Photronics Inc. (NASDAQ:PLAB) Q2 2019 Earnings Conference Call Transcript

May 22, 2019 • 08:30 am ET

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Photronics Inc. (NASDAQ:PLAB) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Photronics Second Quarter Fiscal Year 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference is being recorded, Wednesday, May 22nd 2019.

I would now like to turn the conference over to Troy Dewar, Vice President of Investor Relations. Sir, you may begin.

Executive
Troy Dewar

Thank you, Ashley. Good morning, everyone. Welcome to our review of Photronics 2019 second quarter financial results. Joining me this morning are Dr. Peter Kirlin, Chief Executive Officer; John Jordan, Senior Vice President and Chief Financial Officer; and Dr. Christopher Progler, Vice President and Chief Technology Officer and Strategic Planning. The press release we issued earlier this morning along with the presentation material which accompanies our remarks are available on the Investor Relations section of our web page.

Comments made by any participants on today's call may include forward-looking statements. They include such words as anticipate, believe, estimate, expect, forecast. These forward-looking statements are based upon a number of risks, uncertainties and other factors that are difficult to predict. Actual results may differ materially from those expressed or implied and we assume no obligation to update any forward-looking information.

During the course of our discussion, we will refer to certain non-GAAP financial metrics. These numbers are useful for analysts, investors and management to evaluate our ongoing performance. A reconciliation of these metrics to GAAP financial results is provided in our presentation materials.

At this time, I will turn the call over to Peter.

Executive
Peter S. Kirlin

Thank you, Troy, and good morning, everyone. We performed well during our second quarter in the face of a semiconductor industry downturn due to our design-driven business model, diverse product platform, advanced suite of technologies and resilient customer relationships. In the current industry environment, our customers are introducing new designs as they attempt to attract consumer attention and gain market share in increasingly crowded competitive landscape. These new designs require new photo masks which is great for Photronics. Our leadership position in the market enables us to provide these customers with high-quality masks and they grow revenue despite the current industry slowdown. On top of this, we are investing to improve capability and increase capacity while ramping two new facilities in China. We have placed ourselves in a great position as our performance clearly demonstrates.

Second quarter revenue improved 6% sequentially with growth in both IC and FPD. In IC, high-end memory recovered as anticipated with good demand for NAND and some of the DRAM masks in Asia. FPD growth was once again led by mobile displays, both AMOLED and LTPS LCD. Excluding our new Hefei facility that is currently ramping production, we continue to run at full capacity. These panel producers across Asia preferentially turn to Photronics for their high-end FPD mass needs.

Operating margin improved from the previous quarter as we maintained tight control on costs while ramping two