Photronics Inc.

12/17/2025 | Press release | Distributed by Public on 12/17/2025 13:23

Annual Report for Fiscal Year Ending October 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following should be read in conjunction with "Cautionary Statement Regarding Forward Looking Statements" and our combined consolidated financial statements and notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K.

For a comparison of results of operations for the fiscal years ended October 31, 2024 and 2023, see Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of Photronics Inc.'s Annual Report on Form 10-K for the fiscal year ended October 31, 2024, filed with the SEC on December 19, 2024.

Overview

We sell substantially all of our photomasks to designers and manufacturers of IC and FPD electronic devices. Photomask technology is also being applied to the fabrication of other high-technology products including advanced packaging modules, micro optical components for applications such as virtual reality/augmented reality and silicon photonics, micro-electronic mechanical systems (MEMS), and diverse nanotechnology applications. Our selling cycle is tightly interwoven with the development and release of new semiconductor and display designs and applications, particularly as they relate to the semiconductor industry's migration to more advanced design nodes and fabrication processes. The demand for photomasks is primarily correlated with new product design activity and to a lesser extent scaling up of manufacturing of end products. Consequently, an increase in semiconductor or display sales does not always result in a corresponding increase in photomask sales. To the extent integrated circuit and flat panel display applications rely less on new design activity, it could result in a reduction in demand for photomasks. In addition, new design methodologies driving a reduction in complexity of photomasks could also reduce demand for photomasks ‒ even if the demand for semiconductors and FPDs increases. More broadly, advances in semiconductor, display, and photomask design and production methods that shift the burden of achieving device performance away from lithography could also reduce the demand for photomasks. While there is no indication today that such diminishing of long range photomask demand is occurring or will occur, the microelectronics industry has been volatile, experiencing periodic downturns and slowdowns in design activity. These negative trends have been characterized by, among other things, diminished product demand, excess production capacity, and accelerated erosion of selling prices with a concomitant effect on revenue and profitability.

We are typically required to fulfill customer orders within a short period of time, sometimes within twenty-four hours. This results in a minimal level of backlog orders, typically one to two weeks of backlog for IC photomasks and two to three weeks of backlog for FPD photomasks. However, the demand for some IC photomasks can extend longer than the traditional time period; thus, for some products, our backlog can expand to as long as two to three months.

The global semiconductor and FPD industries are driven by end markets which have broad application in the global economy including but not limited to consumer-driven applications, data centers that support AI implementation, electric vehicles and national security. While we cannot predict the timing of the industry's transition to volume production of next-generation technology nodes, or the timing of up and down-cycles with precise accuracy, we believe that such transitions and cycles will continue into the future, beneficially and adversely affecting our business, financial condition, and operating results as they occur. We believe our ability to remain successful in these environments is dependent upon the achievement of our goals of being a service and technology leader and efficient solutions supplier, which we believe should enable us to continually reinvest in our global infrastructure.

We are focused on improving our competitiveness by advancing our technology and reducing costs and, in connection therewith, have invested and plan to continue to invest in manufacturing equipment to serve both the high-end photomask and mainstream markets. As we face challenges that require us to make significant improvements in our competitiveness, we continue to implement programs to streamline, drive efficiency and reduce cost in our infrastructure.

State-of-the-art production for semiconductor masks is considered to be 7 nanometer and smaller including EUV lithography for ICs and Generation 8.6 AMOLED display-based process technologies for FPDs. However, we define our high-end product category as 28nm and below for semiconductors and Generation 10.5 plus, Generation 6 and 8 AMOLED and LTPS for displays. This is consistent with current merchant mask industry definitions. Moreover, design nodes above 28nm and FPD processes for standard LCD displays below Generation 10 are considered mainstream or standard products. At these geometries and various high-end nodes, we can produce full lines of photomasks, and there is no significant technology employed by our competitors that is not available to us. We expect advanced-generation designs to continue to move to production throughout fiscal 2026, and we believe we are well positioned to service an increasing volume of this business as a result of our investments in manufacturing processes and technology in the regions where our customers are located.


The photomask industry has been, and is expected to continue to be characterized by technological change and evolving industry standards. In order to remain competitive, we will be required to continually anticipate, respond to, and utilize changing technologies. In particular, we believe that, as semiconductor geometries continue to become smaller, and display designs become larger or otherwise more advanced, we will be required to manufacture even more complex products, including photomasks with optical proximity correction, phase-shift and EUV photomasks. Additionally, demand for photomasks has been, and could in the future be, adversely affected by changes in high-performance electronics fabrication methods that affect the type or quantity of photomasks used, such as changes in semiconductor demand that favor programmable IC devices and other approaches that replace application-specific ICs, or the use of certain chip-stacking methodologies that lessen the emphasis on conventional lithography technology. Furthermore, increased market acceptance of alternative methods of transferring circuit designs onto semiconductor wafers could reduce or eliminate the need for photomasks in the production of semiconductors.

Our revenues have benefited, and our costs, including depreciation, have been affected by the increased demand for high-end-technology photomasks that require more advanced manufacturing capabilities, but generally command higher ASPs. Our capital expenditure payments were $188.1 million, $130.9 million and $131.3 million in 2025, 2024 and 2023, respectively. Nonetheless, we intend to continue to make the required investments to support the technological and production requirements of our customers that we believe will continue to enable our growth. This includes investments to replace end-of-life mask-making equipment with higher-performing systems that better serve our customers. In support of this effort, we expect capital expenditure payments to be approximately $330 million in fiscal year 2026.

The manufacture of photomasks for use in fabricating ICs, FPDs, and other related products built using comparable photomask-based process technologies has been, and continues to be, capital intensive. Our employees and our integrated global manufacturing network represent a significant portion of our fixed operating cost base. Should our revenue decrease as a result of a decrease in design releases from our customers, we may have excess or underutilized production capacity, which could significantly impact our operating margins, or result in write-offs from asset impairments.


Results of Operations

The following tables present selected operating information expressed as a percentage of revenue. The columns may not foot due to rounding.

Three Months Ended
October 31,
2025
August 3,
2025
October 31,
2024
Revenue
100.0
%
100.0
%
100.0
%
Cost of goods sold
65.0
66.3
63.0
Gross profit
35.0
33.7
37.0
Selling, general and administrative expenses
9.3
8.8
9.4
Research and development expenses
1.5
2.0
2.4
Operating income
24.1
22.9
25.2
Non-operating (expense) income, net
11.1
(4.5
)
(0.5
)
Income before income tax provision
35.2
18.4
24.7
Income tax (benefit) provision
(1.2
)
4.6
6.5
Net income
36.4
13.8
18.2
Net income attributable to noncontrolling interests
7.8
3.0
2.9
Net income attributable to Photronics, Inc. shareholders
28.6
%
10.9
%
15.3
%

Year Ended
October 31,
2025
October 31,
2024
October 31,
2023
Revenue
100.0
%
100.0
%
100.0
%
Cost of goods sold
64.7
63.6
62.3
Gross profit
35.3
36.4
37.7
Selling, general and administrative expenses
8.9
9.0
7.8
Research and development expenses
1.9
1.9
1.5
Operating income
24.5
25.6
28.4
Non-operating income
1.6
3.0
1.9
Income before income tax provision
26.1
28.5
30.3
Income tax provision
3.7
7.3
7.9
Net income
22.4
21.2
22.4
Net income attributable to noncontrolling interests
6.3
6.1
8.3
Net income attributable to Photronics, Inc. shareholders
16.1
%
15.1
%
14.1
%

Note: All the following tabular comparisons, unless otherwise indicated, are for the three months ended October 31, 2025 (Q4 FY25), August 3, 2025 (Q3 FY25) and October 31, 2024 (Q4 FY24), and for the fiscal years ended October 31, 2025 (YTD FY25), October 31, 2024 (YTD FY24), and October 31, 2023 (YTD FY23). Please refer to Part II, Item 7 of our 2024 Form 10-K for comparative discussion of our fiscal years ended October 31, 2024, and October 31, 2023. The tables in this section (Part II, Item 7) may not foot due to rounding.


Revenue

Our quarterly revenues can be affected by the seasonal purchasing practices of our customers. As a result, demand for our products is typically reduced during the first quarter of our fiscal year by the North American, European, and Asian holiday periods, as some of our customers reduce their development and, consequently, their buying activities during those periods.

The following tables present changes in revenue disaggregated by product type and geographic origin, in Q4 FY25 and YTD FY25 from revenue in prior reporting periods.

Quarterly Changes in Revenue by Product Type ($ in millions)

Q4 FY25 compared with Q3 FY25
Q4 FY25 compared with Q4
FY24
Revenue in
Increase
Percent
Increase
Percent
Q4 FY25
(Decrease)
Change
(Decrease)
Change
IC
High-end *
$
65.8
$
12.2
22.7
%
$
5.8
9.6
%
Mainstream
91.6
(2.5
)
(2.7
)%
(12.1
)
(11.6
)%
Total IC
$
157.4
$
9.7
6.5
%
$
(6.3
)
(3.8
)%
FPD
High-end *
$
48.7
$
(4.8
)
(8.9
)%
$
0.4
0.8
%
Mainstream
9.6
0.5
5.5
%
(0.9
)
(8.8
)%
Total FPD
$
58.3
$
(4.3
)
(6.8
)%
$
(0.5
)
(0.9
)%
Total Revenue
$
215.8
$
5.4
2.6
%
$
(6.8
)
(3.1
)%

* High-end photomasks typically have higher ASPs than mainstream products.

Quarterly Changes in Revenue by Geographic Origin ($ in millions) **

Q4 FY25 compared with Q3 FY25
Q4 FY25 compared with Q4 FY24
Revenue in
Increase
Percent
Increase
Percent
Q4 FY25
(Decrease)
Change
(Decrease)
Change
Taiwan
$
67.3
$
(1.1
)
(1.6
)%
$
(2.4
)
(3.4
)%
China
58.1
7.5
14.8
%
(2.7
)
(4.5
)%
South Korea
37.0
(6.7
)
(15.4
)%
(3.0
)
(7.5
)%
United States
43.5
5.7
15.3
%
1.8
4.2
%
Europe
9.0
(0.1
)
(1.3
)%
(0.9
)
(9.4
)%
Other
0.9
0.1
11.1
%
0.4
87.2
%
Total revenue
$
215.8
$
5.4
2.6
%
$
(6.8
)
(3.1
)%

** This table disaggregates revenue by the location in which it was earned.


Revenue in Q4 FY25 of $215.8 million represented an increase of 2.6% compared with Q3 FY25, and a decrease of 3.1% from Q4 FY24.

Overall IC revenue increased $9.7 million or 6.5% in Q4 FY25 from Q3 FY25 due to strong order patterns globally including the U.S. IC revenue decreased $6.3 million or 3.8% from Q4 FY24, as a result of a decline in maintream products partially offset by an increase in high-end demand. IC mainstream revenue decreased $2.5 million or 2.7% from Q3 FY25, and $12.1 million or 11.6% from Q4 FY24 primarily due to market conditions and geopolitical impacts.

FPD revenue decreased $4.3 million or 6.8% in Q4 FY25 from Q3 FY25, and $0.5 million or 0.9% from Q4 FY24 mainly due to the decrease in high-end products, which decreased $4.8 million or 8.9% in Q4 FY25 from Q3 FY25 due to timing of order patterns.

Year-over-Year Changes in Revenue by Product Type ($ in millions)

YTD FY25 compared with YTD FY24
Revenue in
Increase
Percent
YTD FY25
(Decrease)
Change
IC
High-end *
$
238.9
$
10.4
4.6
%
Mainstream
376.2
(33.4
)
(8.2
)%
Total IC
$
615.1
$
(23.0
)
(3.6
)%
FPD
High-end *
$
195.5
$
0.2
0.1
%
Mainstream
38.7
5.2
15.7
%
Total FPD
$
234.2
$
5.4
2.4
%
Total Revenue
$
849.3
$
(17.6
)
(2.0
)%

* High-end photomasks typically have higher ASPs than mainstream photomasks.

Year-over-Year Changes in Revenue by Geographic Origin ($ in millions)**

YTD FY25 compared with YTD FY24
Revenue in
Increase
Percent
YTD FY25
(Decrease)
Change
Taiwan
$
283.8
$
(4.4
)
(1.5
)%
China
221.0
(11.9
)
(5.1
)%
South Korea
158.5
0.5
0.3
%
United States
148.9
2.3
1.5
%
Europe
34.2
(5.2
)
(13.2
)%
Other
2.9
1.1
61.3
%
$
849.3
$
(17.6
)
(2.0
)%

** This table disaggregates revenue by the location in which it was earned.


Overall revenue decreased $17.6 million or 2.0% in YTD FY25 from YTD FY24, driven by a $23.0 million or 3.6% decrease in IC revenue due to lower demand for mainstream products earlier in the year, partially offset by strong demand for high-end products. FPD revenue increased by $5.4 million or 2.4%, driven by a $5.2 million or 15.7% increase in mainstream product revenue due to an increase in G8 products.

Gross Margin

Percent
Percent
Q4 FY25
Q3 FY25
Change
Q4 FY24
Change
Gross profit
$
75.5
$
70.9
6.5
%
$
82.3
(8.3
)%
Gross margin
35.0
%
33.7
%
37.0
%

Gross margin increased to 35% in Q4 FY25 from 33.7% in Q3 FY25, primarily due to favorable product mix and lower manufacturing cost, partially offset by higher overhead costs.

Gross margin decreased to 35% in Q4 FY25 from 37% in Q4 FY24, primarily due to unfavorable product mix and higher labor costs, partially offset by lower equipment costs as a percentage of revenue.

Percent
YTD FY25
YTD FY24
Change
Gross profit
$
299.8
$
315.9
(5.1
)%
Gross margin
35.3
%
36.4
%

Gross margin decreased to 35.3% in YTD FY25 from 36.4% in YTD FY24, primarily due to increased material costs resulting from unfavorable product mix.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $20.0 million in Q4 FY25, compared with $18.4 million in Q3 FY25, and $21.0 million in Q4 FY24. The $1.6 million increase from Q3 FY25 was primarily the result of additional compensation and related expenses of $1.2 million. The $1.0 million decrease from Q4 FY24 was primarily the result of decreased professional fees of $0.5 million.

Selling, general and administrative expenses were $75.6 million in YTD FY25, compared with $77.8 million in YTD FY24. The decrease of $2.2 million is primarily due to a decrease in compensation and related expenses of $1.1 million and professional fees of $1.0 million.

Research and Development Expenses

Research and development expenses, which primarily consist of development and qualification efforts related to process technologies for high-end IC and FPD applications, decreased $1.1 million to $3.2 million in Q4 FY25, from Q3 FY25; the decrease was primarily caused by decreased qualification activities in the U.S. Research and development expenses in Q4 FY25 decreased by $2.1 million from Q4 FY24 as a result of decreased development activities in the U.S. and Asia. On a full year basis, research and development expenses decreased $0.8 million, to $15.8 million, primarily due to decreased development activities in Asia, partially offset by increased research and development activity in the U.S.


Other Income (Expense), net

Q4 FY25
Q3 FY25
Q4 FY24
Foreign currency transactions impact, net
$
18.6
$
(14.3
)
$
(7.7
)
Interest expense, net
-
-
(0.1
)
Interest income and other income, net
5.3
4.8
6.8
Other income (expense), net
$
23.9
$
(9.4
)
$
(1.0
)

Other income increased $33.3 million in Q4 FY25 from Q3 FY25 and $24.9 million from Q4 FY24, primarily due to foreign currency impacts. The foreign currency impacts were primarily driven by favorable movements of the New Taiwan dollar and the South Korean won, against the U.S. dollar for both periods.

YTD FY25
YTD FY24
Foreign currency transactions impact, net
$
(8.3
)
$
2.2
Interest expense, net
(0.1
)
(0.3
)
Interest income and other income, net
22.0
24.0
Other income (expense), net
$
13.6
$
25.9

Other income decreased $12.3 million in YTD FY25, compared with YTD FY24, due to unfavorable movements of the New Taiwan dollar and the South Korean won, against the U.S. dollar for the period.


Income Tax Provision

Q4 FY25
Q3 FY25
Q4 FY24
Income tax provision
$
(2.7
)
$
9.6
$
14.6
Effective income tax rate
(3.5
)%
24.8
%
26.6
%

The effective income tax rates are sensitive to the jurisdictional mix of our earnings, due, in part, to the non-recognition of tax benefits on losses in jurisdictions with valuation allowances.

The effective income tax rate decreased in Q4 FY25 compared with Q3 FY25 primarily due to the release of a $16.7 million valuation allowance related to deferred tax assets that are now expected to be realized in future periods, as well as $2.8 million of reversals of uncertain tax positions mainly resulting from audit settlements and statute expirations. These favorable items were partially offset by $7.1 million of foreign tax rate differentials driven by higher income levels during the quarter. In addition, the effective tax rate was impacted by an unfavorable jurisdictional mix of earnings.

The effective income tax rate decrease in Q4 FY25, compared with Q4 FY24, is primarily due to the impact of the change in valuation allowance described above, changes in the jurisdictional mix of earnings, and a decrease in foreign tax compared with the prior year.

YTD FY25
YTD FY24
Income tax provision
$
31.6
$
63.6
Effective income tax rate
14.2
%
25.7
%

The decrease in the effective income tax rate on a full-year basis in FY25, compared with FY24, is primarily due to the release of valuation allowance as described above. We also regularly assess the potential outcomes of ongoing and future tax examinations and, accordingly, have recorded accruals for such contingencies. Included in the balance of unrecognized tax benefits as of October 31, 2025 and October 31, 2024, are $11.4 million and $14.7 million respectively, recorded in Other liabilities in the consolidated balance sheets that, if recognized, would impact the effective tax rates.


On December 15, 2022, the European Union (EU) Member States formally adopted the EU's Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (OECD) Pillar Two Framework. The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive. A significant number of other countries are expected to continue to implement similar legislation with varying effective dates.

The Company is currently subject to Pillar Two, but we estimate that the financial impact is immaterial. We will continue to monitor further developments to determine any potential impact in the countries in which we operate.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the United States. The OBBBA includes significant changes to federal tax law and other regulatory provisions that may impact the Company. The legislation enacted will be effective for Photronics commencing in our fiscal year 2026. We will continue to monitor and evaluate the impact of the legislative changes as more guidance becomes available.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests was $16.8 million in Q4 FY25, compared with $6.2 million in Q3 FY25; the increase of $10.6 million was the result of an increase in the net incomes of our joint venture operations. Net income attributable to noncontrolling interests increased $10.5 million in Q4 FY25, compared with $6.4 million in Q4 FY24; which was the result of an increase in the net incomes of our joint venture operations.

Net income attributable to noncontrolling interests increased by $0.7 million in YTD FY25 to $53.8 million from $53.2 million in YTD FY24, as a result of increased net income at both our Taiwan-based and China-based joint venture IC facilities.

Liquidity and Capital Resources

Cash and cash equivalents were $492.3 million and $598.5 million as of October 31, 2025, and October 31, 2024, respectively. As of October 31, 2025, total cash and cash equivalents included $446.1 million held by foreign subsidiaries, including an aggregate of $353.8 million held by our joint ventures in Taiwan and China. In addition, we currently have $95.9 million in short-term investments and CNY 200 million or USD 25 million of borrowing capacity in China to support local operations. See Note 8 - Debt to the consolidated financial statements for additional information on our outstanding debt and currently available financing. Our primary sources of liquidity are our cash on hand and cash we generate from operations.

We continually evaluate alternatives for efficiently funding our capital expenditures and ongoing operations. These reviews may result in our engagement in a variety of investing and financing transactions, in the transfer of cash among subsidiaries, and/or the repatriation of cash to the U.S. The transfer of funds among subsidiaries could be subject to foreign withholding taxes; in certain jurisdictions, repatriation of these funds to the U.S. may subject them to U.S. state income taxes and/or local country withholding taxes. We believe that our liquidity, including available financing, is sufficient to meet our requirements through the next twelve months and thereafter for the foreseeable future. Through the utilization of our existing liquidity, cash we generate from operations and short-term investments, we plan to continue to invest in our business, with our investments targeted to align with our customers' technology road maps. In addition, we stand ready to invest in mergers, acquisitions, or strategic partnerships, should a suitable opportunity arise.

We estimate capital expenditures for our fiscal year 2026 will be approximately $330 million; these investments will be targeted towards high-end and mainstream "point" tools that will increase our operating capacity and efficiency and enable us to support our customers' near-term demands. As of October 31, 2025, we had outstanding capital commitments of approximately $126.4 million and accrued liabilities related to capital equipment purchases of approximately $13.0 million. Although payment timing could vary, primarily as a result of the timing of tool delivery, installation and testing, we currently estimate that we will fund $120.0 million of our total $139.4 million committed and recognized obligations for capital expenditures over the next twelve months. Please refer to Notes 11 - Leases and 16 - Commitments and Contingencies to our consolidated financial statements for additional information on our lease liabilities and unrecognized commitments, respectively.


On August 28, 2024, the Board of Directors authorized an increase to the Company's existing share repurchase program from the remaining $31.7 million to $100 million. In June 2025, the Board of Directors authorized an additional $25 million share repurchase. During the fiscal year ended as of October 31, 2025, the Company repurchased 5.0 million shares for $97.4 million. As a result, as of October 31, 2025, $27.6 million remained available under this authorization. Depending on market conditions, we may utilize some or the entire remaining approved amount to reacquire additional shares.

As discussed in Note 6 - PDMCX Joint Venture of our consolidated financial statements, DNP, the noncontrolling interest in our China-based joint venture has, under certain circumstances, the right to put its interest in the joint venture to Photronics, or to purchase our interest in the joint venture. Under all such circumstances, the sale of DNP's interest would be at its ownership percentage of the joint venture's net book value, with closing to take place within three business days of obtaining required approvals and clearance. As of the date of issuance of this report, DNP had not indicated its intention to exercise this right. As of October 31, 2025, Photronics and DNP each had net investments in this joint venture of approximately $160.4 million.

Cash Flows

Year Ended
October 31,
2025
October 31,
2024
October 31,
2023
Net cash provided by operating activities
$
247.8
$
261.4
$
302.2
Net cash used in investing activities
$
(238.9
)
$
(156.5
)
$
(101.5
)
Net cash used in financing activities
$
(115.3
)
$
(7.7
)
$
(18.5
)

Operating Activities: Net cash provided by operating activities reflects net income adjusted for certain non-cash items, including depreciation and amortization, share-based compensation, and the effects of changes in operating assets and liabilities. Net cash provided by operating activities decreased by $13.6 million in FY25, compared with FY24, primarily due to unfavorable changes in working capital.

Investing Activities: Net cash used in investing activities increased by $82.4 million in FY25, compared to FY24, primarily driven by an increase of purchases of short-term investments of $29.0 million and purchases of property, plant, and equipment of $57.2 million.

Financing Activities: Net cash used in financing activities increased by $107.6 million in FY25, compared to FY24. This was driven by an increase in repurchases of common stock of $97.4 million and repayments of debt of $11.4 million.

Our cash, cash equivalents, and restricted cash balances were positively impacted by changes in foreign currency exchange rates in FY25 of $0.2 million.

Non-GAAP Financial Measures

Non-GAAP Net Income attributable to Photronics, Inc. shareholders and non-GAAP diluted earnings per share attributable to Photronics, Inc. shareholders 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 financial tables below reconcile Photronics, Inc. financial results under U.S. GAAP to our non-GAAP financial information. We believe these non-GAAP financial measures that exclude certain items are useful for analysts and investors to evaluate the Company's on-going performance because they enable a more meaningful comparison of historical results of the Company's core business. 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 U.S. 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.


The following table reconciles U.S. GAAP net income and diluted earnings per share attributable to Photronics, Inc. shareholders to non-GAAP net income and diluted earnings per share attributable to Photronics, Inc. shareholders for the indicated periods. The columns may not foot due to rounding.

Three Months ended
Year ended
Oct 31,
Aug 3,
Oct 31,
Oct 31,
Oct 31,
Oct 31,
2025
2025
2024
2025
2024
2023
Reconciliation of U.S. GAAP to non-GAAP net income:
U.S. GAAP net income attributable to Photronics, Inc. shareholders
$
61,801
$
22,891
$
33,869
$
136,405
$
130,688
$
125,485
FX (gain) loss
(18,615
)
14,258
7,758
8,310
(2,168
)
(2,466
)
Estimated tax effects of FX (gain) loss
4,781
(3,663
)
(1,936
)
(2,066
)
477
317
Estimated noncontrolling interest effects of above
3,341
(4,130
)
(2,637
)
(5,342
)
(1,407
)
2,676
Reversal of deferred tax valuation allowance
(16,751
)
-
-
(16,751
)
-
-
Non-GAAP net income attributable to Photronics, Inc. shareholders
$
34,557
$
29,356
$
37,054
$
120,556
$
127,590
$
126,012
Weighted-average number of common shares
outstanding - Diluted
57,977
58,068
62,456
59,920
62,391
61,755
Reconciliation of U.S. GAAP to non-GAAP EPS:
U.S. GAAP diluted earnings per share attributable to Photronics, Inc. shareholders
$
1.07
$
0.39
$
0.54
$
2.28
$
2.09
$
2.03
Effects of the non-GAAP adjustments above
(0.47
)
0.12
0.05
(0.27
)
(0.04
)
0.01
Non-GAAP diluted earnings per share attributable to Photronics, Inc. shareholders
$
0.60
$
0.51
$
0.59
$
2.01
$
2.05
$
2.04

Business Outlook

Our current business outlook and guidance was provided in our Full Year and Fourth Quarter Fiscal 2025 Results earnings call, and related slide deck, but is not incorporated herein. These can be accessed in the investor section of our website - www.photronics.com. Information included on our website is not incorporated in this Form 10-K.

Our future results of operations and the other forward-looking statements contained in this filing and in our "Full Year and Fourth Quarter Fiscal 2025 Results" earnings call and presentation involve a number of risks and uncertainties, some of which are discussed in Part I, Item 1A of this report. These factors and a number of other unforeseeable factors could cause actual results to differ materially from our expectations.


Critical Accounting Estimates

Our consolidated financial statements are based on the selection and application of accounting policies, which require management to make significant estimates and assumptions. We believe the following to be the more critical areas that require judgment when applying our accounting policies:


•
Revenue Recognition: The application of GAAP related to the measurement and recognition of revenue requires us to make judgments and estimates, including the determination of whether we should recognize revenue as we perform or upon the completion of our performance, as these determinations impact the timing and amount of our reported revenue and net income. Other significant judgments include the estimation of the point in the manufacturing process at which we are entitled to recognize revenue, as well as the measurement of our progress towards satisfying our performance obligations, which determine the amount of revenue we are entitled to recognize.


•
Property, Plant and Equipment: Significant judgment and assumptions are employed when we establish the estimated useful lives of asset classes, and determine when depreciation should commence for individual assets, as these determinations can significantly impact our gross margin and research and development expenses. Significant judgment would also be employed when events or changes in circumstances indicate that the carrying amount of a group of assets may not be recoverable, as the recoverability assessment requires us to forecast future cash flows related to these assets; this evaluation can significantly impact our gross margin and operating expense.


•
Leases: Significant judgment is applied in the determination of whether an arrangement is, or contains, a lease and, in certain instances, whether the lease should be classified as an operating lease or a finance lease, which can impact the timing and classification of lease costs.


•
Contingencies: We are subject to the possibility of losses from various contingencies. Significant judgment is necessary to estimate the probability and amount of a loss, if any, from such contingencies. An accrual is made when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. Changes in estimates related to, and resolutions of, contingencies may have a material impact on our financial performance.


•
Income Taxes: Our annual tax rate is determined based on our income and the jurisdictions where it is earned, statutory tax rates, and the tax impacts of items treated differently for tax purposes than for financial reporting purposes. Also inherent in determining our annual tax rate are judgments and assumptions regarding the recoverability of certain deferred tax assets, and our ability to uphold certain tax positions. We are subject to complex tax laws, in the U.S. and numerous foreign jurisdictions, and the manner in which they apply can be open to interpretation. Realization of deferred tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction in future periods, which involves business plans, planning opportunities, and expectations about future outcomes. Our assessment relies on estimates and assumptions and may involve a series of complex judgments about future events.

There are a number of estimates and assumptions inherent in calculating the various components of our tax provision. Future events such as changes in tax legislation, geographic mix of earnings, findings in tax audits, and earnings repatriation plans could have an impact on those estimates and our effective tax rate.

Effect of Recent Accounting Pronouncements

See Note 1 to our consolidated financial statements in this report for recent accounting pronouncements that may affect our financial reporting.


Photronics Inc. published this content on December 17, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on December 17, 2025 at 19:23 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]