Photronics Reports First Quarter Fiscal 2023 Results

BROOKFIELD, Conn., Feb. 20, 2023 (GLOBE NEWSWIRE) -- Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its fiscal first quarter 2023 ended January 29, 2023.

“We made a great start to 2023 and grew revenue sequentially, as both IC and FPD high-end businesses improved due to ongoing design-driven demand,” said Frank Lee, chief executive officer. “IC growth was driven by high-end demand from Asian foundries; FPD benefited from increased G10.5+ demand and continued strength in mobile displays.

“Profit margins were somewhat softer than the previous quarter primarily due to less favorable mix and somewhat lower customer premiums to accelerate delivery. Operating cash generation continued strong, which enables us to continue investing in organic growth and maintain a strong balance sheet to support our strategy and help navigate economic uncertainty. I am proud of the performance of the entire Photronics team.”

First Quarter 2023 Results

• Revenue was $211.1 million up 0.4% sequentially and 11% year-over-year
• GAAP net income attributable to Photronics, Inc. shareholders was $14.0 million ($0.23 per diluted share), compared with $37.1 million ($0.60 per diluted share) in the fourth quarter of 2022 and $23.1 million ($0.38 per diluted share) in the first quarter 2022
• Non-GAAP net income attributable to Photronics, Inc. shareholders was $24.4 million ($0.40 per diluted share), compared with $31.2 million ($0.51 per diluted share) in the fourth quarter of 2022 and $19.2 million ($0.32 per diluted share) in the first quarter 2022
• IC revenue was $156.6 million, up 0.2% sequentially and 21% year-over-year
• FPD revenue was $54.5 million, up 1% sequentially and 9% less than same quarter last year
• Cash generated from operating activities was $28 million, and cash invested in growth through capital expenditures was $31 million

Second Quarter 2023 Guidance

For the second quarter of 2023, Photronics expects revenue to be between $205 million and $215 million and net income attributable to Photronics, Inc. shareholders to be between $0.38 and $0.48 per diluted share.

Webcast

A webcast to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, February 22, 2023. 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, 2022, the company had 1,828 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, LTM 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 page.

PHOTRONICS, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
				Three Months Ended
				January 29,				October 31,			January 30,
					2023			2022			2022
Revenue				$	211,090			$	210,266		$	189,827
Cost of goods sold					135,013				129,997			129,964
Gross Profit					76,077				80,269			59,863
Operating Expenses:
Selling, general and administrative					16,818				15,683			15,727
Research and development					3,302				4,045			5,939
Total Operating Expenses					20,120				19,728			21,666
Operating Income					55,957				60,541			38,197
Non-operating (loss) income, net					(14,425	)			10,797			4,707
Income Before Income Tax Provision					41,532				71,338			42,904
Income tax provision					12,582				16,074			11,178
Net Income					28,950				55,264			31,726
Net income attributable to noncontrolling interests					14,964				18,204			8,662
Net income attributable to Photronics, Inc. shareholders				$	13,986			$	37,060		$	23,064
Earnings per share:
Basic				$	0.23			$	0.61		$	0.38
Diluted				$	0.23			$	0.60		$	0.38
Weighted-average number of common shares outstanding:
Basic					60,894				60,773			60,158
Diluted					61,470				61,374			60,936

PHOTRONICS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
				January 29,			October 31,
				2023			2022
Assets
Current assets:
Cash and cash equivalents				$	334,792		$	319,680
Short-term investments					39,199			38,820
Accounts receivable					220,692			198,147
Inventories					52,796			50,753
Other current assets					53,337			37,252
Total current assets					700,816			644,652
Property, plant and equipment, net					710,927			643,873
Other assets					29,937			27,305
Total assets				$	1,441,680		$	1,315,830
Liabilities and Equity
Current liabilities:
Current portion of long-term debt				$	6,541		$	10,024
Accounts payable and accrued liabilities					192,790			183,773
Total current liabilities					199,331			193,797
Long-term debt					27,323			32,310
Other liabilities					32,306			27,634
Photronics, Inc. shareholders' equity					920,765			831,527
Noncontrolling interests					261,955			230,562
Total equity					1,182,720			1,062,089
Total liabilities and equity				$	1,441,680		$	1,315,830

PHOTRONICS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
					Three Months Ended
					January 29,				January 30,
						2023				2022
Cash flows from operating activities:
Net income					$	28,950			$	31,726
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization						19,105				20,810
Share-based compensation						1,821				1,457
Changes in operating assets, liabilities and other						(22,196	)			5,137
Net cash provided by operating activities						27,680				59,130
Cash flows from investing activities:
Purchases of property, plant and equipment						(31,097	)			(19,175	)
Government incentives						1,014				-
Other						(87	)			(43	)
Net cash used in investing activities						(30,170	)			(19,218	)
Cash flows from financing activities:
Repayments of debt						(9,218	)			(15,192	)
Purchases of treasury stock						-				(2,522	)
Contributions from noncontrolling interest						-				14,997
Proceeds from share-based arrangements						672				3,840
Net settlements of restricted stock awards						(1,168	)			(1,458	)
Net cash used in financing activities						(9,714	)			(335	)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash						27,499				(2,057	)
Net increase in cash, cash equivalents, and restricted cash						15,295				37,520
Cash, cash equivalents, and restricted cash, beginning of period						322,409				279,680
Cash, cash equivalents, and restricted cash, end of period					$	337,704			$	317,200

PHOTRONICS, INC.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(Unaudited)
	Three Months ended
	January 29,				October 31,				January 30,
		2023				2022				2022
Reconciliation of GAAP to Non-GAAP Net Income:
GAAP Net Income	$	13,986			$	37,060			$	23,064
FX (gain) loss		16,944				(10,369	)			(5,268	)
Estimated tax effects of above		(4,506	)			2,522				1,337
Estimated noncontrolling interest effects of above		(2,060	)			1,990				96
Non-GAAP Net Income	$	24,364			$	31,203			$	19,229
Weighted-average number of common shares outstanding - Diluted		61,470				61,374				60,936
Reconciliation of GAAP to Non-GAAP EPS:
GAAP diluted earnings per share	$	0.23			$	0.60			$	0.38
Effects of the above adjustments	$	0.17			$	(0.10	)		$	(0.06	)
Non-GAAP diluted earnings per share	$	0.40			$	0.51			$	0.32

Note: Totals may differ due to rounding.

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				Year ended
	January 29,				October 31,				October 31,				Target Model
		2023				2022				2021			Two-year Horizon
GAAP Net cash provided by operating activities	$	27,680			$	275,187			$	150,772			$	350,000 - 400,000
Purchases of property, plant and equipment		(31,097	)			(112,338	)			(109,099	)			(100,000	)
Government Incentives		1,014				3,615				5,775				-
Free Cash Flow	$	(2,403	)		$	166,464			$	47,448			$	250,000 - 300,000
Reconciliation of Free Cash flow to LTM Free Cash Flow:
	Free Cash Flow
Three Months ended January 29, 2023	$	(2,403	)
Year-ended October 31, 2022		166,464
Three Months ended January 30, 2022		(39,955	)
LTM January 29, 2023	$	124,106
Reconciliation of Cash and cash equivalents to Net Cash:
					As of
	January 29,				October 31,				January 30,
		2023				2022				2022
Cash and cash equivalents	$	334,792			$	319,680			$	314,195
Short-term investments		39,199				38,820				-
Current portion of Long-term debt		(6,541	)			(10,024	)			(18,307	)
Long-term Debt		(27,323	)			(32,310	)			(78,540	)
Net Cash	$	340,127			$	316,166			$	217,348

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