Photronics Inc. (NASDAQ:PLAB) Q3 2020 Earnings Conference Call - Final Transcript

Aug 27, 2020 • 08:30 am ET

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Photronics Inc. (NASDAQ:PLAB) Q3 2020 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 Third Quarter Full Year 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded, Thursday, August 27, 2020. [Operator Instructions]

And I would now like to hand the conference over to your speaker today, Troy Dewar, Vice President of Investor Relations. Thank you. And please go ahead, sir.

Executive
R. Troy Dewar

Thank you, Chris. Good morning, everyone. Welcome to our review of Photronics' 2020 third quarter financial results. Joining me this morning are Peter Kirlin, our Chief Executive Officer; John Jordan, our Chief Financial Officer; and Chris Progler, our Chief Technology Officer.

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'll turn the call over to Peter.

Executive
Peter S. Kirlin

Thank you, Troy, and good morning, everyone. We performed well in the third quarter achieving strong revenue growth as supply chains returned to normal, market demand recovered and we benefited from our broad product offerings, global footprint and leading technology. Design activity was healthy with dramatic improvements in high-end display and mainstream IC markets. Also notable of our results for the quarter was a strong recovery in our China business with revenue from products shipped into China up 10% compared with the second quarter.

Profit margins improved sequentially and year-over-year due to our relentless focus on cost control, which underpins our ability to leverage revenue growth into margin expansion. Our China operations were profitable for the first time this quarter. Given the size of our investment, it is a very significant milestone for Photronics.

Consolidated operating margins were 12.6% and earnings were $0.17 per share. We added to our cash balance during the quarter fortifying our financial position. We operate in a capital intensive business that requires significant investments for growth. As our China operations were well on their way to full utilization, we're actively engaged with customers to obtain long-term purchase agreements to provide support for incremental investments. Our strong balance sheet enables us to rigorously pursue these opportunities without jeopardizing our financial stability or diluting our shareholders.

Year-to-date revenues were 17% better than last year. We are tracking towards our third consecutive year of record revenues. Operating income is up 60% for the first nine months of the year. Cash generated by operations has more than tripled. Our cash balance is 30% higher than this time last year. These results validate that our strategy is working. We've followed a disciplined approach to capital allocation that places a priority on profitable organic