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Photronics(PLAB) - 2024 Q3 - Earnings Call Transcript
PLABPhotronics(PLAB)2024-08-29 14:25
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Financial Data and Key Metrics Changes - Third quarter revenue was 211million,down3211 million, down 3% sequentially due to market softness in both IC and FPD segments [11] - Gross margin decreased to 35.6%, slightly down due to lower revenue [13] - Non-GAAP EPS was 0.51, higher than the previous quarter and the same as last year [14] Business Line Data and Key Metrics Changes - IC revenue decreased 3% quarter-over-quarter, with high-end logic mask orders declining while memory business improved [11][12] - FPD revenue was lower sequentially, although high-end resumed growth due to improved demand for mobile AMOLED displays [12] Market Data and Key Metrics Changes - Demand for photomasks is driven by design activity, with trends in AI, mobile computing, and increased IC content in various applications supporting new designs [7][8] - The display market is seeing innovation primarily from new mobile display features and higher screen resolutions [9] Company Strategy and Development Direction - The company is evaluating growth options including strategic expansion and partnerships in the US, Europe, and Asia [6] - Plans to increase the share repurchase program to 100million,indicatingconfidenceinlong−termmarketprospects[15]ManagementCommentsonOperatingEnvironmentandFutureOutlook−Managementnotedthatlingeringmacrouncertaintyandcustomerconcernsaboutelevatedinventoryhaveimpacteddemand[5]−Despitecurrentsoftness,managementremainsoptimisticaboutlong−termgrowthdrivenbymegatrendsinthephotomaskmarket[30]OtherImportantInformation−Operatingexpenseswereslightlylowerquarter−over−quarter,withoperatingmarginscompressingto24.7100 million, indicating confidence in long-term market prospects [15] Management Comments on Operating Environment and Future Outlook - Management noted that lingering macro uncertainty and customer concerns about elevated inventory have impacted demand [5] - Despite current softness, management remains optimistic about long-term growth driven by megatrends in the photomask market [30] Other Important Information - Operating expenses were slightly lower quarter-over-quarter, with operating margins compressing to 24.7% [13] - The company expects fourth quarter revenue to be in the range of 213 million to 221million,withnon−GAAPEPSestimatedbetween221 million, with non-GAAP EPS estimated between 0.48 to $0.54 [16][17] Q&A Session Summary Question: Impact of tax and non-controlling interest on earnings - The tax impact was due to the jurisdictional mix of earnings, with better performance from wholly owned subsidiaries offsetting weaker joint ventures [19] Question: Increase in SG&A despite revenue dip - SG&A increased primarily due to professional services fees incurred during the quarter [22] Question: Health of the mainstream business - The mainstream business remains stable due to the need for replacing aging equipment, which helps maintain pricing [24] Question: Long-term impact of Apple canceling its micro display project - The company does not foresee significant impact from Apple's decision, as it was not considered a major growth driver [26] Question: Technology advantage in OLED ramping - The company believes it has a strong technology lead in FPD and expects good ASPs for advanced masks used in AMOLED production [27]