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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT

graphic
 Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported)
December 11, 2024

PHOTRONICS, INC.
(Exact name of registrant as specified in its charter)
 
Connecticut
 0-15451
   06-0854886
(State or Other Jurisdiction of  Incorporation)
(Commission File Number)
(IRS Employer Identification No.)

 
15 Secor Road, Brookfield, CT
  
06804
        (Address of principal executive offices)
  
(Zip Code)

Registrant’s Telephone Number, including area code
  
(203) 775-9000

(Former name or former address, if changed since last report)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 Title of each class
Trading Symbol(s)
Name of each exchange on which registered
COMMON STOCK, $0.01 par value per share
PLAB
NASDAQ Global Select Market

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02.
Results of Operations and Financial Condition.
 
On December 11, 2024, Photronics, Inc. (the “Company”) issued a press release reporting fourth quarter fiscal 2024 results.

On December 11, 2024, the Company will conduct a conference call with respect to its financial results and other matters during which it will also disclose a slide presentation.

A copy of the press release is furnished as Exhibit 99.1 to this report and a copy of the slide presentation is furnished as Exhibit 99.2 to this report. The information contained in this Item 2.02 and the attached Exhibits 99.1 and 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be incorporated by reference in any filing under the Securities Act of 1933 except as shall be expressly set forth by specific reference in such filing.


Item 9.01.
Financial Statements and Exhibits.
 
(d)
Exhibits
Press Release December 11, 2024.
Photronics Q4 2024 Financial Results Conference Call December 11, 2024 slides.

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
PHOTRONICS, INC.
 
(Registrant)
   
 
By: 
 /s/ Christopher J. Lutzo
 
Name:
Christopher J. Lutzo
 
Title:
Vice President,
 

General Counsel and Secretary
   
Date:  December 11, 2024
  


Exhibit 99.1
For Further Information:
Ted Moreau
VP, Investor Relations
469.395.8175
tmoreau@photronics.com
 

Photronics Reports Full Year and Fourth Quarter Fiscal 2024 Results

BROOKFIELD, Conn. December 11, 2024 (GLOBE NEWSWIRE) — Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its full year and fourth quarter of fiscal year 2024 ended October 31, 2024.
 
“We achieved sequential revenue growth in the fourth quarter, with increased sales in both Integrated Circuits (IC) and Flat Panel Displays (FPD),” said Frank Lee, chief executive officer. “IC growth was driven by strong high-end sales, particularly in the US, while FPD was led by mainstream demand. Photomask demand trends were favorable as we ended the year and we are cautiously optimistic that these trends will continue into 2025, driven by megatrends such as AI, supply chain regionalization, and edge computing. We believe our competitive advantages and market leadership will allow us to grow along with the photomask market growth trajectory. Combined with financial discipline to expand margins and improve cash flow, we are well positioned to continue growing profitably and creating shareholder value.”
 
Full Year Fiscal 2024 Results

 •
Revenue was $866.9 million, down 3% from the previous year.

•
GAAP net income attributable to Photronics, Inc. shareholders was $130.7 million, or $2.09 per diluted share, compared with $125.5 million, or $2.03 per diluted share in 2023.

•
Non-GAAP net income attributable to Photronics, Inc. shareholders was $127.6 million, or $2.05 per diluted share, compared with $126.0 million, or $2.04 per diluted share in 2023.

•
IC revenue was $638.1 million, down 2%.

•
FPD revenue was $228.8 million, down 5%.

•
Cash generated from operating activities was $261.4 million, and cash invested in organic growth through capital expenditures was $130.9 million.
 
Fourth Quarter Fiscal 2024 Results

 •
Revenue was $222.6 million, down 2% year-over-year and up 6% sequentially.

•
GAAP Net income attributable to Photronics, Inc. shareholders was $33.9 million, or $0.54 per diluted share, compared with $44.6 million, or $0.72 per diluted share in the fourth quarter of 2023 and $34.4 million, or $0.55 per diluted share in the third quarter of 2024.

•
Non-GAAP Net income attributable to Photronics, Inc. shareholders was $37.1 million, or $0.59 per diluted share, compared with $37.2 million, or $0.60 per diluted share in the fourth quarter of 2023 and $31.9 million, or $0.51 per diluted share in the third quarter of 2024.

•
IC revenue was $163.7 million, down 1% year-over-year and up 5% sequentially.

•
FPD revenue was $58.9 million, down 7% from the same quarter last year and up 7% sequentially.

•
Cash generated from operating activities was $68.4 million, and cash invested in organic growth through capital expenditures was $43.2 million.

•
Cash and Short-term investments at the end of the quarter were $640.7 million, and Debt was $18.0 million.

First Quarter Fiscal 2025 Guidance
 
For the first quarter of fiscal 2025, Photronics expects Revenue to be between $208 million and $216 million and non-GAAP Net income attributable to Photronics, Inc. shareholders to be between $0.43 and $0.49 per diluted share.
 
Webcast
 
A webcast to discuss these results is scheduled for 8:30 a.m. Eastern time on December 11, 2024.  The call will be broadcast live and on-demand on the Events and Presentations link on the Photronics website. Analysts and investors who wish to participate in the Q&A portion of the call should click here. It is suggested that participants register fifteen minutes prior to the call’s scheduled start time.
 
About Photronics
 
Photronics is a leading worldwide manufacturer of integrated circuit (IC) and flat panel display (FPD) photomasks. High precision quartz plates that contain microscopic images of electronic circuits, photomasks are a key element in the IC and FPD manufacturing process. Founded in 1969, Photronics has been a trusted photomask supplier for over 50 years.  As of October 31, 2024, the company had approximately 1,878 employees. The company operates 11 strategically located manufacturing facilities in Asia, Europe, and North America. Additional information on the company can be accessed at www.photronics.com.

Forward-Looking Statements

Certain statements in this press release constitute “forward-looking statements” regarding our industry, our strategic position, and our financial and operating results.  These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results, performance or achievements to differ materially.  Please refer to our Annual Report on Form 10-K for the fiscal year ended October 31, 2023 and other subsequent filings with the Securities and Exchange Commission. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in these forward-looking statements. 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 forward-looking statements after the date of this release to conform these statements to actual results.
 
Non-GAAP Financial Measures
 
Non-GAAP Net Income attributable to Photronics, Inc. shareholders and non-GAAP diluted earnings per share are “non-GAAP financial measures” as such term is defined by Regulation G of the Securities and Exchange Commission, and may differ from similarly named non-GAAP financial measures used by other companies. The attached financial supplement reconciles Photronics, Inc. financial results under GAAP to non-GAAP financial information. We believe these non-GAAP financial measures that exclude certain items are useful for analysts and investors to evaluate our future on-going performance because they enable a more meaningful comparison of our projected performance with our historical results. These non-GAAP metrics are not a measure of consolidated operating results under U.S. GAAP and should not be considered as an alternative to Net income (loss), Net income (loss) per share, or any other measure of consolidated results under U.S. GAAP. The items excluded from these non-GAAP metrics, but included in the calculation of their closest GAAP equivalent, are significant components of the condensed consolidated statement of income and must be considered in performing a comprehensive assessment of overall financial performance. Please refer to the non-GAAP reconciliations below.
 
PHOTRONICS, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)

   
Three Months Ended
    
Year Ended
  
   
October 31,
    
July 28,
    
October 31,
    
October 31,
    
October 31,
  
   
2024
    
2024
    
2023
    
2024
    
2023
  
                               
Revenue
  
$
222,628
    
$
210,984
    
$
227,473
    
$
866,946
    
$
892,076
  
                                         
Cost of goods sold
    
140,326
      
135,846
      
142,591
      
551,000
      
555,914
  
                                         
Gross Profit
    
82,302
      
75,138
      
84,882
      
315,946
      
336,162
  
                                         
Operating Expenses:
                                        
                                         
Selling, general and administrative
    
21,008
      
19,436
      
16,731
      
77,760
      
69,458
  
 
                                        
Research and development
    
5,285
      
3,555
      
3,367
      
16,576
      
13,654
  
 
                                        
Total Operating Expenses
    
26,293
      
22,991
      
20,098
      
94,336
      
83,112
  
                                         
Other operating (loss) gain
    
(182
)
    
1
      
-
      
(92
)
    
-
  
                                         
Operating Income
    
55,827
      
52,148
      
64,784
      
221,518
      
253,050
  
                                         
Non-operating (loss) income, net
    
(1,034
)
    
10,145
      
18,660
      
25,897
      
16,896
  
                                         
Income Before Income Tax Provision
    
54,793
      
62,293
      
83,444
      
247,415
      
269,946
  
                                         
Income tax provision
    
14,568
      
14,124
      
20,288
      
63,567
      
70,312
  
                                         
Net Income
    
40,225
      
48,169
      
63,156
      
183,848
      
199,634
  
                                         
Net income attributable to noncontrolling interests
    
6,356
      
13,781
      
18,545
      
53,160
      
74,149
  
                                         
Net income attributable to Photronics, Inc. shareholders
  
$
33,869
    
$
34,388
    
$
44,611
    
$
130,688
    
$
125,485
  
                                         
Earnings per share:
                                        
                                         
Basic
  
$
0.55
    
$
0.56
    
$
0.73
    
$
2.12
    
$
2.05
  
 
                                        
Diluted
  
$
0.54
    
$
0.55
    
$
0.72
    
$
2.09
    
$
2.03
  
                                         
Weighted-average number of common shares outstanding:
                                        
                                         
Basic
    
61,863
      
61,815
      
61,290
      
61,726
      
61,139
  
 
                                        
Diluted
    
62,456
      
62,414
      
62,067
      
62,391
      
61,755
  

PHOTRONICS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)

   
October 31,
    
October 31,
  
   
2024
    
2023
  
             
Assets
            
             
Current assets:
            
Cash and cash equivalents
  
$
598,485
    
$
499,292
  
Short-term investments
    
42,184
      
12,915
  
Accounts receivable
    
200,830
      
194,927
  
Inventories
    
56,527
      
49,963
  
Other current assets
    
33,036
      
28,353
  
 
                
Total current assets
    
931,062
      
785,450
  
                 
Property, plant and equipment, net
    
745,257
      
709,244
  
Other assets
    
35,740
      
31,527
  
                 
Total assets
  
$
1,712,059
    
$
1,526,221
  
                 
Liabilities and Equity
                
                 
Current liabilities:
                
Current portion of long-term debt
  
$
17,972
    
$
6,621
  
Accounts payable and accrued liabilities
    
165,839
      
178,602
  
 
                
Total current liabilities
    
183,811
      
185,223
  
                 
Long-term debt
    
25
      
17,998
  
Other liabilities
    
47,464
      
47,391
  
                 
Equity:
                
Photronics, Inc. shareholders’ equity
    
1,120,864
      
975,008
  
Noncontrolling interests
    
359,895
      
300,601
  
Total equity
    
1,480,759
      
1,275,609
  
                 
Total liabilities and equity
  
$
1,712,059
    
$
1,526,221
  

PHOTRONICS,  INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

   
Year Ended
  
   
October 31,
    
October 31,
  
   
2024
    
2023
  
             
Cash flows from operating activities:
            
Net income
  
$
183,848
    
$
199,634
  
Adjustments to reconcile net income to net cash
                
provided by operating activities:
                
Depreciation and amortization
    
82,805
      
80,835
  
Share-based compensation
    
13,890
      
8,001
  
Changes in operating assets, liabilities and other
    
(19,099
)
    
13,706
  
                 
Net cash provided by operating activities
    
261,444
      
302,176
  
                 
Cash flows from investing activities:
                
Purchases of property, plant and equipment
    
(130,942
)
    
(131,295
)
Purchases of short-term investments
    
(100,558
)
    
(20,192
)
Proceeds from maturities of short-term investments
    
72,836
      
47,537
  
Government incentives
    
2,229
      
2,522
  
Other
    
(30
)
    
(117
)
                 
Net cash used in investing activities
    
(156,465
)
    
(101,545
)
                 
Cash flows from financing activities:
                
Repayments of debt
    
(6,621
)
    
(18,439
)
Proceeds from share-based arrangements
    
1,916
      
1,248
  
Net settlements of restricted stock awards
    
(3,025
)
    
(1,302
)
                 
Net cash used in financing activities
    
(7,730
)
    
(18,493
)
                 
Effects of exchange rate changes on cash, cash equivalents, and restricted cash
    
2,127
      
(2,680
)
                 
Net increase in cash, cash equivalents, and restricted cash
    
99,376
      
179,458
  
Cash, cash equivalents, and restricted cash, beginning of period
    
501,867
      
322,409
  
                 
Cash, cash equivalents, and restricted cash, end of period
  
$
601,243
    
$
501,867
  

PHOTRONICS, INC.
Reconciliation of GAAP Net income attributable to Photronics, Inc. shareholders to Non-GAAP Net income and
GAAP Diluted Earnings Per Share to Non-GAAP Diluted Earnings Per Share
(in thousands)
(Unaudited)

   
Three Months ended
    
Year Ended
  
   
October 31,
    
July 28,
    
October 31,
    
October 31,
    
October 31,
  
   
2024
    
2024
    
2023
    
2024
    
2023
  
                               
                               
GAAP Net Income attributable to Photronics, Inc. shareholders
  
$
33,869
    
$
34,388
    
$
44,611
    
$
130,688
    
$
125,485
  
FX (gain) loss
    
7,758
      
(4,068
)
    
(13,234
)
    
(2,168
)
    
(2,466
)
Estimated tax effects of FX (gain) loss
    
(1,936
)
    
914
      
3,437
      
477
      
317
  
Estimated noncontrolling interest effects of above
    
(2,637
)
    
681
      
2,431
      
(1,407
)
    
2,676
  
Non-GAAP Net income attributable to Photronics, Inc. shareholders
  
$
37,054
    
$
31,915
    
$
37,245
    
$
127,590
    
$
126,012
  
                                         
Weighted-average number of common shares outstanding - Diluted
    
62,456
      
62,414
      
62,067
      
62,391
      
61,755
  
                                         
GAAP Diluted Earnings Per Share
  
$
0.54
    
$
0.55
    
$
0.72
    
$
2.09
    
$
2.03
  
Effects of non-GAAP adjustments above
    
0.05
      
(0.04
)
    
(0.12
)
    
(0.04
)
    
0.01
  
Non-GAAP Diluted Earnings Per Share
  
$
0.59
    
$
0.51
    
$
0.60
    
$
2.05
    
$
2.04
  


Exhibit 99.2


 December 11, 2024  Q4 2024 Financial Results Conference Call 
 
 Safe Harbor Statement  This presentation and some of our comments during this presentation may contain projections or other forward-looking statements regarding future events, our future financial performance, and/or the future performance of the industry. These statements are predictions and contain risks and uncertainties. We refer you to the risk factors in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023 and other subsequent filings with the Securities and Exchange Commission. These documents contain and identify important factors that could cause the actual results for the Company to differ materially from those contained in our projections or forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee the accuracy of any forecasts or estimates, and we are not obligated to update any forward-looking statements if our expectations change. 
 
 Q4 2024 Summary  Strong Quarter to End the Year, Giving Us Momentum as We Enter 2025  $222.6M  Revenue  25.1%  Operating Margin  $0.54  EPS  $0.59  Non-GAAP EPS1  $68.4M  Operating Cash Flow  $640.7M  Cash2 and Short-term investments  (2%) Y/Y  6% Q/Q  (340) bps Y/Y  40 bps Q/Q  (25%) Y/Y  (2%) Q/Q  (2%) Y/Y  16% Q/Q  (36%) Y/Y  (9%) Q/Q  25% Y/Y  6% Q/Q  Revenue improved sequentially with growth in both IC and FPD product lines; high-end IC demand from foundries in the US and Asia were the biggest drivers to growth; long-term demand driven by megatrends such as AI, IoT, and supply chain regionalization.  Operating margin increased Q/Q as improved gross margin was partially offset by higher operating expenses; after adjusting for FX, non-GAAP EPS was $0.59, a 16% increase from Q3 2024.  Strengthened balance sheet by increasing cash and short-term investments balance and reducing debt through solid cash flow generation, providing flexibility to support capital allocation strategy, with announced plans to expand US IC manufacturing capacity.  Capital allocation strategy based upon investing in growth, returning cash to shareholders, and potential business development initiatives, all focused on increasing shareholder value.  1See reconciliation included in this presentation; 2Includes cash equivalents 
 
 2024 Summary  Managed to Drive Strong Cash Flow Generation and Deliver Sustainable Shareholder Value  $866.9M  Revenue  25.6%  Operating Margin  $2.09  EPS  $2.05  Non-GAAP EPS1  $261.4M  Operating Cash Flow  $640.7M  Cash2 and Short-term investments  (3%) Y/Y  (280) bps Y/Y  3% Y/Y  1% Y/Y  (14%) Y/Y  25% Y/Y  Revenue lower due to general semiconductor industry softness following a record fiscal 2023.  Operating margin compression due to impact from operating leverage on gross margin and higher opex; non-GAAP EPS was flat.  Strengthened balance sheet due to cash flow generation, allowing us to increase cash balance while reducing debt.  Multi-pronged capital allocation strategy to invest in growth, return cash to shareholders, and explore business development initiatives.  1See reconciliation included in this presentation; 2Includes cash equivalents 
 
 Revenue by Product Line  $M  Q424  Q/Q  Y/Y  High-End*  60.1  21%  4%  Mainstream  103.7  (3%)  (3%)  Total  163.7  5%  (1%)  High-end sales improved on higher foundry demand from the US and Asia; memory was stronger Y/Y.  Mainstream down due to mid-quarter softness that has since stabilized.  Long-term growth drivers:  New designs by customers to gain market share and support technology roadmap for megatrends such as AI.  Regionalization driving investments for global chip capacity.  Complex advanced leading-edge nodes require higher number of layers and masks.  *IC: 28nm and smaller; FPD: G10.5+, AMOLED and LTPS   Totals may differ due to rounding  High-end flat Q/Q as strong G10.5+ sales offset by softer mobile display demand.  Mainstream improved as we allocated capacity during soft high-end demand.  Long-term growth drivers:  Technology development drives higher-value mask demand.  Mobile demand is expected to remain strong with rollout of new designs and emerging panel makers winning market share.  AMOLED moving to larger G8.6 form factor driving need to collaborate on mask development.  $M  Q424  Q/Q  Y/Y  High-End*  48.4  Flat  (9%)  Mainstream  10.5  57%  8%  Total  58.9  7%  (7%)  IC  FPD 
 
 Balance Sheet and Cash Flow Metrics  Balance Sheet Provides Resilience, Enables Growth Strategy and Shareholder Value Creation  $M  Q424  Y/Y  Q/Q  Cash, cash equivalents and Short-term investments  640.7  25%  6%  Debt  18.0  (27%)  (10%)  Operating Cash Flow  68.4  (36%)  (9%)  Capital Expenditures  43.2  (18%)  77%  Actively controlling cash, cash equivalents, and short-term investments to maintain liquidity and optimize returns, while also reducing Debt (comprised of US equipment leases).  Continued strong operating cash flow from income generation and working capital management.  Capex targets growth in IC capacity, tool replacement, & facility expansion.  Strong balance sheet allows us to fund growth investments, return cash to shareholders, consider business development initiatives, and remain resilient to effects of industry downturns. 
 
 Q1 2025 Guidance   Revenue ($M)  208 – 216  Operating Margin  23% - 25%  Taxes ($M)  17 – 19  Diluted non-GAAP EPS  $0.43 - $0.49  Diluted Shares (M)  ~62  Full-year Capex (M)  200  Reflects typical Q1 seasonality, including Chinese New Year beginning in late January.  Incorporation of chips in AI, IoT, 5G, and consumer products.  New designs to capture market share.  Advanced display technologies.  Outlook clouded by geopolitical uncertainty and macro-economic headwinds.  Disciplined cost controls and managing cash to maximize returns and deliver long-term shareholder value. 
 
 Corporate Overview 
 
 Photronics Overview (Nasdaq: PLAB)  All data are last twelve months as of 10/31/2024 unless otherwise noted | IC: Integrated Circuit | FPD: Flat Panel Display  Revenue By Product Group  Revenue By Region  Unmatched Global Footprint  11 STRATEGICALLY LOCATED MANUFACTURING FACILITIES  IC  FPD  IC & FPD  $867M  $222M  $261M  $1.6B  ~1,900  ~675  1969  Revenue  Operating Income  Operating Cash Flow  Market Cap  12/3/2024  Employees  Customers  Founded 
 
 Phases of Photronics Revenue Growth  Phase I: 1969 – 1986  Technology Startup  Organic Growth  Mostly US  Pre-IPO  Phase II: 1986 – 2002  M&A Growth  Merchant Consolidation  Global Expansion  Phase IV: 2018 and Beyond  Leverage China 1st Mover Advantage  Long-Term Purchase Agreements  Extend Technology Leadership  Increase Market Share  Strategic Capital Allocation  Phase III: 2003 – 2017  Enter High-End Market  Form Strategic Partnerships  Invest in High-End Capability  Establish FPD Presence  Improve Balance Sheet  A  B  C  D  A  G7.5 Display Substrate  B  High-End IC Memory  C  High-End IC Logic  D  G10.5+ Display Substrate  AMOLED Mobile  “Made In China 2025”  Technology inflections catalyze Future Demand: 
 
 Compelling Investment Thesis  Trusted supplier due to rapid response of high-quality masks   Broad technology suite andgeographic presence  Supports organic growth initiatives  Targets industry demand and technology trends  Semiconductor industry expansion driving design activity across all nodes  Advanced displays require additional layers and leadingmask technologies  GLOBAL LEADER in the merchant photomask industry  INVESTMENT STRATEGY   To deliver sustainable cash flow generation  POSITIVE DEMAND TRENDSdrive strategic growth investments  Driving operational excellence through core competencies  Competitive advantage in industry with high barriers to entry  SOLID EXECUTIONdriven by a culture ofsustainable performance  Demonstrated Success Delivering Value to Customers and Creating Value for Shareholders 
 
 Core Competencies Serve as Competitive Advantages  Global Footprint  Close to customer  Aligned with end markets  Flexible supply chain  Technology Leader  Process know-how  Advanced Process-of-Record  High barriers to entry  Commercial Excellence  Customer first  Trusted partner  Wafer yield enhancement  Technology roadmap enabler  Operational Excellence  Responsive delivery  High yields  Cost control  Supply chain optimization  Teamwork and execution 
 
 Semiconductor: growing capacity and design activity  More extensive use of semiconductors across multiple applications, driven by megatrends such as AI and IoT.  Supply chain regionalization supported by governments globally driving investments in semiconductor fabs that creates redundant production capacity and drives photomask demand.  Differentiation by design becoming competitive factor in mainstream (ASIC) and leading-edge applications.  Expanding EUV adoption drives semi manufacturer photomask outsourcing of legacy technology nodes, increasing TAM for merchant suppliers.  Display: advanced displays driving innovation  Global panel makers innovating to win AMOLED market share.  Growing panel competition drives innovation and greater mask value.  AMOLED manufacturing moving to larger G8.6 form factor, requiring high-quality, advanced photomasks.  Long-Term Trends Driving Photomask Demand  Innovative Designs and Manufacturing Complexity Drives Photomask Demand 
 
 Supply Chain Regionalization Driving Global Semiconductor Investments  Concerns around national security and supply chain reliability are driving regional investments in semiconductor manufacturing.  Semiconductor fabs are capitalizing on government incentives to build capacity in US, Europe, and Asia.  Regionalization creates additional semiconductor production, increasing global demand for photomasks.  Photronics has operations in 4 of the top 5 countries for semiconductor manufacturing.  Our IC Manufacturing Footprint Aligns with Global Semiconductor Production  PLAB IC Locations  Top 5 Semiconductor Countries:  Taiwan, South Korea, Japan, China, US  Unmatched Geographic Presence Positioned to Benefit from this Trend 
 
 Advanced Displays are Driving Innovation   Innovation and Design Complexity Favors Us as Technology Leader  AMOLED displays continue to gain market share in mobile displays, including smartphones, tablets, and PC.  Emerging panel makers releasing new AMOLED displays to gain market share against established incumbents.  Panel makers incorporating additional functionality into displays (e.g., biometric sensors), increasing value and complexity of mask set.  New form factors (e.g., flexible or rollable displays) requiring AMOLED technology continue to be introduced.  Panel makers are developing AMOLED production process to increase substrate size to G8.6, requiring larger, high-quality advanced masks.  Mini- or Micro-LED are future technologies that could drive additional mask demand across many applications. 
 
 Clear Capital Deployment Priorities Supported by Strong Balance Sheet  $M  2024  Cash and Short-term Investments  641  Debt  18  Operating Cash Flow  261  Capital Expenditures  131  Balance Sheet Provides Resilience, Enables Growth Strategy and Shareholder Value Creation  Fund organic growth  Increase IC capacity  Maintain technical leadership  Expand capacity to support customer demand  Financial discipline to improve ROIC  Share repurchase  Repurchased 12M shares, returning $130M to shareholders since 2018  $100M remaining under current authorization  Business development initiatives  IC & FPD photomask industry, including strategic partnerships or joint ventures  Adjacencies to increase revenue diversification 
 
 Strategic Investment Strategy Sustains Profitable Growth  17  Proven Approach to Profitably Grow Revenue, Capture Market Share, and Improve ROIC  Win market share in growing IC and FPD markets  Leverage global footprint to benefit from IC regionalization trends  Capitalize on FPD technology leadership to continue improving mix  Enter long-term purchase agreements and earn process-of-record  Improved pricing environment in high-end and mainstream IC   Dynamically align asset tool set to match end-market demand  Increasing benefit from operating leverage  GROW REVENUE IN EXCESS OF MARKET  MARGIN EXPANSION IMPROVES PROFITS  Operational Excellence  Commercial Excellence  Technology Leader  Global Footprint  WINNING THROUGH COMPETITIVE ADVANTAGES  Organic growth through high-return targeted capacity expansionEnter LTPAs to mitigate investment risk and quickly ramp revenues  STRATEGIC APPROACH TO CAPITAL INVESTMENTS 
 
 Appendix 
 
 Revenue by Product Group ($M)  Total may differ due to rounding  IC  FPD  Mainstream  High-End  Mainstream  High-End  Total Revenue  IC Revenue  FPD Revenue  High-End: 28nm and smaller  High-End: G10.5+, AMOLED and LTPS 
 
 Non-GAAP Financial Measures  Non-GAAP Net Income attributable to Photronics, Inc. shareholders and non-GAAP diluted earnings per share are “non-GAAP financial measures” as such term is defined by Regulation G of the Securities and Exchange Commission, and may differ from similarly named non-GAAP financial measures used by other companies. The attached financial supplement reconciles Photronics, Inc. financial results under GAAP to non-GAAP financial information. We believe these non-GAAP financial measures that exclude certain items are useful for analysts and investors to evaluate our future on-going performance because they enable a more meaningful comparison of our projected performance with our historical results. These non-GAAP metrics are not a measure of consolidated operating results under U.S. GAAP and should not be considered as an alternative to Net income (loss), Net income (loss) per share, or any other measure of consolidated results under U.S. GAAP. The items excluded from these non-GAAP metrics, but included in the calculation of their closest GAAP equivalent, are significant components of the condensed consolidated statement of income and must be considered in performing a comprehensive assessment of overall financial performance. Please refer to the non-GAAP reconciliations on the following page.  
 
 Non-GAAP Financial Measures