Press Release

Photronics Reports Third Quarter Fiscal 2023 Results

September 6, 2023 at 6:30 AM EDT
PDF Version

BROOKFIELD, Conn., Sept. 06, 2023 (GLOBE NEWSWIRE) -- Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its third quarter of fiscal year 2023 ended July 30, 2023.

“The Photronics team performed well in the third quarter, maintaining strong margins in an environment where we experienced a temporary demand slowdown in some of our end markets,” said Frank Lee, chief executive officer. “Revenues increased 2% over the prior year quarter and were slightly lower than the record levels in the second quarter of this year. IC declined sequentially as softer mainstream demand more than offset high-end growth in Asia. FPD high-end demand was lower as strong AMOLED sales were offset by lower LTPS and G10.5+.

“Despite lower revenue, we maintained good profit margins and once again drove strong cash flow generation, further strengthening the balance sheet to fund our strategic growth initiatives and navigate the industry downturn. The long-term photomask demand outlook remains positive, driven by several secular drivers that support robust design activity for new devices and ongoing trends to onshore semiconductor production in response to rising geopolitical risks. As the world’s largest merchant photomask manufacturer, we are well positioned to benefit from these ongoing trends.”

Third Quarter Fiscal 2023 Results

  • Revenue was $224.2 million, up 2% year-over-year and down 2% sequentially
  • GAAP net income attributable to Photronics, Inc. shareholders was $27.0 million, or $0.44 per diluted share, compared with $31.2 million, or $0.51 per diluted share in the third quarter 2022 and $39.9 million, or $0.65 per diluted share in the second quarter of 2023
  • Non-GAAP net income attributable to Photronics, Inc. shareholders was $31.6 million, or $0.51 per diluted share, compared with $28.9 million, or $0.47 per diluted share in the third quarter 2022 and $32.9 million, or $0.54 per diluted share in the second quarter of 2023
  • IC revenue was $163.1 million, up 1% year-over-year and down 2% sequentially
  • FPD revenue was $61.1 million, up 4% from the same quarter last year and down 2% sequentially
  • Cash generated from operating activities was $85.9 million, and cash invested in organic growth through capital expenditures was $21.1 million
  • Cash balance at the end of the quarter was $448.5 million, with $27.3 million in short-term investments and $26.7 million in debt

Fourth Quarter Fiscal 2023 Guidance

For the fourth quarter of fiscal 2023, Photronics expects revenue to be between $222 million and $232 million and non-GAAP net income attributable to Photronics, Inc. shareholders to be between $0.51 and $0.59 per diluted share.

Webcast

A webcast to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, September 6, 2023. The call will be broadcast live and on-demand on the Events and Presentations link on the Photronics website. Analysts and investors who wish to participate in the Q&A portion of the call should click here. It is suggested that participants register fifteen minutes prior to the call's scheduled start time.

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 over 50 years. As of October 31, 2022, the company had 1,828 employees. The company operates 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” regarding our industry, our strategic position, and our financial and operating results. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results, performance or achievements to differ materially. Please refer to the documents we file with the Securities and Exchange Commission. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in these forward-looking statements. These certain factors can be found at www.photronics.com/riskfactors. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forward-looking statements after the date of this release to conform these statements to actual results.

Non-GAAP Financial Measures

Non-GAAP Net Income attributable to Photronics, Inc. shareholders and non-GAAP earnings per share, Free Cash Flow, and Net Cash are "non-GAAP financial measures" as such term is defined by the Securities and Exchange Commission and may differ from similarly named non-GAAP financial measures used by other companies. The attached financial supplement reconciles Photronics, Inc. financial results under GAAP to non-GAAP financial information. We believe these non-GAAP financial measures that exclude certain items are useful for analysts and investors to evaluate our future on-going performance, because they enable a more meaningful comparison of our projected performance with our historical results. These non-GAAP metrics are not intended to represent funds available for our discretionary use and are not intended to represent, or be used as a substitute for, gross profit, operating income, net income, cash and cash equivalents, or cash flows from operations, 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 condensed consolidated balance sheets and statement of cash flows and must be considered in performing a comprehensive assessment of overall financial performance. Please refer to the non-GAAP reconciliations on the following pages.

For Further Information:
John P. Jordan
Executive Vice President & CFO
203.740.5671
jjordan@photronics.com


PHOTRONICS, INC. 
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
         
         
  Three Months Ended   Nine Months Ended
  July 30,   April 30,   July 31,   July 30,   July 31,
    2023       2023       2022       2023       2022  
                   
Revenue $ 224,206     $ 229,306     $ 219,948     $ 664,603     $ 614,283  
                   
Cost of goods sold   137,405       140,904       136,085       413,323       400,338  
                   
Gross Profit   86,801       88,402       83,863       251,280       213,945  
                   
Operating Expenses:                  
                   
Selling, general and administrative   18,032       17,878       15,960       52,728       48,306  
                   
Research and development   3,505       3,479       4,151       10,287       14,297  
                   
Total Operating Expenses   21,537       21,357       20,111       63,015       62,603  
                   
Other operating loss   -       -       (23 )     -       (17 )
                   
Operating Income   65,264       67,045       63,729       188,265       151,325  
                   
Non-operating (loss) income, net   (911 )     13,571       3,641       (1,764 )     16,370  
                   
Income Before Income Tax Provision   64,353       80,616       67,370       186,501       167,695  
                   
Income tax provision   16,098       21,343       18,146       50,023       43,717  
                   
Net Income   48,255       59,273       49,224       136,478       123,978  
                   
Net income attributable to noncontrolling interests   21,296       19,344       17,994       55,604       42,252  
                   
Net income attributable to Photronics, Inc. shareholders $ 26,959     $ 39,929     $ 31,230     $ 80,874     $ 81,726  
                   
Earnings per share:                  
                   
Basic $ 0.44     $ 0.65     $ 0.51     $ 1.32     $ 1.35  
                   
Diluted $ 0.44     $ 0.65     $ 0.51     $ 1.31     $ 1.34  
                   
Weighted-average number of common shares outstanding:                  
                   
Basic   61,233       61,138       60,701       61,089       60,488  
                   
Diluted   61,974       61,507       61,299       61,650       61,127  
                   


PHOTRONICS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
 
         
  July 30,   October 31,  
  2023   2022  
         
Assets        
         
Current assets:        
Cash and cash equivalents $ 448,479     $ 319,680  
Short-term investments   27,325       38,820  
Accounts receivable   206,128       198,147  
Inventories   55,379       50,753  
Other current assets   34,900       37,252  
         
Total current assets   772,211       644,652  
         
Property, plant and equipment, net   701,459       643,873  
Other assets   29,673       27,305  
         
Total assets $ 1,503,343     $ 1,315,830  
         
         
         
Liabilities and Equity        
         
Current liabilities:        
Current portion of long-term debt $ 6,589     $ 10,024  
Accounts payable and accrued liabilities   184,063       183,773  
         
Total current liabilities   190,652       193,797  
         
Long-term debt   20,121       32,310  
Other liabilities   40,694       27,634  
         
Photronics, Inc. shareholders' equity   961,212       831,527  
Noncontrolling interests   290,664       230,562  
Total equity   1,251,876       1,062,089  
         
Total liabilities and equity $ 1,503,343     $ 1,315,830  
         


PHOTRONICS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
       
       
  Nine Months Ended
  July 30,   July 31,
    2023       2022  
       
Cash flows from operating activities:      
Net income $ 136,478     $ 123,978  
Adjustments to reconcile net income to net cash      
provided by operating activities:      
Depreciation and amortization   59,523       61,210  
Share-based compensation   5,874       4,623  
Changes in operating assets, liabilities and other   (6,319 )     6,110  
       
Net cash provided by operating activities   195,556       195,921  
       
Cash flows from investing activities:      
Purchases of property, plant and equipment   (78,813 )     (46,337 )
Purchases of available-for-sale debt securities   (9,837 )     -  
Proceeds from maturity of available-for-sale debt securities   22,500       -  
Government incentives   2,033       1,394  
Other   (116 )     (179 )
       
Net cash used in investing activities   (64,233 )     (45,122 )
       
Cash flows from financing activities:      
Repayments of debt   (16,351 )     (51,917 )
Purchases of treasury stock   -       (2,522 )
Contributions from noncontrolling interest   -       24,995  
Proceeds from share-based arrangements   1,241       5,505  
Net settlements of restricted stock awards   (1,292 )     (1,463 )
       
Net cash used in financing activities   (16,402 )     (25,402 )
       
Effects of exchange rate changes on cash, cash equivalents, and restricted cash   13,813       (21,308 )
       
Net increase in cash, cash equivalents, and restricted cash   128,734       104,089  
Cash, cash equivalents, and restricted cash, beginning of period   322,409       279,680  
       
Cash, cash equivalents, and restricted cash, end of period $ 451,143     $ 383,769  
       
       



PHOTRONICS, INC.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(Unaudited)
           
           
  Three Months ended
  July 30,   April 30,   July 31,
    2023       2023       2022  
Reconciliation of GAAP to Non-GAAP Non-operating (loss) Income:          
           
GAAP Non-operating (loss) income, net $ (911 )   $ 13,571     $ 3,641  
FX (gain) loss   4,543       (10,718 )     (3,862 )
Non-GAAP Non-operating (loss) income, net $ 3,632     $ 2,853     $ (221 )
           
           
Reconciliation of GAAP to Non-GAAP Income tax provision:          
           
GAAP Income tax provision $ 16,098     $ 21,343     $ 18,146  
Estimated tax effects of FX (gain) loss   (1,193 )     2,823       955  
Non-GAAP Income tax provision $ 17,291     $ 18,520     $ 17,191  
           
           
Reconciliation of GAAP to Non-GAAP Noncontrolling interests:          
           
GAAP Noncontrolling interests $ 21,296     $ 19,344     $ 17,994  
Estimated noncontrolling interest effects of above   1,328       901       527  
           
Non-GAAP Noncontrolling interests $ 19,968     $ 18,443     $ 17,467  
           
           
Reconciliation of GAAP to Non-GAAP Net Income:          
           
GAAP Net Income $ 26,959     $ 39,929     $ 31,230  
FX (gain) loss   4,543       (10,718 )     (3,862 )
Estimated tax effects of above   (1,193 )     2,823       955  
Estimated noncontrolling interest effects of above   1,328       901       527  
Non-GAAP Net Income $ 31,637     $ 32,935     $ 28,850  
           
Weighted-average number of common shares outstanding - Diluted   61,974       61,507       61,299  
           
Reconciliation of GAAP to Non-GAAP EPS:          
           
GAAP diluted earnings per share $ 0.44     $ 0.65     $ 0.51  
Effects of the above adjustments $ 0.07     $ (0.11 )   $ (0.04 )
Non-GAAP diluted earnings per share $ 0.51     $ 0.54     $ 0.47  
           


PHOTRONICS, INC.
Reconciliation of GAAP to Non-GAAP Financial Information (cont.)
(in thousands)
(Unaudited)
           
           
Reconciliation of Net cash provided by operating activities to Free Cash Flow        
  Nine Months ended      
  July 30,        
    2023          
           
           
GAAP Net cash provided by operating activities $ 195,556          
           
Purchases of property, plant and equipment   (78,813 )        
           
Free Cash Flow $ 116,743          
           
           
           
           
Reconciliation of Cash and cash equivalents to Net Cash:          
      As of    
  July 30,   October 31,   July 31,
    2023       2022       2022  
           
Cash and cash equivalents $ 448,479     $ 319,680     $ 380,833  
           
Current portion of Long-term debt   (6,589 )     (10,024 )     (10,727 )
           
Long-term Debt   (20,121 )     (32,310 )     (46,589 )
           
Net Cash $ 421,769     $ 277,346     $ 323,517  
           

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Source: Photronics, Inc.