Photronics(US:PLAB)2025-05-28 13:32Financial Data and Key Metrics Changes - The company achieved second quarter sales of $211 million, which was in the middle of the guidance range, representing a 3% year-over-year decline [7][17] - Non-GAAP diluted EPS was $0.40, while diluted GAAP EPS attributable to shareholders was $0.15 [7][22] - Gross margin was reported at 37%, in line with the quarterly average over the past three years, and operating margin improved to 26%, above guidance [21][22] Business Line Data and Key Metrics Changes - Integrated Circuit (IC) revenue was $156 million, down 3% year-over-year, with high-end revenue increasing 2% year-over-year, representing 38% of IC revenue [17][18] - Flat Panel Display (FPD) revenue was $55 million, declining 2% year-over-year, with strength noted in mobile applications and advanced mass technologies [20][21] Market Data and Key Metrics Changes - Revenue from IC joint ventures in China and Taiwan remained healthy, while revenue from the U.S. declined sequentially due to lower-end design node weakness [21] - The company noted a continuation of favorable design node migration trends, particularly benefiting from the growing AI ecosystem [8][17] Company Strategy and Development Direction - The company is focusing on capacity expansion in the U.S. to support the migration to higher-end nodes and is strategically positioned to benefit from the reshoring of semiconductor production [8][12] - The geographic footprint is viewed as a strategic asset, with 11 cleanroom production facilities globally to support customer collaboration and rapid response [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding near-term demand due to macroeconomic uncertainties and tariff dynamics, expecting third quarter revenue to be in the range of $200 million to $208 million [25][50] - The company remains focused on balancing capital allocation between organic growth, strategic investments, and returning cash to shareholders [24][50] Other Important Information - The company repurchased $72 million worth of shares during the quarter, reflecting confidence in long-term health [7][24] - A succession plan was announced with the retirement of the CEO, Frank Lee, and the appointment of George Macricostas as the new CEO [13][15] Q&A Session Summary Question: Insights on mainstream business and supply-demand dynamics - The mainstream market remains weak due to low wafer fab utilization among aged fab customers, particularly in power, industrial, and consumer segments [27][28] - There is a muted demand balance, but it is not expected to be a long-term issue [29] Question: Weakness in Asia and its impact - Weakness in mainstream is broad-based, not confined to Asia, with Europe showing significant weakness due to automotive and industrial microcontrollers [31] Question: Year-over-year earnings impact - Pricing pressure exists, but the company is focusing on product mix to mitigate this, particularly in higher-end mainstream and node migration [34][35] Question: Priorities for the new CEO - The new CEO will focus on cost structure, driving revenue, and market share growth, emphasizing an orderly transition [40][41] Question: Customer order delays due to macroeconomic concerns - Customers are indeed delaying orders due to uncertainty in the current tariff environment, which is reflected in the cautious outlook [49]