Daktronics (DAKT) FY2026 10-K Risk Factors: 10 New, 9 Dropped

What the changes say

Tariffs now dominate, with elevated U.S. rates, China component exposure, retaliatory tariffs, uncertain refunds, and supplier cost pass-through.

What changed since the prior 10-K

New

NewMacroeconomic Risks
Changes in trade policies and the imposition of tariffs, have affected, and may continue to affect, our results of operations and financial condition
Elevated U.S. tariffs and possible retaliatory tariffs raise component and export costs across manufacturing that relies on suppliers in over 40 countries.
NewMacroeconomic Risks
enterprises, and result in continued global financial market volatility. The impact of these changes in trade policies and the resulting trade and market uncertainty could have a negative impact on our results of operations
Tariff refunds, supplier cost increases, alternative sourcing, manufacturing changes, and product redesign may not offset trade-policy costs or supply disruption.
NewMacroeconomic Risks
In addition, competitors may benefit from manufacturing or sourcing strategies, including near-shoring or alternative supply chain structures, or may qualify for tariff exemptions or more favorable trade treatment that are not available to us, which could place us at a competitive disadvantage
Competitors with near-shored supply chains or tariff exemptions could gain pricing and availability advantages, reducing Daktronics orders, margins, or competitiveness.
NewMacroeconomic Risks
Global conflicts could adversely impact our business and financial results
Conflicts, particularly in the Middle East, could delay customer decisions and projects, disrupt shipping, increase inflation, or cause cyberattacks.
NewRisks Related to Our Business and Industry
Cost inflation and shortages of the raw materials and components used to manufacture our products have and may continue to occur due to various factors, such as worldwide demand, natural disasters, logistics disruptions, war and other conflicts, and trade regulations
Aluminum inflation and AI- and data-center-driven demand for computing components are increasing costs and creating shortages that could reduce margins.
NewRisks Related to Our Business and Industry
Our global manufacturing and sales operations expose us to risks that could materially and adversely impact our business
International manufacturing and sales, including China sourcing and Mexico expansion, expose Daktronics to tariffs, foreign regulations, currency, labor, logistics, and investment risks.
NewRisks Related to Our Business and Industry
Increases in the cost or limited availability of computing infrastructure, including memory and processing resources, could adversely affect our business, financial condition, and results of operations
AI-driven demand may increase the cost and reduce availability of memory, processors, networking equipment, cloud services, and other computing infrastructure.
NewRisks Related to an Investment in Our Common Stock
We have experienced activist stockholder activity that has led to changes in our Board composition and governance practices, and the possibility of future activism could have a material adverse effect on our business, financial condition, or results of operations, as well as the price of our common stock
The March 2025 Alta Fox agreement changed Board composition and governance, while future activism could disrupt strategy, operations, and securities prices.
NewRisks Related to an Investment in Our Common Stock
In response to stockholder engagement, including activist activity, we are pursuing various strategic and operational initiatives. These initiatives may not be successfully implemented, may disrupt our operations, or may not achieve the expected benefits within the anticipated timeframes, if at all
Strategic and operational initiatives prompted by shareholder engagement may fail, disrupt operations, or miss expected benefits and timelines.
NewRisks Related to an Investment in Our Common Stock
Our founder and former Chairman of the Board and his family may have the ability to significantly influence all matters submitted to our stockholders for approval
Kurtenbach family ownership could significantly influence stockholder votes and management affairs, potentially delaying or preventing acquisitions favored by other shareholders.

Dropped

DroppedMacroeconomic Risks
Geopolitical issues, conflicts, governmental actions, including the imposition of tariffs, changes in laws, regulations, and policies, and other global events could adversely affect our results of operations and financial condition
Broad geopolitical conflicts, government actions, tariffs, regulatory changes, and global events could disrupt operations and increase costs.
DroppedMacroeconomic Risks
These impacts could reduce profitability and could have a material adverse effect on our results of operations and financial condition if they escalate into geographies in which we do business, manufacture our products, or obtain raw materials and components for production
Escalating geopolitical impacts could affect Daktronics markets, manufacturing locations, and sources of raw materials and components.
DroppedRisks Related to Our Business and Industry
Electronic and other components and materials used in our products are sometimes in short supply, which may impact our ability to meet customer demand. Transportation costs and availability can fluctuate due to fluctuations in oil prices and other social, economic, and geopolitical factors
DroppedRisks Related to Our Business and Industry
Expanding our international footprint remains a key part of our growth strategy. However, operating across multiple countries exposes us to a variety of risks that may not be present in our domestic operations
DroppedRisks Related to Our Business and Industry
The terms and conditions of our credit facilities impose restrictions on our operations, and if we default on our credit facilities, it could have a material adverse effect on our results of operations and financial condition, make us vulnerable to adverse economic or industry conditions, and cause liquidity issues
DroppedRisks Related to Our Business and Industry
changes in tax laws, or the outcome of income tax audits and any related litigation. The United States Tax Cuts and Jobs Act of 2017 is one such example of legislation that has impacted our effective tax rate
DroppedRisks Related to an Investment in Our Common Stock
be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns even if we prevail in the litigation, which could harm our business
DroppedRisks Related to an Investment in Our Common Stock
Activist stockholder activity has impacted, and may continue to impact, our governance, operations, strategic directions, and the value of our common stock
Component shortages and transportation cost or availability fluctuations could prevent timely production or reduce profitability.
DroppedRisks Related to an Investment in Our Common Stock
Our executive officers, directors and principal stockholders have the ability to significantly influence all matters submitted to our stockholders for approval
International operations could face regulatory, political, currency, labor, infrastructure, logistics, tariff, and trade-agreement risks.

Reworded

98% rewrittenRisks Related to Our Business and Industry
There can be no assurance that we will engage in any acquisitions or divestitures or that we will be able to do so on terms that will result in any expected benefits
The risk shifted from affiliate investment impairment and a $15.5 million uncollectible note to no remaining affiliate investments and a $3.8 million 2026 provision.
90% rewrittenMacroeconomic Risks
In addition, these demand fluctuations may reduce our ability to effectively utilize our capacity and negatively impact our results of operations
Supply-chain and inflation language was retained, while borrowing risk now covers variable benchmarks, alternative base rates, and unused-facility commitment fees.
85% rewrittenRisks Related to Our Business and Industry
Our global operations expose us to global regulatory, geopolitical, economic, and social changes and add additional risks and uncertainties which can harm our business, operating results, and financial condition
The risk now emphasizes international laws, regulations, government actions, trade relationships, restrictions, and monetary or fiscal policy, omitting pandemic-style examples.
81% rewrittenRisks Related to an Investment in Our Common Stock
Significant changes in the market price of our common stock could result in securities litigation claims against us
The risk now explicitly includes future securities litigation, litigation costs, management distraction, analyst downgrades, and missed investor expectations.
79% rewrittenRisks Related to Our Business and Industry
Information Systems, Legal, and Regulatory Risks
Security language now says Daktronics cannot guarantee data restoration or vulnerability remediation after system failures or breaches.
71% rewrittenRisks Related to Our Business and Industry
Global tax law changes may adversely affect our business, financial condition, and results of operations
The risk now expressly includes tax-law changes, tax audits, related litigation, and the 2017 Tax Cuts and Jobs Act.
71% rewrittenRisks Related to Our Business and Industry
Unanticipated warranty and other costs for defective products could adversely affect our financial condition, results of operations, and reputation
The risk now highlights complex-system reliability, environmental conditions, customer-infrastructure integration, third-party components, contractual claims, and customer dissatisfaction.
69% rewrittenRisks Related to Our Business and Industry
Environmental, social, and governance (“ESG”) regulations and disclosures may impact our reputation, expose us to additional costs, or have other impacts which could adversely affect our business, financial condition, or results of operations
ESG language now emphasizes evolving expectations and differing regulatory approaches across jurisdictions, while retaining uncertainty over ratings and methodologies.
55% rewrittenRisks Related to Our Business and Industry
Our backlog may not be indicative of future revenue, profitability, or results of operations
Was: Backlog may not be indicative of future revenue or profitability
55% rewrittenRisks Related to Our Business and Industry
We may not be able to utilize our capacity efficiently or accurately plan our capacity requirements, which may materially and adversely affect our business and operating results
40% rewrittenRisks Related to Our Business and Industry
We depend on third parties to complete some of our contracts
40% rewrittenRisks Related to Our Business and Industry
Acquisitions, investments, and divestitures pose financial, management, and other risks and challenges
38% rewrittenRisks Related to Our Business and Industry
Our results of operations on a quarterly and annual basis have and are likely to continue to fluctuate and be substantially affected by the size and timing of large contract order awards
33% rewrittenMacroeconomic Risks
Unexpected events, including natural disasters, weather events, wars, terrorist acts, and pandemics, may increase our cost of doing business or disrupt our operations
31% rewrittenRisks Related to Our Business and Industry
If goodwill or other intangible assets in connection with our acquisitions become impaired, we could take significant non-cash charges against earnings
27% rewrittenRisks Related to Our Business and Industry
We may fail to continue to attract, develop, and retain key personnel, including management personnel, which could negatively impact our operating results
25% rewrittenRisks Related to an Investment in Our Common Stock
The protections we have adopted and to which we are subject may discourage takeover offers favored by our stockholders

All 43 risk factors

Headings as the filing states them, in filing order.

Macroeconomic Risks

01Changes in trade policies and the imposition of tariffs, have affected, and may continue to affect, our results of operations and financial conditionNew
02enterprises, and result in continued global financial market volatility. The impact of these changes in trade policies and the resulting trade and market uncertainty could have a negative impact on our results of operationsNew
03In addition, competitors may benefit from manufacturing or sourcing strategies, including near-shoring or alternative supply chain structures, or may qualify for tariff exemptions or more favorable trade treatment that are not available to us, which could place us at a competitive disadvantageNew
04Global conflicts could adversely impact our business and financial resultsNew
05Our business is sensitive to global economic conditions, including recessions, inflation, and interest rate fluctuations. Weakened global economic or recessionary conditions may materially and adversely affect our industry, business and results of operations
06In addition, these demand fluctuations may reduce our ability to effectively utilize our capacity and negatively impact our results of operations90% rewritten
07Unexpected events, including natural disasters, weather events, wars, terrorist acts, and pandemics, may increase our cost of doing business or disrupt our operations33% rewritten

Risks Related to Our Business and Industry

08We may be unable to protect our intellectual property rights effectively, or we may infringe upon the intellectual property rights of others, either of which may have a material adverse effect on our operating results and financial condition
09If we fail to timely and effectively obtain shipments of raw materials and components from our suppliers or to send shipments of our manufactured product to our customers, our business and operating results could be materially and adversely affected
10Cost inflation and shortages of the raw materials and components used to manufacture our products have and may continue to occur due to various factors, such as worldwide demand, natural disasters, logistics disruptions, war and other conflicts, and trade regulationsNew
11Our global manufacturing and sales operations expose us to risks that could materially and adversely impact our businessNew
12We depend on third parties to complete some of our contracts40% rewritten
13We may not be able to utilize our capacity efficiently or accurately plan our capacity requirements, which may materially and adversely affect our business and operating results55% rewritten
14Our results of operations on a quarterly and annual basis have and are likely to continue to fluctuate and be substantially affected by the size and timing of large contract order awards38% rewritten
15We enter into fixed price contracts, which could reduce our profits if actual costs exceed estimated costs
16Our backlog may not be indicative of future revenue, profitability, or results of operations55% rewritten
17Unanticipated events resulting in credit losses could have a material adverse impact on our financial results
18Our actual results could differ from the estimates and assumptions we make to prepare our financial statements, which could have a material adverse impact on our financial condition and results of operations
19Unanticipated warranty and other costs for defective products could adversely affect our financial condition, results of operations, and reputation71% rewritten
20If we became unable to obtain adequate surety bonding or letters of credit, it could adversely affect our ability to bid on new work, which could have a material adverse effect on our future revenue and business prospects
21Acquisitions, investments, and divestitures pose financial, management, and other risks and challenges40% rewritten
22There can be no assurance that we will engage in any acquisitions or divestitures or that we will be able to do so on terms that will result in any expected benefits98% rewritten
23If goodwill or other intangible assets in connection with our acquisitions become impaired, we could take significant non-cash charges against earnings31% rewritten
24We may fail to continue to attract, develop, and retain key personnel, including management personnel, which could negatively impact our operating results27% rewritten
25Increases in the cost of employee benefits could impact our financial results and cash flows
26The outcome of pending and future claims, investigations, or litigation can have a material adverse impact on our business, financial condition, and results of operations
27Information Systems, Legal, and Regulatory Risks79% rewritten
28Increases in the cost or limited availability of computing infrastructure, including memory and processing resources, could adversely affect our business, financial condition, and results of operationsNew
29Our global operations expose us to global regulatory, geopolitical, economic, and social changes and add additional risks and uncertainties which can harm our business, operating results, and financial condition85% rewritten
30Our business involves the use of hazardous materials, and we must comply with environmental, health, and safety laws and regulations, which can be expensive and restrict how we do business
31Doing business on a worldwide basis requires us to comply with the laws and regulations of the United States government and various foreign jurisdictions. These laws and regulations place restrictions on our operations, trade practices, partners, customers, and investments
32Regulation in the areas of privacy, data protection, and information security could increase our costs and affect or limit our business opportunities and how we collect or use personal information
33Environmental, social, and governance (“ESG”) regulations and disclosures may impact our reputation, expose us to additional costs, or have other impacts which could adversely affect our business, financial condition, or results of operations69% rewritten
34Global tax law changes may adversely affect our business, financial condition, and results of operations71% rewritten
35Ineffective internal control over financial reporting could result in errors in our financial statements, reduce investor confidence, and adversely impact our stock price
36Insurance coverage can be difficult or expensive to obtain, and our failure to obtain adequate insurance coverage at reasonable costs could adversely affect our financial condition or results of operations
37We have been required to conduct a good faith reasonable country of origin analysis on our use of “conflict minerals”, which has imposed and may impose additional costs on us and could raise reputational challenges and other risks

Risks Related to an Investment in Our Common Stock

38The protections we have adopted and to which we are subject may discourage takeover offers favored by our stockholders25% rewritten
39Our common stock has at times been thinly traded, which may result in low liquidity and price volatility
40Significant changes in the market price of our common stock could result in securities litigation claims against us81% rewritten
41We have experienced activist stockholder activity that has led to changes in our Board composition and governance practices, and the possibility of future activism could have a material adverse effect on our business, financial condition, or results of operations, as well as the price of our common stockNew
42In response to stockholder engagement, including activist activity, we are pursuing various strategic and operational initiatives. These initiatives may not be successfully implemented, may disrupt our operations, or may not achieve the expected benefits within the anticipated timeframes, if at allNew
43Our founder and former Chairman of the Board and his family may have the ability to significantly influence all matters submitted to our stockholders for approvalNew

Other Daktronics 10-Ks

FY2025 10-K risk factors
42 risks
This company faces significant tariff and supply chain risks, relying on components from over 40 countries for U.S. manufacturing. Operations are concentrated in South Dakota and Minnesota, exposing them to regional disruptions. Large, custom contract timing and fixed-price bids heavily influence quarterly results.
Filed Jun 25, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.