Photronics Inc. (NASDAQ:PLAB) Q4 2019 Earnings Conference Call - Final Transcript
Dec 11, 2019 • 08:30 am ET
John P. Jordan
have reported previously, qualification for IC products takes nine to 12 months, so production from our new Xiamen facility will be increasing over the next few quarters, providing another leg of growth as those qualifications are completed. Underlying IC market demand is expected to be stable to improving, influenced somewhat by normal seasonality.
FPD revenue was also a record, 15% higher than the previous record established last quarter. The drivers remain the same; strong demand from OLED displays and increased production from our Hefei facility. We do not anticipate any weakening of these trends, so we expect the growth at Hefei to continue as production ramps.
Gross margin improved sequentially, the impact from operating leverage expanded margins to 24.4%. Operating margin also improved to 13.7%, the effect of increased revenue and lower operating expenses. The headwind from China operations was $4.1 million and our Hefei operation was close to breakeven in Q4. Total year operating expense margin, excluding China expenses, was essentially flat year-on-year.
Other expense was $6.1 million, almost entirely due to unrealized foreign exchange loss, primarily in China and Korea. Minority interest was essentially flat compared with the third quarter. Earnings from our Taiwan JV were partially offset by losses from the China JV. This resulted in net income attributable to Photronics, Inc. shareholders of $9.7 million or $0.15 per diluted share.
Cash generated by operations was quite strong at $48 million for the quarter. We also received $5 million in government incentives from China. We spent $17 million for capex in the quarter and paid $19 million in dividends to our Taiwan JV partner. We also repurchased nearly 1 million shares of our common stock in the quarter for $11 million.
For the fiscal year 2019, we repurchased 2.1 million shares for a total of $22 million. Since inception of our share repurchase program in July 2018, we have spent $45 million to repurchase 4.7 million shares. The share repurchases combined with the redemption of our convertible debt over the last few years have reduced our reported diluted shares by 15% from the peak in 2015, creating additional value for our shareholders.
Capex for the full year 2019 was $177 million, slightly less than our estimate of $185 million. We expect that difference together with the approximately $25 million deferral, we mentioned during our third quarter conference call, to be spent in early 2020. For the fiscal year 2020, we expect total capex to be approximately $100 million, which includes the 2019 carryover.
Before I provide first quarter guidance, I will remind you that our visibility is always limited as our backlog is typically only one to two weeks and demand for some of our products is inherently uneven and difficult to predict. Additionally, the ASPs for high-end mask sets are high. And as this segment of the business grows, a relatively low number of high-end orders can have a significant impact on our quarterly revenue and earnings. Lastly, I'll caution that any development from the ongoing