Photronics Inc. (NASDAQ:PLAB) Q4 2019 Earnings Conference Call - Final Transcript

Dec 11, 2019 • 08:30 am ET

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Photronics Inc. (NASDAQ:PLAB) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Photronics Fourth Quarter Fiscal Year '19 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Troy Dewar, Vice President of Investor Relations. Please go ahead, sir.

Executive
Troy Dewar

Thank you, Joe. Good morning, everyone. Welcome to our review of Photronics 2019 fourth 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, 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 webpage. Comments made by any participants on today's call may include forward-looking statements that include such words as anticipate, believe, estimate, expect, forecast, in our view. 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.

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

Executive
Peter S. Kirlin

Thank you, Troy, and good morning, everyone. We ended 2019 with momentum, achieving record quarterly and annual revenue due to strong design activity across the majority of our customer base, increased capacity as we ramp production in two new manufacturing facilities, and outstanding work by our entire organization to win new business and expand share.

In addition to record total revenue, we raised the bar with record quarterly revenue for IC and FPD photomasks, while annual FPD revenues also reached a new high. It was a superb quarter capping off a great year, and I'm very pleased with our performance. With growing revenue and high operating leverage, profit margins expanded, combined with consistent efforts to control cost, we delivered 13.7% operating margins, better than last quarter and last year despite a larger operating footprint and growing headcount.

For the year, operating margins were 9.5%, a remarkable achievement given the challenges we faced, including headwinds from start-up expenses, the semiconductor and LCD industry downturns, and growing geopolitical uncertainty. These outstanding operating results generated EPS of $0.15 per share for the quarter, which is in line with our expectations and included significant foreign exchange loss below the operating line.

In addition to record revenue and solid earnings, we maintained a strong cash balance, ending the quarter with $154 million in net cash. Cash generated from operations more than offset our strategic uses of cash during the quarter, including share repurchases. With the bulk of our China investment now behind us and growing confidence in our long-term ability to generate cash, we have restarted our share repurchase activity. We see this as an effective use of cash to invest in what we believe to be an undervalued asset while also reducing number of shares of outstanding. We spent approximately $11 million for shares in the last two months of