Photronics, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Petronix's first quarter fiscal 2024 earnings conference call. At this time, all participants are on 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 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. As a reminder, this conference is being recorded today, Wednesday, February 21st, 2024. I would now like to turn the conference over to Richelle Burr, Chief Administrative Officer. Please go ahead.

Thank you, Livia. Good morning, everyone. Welcome to our review of Photronics Fiscal 2024 First Quarter Results. Joining me this morning are Frank Lee, our Chief Executive Officer, Chris Progler, our Chief Technology Officer, John Jordan, our Chief Financial Officer, and Eric Rivera, our Chief Accounting Officer and Corporate Controller. The press release we issued earlier this morning, together with the presentation materials that accompany 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, Richard, and good morning, everyone. We achieved sales growth compared with last year as both IC and FPD increased, with high-end growth being partially offset by soft mainstream demand in both sectors. Compared with the fourth quarter, sales were down due to seasonal trends and four fewer days in the first quarter. Demand was weaker and sales were softer than we expected during the first month of the quarter for both ICN and PD. Demand improved during the quarter, increasing our revenue round rate and giving us confidence that revenue will improve in the second quarter. Earnings improved over last year as operation leverage drove higher gross margins. Our quarter-over-quarter comparison, no variance caused gross margin to fall. Once again, our team has done well to control expenses and deliver a solid margin, even with lower sales compared with fourth quarter. The first quarter earnings were $0.42 per share on a gap basis and $0.48 per share on a non-gap basis. Operation cash flow improved from the first quarter of last year, allowing us to further strengthen our balance sheet to support our growth plans. I would now like to offer some comments on the overall market mass market and demand environment. As I stated earlier, mass demand was soft at the start of first quarter for both IC and FPD. Demand improved through the quarter, including the usual spike in orders we see ahead of Chinese New Year, which started on February 9th. While still early following the holiday break, we do expect demand trends we saw prior to Chinese New Year to continue in Q2. Well, I think we are seeing a growing trend in new migration from customers in Asia as they move to 28 and 22 nanometers to improve performance. The trend is driving type I demand for our high-end business. In memory, the industry is seeing a recovery in demand. Our memory exposure is with Tier 2 providers, not typically high-variant applications. They are seeing encouraging demand trends as well. For FPD, Our business outlook looks good, even as the overall display industry remains soft. As a technology leader with a strong market presence in the more advanced AMOLED displays, we have a competitive advantage that keeps demand high for our display masks. Displays for premium smartphones are continually asking new features and Panel makers are innovating to gain market share. This benefits us as we have great relationship with the large panel makers and can provide high quality masks to help them achieve their goals. We feel momentum during the second half of the first quarter and expect our revenue to grow in the second quarter. As this happens, we will remain focused on controlling costs to increase margins and increasing cash flow to support growth investments. I am optimistic about the rest of the year, expecting the semiconductor industry should transition to the next phase of growth, leading to an increase in photomass demand during our second to third physical quarters. We believe our technology, strong customer relations, and global presence will position us to continue to perform well. Before turning the call over to John to review Q1 results, I would like to publicly congratulate John on his upcoming retirement. John has been an important member of our executive team since joining Fort Lauderdale in 2017 and has been a great partner to me over the entire time, especially during my time as CEO. He has led us through tremendous growth and geographic expansion on behalf of the entire organization I wish you well in retirement. John, the floor is yours.