Photronics, Inc. Q4 FY2025 earnings call

• Delivered strong financial results with sales of $216 million, increasing 3% sequentially. - Record high-end IC revenue led by US and Asia. - Recognized tax valuation allowance reversal due to improved US execution and outlook. - Executing strategic geographic expansions in US and Korea to enhance revenue contribution and diversify geographic mix. - Achieved technical and commercial developments like increased captive outsourcing, high-end node migrations, and advanced mask writer in US in full production. - Favorable product mix drove gross margin improvement to 35%.

IC revenue was $157 million, with record high-end IC revenue at 42% of IC revenue. High-end IC represented 20% of total revenue. FPD revenue was $58 million, declining 1% year over year. Gross margin improved to 35%, operating margin 24%, non-GAAP diluted EPS 60¢ per share.

• Fiscal Q1 revenue expected in range of $217 million to $225 million. - Operating margin expected between 23-25%. - Non-GAAP diluted EPS expected between 51 and 59¢ per share. - Fiscal 2026 CapEx expected to total approximately $330 million with investments in US and Korea to capitalize on growth trends.

• Geopolitical impacts on mainstream IC, especially in China. - Temporary FPD slowdown in late Q4 persisted into November but abated. - Foreign exchange impacts and deferred tax valuation allowance reversal risks.

Q: On market share with largest competitor going public, how is Photronics viewing relative size and trends?

A: Eric said market share as perceived before, Texan has more market share but Photronics and Texan are around same size when combining FPD. George added growing US high-end demand supports market share increase.

Q: View on overall competitive environment?

A: George said node migration, especially in US, with Boise site as only high-end merchant mass supplier in US, capturing more high-end shares.

Q: Mainstream business softness, supply and demand impact on margins and capital spend?

A: Frank Lee said focusing on anchor key customers, utilizing capacity better for higher value product mix.

Q: FPD ASPs and when meaningful percentage of business?

A: Chris Progler said g 8.6 in early production ramp, expect gradual increase in display revenue contribution in 2026.

Q: Allen Texas facility revenue potential?

A: Eric said revenue to start in second half of 2026 and continue to 2027 when fully ramped, Chris added Allen ramp frees up Boise capacity for higher-end applications.

Q: Outsourcing increase, pricing and margins on high-end vs traditional mainstream?

A: Eric said high end has higher ASPs and margins. George added captives paying fair price for outsourcing.

Q: Export restrictions, change in customer planning sentiment?

A: Eric said easing of export restrictions, customers planning better. Chris Progler added projects based on longer-term dialogue with key customers.

Q: Concentration of high-end IC growth and pipeline confidence?

A: Chris Progler said growth from existing core customer base, broad-based in foundry and memory, sustainable.

Q: Korea commercial model compared to US?

A: Frank Lee said customer outsourcing trend continues with communication about low max and outsourcing demand.