Good afternoon. Next presenting company is Photronics, trades on the NASDAQ under the ticker PLAB. Here today to do the presentation on behalf of the company is the Vice President of Investor Relations, Ted Moreau. Ted, can I use this or do I use the computer? Okay. All right. Thank you for joining us. Give a rundown of the company, a little bit of a historical. You see the numbers up there? That's trailing 12 months. Really, when you think about, you know, the important takeaway, I think, you know, on this slide is bottom right corner, and we'll talk about this in a little bit, is our geographic presence. It's a very strategic asset that we. Have an advantage that we have. 11 clean room facilities throughout the world, six in Asia, three in the United States, and two in Europe. On the bottom left hand side you can see kind of our. How we break out revenue. We have essentially two business units. One is serving the semiconductor industry which we call IC or Integrated Circuit. That is 75% of the total business. The other 25% is targeting the display market, which we call FPD or Flat- Panel Display. Within both of these markets we have a high-end aspect or portion and a mainstream portion. In the display side, high-end is 85% approximately of the total display side. In IC it is about 38%. I'll define the category for high-end on IC because you know, everybody wants to understand, you know, I mean when in the semiconductor industry we hear a lot about like GPUs for AI architectures utilizing 3 nm, 5 nm at, you know, being manufactured at TSMC and Whatnot. Right. Our high-end actually is a little bit arm's length away from that. Our high-end categories include 14 nm, 22 nm, and 28 nm. We do have a little bit of production at 7 nm that we do like kind of developmental work for specific use cases. It does not really go into manufacturing production. That was just kind of like a little bit of a background. High- level, company's been in business since 1969, has done a fantastic job on competing and has become essentially a leading supplier into the industry. What exactly is it that we do? We make a photomask for both markets, FPD and IC. In FPD, the size of the photomask you can see kind of on the bottom left-hand side is like 3 m wide, 2 m tall or even 3 m tall, very heavy. Our clean room facilities in Asia are very automated because it's too difficult for people to lift these photomasks. On the IC side, the photomask size is about 6 in by 6 in. What happens is, what did we do to create the photomask and why is it important? We are very critical to the semiconductor manufacturing process. We receive a semiconductor chip design from our customers, customers being the fabs. If you look at, you know, in our filings, you would see companies like United Microelectronics or UMC, is 15% of revenue. Semiconductor Manufacturing Incorporated, or SMIC, they're a 10%, you know, about a 10% customer. It's any. Our customers are any facilities that manufacture semiconductor chips. We receive the semiconductor chip design and essentially take that design and write it and etch it and print it onto a piece of glass to become the photomask. At, say, 90 nm, a semiconductor chip design will require about, I'll say, 25 layers or photomasks. For the mask set at 14 nm, we're probably talking about 70 layers or photomasks per set. Obviously we want to push into the higher end as much as possible because we get an ASP and obviously revenue bump on it. We take the photomasks, we take the semiconductor chip design, create the photomasks, ship off the mask set back to the fab. They put the mask into the lithography tool at the very front end of the semiconductor manufacturing line. The lithography tool shines the laser through the photomask and projects the design onto the wafer. That's essentially how you get. The. Chip design onto the wafer for the beginning of chip production. Right. A little bit of history on the company and the revenue trajectory again started up in 1969. The first phase of the company for about, you know, 15- 18 years was basically in startup mode. The company entered into phase two around 1986, really started consolidating the industry. The industry itself started consolidating. Photronics was active there. From like 2003 through 2018, saw modest revenue growth, nothing tremendously significant. I would say in the last five years, a couple of events came into fruition that really accelerated our revenue growth. This slide kind of shows that as well. You can kind of see, you know, more recently we've gained a lot of scale. What happened, one is the entrance of our, we entered into a joint venture in Taiwan in 2014 and we entered into a joint venture in China in 2019. Both of those are on the integrated circuit side. We also had a flat- panel display business serving that. We started up in a new facility in China in 2019. All of a sudden, we accelerated our revenue over the last five years and our exposure to China went from about 3% of revenue in 2019 to 28% of revenue in 2024, October fiscal year end. That was one catalyst for revenue growth. Covid hits. Everybody knows supply chains, particularly in the technology industry, really became disrupted. Our business went from a historical one to three week lead times to up to about four to five months. The fabs, our customers, the fabs were really in a panic and they realized they needed to start, I guess, building or reinforcing the relationship with companies such as Photronics. It was that. The supply demand imbalance that had occurred plus the strategic importance that the fabs began placing on the photomask merchant supply part of the market led to an improved pricing power for companies such as Photronics. If you were to look at our margin profile over the last five years, you would see back in 2020 we were around 23%-24% gross margins. In 2024 we were about 37% gross margins. Very significant improvement in margin profile, very significant improvement in cash flow. What are the drivers of the business? Again, on the, on the semiconductor side? The photomask industry we estimate to be approximately 1%- 1.5% of the total semiconductor market. So we kind of grow along with the semiconductor market. Within that market there is a merchant market and a captive market. Companies such as TSMC, Intel, Samsung, Micron, even Semiconductor Manufacturing Intecorporated all have an internal captive photomask development capability. But they do also outsource as well. I mean if you look at our filings, Samsung is a 10% customer. So TSMC is a customer, Intel's a customer. Obviously SMIC is an important customer. So many of these captives also outsource photomask. And so, you know, so why do they have their own mass production and why do they outsource some production to companies? Merchant suppliers such as Photronics, particularly TSMC, Intel, Samsung are trying to push leading edge development in the semiconductor industry. They're very concerned about innovation, they're very concerned about their own intellectual property and really pushing the envelope. The industry on the photomask from a merchant supplier perspective is pretty capital intensive. We target about 15% of our revenue for CapEx on an annual basis. 2025 is an investment year so we're going to be a little bit elevated above that. Generally speaking, it's a capital intensive business. How we think about investing on the next generation of technology such as EUV, we're very cautious. We don't want to jump into investments aggressively without understanding what the return is. Given there's only a handful of customers at the leading edge today, it's not entirely clear how we generate a return on any kind of investment pushing the leading edge. We like to think of ourselves as arm's length away from lead and edge. That is why we, you know, our high-end category again is 14, 22 and 28. There is a, and this kind of gets into the geographic footprint to some extent. As I said at the beginning, geographic footprint is a strategic advantage for us. If you think about a semiconductor chip design and going through the production, a lot of times they will go, the production line will halt production temporarily and the fab will work with the semiconductor chip company and they will undergo a re-spin and in that situation, they have halted production. The chip company kind of makes tweaks to the design. We receive those tweaks. We actually produce an additional several number of photomasks for that chip design. Because this whole process, the manufacturing line has downtime obviously. Time is money. Right. And so being strategically close to your customer locations is an advantage. You know, we have the greatest breadth on geographic locations in the industry from a merchant supply perspective. And as we've, and as we're starting to see now with TSMC expanding operations into the United States, we're kind of seeing this reshoring of production into the United States on the chip side. Right. GlobalFoundries just announced an expansion plan last week. We're seeing Texas Instruments expand pretty aggressively. And so, you know, we're really excited about the opportunity. And so, you know, given our three locations here in the United States, basically our only competitor, virtually our only competitor on the merchant side, a company called TOPPAN, T O P P A N, has a photomask operation. They have one facility in the United States combined. On the merchant side, we are close to 95% of the U.S. market. So we're really optimistic about this reshoring of production into the United States. Part of that is obviously, you know, production coming in the United States. We're well positioned for it. There's a kind of a secondary impact to that, and that is with TSMC and this kind of gets into the node migration concept as well. And we talked a lot about, you know, earlier, 90 nm, you're probably 25 masks, 14 nm, you're about 70 masks per design. Right. TSMC with their new facilities going up in Arizona, one's I think already, you know, up, up and running, and they have several more on the way. They do have a captive photomask operation in the United States already, but it's very focused on this high-end. What's interesting is if even if you take a set of photomasks for 3 nm, for a 3 nm design, about a third, and let's say that's probably, you know, 80, 90, 100 masks, about a third of those masks will actually be on 3 nm. The rest of them could be on 28 nm. Whoa. Look who's really good at 28 nm. We are optimistic that opportunity is opening up from the captives to increase more outsourcing again. At the moment it's about 60%-65% of the market is captive. We think that that's going to dwindle a little bit over the next several years as TSMC is looking to maybe utilize companies such as Photronics for mass production. We're having conversations with Intel, same thing Samsung. We're really excited about that. And so then, you know, how do we. On the right side, you know, on the right side. Let me finish the thought. Operational execution. Why did we win? It is really all about obviously geographic presence. Time to market speed is hugely critical. Obviously, you know, quality, you know, quality of your product is obviously important as well. Right? As you, you know, you do not want to design a set of photomasks that, you know, that has like a speck of dust or a speck of dirt on the photomask and all of a sudden, you know, the lasers are projecting that dirt onto the wafer, right, that would be hugely problematic to your chip design. Quality is of utmost importance. You know, we have done a really good job there. Response time. We work very close with customers. We have developed fantastic customer relationships. You know, in our. Let me talk a little bit about the China market again. China represents about, if you were to look at our geographic revenue breakout, it's 28% of our revenue that is from revenue generated out of our facilities in China. 100% of our production in our China facilities goes to customers in China. A decent amount of our production in Taiwan, which, you know, about 33% of our revenue in Taiwan or 33% of our total revenue originates out of our facilities in Taiwan, a decent amount of that also goes into China. Our China exposure is probably, we used to break it out about a year and a half to two years ago saying it was above 40%. We're probably still in that 40% plus range as total exposure in China. People always ask, well, okay, what's the competitive dynamics in China? Again? I want to, let me step back. I mentioned earlier, competitive dynamics in the United States is about 95% of the merchant market, you know, is two players. Globally, it's about 65%-70% is two players, Photronics and TOPPAN. Now, if we speak specifically about China, there are new entrants that have been popping up over the last, say, five years and they are being financed by the Chinese national government. China has an initiative for a homegrown semiconductor industry that they are financing. You know, we are seeing these new entrants, we do see them more consistently at the very old generations of nodes. They are having a harder time competing at the higher end. That is obviously, we get the ASP bump, but competitively it's less intense at the higher end nodes. That is why you'll hear us continuously talk about node migration and continuing to strive to push towards 65 nm, 40 nm, 28, 22, 14. Eventually, you know, maybe we'll go to 7 nm or 5 nm or something. Right? Why is it that the Chinese new entrants cannot compete at the higher end nodes? That is because they, just like any clean room facility, order equipment or tools from the suppliers. If we were to order those tools and we're not real familiar with that particular tool, that supplier would send off technicians and engineers to our facilities and help us get up and running. Because of the restrictions placed on China and the entity list and all the trade war situation going on, it does not matter which company it is supplying the tool, whether it is in Japan, you know, a company in Japan or Europe or the United States, they are not sending delegations and technicians off to startups in China. China, these new entrants in China are having to essentially learn the technology curve on their own. We feel as though it is going to be at least a good three to five years before they are able to move up the technology curve and compete a little more aggressively with us. We are really pleased with our operations in China. It has been a very significant growth driver, excuse me, growth driver of the business. We will look to continue to compete there over the next however many, I'll just say for the foreseeable future. I'm going to actually cruise ahead here. Actually, I guess I'll talk a little bit about the most recent quarter. We're on an October fiscal year end. Revenue has been a little stagnant over the last, say, 12- 18 months. You know, we've been impacted a little bit by the semiconductor industry downturn again. I mean, we all hear about the tremendous growth rates that the leading edge is occurring at the leading edge because of artificial intelligence and Whatnot. And NVIDIA's, you know, continues to put up impressive numbers, but the rest of the market hasn't been performing quite as well. That's clearly reflected in our business. Again, I want to reiterate that our business demand drivers are design starts. Not as much on wafer starts or Wafer Fab Equipment growth. Very much on the design starts of new chip designs. Good numbers. Again, on the gross margin side, I think we were 36.9% in the quarter. We only spend about OpEx typically is about 10% of revenue and generate strong operating profit margins in the mid-20s and then obviously continue to drive strong cash flow. During the quarter had a very good, you know, the JVs in Taiwan and China performed quite well. The rest of the business was a little sluggish. During the quarter, a very significant portion of income generation was attributed to the joint ventures and, you know, revenue by product line. Again, you know, we talked a lot about the differences or the percentage breakouts. I would just say, you know, node migration on the IC side is very important. On the FPD side, we've recently introduced the next generation of what we call AMOLED Display Technology. It's basically taking, it basically allows the technical benefits of the screen in the smartphone to be utilized in more laptops, bigger screen sizes, laptops, computers and whatnot. You should start to see in the coming years improved display colors, brightness, better brightness, you actually would see or recognize a lighter feel to whatever device that you're holding. Because AMOLED G8.6, which is this new generation which is just starting to go into production for us, we've shipped two photomask sets in the most recent quarter. You should start to see some pretty. Impressive display technologies come out over the. Coming years, including foldables. The G8.6 technology really improves the ability to create a foldable device. Everybody always asks about our cash balance. Very strong balance sheet, $558 million worth of cash. The 10Q should be out shortly. The last 10Q we disclosed 57% of the cash balance is associated with our joint ventures. If you actually backed into the, and I think you would see, you know, that number probably increases in the most recent quarter. The reason for that is, you know, kind of gets into the capital allocation. The third aspect of the capital allocation thought process is during the second quarter we spent $72 million to repurchase stock. We took advantage of the volatility in the financial markets and very aggressively repurchased stock during the quarter we had. That repurchase stems from an authorization stemming back to last August where we increased, the board increased the authorization from $30 million up to $100 million. As of the end of April, we had $23 million remaining on the share repurchase authorization. From here, everybody asks about, okay, are you going to continue to be aggressive repurchasing stock? I'd like to remind investors that yes, we are in a capital- intensive business. Again, 15% of revenue is spent on CapEx in any given year. This year is going to be elevated because of some investment that's occurring here in the United States to take advantage of the reshoring of semiconductor production. We have, you know, business development initiatives that we're always presented with. You know, what do we choose to use our cash on? We want to make sure, you know, we really want to make sure that we can continue to drive revenue growth and earnings power and earnings growth in the future. We're going to be a little bit more deliberate and opportunistic from here on share repurchases. But, you know, it's still out there and available to us. Just make a quick comment. We got it down sequentially for our July quarter and the reason for that is because of tariffs. We do not get impacted on the tariffs because of our geographic facilities. We can basically move production around to various facilities to bypass any tariff risks. What's happening is the semiconductor chip providers, you know, they're not entirely certain they know what the cost is at a various, you know, some of the facilities, some of the production facilities that are out there. They want to maximize their profit every time they release a semiconductor chip design to production. Because of the uncertainty around the tariff situation, that has, what we believe is, temporarily slowed down the release of some of the semiconductor chip designs that have come to market. That impacted our guidance for the second quarter. I think with that I will leave it up to questions. We have about eight minutes to go before questions or before everybody wants to go grab a be. Yes, go ahead. I'm new to the story. Yeah. If you, you're talking about the high-end. Yes. The smallest line widths that your customers do that themselves. Yeah. Which means that years ago 25nm they would have been doing themselves. Yep. Why are they not still producing those masks as opposed to having you do it now? It seems like that would just be natural and super easy for them to do. It's not tremendous, it's not strategic for them. You know, they're really focused again, they're really focused on pushing the envelope on technological innovation. They are, you know, I mean if you look at like TSMC's revenue mix, and I can't remember off the top of my head, but I think it was like 75% of their revenue is generated in like 3, 5, and 7 nm or something like that. Right. I mean they do outsource to companies like, you know, Photronics a little bit. Not significant. You know, they're really focused on pushing the envelope curve on the innovation. You know, again, it remains to be seen, but I think, you know, let me get back to. There's no cost advantage for them to produce their own photomasks versus Photronics, at least that's according to our Chief Technology Officer, that's what he's informed me. Again, it really gets back to that, just pushing the envelope on the technological innovation. And again, you know, what we think could happen, and we're very optimistic about it, is they would open up 28nm at least here in the United States, probably maintain status quo because they have the operations in existence in Taiwan. At least in the United States they could open up like a 28nm to us, which would be part of like a 3nm production line. Right. Samsung is actually looking to increase the amount of outsourcing to the merchant suppliers as they focus again on the leading edge. It's really about that leading edge versus trailing edge concept and what's strategic to them. One more question on that, Mr. Moreau. When you sort of question, how long does a mask last? How many years can you get? The spirit of the question is. Yeah. If you're simply shining light through. Yeah. Through a product, I mean, shouldn't it last for a very long time? What they were using years ago, that was cutting edge. They just now use it for their trailing edge. Let's say you have a chip design at 65nm, and this next generation of the exact same product is going to be at 40 nm. That's going to require a different set of photomasks because it's actually going to be a tweak to the chip design. That's why the chip design start is so important to us. Your point is exactly spot on. Wafer starts do not really matter as well. There's a much lower correlation between wafer starts and photomask production. There is a little bit of degradation on a photomask through just wear and tear, but it's like 100,000 wafers or something. It's a pretty high wafer count before you start to get any kind of degradation, and it's not significant. What we tend to see is on the photomask, we actually apply what we call a pellicle, which is a little bit of a film, to essentially protect the glass. That pellicle actually does wear down at a much more rapid rate, and so that has to be replaced. That is like, I do not know, 2% or 3% of our total revenue, so it is not like it is a significant driver. Right. Your point, yeah, you are exactly right. It is a disposable, but it is not a disposable in the way everybody wants it to be a disposable, or at least we want it to be a disposable. Right. Yeah. Thank you. Sure, go ahead. Where are you at? Knowing how firm potentially increased demand for reshoring is, are you actually getting orders? Are you just talking to customers? Seed for their newest facility? It's still 5nm below. Yeah. Are you just hearing stuff or are you actually? Yeah, we're not. Our, one of our facilities here in the United States, we're expanding capacity and that's part of our investment here in the United States or part of our global CapEx plan for 2025. By the time we get that facility up and running, we're probably talking for production volume, we're probably talking early to mid calendar 2026. And by the time you qualify customers, you're probably talking about kind of a late 2026 into calendar 2027 timeline for revenue contribution out of this incremental capacity. Yeah, we're not quite there on actually receiving orders on this reshoring of production in the United States. You know, it's more of conversations with customers. As I was saying though, Taiwan Semiconductor, the conversations are going very well there. Samsung actually has a facility down in Austin. Conversations there are very productive. Even companies like Microchip, ON Semiconductor, GlobalFoundries, Texas Instruments is, you know, I'll say GlobalFoundries has just announced a pretty significant fab expansion plan. That's gonna take time and it's for sure it's gonna take time, but the opportunity is certainly there and the conversations are there. ON Semiconductor is moving a production facility into our backyard, like literally right next door to our facility in Allen, Texas. It's those conversations that have given us a lot of conviction about the U.S. market. If we look out, you know, in I would say probably the 2027, 2028 timeframe, I would venture a guess that the United States is probably the highest growth region for this business. Yeah, go ahead. Think about the high Capex that may lead to higher deficiencies. Yeah. The two biggest factors driving gross margin are actually revenue volume and then your depreciation schedule. You know, it's much less of a product mix factor. We have a pretty significant amount of end of life tools. That's kind of why we're in this investment period that we are in. On the CapEx side, we're about two-thirds of the way through an end of life replacement tool cycle. That's about two more years of kind of elevated investment there. We have a 15 year depreciation timeline on high-end tools, 11 years on more mainstream tools. Yeah, as you drive more revenue through your fixed cost infrastructure, you're going to improve your margin profile. Right. I mean, and I hate to, hate to bring it up, but if you ran, you know, did a, you know, back of the napkin calculation on our margin profile for, you know, guidance for Q3. It's not a formal guidance, but you can basically back into 33% gross margin profile for the July quarter, down from 36.9%. A significant portion of that is due to lower sales volumes, you know, running through your facilities. It's a lot about utilization of your clean room facilities and where are you on your depreciation schedule? And you know, obviously if you're running depreciation through, you know, a clean room facility, you're going to have a lower gross margin profile than if you've already, you know, ran through that depreciation. Life does that. Yeah, yeah. How long do you think it would last? I know that it depends on the top line. You mean, are you saying extended from, you know, that work, the headwind that we're seeing in the July quarter. How long do I think it'll last? I don't have that kind of a crystal ball. I would say, you know, I mean a lot. A lot of people ask about, well, how's the pricing environment? You know, I'll talk a little bit about that real quick. We do have long term sales agreements that we've entered into coming out of the Covid time frame. A lot of the customers wanted to ensure continuity of supply and so we entered into one- to three-year sales agreements with many of our top customers. Many of them or several or all of them I think are listed in, you know, the 10% section of the filings. Right. That ensures at least, you know, a very solid pricing stability of pricing and gives you good visibility on what your pricing is going to be over the next year or two and what your market share would be at that particular customer over the, you know, the life of that sales agreement. We recently re-entered a new agreement, a new three-year agreement with one of those top customers with virtually essentially the same pricing that we had from the prior agreement. We are really, really confident about, you know, about our, you know, where we stand on the pricing side. Yep. Go ahead. Yeah. Can you talk a little bit about the display market? Like our outlook is, you know, that's a really tough. Yeah, I mean it's interesting because it's interesting because G8.6, the customer has its own internal mask operations and they chose to go with us. And why do they choose to go with us? Because technologically we are the, I hate to break, but we are the best and we're the only ones that can push the technology curve. We are the only ones that can produce photomasks, high- quality photomasks at even what we call G10, 10.5, which is for like, you know, massive like 75 in TV screen TVs. Other companies aren't able to match that technological capability. The pricing there is sound because we're in a very good position. Even, you know, a lot of the, you know, customers in the Asia market, and particularly in the China market, have seen that, you know, we're a supplier to Samsung. They're like, well, if they're a supplier to Samsung, they're good enough for me. They kind of take that view. Yeah. In addition, the competitive dynamics in the display market, we competed with a company that entered into a joint venture with one of their customers, their customer being. BOE, based in Japan. This particular competitor had a reasonable market share in Asia. When they entered into that joint venture, many if not most of their other customers said, no, thank you, we're not going to work with you anymore because we're competing with BOE. We actually ended up capturing a lot of market share when those two companies entered into that joint venture. We're in a really good position. On G8.6, we're optimistic that the ASPs have a pretty meaningful bump above the prior generation. You know, if I look out over the next several years, I would, you know, this is obviously as we do things today, but pretty optimistic about one, you know, as I mentioned, U.S. growth, I think, is going to be a growth driver. I think the display market would be, you know, not like, not an amazing growth driver, but I think would be a reasonable contributor to the growth trajectory of the company. Okay. All right, thank you very much for listening. Really appreciate it.