii) results of operations of the Company during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

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These statements reflect our current views with respect to future events and financial performance.

The words "may," "might," "would," "could," "should," "will," "expect," "estimate," "anticipate," "believe," "intend," "plan," "forecast," "project," and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The words “may,” “might,” “would,” “could,” “should,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend,” “plan,” “forecast,” “project,” “continue,” “outlook,” “focus,” “goal,” “target,” “transform,” “expand,” “execute,” “ongoing,” “improve,” “grow,” and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Any and all forecasts and projections in this document are “forward-looking statements” and are based on management’s current expectations or beliefs.

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Important factors that may cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, changes in economic and market conditions, management of growth, timing and magnitude of future contracts, orders, and capital investment projects, fluctuations in margins, interest rate risk, the introduction of new products and technology, the impact of adverse weather conditions, increased regulation, the imposition of tariffs, trade wars, the availability and costs of raw materials, components, and shipping services, geopolitical and governmental actions, including the U.S.

federal government shutdown, expansion into new geographical markets, the Company’s recent leadership transition, transformation initiatives, future strategy, and the other risks, trends, and uncertainties described more fully in the Company’s Annual Report on Form 10-K for the fiscal year ended April 26, 2025 (the "Form 10-K") filed with the Securities and Exchange Commission ("SEC"), this Quarterly Report on Form 10-Q, and other reports filed with or furnished to the SEC by the Company.

federal government shutdown, expansion into new geographical markets, the Company’s recent leadership transition, transformation initiatives, future strategy, and the other risks, trends, and uncertainties described more fully in the Company’s Annual Report on Form 10-K for the fiscal year ended May 2, 2026 (the "Form 10-K") filed with the Securities and Exchange Commission ("SEC"), this Quarterly Report on Form 10-Q, and other reports filed with or furnished to the SEC by the Company.

We also wish to caution investors that other factors might in the future prove to be important in affecting our results of operations.

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Risk Factors” of Part I), and other reports filed with or furnished to the SEC by the Company.

The quarter-over-quarter comparisons in this MD&A are as of and for the fiscal quarters ended January 31, 2026 and January 25, 2025 unless otherwise stated.

The quarter-over-quarter comparisons in this MD&A are as of and for the fiscal quarters ended August 1, 2026 and August 2, 2025 unless otherwise stated.

Non-GAAP Financial Measures

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By presenting contribution margin, we aim to enhance transparency and allow investors to better understand how we evaluate and manage our business operations.

We are recognized industry leaders in the design and manufacture of electronic scoreboards, programmable display systems, and large-screen video displays serving sporting, commercial, and transportation markets.

We serve our customers by delivering high-quality standard display products as well as custom-designed and integrated systems.

Our product portfolio ranges from small-scale scoreboards and electronic displays to large, multimillion-dollar video display systems.

These offerings are complemented by related control, timing, and sound systems.

We are widely acknowledged for our technical expertise and our ability to design, market, manufacture, install, and service comprehensive integrated solutions that display real-time data, graphics, animation, and video.

Our operations encompass a full spectrum of activities, including marketing and sales, engineering and product design and development, manufacturing, technical contracting, professional services, and customer service and support.

See the section of this Item 2 entitled “Reportable Segment Performance Summary” for a reconciliation of contribution margin to operating income, the most directly comparable GAAP measure.

Daktronics designs, manufactures, and sells electronic display systems and related solutions used in sports, commercial, and transportation applications.

Our offerings include standard display products as well as custom-designed and integrated systems that incorporate display hardware, control systems, and software.

Our product portfolio ranges from small scoreboards and electronic displays to large-scale video display systems deployed in stadiums, arenas, commercial facilities, and other public venues.

These systems are often integrated with related technologies, including control, timing, and audio systems, and are used to present real-time data, graphics, animation, and video.

We operate a vertically integrated business model that includes marketing and sales, engineering and product design and development, manufacturing, installation, and ongoing customer support.

This lifecycle approach allows us to support customers from initial system design and installation through long-term maintenance, upgrades, and replacement cycles.

In addition to equipment sales and installation, we provide services that include technical support, professional services, and software-based solutions that enable customers to operate and manage their display systems.

The Company operates on a 52- or 53-week fiscal year ending on the Saturday closest to April 30.

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Each fiscal quarter consists of 13 weeks, except in a 53-week fiscal year, where the first quarter includes 14 weeks.

The nine months ended January 31, 2026, and January 25, 2025, included 40 and 39 weeks of operations, respectively.

The three months ended August 1, 2026, and August 2, 2025, included 13 and 14 weeks of operations, respectively.

Known Trends and Uncertainties

During fiscal 2025, we embarked on our business transformation program, which is focused on driving sustainable growth, margin improvement, and enhanced returns on invested capital.

The Company’s transformation roadmap, developed through rigorous analysis and planning, is designed to support ambitious sales and profitability targets.

Strong order growth during the quarter reflects ongoing market adoption of digital display technologies and the strength of Daktronics’ integrated product and service offerings.

The business environment remains dynamic, with several external factors continuing to influence customer demand and operational costs.

The Company continues to be affected by U.S.

government‑imposed tariffs on electronic components, aluminum, steel, and copper, as well as reciprocal tariffs imposed by foreign countries.

In addition, changes to U.S.

trade policy, including the elimination of the de minimis exemption for low‑value shipments, continued to increase logistics and import‑related costs.

These tariffs may impact gross margins and could influence customer purchasing behavior, particularly for projects dependent on federal funding.

In response, Daktronics is actively monitoring its pricing strategies and sourcing plans to mitigate these effects.

However, the ultimate impact on demand remains uncertain.

On February 20, 2026, the U.S.

Supreme Court ruled that tariffs imposed by the U.S.

presidential administration under the International Emergency Economic Powers Act (“IEEPA”) exceeded presidential authority and were invalidated.

Following the ruling, the administration implemented a temporary global tariff under alternative trade authorities and has indicated an intention to increase the rate to up to 15%.

The timing, duration, and final rate of these tariffs remain uncertain.

We continue to monitor these developments and assess the potential impact on our results of operations.

The global market for digital display systems continues to expand, driven by investments in manufacturing capacity and advancements in display and control technologies.

The industry is seeing increased adoption of surface mount and chip-on-board technologies, particularly for narrow pixel pitch (NPP) and micro-LED applications, as manufacturers and customers seek higher performance and efficiency.

Innovations in software, artificial intelligence, and professional services are enhancing content creation, user interfaces, monitoring, and security.

During the first quarter of fiscal 2027, we continued to focus on initiatives intended to support sustainable growth, improve operating performance, and enhance returns on invested capital.

These efforts include operational execution, capacity optimization, digital capabilities, and initiatives designed to support long-term scalability and profitability.

Demand for digital display systems continues to be supported by the ongoing adoption of LED-based technologies across sports, commercial, and transportation applications;

however, customer demand levels and project timing can vary based on economic conditions, funding availability, and other external factors.

The business environment remains dynamic, with changes in trade policy and tariffs continuing to affect supply chains, customer purchasing decisions, and operating costs.

Tariffs on electronic components, aluminum, steel, copper, and other imported materials have increased product costs and created uncertainty regarding future project economics.

In response, the Company has taken pricing actions, sourcing strategies, and operational initiatives intended to mitigate these impacts;

however, the ultimate effect on demand, margins, and profitability remains uncertain.

The Company continues to monitor developments related to tariffs and available refund programs associated with certain previously paid tariffs.

Daktronics has submitted, and may continue to submit, claims for additional recoveries where appropriate.

The Company recognizes tariff refunds when received.

Due to uncertainties regarding eligibility, administrative review processes, and the ultimate resolution of outstanding claims, the Company has not recognized assets related to potential recoveries that do not meet the applicable accounting recognition criteria.

The timing and amount of any future recoveries remain uncertain.

The global market for digital display systems continues to evolve through advancements in display technologies, control systems, software, and related services.

Customers increasingly seek integrated solutions that improve content management, user experience, system monitoring, reliability, and operational efficiency.

The adoption of narrow pixel

pitch and other advanced display technologies continues to influence customer purchasing decisions across many of the markets we serve.

Daktronics participates in large end markets that continue to benefit from customer investments intended to enhance audience engagement, communication, and operational effectiveness.

To address evolving market conditions and competitive dynamics, we continue to focus on operational execution, manufacturing efficiency, product innovation, and market expansion.

While these initiatives are expected to support long-term growth opportunities and operating performance, the timing and magnitude of associated benefits depend on execution, customer demand, and broader economic conditions.

The Company also continues to expand its global manufacturing footprint, including the ongoing ramp-up of manufacturing operations in Mexico.

We expect these expanded manufacturing facilities to provide additional manufacturing flexibility and support long-term cost structure optimization.

However, the timing and extent of associated operational and financial benefits depend on production volumes, staffing, execution, and market conditions.

There may be periods in which revenue trends and operating expenses are not fully aligned as the Company continues to invest in operational capabilities, systems, manufacturing flexibility, and corporate governance.

While these investments may affect near-term profitability, they are intended to support long-term operational effectiveness, scalability, and value creation.

Despite ongoing uncertainties related to tariffs, trade policy, geopolitical developments, and broader economic conditions, the Company believes the long-term demand drivers supporting the audiovisual industry remain favorable.

Continued adoption of digital display technologies, together with the Company's portfolio of products, software, services, and integrated solutions, may support future growth opportunities.

Actual demand levels, however, will continue to depend on customer spending priorities, funding availability, competitive conditions, and overall economic activity.

We maintain a unique leadership position in our target markets, which are large, growing, and supported by resilient demand from customers seeking to enhance audience experiences in sports, commercial, and transportation environments

We are investing in capacity and resources to grow and deepen market penetration.

To capitalize on this position, we continue to focus on digital and business transformation, cost structure optimization, and market expansion.

In fiscal 2025, we established a Business Transformation Office ("BTO") to conduct a comprehensive review of our business, strategy, and operations.

The BTO is developing strategic initiatives, enabled in part by our digital transformation, to deliver improved customer outcomes, deeper market penetration, above-market growth, and more efficient delivery, fulfillment, and service.

These initiatives are structured to support our ambitious business transformation plan:

revenue growth outpacing our addressable market, operating margins of 10–12%, and returns on capital of 17–20%, consistently exceeding our cost of capital.

The Company continues to monitor and adjust its capacity and resource levels in response to market conditions.

Daktronics is expanding the Company’s global manufacturing network into Mexico, as part of its broader three-year strategic plan for improving profitable growth and increasing the overall agility of the company’s production capacity.

The new facility is expected to be in production by the end of fiscal 2026.

There may be periods where sales and expenses are not fully aligned, particularly as investments in transformation and corporate governance are made.

These investments may affect near-term profitability but are intended to support long-term value creation.

Despite ongoing uncertainties related to tariffs, geopolitical developments, and federal funding priorities, Daktronics believes that the fundamental drivers of the audiovisual industry remain strong.

Increased adoption of LED display systems across industries, combined with the Company’s ongoing development of new technologies, services, and sales channels, are expected to support long-term growth.

RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED JANUARY 31, 2026 AND JANUARY 25, 2025

COMPARISON OF THE THREE MONTHS ENDED AUGUST 1, 2026 AND AUGUST 2, 2025

Product Order Backlog

Backlog represents the dollar value of contractually binding customer purchase commitments for integrated electronic display systems and related products and services that are expected to be recognized as net sales in future periods.

Orders are included in backlog when we have received an executed contract and any required deposits or security, and the revenue has not yet been recognized.

Certain orders supported by binding letters of intent or contracts are excluded from backlog until all required contractual documentation and deposits are received.

Orders and backlog are non-GAAP operating measures, and our methodology for determining these metrics may differ from those used by other companies.

Management believes that order and backlog levels provide meaningful insight into our business activity, including fluctuations due to seasonality and the timing of large-scale projects.

New orders during the period are used to assess market share and competitive performance, while backlog informs capacity and resource planning.

Given that orders and backlog are operational measures and that the Company’s methodology for calculating them does not meet the definition of a non-GAAP financial measure, as that term is defined by the SEC, a quantitative reconciliation is not required or provided.

The timing of order fulfillment is subject to customer schedules, supply chain conditions, and our production capacity.

We believe order information is useful to investors as an indicator of future revenue and market positioning.

As of January 31, 2026, our product order backlog was $342.3 million, compared to $273.2 million as of January 25, 2025, and $341.6 million as of April 26, 2025.

The increase in backlog year over year reflects a higher volume of order bookings, driven by continued market adoption and demand for digital display technologies.

We expect to fulfill the backlog as of January 31, 2026, within the next 24 months.

However, fulfillment timing may be impacted by project delays due to customer site conditions, which are outside of our control.

Backlog represents the dollar value of orders for integrated electronic display systems and related products and services which are expected to be recognized in net sales in the future.

Orders are contractually binding purchase commitments from customers.

Orders are included in backlog when we are in receipt of an executed contract and any required deposits or security and have not yet been recognized into net sales.

Certain orders for which we have received binding letters of intent or contracts will not be included in backlog until all required contractual documents and deposits are received.

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

Order and backlog levels provide management and investors additional details surrounding the results of our business activities in the marketplace and highlight fluctuations caused by seasonality and multimillion-dollar projects.

Management uses orders to evaluate market share and performance in the competitive environment.

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.

As of August 1, 2026, our product order backlog was $311.3 million, compared to $360.3 million as of August 2, 2025, and $356.2 million as of May 2, 2026.

The decrease in backlog year-over-year reflects the conversion of existing backlog into revenue at a pace that exceeded order intake during the quarter.

We expect to fulfill the backlog as of August 1, 2026 within the next 24 months.

The timing of backlog fulfillment may be impacted by project delays resulting from factors outside of our control, including customer site conditions.

Consolidated Performance Summary

The following is an analysis of changes in key items included in the statements of operations for the three months ended January 31, 2026 and January 25, 2025:

January 31, 2026 % of Net sales (1)

January 25, 2025 % of Net sales (1)

The following is an analysis of changes in key items included in the statements of operations for the three months ended August 1, 2026 and August 2, 2025 (in thousands):

August 1, 2026 % of Net sales (1)

August 2, 2025 % of Net sales (1)

Dollar Change (1)

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Total operating expenses 46,663 19.9 41,800 19.1 4,863 11.6

Operating income (loss) 1,922 1.1 (3,628) (2.4) 5,550 (153.0)

Operating income 24,936 10.6 23,272 10.6 1,664 7.2

Nonoperating income (expense):

Interest income (expense), net 1,134 0.5 893 0.4 241 27.0

Change in fair value of convertible note — — (14,083) (9.4) 14,083 (100.0)

Other income (expense), net 518 0.3 (613) (0.4) 1,131 (184.5)

Income (loss) before income taxes 3,512 1.9 (17,816) (11.9) 21,328 (119.7)

Income tax expense (benefit) 502 0.3 (660) (0.4) 1,162 (176.1)

Net income (loss) $ 3,010 1.7 % $ (17,156) (11.5) % $ 20,166 (117.5) %

Other expense, net (403) (0.2) (1,942) (0.9) 1,539 (79.2)

Income before income taxes 25,667 10.9 22,223 10.1 3,444 15.5

Income tax expense 6,237 2.7 5,753 2.6 484 8.4

Net income $ 19,430 8.3 % $ 16,470 7.5 % $ 2,960 18.0 %

Diluted earnings per share $ 0.40 $ 0.33 $ 0.07 21.2 %

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In addition, percentages may not add in total due to rounding.

The sales increase in the third quarter of fiscal 2026 compared to the same period in fiscal 2025 was the result of higher sales volumes in the Commercial, Live Events, and High School Parks and Recreation business units, partially offset by decreased sales in the Transportation and International business units.

The amount of recognized revenue associated with performance obligations satisfied in prior years during the three months ended January 31, 2026 and January 25, 2025 was immaterial.

Order volume increased in the third quarter of fiscal 2026 compared to the same period in fiscal 2025 primarily due to order growth in the High School Parks and Recreation and Transportation business units, partially offset by lower order volume in the Live Events and International business units.

Order bookings in the Commercial business unit remained

relatively flat.

Variability in orders is typical for large project business areas, especially for sports projects, during the Company’s third fiscal quarter.

Gross profit increased in the third quarter of fiscal 2026 compared to the same period in fiscal 2025 as a result of higher sales volume.

Gross profit as a percentage of net sales decreased slightly to 24.0 percent for the third quarter of fiscal 2026 as compared to 24.6 percent for the same period a year ago, primarily due to project mix variability.

Total warranty expense as a percentage of sales increased slightly to 1.3 percent for the third quarter of fiscal 2026 as compared to 0.9 percent for the same period a year ago.

Selling expenses increased in the third quarter of fiscal 2026 compared to the same period in fiscal 2025 primarily due to increases in personnel related wages and benefits.

General and administrative expenses decreased in the third quarter of fiscal 2026 compared to the same period in fiscal 2025.

During the third quarter of fiscal 2026 and fiscal 2025, the Company incurred $2.1 million and $4.8 million, respectively, for expenses related to management transitions, acquisition costs, strategic and digital transformation initiatives, and corporate governance matters.

Product design and development expenses increased in the third quarter of fiscal 2026 compared to the same period in fiscal 2025 primarily due to higher staffing costs and investments in advanced technologies and engineering services.

Interest income (expense), net in the third quarter of fiscal 2026 increased compared to the same period one year ago primarily due to higher cash levels invested in interest-bearing accounts.

During the third quarter of fiscal 2025, the interest expense included interest on the convertible note, which was settled during fiscal 2025.

Change in fair value of Convertible Note results from accounting for the senior secured convertible note dated May 11, 2023 we issued to Alta Fox Opportunities Fund, LP during fiscal 2024 (the “Convertible Note”) under the fair value option.

The fair value change was primarily caused by the forced conversion of the entire Convertible Note in the third and fourth quarters of fiscal 2025.

All amounts due under the Convertible Note were settled in fiscal 2025, and the Company has no further obligations under the Convertible Note.

Other income (expense), net increased in the third quarter of fiscal 2026 compared to the same period in fiscal 2025 primarily due to foreign currency volatility and the X Display Company Technology Limited (“XDC”) business combination.

Income tax expense (benefit):

For the three months ended January 31, 2026, our effective tax rate was 14.3 percent compared to 3.7 percent for the three months ended January 25, 2025.

The lower tax rate in the third quarter of fiscal 2025 is due to the tax effect of the increase of the Convertible Note fair value adjustment to expense that is not deductible for tax purposes reduced by the tax effect of the period's decrease in pre-tax income, whereas in the third quarter of fiscal 2026, the tax rate was reduced by increases to discrete tax benefits and a reversal of a valuation allowance with no fair value adjustments applicable.

For the three months ended January 31, 2026, our earnings per diluted share was $0.06 compared to a loss per diluted share of $0.36 in the same period last year.

Sales, orders, gross profit, and operating expenses were impacted as a result of the first quarter of fiscal 2027 including 13 weeks.

The first quarter of fiscal 2026 contained 14 weeks.

The net sales increase in the first quarter of fiscal 2027 compared to the same period in fiscal 2026 was the result of higher sales volumes in the Live Events, Transportation, and International business units, partially offset by decreased sales in the Commercial and High School Park and Recreation business units.

The amount of recognized revenue associated with performance obligations satisfied in prior years during the three months ended August 1, 2026 and August 2, 2025 was immaterial.

Order volume decreased in the first quarter of fiscal 2027 compared to the same period in fiscal 2026, reflecting the timing of customer project awards and a strong prior-year comparison period that included an additional week of operations.

Variability in orders is typical in the Company's project-based business, with order volume fluctuating from period to period based on the timing and size of customer awards and project bookings.

Gross profit:

Gross profit increased in the first quarter of fiscal 2027 compared to the same period in fiscal 2026 as a result of higher sales volume.

Gross profit as a percentage of net sales increased slightly to 30.5 percent for the first quarter of fiscal 2027 as compared to 29.7 percent for the same period a year ago.

The increase in gross profit margin included the receipt of tariff refunds, partially offset by higher price-sensitive input costs.

Total warranty expense as a percentage of sales increased to 1.7 percent for the first quarter of fiscal 2027 as compared to 1.2 percent for the same period a year ago.

Selling expenses increased in the first quarter of fiscal 2027 compared to the same period in fiscal 2026 primarily due to increases in personnel-related wages and benefits and a commission on a large International project completed during the quarter.

General and Administrative:

General and administrative expenses increased in the first quarter of fiscal 2027 compared to the same period in fiscal 2026 primarily due to continued investments in operational capabilities, technology initiatives, and corporate support functions.

Product Design and Development:

Product design and development expenses increased in the first quarter of fiscal 2027 compared to the same period in fiscal 2026 primarily due to continued investment in product development, engineering resources, and technology initiatives intended to support future growth opportunities.

Interest Income (Expense), net:

Interest income increased in the first quarter of fiscal 2027 compared to the same period a year ago, reflecting higher interest income on invested cash balances and lower interest expense and interest on tariff refunds.

Other Expense, net:

Other expense decreased in the first quarter of fiscal 2027 compared to the same period in fiscal 2026 due to lower non-operating expenses recognized during the most recent period.

Foreign currency fluctuations continued to impact results in both periods.

Income Tax Expense:

For the three months ended August 1, 2026, our effective tax rate was 24.3 percent compared to 25.9 percent for the three months ended August 2, 2025.

The decrease in the effective tax rate was primarily attributable to valuation allowances recorded in fiscal 2026 which did not recur in fiscal 2027.

The increase in net income reflects higher gross profit and operating income compared to the same period a year ago.

For the three months ended August 1, 2026, our earnings per diluted share was $0.40 compared to $0.33 in the same period last year.

Reportable Segment Performance Summary

The following table presents financial performance information for our reportable segments for the three months ended January 31, 2026 and January 25, 2025, including a reconciliation of contribution margin, a non-GAAP measure, to GAAP operating income, which is the most directly comparable GAAP measure to contribution margin:

Three Months Ended January 31, 2026

Non-GAAP Reconciliation:

The following table shows information regarding our reportable segment financial performance of contribution margin reconciled to operating income, the most comparable GAAP metric, for the three months ended August 1, 2026 and August 2, 2025 (in thousands):

Three Months Ended August 1, 2026

Commercial Percent of net sales (1)

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Orders $ 46,568 $ 47,213 $ 56,276 $ 22,703 $ 19,039 $ 191,799

Three Months Ended January 25, 2025

Three Months Ended August 2, 2025

Commercial Percent of net sales (1)

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In addition, percentages may not add in total due to rounding.

During the third quarter of fiscal 2026, total net sales increased and gross profit as a percentage of net sales decreased, reflecting the cumulative impact of the following factors:

The increase in net sales in the third quarter of fiscal 2026 compared to the same period one year ago was primarily driven by fulfilling orders in Spectacular LED video display projects, On-Premise digital signage, and Out-of-Home digital billboards.

Gross profit as a percentage of sales increased due to delivering more profitable projects in the Spectaculars niche and higher sales volume over a relatively fixed cost structure.

Selling expenses remained relatively flat.

The slight increase in order bookings reflects continued market adoption of digital display technology.

The increase in net sales in the third quarter of fiscal 2026 compared to the same period one year ago was due to the fulfillment of large project orders.

Gross profit as a percentage of sales in the quarter remained relatively flat.

Selling expenses remained relatively flat.

Order bookings fluctuate based on the timing of large project bookings and seasonal sports impacts.

During the third quarter of fiscal 2026, we booked a large Major League Baseball stadium project, but had lower orders of other large facility projects.

High School Park and Recreation:

Sales increased during the third quarter of fiscal 2026 compared to the same period one year ago primarily driven by higher project execution and continued demand for video display systems.

Gross profit as a percentage of sales decreased due to price increases not recovering all increases in tariff costs.

Selling expenses remained relatively flat.

Order bookings increased due to stronger demand for video display systems in school during the off season.

Transportation:

Sales decreased during the third quarter of fiscal 2026 compared to the same period one year ago due to lower order bookings in fiscal 2025 which reduced the level of backlog available to build.

Gross profit as a percentage of sales decreased due to a shift in project mix toward smaller projects, added tariff expenses, and competitive pricing pressure, which resulted in higher cost of goods sold as a percentage of sales.

Selling expenses remained relatively flat.

Order bookings increased compared to the prior year, reflecting strong demand and continued momentum in airports.

International:

The decrease in net sales in the third quarter of fiscal 2026 was driven by timing of conversion of orders due to lower backlog compared to one year ago.

Gross profit as a percentage of sales decreased primarily due to lower sales volume over relatively fixed cost structure.

Selling expenses remained relatively flat.

Order bookings decreased compared to the same period a year ago, with results primarily reflecting the timing of large stadium project awards in international markets.

However, demand remained strong, primarily due to successful order bookings in Australia and Europe.

RESULTS OF OPERATIONS

COMPARISON OF THE NINE MONTHS ENDED JANUARY 31, 2026 AND JANUARY 25, 2025

Consolidated Performance Summary

The following is an analysis of changes in key items included in the statements of operations for the nine months ended January 31, 2026 and January 25, 2025:

January 31, 2026 % of Net sales (1)

January 25, 2025 % of Net sales (1)

Dollar Change (1)

Percent Change (1)

Net sales $ 630,096 100.0 % $ 583,926 100.0 % $ 46,170 7.9 %

Cost of sales 459,570 72.9 431,584 73.9 27,986 6.5

Gross profit 170,526 27.1 152,342 26.1 18,184 11.9

Operating expenses:

Selling 48,225 7.7 44,811 7.7 3,414 7.6

General and administrative 43,901 7.0 43,771 7.5 130 0.3

Product design and development 31,643 5.0 28,902 4.9 2,741 9.5

Total operating expenses 123,769 19.6 117,484 20.1 6,285 5.3

Operating income 46,757 7.4 34,858 6.0 11,899 34.1

Nonoperating income (expense):

Interest income (expense), net 2,523 0.4 710 0.1 1,813 255.4

Change in fair value of convertible note — — (25,369) (4.3) 25,369 (100.0)

Other expense, net (1,683) (0.3) (2,612) (0.4) 929 (35.6)

Income before income taxes 47,597 7.6 7,587 1.3 40,010 527.3

Income tax expense 10,636 1.7 8,283 1.4 2,353 28.4

Net income (loss) $ 36,961 5.9 % $ (696) (0.1) % $ 37,657 (5410.5) %

Diluted earnings per share $ 0.75 $ (0.01) $ 0.76 (7600.0) %

Diluted weighted average shares outstanding 49,528 46,944 $ 2,584 5.5 %

Orders $ 638,789 $ 540,664 $ 98,125 18.1 %

(1) Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.

In addition, percentages may not add in total due to rounding.

Sales, orders, gross profit, and operating expenses were impacted as a result of the first nine months of fiscal 2026 including 40 weeks compared to the more common 39 weeks.

Sales, orders, gross profit, and operating expenses were impacted as a result of the first quarter of fiscal 2027 including 13 weeks.

The first quarter of fiscal 2026 contained 14 weeks.

The sales increase in the first nine months of fiscal 2026 compared to the same period in fiscal 2025 was the result primarily of higher volumes in the Commercial, Live Events, High School Park and Recreation, and International business units, partially offset by decreased sales in the Transportation business unit.

The amount of recognized revenue associated with performance obligations satisfied in prior years during the nine months ended January 31, 2026 and January 25, 2025 was immaterial.

Order volume increased in the first nine months of fiscal 2026 compared to the same period in fiscal 2025 primarily due to order growth in the Live Events, High School Park and Recreation, Transportation, and International business units.

Order bookings in the Commercial business unit remained relatively flat.

Order bookings were supported by continued demand for large‑scale video display systems across professional sports, transportation, education, and international markets.

Activity was driven by projects at major professional sports venues, strong order activity in aviation and ITS, ongoing adoption of video in school and community settings, and international opportunities.

Gross profit as a percentage of net sales increased to 27.1 percent for the first nine months of fiscal 2026 as compared to 26.1 percent for the same period a year ago.

The increase was driven by a combination of strategic pricing, continued operational efficiencies, and overall project mix across the business.

Total warranty expense as a percentage of sales decreased slightly to 1.4 percent for the first nine months of fiscal 2026 as compared to 1.6 percent for the same period from a year ago.

Selling expenses increased in the first nine months of fiscal 2026 compared to the same period in fiscal 2025 primarily due to increases in personnel-related wages and benefits and increased staffing levels to support future growth.

General and administrative expenses increased in the first nine months of fiscal 2026 compared to the same period in fiscal 2025 primarily due to personnel-related wages and benefits and included $2.5 million for expenses related to management transitions and acquisition costs.

During the first nine months of fiscal 2025, the Company incurred $9.0 million of consultant related expenses associated with the strategic and digital transformation initiatives and corporate governance matters.

Product design and development expenses increased in the first nine months of fiscal 2026 compared to the same period in fiscal 2025 primarily due to higher staffing costs and investments in advanced technologies and engineering services.

Interest income (expense), net in the first nine months of fiscal 2026 increased compared to the same period one year ago primarily due to higher cash levels invested in interest-bearing accounts.

During the first nine months of fiscal 2025, the interest expense included interest on the Convertible Note, which was settled during fiscal 2025.

Change in fair value of Convertible Note results from accounting for the Convertible Note.

The fair value change was primarily caused by the forced conversion of the entire Convertible Note in the third and fourth quarters of fiscal 2025.

All amounts due under the Convertible Note were settled in fiscal 2025.

Other expense, net remained relatively flat in the first nine months of fiscal 2026 compared to the same period in fiscal 2025.

Income tax expense:

For the nine months ended January 31, 2026, our effective tax rate was 22.3 percent compared to an effective tax rate of 109.2 percent for the nine months ended January 25, 2025.

The higher tax rate in the first nine months of fiscal 2025 was primarily due to the impact of the fair value adjustment to the Convertible Note that is not deductible for tax purposes in proportion to pre-tax income, whereas the tax rate for the first nine months of fiscal 2026 is lower due to having no further impacts of fair value adjustments on Convertible Note.

For the nine months ended January 31, 2026, our earnings per diluted share was $0.75 compared to a loss per diluted share of $0.01 in the same period last year.

Reportable Segment Performance Summary

The following table presents financial performance information for our reportable segments, including a reconciliation of contribution margin, a non-GAAP measure, to GAAP operating income for the nine months ended January 31, 2026 and January 25, 2025:

Nine Months Ended January 31, 2026

Commercial Percent of net sales (1) Live Events Percent of net sales (1) High School Park and Recreation Percent of net sales (1) Transportation Percent of net sales (1) International Percent of net sales (1) Total Percent of net sales (1)

Net sales $ 140,425 $ 236,192 $ 136,963 $ 53,122 $ 63,394 $ 630,096

Cost of sales 101,348 72.2 % 181,134 76.7 % 91,436 66.8 % 36,925 69.5 % 48,727 76.9 % 459,570 72.9 %

Gross profit 39,077 27.8 55,058 23.3 45,527 33.2 16,197 30.5 14,667 23.1 170,526 27.1

Selling 13,298 9.5 9,063 3.8 12,748 9.3 4,557 8.6 8,559 13.5 48,225 7.7

Contribution margin 25,779 18.4 45,995 19.5 32,779 23.9 11,640 21.9 6,108 9.6 122,301 19.4

General and administrative — — — — — — — — — — 43,901 7.0

Product design and development — — — — — — — — — — 31,643 5.0

Operating income $ 25,779 18.4 % $ 45,995 19.5 % $ 32,779 23.9 % $ 11,640 21.9 % $ 6,108 9.6 % $ 46,757 7.4 %

Orders $ 127,958 $ 254,817 $ 138,109 $ 67,775 $ 50,130 $ 638,789

Nine Months Ended January 25, 2025

Net sales $ 115,614 $ 231,887 $ 125,444 $ 62,757 $ 48,224 $ 583,926

Cost of sales 87,795 75.9 % 182,095 78.5 % 81,032 64.6 % 39,410 62.8 % 41,252 85.5 % 431,584 73.9 %

Gross profit 27,819 24.1 49,792 21.5 44,412 35.4 23,347 37.2 6,972 14.5 152,342 26.1

Selling 12,808 11.1 8,172 3.5 11,932 9.5 4,080 6.5 7,819 16.2 44,811 7.7

Contribution margin 15,011 13.0 41,620 17.9 32,480 25.9 19,267 30.7 (847) (1.8) 107,531 18.4

General and administrative — — — — — — — — — — 43,771 7.5

Product design and development — — — — — — — — — — 28,902 4.9

Operating income (loss) $ 15,011 13.0 % $ 41,620 17.9 % $ 32,480 25.9 % $ 19,267 30.7 % $ (847) (1.8) % $ 34,858 6.0 %

Orders $ 127,653 $ 199,555 $ 116,834 $ 48,819 $ 47,803 $ 540,664

Net Dollar and % Change

Commercial Percent Change (1) Live Events Percent Change (1) High School Park and Recreation Percent Change (1) Transportation Percent Change (1) International Percent Change (1) Total Percent Change (1)

Net sales $ 24,811 21.5 % $ 4,305 1.9 % $ 11,519 9.2 % $ (9,635) (15.4) % $ 15,170 31.5 % $ 46,170 7.9 %

Cost of sales 13,553 15.4 (961) (0.5) 10,404 12.8 (2,485) (6.3) 7,475 18.1 27,986 6.5

Gross profit 11,258 40.5 5,266 10.6 1,115 2.5 (7,150) (30.6) 7,695 110.4 18,184 11.9

Selling 490 3.8 891 10.9 816 6.8 477 11.7 740 9.5 3,414 7.6

Contribution margin 10,768 71.7 4,375 10.5 299 0.9 (7,627) (39.6) 6,955 (821.1) 14,770 13.7

General and administrative — — — — — — — — — — 130 0.3

Product design and development — — — — — — — — — — 2,741 9.5

Operating income (loss) $ 10,768 71.7 % $ 4,375 10.5 % $ 299 0.9 % $ (7,627) (39.6) % $ 6,955 (821.1) % $ 11,899 34.1 %

Orders $ 305 0.2 % $ 55,262 27.7 % $ 21,275 18.2 % $ 18,956 38.8 % $ 2,327 4.9 % $ 98,125 18.1 %

(1) Amounts are calculated on unrounded numbers and therefore may not recalculate using the rounded numbers provided.

In addition, percentages may not add in total due to rounding.

During the first nine months of fiscal 2026, total net sales and gross profit as a percentage of net sales increased, reflecting the cumulative impact of the following factors:

The increase in net sales in the first nine months of fiscal 2026 compared to the same period one year ago was primarily driven by fulfilling orders in all niches, including On-Premise digital signage, Out-of-Home digital billboards, and Spectacular LED video display projects.

Gross profit as a percentage of sales increased due to pricing strategies and higher sales volume over a relatively fixed cost structure.

Selling expenses increased due to personnel related wages and benefits costs for investments in staffing to support future growth and an increase in bad debt reserves.

Order bookings remained relatively flat.

The increase in net sales in the first nine months of fiscal 2026 was driven by the fulfillment of a large project orders.

The increase in gross profit as a percentage of sales in the quarter is attributable to higher sales volume over a relatively fixed cost structure.

Selling expenses increased due to personnel-related wages and benefit costs for investments in staffing to support future growth.

Order bookings vary because of large project booking impacts and seasonal sports impacts.

The increase in order bookings is primarily driven by strong demand for large‑scale video display systems across professional sports venues, including multiple professional sports stadium and arena projects.

During the first quarter of fiscal 2027, total net sales increased and gross profit as a percentage of net sales increased, reflecting the cumulative impact of the following factors:

The decrease in net sales in the first quarter of fiscal 2027 compared to the same period one year ago was primarily due to lower backlog entering the quarter, which reduced the volume of projects available for revenue recognition during the period.

Gross profit as a percentage of sales increased due to delivering more profitable projects in the Spectaculars and On-Premise niches and higher sales volume over a relatively fixed cost structure.

Selling expenses decreased year-over-year, primarily reflecting lower personnel costs.

The increase in order bookings reflects continued market adoption of digital display technology.

The increase in net sales in the first quarter of fiscal 2027 compared to the same period one year ago was primarily due to the timing and execution of project deliveries and revenue recognition on large customer projects.

Gross profit as a percentage of sales in the quarter decreased slightly due to normal variability in project and customer mix.

Selling expenses remained relatively flat.

Order volume decreased in the first quarter of fiscal 2027 compared to the same period in fiscal 2026 primarily due to the timing of customer project awards and a strong prior-year comparison period.

Variability in orders is common within the Live Events business unit, as a relatively small number of large projects can significantly affect order volume in any given period.

High School Park and Recreation:

Sales increased during the first nine months of fiscal 2026 compared to the same period one year ago, reflecting continued expansion of video display installations in school and community markets.

Gross profit as a percentage of sales was impacted by cost increases not fully absorbed by pricing strategies.

Selling expenses increased slightly due to personnel related wages and benefit costs for investments in staffing to support future growth.

Order bookings increased due to stronger demand for video display systems across school and community markets, supported by simplified offerings, expanded sales channels, and continued interest in interactive content solutions.

Sales decreased during the first quarter of fiscal 2027 compared to the same period one year ago primarily due to lower project delivery activity during the quarter.

Gross profit as a percentage of sales decreased slightly due to normal variability in project and customer mix.

Selling expenses decreased primarily due to lower sales activity during the period.

Order bookings decreased due to the timing of customer project awards.

Order activity can fluctuate from period to period based on customer funding cycles and project timing.

Transportation:

Sales decreased during the first nine months of fiscal 2026 compared to the same period one year ago, primarily due to lower order bookings which reduced the level of backlog available to build.

Gross profit as a percentage of sales decreased due to a shift in project mix to smaller projects with tighter margins and added tariff expense, which resulted in higher cost of goods sold as a percentage of sales.

Selling expenses increased due to personnel related wages and benefits costs for investments in staffing to support future growth.

Order bookings increased compared to the prior year, primarily driven by strong demand in airports.

Sales increased during the first quarter of fiscal 2027 compared to the same period one year ago due to increased project delivery activity and revenue recognition during the quarter.

Gross profit as a percentage of sales increased primarily due to favorable project mix and execution on projects recognized during the quarter.

Selling expenses and order bookings remained relatively flat year-over-year.

International:

The increase in net sales in the first nine months of fiscal 2026, reflecting conversion of higher backlog into revenue, supported by large project execution and increased production volumes.

Gross profit as a percentage of sales increased primarily due to higher sales volume and favorable project mix.

Selling expenses increased due to personnel related wages and benefits costs for investments in staffing to support future growth.

The increase in order bookings is primarily driven by successful bookings across the Middle East, Europe, and Australia, and the continued execution of global expansion strategies.

The increase in net sales in the first quarter of fiscal 2027 was due to the timing of project execution and customer deliveries.

Gross profit as a percentage of sales increased primarily due to favorable project mix and improved execution on projects recognized during the quarter.

Selling expenses increased primarily due to a commission on a large project completed during the quarter and investments to support growth within the International business unit.

Order bookings increased compared to the same period a year ago, reflecting favorable customer demand and project award timing.

LIQUIDITY AND CAPITAL RESOURCES

Nine Months Ended

(in thousands) January 31,

2026 January 25,

Three Months Ended

(in thousands) August 1,

2026 August 2,

2025 Dollar Change

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Net cash provided by operating activities:

The $54.3 million of cash provided by operating activities during the first nine months of fiscal 2026 decreased from the $74.8 million in the same period of fiscal 2025.

This decrease was primarily driven by a large increase in accounts receivable, which used $21.9 million of cash in fiscal 2026 compared to a $21.8

million source of cash in fiscal 2025.

Inventory reductions and increased stock-based compensation partially offset this impact, while non-cash adjustments such as depreciation and amortization remained relatively consistent year-over-year.

Changes in operating assets and liabilities used $4.6 million of cash in fiscal 2026, compared to a $31.0 million source of cash in fiscal 2025, mainly due to the shift in accounts receivable, accounts payable, and income tax receivable and payable, and inventory reductions.

The changes in net operating assets and liabilities for the nine months ended January 31, 2026 and January 25, 2025 consisted of the following:

Nine Months Ended

2026 January 25,

The $31.4 million of cash provided by operating activities during the first three months of fiscal 2027 increased from the $26.1 million in the same period of fiscal 2026.

The increase was primarily driven by higher net income and a greater source of cash from changes in operating assets and liabilities.

Changes in operating assets and liabilities provided $5.9 million of cash in fiscal 2027 compared to $1.7 million in fiscal 2026, primarily reflecting favorable changes in contract assets, customer deposits, income taxes receivable, and accrued liabilities.

These benefits were partially offset by a larger use of cash for accounts receivable and inventory and a lower source of cash from accounts payable.

The changes in net operating assets and liabilities for the three months ended August 1, 2026 and August 2, 2025 consisted of the following:

Three Months Ended

(in thousands) August 1,

2026 August 2,

(Increase) decrease:

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Net cash used in investing activities:

During the first nine months of fiscal 2026, net cash used in investing activities totaled $14.9 million, primarily driven by $10.4 million in purchases of property and equipment and $5.2 million in loans to affiliates.

In comparison, the same period in fiscal 2025 saw $14.7 million in property and equipment purchases and $3.3 million in affiliate investments.

Proceeds from the sale of property and equipment were $0.6 million in fiscal 2026 compared to $0.2 million in fiscal 2025.

During the first three months of fiscal 2027, net cash used in investing activities totaled $3.9 million, primarily driven by $4.1 million in purchases of property and equipment offset by $0.2 million in proceeds from sales of property and equipment.

In comparison, the same period in fiscal 2026 had total cash used in investing activities of $5.6 million, driven by $4.3 million in property and equipment purchases and $1.5 million in affiliate investments and offset by $0.2 million in proceeds from sales of property and equipment.

Net cash used in financing activities:

In the first nine months of fiscal 2026, financing activities resulted in a net cash outflow of $23.2 million, which included $22.8 million for repurchased shares, $2.6 million in payments on notes payable, and $0.6 million in tax payments related to RSU issuances.

These were partially offset by $1.5 million in proceeds from stock option exercises and $1.4 million in borrowings on notes payable.

In the first three months of fiscal 2027, financing activities resulted in a net cash outflow of $4.5 million, which included $4.4 million for repurchased shares, $0.3 million in payments on notes payable, offset by $0.2 million in proceeds from exercise of stock options.

In comparison, the first quarter of fiscal 2026 reflected a net outflow of $11.1 million, primarily driven by $10.7 million for repurchased shares and $0.5 million in payments on notes payable.

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Debt and Cash

On November 26, 2025, we entered into a new $71.5 million senior credit facility (the “New Credit Facility”) pursuant to a Credit Agreement (the “New Credit Agreement”).

The New Credit Facility consists of a cash flow‑backed revolving line of credit (the “Revolver”) and a term loan that is not collateralized by real estate (the “New Term Loan”).

We believe the New Credit Facility enhances financial flexibility in managing our operations and capital structure by extending maturities and providing committed liquidity.

As of January 31, 2026, there were no advances under the New Term Loan, and the balance of letters of credit outstanding under the Revolver was approximately $1.9 million.

For additional information on financing

agreements, see “Note 8.

On November 26, 2025, we entered into a $71.5 million senior credit facility (the “Credit Facility”) pursuant to a Credit Agreement (the “Credit Agreement”).

The Credit Facility consists of a cash flow‑backed revolving line of credit (the “Revolver”) and a term loan that is not collateralized by real estate (the “Term Loan”).

We believe the Credit Facility enhances financial flexibility in managing our operations and capital structure by extending maturities and providing committed liquidity.

As of August 1, 2026, there were no advances under the Revolver, and the balance of letters of credit outstanding under the Revolver was approximately $1.9 million.

For additional information on financing agreements, see “Note 7.

Financing Agreements” of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

As of January 31, 2026, we had $144.4 million in cash and cash equivalents.

W e believe that our cash flow from operating activities, together with existing cash and cash equivalents and availability under the New Credit Facility, will be sufficient to fund our working capital, capital expenditures, debt service, stock repurchases, and other financial requirements for at least the next 12 months.

As of August 1, 2026, we had $154.6 million in cash and cash equivalents.

W e believe that our cash flow from operating activities, together with existing cash and cash equivalents and availability under the Credit Facility, will be sufficient to fund our working capital, capital expenditures, debt service, stock repurchases, and other financial requirements for at least the next 12 months.

Our cash equivalent balances consist of high-quality, short-term money market instruments.

Our primary sources of cash and sources of funds for our operations are cash flows from operations, current cash and cash equivalents, investments in our affiliates, and borrowings under the New Credit Facility.

We were in compliance with all debt covenants under the New Credit Agreement as of January 31, 2026, and we expect to remain in compliance with those covenants for at least the next 12 months.

We were in compliance with all debt covenants under the Credit Agreement as of August 1, 2026, and we expect to remain in compliance with those covenants for at least the next 12 months.

Working Capital

Working capital was $234.2 million as of January 31, 2026, and $209.4 million as of April 26, 2025, reflecting a $24.8 million increase.

This change was primarily impacted by fluctuations in key components such as an increase in cash and cash equivalents by $16.9 million, accounts receivable by $21.6 million, contract assets by $7.1 million, and accounts payable by $16.9 million.

Inventory decreased by $2.2 million.

Working capital was $270.0 million as of August 1, 2026, and $254.3 million as of May 2, 2026, reflecting a $15.7 million increase.

This change was primarily impacted by fluctuations in key components such as an increase in cash and cash equivalents by $22.9 million, accounts receivable by $36.1 million, inventory by $7.0 million, and accounts payable by $11.7 million.

Contract assets decreased by $14.9 million .

These shifts are influenced by the seasonality of the sports market and construction cycles, which affect the timing of cash flows.

Specifically, payments for inventory and subcontractors often precede customer receipts, especially on large-scale, customized orders.

Specifically, payments for inventory and to subcontractors often precede customer receipts, especially on large-scale, customized orders.

These projects can span over 12 months, depending on complexity and delivery schedules.

To manage cash flow, the Company typically uses upfront cash for materials and services and offsets this with down payments or progress payments from customers.

As of January 31, 2026, the Company had $6.7 million in retainage on long-term contracts included in receivables and contract assets, which is expected to be collected within one year.

As of August 1, 2026, the Company had $7.9 million in retainage on long-term contracts included in receivables and contract assets, which is expected to be collected within one year.

Other Liquidity and Capital Uses

Our long-term capital allocation strategy prioritizes funding operations and growth investments, maintaining prudent liquidity and leverage ratios that reflect the cyclical nature of our business, reducing debt, and returning excess cash to stockholders through dividends and share repurchases.

During the first nine months of fiscal 2026 and fiscal 2025, we repurchased shares of the Company’s common stock, par value $0.00001 per share (“Common Stock”), but did not issue dividends.

Our long-term capital allocation strategy prioritizes funding operations and investments in areas that support strategy execution including growth and operational excellence, while maintaining reasonable liquidity and leverage ratios that reflect a prudent and compliant capital structure in light of the cyclicality of our business, and the reduction of debt.

We may invest in value-accretive inorganic opportunities, and may also return excess cash over time to stockholders through dividends or share repurchases.

During the first three months of fiscal 2027 and fiscal 2026, we repurchased shares of the Company’s common stock, par value $0.00001 per share (“Common Stock”), but did not issue dividends.

Our strategies for business growth and profitability improvement rely on capital expenditures and strategic investments.

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Additional investments will target quality and reliability testing equipment, demonstration and showroom assets, and continued upgrades to our information infrastructure.

Beyond capital expenditures, we plan to invest in general and administrative functions to support our digital transformation initiatives.

These include modernizing field service automation systems, enhancing enterprise performance planning, and streamlining quoting and sales processes.

Beyond capital expenditures, we plan to invest in general and administrative functions to support our strategic initiatives.

These investments primarily include continued enhancements to our enterprise performance management systems and related business processes.

We also evaluate strategic investments in new technologies, affiliates, or potential acquisitions aligned with our business strategy.

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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 January 31, 2026, we had $66.0 million of bonded work outstanding.

As of August 1, 2026, we had $36.7 million of bonded work outstanding.

Contractual Obligations and Commercial Commitments

During the first nine months of fiscal 2026, there were no material changes in our contractual obligations.

During the first three months of fiscal 2027, there were no material changes in our contractual obligations.

See the Form 10-K for additional information regarding our contractual obligations and commercial commitments.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Form 10-K.

There have been no material changes to the significant accounting policies and critical accounting estimates identified in the Form 10-K during the first nine months of fiscal 2026.

There have been no material changes to the significant accounting policies and critical accounting estimates identified in the Form 10-K during the first three months of fiscal 2027.

New Accounting Pronouncements

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We are exposed to certain interest rate, foreign currency, and commodity risks as disclosed in the Form 10-K.

There have been no material changes in our exposure to the market risks identified in the Form 10-K during the first nine months of fiscal 2026.

There have been no material changes in our exposure to the market risks identified in the Form 10-K during the first three months of fiscal 2027.

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