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)
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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Results of Operations and Financial Condition.
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On March 4, 2020, Photronics, Inc. (the “Company”) issued a press release reporting first quarter fiscal 2020 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.
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Item9.01.
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Financial Statements and Exhibits.
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(d)
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Exhibits
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Press Release dated March 4, 2020.
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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 Q1 2020 Financial Results Conference Call March 4, 2020 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.
(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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Executive Vice President,
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Chief Administrative Officer,
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General Counsel and Secretary
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Date: March 4, 2020
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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 First Quarter Fiscal 2020 Results
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First quarter 2020 revenue of $159.7 million was a record, up 2% sequentially and 28% year-over-year
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Net income attributable to Photronics, Inc. shareholders was $10.3 million, or $0.16 per diluted share
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Cash provided by operating activities was $30.8 million, resulting in a cash balance of $218.3 million
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0.9 million shares were repurchased for $11.0 million
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Second quarter 2020 guidance: revenue between $145 and $155 million with diluted EPS between $0.11 and $0.17
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BROOKFIELD, Conn. March 4, 2020 (GLOBE NEWSWIRE) — Photronics, Inc.
(NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its fiscal 2020 first quarter ended February 2, 2020.
First quarter revenue was a record $159.7 million, 2% better than the previous quarter and 28% better than the same quarter last year. Integrated
circuit (IC) revenue was $107.0 million, down 5% sequentially and up 13% compared with the first quarter of last year. Flat panel display (FPD) revenue of $52.8 million was also a record, up 21% compared with last quarter and 77% compared with the
same period last year.
Net income attributable to Photronics, Inc. shareholders was $10.3 million ($0.16 per diluted share), compared with $9.7 million ($0.15 per diluted
share) for the fourth quarter of 2019 and $5.3 million ($0.08 per diluted share) for the first quarter of 2019.
“We continued to perform well in the first quarter, achieving record revenues for the second consecutive quarter, as design activity remained high and
we were able to extend our FPD leadership by bringing more capacity to the market,” said Peter Kirlin, chief executive officer. “IC revenues were up year-over-year, but down sequentially due to seasonal softness. An uptick in operating expenses
associated with ramping our two new facilities drove operating margins below fourth quarter levels. Below the operating line, a foreign exchange gain and other one-time effects resulted in earnings of $0.16 per share. We generated $30.8 million
cash flow from operating activities, resulting in a cash position of $218.3 million. Despite potential short-term impact that may result from the coronavirus, we are optimistic that our long-term goals for 2020 are still on track. We continue to
develop investment plans to drive further profitable growth across our operations.”
Second Quarter 2020 Guidance
For the second quarter of 2020, Photronics expects revenue to be between $145 million and $155 million, and net income attributable to Photronics, Inc.
shareholders to be between $0.11 and $0.17 per diluted share.
Conference Call
A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, March 4, 2020. 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.
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 and Quarterly filings with the Securities Exchange Commission 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.
03-20
Exhibit 99.2
PHOTRONICS, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
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Three Months Ended
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February 2,
2020 |
October 31,
2019 |
January 27,
2019 |
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Revenue
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$
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159,736
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$
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156,257
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$
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124,712
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Cost of goods sold
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125,134
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118,098
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98,610
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Gross profit
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34,602
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38,159
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26,102
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Operating Expenses:
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Selling, general and administrative
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14,219
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12,140
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13,792
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Research and development
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4,080
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4,543
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4,263
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Total Operating Expenses
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18,299
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16,683
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18,055
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Operating income
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16,303
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21,476
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8,047
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Other income (expense), net
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3,697
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(6,111
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)
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1,108
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Income before income taxes
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20,000
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15,365
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9,155
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Income tax provision
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9,072
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2,327
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1,387
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Net income
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10,928
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13,038
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7,768
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Net income attributable to noncontrolling interests
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628
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3,338
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2,501
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Net income attributable to Photronics, Inc. shareholders
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$
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10,300
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$
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9,700
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$
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5,267
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Earnings per share:
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Basic
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$
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0.16
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$
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0.15
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$
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0.08
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Diluted
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$
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0.16
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$
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0.15
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$
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0.08
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Weighted-average number of common shares outstanding:
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Basic
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65,554
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66,230
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66,583
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Diluted
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66,449
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66,862
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67,047
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Exhibit 99.3
PHOTRONICS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
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February 2,
2020 |
October 31,
2019 |
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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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218,309
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$
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206,530
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Accounts receivable
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141,720
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134,454
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Inventories
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49,673
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48,155
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Other current assets
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31,202
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38,388
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Total current assets
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440,904
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427,527
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Property, plant and equipment, net
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619,935
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632,441
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Intangible assets, net
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6,847
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7,870
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Other assets
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57,774
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50,827
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Total assets
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$
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1,125,460
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$
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1,118,665
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Liabilities and Equity
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Current liabilities:
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Debt
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$
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17,934
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$
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10,873
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Accounts payable and accrued liabilities
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139,720
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141,081
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Total current liabilities
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157,654
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151,954
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Long-term debt
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36,449
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41,887
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Other liabilities
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18,556
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13,732
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Photronics, Inc. shareholders' equity
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770,676
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769,892
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Noncontrolling interests
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142,125
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141,200
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Total equity
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912,801
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911,092
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Total liabilities and equity
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$
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1,125,460
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$
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1,118,665
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Exhibit 99.4
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
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Three Months Ended
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February 2,
2020 |
January 27,
2019 |
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Cash flows from operating activities:
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Net income
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$
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10,928
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$
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7,768
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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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24,626
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18,781
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Share-based compensation
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1,356
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1,062
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Changes in operating assets, liabilities and other
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(6,125
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)
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(46,897
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)
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Net cash provided by (used in) operating activities
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30,785
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(19,286
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)
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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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(13,807
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)
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(106,925
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)
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Government incentive
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2,417
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5,029
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Other
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(139
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)
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19
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|||||
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Net cash used in investing activities
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(11,529
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)
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(101,877
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)
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Cash flows from financing activities:
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Proceeds from long-term debt
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1,140
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28,180
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Purchase of treasury stock
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(11,000
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)
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(10,696
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)
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Repayments of long-term debt
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(389
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)
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-
|
|||||
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Proceeds from share-based arrangements
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2,886
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650
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||||||
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Contribution from noncontrolling interest
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-
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29,394
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||||||
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Dividends paid to noncontrolling interests
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-
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(26,102
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)
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|||||
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Other
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(248
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)
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(45
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)
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||||
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Net cash (used in) provided by financing activities
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(7,611
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)
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21,381
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|||||
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Effect of exchange rate changes on cash, cash equivalents, and restricted cash
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149
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2,961
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||||||
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Net increase (decrease) in cash, cash equivalents, and restrcited cash
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11,794
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(96,821
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)
|
|||||
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Cash, cash equivalents, and restricted cash, beginning of period
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209,291
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331,989
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||||||
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Cash, cash equivalents, and restricted cash, end of period
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$
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221,085
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$
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235,168
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Exhibit 99.5
Photronics, Inc. Q1 2020 Financial Results Conference CallMarch 4, 2020
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.
Photronics Investor DayFriday, May 29, 2020New York Hilton Midtown ManhattanNew York CityDetails to
follow. Contact Troy Dewar (tdewar@photronics.com) with questions. Save the Date
Record revenue of $159.7M, up 2% Q/Q and 28% Y/YRecord FPD revenue driven by mobile displays and Hefei
production rampIC revenue up Y/Y as design activity remains strong; seasonal softness in memory Q/QRecord revenue of products shipped to China, up 13% Q/Q; represents 37% of total revenueNet income attributable to Photronics, Inc.
shareholders of $10.3M ($0.16/share)Cash balance grew to $218M; $31M operating cash generationRepurchased 0.9M shares for $11MChina production contributed $20M to revenue; Hefei facility generated operating profit and positive operating cash
flowPotential impact in Q2 due to coronavirus Q1 2020 Summary 4 Successfully repositioned the business; China investments driving long-term, profitable growth
$M (except EPS) Q120 Q419 Q/Q Q119 Y/Y Revenue $ 159.7 $ 156.3 2% $ 124.7 28% Gross
Profit $ 34.6 $ 38.2 (9%) $ 26.1 33% Gross Margin 21.7% 24.4% (270 bps) 20.9% 80 bps Operating Income $ 16.3 $ 21.5 (24%) $ 8.0 103% Operating Margin 10.2% 13.7% (350 bps) 6.5% 370 bps Other income (expense) $ 3.7 ($
6.1) $ 9.8 $ 1.1 $ 2.6 Income tax provision $ 9.1 $ 2.3 $ 6.7 $ 1.4 $ 7.7 Minority interest $ 0.6 $ 3.3 ($ 2.7) $ 2.5 ($ 1.9) Net Income* $ 10.3 $ 9.7 6% $ 5.3 96% Diluted EPS* $ 0.16 $ 0.15 $ 0.01 $ 0.08 $
0.08 Days in quarter 94 95 (1) 88 6 Gross and operating margin negatively affected by higher ramp and compensation expenseChina operations were $2.9M negative impact to operating income; Hefei facility achieved operating profitOther
income includes FX gain and higher China interest expenseMinority interest reflects Taiwan JV gain offset by China JV loss Income Statement Summary 5 *Net income attributable to Photronics, Inc. shareholders
High-end down Q/Q on seasonal softness; Y/Y driven by strong logic and memoryChina revenue strong as
design activity remains robust+3% Q/Q; +74% Y/YRepresents 24% of Q120 IC revenueOutlookHigh uncertainty related to coronavirus reactionOtherwise, expect stable to improving high-end demandAnticipate production ramping in
Xiamen $M Q120 Q419 Q/Q Q119 Y/Y High-End* $ 41.0 $ 45.0 (9%) $ 34.6 19% Mainstream $ 65.9 $ 67.6 (2%) $ 60.3 9% Total $ 107.0 $ 112.5 (5%) $ 94.9 13% IC Photomask Revenue 6 *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
+22% Q/Q; +154% Y/YRepresents 62% of Q120 FPD revenueOutlookHigh uncertainty related to coronavirus reactionMobile display demand expected to remain highProduction should remain at capacity $M Q120 Q419 Q/Q Q119 Y/Y High-End* $
39.8 $ 25.4 56% $ 15.4 159% Mainstream $ 13.0 $ 18.3 (29%) $ 14.5 (10%) Total $ 52.8 $ 43.7 21% $ 29.8 77% FPD Photomask Revenue 7 *≥G10.5, AMOLED and LTPS Total may differ due to rounding
Full-year 2018 Q119 Q219 Q319 Q419 Full-year 2019 High-End FPD 52,942 15,350 22,051
23,088 25,435 85,924 Mainstream FPD 66,270 14,482 10,942 14,839 18,283 58,546 Total FPD 119,212 29,832 32,993 37,927 43,718 144,470 To align with industry trends and reflect our new operating environment,
we redefined high-end FPD photomasksOld definition: AMOLED, G8.5 or greater (includes G10.5+)New definition: AMOLED, G10.5+ (G8.5 now mainstream), LTPSTable shows revenue splits per new definition New FPD High-End Definition 8
$M Q120 Q419 Q119 Cash $ 218 $ 207 $ 232 Debt $ 54 $ 53 $ 86 Net Cash* $ 164 $ 154 $
146 Operating Cash Flow $ 31 $ 45 ($ 19) Capital Expenditures $ 14 $ 18 $ 107 Government Incentives $ 2 $ 9 $ 5 Share repurchase $ 11 $ 11 $ 11 Debt is local China borrowing to finance fixed assetsFY 2020 capex ~ $100M
(includes 2019 carryover & $35M capital lease)Repurchased 0.9M shares for $11MBalance sheet able to fund planned investments, share repurchases, and strategic M&A opportunities Select Financial Data 9 *Net cash defined as cash and
cash equivalents less long-term borrowings (including current portion), as reported in accordance with GAAP
Revenue ($M) $145 - $155 Operating Margin 7% - 11% Taxes ($M) $3.5 - $4.5 EPS $0.11 -
$0.17 Diluted Shares (M) ~66 High uncertainty related to coronavirus reactionFPD demand growing (AMOLED, LTPS, G10.5+)High-end IC markets stable to improvingRamping China production (IC & FPD)Potential geopolitical headwind Q220
Guidance 10
Thank you for your interest! For Additional Information:R. Troy Dewar, CFAVice President, Investor
Relations203.740.5610tdewar@photronics.com
Appendix
Total Revenue 13 IC FPD
IC Photomask Revenue 14 Mainstream High-End High-End: 28nm and smaller; total may differ due to
rounding
FPD Photomask Revenue 15 Mainstream High-End High-End: ≥G10.5, AMOLED and LTPS; total may
differ due to rounding