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Daktronics Plans to Exit Ireland Facility by Mid-2028
The Company will begin to exit its manufacturing operations at its Ireland facility, with its closure anticipated to be substantially complete by mid-fiscal 2028. The action is intended to reduce fixed costs with a low or negative return outlook and improve manufacturing utilization across the Company's global manufacturing network. The Ireland phased-exit is expected to result in $13.5 million of cumulative pre-tax charges, including employee-related costs, facility wind-down and equipment-transfer costs, and potential asset impairments. The Company expects to recognize approximately $5.3 million of related restructuring charges in fiscal 2027 Q2, with the remaining costs, largely severance, charged in subsequent quarters as incurred through the completion of the phased-exit. Fiscal 2027 pre-tax savings are estimated at $0.9 million. When fully implemented, the Ireland action is expected to generate $7.7 million of annualized pre-tax savings which will fully offset the associated implementation costs in less than two years, while contributing to the Company's broader structural cost reduction and margin improvement objectives. As part of the phased-exit of the Ireland facility, Daktronics is working closely with valued existing customers to plan the necessary production to fulfill outstanding orders and build sufficient spare part inventory to meet our warranty and service obligations.
Daktronics Exits International Transportation Business
Daktronics has decided to exit the highly customized portions of the international transportation business which represents approximately 1.5% of the Company's overall revenue. The low return on this business was a factor in deciding to exit manufacturing in Ireland. Asia Pacific remains an important market, and the Company determined that it could better serve and grow its Asia Pacific customers by operating out of fewer locations. As such, the Company will close its Hong Kong and Macau offices. The $0.2 million associated consolidation costs estimated for the current quarter are expected to be fully recovered through operating savings within the current fiscal year. Annualized run rate savings are expected to be $0.3 million.
Daktronics Acquires X Display Assets and Adjusts Micro-LED Development
In December 2025, Daktronics acquired certain assets of X Display Company Technology Limited, including intellectual property in the display field of use, and added micro-LED and micro-IC development capabilities. The Company continues to monitor commercialization opportunities and the investments required to bring these technologies to market. Due primarily to supply and cost advantage now available in narrow pixel pitch LED technology, Daktronics has decided it will reduce its micro-LED related development activities while retaining and maintaining the acquired intellectual property and preserving opportunities for future commercialization. Associated severance and other pre-tax costs are expected to be $1.2 million in the current quarter and fully recovered through operating savings within the current fiscal year and are expected to generate $3.1 million of annualized pre-tax savings. Acting CFO Howard Atkins commented, "The anticipated benefits of the initiatives announced today are expected to result primarily from a lower structural cost base, improved manufacturing utilization and productivity, and reduced organizational and operating complexity. Today's announcement also supports continued progress towards the Company's fiscal 2028 targets of 7-10% revenue CAGR, 10-12% operating margin, and 17-20% ROIC." The Company expects to incur approximately $15.8 million non-recurring pre-tax restructuring and related charges, including approximately $7.0 million in the current fiscal quarter, with the actions expected to generate more than $18.0 million of annualized run-rate savings when fully implemented.
Daktronics Optimizes Manufacturing Network to Reduce Costs
Daktronics announced manufacturing network optimization designed to reduce structural costs, improve factory utilization and manufacturing flexibility, and focus capital and resources on markets and technologies offering attractive long-term returns. The company is taking these actions to execute the strategic growth and operational excellence initiatives described at its April 9, 2026 Investor Day and reaffirmed in its subsequent investor communications. Its announcement also includes the financial impact of these actions on the current quarter, Q2 fiscal 2027 results and anticipated benefits to future quarterly and annual reporting periods. Highlights include: Determination to exit the highly customized portions of the international transportation business, reorganize APAC operations to better serve customer needs, and plans to announce a new international leader. Manufacturing network optimization actions including the phased-exit of operations from the Ireland manufacturing facility and realignment of production capacity among other manufacturing locations to efficiently and optimally serve customers. Manage micro-LED development costs while continuing to explore avenues for competitive advantage and commercial success. During the implementation period expected over the next six quarters, savings are expected to be $5.0 million during the second half of fiscal 2027 and $16.0 million during fiscal 2028. When implementation is completed, expected by mid-fiscal 2028, the company expects incremental run rate expense savings of $4.5 million quarterly, or $18.0 million annualized. Please see attached table for estimated costs and expense savings by quarter for the second half of fiscal 2027 and for fiscal 2028. All of these components were identified in the company's multi-year transformation plan and are consistent with the company's stated business transformation fiscal 2028 targets of 7-10% revenue CAGR, 10-12% operating margin, and 17-20% ROIC.
Daktronics Expands Manufacturing in China, Expected Savings of $7 Million
Daktronics is also initiating steps to realign products and manufacturing capabilities across its U.S., Mexico, and China operations. Its new facility in Mexico recently completed its first production run, and the Company is expanding manufacturing capability in China, with a move to a new 355,000 square foot leased space for automatable production. The Company is also optimizing capacity and operational efficiency in our U.S. factories through attrition and voluntary terminations offered to employees. To accomplish realignment, the Company expects approximately $1.0 million in costs, of which $0.3 million in voluntary severance is expected in the current quarter. These charges are expected to be fully recouped within fiscal 2027. Planned capacity changes, when fully implemented, are expected to generate annualized run rate savings (net) of approximately $7.0 million.
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