Executive Summary

Revenue of $212.1M declined 2% y/y and 5% q/q; gross margin compressed to 35.6% as mainstream IC softness (6”/8” nodes, auto/industrial) persisted, while high-end IC and initial G8.6 AMOLED orders provided support .
GAAP diluted EPS $0.68 benefited from FX gains; non‑GAAP diluted EPS was $0.52, above the high end of guidance, reflecting disciplined OpEx control and mix management amid seasonal volume pressure .
Q2 FY25 guidance: revenue $208–$216M, operating margin 23–25%, non‑GAAP EPS $0.44–$0.50; diluted shares ~62M; FY25 capex ~$200M for capacity/capability with U.S. expansion tied to customer needs (mostly organic demand, limited CHIPS Act dependency) .
Balance sheet remains a key asset: cash $642.2M, debt $2.7M; operating cash flow $78.5M funded $35.2M capex and $4.6M buybacks; $100M repurchase authorization in place .
Estimate context: S&P Global consensus data could not be retrieved at this time; non‑GAAP EPS topped company guidance; we will update estimate comparisons when available . S&P Global consensus unavailable today.

What Went Well and What Went Wrong

What Went Well
- High-end mix and technology leadership: high-end IC reached 39% of IC revenue; strength at 14–22nm, memory demand improved; first G8.6 AMOLED orders received, leveraging IC techniques into FPD .
- Non-GAAP EPS execution: “Non‑GAAP diluted EPS of $0.52 was above the high end of guidance,” supported by cost controls and lower severance/legal and R&D sequentially .
- Cash generation and balance sheet: $78.5M operating cash flow (37% of revenue), cash $642.2M, debt $2.7M; flexibility for growth/M&A/buybacks .
What Went Wrong
- Mainstream IC weakness: continued softness at older nodes (6”/8”) driven by auto/industrial; pricing held firm but volumes weaker; increased low-end competition in China (not Photronics’ focus) .
- Europe softness: “Sales generated out of our European facilities were weaker than anticipated, and this situation is expected to continue” .
- Margin compression on lower volume: gross margin slipped to 35.6% (from 36.6% in Q1’24 and 37.0% in Q4’24); operating margin 24.6% (25.1% in Q4’24, 26.6% in Q1’24) .

Financial Results

Overall P&L (chronological: Q1 2024 → Q4 2024 → Q1 2025)

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue ($M)	$216.334	$222.628	$212.138
GAAP Diluted EPS	$0.42	$0.54	$0.68
Non‑GAAP Diluted EPS	$0.48	$0.59	$0.52
Gross Margin %	36.6%	37.0%	35.6%
Operating Income ($M)	$57.489	$55.827	$52.177
Operating Margin %	26.6%	25.1%	24.6%
Non‑operating (loss)/income, net ($M)	$(3.747)	$(1.034)	$24.981
Net income attrib. to PLAB ($M)	$26.180	$33.869	$42.851
Diluted shares (M)	62.283	62.456	62.661

Segment Revenue and Changes

Segment	Q4 2024 ($M)	Q1 2025 ($M)	q/q Change	y/y Change
IC	$163.7	$154.0	-6%	-2%
FPD	$58.9	$58.1	-1%	-1%

Product Line KPIs (Q1 2025)

Segment	Product	Q1 2025 ($M)	q/q	y/y
IC	High-End (≤28nm)	60.1	0%	-1%
IC	Mainstream	93.9	-9%	-3%
IC	Total	154.0	-6%	-2%
FPD	High-End (G10.5+, AMOLED, LTPS)	49.7	+3%	-2%
FPD	Mainstream	8.5	-19%	+5%
FPD	Total	58.1	-1%	-1%

Cash Flow and Balance Sheet

Metric	Q1 2025
Cash from Operations ($M)	$78.5
Capital Expenditures ($M)	$35.2
Share Repurchases ($M)	$4.6
Cash & equivalents ($M)	$642.2
Debt ($M)	$2.7

Notes: GAAP to non‑GAAP EPS delta primarily reflects FX gains; reconciliation provided in press materials . CFO noted the non‑operating gain was largely FX on intercompany balances and foreign-currency cash/receivables .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q2 FY25	N/A	$208–$216	New
Operating Margin	Q2 FY25	N/A	23%–25%	New
Non‑GAAP Diluted EPS	Q2 FY25	N/A	$0.44–$0.50	New
Diluted Shares (M)	Q2 FY25	N/A	~62	New
Full‑year Capex ($M)	FY25	N/A	~200	New

Context: Prior quarter (Q4 FY24) issued guidance for Q1 FY25 at revenue $208–$216M and non‑GAAP EPS $0.43–$0.49; not directly comparable as periods differ .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24 and Q4’24)	Current Period (Q1’25)	Trend
AI/Tech initiatives	AI, regionalization, edge computing cited as secular drivers; executing smart investments	AI a longer‑term growth driver (new tools expanding applications); strength in memory; AI-adjacent support chips and fast interconnects (silicon photonics, advanced packaging)	Improving narrative; clearer AI-adjacent demand signals
Supply chain/regionalization	Regionalization viewed as tailwind; cash and capacity to invest	Investing in U.S. expansion based on customer commitments; minimal tariff exposure due to regionalized production	Positive; strategy validated by customer pull
Product performance (IC/FPD)	Q4: IC high‑end strength (US), FPD mainstream led; Q3: demand softness; optimized mix	IC mainstream soft (auto/industrial); high-end IC at 39% of IC revenue; first G8.6 AMOLED orders received	Mixed: mainstream weak; high-end/FPD tech leadership advancing
Regional trends	Q3: select regional order softness; Q4: IC growth led by US	Europe weaker than expected, likely to continue; broad demand in China FPD	Deteriorating in Europe; stable/mixed elsewhere
Tariffs/macro	Macro cautious optimism noted	Cautious on 2025; tariffs not meaningful due to local production; limited visibility with 1–3 week backlog	Macro caution rising
R&D/OpEx discipline	Margin/FCF focus	Sequential OpEx down $2.9M; target OpEx ~10% of revenue; R&D steady-state	Stable/constructive
Capital allocation	Q3: expanded buyback to $100M	$200M FY25 capex; $100M buyback authorization; balanced M&A vs buybacks	Consistent; ample optionality

Management Commentary

“We achieved top-line results in line with our expectations and reflective of seasonal demand patterns… We remain cautious about 2025, while we continue to manage costs and optimize product mix to deliver margins.” – Frank (KangJyh) Lee, CEO .
“Non‑GAAP diluted EPS of $0.52 was above the high end of guidance… Operating margin [was] at the high end of our guidance range.” – Eric Rivera, CFO .
“We received our first orders for G8.6 AMOLED displays… scaling IC‑like technology into FPD.” – Chris Progler, CTO .
“Our [U.S.] capacity expansion plans are driven by specific customer opportunities… we have a modest $3 million of debt remaining.” – Eric Rivera, CFO .
“We… don’t anticipate a meaningful impact on our business from tariffs.” – CEO .

Q&A Highlights

Mainstream IC weakness and pricing: Demand soft at older nodes (6”/8”) in auto/industrial; Photronics maintained pricing; low-end competition increasing in China but PLAB focuses on mid/high-end (55/40/28/22nm) to sustain ASPs .
FPD technology step-up: G8.6 AMOLED challenges (spec scaling, uniformity, integrating IC‑like techniques) addressed; early orders tied to production‑level fab projects (e.g., laptops) .
Capital allocation: $100M buyback authorization intact; deployment balanced vs M&A, dependent on opportunity; substantial liquidity to act .
Capex and CHIPS Act: FY25 capex ~$200M mainly for U.S. expansion and bottleneck relief; customer‑driven and largely organic demand; limited dependency on CHIPS Act awards (supplier NOFO applications pending) .
Risk/tone: Top risks are macroeconomic and geopolitical; visibility remains limited (typical backlog 1–3 weeks); Q2 guide effectively flat q/q .

Estimates Context

S&P Global consensus for Q1 FY25 and Q2 FY25 could not be retrieved due to data access limitations today; we will update estimate comparisons when available. In the interim, Q1 non‑GAAP diluted EPS of $0.52 exceeded the company’s guidance range high end, and Q2 guidance implies operating margin 23–25% on $208–$216M revenue . S&P Global consensus unavailable today.

Key Takeaways for Investors

Mix shift remains the lever: Mainstream softness persists, but high‑end IC mix reached 39% of IC revenue; incremental demand around 14–22nm logic and memory supports pricing/ASP resilience .
New FPD vector: First G8.6 AMOLED orders validate cross‑pollination of IC techniques into FPD and could underpin medium‑term FPD contribution as projects move to volume .
Quality of earnings: GAAP EPS boosted by FX; non‑GAAP EPS of $0.52 aligns better with core performance. Monitor FX volatility’s impact on non‑operating line .
Guidance cautious but disciplined: Flat q/q revenue outlook with 23–25% operating margin highlights cost/mix control amid macro/geopolitical uncertainty and short visibility .
Balance sheet optionality: $642M cash, $2.7M debt, and strong FCF fund $200M capex (U.S. expansion), opportunistic buybacks, and potential M&A without stressing the model .
Watch Europe and auto/industrial: European IC demand weaker than expected and likely to continue; auto/industrial remain soft—key overhangs on mainstream IC volumes .
Potential catalysts: Progress on U.S. capacity builds and customer ramps; expanding AI‑adjacent designs (support chips, interconnects); further G8.6 AMOLED traction; any improvement in mainstream end‑markets .

PHOTRONICS INC (PLAB)·Q1 2025 Earnings Summary