Press Release

Photronics Reports Second Quarter Fiscal 2019 Results

May 22, 2019 at 6:16 AM EDT
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  • Second quarter 2019 revenue was $131.6 million, up 6% sequentially and 1% year-over-year
  • Net income attributable to Photronics, Inc. shareholders was $8.5 million, or $0.13 per diluted share
  • Cash balance was $167.1 million, with capital expenditures of $33.5 million primarily to fund China investments
  • Repaid $57.5 million convertible security, reducing total debt and eliminating 5.5 million potentially dilutive shares
  • Celebrated grand opening of new Xiamen and Hefei facilities in China
  • Shipped first G10.5+ photomask, marking entry into new, growing market
  • Third quarter 2019 guidance: revenue between $132 and $142 million with diluted EPS between $0.05 and $0.14

BROOKFIELD, Conn., May 22, 2019 (GLOBE NEWSWIRE) -- Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its fiscal 2019 second quarter ended April 28, 2019.

Second quarter revenue was $131.6 million, 6% better than the previous quarter and 1% better than the same quarter last year. Integrated circuit (IC) revenue was $98.6 million, up 4% sequentially and down 4% compared with the second quarter of last year. Flat panel display (FPD) revenue was $33.0 million, up 11% compared with last quarter and 16% compared with the same period last year.

Net income attributable to Photronics, Inc. shareholders was $8.5 million ($0.13 per diluted share), compared with $5.3 million ($0.08 per diluted share) for the first quarter of 2019 and $10.7 million ($0.15 per diluted share) for the second quarter of 2018.

"We performed well in the second quarter despite a challenging industry environment, delivering sequential growth in IC and strong sequential and year-over-year growth in FPD,” said Peter Kirlin, chief executive officer. “The double-digit FPD growth resulted from a strong market for masks for mobile displays, including AMOLED and LTPS LCD, with a contribution from our first shipment of a G10.5+ photomask. In IC, we achieved sequential growth with the anticipated recovery in high-end memory. Startup activity in China impacted operating profit, resulting in operating margin of 7.0%. Cash at the end of the quarter was $167.1 million after repayment of $57.5 million in convertible debt, which eliminated 5.5 million potentially dilutive shares, and $33.5 million in capital expenditures, primarily in China. Besides solid financial results, we celebrated the grand opening of our new Xiamen and Hefei facilities in China. We are excited to serve our customers in mainland China with locally produced reticles. With these milestones, we are on track to meet our 2020 targets of $630 million revenue and $0.80 earnings per share.”

Third Quarter 2019 Guidance

For the third quarter of 2019, Photronics expects revenue to be between $132 million and $142 million, and net income attributable to Photronics, Inc. shareholders to be between $0.05 and $0.14 per diluted share.

Conference Call

A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, May 22, 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, 2018, the company had 1,575 employees across 11 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 the company and its subsidiaries. The forward-looking statements contained in this press release 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, political, 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.  There is no assurance that the company’s expectations will be realized. For additional information please see the company’s quarterly and annual reports filed with the Securities and Exchange Commission. The company assumes no obligation to provide revisions to any forward-looking statements.

PHOTRONICS, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited) 
         
        Three Months Ended   Six Months Ended
        April 28,   January 27,    April 29,    April 28,    April 29,
         2019    2019    2018    2019    2018  
                         
Revenue       $   131,580   $   124,712   $   130,779   $   256,291   $   254,225  
                         
Cost of goods sold         105,570       98,610       97,960       204,179       193,744  
                         
  Gross profit           26,010       26,102       32,819       52,112       60,481  
                         
Operating Expenses:                      
                         
  Selling, general and administrative     13,269       13,792       13,637       27,061       25,387  
                         
  Research and development       3,542       4,263       3,817       7,805       7,921  
                         
Total Operating Expenses       16,811       18,055       17,454       34,866       33,308  
                         
  Operating income          9,199       8,047       15,365       17,246       27,173  
                         
Other income (expense), net       3,931       1,108       3,332       5,039       (774 )
                         
  Income before income taxes       13,130       9,155       18,697       22,285       26,399  
                         
Income tax provision         3,278       1,387       3,508       4,665       1,729  
                         
  Net income            9,852       7,768       15,189       17,620       24,670  
                         
Net income attributable to noncontrolling interests     1,373       2,501       4,524       3,874       8,107  
                         
Net income attributable to Photronics, Inc. shareholders $   8,479   $   5,267   $   10,665   $   13,746   $   16,563  
                         
Earnings per share:                      
                         
  Basic       $   0.13   $   0.08   $   0.15   $   0.21   $   0.24  
                         
  Diluted       $   0.13   $   0.08   $   0.15   $   0.20   $   0.23  
                         
Weighted-average number of common shares outstanding:                  
                         
  Basic         66,261     66,583     69,293     66,422     69,024  
                         
  Diluted         70,597     67,047     75,190     71,593     75,052  
                         

 

PHOTRONICS, INC.  
Condensed Consolidated Balance Sheets  
(in thousands)  
(Unaudited)  
   
                 
        April 28,   October 31,    
         2019    2018    
                 
Assets                
                 
Current assets:              
  Cash and cash equivalents   $   167,066   $   329,277    
  Accounts receivable       123,371       120,515    
  Inventories         34,696       29,180    
  Other current assets       76,555       23,759    
                 
  Total current assets       401,688       502,731    
                 
Property, plant and equipment, net     654,357       571,781    
Intangible assets, net       10,182       12,368    
Other assets         19,011       23,129    
                 
Total assets     $   1,085,238   $   1,110,009    
                 
                 
                 
Liabilities and Equity            
                 
Current liabilities:              
  Current portion of long-term debt $   505   $   57,453    
  Accounts payable and accrued liabilities     138,779       133,623    
                 
  Total current liabilities       139,284       191,076    
                 
Long-term debt         35,921       -     
Other liabilities         11,705       14,364    
                 
Photronics, Inc. shareholders' equity      763,568       759,671    
Noncontrolling interests       134,760       144,898    
  Total equity         898,328       904,569    
                 
Total liabilities and equity   $   1,085,238   $   1,110,009    
                 

 

PHOTRONICS,  INC.    
Condensed Consolidated Statements of Cash Flows    
(in thousands)    
(Unaudited)  
                   
                   
          Six Months Ended    
           April 28,    April 29,    
            2019       2018      
                   
Cash flows from operating activities:            
  Net income        $   17,620     $   24,670      
  Adjustments to reconcile net income to net cash          
  provided by operating activities:            
  Depreciation and amortization        38,515         44,429      
  Changes in operating assets, liabilities and other     (58,422 )       (31,191 )    
                   
Net cash (used in) provided by operating activities     (2,287 )       37,908      
                   
Cash flows from investing activities:            
  Purchases of property, plant and equipment     (140,436 )       (44,129 )    
  Government incentive         5,698         -       
  Other             (23 )       296   *  
                   
Net cash used in investing activities       (134,761 )       (43,833 ) *  
                   
Cash flows from financing activities:            
  Proceeds from debt         39,633         -       
  Contribution from noncontrolling interest     29,394         11,998      
  Repayments of debt         (61,220 )       (2,771 )    
  Dividends paid to noncontrolling interests     (26,102 )       -       
  Purchase of treasury stock         (10,696 )       -       
  Proceeds from share-based arrangements     1,033         3,776      
  Other             (45 )       (267 )    
                   
Net cash (used in) provided by financing activities     (28,003 )       12,736      
                   
Effect of exchange rate changes on cash, cash equivalents, and restricted cash      2,843         6,330   *  
                   
Net (decrease) increase in cash, cash equivalents, and restricted cash     (162,208 )       13,141   *  
Cash, cash equivalents, and restricted cash, beginning of period     331,989   *     310,936   *  
                   
Cash, cash equivalents, and restricted cash, end of period $   169,781     $   324,077   *  
                   
* Amount has been modified to reflect the adoption of ASU 2016-18          
                   

 

 

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

 

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Source: Photronics, Inc.