UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

graphic

 Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

Date of report (Date of earliest event reported) 
February 21, 2024
 

PHOTRONICS, INC.
(Exact name of registrant as specified in its charter)
 
Connecticut
0-15451
06-0854886
(State or Other Jurisdiction of Incorporation)
(Commission File Number)   
(IRS Employer Identification No.)

15 Secor Road, Brookfield, CT

06804
(Address of principal executive offices)

(Zip Code)

Registrant's Telephone Number, including area code
(203) 775-9000


(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:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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:

 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
  COMMON STOCK, $0.01 par value per share
  PLAB
  NASDAQ Global Select Market



Item 2.02.
Results of Operations and Financial Condition.
 
On February 21, 2024, Photronics, Inc. (the “Company”) issued a press release reporting first quarter fiscal 2024 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, 99.5, 99.6 and 99.7, 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 February 21, 2024, 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 January 28, 2024 may be disclosed. This information is set forth in Exhibit 99.7.


Item 9.01.
Financial Statements and Exhibits.
 
(d)

Exhibits
     

Press Release February 21, 2024.

Condensed Consolidated Statements of Income.

Condensed Consolidated Balance Sheets.

Condensed Consolidated Statements of Cash Flows.

Reconciliation of GAAP to Non-GAAP Financial Information.

Reconciliation of GAAP to Non-GAAP Financial Information (cont.).

Photronics Q1 2024 Financial Results Conference Call February 21, 2024 slides.


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.


PHOTRONICS, INC.

(Registrant)



By:
/s/ Richelle E. Burr

Name:
Richelle E. Burr

Title:
Executive Vice President,

 
Chief Administrative Officer,

 
General Counsel and Secretary


 
Date:  February 21, 2024
   




Exhibit 99.1

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



Photronics Reports First Quarter Fiscal 2024 Results

BROOKFIELD, Conn. February 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.




Exhibit 99.2

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
 




Exhibit 99.3

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
 




Exhibit 99.4

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
 




Exhibit 99.5

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
 




Exhibit 99.6

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
 




Exhibit 99.7

 February 21, 2024  Q1 2024 Financial Results Conference Call 
 

 Safe Harbor Statement  This presentation and some of our comments during this presentation 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. We refer you to the documents the Company files from time to time with the Securities and Exchange Commission. These documents contain and identify important factors that could cause the actual results for the Company to differ materially from those contained in our projections or 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 the accuracy of any forecasts or estimates, and we are not obligated to update any forward-looking statements if our expectations change. 
 

 Q1 2024 Summary  Year-over-year Growth in Earnings and Cash Flow as we Effectively Manage Costs and Working Capital  1Net income attributable to Photronics, Inc. shareholders. 2Adjusted EPS is a non-GAAP measure; see reconciliation included in this presentation.  $216.3M  Revenue  26.6%  Operating Margin  $0.42  EPS1  $0.48  Adjusted2 EPS1  $41.5M  OCF  $508.5M  Cash  +2% Y/Y  (5%) Q/Q  +10 bps Y/Y  (190) bps Q/Q  +83% Y/Y  (42%) Q/Q  +20% Y/Y  (20%) Q/Q  +50% Y/Y  (61%) Q/Q  +52% Y/Y  +2% Q/Q  Revenue improved Y/Y and down Q/Q; slow start to quarter for IC; demand strengthened during the quarter, positioning for stronger Q2  Adjusted EPS improved Y/Y on operating leverage; lower Q/Q on decreased volume and higher operating expense  Balance sheet fortified due to strong free cash flow generation, debt reduction, and effective management of working capital  Investing in IC capacity to capitalize on market growth trends 
 

 Income Statement Summary  GAAP  Non-GAAP1  $M (except EPS)  Q124  Q/Q  Y/Y  Q124  Q/Q  Y/Y  Revenue  216.3   (5%)  2%  Gross Profit  79.3  (7%)  4%  Gross Margin  36.6%  (70) bps  60 bps  Operating Income   57.5  (11%)  3%  Operating Margin  26.6%  (190) bps  10 bps  Non-operating (loss) income  (3.7)  (22.4)  10.7  5.2  (0.3)  2.6  Income tax provision  14.7  (28%)  17%  16.9  0%  (1%)  Minority interest  12.9  (30%)  (14%)  15,8  (2%)  (7%)  Net income2  26.2  (41%)  87%  29.9  (20%)  23%  Diluted EPS2   0.42  (0.30)  0.19  0.48  (0.12)  0.08  Days in quarter  89  (4)  (1)  1See reconciliation included in this presentation. 2Net income attributable to Photronics, Inc. shareholders.  Gross margins down Q/Q and up Y/Y on operating leverage and change in revenue  Opex increased due to higher SG&A driven by higher compensation expense  GAAP Non-operating income primarily consists of unrealized FX gain/loss;  Non-GAAP removes effect of FX gain/loss  Minority interest reflects net income of IC JVs in Taiwan and China 
 

 Revenue by Product Line  $M  Q124  Q/Q  Y/Y  High-End*  60.9  6%  27%  Mainstream  96.7  (9%)  (11%)  Total  157.6  (4%)  1%  High-end increased on strong demand from Asia foundries; Y/Y also saw contribution from US  Mainstream softness primarily in Asia  Growth drivers:  New designs by customers to gain market share and support technology roadmap  Regionalization driving investments for global chip capacity  Able to maintain pricing in favorable supply / demand dynamic  *IC: 28nm and smaller; FPD: ≥G10.5, AMOLED and LTPS. Totals may differ due to rounding.  High-end grew Y/Y on strong AMOLED demand; Q/Q softer due to premium smartphone seasonality  Mainstream lower due to soft demand at beginning of Q1  Growth drivers:  Technology development drives demand for higher-value masks  Mobile demand is expected to remain strong with rollout of new designs and emerging panel makers winning market share  $M  Q124  Q/Q  Y/Y  High-End*  50.6  (5%)  11%  Mainstream  8.1  (16%)  (8%)  Total  58.7  (7%)  8%  IC  FPD 
 

 Balance Sheet and Cash Flow Metrics  *Net cash is a non-GAAP term; see reconciliation included in this presentation.  Balance Sheet Provides Resilience, Enables Growth Strategy and Shareholder Value Creation  $M  Q124  Y/Y  Q/Q  Cash  508.5  52%  2%  Short-term Investments  13.0  (67%)  1%  Debt  23.4  (31%)  (5%)  Net Cash*  485.1  61%  2%  Operating Cash Flow  41.5  50%  (61%)  Capital Expenditures  43.3  39%  (17%)  Continued strong operating cash flow from income generation and working capital management  Debt comprised of US equipment leases  Capex targets growth in IC capacity & facility expansion  Strong balance sheet able to fund investments, share repurchases, and strategic opportunities and remain resilient to effects of industry downturns 
 

 Q2 2024 Guidance   Revenue ($M)  226 – 236  Operating Margin  27% - 29%  Taxes ($M)  17 – 19  Diluted non-GAAP EPS  $0.50 - $0.58  Diluted Shares (M)  ~62  Full-year Capex ($M)  ~140  Incorporation of chips in IoT, 5G, Crypto and consumer products   New designs to capture market share  Advanced display technologies  Outlook clouded by geopolitical uncertainty and macro-economic headwinds  Driving margin expansion and cash flows to deliver long-term shareholder value 
 

 Appendix 
 

 Revenue by Product Group ($M)  Total may differ due to rounding.  IC  FPD  Mainstream  High-End  Mainstream  High-End  Total Revenue  IC Revenue  FPD Revenue  High-End: 28nm and smaller  High-End: ≥G10.5, AMOLED and LTPS 
 

 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.  
 

 Non-GAAP Financial Measures 
 

 Non-GAAP Financial Measures