Good day, ladies and gentlemen and welcome to the Daktronics fiscal year 2019 fourth quarter earnings results conference call. As a reminder, this conference is being recorded today, Wednesday, May 29, 2019 and is available on the company's website at www.daktronics.com. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. 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 Cherry. Good morning everyone. Thank you for participating in our fiscal and fourth quarter earnings conference call. I would like to review our 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. 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 impact of global trade discussions and policies, management of growth, timing and magnitude of future contracts, fluctuations of margins, and the introduction of new products and technologies and other important factors as noted in detail in our 10-K and 10-Q SEC filings. With that, let me highlight some of the financials starting with the fourth quarter results and the related comparison to fiscal 2018's fourth quarter. Orders were relatively flat. Sales decreased by 7.5% resulting from order timing and related conversion to sales to meet the various needs of the customer. Gross profit as a percentage of net sales was 19.1% as compared to 21.6%. Gross profit was positively impacted by the decrease of warranty as a percent of sales to 2.2% as compared to 4.4% and negatively impacted by $3 million of costs for adjustments made to business combination contingencies and project sales margins being lower. Operating expenses for the fourth quarter of fiscal 2019 was $34.7 million compared to $35.2 million. We had a tax expense of $0.1 million for the Q4 loss as we trued up actual income tax estimates to the actual results. For the full fiscal year, orders were up 4.4% as compared to last year and was our third…

Thank you Sheila. Good morning everyone. As Sheila highlighted, our financial results for fiscal 2019 were lower than anticipated and we had a disappointing second half to the year. Like many other U.S. companies, the dynamic and changing global trade environment and strong global economy has impacted our fiscal year costs by at least $6 million. The biggest impacts were for aluminum price changes, electronic product cost increases and tariffs on components and commodities. We are not only always able to change our prices to match these cost increases. We desire a free and fair global trade and while the global trade environment remains in flux, we are evaluating ways to reduce the impacts. For example, we filed for a U.S. government toll exemptions but have not been granted any to-date. We continue to evaluate new component suppliers from geographies not really currently impacted by high tariff rates. We entered into fixed-price contracts for commodities to stabilize price fluctuations and we are evaluating manufacturing locations that could help reduce the impact. However, many of these countermeasures need additional investments or evaluation to ensure viability and would also impact our ongoing cost structure. On a more positive note, we are able to capitalize on the strong global economy and growing market in digital space. We focused on winning more orders in fiscal 2019 and we’re able to achieve the third highest level of order value in our company's history. This is also a testament of our continued leadership in the marketplaces as customers choose Daktronics for a broad range of solutions, the reliability of our products, and our commitment to serve them over the lifetime of their system. During fiscal 2019, we made continued progress on releasing new offerings to our already competitive and diverse line of solutions, positioning us to…

[Operator Instructions]. Our first question comes from Greg Pendy with Sidoti.

Hi guys. Thanks for taking my questions. I guess just first, you mentioned the warranty expenses were, I guess, 2.2%. So it's kind of a tick up from 3Q. Do you think the 1.5% to 2% normalized is reasonable going forward or do you think it will stay around above 2%?

I think that 2% and under is our goal and I think we can get there as well. There's some variability from quarter-to-quarter, but overall our warranty trends have been in a positive direction.

Okay. That's helpful. And then just moving on just I guess to the impact from tariffs. Can you just give us a sense of are there longer term contracts that are starting to roll off that might give you a little bit of relief in 2020? Or do you think the trend right now, if the regulation stay in place is what we should assume for 2020?

That's a volatile situation, Greg. And we continue to evaluate both the situation and different reactions to that. The recent increase in the tariff amounts on these List 1, 2, and 3 will likely have some impact in this next fiscal year.

Okay. That's helpful. Thanks a lot.

Thank you. Our next question comes from Lisa Springer with Singular Research.

I wanted to ask how much of the fourth quarter gross margin decline was due to the higher commodity costs? If you could just give me kind of a range of what you thought?

I guess maybe 0.5% to 1% range.

Okay. And then in terms of the orders, projects larger than $5 million, does that tend to be focused on a couple of the business units or is it spread across all of the business units or how do those work?

Certainly, our live events business has this large project aspect as well as our spectaculars. And then in our transportation business, we can get orders in that level. Our international business plays in all three of those customer segments and so we will see, depending on the year, opportunities in those areas as well.

Okay. Thank you.

Thank you. Ladies and gentlemen, thank you for participating in today's question-and-answer session. I would now like to turn the call back over to Reece Kurtenbach for any closing remarks.

I appreciate everybody's time and attention this morning. Hope you have a great summer and I look forward to talking to you in August, September. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect and have a wonderful day.