[Glossary of Terms and Acronyms](index=4&type=section&id=Glossary%20of%20Terms%20and%20Acronyms) This section defines key industry, financial, and regulatory terms and acronyms used throughout the report - The glossary defines key industry terms such as **Active-matrix organic light-emitting diode (AMOLED)**, **Flat Panel Display (FPD)**, **Integrated circuit (IC)**, and **Low-Temperature Poly Silicon (LTPS)**, as well as financial and regulatory terms like **Accounting Standards Codification (ASC)**, **Accounting Standards Update (ASU)**, **Securities Exchange Act of 1934 (Exchange Act)**, **Securities and Exchange Commission (SEC)**, and **U.S. GAAP**[12](index=12&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements, emphasizing their non-historical nature and inherent risks that could cause actual results to differ - Forward-looking statements are not historical facts and involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed[13](index=13&type=chunk)[14](index=14&type=chunk) - The company undertakes no obligation to update any forward-looking statements and cautions users not to place undue reliance on them, as various factors may cause actual results to differ materially[15](index=15&type=chunk) PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents unaudited condensed consolidated financial statements, including balance sheets, income, comprehensive income, equity, and cash flows, with detailed notes [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | August 3, 2025 (in thousands) | October 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $479,521 | $598,485 | | Short-term investments | $96,277 | $42,184 | | Accounts receivable, net | $190,875 | $200,830 | | Inventories | $63,490 | $56,527 | | Total current assets | $872,236 | $931,062 | | Property, plant and equipment, net | $838,988 | $745,257 | | Total assets | $1,752,765 | $1,712,059 | | Current portion of long-term debt | $11 | $17,972 | | Total current liabilities | $174,925 | $183,811 | | Total liabilities | $214,765 | $231,300 | | Total equity | $1,538,000 | $1,480,759 | - Total assets increased by **$40,706 thousand** from **$1,712,059 thousand** at October 31, 2024, to **$1,752,765 thousand** at August 3, 2025[17](index=17&type=chunk) - Current portion of long-term debt significantly decreased from **$17,972 thousand** at October 31, 2024, to **$11 thousand** at August 3, 2025[17](index=17&type=chunk) [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) | Metric (in thousands) | Three Months Ended Aug 3, 2025 | Three Months Ended Jul 28, 2024 | Nine Months Ended Aug 3, 2025 | Nine Months Ended Jul 28, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | :---------------------------- | | Revenue | $210,394 | $210,984 | $633,524 | $644,318 | | Gross profit | $70,855 | $75,138 | $224,296 | $233,644 | | Operating income | $48,161 | $52,148 | $156,054 | $165,690 | | Foreign currency transactions impact, net | $(14,258) | $4,068 | $(26,925) | $9,926 | | Net income attributable to Photronics, Inc. shareholders | $22,891 | $34,388 | $74,604 | $96,819 | | Basic EPS | $0.40 | $0.56 | $1.24 | $1.57 | | Diluted EPS | $0.39 | $0.55 | $1.23 | $1.55 | - Net income attributable to Photronics, Inc. shareholders decreased by **33.4%** for the three months ended August 3, 2025, compared to the prior year period, and by **22.9%** for the nine months ended August 3, 2025[19](index=19&type=chunk) - Foreign currency transactions had a significant negative impact, shifting from a gain of **$4,068 thousand** in Q3 FY24 to a loss of **$14,258 thousand** in Q3 FY25, and from a gain of **$9,926 thousand** in YTD FY24 to a loss of **$26,925 thousand** in YTD FY25[19](index=19&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) | Metric (in thousands) | Three Months Ended Aug 3, 2025 | Three Months Ended Jul 28, 2024 | Nine Months Ended Aug 3, 2025 | Nine Months Ended Jul 28, 2024 | | :-------------------------------------------------- | :----------------------------- | :----------------------------- | :---------------------------- | :---------------------------- | | Net income | $29,139 | $48,169 | $111,613 | $143,623 | | Foreign currency translation adjustments | $29,171 | $(6,114) | $33,380 | $(13,819) | | Comprehensive income attributable to Photronics, Inc. shareholders | $41,682 | $29,840 | $92,418 | $85,073 | - Comprehensive income attributable to Photronics, Inc. shareholders increased by **39.7%** for the three months ended August 3, 2025, and by **8.6%** for the nine months ended August 3, 2025, compared to the prior year periods[22](index=22&type=chunk) - Foreign currency translation adjustments significantly improved, moving from a loss of **$(6,114) thousand** in Q3 FY24 to a gain of **$29,171 thousand** in Q3 FY25, and from a loss of **$(13,819) thousand** in YTD FY24 to a gain of **$33,380 thousand** in YTD FY25[22](index=22&type=chunk) [Condensed Consolidated Statements of Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) | Metric (in thousands) | Balance as of Oct 31, 2024 | Balance as of Aug 3, 2025 | | :------------------------------------------ | :------------------------- | :------------------------ | | Total Photronics, Inc. shareholders' equity | $1,120,864 | $1,125,551 | | Noncontrolling interests | $359,895 | $412,449 | | Total equity | $1,480,759 | $1,538,000 | - Total equity increased by **$57,241 thousand** from **$1,480,759 thousand** at October 31, 2024, to **$1,538,000 thousand** at August 3, 2025[17](index=17&type=chunk)[26](index=26&type=chunk) - The company repurchased **4,988 thousand** common shares at a cost of **$97,422 thousand** during the nine months ended August 3, 2025, impacting additional paid-in capital and retained earnings[26](index=26&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric (in thousands) | Nine Months Ended Aug 3, 2025 | Nine Months Ended Jul 28, 2024 | | :------------------------------------ | :---------------------------- | :---------------------------- | | Net cash provided by operating activities | $159,974 | $193,074 | | Net cash used in investing activities | $(173,599) | $(142,058) | | Net cash used in financing activities | $(115,284) | $(6,428) | | Net change in cash, cash equivalents, and restricted cash | $(118,780) | $38,134 | | Cash and cash equivalents at end of period | $479,521 | $537,331 | - Net cash provided by operating activities decreased by **$33,100 thousand (17.1%)** in YTD FY25 compared to YTD FY24, primarily due to decreased net income[29](index=29&type=chunk)[139](index=139&type=chunk) - Net cash used in financing activities increased significantly by **$108,856 thousand** in YTD FY25, primarily driven by **$97,422 thousand** in common stock repurchases and **$13,469 thousand** in debt repayments[29](index=29&type=chunk)[141](index=141&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details the company's accounting policies, significant estimates, and specific financial statement line items, covering business operations, accounting pronouncements, and key account breakdowns [NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION](index=12&type=section&id=NOTE%201%20%E2%80%93%20NATURE%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) - Photronics, Inc. is a leading manufacturer of high-precision photomasks for Integrated Circuits (ICs) and Flat Panel Displays (FPDs), operating eleven manufacturing facilities globally in Taiwan (3), South Korea (1), China (2), the United States (3), and Europe (2)[31](index=31&type=chunk) - The company is currently evaluating the impact of new FASB Accounting Standards Updates (ASU 2024-03, ASU 2023-09, ASU 2023-07) on expense disaggregation, income tax disclosures, and segment reporting, with effective dates ranging from fiscal year 2025 to 2028[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) [NOTE 2 – ACCOUNTS RECEIVABLE, NET](index=13&type=section&id=NOTE%202%20%E2%80%93%20ACCOUNTS%20RECEIVABLE%2C%20NET) | Component | August 3, 2025 (in thousands) | October 31, 2024 (in thousands) | | :---------------------- | :----------------------------- | :----------------------------- | | Accounts Receivable | $161,658 | $172,741 | | Unbilled Receivables | $30,401 | $29,215 | | Allowance for Credit Losses | $(1,184) | $(1,126) | | **Total Accounts Receivable, net** | **$190,875** | **$200,830** | - Accounts receivable, net, decreased by **$9,955 thousand** from **$200,830 thousand** at October 31, 2024, to **$190,875 thousand** at August 3, 2025[39](index=39&type=chunk) [NOTE 3 – CASH, CASH EQUIVALENTS AND INVESTMENTS](index=13&type=section&id=NOTE%203%20%E2%80%93%20CASH%2C%20CASH%20EQUIVALENTS%20AND%20INVESTMENTS) | Category | August 3, 2025 (in thousands) | October 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Cash | $171,146 | $414,074 | | Level 1 (U.S. Gov Securities, Money Market) | $45,271 | $36,322 | | Level 2 (Commercial paper, Time deposits) | $359,381 | $190,273 | | **Total Fair Value** | **$575,798** | **$640,669** | - Total cash, cash equivalents, and short-term investments measured at fair value decreased by **$64,871 thousand** from **$640,669 thousand** at October 31, 2024, to **$575,798 thousand** at August 3, 2025[42](index=42&type=chunk) - The company classifies investments based on maturity, with those maturing within three months as cash and cash equivalents, and those maturing between three months and one year as short-term investments, with fair value measurements categorized into Level 1 and Level 2[40](index=40&type=chunk)[41](index=41&type=chunk) [NOTE 4 - INVENTORIES](index=14&type=section&id=NOTE%204%20-%20INVENTORIES) | Component | August 3, 2025 (in thousands) | October 31, 2024 (in thousands) | | :---------------- | :----------------------------- | :----------------------------- | | Raw materials | $61,908 | $56,128 | | Work in process | $1,560 | $398 | | Finished goods | $22 | $1 | | **Total Inventories** | **$63,490** | **$56,527** | - Total inventories increased by **$6,963 thousand (12.3%)** from **$56,527 thousand** at October 31, 2024, to **$63,490 thousand** at August 3, 2025, primarily driven by increases in raw materials and work in process[45](index=45&type=chunk) [NOTE 5 - PROPERTY, PLANT AND EQUIPMENT, NET](index=15&type=section&id=NOTE%205%20-%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT%2C%20NET) | Component | August 3, 2025 (in thousands) | October 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Land | $12,298 | $11,419 | | Buildings and improvements | $192,625 | $188,756 | | Machinery and equipment | $2,143,635 | $1,990,610 | | Leasehold improvements | $21,037 | $19,268 | | Furniture, fixtures, and office equipment | $18,598 | $18,091 | | Construction in progress | $108,743 | $91,213 | | Accumulated depreciation and amortization | $(1,657,948) | $(1,574,100) | | **Total Property, plant and equipment, net** | **$838,988** | **$745,257** | - Property, plant and equipment, net, increased by **$93,731 thousand (12.6%)** from **$745,257 thousand** at October 31, 2024, to **$838,988 thousand** at August 3, 2025, mainly due to increases in machinery and equipment and construction in progress[47](index=47&type=chunk) - The company exercised early buy-out options for a high-end lithography tool and a high-end inspection tool during the first half of fiscal year 2025, significantly reducing ROU assets from finance leases from **$32,293 thousand** to **$5 thousand**[47](index=47&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) [NOTE 6 - PDMCX JOINT VENTURE](index=15&type=section&id=NOTE%206%20-%20PDMCX%20JOINT%20VENTURE) - Photronics' joint venture, PDMCX, in Xiamen, China, is consolidated as a Variable Interest Entity (VIE) because Photronics holds a controlling financial interest (**50.01%**) and is deemed the primary beneficiary[50](index=50&type=chunk)[54](index=54&type=chunk) | Period | August 3, 2025 (in thousands) | July 28, 2024 (in thousands) | | :-------------------- | :----------------------------- | :----------------------------- | | Net income from PDMCX | $3,485 | $4,369 | - Photronics' maximum exposure to loss from PDMCX is limited to its interest in the net assets of the joint venture, which was **$153,437 thousand** as of August 3, 2025[56](index=56&type=chunk) [NOTE 7 - DEBT](index=17&type=section&id=NOTE%207%20-%20DEBT) | Component | August 3, 2025 (in thousands) | October 31, 2024 (in thousands) | | :---------------- | :----------------------------- | :----------------------------- | | Current portion of long-term debt | $11 | $17,972 | | Long-term debt | $16 | $25 | | **Total debt** | **$27** | **$17,997** | - Total debt significantly decreased from **$17,997 thousand** at October 31, 2024, to **$27 thousand** at August 3, 2025, primarily due to the exercise of early buy-out options on two high-end finance leases[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) - The PDMCX joint venture has an extended revolving, unsecured credit agreement for **CNY 200 million ($25 million)** until July 31, 2026, with no outstanding borrowings as of August 3, 2025[60](index=60&type=chunk) [NOTE 8 – REVENUE](index=18&type=section&id=NOTE%208%20%E2%80%93%20REVENUE) - The company recognizes revenue 'over time' for most photomask sales because they are manufactured to customer specifications and the company has an enforceable right to payment for work completed[61](index=61&type=chunk) | Product Type | Three Months Ended Aug 3, 2025 | Three Months Ended Jul 28, 2024 | Nine Months Ended Aug 3, 2025 | Nine Months Ended Jul 28, 2024 | | :---------------- | :----------------------------- | :----------------------------- | :---------------------------- | :---------------------------- | | IC High-end | $53,648 | $49,499 | $173,053 | $168,417 | | IC Mainstream | $94,176 | $106,385 | $284,605 | $305,984 | | **Total IC** | **$147,824** | **$155,884** | **$457,658** | **$474,401** | | FPD High-end | $53,486 | $48,394 | $146,778 | $146,987 | | FPD Mainstream | $9,084 | $6,706 | $29,088 | $22,930 | | **Total FPD** | **$62,570** | **$55,100** | **$175,866** | **$169,917** | | **Total Revenue** | **$210,394** | **$210,984** | **$633,524** | **$644,318** | | Geographic Origin | Three Months Ended Aug 3, 2025 | Three Months Ended Jul 28, 2024 | Nine Months Ended Aug 3, 2025 | Nine Months Ended Jul 28, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | :---------------------------- | :---------------------------- | | Taiwan | $68,429 | $68,182 | $216,524 | $218,557 | | China | $50,618 | $55,301 | $162,919 | $172,131 | | South Korea | $43,716 | $38,412 | $121,547 | $118,033 | | United States | $37,754 | $38,833 | $105,379 | $104,880 | | Europe | $9,050 | $9,759 | $25,143 | $29,390 | | Other | $827 | $497 | $2,012 | $1,327 | [NOTE 9 - SHARE-BASED COMPENSATION](index=21&type=section&id=NOTE%209%20-%20SHARE-BASED%20COMPENSATION) - The company's 2025 Equity Incentive Compensation Plan was approved, authorizing **5 million shares** for various awards to officers, employees, directors, consultants, advisors, and independent contractors[78](index=78&type=chunk) | Expense Type | Three Months Ended Aug 3, 2025 | Three Months Ended Jul 28, 2024 | Nine Months Ended Aug 3, 2025 | Nine Months Ended Jul 28, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | :---------------------------- | :---------------------------- | | Cost of goods sold | $816 | $683 | $2,378 | $1,946 | | Selling, general, and administrative | $2,174 | $2,388 | $6,729 | $7,126 | | Research and development | $304 | $271 | $896 | $769 | | **Total expense incurred** | **$3,294** | **$3,342** | **$10,003** | **$9,841** | - Restricted stock units were first granted in Q2 FY25, with **162,666 units** granted in YTD FY25 at a weighted-average grant-date fair value of **$19.61 per share**[82](index=82&type=chunk)[83](index=83&type=chunk) [NOTE 10 - INCOME TAXES](index=23&type=section&id=NOTE%2010%20-%20INCOME%20TAXES) | Reporting Period | U.S. Statutory Tax Rates | Effective Tax Rates | | :-------------------------- | :----------------------- | :------------------ | | Three months ended Aug 3, 2025 | 21.0% | 24.8% | | Three months ended Jul 28, 2024 | 21.0% | 22.7% | | Nine Months Ended Aug 3, 2025 | 21.0% | 23.5% | | Nine Months Ended Jul 28, 2024 | 21.0% | 25.4% | - The effective income tax rate for Q3 FY25 increased to **24.8%** from **22.7%** in Q3 FY24, primarily due to changes in the jurisdictional mix of earnings[89](index=89&type=chunk)[131](index=131&type=chunk) - The company is evaluating the effect of the newly enacted U.S. One Big Beautiful Bill Act (OBBBA), which includes tax provisions effective in fiscal year 2026, and has been notified of a routine income tax audit in a foreign jurisdiction[90](index=90&type=chunk)[92](index=92&type=chunk) [NOTE 11 - EARNINGS PER SHARE](index=24&type=section&id=NOTE%2011%20-%20EARNINGS%20PER%20SHARE) | Metric | Three Months Ended Aug 3, 2025 | Three Months Ended Jul 28, 2024 | Nine Months Ended Aug 3, 2025 | Nine Months Ended Jul 28, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :---------------------------- | :---------------------------- | | Net income attributable to Photronics, Inc. shareholders | $22,891 | $34,388 | $74,604 | $96,819 | | Weighted-average common shares outstanding (Basic) | 57,937 | 61,815 | 60,274 | 61,681 | | Basic EPS | $0.40 | $0.56 | $1.24 | $1.57 | | Diluted EPS | $0.39 | $0.55 | $1.23 | $1.55 | - Basic EPS decreased from **$0.56** in Q3 FY24 to **$0.40** in Q3 FY25, and from **$1.57** in YTD FY24 to **$1.24** in YTD FY25, primarily due to lower net income attributable to Photronics, Inc. shareholders[93](index=93&type=chunk) - Weighted-average common shares outstanding (basic) decreased by **6.3%** in Q3 FY25 and **2.3%** in YTD FY25 compared to the prior year periods[93](index=93&type=chunk) [NOTE 12 - COMMITMENTS AND CONTINGENCIES](index=25&type=section&id=NOTE%2012%20-%20COMMITMENTS%20AND%20CONTINGENCIES) - As of August 3, 2025, unrecognized commitments for the acquisition of property, plant and equipment totaled **$147.2 million**, with approximately **$32.5 million** having a remaining term in excess of one year[95](index=95&type=chunk) - The company believes that potential liability under various claims arising in the ordinary course of business will not have a material effect on its consolidated financial statements[96](index=96&type=chunk) [NOTE 13 - CHANGES IN ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME BY COMPONENT](index=25&type=section&id=NOTE%2013%20-%20CHANGES%20IN%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20(LOSS)%20INCOME%20BY%20COMPONENT) | Component | Balance at Oct 31, 2024 | Other comprehensive (loss) income (YTD Aug 3, 2025) | Balance at Aug 3, 2025 | | :------------------------------------------ | :-------------------------- | :------------------------------------------------ | :----------------------- | | Foreign Currency Translation Adjustments | $(85,587) | $33,380 | $(67,762) | | Other | $(732) | $(20) | $(742) | | **Total** | **$(86,319)** | **$33,360** | **$(68,504)** | - Accumulated other comprehensive loss improved from **$(86,319) thousand** at October 31, 2024, to **$(68,504) thousand** at August 3, 2025, primarily driven by positive foreign currency translation adjustments of **$33,380 thousand** for the nine months ended August 3, 2025[98](index=98&type=chunk) [NOTE 14 – SHARE REPURCHASE PROGRAM](index=26&type=section&id=NOTE%2014%20%E2%80%93%20SHARE%20REPURCHASE%20PROGRAM) - During the three-month period ended August 3, 2025, the company repurchased **1.2 million shares** at a cost of **$20.7 million**[100](index=100&type=chunk) - For the nine-month period ended August 3, 2025, the company repurchased **5 million shares** at a cost of **$97.4 million**[100](index=100&type=chunk) - In June 2025, the Board of Directors authorized an additional **$25 million** share repurchase, leaving **$27.6 million** available under this authorization as of August 3, 2025[100](index=100&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition and results of operations, analyzing revenue, gross margin, operating expenses, liquidity, cash flows, and critical accounting estimates [Overview](index=27&type=section&id=Overview) - Photronics sells photomasks primarily to semiconductor designers and manufacturers, and FPD manufacturers, with demand driven by design activity rather than sales volumes[103](index=103&type=chunk) - The microelectronics industry is volatile, with cycles tied to consumer-driven high-performance devices, and the company's success depends on being a service and technology leader[103](index=103&type=chunk)[105](index=105&type=chunk) - Typical backlog for FPD photomasks is two to three weeks, and for IC photomasks, one to two weeks, though some IC backlogs can extend to two to three months[104](index=104&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section analyzes the company's operating performance, highlighting a slight revenue decrease driven by IC weakness, declining gross margin, mixed operating expense trends, and significant foreign currency impacts [Revenue](index=28&type=section&id=Revenue) | Metric | Q3 FY25 vs Q2 FY25 | Q3 FY25 vs Q3 FY24 | YTD FY25 vs YTD FY24 | | :---------------- | :------------------ | :------------------ | :------------------- | | Total Revenue | $(0.6) (-0.3%) | $(0.6) (-0.3%) | $(10.8) (-1.7%) | | IC Revenue | $(8.1) (-5.2%) | $(8.1) (-5.2%) | $(16.8) (-3.5%) | | FPD Revenue | $7.5 (13.5%) | $7.5 (13.6%) | $6.0 (3.5%) | - IC revenue decreased by **$8.1 million (5.2%)** in Q3 FY25 compared to both Q2 FY25 and Q3 FY24, primarily due to reduced high-end and mainstream demand in Asia, influenced by geopolitical trade restrictions and tariff negotiations[116](index=116&type=chunk) - FPD revenue increased by **$7.5 million (13.5%)** in Q3 FY25 compared to Q2 FY25, and by **$7.5 million (13.6%)** compared to Q3 FY24, driven by increased high-end and mainstream demand, particularly in South Korea[117](index=117&type=chunk) [Gross Margin](index=31&type=section&id=Gross%20Margin) | Metric | Q3 FY25 | Q2 FY25 | Q3 FY24 | YTD FY25 | YTD FY24 | | :---------- | :------ | :------ | :------ | :------- | :------- | | Gross profit | $70.9 | $77.9 | $75.1 | $224.3 | $233.6 | | Gross margin | 33.7% | 36.9% | 35.6% | 35.4% | 36.3% | - Gross margin decreased by **320 basis points** in Q3 FY25 compared to Q2 FY25, primarily due to an unfavorable product mix, leading to an **8.2%** increase in material costs (**207 basis points** as a percentage of revenue) and a **6.3%** increase in labor and benefits costs (**70 basis points** as a percentage of revenue)[118](index=118&type=chunk) - Gross margin decreased by **90 basis points** in YTD FY25 compared to YTD FY24, mainly due to a **1.7%** decrease in revenue and an unfavorable product mix resulting in a **2.5%** increase in material costs (**102 basis points** as a percentage of revenue)[120](index=120&type=chunk) [Selling, General and Administrative Expenses](index=31&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) | Period | Q3 FY25 | Q2 FY25 | Q3 FY24 | YTD FY25 | YTD FY24 | | :-------------------- | :------ | :------ | :------ | :------- | :------- | | SG&A Expenses | $18.4 | $18.1 | $19.4 | $55.6 | $56.8 | - Selling, general and administrative (SG&A) expenses increased by **$0.3 million** in Q3 FY25 from Q2 FY25 due to higher professional fees, but decreased by **$1.0 million** from Q3 FY24 due to reduced professional fees[121](index=121&type=chunk) - SG&A expenses decreased by **$1.2 million** in YTD FY25 compared to YTD FY24, primarily due to a **$1.1 million** decrease in labor and benefits costs[122](index=122&type=chunk) [Research and Development Expenses](index=31&type=section&id=Research%20and%20Development%20Expenses) | Period | Q3 FY25 | Q2 FY25 | Q3 FY24 | YTD FY25 | YTD FY24 | | :-------------------- | :------ | :------ | :------ | :------- | :------- | | R&D Expenses | $4.3 | $4.1 | $3.6 | $12.6 | $11.3 | - Research and development (R&D) expenses increased in Q3 FY25 compared to Q2 FY25 and Q3 FY24, primarily due to increased qualification activities in Asia[123](index=123&type=chunk) - R&D expenses increased by **$1.3 million** in YTD FY25 compared to YTD FY24, driven by increased development activities in the U.S.[124](index=124&type=chunk) [Other Income (Expense), net](index=32&type=section&id=Other%20Income%20(Expense)%2C%20net) | Metric | Q3 FY25 | Q2 FY25 | Q3 FY24 | YTD FY25 | YTD FY24 | | :---------------------------------- | :------ | :------ | :------ | :------- | :------- | | Foreign currency transactions impact, net | $(14.3) | $(31.1) | $4.1 | $(26.9) | $9.9 | | Interest income and other income, net | $4.8 | $5.3 | $6.1 | $16.8 | $17.3 | | **Other income (expense), net** | **$(9.4)** | **$(25.8)** | **$10.1** | **$(10.2)** | **$26.9** | - Other Expense, net, decreased by **$16.4 million** in Q3 FY25 from Q2 FY25, primarily due to favorable movements of the New Taiwan dollar and South Korean won against the U.S. dollar[127](index=127&type=chunk) - Other Expense, net, increased by **$19.5 million** in Q3 FY25 from Q3 FY24 and by **$37.1 million** in YTD FY25 from YTD FY24, mainly driven by unfavorable foreign currency impacts[127](index=127&type=chunk)[128](index=128&type=chunk) [Income Tax Provision](index=32&type=section&id=Income%20Tax%20Provision) | Period | Q3 FY25 | Q2 FY25 | Q3 FY24 | YTD FY25 | YTD FY24 | | :-------------------- | :------ | :------ | :------ | :------- | :------- | | Income tax provision | $9.6 | $5.7 | $14.1 | $34.2 | $49.0 | | Effective income tax rate | 24.8% | 19.1% | 22.7% | 23.5% | 25.4% | - The effective income tax rate increased in Q3 FY25 compared with Q2 FY25 and Q3 FY24, primarily due to changes in the jurisdictional mix of earnings[131](index=131&type=chunk) - The company is monitoring the EU's Pillar Two Directive (minimum **15%** effective tax rate) and evaluating the impact of the U.S. One Big Beautiful Bill Act (OBBBA), effective in fiscal year 2026[129](index=129&type=chunk)[130](index=130&type=chunk) [Net Income Attributable to Noncontrolling Interests](index=33&type=section&id=Net%20Income%20Attributable%20to%20Noncontrolling%20Interests) | Period | Q3 FY25 | Q2 FY25 | Q3 FY24 | YTD FY25 | YTD FY24 | | :-------------------- | :------ | :------ | :------ | :------- | :------- | | Net income attributable to noncontrolling interests | $6.2 | $15.4 | $13.8 | $37.0 | $46.8 | - Net income attributable to noncontrolling interests decreased in Q3 FY25 compared to Q2 FY25 and Q3 FY24, and in YTD FY25 compared to YTD FY24, as a result of decreased net income from the company's joint ventures[133](index=133&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's financial position, cash management, and capital allocation strategies, detailing cash flow changes, capital expenditures, and significant share repurchases [Cash Flows](index=34&type=section&id=Cash%20Flows) | Activity | YTD FY25 | YTD FY24 | Change | | :-------------------------------- | :------- | :------- | :------- | | Net cash provided by operating activities | $160.0 | $193.1 | $(33.1) | | Net cash used in investing activities | $(173.6) | $(142.1) | $(31.5) | | Net cash used in financing activities | $(115.3) | $(6.4) | $(108.9) | - Net cash provided by operating activities decreased by **$33.1 million** in YTD FY25 compared to YTD FY24, primarily due to decreased net income[139](index=139&type=chunk) - Net cash used in financing activities increased by **$108.9 million** in YTD FY25, primarily driven by **$97.4 million** in common stock repurchases and **$13.5 million** in debt repayments[141](index=141&type=chunk) [Non-GAAP Financial Measures](index=34&type=section&id=Non-GAAP%20Financial%20Measures) - The company uses non-GAAP financial measures (Net Income and Diluted EPS attributable to Photronics, Inc. shareholders) to provide a more meaningful comparison of its core business performance, excluding items like FX gain/loss and their estimated tax and noncontrolling interest effects[143](index=143&type=chunk) | Metric | Three Months Ended Aug 3, 2025 | Three Months Ended May 4, 2025 | Three Months Ended Jul 28, 2024 | | :---------------------------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | U.S. GAAP Net Income attributable to Photronics, Inc. shareholders | $22,891 | $8,861 | $34,388 | | FX (gain) loss | $14,258 | $31,111 | $(4,068) | | Non-GAAP Net Income attributable to Photronics, Inc. shareholders | $29,356 | $24,259 | $31,915 | | U.S. GAAP diluted earnings per share attributable to Photronics, Inc. shareholders | $0.39 | $0.15 | $0.55 | | Non-GAAP diluted earnings per share attributable to Photronics, Inc. shareholders | $0.51 | $0.40 | $0.51 | [Business Outlook](index=35&type=section&id=Business%20Outlook) - The company's current business outlook and guidance were provided in its Q3 FY25 earnings press release, earnings presentation, and financial results conference call, accessible on its investor website[146](index=146&type=chunk) - Future results of operations and forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations, as discussed in the 2024 Form 10-K and this Form 10-Q[147](index=147&type=chunk) [Critical Accounting Estimates](index=35&type=section&id=Critical%20Accounting%20Estimates) - There have been no material changes to the company's critical accounting estimates since the filing of its Form 10-K for the year ended October 31, 2024[148](index=148&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces foreign currency exchange rate risk, primarily from the South Korean won, New Taiwan dollar, and Chinese yuan, with a 10% adverse movement potentially causing a **$69.7 million** pre-tax loss - The company's primary net foreign currency exposures as of August 3, 2025, included the South Korean won (**$24.9 million**), Japanese yen, New Taiwan dollar (**$36.1 million**), and Chinese yuan (**$5.4 million**)[151](index=151&type=chunk) - A **10%** adverse movement in the value of currencies different from the functional currencies of its subsidiaries would have resulted in a net unrealized pre-tax loss of **$69.7 million** as of August 3, 2025[151](index=151&type=chunk) - The company attempts to minimize foreign currency transaction losses by producing products in the same country where they are sold and by managing working capital, and may use derivative contracts for significant obligations or receivables[150](index=150&type=chunk) - Interest rate risk is not material as there were no variable rate borrowings outstanding as of August 3, 2025[152](index=152&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of August 3, 2025, with no material changes in internal control over financial reporting - Management, under the supervision of the CEO and CFO, evaluated and concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of August 3, 2025[154](index=154&type=chunk) - There were no changes in the company's internal control over financial reporting during the third fiscal quarter ended August 3, 2025, that materially affected or are reasonably likely to materially affect it[155](index=155&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings is referenced in Note 12 of Part I, Item 1, which states that potential liabilities will not have a material effect on consolidated financial statements - Information on legal proceedings is cross-referenced to Note 12 within Part I, Item 1 of this report[156](index=156&type=chunk) - The company believes that its potential liability under various claims arising in the ordinary course of business will not have a material effect on its consolidated financial statements[96](index=96&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors since the 2024 Form 10-K, except for new risks related to tariffs and global trade policies that may increase costs and reduce demand - There have been no material changes to the company's risk factors as set forth in its 2024 Form 10-K, except for the addition of risks related to tariffs and global trade policies[157](index=157&type=chunk) - New tariffs and trade restrictions, such as those from the U.S. One Big Beautiful Bill Act (OBBBA) and Section 232 investigations, may increase supply chain costs, reduce demand, and negatively affect customer purchasing behavior, potentially impacting the company's business, financial condition, and results of operations[158](index=158&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Under its share repurchase program, Photronics repurchased **1.2 million shares** for **$20.7 million** in Q3 FY25 and **5 million shares** for **$97.4 million** in YTD FY25 - During the three-month period ended August 3, 2025, the company repurchased **1.2 million shares** at a cost of **$20.7 million** under its share repurchase program[159](index=159&type=chunk) - For the nine-month period ended August 3, 2025, the company repurchased **5 million shares** at a cost of **$97.4 million**[159](index=159&type=chunk) - In June 2025, the Board of Directors authorized an additional **$25 million** share repurchase, resulting in **$27.6 million** remaining available under this authorization as of August 3, 2025[159](index=159&type=chunk) | Period | Total Number of Shares Purchased | Average Price Paid Per share | Dollar Value of Shares That May Yet Be Purchased (in millions) | | :-------------------------- | :----------------------------- | :--------------------------- | :------------------------------------------------------------- | | May 5, 2025 – June 1, 2025 | 366,900 | $17.34 | $16.9 | | June 2, 2025 – June 29, 2025 | 810,630 | $17.72 | $27.6 | | June 30, 2025 – August 3, 2025 | - | $- | $27.6 | | **Total** | **1,177,530** | | | [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities reported for the period - No defaults upon senior securities were reported[162](index=162&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to Photronics, Inc.[163](index=163&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading arrangements were adopted or terminated by any director or officer during the quarter ended August 3, 2025 - No Rule 10b5-1 trading arrangements were adopted or terminated, including by modification, by any director or officer during the quarter ended August 3, 2025[164](index=164&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer and various Inline XBRL documents - Exhibits filed include certifications of the Chief Executive Officer and Chief Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2) and various Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[165](index=165&type=chunk) [SIGNATURES](index=40&type=section&id=SIGNATURES) The report is duly signed on behalf of Photronics, Inc. by Eric Rivera, Executive Vice President and Chief Financial Officer, on September 9, 2025 - The report was signed by Eric Rivera, Executive Vice President, Chief Financial Officer (Principal Financial Officer/Principal Accounting Officer) on behalf of Photronics, Inc. on September 9, 2025[167](index=167&type=chunk)

Financial Data and Key Metrics Changes - The company reported sales of $210 million, which was flat year over year and sequentially [4] - Non-GAAP diluted EPS was $0.51, exceeding guidance [4] - Operating cash flow represented 25% of revenue, with consolidated cash and short-term investments totaling $576 million [4][18] - Gross margin was reported at 34%, and operating margin was 23%, both above expectations [16] Business Line Data and Key Metrics Changes - Integrated Circuits (IC) revenue was $148 million, reflecting a 5% year-over-year decline, with high-end IC revenue increasing by 8% [13][14] - Flat Panel Display (FPD) revenue was $63 million, up 14% year over year, driven by strong demand in Korea [14][11] Market Data and Key Metrics Changes - Geographically, Taiwan accounted for 33% of total revenue, China for 24%, Korea for 21%, and the U.S. and Europe together accounted for 22% [15] - The company has built a strong FPD business in China, with IC operations generated from a joint venture in Xiamen [16] Company Strategy and Development Direction - The company is focusing on geographic diversification of revenue, with expansion plans in the U.S. and capability extensions in Asia [5][8] - Investments are being made in high-end production capabilities and clean room facilities to meet increased demand [6][7] - The company aims to leverage its strong balance sheet for future growth and competitive advantages [5] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding near-term demand due to geopolitical uncertainties and trade restrictions impacting customers [19] - The company anticipates fourth-quarter revenue in the range of $201 million to $209 million, with operating margins expected between 20% and 22% [19][20] Other Important Information - The company repurchased $21 million worth of stock in the quarter, with a total of $97 million year-to-date [5][18] - Capital expenditures are projected to be $200 million for fiscal 2025, focusing on capacity expansion and technology improvements [18] Q&A Session Summary Question: Will the fourth-quarter mix be similar to the third quarter? - Management confirmed that the mix in the fourth quarter is expected to be similar to that of the third quarter [22] Question: Do tariffs and trade restrictions impact the company directly? - Management clarified that while trade restrictions do not impact the company directly, they do affect customers and material purchases [24] Question: Are investments in higher-end nodes aimed at serving major customers like Samsung and TSMC? - Management confirmed that investments in higher-end nodes are indeed for major customers, including Samsung [26] Question: What end market products will the six to eight nanometer chips serve? - The new chips are primarily for high-end processors, including applications in edge AI devices and mobile communications [32] Question: Will capital expenditures normalize back to historical levels soon? - Management indicated that elevated CapEx is expected to continue for about three years due to end-of-life tool replacements and strategic investments [38][41] Question: How does U.S. government involvement with Intel affect the company? - Management noted that a stronger Intel could benefit the company, as Intel is a customer [60][64]

Financial Data and Key Metrics Changes - The company reported sales of $210 million, which was flat year over year and sequentially [4] - Non-GAAP diluted EPS was $0.51, exceeding guidance [4] - Operating cash flow was 25% of revenue, contributing to a strong balance sheet with $576 million in cash and short-term investments [4][19] - Gross margin was reported at 34%, and operating margin was 23%, both above expectations [17] Business Line Data and Key Metrics Changes - Integrated Circuits (IC) revenue was $148 million, reflecting a 5% decline year over year, with high-end IC revenue increasing by 8% [14][15] - Flat Panel Display (FPD) revenue was $63 million, up 14% year over year, driven by strong demand in Korea [15][12] Market Data and Key Metrics Changes - Geographically, Taiwan accounted for 33% of total revenue, China for 24%, Korea for 21%, and the U.S. and Europe together accounted for 22% [16] - The company noted challenges in the IC market due to geopolitical trade restrictions, particularly affecting demand in Asia [11] Company Strategy and Development Direction - The company is focusing on geographic revenue diversification, with expansion plans in the U.S. and capability enhancements in Asia [5][8] - Investments are being made in high-end production capabilities and clean room facilities to meet increased demand [6][7] - The company aims to leverage its strong balance sheet for future growth and competitive advantages [5] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding near-term demand due to geopolitical uncertainties and the uneven nature of product demand [20] - The company anticipates fourth-quarter revenue to be in the range of $201 million to $209 million, with operating margins expected between 20% to 22% [20] Other Important Information - The company repurchased $21 million worth of stock in the quarter, with a total of $97 million year-to-date [5][19] - Capital expenditures (CapEx) are projected to be $200 million for fiscal 2025, focusing on capacity expansion and technology improvements [19] Q&A Session Summary Question: Will the fourth quarter mix be similar to the third quarter? - Yes, the mix in the fourth quarter is expected to be similar to that of the third quarter [23] Question: Do tariffs and trade restrictions impact the company directly? - The impact is indirect, affecting customers more than the company itself [24][25] Question: Are investments in higher-end nodes aimed at serving major customers like Samsung and TSMC? - Yes, the investments are targeted at higher-end nodes for major customers [27] Question: What end market products will the six to eight nanometer chips serve? - The chips will primarily serve high-end processors, including applications in edge AI and EVs [34] Question: Will CapEx normalize back to historical levels soon? - CapEx is expected to remain elevated for about three years due to ongoing investments and end-of-life tool replacements [40][44] Question: How does the U.S. government's involvement with Intel affect the company? - Strengthening Intel could benefit the company as it is a customer, leading to potential outsourcing opportunities [65][68]

Financial Performance & Strategic Focus - Photronics' revenue for the trailing twelve months reached $856 million[12] - The company's operating income for the same period was $212 million[12] - Operating cash flow totaled $228 million[12] - The company's market capitalization stood at $1.21 billion as of August 21, 2025[12] - Q3 2025 revenue was $210.4 million with a gross margin of 33.7% and an operating margin of 22.9%[60] - Non-GAAP diluted EPS for Q3 2025 was $0.51[60] - The company repurchased 1.18 million shares for $20.7 million in Q3 2025[61] Market Position & Growth Drivers - High-end products accounted for 36% of IC revenue and 85% of FPD revenue in Q3 2025[63, 64] - The company anticipates capital expenditures of approximately $200 million in fiscal year 2025[68, 69, 72] - Revenue by geographic origin: Taiwan 34%, China 26%, Korea 19%, US 17%, Europe 4%[12]

[Photronics Reports Third Quarter Fiscal 2025 Financial Results](index=1&type=section&id=Photronics%20Reports%20Third%20Quarter%20Fiscal%202025%20Financial%20Results) [Executive Summary and Outlook](index=1&type=section&id=Executive%20Summary%20and%20Outlook) Photronics exceeded Q3 FY2025 expectations, guiding Q4 revenue $201M-$209M and non-GAAP EPS $0.42-$0.48, focusing on efficiency and growth - Photronics delivered very good results in Q3 FY2025, with **revenue, profitability, and EPS ahead of expectations**[3](index=3&type=chunk) - Management focuses on **operational efficiency**, accelerating internal investment for **geographic revenue diversification**, and positioning for **sustained revenue and earnings growth**[3](index=3&type=chunk) Fourth Quarter Fiscal 2025 Guidance | Metric | Range | | :------------------------------------------------ | :------------------- | | Revenue | $201 million to $209 million | | Non-GAAP Net income attributable to Photronics, Inc. shareholders per diluted share | $0.42 to $0.48 | [Third Quarter Fiscal 2025 Key Financial Highlights](index=1&type=section&id=Third%20Quarter%20Fiscal%202025%20Key%20Financial%20Highlights) Photronics reported Q3 FY2025 revenue of $210.4M, GAAP net income $22.9M, non-GAAP $29.4M, with FPD growth offsetting IC decline Q3 FY2025 Key Financial Highlights | Metric | Q3 FY2025 | YoY Change | QoQ Change | | :------------------------------------------------ | :---------- | :--------- | :--------- | | Revenue | $210.4 million | -0.3% | -0.3% | | GAAP Net income attributable to Photronics, Inc. shareholders | $22.9 million | -33.5% | +157.3% | | GAAP Diluted EPS | $0.39 | -29.1% | +160.0% | | Non-GAAP Net income attributable to Photronics, Inc. shareholders | $29.4 million | -7.8% | +21.0% | | Non-GAAP Diluted EPS | $0.51 | 0.0% | +27.5% | | IC revenue | $147.8 million | -5% | -5% | | FPD revenue | $62.6 million | +14% | +14% | Q3 FY2025 Cash Flow and Capital Allocation | Metric | Amount | | :------------------------------------ | :------------- | | Cash, cash equivalents and short-term investments (end of quarter) | $575.8 million | | Cash generated from operating activities | $50.1 million | | Cash invested in organic growth (capital expenditures) | $24.8 million | | Cash returned to shareholders (share repurchases) | $20.7 million | - The Board of Directors approved a **$25.0 million increase** to the share repurchase authorization[7](index=7&type=chunk) [About Photronics](index=2&type=section&id=About%20Photronics) Photronics is a global leader in photomask technologies, manufacturing high-precision quartz plates for IC and FPD production - Photronics is a leading worldwide manufacturer of **integrated circuit (IC)** and **flat panel display (FPD) photomasks**[8](index=8&type=chunk) - Photomasks are high-precision quartz plates with microscopic electronic circuit images, crucial for **IC and FPD manufacturing**[8](index=8&type=chunk) - Founded in 1969, the company operates **11 manufacturing facilities** across Asia, Europe, and North America[8](index=8&type=chunk) [Financial Statements](index=3&type=section&id=Financial%20Statements) Photronics' unaudited condensed consolidated financial statements are presented, covering income, balance sheets, cash flows, and GAAP to non-GAAP reconciliation [Condensed Consolidated Statements of Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Condensed Consolidated Statements of Income (Three Months Ended) | Metric | August 3, 2025 | May 4, 2025 | July 28, 2024 | | :------------------------------------------ | :------------- | :---------- | :------------ | | Revenue | $210,394 thousand | $210,992 thousand | $210,984 thousand | | Cost of goods sold | $139,539 thousand | $133,086 thousand | $135,846 thousand | | Gross Profit | $70,855 thousand | $77,906 thousand | $75,138 thousand | | Gross margin % | 33.7% | 36.9% | 35.6% | | Operating Income | $48,161 thousand | $55,717 thousand | $52,148 thousand | | Operating Margin | 22.9% | 26.4% | 24.7% | | Net Income attributable to Photronics, Inc. shareholders | $22,891 thousand | $8,861 thousand | $34,388 thousand | | Diluted EPS | $0.39 | $0.15 | $0.55 | Condensed Consolidated Statements of Income (Nine Months Ended) | Metric | August 3, 2025 | July 28, 2024 | | :------------------------------------------ | :------------- | :------------ | | Revenue | $633,524 thousand | $644,318 thousand | | Cost of goods sold | $409,228 thousand | $410,674 thousand | | Gross Profit | $224,296 thousand | $233,644 thousand | | Gross margin % | 35.4% | 36.3% | | Operating Income | $156,054 thousand | $165,690 thousand | | Operating Margin | 24.6% | 25.7% | | Net Income attributable to Photronics, Inc. shareholders | $74,604 thousand | $96,819 thousand | | Diluted EPS | $1.23 | $1.55 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets | Metric | August 3, 2025 | October 31, 2024 | | :------------------------------------ | :------------- | :--------------- | | Total current assets | $872,236 thousand | $931,062 thousand | | Property, plant and equipment, net | $838,988 thousand | $745,257 thousand | | Total assets | $1,752,765 thousand | $1,712,059 thousand | | Total current liabilities | $174,925 thousand | $183,811 thousand | | Photronics, Inc. shareholders' equity | $1,125,551 thousand | $1,120,864 thousand | | Total equity | $1,538,000 thousand | $1,480,759 thousand | | Total liabilities and equity | $1,752,765 thousand | $1,712,059 thousand | - Cash and cash equivalents decreased from **$598,485 thousand** at October 31, 2024, to **$479,521 thousand** at August 3, 2025[14](index=14&type=chunk) - Short-term investments increased significantly from **$42,184 thousand** to **$96,277 thousand**[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Nine Months Ended) | Metric | August 3, 2025 | July 28, 2024 | | :------------------------------------------ | :------------- | :------------ | | Net cash provided by operating activities | $159,974 thousand | $193,074 thousand | | Net cash used in investing activities | $(173,599) thousand | $(142,058) thousand | | Net cash used in financing activities | $(115,284) thousand | $(6,428) thousand | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(118,780) thousand | $38,134 thousand | | Cash, cash equivalents, and restricted cash, end of period | $482,463 thousand | $540,001 thousand | - Purchases of property, plant and equipment increased to **$120,588 thousand** for the nine months ended August 3, 2025, from **$87,733 thousand** in the prior year period[16](index=16&type=chunk) - Common stock repurchases significantly increased to **$97,422 thousand** for the nine months ended August 3, 2025, compared to none in the prior year period[16](index=16&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) Non-GAAP Net Income and EPS Reconciliation (Three Months Ended) | Metric | August 3, 2025 | May 4, 2025 | July 28, 2024 | | :---------------------------------------------------------------- | :------------- | :---------- | :------------ | | GAAP Net income attributable to Photronics, Inc. shareholders | $22,891 thousand | $8,861 thousand | $34,388 thousand | | Non-GAAP Net income attributable to Photronics, Inc. shareholders | $29,356 thousand | $24,259 thousand | $31,915 thousand | | GAAP Diluted EPS attributable to Photronics, Inc. shareholders | $0.39 | $0.15 | $0.55 | | Non-GAAP Diluted EPS attributable to Photronics, Inc. shareholders | $0.51 | $0.40 | $0.51 | - Non-GAAP adjustments primarily include

Core Viewpoint - Photronics, Inc. reported strong financial results for the third quarter of fiscal year 2025, with revenue, profitability, and earnings per share exceeding expectations. The company aims to enhance operational efficiency and geographic revenue diversification for sustained growth [2][4]. Financial Performance - Revenue for the third quarter was $210.4 million, a decrease of 0.3% year-over-year and sequentially [8]. - GAAP net income attributable to shareholders was $22.9 million, or $0.39 per diluted share, compared to $34.4 million, or $0.55 per diluted share, in the same quarter of 2024 [8]. - Non-GAAP net income attributable to shareholders was $29.4 million, or $0.51 per diluted share, compared to $31.9 million, or $0.51 per diluted share, in the third quarter of 2024 [8]. - Integrated Circuit (IC) revenue was $147.8 million, down 5% year-over-year and sequentially, while Flat Panel Display (FPD) revenue was $62.6 million, up 14% year-over-year and sequentially [8]. Cash Flow and Investments - Cash, cash equivalents, and short-term investments at the end of the quarter totaled $575.8 million, with $396.8 million associated with joint ventures [8]. - Cash generated from operating activities was $50.1 million, with $24.8 million invested in organic growth through capital expenditures and $20.7 million returned to shareholders via share repurchases [8]. - The Board of Directors authorized an increase of $25 million to the share repurchase program [8]. Fourth Quarter Guidance - For the fourth quarter of fiscal 2025, Photronics expects revenue to be between $201 million and $209 million, and non-GAAP net income per diluted share to be between $0.42 and $0.48 [4]. Company Overview - Photronics is a leading manufacturer of photomasks for integrated circuits and flat panel displays, operating 11 manufacturing facilities across Asia, Europe, and North America [6].

Group 1 - The U.S. GDP grew 3% in Q2 2025, driven by a significant decline in imports after a record surge in Q1 2025, although tariff uncertainty remains a concern [2] - The artificial intelligence (AI) sector continues to attract substantial investments, with companies like Anthropic raising $5 billion, increasing its valuation from $62 billion to $170 billion [3] - Photronics (PLAB) is identified as an undervalued stock benefiting from AI-driven demand for photomasks, with a strong fundamental research backing its investment thesis [4][5] Group 2 - Photronics is positioned to profit from AI-driven growth in photomask demand due to advancements in chip technology, capacity expansions, and consumer electronics [5][6] - The global semiconductor manufacturing capacity is projected to grow at a compounded annual rate of 7% from 2024 to 2028, with semiconductor sales increasing by 20% year-over-year in May 2025 [7] - The long-term outlook for the semiconductor market indicates an 8% compounded annual growth rate from 2025 to 2034, driven by the demand for advanced chipmaking technologies [8][9] Group 3 - Photronics has increased its high-end photomask revenue from 30% in fiscal 2023 to 39% in the first half of fiscal 2025, indicating a shift towards higher-value products [12] - The company operates 11 production facilities globally, which minimizes tariff impacts and allows for efficient collaboration with customers [13][15] - Photronics has demonstrated strong financial performance, with revenue and core earnings growing at compounded annual rates of 6% and 25% since fiscal 2014, respectively [16] Group 4 - The company has generated $415 million in free cash flow from fiscal 2020 to fiscal 2Q25, representing 37% of its enterprise value, which supports its share repurchase program [19] - Photronics has a competitive edge in profitability, with a NOPAT margin of 19% and a return on invested capital (ROIC) of 12% in the trailing twelve months [17][21] - The company has repurchased $77 million in shares in the first half of fiscal 2025, with a potential repurchase yield of 1.8% based on current market capitalization [23] Group 5 - Photronics faces ongoing tariff uncertainty, particularly regarding its revenue from China, which accounted for 27% of its revenue in the first half of fiscal 2025 [24] - The company generated 36% of its revenue from three customers in fiscal 2024, indicating a concentration risk that could impact financial performance [27] - The current stock price implies a permanent decline in profits of 20%, despite the company's historical growth rates in NOPAT [29]

Core Viewpoint - Photronics, Inc. is set to announce its financial results for Q3 of fiscal 2025 on August 27, 2025, before market opening [1] Company Overview - Photronics is a leading global manufacturer of photomasks for integrated circuits (IC) and flat panel displays (FPD) [3] - The company has been a trusted supplier for over 56 years, having been founded in 1969 [3] - Photronics operates 11 strategically located manufacturing facilities across Asia, Europe, and North America [3] Upcoming Events - A public conference call will be held on the same day as the financial results announcement at 8:30 a.m. Eastern time [2] - During the call, management will address questions regarding financial performance, business conditions, and industry outlook, with some information potentially being disclosed for the first time [2] - The call will be available for live and on-demand streaming on the Photronics website [2]

Company Overview - Photronics, Inc. is a leading worldwide manufacturer of integrated circuit (IC) and flat panel display (FPD) photomasks, which are essential in the manufacturing process of ICs and FPDs [2] - The company has been a trusted photomask supplier for over 56 years, having been founded in 1969 [2] - Photronics operates 11 strategically located manufacturing facilities across Asia, Europe, and North America [2] Upcoming Investor Conferences - Photronics will participate in the Oppenheimer's 28th Annual Technology, Internet, & Communications Conference on August 13, 2025, which will be held virtually [1] - The company is also scheduled to attend TD Cowen's 53rd Technology Growth Cap Summit in New York, NY, on September 4, 2025 [1] - Additionally, Photronics will take part in the Singular Research Investor Conference in New York, NY, on September 10, 2025 [1]

Core Insights - Photronics, Inc. has installed a new multi-beam tool in its Boise, Idaho facility, enhancing its technological leadership in photomask technologies [1][2] - This installation represents the first multi-beam writer in production for the merchant market in the U.S., supporting both U.S. Government Trusted and commercial advanced photomask applications [2] - The multi-beam tool is designed to improve writing speed and performance for U.S. built merchant photomask products, enabling faster time to market and enhanced IC performance for customers [2] Company Overview - Photronics is a leading manufacturer of integrated circuit (IC) and flat panel display (FPD) photomasks, essential for the manufacturing process of ICs and FPDs [3] - The company has been a trusted supplier for over 56 years and operates 11 manufacturing facilities strategically located in Asia, Europe, and North America [3]