Press Release

Photronics Reports First Quarter Fiscal 2024 Results

February 21, 2024 at 6:30 AM EST
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BROOKFIELD, Conn., Feb. 21, 2024 (GLOBE NEWSWIRE) -- Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its first quarter of fiscal year 2024 ended January 28, 2024.

“First quarter revenue increased year-over-year even though typically lower seasonal demand was weaker than anticipated, especially in the beginning of the quarter. Order rates improved through the quarter, continuing into second quarter,” said Frank Lee, chief executive officer. “High-end IC revenue increased both sequentially and year-over-year, primarily in 22nm and 28nm nodes, as customers continue migration to these nodes for improved performance and optimal cost. High-end FPD also increased over last year’s first quarter, but decreased from the fourth quarter due to typically lower seasonal demand for premium smartphone displays that use AMOLED technology. Operating margin increased year-over-year, but contracted sequentially, resulting from operating leverage in the year-over-year result and the impact of higher operating expenses in the sequential comparison. Cash generation remains strong, further strengthening our balance sheet with ample liquidity for our profitable growth investments. The Photronics team continues their outstanding performance, and with expectations for growth in the second quarter, we are building momentum for another record year in 2024.”

First Quarter Fiscal 2024 Results

  • Revenue was $216.3 million, up 2% year-over-year and down 5% sequentially
  • GAAP net income attributable to Photronics, Inc. shareholders was $26.2 million, or $0.42 per diluted share, compared with $14.0 million, or $0.23 per diluted share in the first quarter 2023 and $44.6 million, or $0.72 per diluted share in the fourth quarter of 2023
  • Non-GAAP net income attributable to Photronics, Inc. shareholders was $29.9 million, or $0.48 per diluted share, compared with $24.4 million, or $0.40 per diluted share in the first quarter 2023 and $37.2 million, or $0.60 per diluted share in the fourth quarter of 2023
  • IC revenue was $157.6 million, up 1% year-over-year and down 4% sequentially
  • FPD revenue was $58.7 million, up 8% from the same quarter last year and down 7% sequentially
  • Cash generated from operating activities was $41.5 million, and cash invested in organic growth through capital expenditures was $43.3 million; we received $1.1 million in government incentives for investments made
  • Cash balance at the end of the quarter was $508.5 million, with $13.0 million in short-term investments and $23.4 million in debt

Second Quarter Fiscal 2024 Guidance

For the second quarter of fiscal 2024, Photronics expects revenue to be between $226 million and $236 million and non-GAAP net income attributable to Photronics, Inc. shareholders to be between $0.50 and $0.58 per diluted share.

Webcast

A webcast to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, February 21, 2024. The call will be broadcast live and on-demand on the Events and Presentations link on the Photronics website. Analysts and investors who wish to participate in the Q&A portion of the call should click here. It is suggested that participants register fifteen minutes prior to the call's scheduled start time.

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 over 50 years. As of October 31, 2023, the company had approximately 1,885 employees. The company operates 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” regarding our industry, our strategic position, and our financial and operating results. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results, performance or achievements to differ materially. Please refer to the documents we file with the Securities and Exchange Commission. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in these forward-looking statements. These certain factors can be found at www.photronics.com/riskfactors. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forward-looking statements after the date of this release to conform these statements to actual results.

Non-GAAP Financial Measures

Non-GAAP Net Income attributable to Photronics, Inc. shareholders and non-GAAP earnings per share, Free Cash Flow, and Net Cash are “non-GAAP financial measures” as such term is defined by the Securities and Exchange Commission, and may differ from similarly named non-GAAP financial measures used by other companies. The attached financial supplement reconciles Photronics, Inc. financial results under GAAP to non-GAAP financial information. We believe these non-GAAP financial measures that exclude certain items are useful for analysts and investors to evaluate our future on-going performance because they enable a more meaningful comparison of our projected performance with our historical results. These non-GAAP metrics are not intended to represent funds available for our discretionary use and are not intended to represent, or be used as a substitute for, gross profit, operating income, net income, cash and cash equivalents, or cash flows from operations, as measured under GAAP. The items excluded from these non-GAAP metrics, but included in the calculation of their closest GAAP equivalent, are significant components of the condensed consolidated balance sheets and statement of cash flows and must be considered in performing a comprehensive assessment of overall financial performance. Please refer to the non-GAAP reconciliations on the following pages.

For Further Information:
John P. Jordan
Executive Vice President & CFO
203.740.5671
jjordan@photronics.com

PHOTRONICS, INC. 
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
 
 
  Three Months Ended  
  January 28,
2024
   October 31,
2023
    January 29,
2023
  
                         
Revenue $ 216,334     $ 227,473     $ 211,090    
                         
Cost of goods sold   137,079       142,591       135,013    
                         
Gross Profit   79,255       84,882       76,077    
                         
Operating Expenses:                        
                         
Selling, general and administrative   18,321       16,731       16,818    
                         
Research and development   3,445       3,367       3,302    
                         
Total Operating Expenses   21,766       20,098       20,120    
                         
Operating Income   57,489       64,784       55,957    
                         
Non-operating (loss) income, net   (3,747 )     18,660       (14,425 )  
                         
Income Before Income Tax Provision   53,742       83,444       41,532    
                         
Income tax provision   14,660       20,288       12,582    
                         
Net Income   39,082       63,156       28,950    
                         
Net income attributable to noncontrolling interests   12,902       18,545       14,964    
                         
Net income attributable to Photronics, Inc. shareholders $ 26,180     $ 44,611     $ 13,986    
                         
Earnings per share:                        
                         
Basic $ 0.43     $ 0.73     $ 0.23    
                         
Diluted $ 0.42     $ 0.72     $ 0.23    
                         
Weighted-average number of common shares outstanding:                        
                         
Basic   61,455       61,290       60,894    
                         
Diluted   62,283       62,067       61,470    
                         


PHOTRONICS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
 
 
  January 28,
2024
   October 31,
2023
  
             
Assets            
             
Current assets:            
Cash and cash equivalents $ 508,518   $ 499,292  
Short-term investments   12,996     12,915  
Accounts receivable   203,607     194,927  
Inventories   50,680     49,963  
Other current assets   31,876     28,353  
             
Total current assets   807,677     785,450  
             
Property, plant and equipment, net   742,671     709,244  
Other assets   32,488     31,527  
             
Total assets $ 1,582,836   $ 1,526,221  
             
             
             
Liabilities and Equity            
             
Current liabilities:            
Current portion of long-term debt $ 20,771   $ 6,621  
Accounts payable and accrued liabilities   164,518     178,602  
             
Total current liabilities   185,289     185,223  
             
Long-term debt   2,655     17,998  
Other liabilities   47,838     47,391  
             
Photronics, Inc. shareholders' equity   1,022,956     975,008  
Noncontrolling interests   324,098     300,601  
Total equity   1,347,054     1,275,609  
             
Total liabilities and equity $ 1,582,836   $ 1,526,221  
 


PHOTRONICS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
 
  Three Months Ended  
  January 28,
2024
    January 29,
2023
  
                 
Cash flows from operating activities:                
Net income $ 39,082     $ 28,950    
Adjustments to reconcile net income to net cash
 provided by operating activities:
                
Depreciation and amortization   20,702       19,105    
Share-based compensation   2,573       1,821    
Changes in operating assets, liabilities and other   (20,849 )     (22,196 )  
                 
Net cash provided by operating activities   41,508       27,680    
                 
Cash flows from investing activities:                
Purchases of property, plant and equipment   (43,314 )     (31,097 )  
Purchases of available-for-sale debt securities   (2,436 )     -    
Proceeds from maturities of available-for-sale debt securities   2,500       -    
Government incentives   1,091       1,014    
Other   (56 )     (87 )  
                 
Net cash used in investing activities   (42,215 )     (30,170 )  
                 
Cash flows from financing activities:                
Repayments of debt   (1,194 )     (9,218 )  
Proceeds from share-based arrangements   936       672    
Net settlements of restricted stock awards   (2,613 )     (1,168 )  
                 
Net cash used in financing activities   (2,871 )     (9,714 )  
                 
Effects of exchange rate changes on cash, cash equivalents, and restricted cash   13,026       27,499    
                 
Net increase in cash, cash equivalents, and restricted cash   9,448       15,295    
Cash, cash equivalents, and restricted cash, beginning of period   501,867       322,409    
                 
Cash, cash equivalents, and restricted cash, end of period $ 511,315     $ 337,704    
 


PHOTRONICS, INC.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(Unaudited)
 
 
  Three Months ended
  January 28,
2024
   October 31,
2023
    January 29,
2023
  
Reconciliation of GAAP to Non-GAAP Non-operating (loss) Income:                        
                         
GAAP Non-operating (loss) income, net $ (3,747 )   $ 18,660     $ (14,425 )  
FX (gain) loss   8,909       (13,234 )     16,944    
Non-GAAP Non-operating (loss) income, net $ 5,162     $ 5,426     $ 2,519    
                         
                         
Reconciliation of GAAP to Non-GAAP Income tax provision:                        
                         
GAAP Income tax provision $ 14,660     $ 20,288     $ 12,582    
Estimated tax effects of FX (gain) loss   (2,244 )     3,437       (4,506 )  
Non-GAAP Income tax provision $ 16,904     $ 16,851     $ 17,088    
                         
                         
Reconciliation of GAAP to Non-GAAP Noncontrolling interests:                        
                         
GAAP Noncontrolling interests $ 12,902     $ 18,545     $ 14,964    
Estimated noncontrolling interest effects of above   (2,939 )     2,431       (2,060 )  
Non-GAAP Noncontrolling interests $ 15,841     $ 16,114     $ 17,024    
                         
                         
Reconciliation of GAAP to Non-GAAP Net Income:                        
                         
GAAP Net Income $ 26,180     $ 44,611     $ 13,986    
FX (gain) loss   8,909       (13,234 )     16,944    
Estimated tax effects of above   (2,244 )     3,437       (4,506 )  
Estimated noncontrolling interest effects of above   (2,939 )     2,431       (2,060 )  
Non-GAAP Net Income $ 29,906     $ 37,245     $ 24,364    
                         
Weighted-average number of common shares outstanding - Diluted   62,283       62,067       61,470    
                         
Reconciliation of GAAP to Non-GAAP EPS:                        
                         
GAAP diluted earnings per share $ 0.42     $ 0.72     $ 0.23    
Effects of the above adjustments $ 0.06     $ (0.12 )   $ 0.17    
Non-GAAP diluted earnings per share $ 0.48     $ 0.60     $ 0.40    
 


PHOTRONICS, INC.
Reconciliation of GAAP to Non-GAAP Financial Information (cont.)
(in thousands)
(Unaudited)
 
 
Reconciliation of Net cash provided by operating activities to Free Cash Flow
             
  Three Months Ended              
  January 28,
2024
              
                   
                   
GAAP Net cash provided by operating activities $ 41,508                
                   
Purchases of property, plant and equipment (43,314 )              
                   
Free Cash Flow $ (1,806 )              
                   
                   
Reconciliation of Cash and cash equivalents to Net Cash:                  
  As of    
  January 28,
2024
   October 31,
2023
   January 29,
2023
  
                   
Cash and cash equivalents $ 508,518     $ 499,292     $ 334,792    
                   
Current portion of Long-term debt (20,771 )   (6,621 )   (6,541 )  
                   
Long-term Debt (2,655 )   (17,998 )   (27,323 )  
                   
Net Cash $ 485,092     $ 474,673     $ 300,928    
                   


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Source: Photronics, Inc.