UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934
Date of report (Date of earliest event reported) January 16, 2019
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PHOTRONICS, INC.
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(Exact name of registrant as specified in its charter)
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Connecticut
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0-15451
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06-0854886
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification Number)
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15 Secor Road, Brookfield, CT
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06804
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrant's Telephone Number, including area code
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(203) 775-9000
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(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule
12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2)
Emerging growth company □
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □
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Item 7.01
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Regulation FD
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On January 16, 2019, Photronics, Inc. (the “Company”) will present at the 21st Annual Needham Growth Conference. The presentation to be used
during the event is attached as Exhibit 99.1 to this Form 8-K. The presentation will also be available via webcast. Interested parties may register for the webcast through the Investors section of the Company’s website at www.photronics.com.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed
“filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as
amended, except as shall be expressly set forth by specific reference in such a filing.
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Item 9.01.
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Financial Statements and Exhibits
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(d) Exhibits
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99.1
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Presentation January 16, 2019.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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PHOTRONICS, INC.
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(Registrant)
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DATE: January 16, 2019
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BY
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/s/ Richelle E. Burr
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Richelle E. Burr
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Vice President, General Counsel
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PHOTRONICS, INC.
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EXHIBIT INDEX
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Exhibit
Number
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Description
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Presentation January 16, 2019.
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Exhibit 99.1
Photronics, Inc.Global Leader in the Merchant Photomask Industry 21st Annual Needham Growth
ConferenceJanuary 16, 2019
Safe Harbor Statement 2 This presentation and some of our comments may contain projections or other
forward-looking statements regarding future events, our future financial performance, and/or the future performance of the industry. These statements are predictions, and contain risks and uncertainties. Actual events or results may differ
materially from those presented. These statements include words like “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “may”, “should”, “plan”, “project” or the negative thereto. We cannot guarantee the accuracy of any forecasts or
estimates, and we are not obligated to update any forward-looking statements if our expectations change. If you would like more information on the risks involved in forward-looking statements, please see the documents we file from time to time
with the Securities and Exchange Commission, specifically our most recent Form 10K and Form 10Q.Non-GAAP Financial MeasuresThis presentation and some of our comments may reference non-GAAP financial measures. These non-GAAP financial measures
exclude certain income or expense items, and are consistent with another way management internally analyzes our results of operations. Non-GAAP information should be considered to be a supplement to, and not a substitute for, financial statements
prepared in accordance with GAAP. Please see the “Reconciliation of GAAP to Non-GAAP Financial Information” in this presentation.
Global leader in merchant photomask industryDelivering growth by leveraging core competencies: Operational
Excellence, Low Cost Producer, Technology Leadership, Customer IntimacyInvesting aggressively to exploit secular growth opportunitiesChina industry expansion – Made in China 2025Technology inflection from LCD to AMOLEDExplosion of G10.5+ panel
capacityOn track for 2020 target: $630M revenue & $0.80 EPSStrategic investments bring top-line growthOperating leverage creates margin expansionShare repurchase reverses dilutionAdditional upside from potential M&A A Compelling
Investment Thesis 3
Largest merchant photomask manufacturerUnmatched global footprintInvesting to exploit market disruptions
with reciprocal customer commitments Strong balance sheet to fund growth Photronics at a Glance 4
Photomasks are Critical to Electronic Manufacturing 5 ComponentDesign End User Manufacturing
Process Photomask
Cost controlSupply chain optimization Low Cost Producer Flexible deliveryHigh yields Operational
Excellence Trusted partnerWafer yield enhancement Customer Intimacy Process know-howAdvanced PoR Technology Leader Core Competencies Underpin Sustainable Growth 6
Repositioned the CompanyChinaTotal TAM ~$700M by 2022Region with strongest growth potentialSupported by new
manufacturing facilities in 2019IC CaptiveApproximately $2.4B TAMWe are seen as trusted partnerCommitments strengthen sustainabilityHigh-end revenue growthHigh value and high growthSupports China & captive initiatives Delivering on Growth
Commitments 7 +131% +85% +42%
Technology as a Tool to Support Business
Growth 8 High-End39% Mainstream61% High-End64% Mainstream36% Growth Investment Cycle
Repositioning the companyImproving high-end revenue China investmentsFPD technology inflections Strategic
photomask partnershipsAdjacent market M&A Driving Sustainable, Profitable Growth 9 Short term (6-12 months) Medium term (12-36 months) Long term (36+ months) Implemented Ongoing Future
We already have growing business in China19% of total revenue in 201813% of IC revenue39% of FPD
revenueGrowing strong since 2015IC +51% CAGRFPD +67% CAGRManufacturing presence in China aims to accelerate growthCustomer contracts will help quickly ramp facilitiesInvestment incentives reduce risk and improve returnsIC JV enables us to compete
more effectively Developing and Growing China Business 10 +57% CAGR
IC FPD Location Xiamen Hefei Investment Amount $160M $160M Cleanroom Size ~2,500 m2 ~4,500
m2 Ownership Structure Majority-owned (50.01%) JV Wholly-owned Technology High-end, mainstream, logic, memory Up to G10.5+, AMOLED Production Start First half of 2019 First half of 2019 Incremental Revenue $150M (total for both
operations) Investing in China Operations 11 PLAB well positioned for these investmentsGlobal merchant market and technology leaderStrong footprint in AsiaBalance sheet to support investment Customer commitments totaling ~$300M over next
three yearsEnables Hefei facility to operate profitablyEnables Xiamen facility to achieve breakeven
Reducing Risk of China Investment 12
Mobile devices moving from LCD to AMOLEDSuperior visual characteristicsLower power consumptionEnables
flexible formatPreferred for VR/AR devicesIncreases mask complexityMore mask layers per setTighter specs on each layerExtending technology leadership with P-800 in KoreaOnly firm with this advanced mask writerProduces highest resolution AMOLED
masksCompetitive advantage vs. all merchants and captives Leveraging Technology Leadership for Mobile Display AMOLED Adoption 13 Source: Internal Estimates AMOLED remains preferred technology for mobile applications
65” 65” 65” 65” 65” 65” 65” 65” 95% G10.5+ Improved Glass Efficiency for
Ultra-Large Screen TV 14 2940 mm x 3370 mm 2200 mm x 2500 mm 1950 mm x 2250 mm 1500 mm x 1850 mm 75” 75” 75” 75” 75” 75” 94% 65” 65” 65” 64% 75” 75” 73% 65” 65” 88%
China represents fastest growing display region64 fabs in production, under construction or being
plannedLargest display producer (Korea 2nd)Photomask opportunities in China are attractiveWide range of display technology, including AMOLED & G10.5+No merchant photomask producer with high-end experienceNo G10.5+ photomask producer “Made in
China 2025” Driving Growth in FPD Market 15 +17% CAGR Source: Internal Estimates G10.5+ CAGR +62%
64 China Display Fabs in Production by 2022 16 Image from
https://commons.wikimedia.org/wiki/File:China-equirect.png LCD (7)AMOLED (15)G10.5+ (7) Photronics LocationsFPD KoreaFPD HefeiFPD
Taiwan LCD (25)AMOLED (9)G10.5+ (1) New (29) Existing (35)
China represents fastest growing semiconductor regionGrowing domestic producersInvestments by
multi-nationalsMore investment needed to meet national targets2022 forecast is 17%China government target is 40% by 2020, 70% by 2025Photomask opportunities in China are attractiveWide range of nodes in logic and memoryNo strong domestic merchant
mask producer “Made in China 2025” Driving Growth in IC Market 17
23 New China 12” IC Fabs 18 Image from
https://commons.wikimedia.org/wiki/File:China-equirect.png Photronics LocationsIC KoreaIC XiamenIC TaiwanIC Boise (not shown) Logic (17)Memory (6) Innotron (M) Nexchip (L) YMTC (M) Samsung
(M) AOS (L) Unigroup (L) GF (L) SMIC (L) Intel (M) SMIC (L) Cansemi (L) JHICC (M) USC (L) Silan (L) Sien IC (L) HidM (L) AMS (L) TSMC (L) HH Group (L) Unigroup (M) SMIC (L) SMIC (L) HLIC (L)
Top line growth combined with continued focus on driving costs outDisciplined focus on investments to
improve ROICMaintain strong balance sheet while returning cash to shareholdersLaunched two buy-back programs in FY18Financial stability through economic downturnFlexibility to invest in other growth opportunities (organic or M&A) Strategic
Priorities to Improve Shareholder Value 19
Powerful operating leverage: target 50%Strong operating cash flow generatorPositive free cash flow every
fiscal year since 2009Solid balance sheet Solid Financial Fundamentals 20
Key Success Factors“Made in China 2025” – new facilitiesFPD technology inflectionsRepositioning the
companyNode migration (logic & memory)Growing business with captive producersIC JV’s in China and TaiwanStable mainstream businessCross-site collaboration to serve global customers On Our Way to 2020 Target 21
Fund organic growthGeographic expansion into ChinaTechnical investments to maintain leadership
positionExplore strategic M&APhotomask industry – IC & FPDAdjacencies to increase revenue diversificationDebt repaymentConverts mature in April 2019Established $75M loan agreements in ChinaShare repurchase Repurchased $23M of $45M net
authorization in 2018Reduced outstanding shares by 2.6M Clear Capital Deployment Priorities 22 *Net cash defined as cash and cash equivalents less long-term borrowings (including current portion)
Clear path to accelerate profitable growthPrudent stewardship of balance sheetFinancial model to grow
income faster than revenueOn track to achieve financial targetsRevenue $630M & EPS $0.80 by 2020Operating margin > 15%Minimum $100M net cashImprove ROIC – no projects accepted below hurdle rate Financial Summary 23
Global leader in merchant photomask industryDelivering growth by leveraging core competencies: Operational
Excellence, Low Cost Producer, Technology Leadership, Customer IntimacyInvesting aggressively to exploit secular growth opportunitiesChina industry expansion – Made in China 2025Technology inflection from LCD to AMOLEDExplosion of G10.5+ panel
capacityOn track for 2020 target: $630M revenue & $0.80 EPSStrategic investments bring top-line growthOperating leverage creates margin expansionShare repurchase reverses dilutionAdditional upside from potential M&A A Compelling
Investment Thesis 24
Thank you for your interest! For Additional Information:R. Troy Dewar, CFAVice President, Investor
Relations203.740.5610tdewar@photronics.com