Photronics, Inc.

Good day and thank you for standing by. Welcome to the Photronics third quarter fiscal year 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded on Wednesday, September 6, 2023. I would now like to turn the conference over to Rochelle Burr, Chief Administrative Officer. Please go ahead.

Thank you, Michelle. Good morning, everyone. Welcome to our review of Photonics' fiscal 2023 third quarter results. Joining me this morning are Frank Lee, our Chief Executive Officer, John Jordan, our Chief Financial Officer, Chris Prosler, our Chief Technology Officer, and Eric Rivera, our Chief Accounting Officer and Corporate Controller. 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's 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. Our team did a great job in the third quarter. maintaining margin, and improving cash flow, even while we experienced slightly softer demand. Remedy during the quarter was $224 million, 2% better than last year's third quarter, but sequentially 2% lower than the record of $229 million set in our previous quarter. Looking at the full year today, revenues are up 8% compared to last year. At the midpoint of the revenue range in our Q4 guidance, we are on track to achieve our sixth consecutive year of record revenue. We continue to deliver consistent financial performance against the backdrop of and extended semiconductor downturn. Profitability has improved year-to-date, with growth margins up 3 percent from last year and operation margins up nearly 4 percent. Turning to the IC business, high-end IC revenue was up from Q2, as demand increased from factory customers in Asia. At the same time, reduced mainstream demand in Asia caused our overall IC revenue to fall slightly. We believe we have maintained market share. Our geographic presence and the broad technologies have positioned the company well to continue to grow as market demand improves. MPD saw continued growth in high-end AMOLED masks for mobile display. This was offset by declines in photo masks for G10.5 Plus and LTPS displays. AMOLED usage is expanding into larger format high-end tablet, laptop, and automotive sectors, while increasing penetration into smartphones. We also see emerging panel makers attempt to gain market share by releasing new AMOLED designs. In future years, another positive trend will be the production of AMOLED panels on G8.6 size glass. This product will require a new level of high quality superior photo mask, favoring Fortran's technology leadership position. We are confident in our ability to continue to win business with these advanced technologies. The strong MRA demand and continued mainstream business kept our APDFAP operation at high utilization levels in Q3. and we expect to maintain the trend into Q4. We overcame overall market, market is the lower revenue by further controlling costs and optimizing our product mix. That enables us to maintain growth and operation margins in line with the record levels set in Q2. In addition, our customer long-term agreements help us preserve the ASP and FAB utilization rates. As a result, we earn $0.44 per share on a GAAP basis and $0.51 per share on a non-GAAP basis. Recovery in a global semiconductor industry seems to be slower than previous anticipated due to continued macroeconomic uncertainty and new consumer demand. However, on a positive side, IC design intensive industries trend should be a positive driver for photo mass growth. Technologies such as the AI, data center, IoT, automotive, industrial, and machine learning, we'll continue to try chip makers to produce design for many varieties of new ICs. Since each design requires a unique set of photomask to launch this IC product, this will drive demand for both high-end and mainstream business. Additionally, I'm surely trained are supporting expanding investment in global semiconductor manufacturing capacity across multiple nodes. Large-wave threat projects are under construction or planned in Asia, North America, and Europe to help each region manage their semiconductor supply chain. Consequently, we also expect this additional capacity to drive more global demand for photo masks. Our financial discipline, capital allocation strategy, and careful cash balance sheet management support our long-term growth initiative to take advantage of these trends. The priority of our Chinese capital allocation strategy has been to invest in profitable organic growth. We believe our ability to outgrow the IC market and win photo mass share results from the target capital investment. All of the above factors give us confidence that photo mass demand will continue to grow over the long term. is uniquely positioned to benefit from these growth opportunities. 2023 is on track to be another great year for Fortranis, and the company is performing well, even under a difficult industry environment. I have full confidence in our team's ability And I am optimistic that we will be able to grow revenues, expand margin, and deploy capital to continue creating shareholder value. With that, I will turn the call over to John.