Good day, ladies and gentlemen, and welcome to the Daktronics Fiscal Year 2024 Fourth Quarter Earnings Results Conference Call. As a reminder, this conference is being recorded today, Wednesday, June 12, 2024, and is available on the company's website at www.daktronics.com. I would now like to turn the conference over to Ms. Carla Gatzke, company's Secretary for Daktronics for some introductory remarks. Please go ahead, Carla.

Thank you, Siobhan. Good morning everyone. Thank you for participating in our fourth quarter earnings conference call. I would like to review a few disclosure 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. These forward-looking statements reflect the company's expectations or beliefs concerning future events. All forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from our expectations. Such risks include, but aren't limited to, changes in economic and market conditions management of growth, timing and magnitude of future contracts and orders, fluctuations in margins the introduction of new products and technology, availability of raw materials, components, and shipping services, and other important factors. These identified factors could cause actual results to differ materially from those discussed in this call in the company's fourth quarter 2024 quarterly earnings release and in most -- and its most recent Annual Report on Form 10-K. Our fourth quarter 2024 earnings release contains certain non-GAAP financial measures and was furnished to the SEC on a Form 8-K this morning. We will also make slides available for today's call. All of these documents are available on the Investors section of Daktronics website, www.daktronics.com. I'll turn the call over to our CEO, Reece Kurtenbach.

Thank you. Good morning, everyone. Thank you all for joining us today. I would like to start by saying congratulations to the Daktronics team for an amazing year. We began and finished fiscal 2024 strong, demonstrating the increased power of our more profitable business model resulting from the operating improvements we've made over the past few years. We achieved record revenue and solid expansion in our operating profitability and cash flow generation. As you can see on our slide presentation on Page 3, fiscal 2024 was a year of terrific accomplishment as we executed on a number of strategies and made progress toward our long-term objectives. Some highlights of our year. We refinanced the company to ensure we have the resources available to serve our customers and build long-term value for our shareholders. We executed consistently to incrementally raise the base profitability of the business by allocating resources to growing business segments and the most profitable projects. We generated substantially higher cash flow through our increased profitability and our management of working capital and through efforts such as invent -- as reduction in inventory levels post supply chain correction. On the product front, we continue to innovate to maintain our technology leadership, as seen in releases like additional Narrow Pixel Pitch product lines used primarily in indoor applications. With respect to our end market penetration, our teams deepened our relationship with AV integrators in new customer areas to reach growing markets. As an example, we delivered displays to a number of military sites this past year. We laid essential groundwork for our digital transformation strategy, making progress in our services systems area and investing in enterprise performance management software. In our facilities, we further optimized our operations in manufacturing and site fulfillment processes as we continue -- as we return…

Thank you, Reece. Please turn your attention to Slide number 5 F Q4 FY 2024 financial highlights for the quarterly overview. The quarter-over-quarter comparisons in this slide and related discussion are as of and for fiscal quarters ended April 27, 2024, and April 29, 2023, unless stated otherwise. Orders increased by 14.6%, primarily driven by strengthening in Live Events and International business unit orders. Strong demand in the Live Events business unit was the result of success in capturing SAM from projects for colleges and universities. International orders are starting to rebound as some stability and economic improvement has increased customers' desire to move forward on projects. Our commercial business unit continues to see softness in large projects and there was some slowing in the High School Park and Recreation and Transportation business units in the quarterly comparison. We generated sales of $216 million for the fourth quarter of fiscal 2024 as compared to $210 million last year. This 2.9% increase in sales volume is the result of fulfilling college and university orders and Live Events, Transportation order deliveries, a solid win rate, and on-time deliveries. This is -- this was somewhat offset by a sales decline in International. Gross margin as a percent of net sales increased to 25.7% as compared to 24.8% in the fourth quarter of fiscal 2023. The increase in gross profit percentage is attributable to our strategic focus on profitable markets and projects, manufacturing efficiencies, and stability in our diversified supply chain. Operating margin was 9% of sales as compared to last year's 8.7%. Fiscal 2024's fourth-quarter positive operating margin rate is attributable to our continued careful management of operating expenses while investing in our digital transformation and product innovation. Please turn to Slide 6, as I highlight year-to-date performance. The year-over-year comparisons in this…

Thanks, Sheila. Please reference Slide 7 titled Market Verticals Update. Our mission is to support our customers as they inform, entertain, and persuade their customers and audiences. Let us look more specifically into our business areas. In Live Events, during the quarter we completed the Detroit Tigers project along with a number of other college and university projects. We expect Live Events demand to remain strong as venues enhance facilities to entertain fans and attract athletes. We see this trend continuing and more focus being placed on entertainment areas and the experience outside the bowl, in places like entryways, atriums, concourses, and adjacent entertainment areas. Our Narrow Pixel Pitch line of products match the needs of customers for these places. Commercial orders, especially from customers in the out-of-home advertising space, can be sensitive to economic conditions, and they can rebound quickly as conditions improve. This market is also sensitive to the large national advertiser spending decisions, which is why we also focus on winning other independent billboard sales and have seen important increases in this market vertical over the last year. We continue to innovate and provide competitive differentiation in the marketplace to reach the needs of our customers. We continue to build out our AV integrator network to market our narrow pixel pitch product lines, especially in control room applications used by military, utility, and transportation agencies. To date, we have installed 131 displays on 43 different bases globally. And in FY 2024, the American Transmission Company in Wisconsin purchased two large screens, one 8.5 feet high by 86 feet wide and another 6.5 feet high by 52 feet wide. In Transportation, our teams are focused on winning projects for intelligent transportation systems, airport projects, and other mass transit systems projects. Other highlights of our Q4 performance include orders…

Thank you. At this time, we will conduct the question-and-answer session. [Operator Instructions] Our first question comes from the line of BJ Cook from Singular Research. Your line is open.

Hey, guys. Great quarter. Thanks for taking my call. Just a couple of questions. You guys are targeting some recurring revenue opportunities in control systems and content. I just kind of curious, are you marketing these services to new orders going out, existing customers, and projects that are on the market now? And would you expect that over time to be a meaningful part of the business?

BJ, thanks for joining us on today's call and I appreciate the question. Yes, to all of that, I guess, is the answer. The services we offer are especially important as a new customer takes on a system and grows their capability to operate program, understand what they're trying to accomplish with their systems, and that is in sports, that is in commercial, that is in transportation. And then as they get through their first year, in subsequent years, they often benefit from refreshing, and there's a changeover in staffing often. And so the future years is a continual opportunity to sell different services. And the displays themselves are often projected to last 10 years or -- and sometimes more. But the control capability computers run at a different cycle, so there's often a desire to refresh the software capabilities and in systems where we provide dedicated on-site processing, the computer systems, sometimes in year three and sometimes in year five, as they go through the system lifecycle.

I got you. That makes sense. You highlighted a couple of times new military shipments and products there. I guess typically you think military, I think, well, it's a big deal just to get in there certifications, you got to kind of know somebody. I just wondered if these are kind of went through that process if they're new customers. And would you expect that to be kind of an opportunity to expand into more military business?

We see the military business is very good. We have a differentiated product line with a Made in America control system and control path, as well as modules and displays. And we partner with AV system integrators that are focused on that market and provide what you described, these kind of special requirements to even get on a base, plus many of the other elements that go around a display to make one of these spaces successful. And this product we have, the Narrow Pixel Pitch product is increasingly what they go to replace LCD or projection type of technologies. And it unlocks uses that they previously may be desired to have something, but the technology was just not quite right. And so we see that all of those are potentials for this kind of narrow pixel pitch product for military and really other applications in control centers and elsewhere.

Okay. Hey, thanks a lot, guys. I appreciate it.

Thank you, BJ.

Thank you. And our next question comes from the line of Anja Soderstrom from Sidoti. Your line is now open.

Hi, and thank you for taking my question, and congratulations on the strong quarter. I'm curious about the new Flip-Chip. Has that been received? And what can we expect in potential contribution in terms of revenue and margins from that?

Thank you, Anja, for attending the call. We are very excited about this chip on board that's enabled partially through this Flip-Chip technology, and it provides really a lot of enhancements in our NPP product line. Oftentimes we use that as a -- at a higher pixel pitch or a tighter resolution. We use it -- it's more rugged and durable, so it's more friendly. If somebody can like reach out and touch the face, it has a very high contrast. So it responds well in high-brightness sorts of situations. So we've seen a high receptivity to this product line in our customer base and our partner channels. As far as a prediction on impact on profitability or revenue, maybe it's too soon for us to estimate that.

Okay. Thank you. And I have a follow-up on the recurring revenue question. Is that a higher margin than the overall?

It is at a higher margin, and it adds significantly to our customer satisfaction, which we think it increases the likelihood they'll buy from us again. As of today, it's a smaller portion of our overall revenue, but we think it's an exciting area and there's room to grow in the future.

Okay. And what are you seeing in international markets? It seems like the orders were increasing there at least.

We're hopeful that the geopolitical situation across the world will be less dynamic in the coming years. And it appears that the market is picking up. We still -- and we've had considerable interest during these times. But as described, it was hard to get that interest to convert into orders. But in the last few months, we've been seeing increasing indications that that's easier and easier. So we're hopeful that the international market will continue to pull out of the situation that it's in. Overall, we are very excited about our international markets. A lot of this -- the buying -- thinking from those customers is similar to what we have in the US and our market share is relatively small internationally, allowing us room to grow in those areas as well as we've invested a lot in the sales, service, and fulfillment teams and we believe we can handle growth with our current footprint.

Okay. Thank you. That was all for me.

Thank you.

Thank you. I am showing no further questions at this time. I would now like to turn the call back over to Reece Kurtenbach for any closing remarks.

Yeah. Thank you, everyone, for attending today's conference. Appreciate the questions. And we'll see you in a few months when we have our first quarter earnings call. I hope you all have a great summer and we'll see you later in the early fall. Bye-bye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.