Press Release

• Record first-quarter sales of $130.0 million, up 5% compared with last year and the seventh consecutive quarter of year-over-year revenue growth
• Net income of $21.0 million ($0.28 per diluted share) includes a non-recurring net gain of $8.8 million ($0.11 per diluted share)
• FPD sales increased 37% year-over-year, with high-end FPD sales up 56%
• EBITDA of $49.7 million, up 46% from the first quarter of 2015
• Net cash of $101 million, up $28 million sequentially, providing financial strength and flexibility to fund growth
• Second quarter 2016 guidance: sales between $120 and $130 million; diluted EPS between $0.08 and $0.16

BROOKFIELD, Conn.--(BUSINESS WIRE)-- Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in supplying innovative imaging technology solutions for the global electronics industry, today reported financial results for fiscal 2016 first quarter ended January 31, 2016.

First quarter sales were $130.0 million, up 5% compared with last year, and down 8% sequentially. Sales of IC photomasks were $99.8 million, down 2% from the same period last year and 11% from last quarter, while sales of flat panel display (FPD) photomasks were $30.2 million, up 37% compared with last year and flat sequentially. GAAP net income attributable to Photronics, Inc. shareholders was $21.0 million, or $0.28 per diluted share, including a non-recurring net gain of $8.8 million ($0.11 per diluted share) on the sale of investment in a foreign entity, compared with $3.8 million, or $0.06 per diluted share, for the first quarter of 2015. Excluding the gain, non-GAAP net income attributable to Photronics, Inc. shareholders was $12.2 million, or $0.17 per diluted share, compared with $4.7 million, or $0.07 per diluted share, for the first quarter of 2015, excluding net financing expenses.

"Despite a challenging macroeconomic environment, we executed well and were able to achieve record first-quarter sales," stated Peter Kirlin, chief executive officer. "Continuing the trend from 2015, demand for high-end memory and FPD masks was strong. Demand for high-end logic masks, which can be uneven when transitioning to new nodes, was soft due to slower product launches from Asian foundries. Mainstream IC was down globally due to Asian foundry softness and a greater-than-normal seasonal downturn in the US and Europe. These factors contributed to net income well above last year's results but off from the record-setting fourth quarter. We also built upon our already solid cash balance, lifting our net cash position to $101 million. All said, I believe our results were very good given the environment we faced, and I'm still very confident in our long-term ability to achieve profitable growth."

Second Quarter 2016 Guidance

Kirlin continued, "Looking into the second quarter, we expect continued strong demand from high-end memory and FPD. We anticipate continued softness in high-end logic due to low demand from Asian foundries, as well as potential headwinds in Asia due to the Chinese New Year." For the second quarter of 2016, Photronics expects revenues to be between $120 million and $130 million and net income attributable to Photronics, Inc. shareholders to be between $0.08 and $0.16 per diluted share.

Non-GAAP Financial Measures

Non-GAAP net income attributable to Photronics, Inc. shareholders and non-GAAP earnings per share are "non-GAAP financial measures," as such term is defined by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. The attached financial supplement reconciles non-GAAP financial information with Photronics, Inc.'s financial results under GAAP. Photronics, Inc. believes that non-GAAP net income attributable to Photronics, Inc. shareholders and non-GAAP earnings per share that exclude certain non-cash or non-recurring income or expense items are useful for analysts and investors to evaluate Photronics, Inc.'s future on-going performance because they enable a more meaningful comparison of Photronics, Inc.'s projected earnings and performance with its historical results of prior periods. These non-GAAP metrics, in particular non-GAAP net income attributable to Photronics, Inc. shareholders and non-GAAP earnings per share, are not intended to represent funds available for Photronics, Inc.'s discretionary use and are not intended to represent, or be used as a substitute for, operating income, net income or cash flows from operations data as measured under GAAP. The items excluded from these non-GAAP metrics, but included in the calculation of their closest GAAP equivalent, are significant components of the consolidated statements of operations and must be considered in performing a comprehensive assessment of overall financial performance. Non-GAAP financial information is adjusted for the following items:

• Non-recurring net gain on sale of investment in fiscal 2016
• Financing expenses in fiscal 2015 related to the exchange of convertible senior notes

The presentation of this financial information should not be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States. The attached financial supplement reconciles non-GAAP financial information with Photronics, Inc.'s financial results under GAAP.

Conference Call

A conference call with investors and the media to discuss these results is scheduled for 8:30 a.m. Eastern Time on Wednesday, February 24, 2016. The call can be accessed by logging onto Photronics' web site at www.photronics.com. The live dial-in number is (877) 377-7095, or (408) 774-4601 outside of the United States and Canada. The call will be archived on Photronics' web site for instant replay access.

About Photronics

Photronics is a leading worldwide manufacturer of photomasks. Photomasks are high precision quartz plates that contain microscopic images of electronic circuits. A key element in the manufacture of semiconductors and flat panel displays, photomasks are used to transfer circuit patterns onto semiconductor wafers and flat panel substrates during the fabrication of integrated circuits, a variety of flat panel displays and, to a lesser extent, other types of electrical and optical components. They are produced in accordance with product designs provided by customers at strategically located manufacturing facilities in Asia, Europe, and North America. Additional information on the Company can be accessed at www.photronics.com.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements made by or on behalf of Photronics, Inc. and its subsidiaries (the Company). The forward-looking statements contained in this press release and other parts of Photronics' web site involve risks and uncertainties that may affect the Company's operations, markets, products, services, prices, and other factors. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental, and technological factors as well as decisions we may make in the future regarding our business, capital structure and other matters. These forward-looking statements generally can be identified by phrases such as "believes", "expects", "anticipates", "plans", "projects", and similar expressions. Accordingly, there is no assurance that the Company's expectations will be realized. For a fuller discussion of the factors that may affect the Company's operations, see "Forward Looking Statements" in the Company's Quarterly and Annual Reports to the Securities and Exchange Commission on Forms 10-Q and 10-K. The Company assumes no obligation to provide revisions to any forward-looking statements.

03-2016

PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
			Three Months Ended
			January 31,					February 1,
			2016					2015
Net sales			$	129,956				$	123,505
Costs and expenses:
Cost of sales				(94,520	)				(95,321	)
Selling, general and administrative				(12,198	)				(11,944	)
Research and development				(5,700	)				(4,681	)
Operating income				17,538					11,559
Gain on sale of investment				8,785					-
Other income (expense), net				878					(1,283	)
Income before income taxes				27,201					10,276
Income tax provision				(3,700	)				(3,134	)
Net income				23,501					7,142
Net income attributable to noncontrolling interests				(2,499	)				(3,305	)
Net income attributable to Photronics, Inc. shareholders			$	21,002				$	3,837
Earnings per share:
Basic			$	0.31				$	0.06
Diluted			$	0.28				$	0.06
Weighted-average number of common shares outstanding:
Basic				66,807					66,066
Diluted				79,136					67,020

PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
			January 31,				November 1,
			2016				2015
Assets
Current assets:
Cash and cash equivalents			$	231,444			$	205,867
Accounts receivable				99,936				110,056
Inventories				21,760				24,157
Other current assets				19,840				24,034
Total current assets				372,980				364,114
Property, plant and equipment, net				519,272				547,284
Investment in joint venture				92,931				93,021
Intangible assets, net				23,184				24,616
Other assets				14,983				16,520
			$	1,023,350			$	1,045,555
Liabilities and Equity
Current liabilities:
Current portion of long-term borrowings			$	63,955			$	65,495
Accounts payable and accrued liabilities				102,410				127,197
Total current liabilities				166,365				192,692
Long-term borrowings				66,224				67,120
Other liabilities				23,298				23,677
Photronics, Inc. shareholders' equity				653,065				646,555
Noncontrolling interests				114,398				115,511
Total equity				767,463				762,066
			$	1,023,350			$	1,045,555

PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
			Three Months Ended
			January 31,					February 1,
			2016					2015
Cash flows from operating activities:
Net income			$	23,501				$	7,142
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization				20,628					20,854
Gain on sale of investment				(8,785	)				-
Changes in assets, liabilities and other				8,044					(5,696	)
Net cash provided by operating activities				43,388					22,300
Cash flows from investing activities:
Purchases of property, plant and equipment				(21,539	)				(40,371	)
Proceeds from sale of investments				8,785					-
Other				193					43
Net cash used in investing activities				(12,561	)				(40,328	)
Cash flows from financing activities:
Repayments of long-term borrowings				(2,437	)				(2,367	)
Proceeds from share-based arrangements				2,063					768
Net cash used in financing activities				(374	)				(1,599	)
Effect of exchange rate changes on cash				(4,876	)				(4,692	)
Net increase (decrease) in cash and cash equivalents				25,577					(24,319	)
Cash and cash equivalents, beginning of period				205,867					192,929
Cash and cash equivalents, end of period			$	231,444				$	168,610

PHOTRONICS, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands, except per share data)
(Unaudited)
			Three Months Ended
			January 31,					February 1,
			2016					2015
Reconciliation of GAAP to Non-GAAP Net Income
Attributable to Photronics, Inc. Shareholders
GAAP net income attributable to Photronics, Inc. shareholders			$	21,002				$	3,837
(a) Gain on sale of investment, net of tax				(8,753	)				-
(b) Financing expenses, net of tax				-					901
Non-GAAP net income attributable to Photronics, Inc. shareholders			$	12,249				$	4,738
Reconciliation of GAAP to Non-GAAP Net Income
Applicable to Common Shareholders
Weighted average number of diluted shares outstanding
GAAP				79,136					67,020
Non-GAAP				79,136					67,020
Net income per diluted share
GAAP			$	0.28				$	0.06
Non-GAAP			$	0.17				$	0.07
(a) Represents gain on sale of investment in a foreign entity
(b) Represents financing expenses related to the exchange of $57.5 million of 3.25% convertible senior notes

PHOTRONICS, INC. AND SUBSIDIARIES
Non-GAAP Financial Measure
Reconciliation of GAAP Net Income to Non-GAAP EBITDA
(in thousands)
(Unaudited)
			Three Months Ended
			January 31,				February 1,
			2016				2015
GAAP Net Income (a)			$	23,501			$	7,142
Add: interest expense				1,174				1,370
Add: income tax expense				3,700				3,134
Add: depreciation and amortization				20,457				20,607
Add: special items (b)				897				1,826
Non-GAAP EBITDA			$	49,729			$	34,079
(a) Includes net income attributable to noncontrolling interests, and in 2016 includes gain on sale
of investment in a foreign entity
(b) Special items consist of stock compensation expense, and in 2015 includes financing expenses
in connection with the exchange of $57.5 million of 3.25% convertible senior notes

View source version on businesswire.com: http://www.businesswire.com/news/home/20160224005304/en/

Photronics, Inc.
R. Troy Dewar, CFA, 203-740-5610
Director, Investor Relations
tdewar@photronics.com

Source: Photronics, Inc.

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