Good day, ladies and gentlemen, and welcome to Daktronics Fiscal Year 2020 Fourth Quarter Earnings Results Conference Call. As a reminder, this conference is being recorded today, Wednesday, June 10th, 2020 and is available on the company's website at www.daktronics.com. After the speakers' presentation, there will be a question-and-answer session. [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, operator. Good morning everyone. Thank you for participating in our fiscal year and fourth 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, the impact of governmental laws, regulations and orders, including those resulting from pandemics, disruptions to our business caused by geopolitical events, military actions, work stoppages, natural disasters, or international health emergencies, such as the COVID-19 pandemic, 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 starting with the fourth quarter results and the related time comparisons to fiscal 2019's fourth quarter. Orders decreased by 9.4% mostly related to the commercial and international business units as advertising spend contracted due to the COVID-19 outbreak, impacting spending by our out-of-home companies and customers. Sales decreased by 1.3% resulting from fluctuations in the timing of order bookings and related conversions to sales. About halfway through the fourth quarter, we saw some customer delays in their shipments and were not able to go to some project sites because of the COVID-19 stay-at-home orders around the world. Gross profits as a percentage of net sales was 22.7% as compared to 19.1% last year fourth quarter. Gross…

Thank you, Sheila. Good morning everyone. As we entered into fiscal 2020, we focused on order growth, market development, deployment of newly designed solutions, development of advanced manufacturing techniques, and managing capacity and spend. We achieved these goals. Our investments in technology yielded additional control system features and broadened our display lineup, contributing to increased orders. As Sheila said, we were able to achieve the second highest level of order value in our company's history. As highlighted in our release, -- winning projects and delivering on our commitments to customers, which is also a testament of our continued leadership in the marketplace. Customers choose Daktronics for new and leading technologies, our broad range of solutions, the reliability of our products, and our commitment to serve them over the lifetime of their system. Like many other companies, the uncertainty of the impacts of the COVID-19 global pandemic has impacted our business. COVID-19 has created disruptions since its initial outbreak first impacting our China operations. Our goals throughout have been to keep our people and stakeholders safe while operating our business. To this end, beginning in February, we created COVID-19 response teams to manage our global and localized response activities. Using the guidance from the U.S. Centers for Disease and Control and Prevention, the World Health Organization, and other applicable regulatory agencies, we enhanced or implemented robust health, safety, and cleaning protocols across our organization. Employees are working from home where possible and we have limited or eliminated travel for the time being. As this virus has spread across the globe, it has generated appropriate responses by governments and regulatory agencies to keep people safe. But these responses have also disrupted our customer's businesses in various ways, as well as impacting how work is done. Because of this, our manufacturing and service…

Certainly. [Operator Instructions] Our first question comes from line of Greg Pendy from Sidoti. Your question, please.

Hey, guys. Thanks for taking my questions. First of all, congratulations on getting the warranty expenses down for the year. I know there's a lot out of your control, but you guys definitely -- on what you can control, delivered on that. And I just wanted to get a sense, I guess on a go forward basis, I know there was an uptick and some failures a few years back, but where are we in that? And are we in sort of your -- are you comfortable that we can start thinking that the warranty expenses will be in sort of that 1.5% to 2% range on a go-forward basis?

We are -- we believe we're through that other issue and we have not seen a significant issue like that raise its head. And so yes, I believe that's a fair estimate.

Great, that's helpful. Thanks. And then second question. Thanks for the color on the supply chain. Can you just maybe talk to us a little bit about what you're seeing on the costs of both components and maybe things like aluminum and stuff and how we should be thinking about the costs outside of just the disruptions and the availability of product?

Yes, that's a great question. The volatility in so many of these markets isn't a continued increase price pressure and isn't a bargaining position where things are lowering in cost, but it can fluctuate greatly based on all -- in brief periods of time. We do -- on many of our commodities, we do negotiate longer term contracts, which gives our stability there and we have very deep vendor relations. So, I believe we have a stability in our supply chain, but predicting some of that volatility and pricing is pretty difficult, Greg.

Okay, great. And then just one final one, just in light of paring back on the dividends and share repurchases, but then going for the investment on the microLED side, can you kind of elaborate maybe on why that's significant from an investment standpoint, perhaps maybe from a strategic standpoint, as we kind of look out to the future?

I believe as we've said in our continued communication that this narrow pixel pitch, which is roughly seen as products at a 2.5 millimeter pitch and less so a distance from one pixel to another. As we get to 1 millimeter and below, we believe microLED is a good technology for that. And this investment sets us up for that ongoing into the future. And we believe it's critical for our ongoing viability.

Great. All right. Well, congratulations on the quarter. I appreciate the follow-up on the questions. Thanks.

Appreciate it. Thanks Greg.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Reece Kurtenbach for any further remarks.

Thank you. We appreciate everybody's attendance in today's call. We know this is a challenging time and we're committed to the long-term viability of Daktronics and working through this in a way that makes us stronger as we come out. So, we hope you have a great summer and we'll talk to you again in the fall. Thank you.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.