Photronics(PLAB) - 2021 Q1 - Quarterly Report

Financial Performance - In Q1 FY21, the company's revenue was $152.1 million, with a gross margin of 20.1$1.0 million, or 0.9%, from Q4 FY20, while FPD photomasks increased by $3.7 million, or 8.6$11.7 million, representing 7.7% of revenue, down from 10.0% in Q4 FY20[122] - The company experienced a decrease in net income attributable to shareholders, which was 5.3% in Q1 FY21 compared to 4.3% in Q4 FY20[122] - Revenue decreased by 4.8% in Q1 FY21 compared to Q1 FY20, with IC demand declining by 1.9% and FPD demand falling by 10.7%[129] - Gross margin decreased by 1.3 percentage points in Q1 FY21 from Q4 FY20, primarily due to an unfavorable product mix and increased material costs[130] - Gross profit for Q1 FY21 was $30.5 million, down from$31.9 million in Q4 FY20 and $34.6 million in Q1 FY20[130] - Selling, general and administrative expenses were$14.1 million in Q1 FY21, an increase from $12.8 million in Q4 FY20[132] - Net cash provided by operating activities was$26.3 million in Q1 FY21, a decrease of $4.5 million from$30.8 million in Q1 FY20[139] - Cash and cash equivalents at the end of Q1 FY21 were $278.5 million, a slight decrease from$278.7 million at the end of fiscal 2020[138] - Net income attributable to noncontrolling interests was $1.5 million in Q1 FY21, down from$2.1 million in Q4 FY20, mainly due to decreased net income at the Taiwan-based IC facility[137] Investments and Financing - The company entered into a five-year finance lease for a high-end lithography tool valued at $35.6 million, with monthly payments starting at$0.04 million[110] - The interest rate for the finance lease of the high-end inspection tool is 1.09%[111] - The company received initial proceeds of approximately $6.3 million from a loan approved for 200 million RMB (approximately$30.9 million) in Q4 FY20[112] - A dividend of approximately $16.2 million was paid to noncontrolling interests from the company's majority-owned IC subsidiary in Taiwan[115] - The company authorized a stock repurchase program of up to$100 million in Q4 FY20, repurchasing 2.5 million shares at an average price of $11.34 per share[120] Research and Development - Research and development expenses increased to 3.1$4.7 million in Q1 FY21, compared to $4.1 million in both Q4 FY20 and Q1 FY20, reflecting increased development activities in the U.S.[133] Future Outlook - The company expects Q4 FY20 revenue to increase in the high single digits as a percentage of FY20 revenue[146] - Operating profit is anticipated to grow at a rate similar to the 23$32.5 million, with significant exposures to the Chinese renminbi and South Korean won[152] - The company does not expect a material effect from a 10% adverse movement in interest rates on variable rate borrowings[153] - The majority of growth in the IC and FPD markets is expected to come from the Asia region, predominantly China[148] - The company is continually assessing its global manufacturing strategy, which may lead to future facility closures or expansions based on market conditions[148] - Recent changes in U.S. leadership may improve trade relations with China, potentially affecting the company's operations[147]