Press Release

Photronics Reports Fourth Quarter Fiscal 2019 Results

December 11, 2019 at 6:00 AM EST
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  • Fourth quarter 2019 revenue increased 13% sequentially and 8% year-over-year to $156.3 million, a record overall and for both IC and FPD photomasks
  • Effective cost control and operating leverage at the increased revenue level helped expand operating margin to 13.7%
  • Net income attributable to Photronics, Inc. shareholders was $9.7 million, or $0.15 per diluted share
  • Cash provided by operating activities was $48.3 million, resulting in a cash balance of $206.5 million
  • 1.0 million shares were repurchased for $11.0 million
  • First quarter 2020 guidance: revenue between $146 and $154 million with diluted EPS between $0.13 and $0.18

BROOKFIELD, Conn., Dec. 11, 2019 (GLOBE NEWSWIRE) -- Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its fiscal 2019 fourth quarter ended October 31, 2019.

Fourth quarter revenue was $156.3 million, 13% better than the previous quarter and 8% better than the same quarter last year. Integrated circuit (IC) revenue was a record $112.5 million, up 12% sequentially and 1% compared with the fourth quarter of last year. Flat panel display (FPD) revenue of $43.7 million was also a record, up 15% compared with last quarter and 29% compared with the same period last year.

Net income attributable to Photronics, Inc. shareholders was $9.7 million ($0.15 per diluted share), compared with $6.3 million ($0.10 per diluted share) for the third quarter of 2019 and $12.5 million ($0.18 per diluted share) for the fourth quarter of 2018.

"Fourth quarter revenue was a record for us, marking the ninth consecutive quarter of year-over-year revenue growth and propelling us to record annual revenues for the second successive year. Design activity was robust across the majority of our customer base, and we continued to ramp production at two new manufacturing facilities in China,” said Peter Kirlin, chief executive officer. “IC and FPD revenues were both a record. FPD benefited from strong mobile display markets and growing G10.5+ production, and IC saw an acceleration of design activity in China. Gross and operating margins improved sequentially due to high operating leverage and tight cost controls. During the quarter, we resumed our share repurchase activity while also growing our cash balance on strong operating cash generation. 2019 was a great year for Photronics, achieving record revenue, maintaining a strong balance sheet, demonstrating a commitment to return cash to our shareholders, and establishing a solid manufacturing presence in the rapidly growing China market. We are well positioned to build on this strength in 2020 and beyond.”

First Quarter 2020 Guidance

For the first quarter of 2020, Photronics expects revenue to be between $146 million and $154 million, and net income attributable to Photronics, Inc. shareholders to be between $0.13 and $0.18 per diluted share.

Conference Call

A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, December 11, 2019. The call can be accessed by logging onto Photronics' website 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’ website for instant replay access.

About Photronics

Photronics is a leading worldwide manufacturer of integrated circuit (IC) and flat panel display (FPD) photomasks. High precision quartz plates that contain microscopic images of electronic circuits, photomasks are a key element in the IC and FPD manufacturing process. Founded in 1969, Photronics has been a trusted photomask supplier for 50 years. As of October 31, 2019, the company had 1,775 employees. The company has 11 strategically located manufacturing facilities in Asia, Europe, and North America. Additional information on the company can be accessed at www.photronics.com.

Forward-Looking Statements

Certain statements in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements made by or on behalf of the company and its subsidiaries. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Photronics to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate,” “will,” “should,” “would,” “may” and “could” or similar words or expressions are generally forward-looking in nature and not historical facts. Any statements that refer to outlook, expectations or other characterizations of future events, circumstances or results, including all statements related to the operation or effects of the Section 382 Rights Plan and to the use of NOLs to offset future taxable income, are also forward-looking statements. Important risks, assumptions and other important factors that could cause future results to differ materially from those expressed in the forward-looking statements are specified in Photronics’ Annual Report on Form 10-K for the year ended October 31, 2018 and its most recent Quarterly Report on Form 10-Q for the period ended July 28, 2019 under headings such as “Forward-Looking Statements”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other filings and furnishings made by Photronics with the Securities and Exchange Commission from time to time. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental, political, and technological factors as well as decisions we may make in the future regarding our business, capital structure and other matters. Photronics undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. There is no assurance that Photronics’ expectations will be realized.

For Further Information:
R. Troy Dewar, CFA
Vice President, Investor Relations
(203) 740-5610
tdewar@photronics.com

PHOTRONICS, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)

  Three Months Ended   Year Ended
  October 31,   July 28,   October 31,   October 31,   October 31,
    2019       2019     2018     2019     2018
                   
Revenue $ 156,257     $ 138,112     $ 144,660   $ 550,660     $ 535,276
                   
Cost of goods sold   118,098       107,542       109,236     429,819       403,773
                   
Gross profit   38,159       30,570       35,424     120,841       131,503
                   
Operating Expenses:                  
                   
Selling, general and administrative   12,140       13,124       13,504     52,326       51,395
                   
Research and development   4,543       4,046       3,906     16,394       14,481
                   
Total Operating Expenses   16,683       17,170       17,410     68,720       65,876
                   
Operating income   21,476       13,400       18,014     52,121       65,627
                   
Other (expense) income, net   (6,111 )     (348 )     2,307     (1,420 )     2,944
                   
Income before income taxes   15,365       13,052       20,321     50,701       68,571
                   
Income tax provision   2,327       3,218       3,552     10,210       7,335
                   
Net income   13,038       9,834       16,769     40,491       61,236
                   
Net income attributable to noncontrolling interests   3,338       3,487       4,282     10,698       19,181
                   
Net income attributable to Photronics, Inc. shareholders $ 9,700     $ 6,347     $ 12,487   $ 29,793     $ 42,055
                   
Earnings per share:                  
                   
Basic $ 0.15     $ 0.10     $ 0.18   $ 0.45     $ 0.61
                   
Diluted $ 0.15     $ 0.10     $ 0.18   $ 0.44     $ 0.59
                   
Weighted-average number of common shares outstanding:                  
                   
Basic   66,230       66,313       67,894     66,347       68,829
                   
Diluted   66,862       66,570       73,921     69,155       74,821
                   

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

  October 31,   October 31,
  2019   2018
       
Assets      
       
Current assets:      
Cash and cash equivalents $ 206,530   $ 329,277
Accounts receivable   134,454     120,515
Inventories   48,155     29,180
Other current assets   49,634     23,759
       
Total current assets   438,773     502,731
       
Property, plant and equipment, net   621,195     571,781
Intangible assets, net   7,870     12,368
Other assets   50,827     23,129
       
Total assets $ 1,118,665   $ 1,110,009
       
       
       
Liabilities and Equity      
       
Current liabilities:      
Debt $ 10,873   $ 57,453
Accounts payable and accrued liabilities   141,081     133,623
       
Total current liabilities   151,954     191,076
       
Long-term debt   41,887     -
Other liabilities   13,732     14,364
       
Photronics, Inc. shareholders' equity   769,892     759,671
Noncontrolling interests   141,200     144,898
Total equity   911,092     904,569
       
Total liabilities and equity $ 1,118,665   $ 1,110,009
       

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

  Year Ended
  October 31,   October 31,
    2019       2018  
       
Cash flows from operating activities:      
Net income $ 40,491     $ 61,236  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization   83,879       84,333  
Share-based compensation   3,680       3,180  
Changes in operating assets, liabilities and other   (56,210 )     (18,182 )
       
Net cash provided by operating activities   71,840       130,567  
       
Cash flows from investing activities:      
Purchases of property, plant and equipment   (177,191 )     (92,585 )
Government incentives   22,364       1,005  
Other   (33 )     711  
       
Net cash used in investing activities   (154,860 )     (90,869 )
       
Cash flows from financing activities:      
Proceeds from debt   54,633       -  
Contribution from noncontrolling interest   29,394       17,996  
Repayments of debt   (61,319 )     (4,639 )
Dividends paid to noncontrolling interests   (45,050 )     (8,166 )
Purchase of treasury stock   (21,696 )     (23,111 )
Proceeds from share-based arrangements   2,071       4,634  
Other   (92 )     (519 )
       
Net cash used in financing activities   (42,059 )     (13,805 )
       
Effect of exchange rate changes on cash, cash equivalents, and restricted cash   2,381       (4,840 )
       
Net (decrease) increase in cash, cash equivalents, and restricted cash   (122,698 )     21,053  
Cash, cash equivalents, and restricted cash, beginning of period   331,989       310,936  
       
Cash, cash equivalents, and restricted cash, end of period $ 209,291     $ 331,989  
       

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Source: Photronics, Inc.