Photronics, Inc.

Good day, and thank you for standing by. Welcome to the Photronics second quarter physical 2025 earnings conference 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. I would now like to hand the conference over to your speaker today, Ted Morrow, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone. Welcome to our review of Fortronics' fiscal second quarter 2025 financial results. Joining me this morning are Frank Lee, CEO, George Microcostas, Chairman, Eric Rivera, CFO, and Chris Progler, CTO. 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 website. 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 subject to various risks and uncertainties and other factors that are difficult to predict. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forelooking statements after the date of the presentation to conform these statements to actual results. Portronics has provided additional information in its most recent Form 10-K and other subsequent reports filed with the SEC concerning factors that could cause actual results to differ materially. During the course of our discussion, we will refer to certain non-GAAP financial measures. These numbers may be useful for analysts, investors, and management to evaluate ongoing performance. A reconciliation of these metrics to gap financial results is provided in our presentation materials. During the third quarter, we will be participating in the TD Cowen TMT Conference, the DA Davidson Consumer and Technology Conference, the Three-Part Advisors East Coast Conference, and the Singular Research Investor Conference. I will now turn the call over to Frank.

Thank you, Ted, and good morning, everyone. We achieved second quarter sales of $211 million which was in the middle of our guidance range. Non-GAAP W EPS was $0.40. We took the advantage of financial market opportunity during the quarter by spending $72 million to repurchase 3.6 million shares, which should drive greater earnings leverage in the future. In our ICM market, chip designs are migrating to higher end nodes. These nodes require more photo masks per design, which generate higher ASPs per mask set. In the United States, our 2025 capacity expansion plan targets this node migration opportunity. In Asia, we are also in a strong position to benefit from a market transition towards higher-end nodes, as reflected in our Q2 results. We believe some of the positive node transition trends come from IC serving a growing AI ecosystem. In the FPD market, we are the technology leading mass suppliers to the industry. including to companies that have their own captive mass operations. Condition improved during the quarter due to the seasonal timing of major smartphone and laptop design release. For the first time, these consumer products were produced in larger G8.6 panel size using AMOLED display technology. We are optimistic that with more emerging G8.6 related products and R&D activities, our advanced photomask technology will help us gain market share in the coming G8.6 AMOLED era. With the current market dynamics, our geographic footprint is a strategic asset that differentiates photonics positions. To support our global customers, we operate 11 cleanroom production facilities, including six in Asia, three in the US, and two in Europe. Our manufacturing facilities located close to our customers enables our rapid response advantage and facilitates collaboration with customer. Our global footprint allows photonics to capitalize on new business opportunities as the semiconductor industry diversifies its manufacturing footprint. For example, our strategic capacity and capability expansion in the U.S. coincides with the reassuring of semiconductor production to the U.S. Our program is progressing as planned. to support this U.S. customer effect and design roadmaps and expansions. U.S. tariff dynamics during the quarter increased global macroeconomic uncertainty. While tariff negotiations remain ongoing, we can leverage our diverse geographic footprint as a strategic asset and a competitive advantage. Our ability to allocate production across our geographic locations allow us to ship the majority of masks within regions or countries, mitigating potential tariff costs for our customers. This morning, as part of a carefully considered succession plan, I have decided to retire from the CEO position after three years. I have truly enjoyed my time and I'm proud of the work we have done to move us forward. I will continue to manage the Fortranix Azure operations until my retirement. I will now introduce you George Makrokastas, our chairman and newly appointed CEO.