Photronics(PLAB) - 2024 Q4 - Annual Report

Financial Performance - Total revenue for the year ended October 31, 2024, was $866,946, a decrease of 2% from$ 892,076 in 2023 [252]. - Gross profit for 2024 was $315,946, down from$ 336,162 in 2023, reflecting a gross margin of approximately 36.4% [252]. - Operating income decreased to $221,518 in 2024 from$ 253,050 in 2023, indicating a decline of about 12.5% [252]. - Net income attributable to Photronics, Inc. shareholders was $130,688 for 2024, compared to$ 125,485 in 2023, representing an increase of 2% [252]. - Comprehensive income for 2024 was $192,397, down from$ 205,246 in 2023, indicating a decrease of approximately 6.5% [255]. - Net income for the year ending October 31, 2024, was $183,848, a decrease from$ 199,634 in 2023, representing a decline of about 8% [260]. - Cash flows from operating activities provided $261,444 in 2024, down from$ 302,176 in 2023, indicating a decrease of approximately 13.5% [260]. - The company reported share-based compensation expense of $13,890 for 2024, an increase from$ 8,001 in 2023, marking a rise of about 73.6% [260]. - Total expenses incurred for the year ended October 31, 2024, were $13,890 million, a significant increase from$ 8,001 million in 2023, representing a 73.6% year-over-year growth [370]. Assets and Liabilities - Total current assets increased to $931,062 in 2024, up from$ 785,450 in 2023, marking a growth of approximately 18.5% [247]. - Total liabilities decreased to $231,300 in 2024 from$ 250,612 in 2023, a reduction of about 7.7% [247]. - Cash and cash equivalents rose to $598,485 in 2024, compared to$ 499,292 in 2023, reflecting an increase of approximately 19.9% [247]. - Property, plant, and equipment, net increased to $745.3 million as of October 31, 2024, from$ 709.2 million as of October 31, 2023, reflecting a growth of 5.1% [324]. - The total inventory as of October 31, 2024, was $56.5 million, an increase of 13.1% from$ 50.0 million as of October 31, 2023 [322]. - The allowance for credit losses was $1.1 million as of October 31, 2024, compared to$ 1.1 million as of October 31, 2023, indicating stability in credit risk management [316]. Research and Development - Research and development expenses increased to $16,576 in 2024 from$ 13,654 in 2023, a rise of about 21.5% [252]. - Research and development expenses were $16.6 million,$ 13.7 million, and $18.3 million for the years ended October 31, 2024, 2023, and 2022, respectively, indicating a year-over-year increase of 21.2% from 2023 to 2024 [300]. Foreign Currency and Risk Management - The primary net foreign currency exposures include the South Korean won, Japanese yen, New Taiwan dollar, Chinese renminbi, Singapore dollar, British pound sterling, and euro [225]. - The increase in foreign currency rate change risk is primarily due to increased net exposures of the New Taiwan dollar and South Korean won against the U.S. dollar [225]. - The company does not believe that a 10% change in the exchange rates of other non-U.S. dollar currencies would have had a material effect on its consolidated financial statements as of October 31, 2024 [225]. - The company engages in transactions in multiple currencies, which may affect reported revenue and operating income due to exchange rate fluctuations [223]. - The company does not enter into derivatives for speculative purposes, focusing instead on mitigating exposure to foreign currency fluctuations [224]. Customer Concentration - As of October 31, 2024, Customer A accounted for 19.2% of the net accounts receivable, a decrease from 21% in the previous year [415]. - Customer B's share of net accounts receivable increased to 14.6% from 10% year-over-year [415]. - For the revenue attributable to customers, Customer A represented 15% in the reporting period ending October 31, 2024, compared to 14% in 2022 [417]. - Customer B's revenue contribution rose to 12% from 10% year-over-year [417]. - Customer C's revenue share decreased to 9% from 13% in the previous year [417]. - The company monitors customer concentration in both accounts receivable and revenue to manage financial risk effectively [414]. - The company maintains a strategy of diversifying its customer base to reduce dependency on major clients [414]. Tax and Deferred Income - The income tax provision for the year ended October 31, 2024, was$ 63,567 million, a decrease from $70,312 million in 2023 [385]. - The company's income before income tax provisions was$ 247,415 million for the year ended October 31, 2024, compared to $269,946 million in 2023 [382]. - As of October 31, 2024, the net deferred income tax assets increased to$ 22,590 million from $21,062 million in the previous year, reflecting a valuation allowance decrease due to expected realizable tax benefits [389]. - The balance of unrecognized tax benefits increased to$ 14,720 million as of October 31, 2024, from $8,908 million in the previous year, including interest and penalties [395]. - The company established a valuation allowance for deferred tax assets, which decreased in 2024 due to management's assessment of realizable tax benefits [389]. Investments and Capital Expenditures - The company invested$ 130,942 in property, plant, and equipment in 2024, slightly down from $131,295 in 2023 [260]. - The company has unrecognized commitments totaling$ 74,046 million for the fiscal year 2025, primarily for property, plant, and equipment acquisitions [407]. - The company plans to exercise early buyout options for finance leases during the first half of 2025, which includes a $7.2 million inspection tool and a$ 35.5 million lithography tool [341][342]. Share-Based Compensation - The company granted 865,050 restricted stock awards in 2024, with a weighted-average grant-date fair value of $29.50 per share, compared to 791,925 awards in 2023 at$ 16.84 [373]. - The total intrinsic value of options exercised in 2024 was $2,981 million, an increase from$ 1,654 million in 2023 [378]. - The company recognized $1.2 million of incremental stock-based compensation due to the accelerated vesting of restricted stock awards for departing executives [370]. - Share-based compensation expenses increased in 2024, reflecting the company's ongoing commitment to incentivizing its workforce [368].