\nAlta Fox Capital Management, LLC (together with its affiliates, \u201cAlta Fox\u201d or \u201cwe\u201d), the largest shareholder of Daktronics, Inc. (NASDAQ: DAKT) (\u201cDaktronics\u201d or the \u201cCompany\u201d) based on its beneficial ownership interest on a fully converted basis of 11.7% of the outstanding shares, today issued the following statement to correct misleading claims from the Company regarding Alta Fox\u2019s motives and recent actions:<\/p>\n
\n\u201cYesterday, we released a detailed presentation outlining the serious governance issues at Daktronics, including long-term underperformance during Chairman and CEO Reece Kurtenbach\u2019s tenure, a misalignment of interests between the Board of Directors (the \u201cBoard\u201d) and shareholders, and rampant nepotism in the executive ranks.<\/p>\n
\nInstead of responding to the governance concerns raised by its largest shareholder, Daktronics has tried to paint Alta Fox as a bloodthirsty creditor, somehow misaligned with Daktronics’ equity investors. This is a weak argument that investors will not be duped into believing. Let us set the record straight:<\/p>\n
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- \nAlta Fox has an equity position in Daktronics worth nearly $114 million once converted, or 11.7% of the Company\u2019s outstanding shares.1<\/sup>To insinuate that we are not aligned with shareholders is absurd, considering we are the Company\u2019s largest shareholder and own ~5x the number of shares held by the entire Board.<\/p>\n
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- The Company neglects to mention that Alta Fox has sought further governance enhancements as part of any agreement to retire our convertible promissory note<\/b>. Over the years, Daktronics has failed to take our shareholder-friendly recommendations and highly qualified director candidates seriously. Unfortunately, this is unsurprising for a Company that abides by worst-in-class governance practices, including a staggered Board, poison pill and nepotism. Despite its claims of engaging in good faith, the Company never presented us with any proposed framework or offer.<\/b> The Company merely suggested retiring the note early, without specifying a value, which Alta Fox noted could be a way to avoid diluting existing shareholders. We have consistently been a better barometer of Daktronics\u2019 fair value than the current Board, and we would never accept a discount to what we believe the Company is worth.\n<\/li>\n
- As a shareholder, we have an unassailable right to put up directors for election at an annual meeting and to call a special meeting of shareholders<\/b>. The Company\u2019s claim in its December 11th<\/sup> press release that we have tried to “intimidate”<\/i> the Board by stating our intention to nominate highly qualified, independent director candidates is not only delusional, but also speaks to the Board\u2019s extreme level of entrenchment and the insular culture it has perpetuated.\n<\/li>\n
- Counter to what Daktronics claims, Alta Fox\u2019s May 2023 post that stated our belief that shares could triple to ~$16.23 has proven prescient: Daktronics currently trades at ~$19.2<\/sup><\/b> In the 19 months since that post, we have continued to study the business and speak to industry experts and ex-employees. We now believe the Company\u2019s potential upside is far greater than we originally realized, and that Daktronics\u2019 significant governance discount can be addressed, as we highlighted in our December 10th<\/sup> presentation. Perhaps this is news to the Board or its advisors, but facts and price targets can change over time.\n<\/li>\n
- We clearly see more potential value in Daktronics than the current Board or management do<\/b>. As outlined in our December 10th<\/sup> presentation<\/a>, we believe there is a path to achieving $40 per share and ~100% upside by FY28 through governance reforms, the addition of new directors who possess expertise in corporate governance and investor communication, and operational improvements.\n<\/li>\n<\/ol>\n
\nIt is disturbing to see Daktronics attempt to smear Alta Fox\u2019s reputation with other shareholders after we stepped in to provide necessary rescue capital to the Company in its time of need and have dedicated more than two years to patiently advocating for improvements to the Company\u2019s governance, financial management practices and performance.<\/p>\n
As much as the Daktronics Board may try to evade it, accountability is coming<\/b>. Alta Fox intends to utilize our full voting power as equity investors to benefit all stakeholders. We look forward to providing shareholders an opportunity to elect highly qualified directors so that Daktronics can realize its full potential.\u201d<\/p>\n
\n***<\/p>\n
Alta Fox encourages Daktronics stakeholders to visit <\/i>www.FixDaktronics.com<\/i><\/a> to learn more about our path to $40 per share and to sign up for updates regarding our efforts at the Company.<\/i><\/p>\n
About Alta Fox<\/span><\/b><\/p>\n
\nFounded in 2018 by Connor Haley, Alta Fox is a Texas-based alternative asset management firm that employs a long-term focused investment strategy to pursue exceptional risk-adjusted returns for a diverse group of institutions and qualified individual clients. Alta Fox focuses on identifying often overlooked and under-the-radar opportunities across asset classes, market capitalization ranges and sectors. Learn more by visiting www.AltaFoxCapital.com<\/a>.<\/p>\n
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS<\/b><\/p>\n
\nThe information herein contains \u201cforward-looking statements.\u201d Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as \u201cmay,\u201d \u201cwill,\u201d \u201cexpects,\u201d \u201cintends,\u201d \u201cbelieves,\u201d \u201canticipates,\u201d \u201cplans,\u201d \u201cestimates,\u201d \u201cprojects,\u201d \u201cpotential,\u201d \u201ctargets,\u201d \u201cforecasts,\u201d \u201cseeks,\u201d \u201ccould,\u201d \u201cshould\u201d or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Forward-looking statements relate to future events or future performance and involve known and unknown risks, uncertainties, and other factors that may cause actual results, levels of activity, performance or achievements or those of the industry to be materially different from those expressed or implied by any forward-looking statements. Daktronics, Inc., a South Dakota corporation, has also identified additional risks relating to its business in its public filings with the Securities and Exchange Commission (the \u201cSEC\u201d). Alta Fox Capital Management, LLC (together with its affiliates, \u201cAlta Fox\u201d), has based these forward-looking statements on current expectations, assumptions, estimates, beliefs, and projections. While Alta Fox believes these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which involve factors or circumstances that are beyond Alta Fox\u2019s control. There can be no assurance that any idea or assumption herein is, or will be proven, correct. If one or more of the risks or uncertainties materialize, or if the underlying assumptions of Alta Fox described herein prove to be incorrect, the actual results may vary materially from outcomes indicated by these statements. Accordingly, forward-looking statements should not be regarded as a representation by Alta Fox that the future plans, estimates or expectations contemplated will ever be achieved. You should not rely upon forward-looking statements as a prediction of actual results and actual results may vary materially from what is expressed in or indicated by the forward-looking statements. Except to the extent required by applicable law, Alta Fox will not undertake and specifically declines any obligation to disclose the results of any revisions that may be made to any projected results or forward-looking statements herein to reflect events or circumstances after the date of such projected results or statements or to reflect the occurrence of anticipated or unanticipated events.<\/p>\n
\nCertain statements and information included herein have been sourced from third parties. Alta Fox does not make any representations regarding the accuracy, completeness or timeliness of such third party statements or information. Except as may be expressly set forth herein, permission to cite such statements or information has neither been sought nor obtained from such third parties. Any such statements or information should not be viewed as an indication of support from such third parties for the views expressed herein.<\/p>\n
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1<\/sup> Based on Daktronics\u2019 share price of $19.24 on December 10, 2024.
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2<\/sup> Daktronics closed at $19.24 on December 10, 2024, a 277% increase from its $5.10 closing price on May 11, 2023, the day before Alta Fox\u2019s post on X.<\/p>\n<\/p>\n
View source version on businesswire.com: <\/span>https:\/\/www.businesswire.com\/news\/home\/20241211772129\/en\/<\/a><\/span><\/p>\n
\nFor Shareholders:<\/p>\n
\nAlta Fox Investor Relations
\n
ir@altafoxcapital.com<\/a><\/p>\n\nor<\/p>\n
\nOkapi Partners
\n
Bruce Goldfarb \/ Chuck Garske, 212-297-0720
\n
info@okapipartners.com<\/a><\/p>\n\nFor Media:<\/p>\n
- The Company neglects to mention that Alta Fox has sought further governance enhancements as part of any agreement to retire our convertible promissory note<\/b>. Over the years, Daktronics has failed to take our shareholder-friendly recommendations and highly qualified director candidates seriously. Unfortunately, this is unsurprising for a Company that abides by worst-in-class governance practices, including a staggered Board, poison pill and nepotism. Despite its claims of engaging in good faith, the Company never presented us with any proposed framework or offer.<\/b> The Company merely suggested retiring the note early, without specifying a value, which Alta Fox noted could be a way to avoid diluting existing shareholders. We have consistently been a better barometer of Daktronics\u2019 fair value than the current Board, and we would never accept a discount to what we believe the Company is worth.\n<\/li>\n