Photronics(US:PLAB)2021-12-08 16:19Financial Data and Key Metrics Changes - Record fourth quarter revenue of $181 million, a 6% sequential increase and a 21% year-over-year increase [26][27] - Gross margin improved to 28.7% and operating margin to 18.5%, marking the best margins since 2016 [32] - Earnings per diluted share was $0.33 for the quarter and $0.89 for the year [35] Business Line Data and Key Metrics Changes - Both Integrated Circuit (IC) and Flat Panel Display (FPD) segments posted record revenues for Q4 and the full year [28] - IC high-end business grew primarily from logic demand from Asia foundries, while memory demand remained stable [28] - FPD strength driven by mobile applications and a recovery in mainstream LCD demand, with expectations for continued growth in 2022 [29][30] Market Data and Key Metrics Changes - China represented 37% of total revenue, with strong demand for products shipped into the region [30] - Revenue shipped into China reached a trailing 12-month run rate of $250 million, indicating significant market share growth [19] - The European market is beginning to see pricing actions, although it remains smaller than Asia [22] Company Strategy and Development Direction - The company is focusing on geographic expansion into China and capitalizing on the technology shift from LCD to AMOLED displays [13][14] - Investments are being made to expand capacity in Taiwan to meet growing demand, particularly in the legacy foundry sector [15][16] - The company aims to maintain strong margins and continue prudent investments to drive growth [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, expecting continued strong demand across both IC and FPD markets [41][44] - The company is well-positioned to capture growth in the legacy foundry sector, driven by a halt in Moore's Law for most logic applications [17][18] - Management noted that supply chain disruptions were managed effectively, with no significant impact on operations [56][57] Other Important Information - Operating cash flow for the year was $151 million, a 5% increase from the previous year [36] - Capital expenditures for fiscal 2022 are expected to be around $100 million, focusing on IC capacity [37] - The company has repurchased a total of 11.8 million shares for $127.5 million since initiating the buyback program [38][39] Q&A Session Summary Question: How much of the sequential increase in mainstream IC photomask revenue was due to volume versus pricing? - Management indicated that approximately two margin points were attributable to price increases [47] Question: What is the outlook for gross margins in the fiscal first quarter? - Management expects gross margins to remain stable, with revenue increases and margin differences staying similar [49] Question: Are there any disruptions from supply chain issues or power outages in China? - Management confirmed no disruptions occurred, as they have backup power generation and a global supplier network [56][57] Question: Is the pricing environment now supportive of adding new tools for the mainstream business? - Management stated that current pricing does not support the installation of new lines but allows for incremental tool additions to maximize existing capacity [60] Question: What trends are being observed in the mainstream business? - Management noted broad-based strength across categories, including significant contributions from sectors like power EVs [67] Question: What are the technology trends for flat panel displays? - Management highlighted a gradual shift from LCD to AMOLED displays, with increasing complexity in mask content for new technologies [68][69]