Photronics, Inc.

Good day and thank you for standing by. Welcome to the Photronics Q2 fiscal year 26 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 hear an automated message advising that 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 Moreau, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone. Welcome to our review of Hotronix Fiscal Second Quarter 2026 Financial Results. Joining me this morning are George Makakasis, Chairman and Chief Executive Officer, Eric Rivera, President and Chief Financial Officer, and Frank Lee, Senior Executive for ASIA. The press release issued earlier this morning, along with the presentation materials accompanying our remarks, is available on the investor relations section of our website and on the form 8-K filed with the SEC. This call includes forward-looking statements that involve risks and uncertainties, which could cause Poltronix results to differ materially from management's current expectations. We encourage you to review the forward-looking statements disclosure included in our earnings release and in our most recent SEC filings. In the coming weeks, we will be participating in investor conferences hosted by Bank of America in San Francisco, three-part advisors in New York, DA Davidson in Nashville, and Singular Research in Las Vegas. With that, I will now turn the call over to George.

Thank you, Ted, and good morning, everyone. In Q2, global photomass dynamics reflected a mix of supportive long-term drivers alongside temporary headwinds. Industry demand for leading-edge memory and logic chips for AI applications remains exceptionally strong. Manufacturing these chips requires a significant number of high-end photo masks, which creates a compelling multi-year growth opportunity for Photonics. We are taking several strategic actions to strengthen our position in this growing market, which I will discuss later in more detail. Importantly, as a reminder, photo mask demand is more closely aligned with semiconductor design releases than to wafer starts. In the near term, several factors have delayed design releases, including elevated fab utilization rates, memory supply constraints, and geopolitical uncertainty. Eric will further elaborate on these factors. Given these unexpected near-term headwinds for certain ship design releases, the seasonal recovery following Chinese New Year has not occurred to the extent anticipated. As a result, our IC business decreased 5% year-over-year to 148 million, resulting in total fiscal Q2 revenue of $210 million, which was essentially flat year over year. Despite the near-term industry headwinds, we continue to execute against our investment priorities and strengthen our position in the robust high-end market segment. Our ongoing investments in our U.S. and Korea operations are designed to strengthen Photonics' long-term competitive position as we expand site capabilities into more advanced technology nodes. Both expansion projects remain on track, and over the next several years, we expect these investments to help us capture photo mass demand and support a more geographically diverse revenue base. Strategically, these investments align us with the industry's ongoing manufacturing regionalization trends. They also position us to benefit from increased outsourcing opportunities from captive photomask producers, which will further shift our product mix towards more advanced geometries that carry higher ASPs. At our Courier facility, we are preparing our cleanroom for the arrival of key equipment to extend our capabilities down to 8 nanometer and below, and we expect installations to begin later in the fiscal year. At our Allen facility, we are beginning production of qualification masks and continue to target initial revenue late in the fiscal year with a more meaningful contribution to revenue growth in 2027 and beyond. Over time, we expect the site will become an important mask supplier for U.S. onshore mainstream semiconductor manufacturing. For leading edge AI chips, our high-end U.S. facility in Boise is qualified to produce masks at the 7 nanometer node, and our teams are working closely with customers on even more advanced nodes. Otronic's facility in Taiwan and the U.S. are also well positioned to capture the increasing opportunities in advanced chip packaging applications. Turning to FPD, revenue of $62 million increased 13% year over year, reflecting our capability to produce more complex, larger mask sizes and our strong differentiation in AMOLED. Our market-leading high-end capabilities in the dynamic China market remain strong and should support display revenue growth in the coming years. In Korea, where we maintain strong market share, positive seasonality returned during fiscal Q2 after a slower start to the calendar year. The launch schedules of high-end consumer electronics, particularly in smartphones and smartwatches for Western markets, remain on track. Encouragingly, These high-end consumer electronics have not been impacted by tight memory conditions. Our recently installed FPD mask layer is entering production. This tool is expected to maximize our opportunity in G8.6 AMOLED, which carries higher ASP mask layers and is anticipated to be more widely adopted later in the calendar year. We expect continued strength in the Korea FPD market ahead of this higher resolution upgrade cycle. Returning to IC, while we are observing some signs of order recovery, near-term visibility regarding the timing of certain design releases remains limited. For the medium and long-term, secular demand trends remain positive, as highlighted at the beginning of my prepared remarks. We are excited about the benefits our expansion projects are expected to provide, with initial U.S. revenue anticipated late in fiscal 2026 and initial revenue from our Korea expansion by the end of fiscal 2027. Both expansion projects are expected to open additional leading edge opportunities. I will now turn the call over to Eric to review our second quarter results and provide third quarter guidance.