Good day, ladies and gentlemen, and welcome to Daktronics Fiscal Year 2020 Second Quarter Earnings Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Ms. Sheila Anderson, Chief Financial Officer for Daktronics for some introductory remarks. Please go ahead, Sheila.

Thank you. Good morning, everyone. Thank you for participating in our second quarter earnings conference call. I would like to review our disclosures cautioning investors and participants that in addition to statements of historical facts, we will be discussing forward-looking statements reflecting our expectations and plans about our future financial performance and future business opportunities. All forward-looking statements involve risks and uncertainties, which may be out of our control and may cause actual results to differ materially. Such risks include changes in economic conditions, changes in the competitive and market landscape including impacts of global trade discussions and policies, management of growth, timing and magnitude of future orders and contracts, fluctuations of margins, the introduction of new products and technologies and other important factors as noted and detailed in our 10-K and 10-Q SEC filings. With that, let me highlight some of the financial results for the second quarter and year-to-date of fiscal 2020, and the related time comparisons to fiscal 2019. As a reminder, fiscal 2020 is a 53-week year and fiscal 2019 was a 52-week year. The extra week of fiscal 2020 fell within the first quarter, resulting in six months ended being 27 weeks versus 26 weeks. Sales, orders and all areas of operating expenses were impacted with the additional week in the six-month comparison. For the second quarter, overall orders remained relatively flat as compared to last year's second quarter. Orders increased in the International and High School Park and Recreation business units and decreased in the Transportation, Commercial and Live Events business units. For the year, orders were up 8.9%. Live Events and International orders increased which were partly offset by declines in Transportation and High School Park and Recreation orders. Commercial orders were flat year-over-year. The volatility of orders timing for large projects and…

Thank you, Sheila. Good morning, everyone. As Sheila highlighted, we had a strong start for orders in fiscal '20, growing as the overall market also grows. We continue to invest in development and have more solutions to market to more customers than ever before. This work, coupled with our other investments to increase our capabilities in sales, manufacturing, and service poised us for long-term profitable growth. As an example, our sales team and service networks reach around the globe and are valuable assets for both our sales partners and end customers. Solutions like our narrow pixel pitch displays are being adopted by new and existing customers around the world. Especially for these new indoor product lines, we continue to explore and develop new channels to sell through, often with integrators that can incorporate our products into locations like corporate offices, control centers, and retail stores. Our control and content management offerings have also been enhanced, improving the way our customers utilize our systems and providing greater ease of use to help them inform and entertain their audiences. This has created demand for both control system upgrades as well as new system purchases. To highlight the success in this area, we recently completed an installation in Las Vegas at The Venetian Casinos, [sportsbook] [ph] area, and look forward to installing other similar installations. We're also focusing on our ability to provide narrow pixel pitch technology to the public sector, including federal and Department of Defense applications. These solutions align with the needs and applications of government network operation centers, command centers, situation rooms, conference rooms, theaters, and offices. Like many other U.S. companies, we are in the midst of a dynamic and volatile global trade environment. Today, we are most impacted by the administrations of both China and the United States,…

[Operator Instructions] Our first question comes from the line of Lisa Springer from Singular Research. Your line is now open.

Thank you. Good morning. I wanted to ask about the -- if you could give us a little more color around the increase in product delivery cost. Was that across all business segments or focused in special segments?

It was primarily in our segments with the larger projects, so a little bit through Live Events, a little bit through Commercial. Those probably were the two more significant areas.

And do you think that's going to be a challenge in the second half of the year as well, or do you expect that to improve?

I think we're continuing to improve our processes over time and that should improve itself.

Okay, thank you.

Okay.

Our next question comes from the line of Greg Pendy from Sidoti. Your line is now open.

First one, I just wanted to ask on Live Events, you're saying that you expect the business to be similar sized to the previous years. I mean last year, you had some pretty soft weakness, if I'm not mistaken, in the second half. Are you expecting when you say similar years, can we go back a few years? Are you talking specifically to 2019?

Yes. I think that market will go up and down depending on the projects that are available and the larger projects. And I would tend to draw some type of continuity across multiple years and take out a variance in one year here and there.

Okay, got it. That's helpful. And then I just wanted to also, I guess, going into the tariffs, you're saying slightly more than $10 million, so is that a little bit more pressure than you're expecting in 1Q? I think you're expecting around $10 million on the component pressure.

I think actually that's a pretty dynamic area, so $10 million is probably a conservative area. We're continuing to focus on ways to minimize those costs in both the components like you mentioned and the pricing there as well as the tariff costs. So maybe, I'd say it's more around the $10 million area impact.

Okay, that's great. And then, one more final thing; can you just talk a little bit about warranty expense? I think we're starting to anniversary some more normalized warranty expenses; just kind of how we should be thinking about that going forward?

Yes. Warranty is -- where we install our displays and the environments they're in, we don't expect that number to be zero. We would like to see that at 2% or less. And so as we're -- as you indicate, we're entering more of a range that is -- we think this is closer to a long-term sustainable up level.

Okay, that's good. Thanks a lot, very helpful. Thank you.

I appreciate the comments.

I'm not showing any further questions at this time. I would now like to turn the call back to Reece Kurtenbach for any closing remarks.

Thanks, everyone for the participation on the call today. And that -- there is going to be a change going forward to adapt to the current environment, we're planning to host earnings calls semi-annually rather than quarterly on into the future. So future calls would take place at this time after our second quarter, generally in November of the year, and then after our year-end, which is generally near the end of May for that call. We will continue to release quarterly results and a commentary and earnings releases, as well as our SEC filings, and we periodically appear at investor conferences through the years. So as you have any questions or comments on future releases or on today's discussion, please direct to Sheila as noted in the earnings release, or you can always email investor@daktronics.com. With that, we hope everyone in the U.S., at least has a great Thanksgiving, and we wish you all a wonderful holiday season and a prosperous New Year. We'll talk to you in May.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.