Financial Performance & Guidance - Photronics' revenue for Fiscal Quarter 2 2025 was $211 million, a decrease of 3% year-over-year and 1% quarter-over-quarter[38] - The operating margin for Fiscal Quarter 2 2025 was 264%, a 60 bps increase year-over-year and a 180 bps increase quarter-over-quarter[38] - Diluted EPS for Fiscal Quarter 2 2025 was $015, a decrease of 74% year-over-year and 78% quarter-over-quarter[38] - Non-GAAP diluted EPS for Fiscal Quarter 2 2025 was $040, a decrease of 13% year-over-year and 23% quarter-over-quarter[38] - The company is guiding for Fiscal Quarter 3 2025 revenue between $200 million and $208 million, with an operating margin between 20% and 22%, and non-GAAP diluted EPS between $035 and $041[43] Revenue Breakdown - High-end products accounted for 38% of total revenue, while mainstream products accounted for 62% in Fiscal Quarter 2 2025[40] - IC high-end products accounted for 79% of IC total revenue, while IC mainstream products accounted for 21% in Fiscal Quarter 2 2025[41] - FPD high-end products accounted for 38% of FPD total revenue, while FPD mainstream products accounted for 62% in Fiscal Quarter 2 2025[41] - IC revenue in Fiscal Quarter 2 2025 was $1559 million, a increase of 1% quarter-over-quarter and a decrease of 3% year-over-year[40] - FPD revenue in Fiscal Quarter 2 2025 was $551 million, a decrease of 5% quarter-over-quarter and a decrease of 2% year-over-year[41] Strategic Initiatives & Market Position - Photronics is a global leader in the merchant photomask industry, with a broad technology suite and geographic presence[21] - The company's strategic investment strategy focuses on organic growth through targeted capacity expansion and long-term purchase agreements[34] - Supply chain regionalization is driving global semiconductor investments, increasing demand for photomasks[29] - Advanced displays, particularly AMOLED, are driving innovation and increasing the value and complexity of mask sets[33]

Revenue Performance - Revenue for Q2 FY2025 was $211.0 million, a decrease of 3% year-over-year and 1% sequentially[3]. - Integrated Circuit (IC) revenue was $155.9 million, down 3% year-over-year but up 1% sequentially[3]. - Flat Panel Display (FPD) revenue was $55.1 million, down 2% year-over-year and 5% sequentially[3]. - For Q3 FY2025, revenue guidance is expected to be between $200 million and $208 million, with non-GAAP net income per diluted share between $0.35 and $0.41[4]. Net Income and Earnings Per Share - GAAP net income attributable to shareholders was $8.9 million, or $0.15 per diluted share, compared to $36.3 million, or $0.58 per diluted share in Q2 FY2024[3]. - Non-GAAP net income attributable to shareholders was $24.3 million, or $0.40 per diluted share, down from $28.7 million, or $0.46 per diluted share in Q2 FY2024[3]. - GAAP net income attributable to Photronics, Inc. shareholders for the three months ended May 4, 2025, was $8.861 million, a decrease from $42.851 million in the previous quarter[18]. - Non-GAAP net income attributable to Photronics, Inc. shareholders was $24.259 million, compared to $32.383 million in the previous quarter[18]. - GAAP diluted earnings per share attributable to Photronics, Inc. shareholders decreased to $0.15 from $0.68 in the previous quarter[18]. - Non-GAAP diluted earnings per share attributable to Photronics, Inc. shareholders was $0.40, down from $0.52 in the previous quarter[18]. Cash Flow and Investments - Cash generated from operating activities was $31.5 million, with $60.5 million invested in organic growth and $72.1 million returned to shareholders through stock repurchases[9]. - Cash, cash equivalents, and short-term investments at the end of the quarter totaled $558.4 million[9]. - The company repurchased $72 million of its stock during the quarter as part of its strategy to return cash to shareholders[2]. Foreign Exchange Impact - Foreign exchange (FX) gain/loss for the quarter was a loss of $31.111 million, compared to a gain of $18.443 million in the previous quarter[18]. - Estimated tax effects of FX gain/loss were $(8.337) million, compared to $5.152 million in the previous quarter[18]. - Estimated noncontrolling interest effects related to FX were $(7.376) million, compared to $2.823 million in the previous quarter[18]. Management Changes - The transition of CEO from Dr. Frank Lee to Mr. George Macricostas was announced, with Dr. Lee remaining involved in Asia operations[1]. Overall Financial Performance - The company experienced a decrease in non-GAAP adjustments, with effects of $(0.25) per share compared to $(0.16) in the previous quarter[18]. - Overall, the financial performance indicates a significant decline in both net income and earnings per share compared to the previous quarter[18].

Core Viewpoint - Photronics, Inc. reported its second-quarter fiscal 2025 financial results, revealing a decline in revenue and net income, while announcing a leadership transition with Dr. Frank Lee stepping down as CEO and Mr. George Macricostas taking over the role [1][2][8]. Financial Performance - Revenue for the second quarter was $211.0 million, a decrease of 3% year-over-year and 1% sequentially [8]. - GAAP net income attributable to Photronics, Inc. shareholders was $8.9 million, or $0.15 per diluted share, compared to $36.3 million, or $0.58 per diluted share, in the second quarter of 2024 [8]. - Non-GAAP net income attributable to Photronics, Inc. shareholders was $24.3 million, or $0.40 per diluted share, down from $28.7 million, or $0.46 per diluted share, in the same quarter last year [8][19]. - Integrated Circuit (IC) revenue was $155.9 million, down 3% year-over-year but up 1% sequentially [8]. - Flat Panel Display (FPD) revenue was $55.1 million, down 2% year-over-year and 5% sequentially [8]. Cash Flow and Shareholder Returns - Cash generated from operating activities was $31.5 million, with $60.5 million invested in organic growth through capital expenditures [8]. - The company returned $72 million to shareholders through stock repurchases during the quarter [2][8]. - Cash, cash equivalents, and short-term investments at the end of the quarter totaled $558.4 million [8]. Guidance for Future Performance - For the third quarter of fiscal 2025, Photronics expects revenue to be between $200 million and $208 million, with non-GAAP net income attributable to shareholders projected to be between $0.35 and $0.41 per diluted share [4]. Leadership Transition - Dr. Frank Lee will continue to manage the company's Asia operations and remain Chairman and President of Photronics' PDMC subsidiary in Taiwan [1][2]. - Mr. George Macricostas has assumed the role of Chief Executive Officer while remaining Chairman of the Board [1][2]. 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].

Company Overview - Photronics, Inc. (NASDAQ: PLAB) is a manufacturer of photomasks used in integrated circuits and flat panel display manufacturing across the US, Asia, and Europe [1] - The company is initiated with a Strong Buy rating and a price target of $32 [1] Investment Thesis - The Strong Buy rating is based on above-consensus expectations for the company's performance [1] - Moretus Research emphasizes a structured framework to identify companies with durable business models and mispriced cash flow potential [1] - The research focuses on underappreciated companies undergoing structural changes or temporary dislocations, which can lead to asymmetric returns [1] Research Methodology - Moretus Research combines rigorous fundamental analysis with a judgment-driven process, avoiding noise and overly complex forecasting [1] - Valuation is based on sector-relevant multiples tailored to each company's business model and capital structure, emphasizing comparability and relevance [1] - The research aims to provide professional-grade insights and actionable valuation, raising the standard for independent investment research [1]

Core Viewpoint - The article discusses the current state and future prospects of the photomask industry, highlighting the challenges faced by domestic companies in China and the potential for growth driven by increasing demand in downstream applications such as semiconductors and flat panel displays [2][3][4]. Group 1: Photomask Industry Overview - Photomasks are critical materials in microelectronics manufacturing, serving as templates for transferring circuit designs onto substrates or wafers [2][5]. - The global photomask market has been growing steadily, reaching a size of $5.2 billion by 2022 [2]. - The domestic photomask industry in China is currently lagging, with reliance on foreign imports for upstream equipment and materials [3][35]. Group 2: Market Dynamics - The demand for photomasks is driven by the growth of downstream industries, particularly in consumer electronics and semiconductor manufacturing [35][48]. - The photomask industry exhibits a counter-cyclical property, where sales can increase during downturns in the panel industry as manufacturers invest in new product development [3][48]. - The semiconductor photomask market is dominated by companies from the US and Japan, with a significant portion of the market share held by firms like Intel, Samsung, and TSMC [3][4]. Group 3: Domestic Companies and Development - Domestic companies such as Qingyi Optoelectronics and Luwei Optoelectronics are making strides in the photomask sector, with advancements in technology and market share [4][30]. - The article emphasizes the importance of mergers and acquisitions for domestic firms to enhance their technical capabilities and compete with established international players [4][30]. - The shift of panel and semiconductor production capacity to mainland China presents an opportunity for local photomask manufacturers to grow [4][65]. Group 4: Technological and Market Trends - The photomask production process involves several complex steps, requiring high precision and advanced technology [17][21]. - The industry is witnessing a trend towards larger and more sophisticated display panels, which in turn increases the demand for advanced photomasks [52][65]. - The market for photomasks is expected to continue growing, with projections indicating a rise in the domestic market size from 7.412 billion yuan in 2019 to 12.436 billion yuan in 2023 [48][49].

Core Viewpoint - Photronics, Inc. is set to announce its financial results for Q2 of fiscal 2025 on May 28, 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 55 years, 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 potentially undisclosed information [2] - The call will be available for live and on-demand streaming on the Photronics website [2]

Group 1 - Photronics, Inc. announced its participation in several upcoming financial conferences, including TD Cowen's 53rd Annual Technology, Media & Telecom Conference on May 29, D.A. Davidson's 1st Annual Technology & Consumer Conference on June 10, Three Part Advisors East Coast IDEAS Conference on June 11, and Singular Research Investor Conference on June 18 [1] - The company 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] - Photronics has been a trusted photomask supplier for over 55 years and operates 11 strategically located manufacturing facilities across Asia, Europe, and North America [2]

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Revenue and Profitability - Revenue for Q1 FY25 was $212.1 million, a decrease of 4.7% compared to Q4 FY24 and a decrease of 1.9% compared to Q1 FY24, primarily due to seasonal softness and mainstream weakness in Asia and Europe [110]. - Gross profit for Q1 FY25 was $75.5 million, resulting in a gross margin of 35.6%, down from 37.0% in Q4 FY24, primarily due to a revenue decrease of 4.7% [113]. - Net income attributable to Photronics, Inc. shareholders was 20.2% in Q1 FY25, an increase from 15.3% in Q4 FY24 [104]. - Non-GAAP net income attributable to shareholders for Q1 FY25 was $32.4 million, compared to $29.9 million in Q1 FY24 [134]. Expenses - Selling, general, and administrative expenses were $19.1 million in Q1 FY25, a decrease from $21.0 million in Q4 FY24, attributed to lower compensation and professional fees [115]. - Research and development expenses decreased to $4.3 million in Q1 FY25 from $5.3 million in Q4 FY24, primarily due to reduced qualification activities in Asia [116]. Cash Flow and Investments - As of February 2, 2025, cash and cash equivalents totaled $642.2 million, an increase from $598.5 million on October 31, 2024 [122]. - Net cash provided by operating activities increased by $37.0 million in Q1 FY25, totaling $78.5 million compared to $41.5 million in Q1 FY24 [128]. - Net cash flows provided by investing activities improved by $49.0 million in Q1 FY25, driven by an additional maturity of short-term investments of $39.0 million [129]. - The company repurchased 195,079 shares for $4.6 million during Q1 FY25, with $95.4 million remaining under the share repurchase authorization [125]. Tax and Other Income - The effective income tax rate for Q1 FY25 was 24.5%, down from 26.6% in Q4 FY24, primarily due to changes in the jurisdictional mix of earnings [118]. - Other income increased to $25.0 million in Q1 FY25 from a loss of $1.0 million in Q4 FY24, driven by favorable foreign currency impacts [117]. Market Conditions and Future Outlook - The backlog for IC photomasks can expand to as long as two to three months due to demand exceeding supply capacity [100]. - The company anticipates continued transitions and cycles in the semiconductor industry, which will affect its business and financial condition [101]. - The company estimates capital expenditures for fiscal year 2025 to be approximately $200 million, primarily in Asia and the U.S. [124]. - The company plans to continue investing in its business and is ready to pursue mergers, acquisitions, or strategic partnerships if suitable opportunities arise [123]. Foreign Currency and Commitments - A 10% adverse movement in foreign currencies would have resulted in a net unrealized pre-tax loss of $62.7 million as of February 2, 2025 [141]. - Outstanding capital commitments as of February 2, 2025, were approximately $170.3 million, with accrued liabilities related to capital equipment purchases of approximately $13.9 million [124]. - The company has CNY 200 million (approximately $27.7 million) of borrowing capacity in China to support local operations [122].

Financial Performance (FQ1 2025) - Revenue was $212.1 million, a decrease of 2% year-over-year and 5% quarter-over-quarter[5] - Operating margin was 24.6%, a decrease of 200 basis points year-over-year and 50 basis points quarter-over-quarter[5] - Diluted EPS was $0.68, an increase of 62% year-over-year and 26% quarter-over-quarter[5] - Non-GAAP Diluted EPS was $0.52, an increase of 8% year-over-year and a decrease of 12% quarter-over-quarter[5] - Operating cash flow was $78.5 million, an increase of 89% year-over-year and 15% quarter-over-quarter[5] - Cash and short-term investments totaled $642.2 million, an increase of 23% year-over-year and 0% quarter-over-quarter[5] Revenue by Product Line (FQ1 2025) - IC High-End revenue was $60.1 million, a decrease of 1% year-over-year and 0% quarter-over-quarter[9] - IC Mainstream revenue was $93.9 million, a decrease of 3% year-over-year and 9% quarter-over-quarter[9] - FPD High-End revenue was $49.7 million, a decrease of 2% year-over-year and an increase of 3% quarter-over-quarter[10] - FPD Mainstream revenue was $8.5 million, an increase of 5% year-over-year and a decrease of 19% quarter-over-quarter[10] Guidance (FQ2 2025) - Revenue is expected to be between $208 million and $216 million[14] - Operating margin is expected to be between 23% and 25%[14] - Diluted non-GAAP EPS is expected to be between $0.44 and $0.50[14] - Full-year Capex is expected to be approximately $200 million[14]