Photronics Reports First Quarter Fiscal 2024 Results

Photronics, Inc.

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