Continued strong operating cash flow from income generation and working capital management Crypto and consumer products 11 | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|------------------------------------------------------------------------|--- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission file number 001-39063 PHOTRONICS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorpora ...

Financial Data and Key Metrics Changes - Revenue for the full year-to-date is up 8% compared to last year, with Q3 revenue at $224 million, a 2% increase year-over-year but a 2% decrease sequentially from Q2 [4][19] - Gross margins improved by 3% year-over-year, while operating margins increased nearly 4% [4][8] - Net income for the quarter was $27 million on a GAAP basis, or $0.44 per diluted share, and $31.6 million on a non-GAAP basis, or $0.51 per share [9] Business Line Data and Key Metrics Changes - Integrated Circuit (IC) revenue was $163.1 million, down 2% sequentially, with high-end IC revenue increasing due to strong foundry logic demand in Asia [7][20] - Flat Panel Display (FPD) revenue also decreased by 2% from the previous quarter, with strong AMOLED demand offset by declines in photomask for G10.5+ and LTPS displays [24] Market Data and Key Metrics Changes - The overall semiconductor market is expected to decline sharply in 2023 but is anticipated to gradually recover in 2024 [13] - The Photomask industry is expected to be flat or slightly down in 2023, with Photronics outperforming broader market indicators [13] Company Strategy and Development Direction - The company is focused on capital allocation strategies that prioritize profitable organic growth and investments in advanced technologies [6] - Photronics aims to leverage its technology leadership in AMOLED panels and maintain high utilization levels in its FPD fab operations [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand for Photomasks, driven by trends in AI, data centers, IoT, and automotive sectors [21][22] - The company is optimistic about revenue growth, margin expansion, and capital deployment to create shareholder value despite a challenging industry environment [10][22] Other Important Information - Operating cash flow was strong at $85.9 million, with year-to-date CAPEX at $78.8 million and a forecast of approximately $130 million for 2023 [9][10] - The company maintains a strong balance sheet with cash of $448.5 million and low debt levels, providing liquidity for growth investments [9] Q&A Session Summary Question: What are the driving factors behind the good margins despite demand slowdown? - Management attributed the strong margins to long-term purchase agreements with major customers, a favorable product mix, and effective cost management [28][30] Question: What does the future demand in mainstream look like? - Long-term demand for mainstream is expected to remain strong, with a potential recovery anticipated in Q4 and into 2024 [31][32] Question: How is the health of the Chinese market for both semi and FPD? - The Chinese business remains strong, with minimal impact from government restrictions [37] Question: What is the split of capital expenses for IC and FPD? - Capital expenses are primarily for expansion in Taiwan and China, with investments across all locations [38]

Q3 2023 Financial Results Conference Call September 6, 2023 Safe Harbor Statement 9/6/2023 2 -2% Q/Q +2% Y/Y PHOTRONICS, INC. PHOTRONICS, INC. PHOTRONICS, INC. PHOTRONICS, INC. $448.5M IC: -2% Q/Q, +1% Y/Y FPD: -2% Q/Q, +4% Y/Y $27.3M Short-term investments • Maintaining margins and strong cash flow as demand softens Q/Q; favorable long-term demand drivers remain • Investing in IC capacity to capitalize on market growth trends *Net income attributable to Photronics, Inc. shareholders • On pace for record ye ...

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Unaudited financial statements for the periods ended April 30, 2023, show the company's financial position and performance [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets reached $1.45 billion and total equity grew to $1.20 billion, reflecting strong retained earnings growth **Condensed Consolidated Balance Sheet Highlights (in thousands)** | Account | April 30, 2023 | October 31, 2022 | | :--- | :--- | :--- | | **Total current assets** | $720,116 | $644,652 | | **Total assets** | $1,451,025 | $1,315,830 | | **Total current liabilities** | $185,168 | $193,797 | | **Total liabilities** | $246,341 | $253,741 | | **Total equity** | $1,204,684 | $1,062,089 | [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Quarterly revenue rose 12.1% to $229.3 million, driving a 45.5% increase in net income and a diluted EPS of $0.65 **Three Months Ended Financial Performance (in thousands, except EPS)** | Metric | April 30, 2023 | May 1, 2022 | | :--- | :--- | :--- | | Revenue | $229,306 | $204,509 | | Gross Profit | $88,402 | $70,220 | | Operating Income | $67,045 | $49,401 | | Net Income Attributable to Photronics, Inc. | $39,929 | $27,432 | | Diluted EPS | $0.65 | $0.45 | **Six Months Ended Financial Performance (in thousands, except EPS)** | Metric | April 30, 2023 | May 1, 2022 | | :--- | :--- | :--- | | Revenue | $440,397 | $394,336 | | Gross Profit | $164,479 | $130,083 | | Operating Income | $123,002 | $87,598 | | Net Income Attributable to Photronics, Inc. | $53,915 | $50,496 | | Diluted EPS | $0.88 | $0.83 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated $109.7 million in cash, while capital expenditures drove higher cash use in investing **Six Months Ended Cash Flow Summary (in thousands)** | Activity | April 30, 2023 | May 1, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $109,677 | $103,289 | | Net cash used in investing activities | ($62,260) | ($33,614) | | Net cash used in financing activities | ($15,242) | ($2,166) | | Net increase in cash | $47,796 | $52,592 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail key accounting policies, VIE consolidation, debt repayment, and significant capital expenditure commitments - The company is a leading manufacturer of photomasks, a key element in the production of integrated circuits (ICs) and flat-panel displays (FPDs), operating eleven manufacturing facilities worldwide[29](index=29&type=chunk) - The PDMCX joint venture with DNP is consolidated as a Variable Interest Entity (VIE) because **Photronics is the primary beneficiary**, holding a controlling financial interest[47](index=47&type=chunk) - In Q2 FY23, the company **repaid the entire remaining balance of its Xiamen Project Loans**, totaling 26.4 million RMB (approx $3.9 million), leaving only finance leases as outstanding debt[51](index=51&type=chunk)[57](index=57&type=chunk) - Revenue is primarily recognized 'over time' as the company performs work on custom photomasks, using a cost-based input method to measure progress[62](index=62&type=chunk) - As of April 30, 2023, the company had outstanding **capital expenditure commitments of approximately $113.1 million**, mainly for high-end equipment[95](index=95&type=chunk) - The share repurchase program authorized in September 2020 has **$31.7 million remaining for future repurchases** as of April 30, 2023[104](index=104&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Record Q2 revenue of $229.3 million was driven by strong IC and FPD demand, improving gross margin to 38.6% [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Revenue grew 12.1% year-over-year to $229.3 million, driven by strong IC and FPD demand that expanded margins **Revenue by Product Type - Q2 FY23 vs. Q2 FY22 (in millions)** | Product Type | Q2 FY23 Revenue | Change vs Q2 FY22 | % Change | | :--- | :--- | :--- | :--- | | Total IC | $167.0 | $21.3 | +14.6% | | Total FPD | $62.3 | $3.5 | +6.0% | | **Total Revenue** | **$229.3** | **$24.8** | **+12.1%** | - IC revenue increases were driven by **strong demand in Asia for mainstream products** used in consumer goods, IoT, 5G, and cryptocurrency mining, leading to a favorable pricing environment[123](index=123&type=chunk)[124](index=124&type=chunk) - FPD revenue growth was driven by **strong high-end demand for AMOLED panels** used in advanced mobile displays[125](index=125&type=chunk) - **Gross margin for Q2 FY23 increased by 4.3 percentage points** year-over-year to 38.6%, primarily due to higher revenue and favorable product mix[127](index=127&type=chunk) - Non-operating income was significantly impacted by foreign currency fluctuations, with a **net gain of $10.7 million in Q2 FY23**, primarily from favorable movements of the South Korean won and New Taiwan dollar against the USD[133](index=133&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $367.5 million in cash and plans capital expenditures of $130.0 million for FY23 - **Cash and cash equivalents were $367.5 million** as of April 30, 2023, with $352.4 million held by foreign subsidiaries[142](index=142&type=chunk) - Estimated **capital expenditures for the full fiscal year 2023 are approximately $130.0 million** to support customer demand[144](index=144&type=chunk) - As of April 30, 2023, the company had **outstanding capital commitments of $113.1 million**[144](index=144&type=chunk) - The share repurchase program has approximately **$31.7 million remaining** under its authorization[145](index=145&type=chunk) [Non-GAAP Financial Measures](index=36&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures are used to clarify performance, with Net Cash increasing to $339.1 million as of April 30, 2023 **Reconciliation of GAAP to Non-GAAP EPS (Q2 FY23)** | Metric | Amount | | :--- | :--- | | GAAP diluted earnings per share | $0.65 | | Effects of adjustments (FX, tax, NCI) | ($0.11) | | **Non-GAAP diluted earnings per share** | **$0.54** | **Net Cash Calculation (in millions)** | Component | April 30, 2023 | October 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $367.5 | $319.7 | | Current portion of Long-term debt | ($7.0) | ($10.0) | | Long-term debt | ($21.3) | ($32.3) | | **Net cash** | **$339.1** | **$277.3** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is foreign currency exposure, with a potential $48.0 million pre-tax loss from a 10% adverse shift - The company's primary market risk is **foreign currency exchange rate risk**, with functional currencies including the South Korean won, New Taiwan dollar, RMB, Singapore dollar, British pound, and euro[162](index=162&type=chunk) - As of April 30, 2023, a hypothetical **10% adverse movement in foreign currency exchange rates would result in a net unrealized pre-tax loss of $48.0 million**[164](index=164&type=chunk) - The most significant currency exposures at quarter-end were the **South Korean won, RMB, and New Taiwan Dollar** against the U.S. dollar[164](index=164&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of the end of the period covered by the report[167](index=167&type=chunk) - **No changes in internal control over financial reporting** occurred during the second fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[168](index=168&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings beyond those arising in the ordinary course of business - For information on legal proceedings, the report refers to Note 11 in Item 1[170](index=170&type=chunk) - Note 11 details a customs audit in China, for which a **$2.2 million contingent loss was recorded in May 2022** and a $1.0 million reversal was made upon settlement in November 2022[96](index=96&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors disclosed in the 2022 Annual Report on Form 10-K - **No material changes** have been made to the risk factors previously disclosed in the 2022 Form 10-K[171](index=171&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the public program in Q2 2023, leaving $31.7 million available under the authorization - The company's board authorized a **$100 million share repurchase program** in September 2020[172](index=172&type=chunk) - **No shares were repurchased** under the publicly announced program during the second quarter of 2023, with a remaining authorized amount of **$31.7 million**[173](index=173&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including Sarbanes-Oxley certifications and XBRL data - Exhibits filed include **CEO and CFO certifications under Sarbanes-Oxley Sections 302** (Exhibit 31.1, 31.2) and 906 (Exhibit 32.1, 32.2)[175](index=175&type=chunk) - The filing includes **Inline XBRL** Instance, Schema, Calculation, Definition, Label, and Presentation documents as required[175](index=175&type=chunk)

OTRONICS, I Total Revenue ($M) 69% 460.2 72% 593.0 74% 641.1 31% 203.6 28% 231.5 26% 229.5 663.8 824.5 870.6 2021 2022 Q2 2023 LTM IC FPD Total may differ due to rounding PHOTRONICS, INC. PHOTRONICS, INC. 5/24/2023 14 IC Photomask Revenue ($M) 641.1 65% 297.2 67% 397.7 70% 452.1 35% 163.0 33% 195.3 30% 189.0 460.2 593.0 PHOTRONICS, INC. PHOTRONICS, INC. Mainstream High-End High-End: 28nm and smaller; Total may differ due to rounding 2021 2022 Q2 2023 LTM PHOTRONICS, INC. PHOTRONICS, INC. 5/24/2023 18 Non-GA ...

Financial Data and Key Metrics Changes - The company achieved record revenue of $229 million in Q2 2023, representing a 9% sequential increase and a 12% year-over-year increase, marking the ninth consecutive quarter of revenue growth [14][10][61] - Gross and operating margins increased by more than 260 and 270 basis points, respectively, to 38.6% and 29.2%, which were 430 and 500 basis points higher than the margins reported in the same quarter last year [55][61] - Non-GAAP EPS was $0.54 for Q2, compared to $0.40 in the previous quarter and $0.38 in the same quarter last year [57][61] Business Line Data and Key Metrics Changes - Integrated Circuit (IC) revenue was $167.1 million, up 7% sequentially and 15% year-over-year, with strong demand across all regions [27][61] - Flat Panel Display (FPD) revenue also reached a record, improving 14% quarter-over-quarter and 6% year-over-year, driven by demand for AMOLED panels [38][61] - Demand for mainstream ICs in the 40 to 55-nanometer range was particularly strong, while some softness was observed in high-end segments [24][27] Market Data and Key Metrics Changes - Shipments to China represented 51% of second quarter revenue, with no material impact from geopolitical tensions reported so far [14][7][5] - The company noted that the photomask market demand is strong, driven by new designs and capacity expansions, which tend to make demand more sustainable [25][26] Company Strategy and Development Direction - The company is focused on maintaining its leading position as a photomask supplier, with strategic investments in technology and advanced process know-how [12][15] - The management emphasized the importance of working closely with customers to support their technology and product enrollment, particularly in the EUV product line [15][26] - The company plans to continue investing in growth while maintaining a strong balance sheet to provide liquidity against uncertainties [26][59] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong design activity and a positive outlook for continued demand in the semiconductor environment [61][26] - The company is monitoring geopolitical tensions closely but has not experienced significant impacts on operations thus far [7][5] - There is an expectation for continued strong demand in the latter half of 2023, particularly from advanced DRAM customers [41][61] Other Important Information - The company generated $82 million in cash from operating activities and has a cash balance of $367 million, providing ample liquidity for growth investments [59][61] - The forecast for 2023 CapEx remains approximately $130 million, primarily for increased IC capacity and end-of-life tool replacements [42][59] Q&A Session Summary Question: What impact have geopolitical tensions had on operations? - Management stated that there has not been a material impact from export control regulations and geopolitical issues between China and the U.S. so far [7][5] Question: Can you quantify any headwinds from China? - Management acknowledged the geopolitical tensions but emphasized that they are working closely with suppliers to manage any potential impacts [7][5] Question: What is the outlook for memory demand? - Management noted that while memory demand has been sluggish, there is optimism among key customers about recovery in the second half of 2023 [41][61] Question: What is the CapEx plan for this year? - The majority of the planned $130 million CapEx is targeted at IC, with investments aimed at high-end mainstream business and tool replacements [42][59]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 29, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission file number 0-15451 PHOTRONICS, INC. (Exact name of registrant as specified in its charter) Connecticut 06-0854886 (State or other j ...

Photronics, Inc. (NASDAQ:PLAB) Q1 2023 Results Conference Call February 22, 2023 8:30 AM ET Company Participants Richelle Burr - Chief Administrative Officer Frank Lee - Chief Executive Officer John Jordan - Chief Financial Officer Chris Progler - Chief Technology Officer Eric Rivera - Chief Accounting Officer and Corporate Controller Conference Call Participants Thomas Diffely - D.A. Davidson Operator Good day, and thank you for standing by. Welcome to the Photronics First Quarter Fiscal 2023 Earnings Call ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission file number 0-15451 PHOTRONICS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization ...