Photronics, Inc.

Good day and thank you for standing by. Welcome to Photronix second quarter 2023 earnings conference call. At this time, I'll participate on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. As a reminder, this conference is being recorded Wednesday, May 24th, 2023. I would now like to turn the conference over to Rochelle Burr, Chief Administrative Officer. Please go ahead.

Thank you, Kevin. Good morning, everyone. Welcome to our review of Botronic's fiscal 2023 second quarter results. Joining me this morning are Frank Lee, our Chief Executive Officer, John Jordan, our Chief Financial Officer, Chris Progler, our Chief Technology Officer, and Eric Rivera, our Corporate Controller and Chief Accounting Officer. The press release we issued earlier this morning, together with the presentation material that 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, and 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. 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 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 Frank.

Thank you, Richa, and good morning, everyone. Second quarter results were strong as we achieved record revenue and profit. Demand for our products grew in both IC and FPD with sequential revenue growth in all regions. Our position as the largest merchant photomaster supplier provide us broad exposure to global markets and make us less dependent on any one sector or region. In addition, we have a talent and dedicated global team. Their performance has enabled Fortranus to deliver record results in Q2. IC demand was strong again this quarter, especially for mainstream. This sector has been growing for the last several quarters. Demand for the advanced portion of mainstream in the 40 to 55 nanometer range is especially strong. On the other hand, we observed some softness in high end. However, we expect this to recover in the next one to two quarters and to resume a growth trend. Within FPD, demand for AMOLED grew significantly. Our customers are releasing new designs for mobile displays as they try to get market share in the next generations of smartphones, tablets, and PCs. Demand for LCD has stabilized with good sequential growth. We expect this favorable trend to continue. Growth and operation margin benefit again this quarter from strike pricing and tight cost management across the organizations. As a result, we earned $0.65 per share on a GAAP basis and $0.45 per share on a non-GAAP basis after excluding $0.11 per share gained from foreign exchange. This was an excellent quarter as we continue to build to another record year. Photomask demand is driven mainly by new designs. Design activities often follow different demand cycles than capital equipment or wafer stocks. For example, our customers often release new designs when their demand is soft and utilization is low. And that could be a better time to introduce new products into their operations. The other condition that drives photo mass demand is capacity expansion, either through new fab or new tools in existing fabs. These factors tend to make photo mass demand more sustainable and even counter Since I was named CEO one year ago, I spent a lot of time with our employees across organizations and have enhanced and driven a great team which has the characteristics to win. In addition, we have strategically invested in technology, and develop advanced process know-how for our leading-edge mask solutions. By working closely with our customers, we are able to fully support their technology and product romance. Our differentiated EUV product line continues to expand, achieving a number of important milestones including our first EUVD red mask shipments in Q2. We have a great market position as a lithium photo mask supplier with 11 strategically located manufacturing sites. Based on data recently published by Tech Insights, we shipped approximately 30% of all photo mask units The leading providers of semiconductors and the display panels trust us to supply their photo masks. This confirms our leading position and is an indication of our broad and diverse market exposure. Finally, we have a great balance sheet of farm growth. Through cash flow generation and financial discipline, we have built a strong and flexible balance sheet that provides liquidity to invest in growth, while also providing support should we see a decline in demand. We are on track to deliver another record year in 2023. Later on, John will provide our Q3 guidance in more detail. Photon mask market demand is strong, and our team is performing well. I am very optimistic about our future. With that, I will turn the call over to John.