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) | (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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(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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N/A
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Item 2.02.
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Results of Operations and Financial Condition.
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On August 27, 2020, Photronics, Inc. (the “Company”) issued a press release reporting third 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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Item 9.01.
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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 August 27, 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 Q3 2020 Financial Results Conference Call August 27, 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.
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(Registrant)
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By:
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/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: August 27, 2020
Exhibit 99.1
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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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Press Release
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Photronics Reports Third Quarter Fiscal 2020 Results
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Third quarter 2020 revenue was $157.9 million, up 11% sequentially and 14% year-over-year
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Net income attributable to Photronics, Inc. shareholders was $10.8 million, or $0.17 per diluted share
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Cash provided by operating activities was $16.9 million, resulting in a cash balance of $260.6 million
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Fourth quarter 2020 guidance: revenue between $148 and $158 million with diluted EPS between $0.12 and $0.19
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BROOKFIELD, Conn. August 27, 2020 (GLOBE NEWSWIRE) — Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions,
today reported financial results for its fiscal 2020 third quarter ended August 2, 2020.
Third quarter revenue was $157.9 million, 11% better than the previous quarter and 14% better than the same quarter last year. Integrated circuit (IC) revenue was $108.7
million, up 12% sequentially and 8% compared with the third quarter of last year. Flat panel display (FPD) revenue was $49.2 million, up 7% compared with last quarter and 30% compared with the same period last year.
Net income attributable to Photronics, Inc. shareholders was $10.8 million ($0.17 per diluted share), compared with $6.3 million ($0.10 per diluted share) for the second
quarter of 2020 and $6.3 million ($0.10 per diluted share) for the third quarter of 2019.
"Customer demand improved this quarter, and we achieved double-digit revenue growth rates compared with last quarter and last year due to our diverse market position and
technology leadership,” said Peter Kirlin, chief executive officer. “China demand recovered for both IC and FPD, with total revenue of product shipped to China increasing 10% compared with the previous quarter. From a market perspective, mainstream
IC and high-end FPD were notable areas of strength. We were able to leverage the growth in revenues to expand profit margins, while also managing expenses, resulting in 12.6% operating margin and $0.17 earnings per diluted share. Our cash balance
grew to $260.6 million, providing us with financial strength and flexibility as we look to continue our strategic growth investments. We are well placed to pursue attractive organic growth opportunities and expand our
leadership position.”
Fourth Quarter 2020 Guidance
For the fourth quarter of 2020, Photronics expects revenue to be between $148 million and $158 million, and net income attributable to Photronics, Inc. shareholders to
be between $0.12 and $0.19 per diluted share.
Conference Call
A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Thursday, August 27, 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 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 and 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, the current pandemic and future recurrences and other developments with respect thereto, governmental responses to the pandemic and related matters, changes
in end markets resulting therefrom, changes in investment, tax, trade, exchange and other laws and regulations, as well as economic, competitive, legal, governmental, political, monetary and fiscal policy, and technological factors and 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 or, except as required to be disclosed in filings or
furnishings with the Securities and Exchange Commission, to report events or to report the occurrence of unanticipated events. There is no assurance that Photronics’ expectations will be realized.
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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Nine Months Ended
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August 2,
2020
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May 3,
2020
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July 28,
2019
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August 2,
2020
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July 28,
2019
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Revenue
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$
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157,895
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$
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142,774
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$
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138,112
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$
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460,405
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$
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394,404
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Cost of goods sold
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120,161
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112,341
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107,542
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357,636
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311,721
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Gross profit
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37,734
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30,433
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30,570
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102,769
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82,683
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Operating Expenses:
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Selling, general and administrative
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13,306
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13,267
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13,124
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40,792
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40,186
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Research and development
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4,492
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4,462
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4,046
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13,034
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11,852
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Total Operating Expenses
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17,798
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17,729
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17,170
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53,826
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52,038
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Operating income
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19,936
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12,704
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13,400
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48,943
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30,645
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Other (expense) income, net
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(2,135
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)
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(951
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)
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(348
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)
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610
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4,692
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Income before income taxes
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17,801
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11,753
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13,052
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49,553
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35,337
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Income tax provision
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4,937
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3,781
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3,218
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17,789
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7,883
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Net income
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12,864
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7,972
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9,834
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31,764
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27,454
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Net income attributable to noncontrolling interests
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2,088
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1,688
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3,487
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4,404
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7,361
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Net income attributable to Photronics, Inc. shareholders
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$
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10,776
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$
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6,284
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$
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6,347
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$
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27,360
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$
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20,093
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Earnings per share:
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Basic
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$
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0.17
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$
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0.10
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$
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0.10
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$
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0.42
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$
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0.30
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Diluted
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$
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0.17
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$
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0.10
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$
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0.10
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$
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0.42
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$
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0.30
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Weighted-average number of common shares outstanding:
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Basic
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64,780
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64,937
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66,313
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65,090
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66,386
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Diluted
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65,247
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65,417
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66,570
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65,704
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69,919
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Exhibit 99.3
PHOTRONICS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
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August 2,
2020
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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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260,597
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$
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206,530
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Accounts receivable
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146,843
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134,454
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Inventories
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54,733
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48,155
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Other current assets
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48,468
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38,388
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Total current assets
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510,641
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427,527
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Property, plant and equipment, net
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623,247
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632,441
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Intangible assets, net
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4,535
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7,870
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Other assets
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57,419
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50,827
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Total assets
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$
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1,195,842
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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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14,683
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$
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10,873
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Accounts payable and accrued liabilities
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160,626
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141,081
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Total current liabilities
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175,309
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151,954
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Long-term debt
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38,183
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41,887
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Other liabilities
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25,665
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13,732
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||||||
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Photronics, Inc. shareholders' equity
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790,242
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769,892
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||||||
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Noncontrolling interests
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166,443
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141,200
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||||||
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Total equity
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956,685
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911,092
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Total liabilities and equity
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$
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1,195,842
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$
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1,118,665
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Exhibit 99.4
PHOTRONICS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
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Nine Months Ended
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||||||||
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August 2,
2020
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July 28,
2019
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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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31,764
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$
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27,454
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||||
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Adjustments to reconcile net income to net cash provided by operating activities:
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||||||||
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Depreciation and amortization
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71,120
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60,387
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||||||
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Share-based compensation
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3,773
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2,871
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||||||
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Changes in operating assets, liabilities and other
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(28,393
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)
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(67,208
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)
|
||||
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Net cash provided by operating activities
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78,264
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23,504
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||||||
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Cash flows from investing activities:
|
||||||||
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Purchases of property, plant and equipment
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(36,693
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)
|
(160,149
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)
|
||||
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Government incentive
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5,263
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17,694
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||||||
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Other
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(139
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)
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(24
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)
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||||
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Net cash used in investing activities
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(31,569
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)
|
(142,479
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)
|
||||
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Cash flows from financing activities:
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||||||||
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Proceeds from long-term debt
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5,699
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53,227
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||||||
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Contribution from noncontrolling interest
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17,596
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29,394
|
||||||
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Purchase of treasury stock
|
(16,894
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)
|
(10,696
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)
|
||||
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Repayments of debt
|
(5,929
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)
|
(61,319
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)
|
||||
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Proceeds from share-based arrangements
|
3,869
|
1,314
|
||||||
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Dividends paid to noncontrolling interests
|
-
|
(26,102
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)
|
|||||
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Other
|
(248
|
)
|
(92
|
)
|
||||
|
Net cash provided by (used in) financing activities
|
4,093
|
(14,274
|
)
|
|||||
|
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
3,486
|
1,206
|
||||||
|
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
54,274
|
(132,043
|
)
|
|||||
|
Cash, cash equivalents, and restricted cash, beginning of period
|
209,291
|
331,989
|
||||||
|
Cash, cash equivalents, and restricted cash, end of period
|
$
|
263,565
|
$
|
199,946
|
||||
Exhibit 99.5
Photronics, Inc. Q3 2020 Financial Results Conference CallAugust 27, 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.
Revenue was $157.9M, up 11% Q/Q and 14% Y/Y12th consecutive quarter of YOY revenue growthFPD production
remained at capacity, with sequential growth across all high-end technologiesIC revenue grew on China recoveryRevenue of products shipped to China improved 10% Q/Q and 46% Y/YNet income attributable to Photronics, Inc. shareholders of $10.8M
($0.17/share)Cash balance grew to $261M$17M generated from operating activity$10M contribution from JV partnerChina production contributed $21M in revenue and $1M in operating profitNext phase of FPD capacity investment on track for tool
delivery in 2021Daniel Liao (Senior Advisor, Lam Research Corp.) joined Board of Directors Q3 2020 Summary 3 Successfully repositioned the business; strategic investments driving long-term, profitable growth
$M (except EPS) Q320 Q220 Q/Q Q319 Y/Y Revenue $ 157.9 $ 142.8 11% $ 138.1 14% Gross
Profit $ 37.7 $ 30.4 24% $ 30.6 23% Gross Margin 23.9% 21.3% 260 bps 22.1% 180 bps Operating Income $ 19.9 $ 12.7 57% $ 13.4 49% Operating Margin 12.6% 8.9% 370 bps 9.7% 290 bps Other income (expense) ($ 2.1) ($
1.0) ($ 1.2) ($ 0.3) ($ 1.8) Income tax provision $ 4.9 $ 3.8 $ 1.2 $ 3.2 $ 1.7 Minority interest $ 2.1 $ 1.7 $ 0.4 $ 3.5 ($ 1.4) Net Income* $ 10.8 $ 6.3 71% $ 6.3 70% Diluted EPS* $ 0.17 $ 0.10 $ 0.07 $ 0.10 $
0.07 Days in quarter 91 91 - 91 - Gross and operating margin moved up with revenue (operating leverage, cost controls)China operations contributed $1.0M to operating incomeOther income / (expense) primarily due to FX gain /
(loss)Minority interest includes IC JVs in Taiwan and China Income Statement Summary 4 *Net income attributable to Photronics, Inc. shareholders
High-end flat; mainstream up on China foundry recoveryChina revenue Up 15% Q/Q and 60% Y/YRepresents
22% of Q320 IC revenueOutlookNew US restrictions on Huawei (8/17) creating greater uncertaintyPotential headwinds if governments escalate shelter-in-place mandates $M Q320 Q220 Q/Q Q319 Y/Y High-End* $ 38.7 $ 38.3 1% $
38.5 1% Mainstream $ 70.0 $ 58.6 19% $ 61.7 13% Total $ 108.7 $ 96.8 12% $ 100.2 8% IC Photomask Revenue 5 *28nm and smaller Total may differ due to rounding
High-end revenue growth across all technologies (AMOLED, G10.5+, LTPS)China revenue Up 5% Q/Q and 36%
Y/YRepresents 56% of Q320 FPD revenueOutlookDynamic market environmentTemporary dislocation as supply chain reacts to Huawei restrictionsPlanned annual PM in Hefei $M Q320 Q220 Q/Q Q319 Y/Y High-End* $ 36.7 $ 31.8 15% $
23.1 59% Mainstream $ 12.6 $ 14.1 (11%) $ 14.8 (15%) Total $ 49.2 $ 45.9 7% $ 37.9 30% FPD Photomask Revenue 6 *≥G10.5, AMOLED and LTPS Total may differ due to rounding
$M Q320 Q220 Q319 Cash $ 261 $ 238 $ 197 Debt $ 53 $ 53 $ 49 Net Cash* $ 208 $ 184 $
148 Operating Cash Flow $ 17 $ 31 $ 26 Capital Expenditures $ 7 $ 16 $ 20 Government Incentives for Capital Equipment - $ 3 $ 12 Share repurchase - $ 6 - Debt is mostly local China borrowing to finance fixed assets, working
capital and VATYTD capex is $37M; expect FY 2020 capex ~$80MBalance sheet able to fund planned investments, share repurchases, and strategic M&A opportunities Select Financial Data 7 *Net cash defined as cash and cash equivalents less
long-term borrowings (including current portion), as reported in accordance with GAAP
Revenue ($M) $148 - $158 Operating Margin 10% - 14% Taxes ($M) $4 - $5 EPS $0.12 -
$0.19 Diluted Shares (M) ~65 Huawei restrictions creates uncertainty across IC & FPD supply chainsAnnual PM planned for Hefei plantFocus on expanding margins and improving cash flowsPotential geopolitical headwind due to coronavirus
reaction and trade policy decisions Q420 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 Total may differ due to rounding
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: ≥G10.5, AMOLED and LTPS; total may
differ due to rounding