Q1 2021 Photronics Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to different Tronic first quarter fiscal year 2021 earnings conference call. At this time all participants are in a listen only mode. Later, we will conduct question and answer session and instructions will follow at that time, Inc.
Any one should require assistance during the conference. Please press Star then zero on your Touchtone telephone as a reminder, this conference is being recorded Wednesday February 24, 2021, I would now like to turn the conference over to Troy Dewar, Vice President of Investor Relations.
Please go ahead.
Thank you Jerome good morning, everyone welcome to our review of Photronics 2021, the first quarter financial results.
Joining me. This morning are Peter Kirlin, our Chief Executive Officer, John Jordan, Our Chief Financial Officer and of course, our Chief Technology Officer.
The press release issued earlier this morning, along with the presentation material, which accompanies our remarks are available on the Investor Relations section of our webpage.
I would like to note the press release had inadvertently omitted the bottom half of the balance sheet debt.
On the <unk> is.
Is correct and we will be correcting the press release.
Comments made by any participants on today's call May include forward looking statements that include such words as anticipate believe estimate expect forecast in our view.
These forward looking statements are based upon the number of risk uncertainties and other factors that are difficult to predict actual results may differ materially from those expressed or implied and we assume no obligation to update any forward looking information.
At this time I will turn the call over to Peter.
Thank you Troy and good morning, everyone.
We achieved sequential growth in the first quarter. The following seasonal trends the main proof of across many sectors.
Most of the level improvement was observed in the high and if the PD.
The strong handle as demand for new mobile displays lit.
The increase.
High end IC was modestly lower with slight improvements in the mainstream IC N F. P D <unk>.
Typical seasonality indicates the Q1 revenue would decline sequentially So inc.
Kris of 2% demonstrates all elements of our global team.
Joe on for more insights into the details shortly.
I'd like to make some general observations on what we're seeing on our market.
Over the last 18 to 24 months, there has been tremendous supply chain disruptions driven.
Driven by a combination of trade policies and economic locked out and the resulting from COVID-19.
In our view these government mandates moving the market in ways that were not easily anticipated.
In some cases the impact has been positive for industry.
Such as the trying to do more of what we do every day remotely spurring demand for work from home electronics.
Conversely, maybe.
Many of them motive manufacturers suspended or severely curtailed vehicle production last spring.
When automobile manufacturing recently returned to normal levels silica capacity had shifted the work from home applications.
The net effect being chip shortages.
The semiconductor industry is quickly reacting to the demand dynamics, creating what we believe to be on inventory grid in semiconductor upcycle.
Pending the installation of additional capacity, particularly at the high end logic nodes.
Semiconductor manufacturers are focusing their resources on increasing output from your chips.
And not on releasing new products.
Therefore, new design activity has been constrained and went to us.
Both of the semiconductor industry cycle of old.
Where the upturn in our business lags the capital equipment suppliers by one to two quarters.
When can you tools are installed with the result of capacity on line.
Is it inventory levels of replenish the dam breaks.
And the wave of new design flows.
Shifting gears the F P D.
The trade policies implemented by the U S over the last few years of clearly impacted.
The electronics industry in China.
Up until late last year. These policy policies had little impact on our business.
However that change once the Huawei was placed on denied entity list last fall.
As a leading manufacturer of smartphones in China.
The way had its own ecosystem of suppliers and their ability to purchase leading edge semiconductors was severely constrained.
It effectively froze their new product roadmap.
The impact on US was the dramatic drop in demand for photo mask the build there maybe display panels.
Fortunately the end market demand for those folks did not disappear.
And as we moved through Q1, we started to see a resurgence of new designs from the alternative fund manufactures.
And recently.
The very first Paypal for honor.
Furthermore.
And then second amounts of new amyloid display manufacturing capacity is being brought on line by our customers in China of this year.
And moving forward, we expect the significant rise in animal its total mass demand that should continue throughout 2021.
Returning to our first quarter results gross and operating margins were lower for this period.
There are several reasons for this and John will provide details during his commentary.
But the bottom line is we must be better positioned our operations of the high end of the market and delivering on this that are critical for the production of leading edge devices.
Based on these factors.
Our margins need to improve we know well what is required to accomplish this.
We're committed to deliver the results of investors as well as we expect.
Moving to the bottom line earnings per share were <unk> 13 cents, our cash balance was steady.
And our strong balance sheet continues to provide her flexibility in managing our value creation strategy moving forward.
We held on our Investor and Analyst day in December.
If you attended the lives of N or listened to the archived webcast. Thank you for your interest and I truly hope you found the presentation helpful.
If you've not yet listened I encourage you to do so.
During that event, we reviewed the kind of likely during the 2018 Investor day, and how we performed against them.
We also look the hit is our investment focus evolves to maintain alignment with market trends the.
The two areas, we highlighted where advanced display technologies in China market growth.
We have three new F. P. D S writing tools that will be installed during 2021.
These will bring us additional capacity to serve our customers who manufacture advanced panels.
These investments should provide us with sequential growth in capacity.
And therefore revenue.
In the second half of 2021.
As stated before we have entered into three multi year purchase agreements the collectively represent of business commitment in excess of $40 million annually to support these investments.
The often comment that the display market is very dynamic this income.
<unk> development and adoption of new technologies the.
The increased penetration of AMOLED displays with smartphones as one example.
As the manufacturers compact combat rather plateauing sales.
By offering premium options such as upgraded displays.
Similarly, the introduction of five G requires of premium display.
With five G capability and feature set.
The resulting transition.
From El TPS, the amyloid requires masks with more layers.
The most basic rigid analyst mezz debt.
Has the only 12 layers, while the most advanced can have up to 25.
The only just the number of layers increase but they were more critical layers within each set.
Further enhancing the value we provide.
Similarly high end technologies of expanding into the large screen television market.
We have seen the ramp of <unk> 10.5, plus form factor, which has come to dominate the production of standard of LCD panels for large screen Tvs.
With this transition largely behind us.
We are currently seeing the commercialization of various OLED displays intended to capture the premium sector of the team the market.
And on part of it approach combines of conventional LCD.
With the mini Leds backplate screen of similar visual experience.
These technologies are good for mass demand because they require more of the mass layers and more critical layers per set pretty more complexity and higher value.
So as the display for the mass market and technology leader, we are well positioned to benefit from these trends.
Shifting to the Chinese IC market, we are in the process of qualifying the final with the litho tool.
From our initial phase of investment and job of it.
The installation of this tool was the late six months because of the supplier self imposed travel restrictions.
Response to COVID-19.
The tool is targeted production of high end photo of masks.
Expectation is that will begin to generate revenue, but he ended the second quarter and ramp through the back half of the year.
China remains a key region of expected growth for the semiconductor industry and of our presence there should position us well to grow with the market.
Over the last three years, our IC revenue.
Of product shipped to China has grown at a compounded annual growth rate of 60%.
And is currently running slightly above the 100 million annually.
We anticipate the their business there will continue to growth and we will remain the merchant foot on the as market leader in China.
We are off to a strong start.
I would like to thank all of our employees for your good work during the first quarter.
Looking forward I continue to believe the 'twenty 'twenty, one will be one of the best years ever for Photronics as we invest to support growing end markets.
Expand our business in advanced display technologies.
Our global customers to meet their product Roadmaps and improved profitability and cash flow to facilitate continue investment in projects that improve our return on capital.
This is kind of I will turn the call over to John.
Thank you Peter good morning, everyone.
Revenue from up 2% compared with the fourth quarter as growth enough to D.
It was partially offset by a decline in IC.
The growth was driven primarily by ample of displays for advanced smartphones.
We have communicated over the last few quarters of the U S ban on Huawei.
The impact on the display the supply chain as design activity stopped while they reacted to the new restrictions.
This affected our fourth quarter. After the results of panel suppliers not required do masks for Huawei phones.
During the first quarter, we saw this disruption ease and the Emerald as demand returns as new phones produced by other manufacturers made their way to the consumer.
I also wanted to pay the demand for LCD masks, including G 10, 45, plus.
Depressed channel producers took advantage of.
The favorable market dynamics by maximizing the output of.
From a product and not releasing new panels.
IC revenue was down slightly compared with the previous quarter is an increase of mainstream as memory growth.
Was offset by reduced high on logic demand, partially due to the industry dynamics Peter mentioned earlier.
In addition, one of our hiring on writing tools and Taiwan was down for an extended period that is true.
Rob will restrictions delayed the repair and returned to production.
On a year over year basis, many of the trends we saw were similar to the sequential trends from the larger decline in the high end logic.
On a smaller increase in the smartphone smartphone displays.
Looking forward, there's a plethora of positive data points from other industries.
Suggest photo of mass demand should increase in 2021.
That combined with the additional capacity we plan to bring online during the second half of the year.
It gives us confidence in our outlook for 2021 of high single digit percentage revenue growth.
The operating profit growth similar to the 23% growth we achieved in 2020.
Gross profit for Q1 was 20% lower than the previous quarter of previous year, driven primarily by unfavorable product mix.
Which we expect to improve and sign on logic demand returns.
Operating expenses were higher sequentially, which is not unusual for the first quarter and within our expectations as a percentage of revenue.
On the operating income line net effects of other income the tax provision of non controlling interests.
More favorable than in comparable periods, resulting in earnings per diluted share.
Of 13 cents from the period.
Our cash balance at the end of the first quarter was $279 million essentially unchanged from the.
The beginning of the quarter.
Operating cash flow was $26 million and we spent $18 million on the capex.
For full fiscal year 2021, we're still forecasting approximately $100 million in Capex as we execute on the next phase of the F. P D capital investment.
We repurchased one 2 million shares of our common stock for the 13 billion of during the quarter, leaving approximately $69 million remaining under our current share repurchase authorization.
On the balance sheet total debt increased by a debt of $33 million, which includes a new equipment lease.
Before I provide second quarter guidance I'll remind you that our visibility is always limited as our backlog is typically the only one to three weeks of demand for some of them of products is it narrows, the uneven and difficult to predict.
Additionally, the Asp's for high end the mask sets of high and as this segment of the business grows the relatively low number of high end the waters fans have a significant impact on our quarterly revenue and earnings.
Geopolitical risk related to government actions to address health concerns of trade policy.
They have an impact on our operations the operations of our customers of suppliers or end market demand, resulting in an adverse impact on our industry and therefore our results.
Given those caveats, we expect second quarter revenue to be in the range of $153 million to $162 million.
We are encouraged by demand trends in our markets and the overall positive commentary, but others in the industry.
The logic recovery as anticipated, but timing is uncertain.
Other markets should continue to grow and we are on track to deliver on 2021 of the targets.
Based on our revenue expectation and our current operating model, we estimate earnings for the second quarter to be on the range of 14 to 20 cents per diluted share.
We have begun 2021 on an encouraging note growing revenue in the seasonally soft period, and leading supply chain challenges.
We are pleased with the performance, but there is room for improvement.
It should improve as we grow revenue further benefiting from the fixed cost absorption and continued focus on removing cost from our supply chain and operations.
During our Investor day in December we presented on a three year target of a little bit of establishes operating margins in the high teens earnings in excess of the dollar a share in free cash flow of approximately 100 millions of dollars.
We're confident that these targets are achievable and look forward to updating you as we move forward.
I will now turn the call over to the operator for your questions.
Ladies and gentlemen, if you have questions at this time. Please press Star then the number one key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
Your first question comes from the line of Tom.
The following with D. A Davidson can we don't ask the question.
Yeah good morning.
I guess the first one on just to look into the mainstream market for you. Obviously, it's still a big part of your revenue what are you seeing as far as industry capacity and what are the pricing trends in growth trends you see there.
Yeah.
Yeah, our mainstream Uh huh.
The main stream the mainstream market right now.
You know, particularly.
In Asia for Us is very strong.
So the.
Of our capacity Inc.
In Korea.
The Taiwan and.
In China. It was sold out in the in the current quarter U S in Europe the.
But throughout Asia.
We're in an oversold.
The situation.
And if you look relative to.
Yeah.
Historical.
Behavior.
Probably the first time in my 35 years anyways were.
I see what we see.
The significant investment being made in legacy nodes.
Seeing the before so the market is.
You know oversold per foot on masks and there's more capacity.
Coming on line.
So this also sets the stage.
The.
Do things that we've picked the we never been able to do in the mainstream which is the start to.
You know nibble debt.
You know raising prices.
So we're in a dynamic of where are we expect to see.
We expect to see pricing.
Move up instead of down.
In the mainstream market segment and that should.
Yes.
The start to happen in the current quarter and as we step through the year.
We'll see how far we can take the won't have a big impact on revenue necessarily but we will have a disproportionate effect on profitability.
So all of these nuts.
Yes, obviously, we like that trend right.
That's right.
Yeah Yeah.
We like that trend.
Okay, great. Thanks, Peter in the.
Follow up you talked about $40 million of annual contracts right now.
Few large flat panel customers. When you look at phase two do you typically get into those contracts are ahead of time.
And so they're kind of in place for when you spend the money to put in another light or what are they did they make sure for the new like go ahead.
Yeah, It's a mix it's the mix of the two.
As far as high of PD business is concerned.
The mine.
Remind you debt for a couple of years running.
We were part of it.
Sold out and our SVP of business Q4 on the Q3 call. We said, we expected Q4 not to be sold out which.
Was for US you know of dislocation and indeed, it happened as we expected.
It would be.
Then when we got on the Q4 call and then our analyst day, a day or two later, what we said was November.
Was it a month of still the months of grim.
The market.
And the December by the time, we had those calls we were able to sell of our capacity.
And that's obviously continued through the quarter. So F. P D revenues this quarter.
Reflect one month of you know kind of crappy market and two months not at the.
What I would describe as the strong market, but strong for us because of our position, particularly anomalous.
So.
We.
Project forward, you know as I said, we expect a lot of.
And will the capacity to.
To come on line.
The particularly in China, right, we estimate.
For our customers of doubling more or less from the beginning of the year to the end.
And were you know, bringing this capacity.
On line right into the midst of the.
The capacity ramp.
Which the service I think you know very well so what we the.
Tools are.
So if you look at our analyst day of Street Litho tools, you know two or two are slated to be delivered in the current quarter.
Because of the short qualification cycles, we expect to ramp both of those tools in the third quarter by the fourth quarter, they should be fully sold out.
Yeah, well, we'll sip of basically we think as soon as we can get them on line, they're gonna be sold out.
The third tool is being installed in the third quarter so of buy.
It should be ramping into the fourth quarter.
So anyways the I'm the lead capacity we're installing.
This year as soon as it comes on line.
We believe we should be able to.
The fill it and the entire factory for the rest of the year.
We believe.
The should be fully sold.
So we're feeling good about.
Amyloid in.
What should constrain or revenues as our ability to install and ramp those new tools.
Right so yeah.
And unlike you know.
Yeah, John made some remarks, if you look at our global cost structure.
The capacity additions, we're making this year or more or less point tools.
Not lives. So 0.2 installations have you know more financial leverage than we have to do what we just did in China, right, which is.
The build factories and install lines that where the lion's share of the Capex. There is not fully utilized so the second wave and.
And her Fay.
Should you know help US you know.
Effectively you know grow into and fully leverage our cost structure there yeah.
Okay great.
The squeeze one more in for John when you look at the single digit revenue growth, but the 23% or so.
The operating.
Leverage.
Is that just kind of normal operating leverage for you or is it some special things going on this year that creates a little bit higher leverage than you would normally see.
The hotel, which we should see opex.
Opex improve as a percentage of revenue to the year of first quarters generally.
Kind of a conflict with the Opex with the.
Employer taxes et cetera.
We are reinstating and then with on a regular normal operating leverage through the rest of the year, we should be a pretty.
Pretty comfortably within the range that we are the.
<unk> discussed the 20.
The low to mid 20%.
So the increase of these new tools doesn't ramped up your Cogs meaningfully.
Well you know, we only start depreciation as we qualify and start generating revenue from those tools some of.
We have a fairly close match of.
The depreciation was the revenue and it's just it's a smaller portion of the depreciation coming on so on the operating leverage will still of.
The 50% farmed out of.
Great Okay, well, that's true type of thing.
Thank you.
Thank you Jill.
Your next question comes from the line of Patrick Ho with Stifel. So we don't ask the question.
Alright, Thank you very much Peter maybe first off in terms of the high end.
Mitch on excuse me the high end IC business can you talk about recovery are you seeing it where are you seeing it in specific markets of the potential recovery and could it be a steep ramp.
When it does finally the public.
Yeah, Yeah yeah.
Inc.
You know Patrick right I think you know the way we have a really.
Strong global team.
It has reacted and does historically and continues to react very quickly to shifts in the market.
And likewise, just the very seasoned.
Team. So if we look at our memory business. For example, you know John commented on it it snapped back just like you would expect it on a normal upturn. So wound you know memory business.
So on.
So traditional logic business, you know different story like beef.
Talked about the mainstream where over the last two to three years and over the next certainly one to two years, we see.
The new capacity coming on line so the mainstream market.
He is oversold.
<unk>.
I've never seen the 35 years, oversold and likely to stay that way.
On the other hand, if you look at the high end logic I think as you know well right there.
There is a problem, they're not part of our customers, but for their customers because of there's a shortage.
Of high end logic capacity I think that now.
It's well understood.
On the capital equipment, guys, right or selling of Fistful of tools right I think we had.
No.
The bookings of 3 billion right in a month in January on think that's ever happened before.
And those tools.
Largely you know many of them being installed in the Asian foundries.
Which right now on.
Are you running Inc. The.
The current designs.
In general quite hard you know trying to.
Keep their customers happy so yeah. If you look at how the high end logic market is behaving it looks like to me the kind of cycled. The ISO 15 years ago, where the business would turn up right the customers would react to the upturn in business.
By building current products and then as they added capacity, we would see a significant uplift in our business because now you know inventory starting to build a little people are more comfortable the new designs debt you know they kept them on the shelf for the quarter. So you know break.
Accounts.
That's that's what the whole business when it was more diversified with many more manufacturers looked like 15 years ago that was the classic cycle for the entirety of our business, we see that classic cycle now we haven't seen it pretty you know at least 10 years, but we see it.
Now in the high end logic sector the designs, they're sitting there they're going to get released.
And they're gonna get released when.
Our customers are doing a better job of keeping their customers happy so yes that will be slightly steeper step up and it'll be reminiscent of the days of old.
So what we see this year is every quarter successively being a better quarter. That's what we see both in our S. T D.
In our IC business and that's what we.
That's what we said during our analyst day, that's what we said on the last call and the only thing that's happened really to change our view between then and now is the interest.
The information flow is incrementally more positive.
So yeah, it's an interesting time right with markets doing and behaving in different ways, but if you look the.
Back over many years each market you look at you can see the.
The reasons for why what is happening is happening so it's an interesting.
Total it you know time, but theres lots of opportunity.
There I think the for us.
Quarter by quarter.
And the capacity we have coming on line.
You know when we bought it we made the purchase decisions.
No it wasn't.
The completely clear what was going to happen the agenda that I think we have the right pieces on the board in the right places to.
Maximize the financial outcome of the current trends in the various markets we participated.
So we're feeling pretty.
Yeah pretty good about the about the business and the belt the markets on.
This year for sure yeah.
Great. That's helpful. Peter maybe as a follow up question.
You talked about the strength in the the mainstream IC business, which again, it's not of Bay, just surprised given the market environment. We're in today.
Maybe related to some of the comments you made about our high end IC. The how are you know historically, it's been driven by new design wins.
Aside from the strong demand and the need for new mats to keep up with.
I get the the main trends out there are you seeing any new designs on the mainstream IC and what I'm trying to get at that is we're seeing more silicon content in markets like automotive.
They are also the.
The other types of against Silicon content increases in different marketplaces are you seeing any design wins on the mainstream IC side.
Yeah that debt.
You know.
Okay.
The the yeah. The answer is yeah, that's right. So I think most.
Nearly all of the automotive applications are not high end or at least the way we define high and it's 28 net below the automotive applications the <unk>.
High end of automotive.
Yeah, It might touch right the 28 nanometer node, but in general it's the.
The older we've of coal older older nodes.
So this is the market.
Where historically when you saw on upturn.
The business would get better.
But it wouldn't be new capacity coming on line.
I think it's very clear Brexit now.
And for the last of year or two.
There's been there are investments being made in the new mainstream fabs.
And those investments are being driven.
Driven by increased demand at the nodes not just for the existing products.
But for new ones.
And I think the point you made by the new car I think today is $800 of silicon content in it on average.
If you go to the high on car, it's much more and as we go shift from the internal combustion engine to you'll the hybrid and electrification model, there's gonna be a boatload of <unk>.
Our electronics.
That's all mainstream.
I mean, some of the the China.
Some of the chips.
Or are you now.
Or I need a couple of inches in diameter.
Great for the switching electronics, so yes, this what's going on in the automobile industry.
Is he is going to create dislocations in our industry the.
No, we don't think any of us ever seen.
So and you could see the capex.
Being adjusted.
To.
Yes.
In advance of it.
So yeah. This is the which is interesting times.
Alright your next question.
Yeah.
Yeah.
Alright, again, ladies and gentlemen, if you have the question at this time. Please press Star then the number one key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key your net.
Question comes from the line of Richard with Northland, You May now ask your question.
Yes, thanks for taking the question.
Just in terms of the gross margin in the first quarter was down 230.
The Bips sequentially and then you had some tools down and it was the weaker mix could you parse those out and just give us a little bit of guidance on as to which was the bigger impact or the or the mix between those impacts.
Yeah.
Yeah, I don't know that we would say one is bigger than the other we'd have the it was the.
The decline of the high end, IC, which and we have the slides kind of lower geometry product up to a higher level of machine sitting on them.
F P D Who's had the you know on.
Some unabsorbed overheads of.
I don't know that I the way one effect on the margin more than the other.
Okay and then.
In terms of Ah it sounded like some of your competitors are adding.
On capacity for mature markets.
Given most of the.
I've been in the market is fully depreciated can those new assets on the.
At current prices and be profitable.
No I mean, I think I think what.
So you know the two.
Just go back on you know clarify one of John's comments. So we saw a high end logic demand weak. So what we did is we the mainstream demand very strong. So what we did was we slid we basically split of our capacity where we took.
Basically.
We kind of moved everything of tool up to keep from do our best to try to maximize our market share.
It's the high end demand resumes will push that all back down you can see the effect on our margins right in the anyone who tries to do the same thing is going ahead of the same outcome right to the extent you use.
The more expensive tools the brain Billboard of S peak product margins, if they get compressed and today, it's not feasible.
By a new mainstream line.
It had it make money at current pricing, it's not feasible, but what the industry will do is what we.
We are doing and what we planned for last year and that is if you look at our maintenance Capex is.
Largely targeted at the mainstream market.
And it's there to debottleneck.
The lines that we existing loans that we have so we can get a little you know finding.
Financially viable capacity uplift in the mainstream.
The pudding, but.
Putting the right tools and the right location, but you know what can we squeeze out of I don't know another 10% maybe 15.
About and then we're done you know and I think our competitors are in a very similar situations. They can do what we're doing out of point tool to align Jean incrementally more capacity, but then they're going to be done.
So.
And the consequence of that.
I think.
Which I think you've highlighted is prices have to go up.
And they'll go up until you can add new capacity and make money right how much of that is.
So I think we've we've run models, but it's it's it's not small.
Got it got it so what what you're painting the picture of us.
The high end sales up in the back half and designs or at least juvenile.
You're going to see a significant uplift in utilization.
In the.
Both mature and high end and the prices should go up and this should be a very favorable trend from margins walking through the year.
Yes, basically will be.
Well slide.
All of them the mainstream business down off the high end tools in the brief fill those tools with the high end logic in Asia. That's one trend another trend is.
It's undeniable that prices will start to or starting in fact, we started after Chinese new year.
With select customers.
We're there.
To start the race mainstream pricing.
I've been doing this for 35 years I've never been able to do that before.
So, but we can do it.
We can do that because everybody is sold out.
Everybody not just photronics everybody.
Got it and then last question.
On climate change.
You know there was this cold snap in Texas, a lot of water damage power out et cetera et cetera.
Thank you have a plant in round rock.
And it's just the.
Wondering was that plant impacted you know is back up and running just any any color there.
Yeah, So yeah, both we and our.
Our largest.
Petitor.
Have you know factories in Texas.
And.
We were both impacted their factory was down for a week as far of factory was down we were offline based on the based on lots of power for about a day.
And the impact of the loss of tower more or less of a depressed output for the best part of a week. So we lost about half of our output in the as a result of Oh, the dislocation in the public right. So on one hand, we're happy we outperformed our competitor who was.
Down hard the entire period on the other.
It did have a impact on.
Our revenues and that's already been baked into the guidance.
So there's nothing nothing nothing that we know of you know beyond that the.
You don't already know.
See the financial consequences of.
So yes.
Yes.
It wasn't a good it wasn't good for us it was worst for a competitor of course, we have several.
He can customers.
The Texas in particular index team, which was the old Freescale, which was the old Motorola and Samsung both of the scope and also in Sydney on.
All three offline for basically for a solid week of now trying to recover our production.
Yeah.
Got it and then we used the matter is when you get better we did better than all of its like the you were still affected yep.
Yeah, and then just last one from me you know you've had some issues getting things.
Things installed prepared because of quarantine and Covid I'm on.
Those issues behind you at this point or you still.
Troubling to get you know the vendors in the do stuffs.
Yes, so the problems with installations we.
Hooper.
Behind us.
No difference.
Uh huh.
But but.
Yeah, we think the installation issues are behind us because there's.
There's kind of one category of vendor that has struggled more than.
Others regarding Covid, we still gonna have a you know I think some issues related to.
The inability of.
Uh huh.
The travel constraints.
Posed by Covid because not every.
The vendor for the photo of me ask industry has fully capable people.
In all the regions, where we operate.
So.
This is going to be a kind of a nagging headache for another quarter or two.
As the we're already seeing with infection rates dropping as the vaccination.
A cross section of the countries, we do business and.
Increases the problems, we've been fighting for for Us right.
Started in per se.
The more than a year ago, we've been fighting with these struggles for a year.
We've done a very good job in mitigating the.
The impact but the.
We kind of see of tail settle with another quarter or two.
And the good news is as the build.
That high end, it's of nine K in German.
That's the very high end evening right that was delayed.
It was the installation of the final acceptance of that tool was.
At the end of the always beginning at the end of October the last day of October.
So we've been working to qualify that tool.
It is oh.
The qualification period is completed it should ramp right into what we think is the ramp in the high end logic market now that might be lucky I don't know, but the tool was always intended.
For a job then.
And you know the rest of the costs that are needed to meet the support that tool is already you know dragging our income statement and once the tools installed the leverage of it financially should be high.
Right so.
Anyways.
Fact that it was delayed isn't the worst thing on the world given the softness in the high end logic market, we're presently seeing.
Yeah, maybe we got lucky on that one yeah.
Got it got it okay. Thanks, so much.
Thank you ladies and gentlemen, there are no further question at this time I will now turn the call over to Peter Kirlin for closing comments.
Yeah.
Thank you for taking the time to join US. This morning, we truly appreciate your interest photronics is well positioned to grow revenue earnings and cash flow this year.
Extending our market and technology leadership positions in moving us towards our long term financial targets.
Look forward to updating you on our success as the year progresses.
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Yeah.
Ladies and gentlemen that concludes the conference call for today, we thank you for your participation in the past the peak from a camera.
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Yeah.
Okay.
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Hello.
Hello.