Ladies and gentlemen, thank you for standing by and welcome to the Richardson Electronics Fourth Quarter Fiscal Year 2020 Earnings Conference Call. At this time, all participants lines are in a listen-only mode. After the speakers' presentation, there'll be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Ed Richardson, CEO. Please go ahead, sir.

Good morning and welcome to Richardson Electronics conference call for the fourth quarter fiscal year 2020. Joining me today are Robert Ben, Chief Financial Officer; Wendy Diddell, Chief Operating Officer and General Manager for Richardson Healthcare; Greg Peloquin, General Manager of our Power & Microwave Technologies Group; Jens Ruppert, General Manager of Canvys. We're all calling in from remote locations. As a reminder, this call is being recorded and will be available for audio playback. I would also like to remind you that we'll be making forward-looking statements and they're based on current expectations and involve risks and uncertainties more so than ever today. Therefore, our actual results could be materially different. Please refer to our press release and SEC filings for an explanation of our risk factors. The fourth quarter was unprecedented and challenging quarter. Never in the company's history have we seen the world change so dramatically nearly overnight. In the third quarter, the coronavirus negatively affected our business, primarily in Asia. The virus quickly spread throughout Europe and the Americas leaving its mark on all of our businesses in the fourth quarter. Our customers and employees quickly changed the way they work. And as an essential business, we continue to operate. This helped prevent the landslide in our revenues, such as those seen in other companies and industries. While COVID-19 negatively impacted our overall results, the Richardson team demonstrated superior support to our customers and suppliers. We're pleased to see sales growth in Canvys North America, and in the semiconductor wafer fab equipment market. Given the ever changing situation in the global economy, it's difficult to predict what the new normal will bring. I'm convinced our business will be stronger with the team we have and with the ongoing investments we're making in our growth initiatives. I'll now turn the call over to Bob Ben who provide a detailed recap of our fourth quarter and full year financials. Then Greg, Wendy, and Jens will discuss individual business unit performance, including more details regarding the impact of the coronavirus.

Thank you, Ed and good morning. I will review our financial results for our fourth quarter in fiscal year 2020, followed by a review of our cash position. Net sales for the fourth quarter fiscal 2020 decreased 11.4% to $37.4 million compared to net sales of $42.2 million in the prior year's fourth quarter, primarily due to COVID-19 and its impact on demand. Although PMT net sales decreased $2.7 million or 8.6%, sales of semiconductor wafer fab equipment specialty products increased from last year's fourth quarter. Canvys sales decreased by $0.8 million or 10.2%. Due to lower sales to medical OEMs and its European market, partially offset by higher North American sales. Richardson Healthcare sales decreased $1.3 million or 47.2% due to hospital closures, restrictions on non-emergency procedures, and many people postponing care during shelter-in-place orders to help stop spread of the virus. Gross margin for the quarter improved to 30.4% of net sales compared to 29.7% of net sales in last year's fourth quarter. This was primarily due to a favorable product mix and improved manufacturing performance in PMT. Operating expenses were $12.7 million for the fourth quarter fiscal 2020 compared to $12.5 million in the fourth quarter fiscal 2019. The increase in operating expenses resulted from higher salaries and severance expenses, partially offset by lower travel and IT expenses. As a result, the company reported an operating loss of $1.3 million for the fourth quarter fiscal 2020 as compared to an operating loss of $6.4 million in the fourth quarter of last year, which included a non-cash goodwill impairment of $6.3 million. Other income for the fourth quarter fiscal 2020, including interest income and foreign exchange was $0.2 million compared to other income of $0.3 million in the fourth quarter fiscal 2019. The income tax provision of $0.2…

Thank you, Bob and good morning everyone. PMT sales in the fourth quarter of fiscal year 2020 were $29.3 million versus $32.1 million in Q4 FY 2019. Our gross margin improved in the quarter to 33.2% versus 30.1% in the prior year, as we improved our manufacturing and efficiencies. Issues related to COVID-19, including temporary business closures and shelter-in-place orders primarily caused the Q4 sales decline when compared to prior year. One positive trend was our bookings. Book-to-bill was 1.20 in the fourth quarter, strong EDG bookings tied to our wafer fab customers, as well as our new technology partners and PMG, our Power Microwave Group drove this growth. Our bookings growth for EDG business was based on continued engineering and logistics support for the wafer fab and global infrastructure markets, benefiting both our OEM and MRO customers. The growth in PMG bookings is due to our new technology partners, our demand creation model, our numerous design wins, high growth markets, and our unique global business model. With increasing backlog over $6.6 million in the quarter, we will continue to improve our go-to-market strategy by investing in key business development resources to greatly improve and increase our customer contact in a more efficient manner. These actions allow us to generate more opportunities in growing the markets using our existing global infrastructure and headcount. Our new technology, bookings growth is supported by key partners, such as Qorvo, MACOM, Anokiwave, UnitedSiC, Alosetron, and Fuji Semiconductor. T2 manufacturers in the industries such as CPI, Thales, NJRC, and PHOTONIS, as well as our own manufacturing capabilities support our global legacy business. COVID-19 did cause a slowdown in Q4. The reason I use the word slowdown is the demand for our product did not go away. In fact, we're excited about the booking trends in…

Thanks, Greg and good morning everyone. FY 2020 began well for the Healthcare Group. We received CE approval, allowing us to offer the ALTA750 for sale in Europe. We adjusted our pricing policy to be aggressive and flexible. We made a concerted effort to identify where Canon CT systems are located throughout the United States. The number of P3 contracts doubled in the year as did the number of customers buying the ALTA750. Nearly 20% of our new customers are from outside of the Americas. For the first three quarters of FY 2020 CT Tube sales were trending upwards, so we know we were on the right track. Then the pandemic hit, causing hospitals to close and suspension of non-clinical procedures. Initially, healthcare organizations reported that CT scans would help diagnose COVID-19. Unfortunately, any "real increase" was more than offset by the significant decrease in patients without the virus. People, in general, have been avoiding hospitals out of fear of catching COVID. We felt the impact on our call volume early in the fourth quarter in both the United States and Europe. Many of our third-party service customers reported up to a 75% drop in call volume. Although hospitals are now reopening, most imaging and radiology personnel are working fewer hours and they are not responding to sales related calls. We continue to reach out via phones, emails, and social media to advise all of our healthcare customers that we are available 24/7 to provide technical support and to ship tubes and parts on demand. We know it is critical to help the hospital stay up and running and to offer them cost-effective alternatives. The pandemic also affected Latin America, which was already experiencing significant economic issues. The virus further depressed our system sales in the quarter. As hospitals are…

Thanks Wendy and good morning everyone. Canvys, which includes the engineering, manufacture and sale of custom displays to original equipment manufacturers in industrial and medical markets, delivered solid performance with sales of $6.6 million during the fourth quarter of fiscal 2020, a decrease of 10.2% over the same period last year. The revenue decrease for the quarter was related to decreased customer demand in Europe due to the outbreak of the coronavirus and the resulting impact on the OEMs. Many of our European customers production also decrease in demand. Sales in North America are actually stronger than prior year's fourth quarter, thanks in part to higher demand for patient monitors that are used in intensive care units and HMIs used for mobile radiography. On the year-to-date basis, global sales grew 3.4% in fiscal year 2020 despite the COVID-19 pandemic and the serious business impact compared to a very strong fiscal year 2019. Gross margin as a percentage of net sales was 31.0% during the fourth quarter of fiscal 2020, down from 32.1% during the fourth quarter fiscal 2019. The decreased gross margin, while still very strong for display business, was related to an unfavorable product mix and foreign currency effects. On the year-to-date basis, our fiscal year 2020 gross margin as a percentage of sales decreased slightly to 32.2% from 32.5% fiscal year 2019. Our backlog continues to be strong and increased on a year-to-year basis by 30%. The healthy backlog positioned along with a number of projects that are currently in the engineering stage position us well for continued growth before considering any long-term impact of COVID-19. By visiting customers and trade shows continues to be a problem under COVID-19, our sales reports are focused on online marketing and cold calling. During the quarter, we received several new orders…

Thanks Jens for a good quarter in spite of the current pandemic. I know it's been a difficult on all three of our business unit managers to maintain sales momentum and keep employee morale up. You've all done an excellent job. Our teams are used to working face-to-face with co-workers, customers and suppliers. We're taking a very conservative approach in order to keep everyone as safe and healthy as possible. We continue to limit the number of employees working from a Richardson facility, the majority our employees in our plants serve in product development, manufacturing, and support or supply chain. We've also restricted travel and face-to-face meetings. With a recent increase in COVID cases throughout many states, we don't actually see any change to this arrangement in the near future. We've been able to serve our customers and suppliers through telecommuting and with a limited staff into the facilities. We'll continue to do this so until the virus is under control. Our employees are our most important asset and their safety must come first. We're not happy about losing money in the quarter. Both Greg and Wendy pointed out areas for growth supported by our investments, and Jens explained that the decrease in Canvys revenue was temporary. For this reason, we elected not to lay off employees, but instead to focus on key initiatives that will derive revenue long-term. Given that our sales effort has continued without interruption, we're confident that over time we will again see sales growth. We do not know when this will happen. This is contingent on economies getting back to work and demand for equipment and services increasing. Now, more than ever, we'll continue to stay focused on cash management. Our SG&A was lower in FY 2020 than the prior year and we spent conservatively less on capital expenditures. Our cash position remains strong, the finance team did a good job repatriating cash, and our bad debt ratio remains low. We'll continue to spend conservatively while investing in our growth initiatives and we'll adjust resources based on ongoing changes in demand. At this point, we'll be happy to answer a few questions.

And there are no questions in the queue. I'd like to turn the call back to Ed for any closing remarks.

Thanks Catherine. Well, thank you for joining us and your ongoing interest in Richardson Electronics. We wish you continued good health. We look forward to discussing our fiscal 2021 first quarter with you in October. With that, Catherine, we'll end the call.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.