Photronics Reports Second Quarter Fiscal 2024 Results

Photronics, Inc.

BROOKFIELD, Conn., May 22, 2024 (GLOBE NEWSWIRE) -- Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its second quarter of fiscal year 2024 ended April 28, 2024.

“Second quarter revenue and gross margin were in line with the first quarter as positive seasonality trends were offset by business headwinds primarily related to temporary soft demand following the Chinese New Year holiday and the impact from earthquakes in Taiwan beginning in early April,” said Frank Lee, chief executive officer. “Order rates, which typically pause during Lunar New Year, have recovered at a slower rate than we typically observe. In addition, the recent earthquakes in Taiwan caused a loss of production across both IC and FPD, resulting in an approximately $3 million revenue impact. Despite these challenges, we maintained gross margin as the global Photronics team performed well, serving our customers by quickly and efficiently recovering from the disruptions. We achieved good earnings and cash generation, further strengthening our balance sheet and positioning us to continue investing in profitable growth. We are building momentum for solid performance in 2024 and beyond.”

Second Quarter Fiscal 2024 Results

• Revenue was $217.0 million, down 5% year-over-year and up 0.3% sequentially

• GAAP net income attributable to Photronics, Inc. shareholders was $36.3 million, or $0.58 per diluted share, compared with $39.9 million, or $0.65 per diluted share in the second quarter 2023 and $26.2 million, or $0.42 per diluted share in the first quarter of 2024

• Non-GAAP net income attributable to Photronics, Inc. shareholders was $28.7 million, or $0.46 per diluted share, compared with $32.9 million, or $0.54 per diluted share in the second quarter 2023 and $29.9 million, or $0.48 per diluted share in the first quarter of 2024

• IC revenue was $160.9 million, down 4% year-over-year and up 2% sequentially

• FPD revenue was $56.1 million, down 10% from the same quarter last year and 5% sequentially

• Cash generated from operating activities was $76.5 million, and cash invested in organic growth through capital expenditures was $20.0 million

• Cash balance at the end of the quarter was $539.2 million, with $20.7 million in short-term investments and $21.8 million in debt
  

Third Quarter Fiscal 2024 Guidance

For the third quarter of fiscal 2024, Photronics expects revenue to be between $221 million and $229 million and non-GAAP net income attributable to Photronics, Inc. shareholders to be between $0.53 and $0.59 per diluted share.

Webcast

A webcast to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, May 22, 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 in our most recent SEC filings. 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, non-GAAP earnings per share, 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.

PHOTRONICS, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
	Three Months Ended												Six Months Ended
	April 28,				January 28,				April 30,				April 28,				April 30,
	2024				2024				2023				2024				2023
Revenue	$	217,000			$	216,334			$	229,306			$	433,334			$	440,397
Cost of goods sold		137,749				137,079				140,904				274,828				275,918
Gross Profit		79,251				79,255				88,402				158,506				164,479
Operating Expenses:
Selling, general and administrative		18,996				18,321				17,878				37,317				34,696
Research and development		4,292				3,445				3,479				7,736				6,781
Total Operating Expenses		23,288				21,766				21,357				45,053				41,477
Other operating gain		89				-				-				89				-
Operating Income		56,052				57,489				67,045				113,542				123,002
Non-operating (loss) income, net		20,534				(3,747	)			13,571				16,786				(854	)
Income Before Income Tax Provision		76,586				53,742				80,616				130,328				122,148
Income tax provision		20,214				14,660				21,343				34,874				33,925
Net Income		56,372				39,082				59,273				95,454				88,223
Net income attributable to noncontrolling interests		20,121				12,902				19,344				33,023				34,308
Net income attributable to Photronics, Inc. shareholders	$	36,251			$	26,180			$	39,929			$	62,431			$	53,915
Earnings per share:
Basic	$	0.59			$	0.43			$	0.65			$	1.01			$	0.88
Diluted	$	0.58			$	0.42			$	0.65			$	1.00			$	0.88
Weighted-average number of common shares outstanding:
Basic		61,771				61,455				61,138				61,613				61,016
Diluted		62,409				62,283				61,507				62,346				61,489

PHOTRONICS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
	April 28,				October 31,
	2024				2023
Assets
Current assets:
Cash and cash equivalents	$	539,160			$	499,292
Short-term investments		20,732				12,915
Accounts receivable		197,523				194,927
Inventories		54,257				49,963
Other current assets		32,461				28,353
Total current assets		844,133				785,450
Property, plant and equipment, net		729,489				709,244
Other assets		29,831				31,527
Total assets	$	1,603,453			$	1,526,221
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	19,318			$	6,621
Accounts payable and accrued liabilities		176,249				178,602
Total current liabilities		195,567				185,223
Long-term debt		2,456				17,998
Other liabilities		37,401				47,391
Photronics, Inc. shareholders' equity		1,034,857				975,008
Noncontrolling interests		333,172				300,601
Total equity		1,368,029				1,275,609
Total liabilities and equity	$	1,603,453			$	1,526,221

PHOTRONICS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
	Six Months Ended
	April 28,				April 30,
	2024				2023
Cash flows from operating activities:
Net income	$	95,454			$	88,223
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		41,487				39,085
Share-based compensation		6,499				3,830
Changes in operating assets, liabilities and other		(25,446	)			(21,461	)
Net cash provided by operating activities		117,994				109,677
Cash flows from investing activities:
Purchases of property, plant and equipment		(63,311	)			(57,728	)
Purchases of available-for-sale debt securities		(16,551	)			(9,837	)
Proceeds from maturities of available-for-sale debt securities		9,000				4,000
Government incentives		1,419				1,393
Other		(6	)			(88	)
Net cash used in investing activities		(69,449	)			(62,260	)
Cash flows from financing activities:
Repayments of debt		(2,844	)			(14,720	)
Proceeds from share-based arrangements		1,055				730
Net settlements of restricted stock awards		(2,938	)			(1,252	)
Net cash used in financing activities		(4,727	)			(15,242	)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash		(3,839	)			15,621
Net increase in cash, cash equivalents, and restricted cash		39,979				47,796
Cash, cash equivalents, and restricted cash, beginning of period		501,867				322,409
Cash, cash equivalents, and restricted cash, end of period	$	541,846			$	370,205

PHOTRONICS, INC.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(Unaudited)
	Three Months ended
	April 28,				January 28,				April 30,
	2024				2024				2023
Reconciliation of GAAP to Non-GAAP Net Income:
GAAP Net Income	$	36,251			$	26,180			$	39,929
FX (gain) loss		(14,766	)			8,909				(10,718	)
Estimated tax effects of above		3,743				(2,244	)			2,823
Estimated noncontrolling interest effects of above		3,489				(2,939	)			901
Non-GAAP Net Income	$	28,717			$	29,906			$	32,935
Weighted-average number of common shares outstanding - Diluted		62,409				62,283				61,507
Reconciliation of GAAP to Non-GAAP EPS:
GAAP diluted earnings per share	$	0.58			$	0.42			$	0.65
Effects of the above adjustments	$	(0.12	)		$	0.06			$	(0.11	)
Non-GAAP diluted earnings per share	$	0.46			$	0.48			$	0.54

PHOTRONICS, INC.
Reconciliation of GAAP to Non-GAAP Financial Information (cont.)
(in thousands)
(Unaudited)
Reconciliation of Cash and cash equivalents to Net Cash:
	As of
	April 28,				October 31,				April 30,
	2024				2023				2023
Cash and cash equivalents	$	539,160			$	499,292			$	367,485
Current portion of Long-term debt		(19,318	)			(6,621	)			(7,017	)
Long-term Debt		(2,456	)			(17,998	)			(21,322	)
Net Cash	$	517,386			$	474,673			$	339,146

For Further Information:
Eric Rivera
Vice President & Interim CFO
203.740.5283
erivera@photronics.com