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Photronics Reports Fourth Quarter Fiscal 2018 Results

  • Fourth quarter 2018 revenue was a record $144.7 million, up 20% year-over-year and 6% sequentially
     
  • Record FPD revenue of $33.8 million on strong high-end AMOLED demand
     
  • Full-year 2018 revenue was a record $535.3 million, up 19% over the previous year
     
  • Net income attributable to Photronics, Inc. shareholders was $12.5 million, or $0.18 per diluted share
     
  • Cash balance was $329 million, with strong operating cash flow of $43.6 million and capex of $28.2 million
     
  • Returned $16.3 million to shareholders through share repurchase program
     
  • First quarter 2019 guidance: revenue between $120 and $130 million with diluted EPS between $0.01 and $0.07

BROOKFIELD, Conn., Dec. 12, 2018 (GLOBE NEWSWIRE) -- Photronics, Inc. (PLAB), a worldwide leader in supplying innovative imaging technology solutions for the global electronics industry, today reported financial results for its fiscal 2018 fourth quarter ended October 31, 2018.

Fourth quarter revenue was a record $144.7 million, improving 20% compared with the same quarter last year and 6% compared with the previous quarter. Integrated circuit (IC) revenue was $110.9 million, up 15% compared with last year and 3% sequentially. Flat panel display (FPD) revenue was a record $33.8 million, up 36% compared with last year and 16% sequentially.

Net income attributable to Photronics, Inc. shareholders was $12.5 million ($0.18 per diluted share), compared with $5.4 million ($0.08 per diluted share) for the fourth quarter of 2017 and $13.0 million ($0.18 per diluted share) for the third quarter of 2018. Results for the third quarter of 2018 included a $2 million one-time tax benefit ($0.01 per diluted share).

"We achieved record revenue during the fourth quarter, with growth in both IC and FPD, as mask demand remained strong and we continued to benefit from our successful repositioning of the business,” said Peter Kirlin, chief executive officer. “Record revenue in FPD was accomplished through growth in high-end AMOLED, strong demand in Korea and solid demand in China. Within IC, high-end memory increased sequentially while high-end logic decreased as our customers experienced softening demand in their end markets. While revenue increased, margins were slightly down due to tool relocation expenses, startup costs in China, and shifts in product mix. We believe all of these are temporary and margins should improve as high-end IC strengthens and our China startup is complete. Despite lower margins, we generated strong cash from operations and were able to defer some capex payments into the first quarter, maintaining a high cash balance. We are well positioned heading into 2019 to ramp our China factories and continue with the next phase of profitable growth.”

First Quarter 2019 Guidance

For the first quarter of 2019, Photronics expects revenue to be between $120 million and $130 million, and net income attributable to Photronics, Inc. shareholders to be between $0.01 and $0.07 per diluted share.

Conference Call

A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, December 12, 2018. The call can be accessed by logging onto Photronics' web site 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’ web site for instant replay access.

About Photronics

Photronics is a leading worldwide manufacturer of photomasks. Photomasks are high precision quartz plates that contain microscopic images of electronic circuits. A key element in the manufacture of semiconductors and flat panel displays, photomasks are used to transfer circuit patterns onto semiconductor wafers and flat panel display substrates during the fabrication of integrated circuits, a variety of flat panel displays and, to a lesser extent, other types of electrical and optical components. They are produced in accordance with product designs provided by customers at strategically located manufacturing facilities in Asia, Europe, and North America. Additional information on the Company can be accessed at www.photronics.com

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements made by or on behalf of Photronics, Inc. and its subsidiaries (the Company). The forward-looking statements contained in this press release and other parts of Photronics’ web site involve risks and uncertainties that may affect the Company’s operations, markets, products, services, prices, and other factors. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental, political, and technological factors as well as decisions we may make in the future regarding our business, capital structure and other matters. These forward-looking statements generally can be identified by phrases such as “believes”, “expects”, “anticipates”, “plans”, “projects”, and similar expressions.  Accordingly, there is no assurance that the Company’s expectations will be realized. For a fuller discussion of the factors that may affect the Company's operations, see "Forward Looking Statements" in the Company's Quarterly and Annual Reports to the Securities and Exchange Commission on Forms 10-Q and 10-K. The Company assumes no obligation to provide revisions to any forward-looking statements.

For Further Information:
R. Troy Dewar, CFA
Director, Investor Relations
(203) 740-5610
tdewar@photronics.com


 
PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
         
    Three Months Ended   Year Ended
    October 31,   July 29,   October 29,   October 31,   October 29,
      2018       2018       2017       2018       2017  
                     
Revenue   $   144,660     $   136,391     $   120,971     $   535,276     $   450,678  
                     
Cost of goods sold       (109,236 )       (100,794 )       (94,529 )       (403,773 )       (359,363 )
                     
Gross profit       35,424         35,597         26,442         131,503         91,315  
                     
Operating Expenses:                    
                     
Selling, general and administrative     (13,504 )       (12,504 )       (10,182 )       (51,395 )       (43,585 )
                     
Research and development       (3,906 )       (2,653 )       (3,838 )       (14,481 )       (15,862 )
                     
Total Operating Expenses       (17,410 )       (15,157 )       (14,020 )       (65,876 )       (59,447 )
                     
Operating income       18,014         20,440         12,422         65,627         31,868  
                     
Other income (expense), net       2,307         1,411         536         2,944         (5,303 )
                     
Income before income taxes       20,321         21,851         12,958         68,571         26,565  
                     
Income tax provision       (3,552 )       (2,054 )       (2,462 )       (7,335 )       (5,276 )
                     
Net income       16,769         19,797         10,496         61,236         21,289  
                     
Net income attributable to noncontrolling interests     (4,282 )       (6,792 )       (5,110 )       (19,181 )       (8,159 )
                     
Net income attributable to Photronics, Inc. shareholders $   12,487     $   13,005     $   5,386     $   42,055     $   13,130  
                     
Earnings per share:                    
                     
Basic   $   0.18     $   0.19     $   0.08     $   0.61     $   0.19  
                     
Diluted   $   0.18     $   0.18     $   0.08     $   0.59     $   0.19  
                     
Weighted-average number of common shares outstanding:                  
                     
Basic     67,894       69,374       68,615       68,829       68,436  
                     
Diluted     73,921       75,258       69,218       74,821       69,288  
                     

 

 
PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
 
             
    October 31,     October 29,  
    2018     2017  
             
Assets            
             
Current assets:            
Cash and cash equivalents   $ 329,277     $ 308,021  
Accounts receivable     120,515       105,320  
Inventories     29,180       23,703  
Other current assets     23,759       12,080  
             
Total current assets     502,731       449,124  
             
Property, plant and equipment, net   571,781       535,197  
Intangible assets, net     12,368       17,122  
Other assets     23,129       19,351  
             
Total assets   $ 1,110,009     $ 1,020,794  
             
             
             
Liabilities and Equity            
             
Current liabilities:            
Current portion of long-term debt $ 57,453     $ 4,639  
Accounts payable and accrued liabilities   133,623       77,137  
             
Total current liabilities     191,076       81,776  
             
Long-term debt     -       57,337  
Other liabilities     14,364       16,386  
             
Photronics, Inc. shareholders' equity   759,671       744,564  
Noncontrolling interests     144,898       120,731  
Total equity     904,569       865,295  
             
Total liabilities and equity   $ 1,110,009     $ 1,020,794  
 

 

 
PHOTRONICS,  INC.  AND  SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
         
    Year Ended
    October 31,   October 29,
      2018       2017  
         
Cash flows from operating activities:        
Net income   $   61,236     $   21,289  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization       84,333         86,573  
Changes in operating assets, liabilities and other     (15,002 )       (11,029 )
         
Net cash provided by operating activities       130,567         96,833  
         
Cash flows from investing activities:        
Purchases of property, plant and equipment     (92,585 )       (91,965 )
Acquisition of business       -          (5,400 )
Proceeds from sale of investments       -          167  
Other       1,856         (868 )
         
Net cash used in investing activities       (90,729 )       (98,066 )
         
Cash flows from financing activities:        
Repayments of long-term debt       (4,639 )       (5,428 )
Dividends paid to noncontrolling interests     (8,166 )       (8,298 )
Purchase of treasury stock       (23,111 )       -   
Contribution from noncontrolling interest     17,996         -   
Proceeds from share-based arrangements     4,634         2,830  
Other       (519 )       (32 )
         
Net cash used in financing activities       (13,805 )       (10,928 )
         
Effect of exchange rate changes on cash       (4,777 )       6,108  
         
Net increase (decrease) in cash and cash equivalents     21,256         (6,053 )
Cash and cash equivalents, beginning of period     308,021         314,074  
         
Cash and cash equivalents, end of period   $   329,277     $   308,021