Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from Glenn Wortman – Sidoti & Company, LLC.
Glenn Wortman - Sidoti & Company, LLC
In the fourth quarter, your Graphics sales were about $17 million. Do you think the number could fall off much further? Do you expect to see sequential growth, or what do you guys think?
David W. McCauley
Certainly, it could fall lower. Do I expect it to? No. As the saying goes, ?I think we just bought them here.? With the interest in growth that we’re seeing in our video/LED screens and recently announced, we’re encouraged although we don’t have an order, this CVS acquisition of Long’s and the interest I said about the restaurant. There’s enough positive signs there to exceed that number. Not impossible not to. If we were not to get the CVS Long order, that won’t help matters but, again, as Bob said, that was not forecast in our projection numbers.
Robert J. Ready
Another thing I’d like to add, Glenn, to that is that in the forecast that we’re giving you, we’ve really looked hard at our best analysis of what’s going on in the retail segment. And it’s almost back to the basics with smaller orders rather than big roll out programs. And as I’m reinforcing my comments a few moments ago, we’re very comfortable that our forecasts are right on target.
Glenn Wortman - Sidoti & Company, LLC
Okay, can you actually break that revenue guidance between the Graphics and the Lighting?
Robert J. Ready
Well, if it stays true to form, we’ve been running around 60-65% Lighting and about 33-40% Graphics, understanding that the mix is somewhat going to be adjusted based on the efforts and the results of the digital boards and some of the things that are going on in the fast food industry, like the LCD that David relate it to.
Glenn Wortman - Sidoti & Company, LLC
And then just finally in the fourth quarter, your sales were higher but the margins narrowed. I assumed a lot of that had to do with the shift of higher percentage of Lighting versus Graphics, which highlighted the other causes for the decrease in profitability?
Robert J. Ready
Yes, I think that probably that, Glenn, is certainly the reaction to the price increases in material and specifically in some of our contracts that we have with some of our larger national accounts, specifically on the Lighting side. There’s always a tendency to be kind of following that. And I think that’s where that pressure is starting to see that. Certainly, the product mix has had a lot to do with that as well. But I think it’s more of the material side. We have initiated a price increase to the depth where that would hold. Yet, it’s a little early to tell. Most of our efforts, of course, has been to start to roll out these solid-state, which will have higher margins. It’s still a little early to tell. I don’t want people to get too anxious. As Scott said, we started rolling this stuff out in March. We really didn’t get some of this stuff in the field and get it installed until the last 60-90 days. And now, these things are starting to show the promises and certainly the capabilities that we told the customers it would. And in the last week, in some cases we just recently received $100,000 order on some crossovers. We’ve received a large order on the, what I call, the jewelry case lights, the linear displays. These are the encouraging things. We sure as hell though that we’ve got our work cut out to offset some of that softness in the retail environment and we’ve made a lot of adjustments in our work model as we’re going towards that. And hopefully, depending on things as forecasted, we’ll start to see some improvements on the bottom line.
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