Core Insights - Photronics, Inc. has appointed Eric Rivera as the new Chief Financial Officer, effective immediately, after serving as interim CFO since February 2024 [1][2] - The CEO, Frank Lee, expressed confidence in Rivera's experience and financial knowledge, emphasizing the importance of his role in driving profitable growth and shareholder value [2] - Photronics is a leading manufacturer of photomasks for integrated circuits and flat panel displays, with a history of over 50 years in the industry [3] Company Overview - Photronics specializes in high precision quartz plates that contain microscopic images of electronic circuits, essential for IC and FPD manufacturing [3] - The company was founded in 1969 and has approximately 1,885 employees as of October 31, 2023 [3] - Photronics operates 11 manufacturing facilities strategically located across Asia, Europe, and North America [3]

BROOKFIELD, Conn., May 28, 2024 (GLOBE NEWSWIRE) -- Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today announced that Eric Rivera, has been promoted to chief financial officer, effective immediately. Eric previously held the role of interim CFO since February 2024 and served as chief accounting officer since 2020. For Further Information: "I am pleased to have Eric join our leadership team in this important role as we work together to continue growing profitabl ...

Core Viewpoint - Photronics reported a decline in earnings and revenues for the second quarter of fiscal 2024, primarily impacted by external factors such as the Taiwan earthquake and the Chinese New Year holiday [1][2]. Financial Performance - Non-GAAP earnings were 46 cents per share, missing the Zacks Consensus Estimate by 16.36% and decreasing 14.8% year over year [1]. - Revenues totaled $217 million, down 5% year over year but up 0.3% sequentially [1]. - Integrated Circuit (IC) revenues increased 2% sequentially but declined 4% year over year to $160.9 million, driven by higher demand in mainstream IC sales [3]. - FPD revenues fell 10% year over year to $56.1 million, with a sequential decline of 5% due to foreign exchange headwinds [3]. - Gross margin contracted 200 basis points year over year to 36.5% [4]. - Operating income was $56.1 million, down 16.4% year over year, with an operating margin contraction of 340 basis points to 25.8% [4]. Balance Sheet & Cash Flow - As of April 28, 2024, cash and cash equivalents and short-term investments were $559.9 million, an increase from $521.5 million as of January 28, 2024 [5]. - Total debt decreased to $21.8 million from $23.4 million in the previous quarter [6]. - Cash generated from operating activities was $76.5 million, with $20 million invested in organic growth through capital expenditures [6]. Guidance - For the third quarter of fiscal 2024, Photronics expects revenues between $221 million and $229 million, with earnings projected between 53 cents and 59 cents per share [7]. Market Position - Photronics currently holds a Zacks Rank 3 (Hold) and has seen its shares decline 16.1% year to date, contrasting with a 6.7% increase in the Zacks Computer & Technology sector [8]. - Competitors with better rankings include Nutanix (Zacks Rank 1), CrowdStrike (Zacks Rank 2), and Dell Technologies (Zacks Rank 2) [8].

Financial Data and Key Metrics Changes - Net income for the quarter was $36.3 million, or $0.58 per diluted share on a GAAP basis, while non-GAAP net income was $28.7 million, or $0.46 per diluted share after adjusting for non-operating FX gain [26] - Operating cash flow generated was $76.5 million, with capital expenditures (capex) at $20 million for the quarter, maintaining an expected total capex of $140 million for 2024 [26][27] - The company ended the quarter with a cash balance of $539.2 million, short-term investments of $20.7 million, and debt of $21.8 million, indicating sufficient liquidity for investments [27] Business Line Data and Key Metrics Changes - Second quarter revenue was $217 million, slightly higher than the first quarter, with IC sales improving quarter-over-quarter while LPD decreased [45][30] - Gross margin was 36.5%, similar to the first quarter but down from the previous year due to lower premium charges, resulting in an operating margin of 25.8% [47] - IC mainstream sales increased, driven by market share gains, while high-end sales were down primarily due to lower U.S. demand [39] Market Data and Key Metrics Changes - The semiconductor environment is gradually improving, with expectations for positive demand momentum in Q3 and Q4 across most IC segments and regions [39][40] - Demand for mobile display masks is expected to pick up in Q3, ahead of anticipated fall launches of new premium smartphones [46] - The company noted that the overall revenue remains around 5% below prior year levels, with a slower ramp in order rates following the Lunar New Year [72] Company Strategy and Development Direction - The company aims to address anticipated demand growth in both high-end and mainstream IC markets while increasing return on invested capital [26] - Long-term optimism is maintained regarding demand trends for both IC and LPD, with expectations that megatrends such as AI will drive chip design activity [40][41] - The company is focused on maintaining strong customer relations and leveraging leading technology to outgrow the photomask industry [42] Management's Comments on Operating Environment and Future Outlook - Management acknowledged unique challenges in Q2, including the impact of the earthquake, but expressed confidence in achieving solid results for the year [30][83] - The company expects third quarter revenue to be in the range of $221 million to $229 million, with non-GAAP earnings per share estimated between $0.53 and $0.59 [28] - Management highlighted that order rates at the beginning of Q3 are encouraging, providing confidence for the upcoming quarter [36] Other Important Information - The earthquake in Taiwan resulted in a $3 million impact primarily due to production lost time, but no significant damage to facilities or equipment was reported [24][71] - The company is investigating the impact of the earthquake on photomasks, with some potentially needing to be scrapped or serviced [82] Q&A Session Summary Question: What was the impact of the earthquake on production and guidance? - The earthquake had a $3 million impact, mainly from production lost time, but it was a one-time event and not expected to affect future guidance [24][34] Question: How is the demand environment looking for the next quarter? - The demand environment is expected to improve, with higher order rates entering Q3, particularly in the high-end segment [36][39] Question: What are the expectations for gross margins in the upcoming quarter? - Gross margins are expected to remain stable, with a focus on improving product mix to maintain profitability despite lower premium charges [47][63]

Safe Harbor Statement | --- | --- | --- | --- | --- | --- | --- | --- | |-------------------------|-------|-------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | Q2 2024 Financial | | | | | | | | | Results Conference Call | | | | | | | | | May 22, 2024 | | | | | | | | PHOTRONICS, INC. 2 This presentation and some of our comments during this presentation may contain projections or other forward-looking statements regarding future events, our future financial performance, and/o ...

Exhibit 99.2 (in thousands, except per share amounts) PHOTRONICS, INC. Condensed Consolidated Statements of Income | | | April 28, | | Three Months Ended January 28, | | April 30, | | April 28, | Six Months Ended | April 30, | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2024 | | 2024 | | 2023 | | 2024 | | 2023 | | Revenue | $ | 217,000 | $ | 216,334 | $ | 229,306 | $ | 433,334 | $ | 440,397 | | Cost of goods sold | | 137,749 | | 137,079 | | 140,904 | | 274,828 | | 275,918 | | G ...

BROOKFIELD, Conn., May 22, 2024 (GLOBE NEWSWIRE) -- Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its second quarter of fiscal year 2024 ended April 28, 2024. "Second quarter revenue and gross margin were in line with the first quarter as positive seasonality trends were offset by business headwinds primarily related to temporary soft demand following the Chinese New Year holiday and the impact from earthquakes in Taiwan begi ...

Photronics (PLAB) is set to report its second-quarter fiscal 2024 results on May 22. For the to-be-reported quarter, PLAB expects revenues between $226 million and $236 million. Non-GAAP earnings are expected to be between 50 cents and 58 cents. The Zacks Consensus Estimate for earnings is pegged at 55 cents, unchanged in the past 30 days and indicating 1.85% year-over-year growth. The company's earnings beat the Zacks Consensus Estimate in two of the trailing four quarters while missing the same on two occ ...

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Photronics, Inc.'s unaudited condensed consolidated financial statements for the quarter ended January 28, 2024, show total assets of **$1.58 billion**, revenue of **$216.3 million**, and net income attributable to shareholders of **$26.2 million** [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of January 28, 2024, total assets increased to **$1.58 billion** from **$1.53 billion**, driven by cash and PPE, while total liabilities decreased and total equity grew to **$1.35 billion** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Jan 28, 2024 | Oct 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $508,518 | $499,292 | | Total current assets | $807,677 | $785,450 | | Property, plant and equipment, net | $742,671 | $709,244 | | **Total assets** | **$1,582,836** | **$1,526,221** | | **Liabilities & Equity** | | | | Total current liabilities | $185,289 | $185,223 | | Total liabilities | $235,782 | $250,612 | | Total equity | $1,347,054 | $1,275,609 | | **Total liabilities and equity** | **$1,582,836** | **$1,526,221** | [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the three months ended January 28, 2024, revenue increased to **$216.3 million**, gross profit rose to **$79.3 million**, and net income attributable to shareholders significantly increased to **$26.2 million** or **$0.42 per diluted share** Three Months Ended Income Statement Highlights (in thousands, except per share data) | Metric | Jan 28, 2024 | Jan 29, 2023 | | :--- | :--- | :--- | | Revenue | $216,334 | $211,090 | | Gross Profit | $79,255 | $76,077 | | Operating Income | $57,489 | $55,957 | | Net income attributable to Photronics, Inc. shareholders | $26,180 | $13,986 | | Diluted Earnings Per Share | $0.42 | $0.23 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For Q1 FY24, net cash from operations increased to **$41.5 million**, investing activities used **$42.2 million**, financing activities used **$2.9 million**, and cash and cash equivalents ended at **$508.5 million** Three Months Ended Cash Flow Summary (in thousands) | Cash Flow Activity | Jan 28, 2024 | Jan 29, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $41,508 | $27,680 | | Net cash used in investing activities | ($42,215) | ($30,170) | | Net cash used in financing activities | ($2,871) | ($9,714) | | Effect of exchange rate changes on cash | $13,026 | $27,499 | | **Net increase in cash** | **$9,448** | **$15,295** | | **Cash and cash equivalents at end of period** | **$508,518** | **$334,792** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, business operations as a photomask manufacturer, consolidation of the PDMCX joint venture, revenue disaggregation, debt, and **$142.2 million** in capital expenditure commitments - Photronics 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 company consolidates its China-based IC joint venture, **PDMCX**, as it is deemed the primary beneficiary of the **Variable Interest Entity (VIE)**[48](index=48&type=chunk) Revenue Disaggregation by Product Type (Q1'24 vs Q1'23, in thousands) | Product Type | Q1 2024 Revenue | Q1 2023 Revenue | | :--- | :--- | :--- | | **IC (Total)** | **$157,589** | **$156,589** | | IC High-end | $60,875 | $48,003 | | IC Mainstream | $96,714 | $108,586 | | **FPD (Total)** | **$58,745** | **$54,501** | | FPD High-end | $50,616 | $45,691 | | FPD Mainstream | $8,129 | $8,810 | | **Total Revenue** | **$216,334** | **$211,090** | - As of January 28, 2024, the company had outstanding commitments for capital expenditures of approximately **$142.2 million**, primarily for **high-end equipment**[89](index=89&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 FY24 financial results, noting **$216.3 million** revenue, a **2.5% YoY increase**, improved gross margin to **36.6%**, strong liquidity with **$508.5 million** cash, and planned **$140 million** capital expenditures for FY24 [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Q1 FY24 revenue was **$216.3 million**, a **2.5% YoY increase** driven by high-end IC and FPD demand, despite a sequential decrease due to mainstream IC and FPD seasonality, with gross margin improving **60 basis points YoY** to **36.6%** Quarterly Revenue Changes by Product Type (in millions) | Product Type | Q1 FY24 Revenue | Change vs Q4 FY23 | Change vs Q1 FY23 | | :--- | :--- | :--- | :--- | | Total IC | $157.6 | -4.2% | +0.6% | | Total FPD | $58.7 | -6.7% | +7.8% | | **Total Revenue** | **$216.3** | **-4.9%** | **+2.5%** | - The decrease in IC revenue from Q4 FY23 was primarily due to reduced **mainstream demand in Asia**, while the year-over-year increase was driven by **high-end demand** offsetting a mainstream decline[113](index=113&type=chunk) - FPD revenue decreased from Q4 FY23 due to **premium smartphone seasonality** but increased **7.8%** from Q1 FY23 due to higher demand for **high-end AMOLED displays**[114](index=114&type=chunk) - Gross margin increased **60 basis points year-over-year** to **36.6%**, primarily due to **higher revenue** and a **favorable product mix**[116](index=116&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$508.5 million** in cash and cash equivalents, plans approximately **$140 million** in FY24 capital expenditures for IC capacity, and has **$31.7 million** remaining for share repurchases - Cash and cash equivalents were **$508.5 million** as of January 28, 2024, with **$494.0 million** held by foreign subsidiaries[124](index=124&type=chunk) - Estimated capital expenditures for the full fiscal year 2024 are approximately **$140 million**, aimed at enhancing **IC capacity and efficiency**[126](index=126&type=chunk) - As of January 28, 2024, approximately **$31.7 million** was available for **share repurchases** under the board-authorized program[127](index=127&type=chunk) [Non-GAAP Financial Measures](index=30&type=section&id=Non-GAAP%20Financial%20Measures) The company presents non-GAAP financial measures like Non-GAAP Net Income, EPS, Free Cash Flow, and Net Cash for clearer performance insights, with Q1 FY24 Non-GAAP diluted EPS at **$0.48** and free cash flow at **negative $1.8 million** GAAP vs. Non-GAAP Diluted EPS Reconciliation | Metric | Q1 FY24 | Q4 FY23 | Q1 FY23 | | :--- | :--- | :--- | :--- | | GAAP diluted earnings per share | $0.42 | $0.72 | $0.23 | | Effects of adjustments (FX, tax, etc.) | $0.06 | $(0.12) | $0.17 | | **Non-GAAP diluted earnings per share** | **$0.48** | **$0.60** | **$0.40** | Free Cash Flow (in millions) | Component | Q1 FY24 | Q1 FY23 | | :--- | :--- | :--- | | Net cash provided by operating activities | $41.5 | $27.7 | | Purchases of property, plant, and equipment | ($43.3) | ($31.1) | | **Free cash flow** | **($1.8)** | **($3.4)** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces market risks primarily from foreign currency fluctuations, notably in KRW, JPY, NTD, and RMB, where a **10% adverse movement** could lead to a **$54.8 million pre-tax loss**, while interest rate risk is immaterial - The company conducts business in several international currencies, with primary exposures in the **South Korean won**, **New Taiwan dollar**, **RMB**, and **Japanese yen**[143](index=143&type=chunk) - As of January 28, 2024, a hypothetical **10% adverse movement** in foreign currency exchange rates would result in a net unrealized pre-tax loss of **$54.8 million**[145](index=145&type=chunk) - The company's most significant currency exposures are the **South Korean won ($13.8M)**, **RMB ($9.7M)**, and **New Taiwan Dollar ($28.4M)** against the U.S. dollar[145](index=145&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and interim CFO, concluded the company's disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the first fiscal quarter - Based on an evaluation as of the end of the reporting period, the **chief executive officer** and **interim chief financial officer** concluded that the company's **disclosure controls and procedures were effective** at a reasonable assurance level[148](index=148&type=chunk) - No **material changes** occurred in the company's **internal control over financial reporting** during the first fiscal quarter[149](index=149&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 12 of the financial statements for information on legal proceedings, which are not expected to have a material effect on the company's financial statements - For information on legal proceedings, the report refers to **Note 12** within Item 1[151](index=151&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors from those disclosed in its Annual Report on Form 10-K for the fiscal year 2023 - There have been **no material changes** to the **risk factors** previously set forth in the company's **2023 Form 10-K**[152](index=152&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase common stock in Q1 2024, with **$31.7 million** remaining available for future repurchases under the board-authorized program Issuer Purchases of Equity Securities (Q1 2024) | Period | Total Shares Purchased | Average Price Paid | Value of Shares Remaining for Purchase (in millions) | | :--- | :--- | :--- | :--- | | Nov 1, 2023 – Jan 28, 2024 | 0 | - | $31.7 | [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) On January 11, 2024, Lucien Bouchard, VP of Global Sales, adopted a Rule 10b5-1 trading plan to sell up to **9,000 shares** of common stock, which have since been traded - On January 11, 2024, an executive officer, **Lucien Bouchard**, adopted a **Rule 10b5-1 trading arrangement** to sell up to **9,000 shares** of common stock[155](index=155&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and interim CFO pursuant to the Sarbanes-Oxley Act (Sections 302 and 906) and Inline XBRL documents - The exhibits filed with this report include **CEO and CFO certifications** (Exhibits 31.1, 31.2, 32.1, 32.2) and **XBRL data files** (Exhibits 101 and 104)[157](index=157&type=chunk)

Financial Data and Key Metrics Changes - Revenue for the first quarter was $216.3 million, up 2% year-over-year but down 5% sequentially due to seasonal trends and fewer operational days [42] - First quarter earnings were $0.42 per share on a GAAP basis and $0.48 per share on a non-GAAP basis, showing an improvement from the previous year [26][47] - Operating cash flow improved by 50% year-over-year to $41.5 million, driven by higher net income and effective working capital management [48] Business Line Data and Key Metrics Changes - Integrated Circuit (IC) revenue was $157.6 million, up 1% year-over-year but down 4% sequentially, with high-end revenue increasing due to strong foundry logic demand in Asia [43] - Flat Panel Display (FPD) revenue was $58.7 million, an 8% increase year-over-year but down 7% from the previous quarter, with high-end FPD revenue improving due to increased demand for AMOLED displays [44][45] - Operating margin was reported at 26.6%, with gross margin at 36.6%, slightly higher year-over-year but lower sequentially [46] Market Data and Key Metrics Changes - Demand improved through the quarter, particularly in the U.S. ahead of the Chinese New Year, with expectations for continued demand trends into Q2 [19] - The semiconductor industry is expected to transition to a new growth phase, leading to increased photomask demand in the second to third fiscal quarters [28] - The pricing environment has stabilized around mid to high 30s percentage gross margin levels, with expectations for gross margin in the 38% range for Q2 [51] Company Strategy and Development Direction - The company is focused on controlling costs to increase margins and cash flow to support growth investments [20] - There is a commitment to targeted investment and consistent execution to ensure continued success, especially in high-end and mainstream IC markets [40] - The company aims to maintain stable pricing in the mainstream sector while focusing on high-end products to offset any pricing pressures [57] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the rest of the year, anticipating a recovery in demand for memory and a stable pricing environment in mainstream products [28][51] - The company expects to continue growing market share and improving profit margins, with confidence in achieving another record year in 2024 [8] - Management noted that the mainstream business is stabilizing, particularly in the 40-nanometer area, which is consuming much of the company's capacity [34] Other Important Information - The company ended the quarter with a cash balance of $508.5 million, providing ample liquidity for growth investments [49] - Capital expenditures for growth were $43.3 million in the quarter, with guidance for the year remaining at $140 million [48] Q&A Session Summary Question: Health of the mainstream business and pricing outlook - Management indicated that mainstream pricing has stabilized, with no need for further adjustments as high-end demand is consuming capacity [34][57] Question: Impact of OLED strength on flat panel business - Management noted that OLED strength is beneficial, but the Gen 10.5 range remains soft, with a focus on AMOLED products being more profitable [59] Question: Update on EUV activity - The customer base for EUV is expanding, with demonstrations being conducted to compare yields between EUV and optical masks [12]