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
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Date of report (Date of earliest event reported)
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(Exact name of registrant as specified in its charter)
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(State or Other Jurisdiction of)
Incorporation
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(Commission File Number)
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(IRS Employer Identification No.)
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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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(
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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 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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| Item 2.02. |
Results of Operations and Financial Condition.
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On December 11, 2019, Photronics, Inc. (the “Company”) issued a press release reporting fourth quarter fiscal 2019 results.
A copy of the press release is furnished as Exhibit 99.1 to this report. The information contained in this Item 2.02 and the attached Exhibits 99.1,
99.2, 99.3, 99.4, and 99.5, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be incorporated by reference in any filing under the Securities Act of 1933 except as shall be expressly set
forth by specific reference in such filing.
On December 11, 2019, the Company will conduct a conference call during which certain unaudited, non-GAAP financial information related to the Company’s
operations for the three months ended October 31, 2019 may be disclosed. This information is set forth in Exhibit 99.5.
EBITDA is a non-GAAP financial measure that the Company defines pursuant to its credit agreement. The Company believes that EBITDA is generally accepted
as providing useful information regarding the operational strength and performance of its business, including the ability of the Company to pay interest, service debt and fund capital expenditures. The Company’s method for calculating EBITDA may
not be comparable to methods used by other companies but is the same method the Company uses for calculating EBITDA under its credit facility. The Company has included in the press release certain reconciliation information for EBITDA to its most
directly comparable financial measure of net income calculated and reported in accordance with GAAP.
| Item 5.02. |
Departure of Directors or Certain Officers; Election of Officers; Appointment
of Certain Officers; Compensatory Arrangements of Certain Officers.
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The Company announced that Eric Rivera, Vice President, Corporate Controller, has been named Principal Accounting Officer effective December 5, 2019.
| Item 9.01. |
Financial Statements and Exhibits.
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(d)
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Exhibits
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Press Release dated December 11, 2019.
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Condensed Consolidated Statements of Income.
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Condensed Consolidated Balance Sheets.
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Condensed Consolidated Statements of Cash Flows.
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Photronics Q4 2019 Financial Results Conference Call December 11, 2019 slides.
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SIGNATURE
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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By: /s/ Richelle E. Burr
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Name:
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Richelle E. Burr
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Title:
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Vice President, General Counsel and
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Secretary | |
Date: December 11, 2019
Exhibit 99.1
Press Release
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For Further Information:
R. Troy Dewar, CFA
Vice President, Investor Relations
(203) 740-5610
tdewar@photronics.com
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Photronics Reports Fourth Quarter Fiscal 2019 Results
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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
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Effective cost control and operating leverage at the increased revenue level helped expand operating margin to 13.7%
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Net income attributable to Photronics, Inc. shareholders was $9.7 million, or $0.15 per diluted share
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Cash provided by operating activities was $48.3 million, resulting in a cash balance of $206.5 million
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1.0 million shares were repurchased for $11.0 million
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First quarter 2020 guidance: revenue between $146 and $154 million with diluted EPS between $0.13 and $0.18
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BROOKFIELD, Conn. December 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.
Exhibit 99.2
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
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Three Months Ended
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Year Ended
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October 31,
2019
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July 28,
2019
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October 31,
2018
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October 31,
2019
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October 31,
2018
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Revenue
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$
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156,257
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$
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138,112
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$
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144,660
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$
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550,660
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$
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535,276
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Cost of goods sold
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118,098
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107,542
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109,236
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429,819
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403,773
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Gross profit
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38,159
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30,570
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35,424
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120,841
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131,503
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Operating Expenses:
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Selling, general and administrative
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12,140
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13,124
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13,504
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52,326
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51,395
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Research and development
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4,543
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4,046
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3,906
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16,394
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14,481
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Total Operating Expenses
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16,683
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17,170
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17,410
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68,720
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65,876
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Operating income
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21,476
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13,400
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18,014
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52,121
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65,627
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Other (expense) income, net
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(6,111
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)
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(348
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)
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2,307
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(1,420
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)
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2,944
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Income before income taxes
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15,365
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13,052
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20,321
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50,701
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68,571
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Income tax provision
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2,327
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3,218
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3,552
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10,210
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7,335
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Net income
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13,038
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9,834
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16,769
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40,491
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61,236
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Net income attributable to noncontrolling interests
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3,338
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3,487
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4,282
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10,698
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19,181
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Net income attributable to Photronics, Inc. shareholders
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$
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9,700
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$
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6,347
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$
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12,487
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$
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29,793
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$
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42,055
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Earnings per share:
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Basic
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$
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0.15
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$
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0.10
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$
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0.18
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$
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0.45
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$
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0.61
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Diluted
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$
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0.15
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$
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0.10
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$
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0.18
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$
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0.44
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$
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0.59
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Weighted-average number of common shares outstanding:
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Basic
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66,230
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66,313
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67,894
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66,347
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68,829
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Diluted
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66,862
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66,570
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73,921
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69,155
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74,821
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Exhibit 99.3
PHOTRONICS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
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October 31,
2019
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October 31,
2018
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Assets
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Current assets:
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Cash and cash equivalents
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$
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206,530
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$
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329,277
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Accounts receivable
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134,454
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120,515
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Inventories
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48,155
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29,180
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Other current assets
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49,634
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23,759
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Total current assets
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438,773
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502,731
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Property, plant and equipment, net
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621,195
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571,781
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Intangible assets, net
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7,870
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12,368
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Other assets
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50,827
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23,129
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Total assets
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$
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1,118,665
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$
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1,110,009
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Liabilities and Equity
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||||||||
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Current liabilities:
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Debt
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$
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10,873
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$
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57,453
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Accounts payable and accrued liabilities
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141,081
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133,623
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Total current liabilities
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151,954
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191,076
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Long-term debt
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41,887
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-
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||||||
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Other liabilities
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13,732
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14,364
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Photronics, Inc. shareholders' equity
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769,892
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759,671
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||||||
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Noncontrolling interests
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141,200
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144,898
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||||||
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Total equity
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911,092
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904,569
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||||||
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Total liabilities and equity
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$
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1,118,665
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$
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1,110,009
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Exhibit 99.4
PHOTRONICS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
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Year Ended
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||||||||
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October 31,
2019
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October 31,
2018
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|||||||
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Cash flows from operating activities:
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||||||||
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Net income
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$
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40,491
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$
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61,236
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||||
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Adjustments to reconcile net income to net cash provided by operating activities:
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Depreciation and amortization
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83,879
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84,333
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Share-based compensation
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3,680
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3,180
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||||||
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Changes in operating assets, liabilities and other
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(56,210
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)
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(18,182
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)
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Net cash provided by operating activities
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71,840
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130,567
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Cash flows from investing activities:
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||||||||
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Purchases of property, plant and equipment
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(177,191
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)
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(92,585
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)
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||||
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Government incentives
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22,364
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1,005
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||||||
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Other
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(33
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)
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711
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Net cash used in investing activities
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(154,860
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)
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(90,869
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)
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Cash flows from financing activities:
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||||||||
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Proceeds from debt
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54,633
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-
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||||||
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Contribution from noncontrolling interest
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29,394
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17,996
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||||||
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Repayments of debt
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(61,319
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)
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(4,639
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)
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||||
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Dividends paid to noncontrolling interests
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(45,050
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)
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(8,166
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)
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||||
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Purchase of treasury stock
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(21,696
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)
|
(23,111
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)
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||||
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Proceeds from share-based arrangements
|
2,071
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4,634
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||||||
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Other
|
(92
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)
|
(519
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)
|
||||
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Net cash used in financing activities
|
(42,059
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)
|
(13,805
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)
|
||||
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Effect of exchange rate changes on cash, cash equivalents, and restricted cash
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2,381
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(4,840
|
)
|
|||||
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Net (decrease) increase in cash, cash equivalents, and restricted cash
|
(122,698
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)
|
21,053
|
|||||
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Cash, cash equivalents, and restricted cash, beginning of period
|
331,989
|
310,936
|
||||||
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Cash, cash equivalents, and restricted cash, end of period
|
$
|
209,291
|
$
|
331,989
|
||||
Exhibit 99.5
Photronics, Inc. Q4 2019 Financial Results Conference CallDecember 11, 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”, “plan”, “project”, “in our view” 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.
Record revenue, up 13% Q/Q and 8% Y/YRecord FPD revenue driven by mobile displays and Hefei production
rampRecord IC revenue as China design activity acceleratesRecord revenue of products shipped to China, representing 33% of total revenueOperating margin expanded to 13.7% on operating leverage and cost controlNet income attributable to
Photronics, Inc. shareholders of $9.7M ($0.15/share)Cash balance grew to $207M on strong operating cash flowRepurchased 1.0M shares for $11MChina production contributed $11M to revenue Q4 2019 Summary 3 Successfully repositioned the
business; China investments driving long-term, profitable growth
$M (except EPS) Q419 Q319 Q/Q Q418 Y/Y Revenue $ 156.3 $ 138.1 13% $ 144.7 8% Gross Profit $
38.2 $ 30.6 25% $ 35.4 8% Gross Margin 24.4% 22.1% 230 bps 24.5% (10 bps) Operating Income $ 21.5 $ 13.4 60% $ 18.0 19% Operating Margin 13.7% 9.7% 400 bps 12.5% 120 bps Other income (expense) ($ 6.1) ($ 0.3) ($
5.8) $ 2.3 ($ 8.4) Income tax provision $ 2.3 $ 3.2 ($ 0.9) $ 3.6 ($ 1.2) Minority interest $ 3.3 $ 3.5 ($ 0.1) $ 4.3 ($ 0.9) Net Income* $ 9.7 $ 6.3 53% $ 12.5 (22%) Diluted EPS* $ 0.15 $ 0.10 $ 0.05 $ 0.18 ($
0.03) Days in quarter 95 91 4 94 1 Gross and operating margin improved Q/Q on revenue growth, operating leverage and cost controlsChina operations were $4.1M negative impact to operating incomeOther income/expense primarily attributable
to FX gain/lossMinority interest reflects Taiwan JV gain partially offset by China JV loss Income Statement Summary 4 *Net income attributable to Photronics, Inc. shareholders
Revenue grew with increase in broad-based design activityChina revenue rebounded as firms accelerate
product development+72% Q/Q; +32% Y/YRepresents 22% of Q419 IC revenueOutlookExpect stable to improving high-end demandAnticipate production ramping in XiamenPotential impact from US-China trade discussionsSeasonal
headwinds $M Q419 Q319 Q/Q Q418 Y/Y High-End* $ 45.0 $ 38.5 17% $ 39.4 14% Mainstream $ 67.6 $ 61.7 9% $ 71.4 (5%) Total $ 112.5 $ 100.2 12% $ 110.9 1% IC Photomask Revenue 5 *28nm and smaller Total may differ due
to rounding
Record FPD revenue driven by mobile displays and China production ramp, including G10.5+China revenue
+32% Q/Q; +118% Y/YRepresents 61% of Q419 FPD revenueOutlookMobile display demand expected to remain highLCD industry downturn continuesHefei shipments should continue to ramp $M Q419 Q319 Q/Q Q418 Y/Y High-End* $ 28.5 $ 25.9 10% $
22.0 29% Mainstream $ 15.2 $ 12.0 27% $ 11.8 30% Total $ 43.7 $ 37.9 15% $ 33.8 29% FPD Photomask Revenue 6 *≥G8 and AMOLED Total may differ due to rounding
$M Q419 Q319 Q418 Cash $ 207 $ 197 $ 329 Debt $ 53 $ 49 $ 57 Net Cash* $ 154 $ 148 $
272 Operating Cash Flow $ 48 $ 26 $ 44 Capital Expenditures $ 17 $ 20 $ 28 Share repurchase $ 11 - $ 16 Deploying cash balance to fund China investmentsDebt is local China borrowing to finance fixed assetsFY 2019 capex $177M;
anticipate FY 2020 capex ~ $100M (includes 2019 carryover)Repurchased 1.0M shares for $11M (YTD 2.1M shares for $22M)Balance sheet able to fund planned investments, share repurchases, and strategic M&A opportunities Select Financial
Data 7 *Net cash defined as cash and cash equivalents less long-term borrowings (including current portion), as reported in accordance with GAAP
Revenue ($M) $146 - $154 Operating Margin 10% - 13% Taxes ($M) $3.5 - $4.5 EPS $0.13 -
$0.18 Diluted Shares (M) ~66 FPD demand growing (AMOLED, G10.5+)High-end IC markets stable to improvingRamping China production (IC & FPD)Potential geopolitical headwindTypical seasonal softness in US and Europe, plus additional impact
from Chinese New Year Q120 Guidance 8
Thank you for your interest! For Additional Information:R. Troy Dewar, CFAVice President, Investor
Relations203.740.5610tdewar@photronics.com
Appendix
Total Revenue 11 IC FPD
IC Photomask Revenue 12 Mainstream High-End High-End: 28nm and smaller; total may differ due to
rounding
FPD Photomask Revenue 13 Mainstream High-End High-End: ≥G8 and AMOLED; total may differ due to
rounding