8-K
Photronics Inc (PLAB)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934
| Date of report (Date of earliest event reported) | May 24, 2023 |
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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. |
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On May 24, 2023, Photronics, Inc. (the “Company”) issued a press release reporting second quarter fiscal 2023 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 May 24, 2023, 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 April 30, 2023 may be disclosed. This information is set forth in Exhibit 99.7.
| Item 9.01. | Financial Statements and Exhibits. |
|---|---|
| (d) | Exhibits |
| --- | --- |
| 99.1 | Press Release May 24, 2023. |
| --- | --- |
| 99.2 | Condensed Consolidated Statements of Income. |
| 99.3 | Condensed Consolidated Balance Sheets. |
| 99.4 | Condensed Consolidated Statements of Cash Flows. |
| 99.5 | Reconciliation of GAAP to non-GAAP Financial Information. |
| 99.6 | Reconciliation of GAAP to non-GAAP Financial Information (cont.). |
| 99.7 | Photronics Q2 2023 Financial Results Conference Call May 24, 2023 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: May 24, 2023 |
Exhibit 99.1
| For Further Information:<br><br> <br>John P. Jordan<br><br> <br>Executive Vice President & CFO<br><br> <br>203.740.5671<br><br> <br>jjordan@photronics.com |
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Photronics Reports Second Quarter Fiscal 2023 Results
BROOKFIELD, Conn. May 24, 2023 (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 2023 ended April 30, 2023.
“We achieved record revenue in the second quarter with growth across IC and FPD as demand for our design-driven product remained high,” said Frank Lee, chief executive officer. “Mainstream IC demand remained robust across all regions, especially Asia and the US. FPD demand was driven primarily by AMOLED for advanced mobile displays as that technology continues to be adopted across new devices. Profit margins expanded on positive volume leverage, pricing, favorable mix, and tight control of cost. Cash generated from operating activities was very strong, enabling us to strengthen our balance sheet while also investing in organic growth. We are on pace for another great year in 2023 and to deliver on our long-term financial goals. I am confident that our team will continue to perform well to create value for our shareholders.”
Second Quarter Fiscal 2023 Results
| • | Revenue was $229.3 million up 9% sequentially and 12% year-over-year |
|---|---|
| • | GAAP net income attributable to Photronics, Inc. shareholders was $39.9 million ($0.65 per diluted share), compared with $14.0 million ($0.23 per diluted share) in the<br> first quarter of 2023 and $27.4 million ($0.45 per diluted share) in the second quarter 2022 |
| --- | --- |
| • | Non-GAAP net income attributable to Photronics, Inc. shareholders was $32.9 million ($0.54 per diluted share), compared with $24.4 million ($0.40 per diluted share) in<br> the first quarter of 2023 and $23.1 million ($0.38 per diluted share) in the second quarter 2022 |
| --- | --- |
| • | IC revenue was $167.1 million, up 7% sequentially and 15% year-over-year |
| --- | --- |
| • | FPD revenue was $62.3 million, up 14% sequentially and 6% more than same quarter last year |
| --- | --- |
| • | Cash generated from operating activities was $82 million, and cash invested in growth through capital expenditures was $27 million |
| --- | --- |
| • | Cash balance at the end of the quarter was $367.5 million with debt of $28 million, providing funds and available liquidity to support our growth investments |
| --- | --- |
Third Quarter Fiscal 2023 Guidance
For the third quarter of fiscal 2023, Photronics expects revenue to be between $224 million and $234 million and non-GAAP net income attributable to Photronics, Inc. shareholders to be between $0.48 and $0.54 per diluted share.
Webcast
A webcast to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, May 24, 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 pages.
Exhibit 99.2
PHOTRONICS, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| April 30,<br><br> <br>2023 | January 29,<br><br> <br>2023 | May 1,<br><br> <br>2022 | April 30,<br><br> <br>2023 | May 1,<br><br> <br>2022 | ||||||||
| Revenue | $ | 229,306 | $ | 211,090 | $ | 204,509 | $ | 440,397 | $ | 394,336 | ||
| Cost of goods sold | 140,904 | 135,013 | 134,289 | 275,918 | 264,253 | |||||||
| Gross Profit | 88,402 | 76,077 | 70,220 | 164,479 | 130,083 | |||||||
| Operating Expenses: | ||||||||||||
| Selling, general and administrative | 17,878 | 16,818 | 16,613 | 34,696 | 32,340 | |||||||
| Research and development | 3,479 | 3,302 | 4,206 | 6,781 | 10,145 | |||||||
| Total Operating Expenses | 21,357 | 20,120 | 20,819 | 41,477 | 42,485 | |||||||
| Operating Income | 67,045 | 55,957 | 49,401 | 123,002 | 87,598 | |||||||
| Non-operating (loss) income, net | 13,571 | (14,425 | ) | 8,021 | (854 | ) | 12,728 | |||||
| Income Before Income Tax Provision | 80,616 | 41,532 | 57,422 | 122,148 | 100,326 | |||||||
| Income tax provision | 21,343 | 12,582 | 14,393 | 33,925 | 25,571 | |||||||
| Net Income | 59,273 | 28,950 | 43,029 | 88,223 | 74,755 | |||||||
| Net income attributable to noncontrolling interests | 19,344 | 14,964 | 15,597 | 34,308 | 24,259 | |||||||
| Net income attributable to Photronics, Inc. shareholders | $ | 39,929 | $ | 13,986 | $ | 27,432 | $ | 53,915 | $ | 50,496 | ||
| Earnings per share: | ||||||||||||
| Basic | $ | 0.65 | $ | 0.23 | $ | 0.45 | $ | 0.88 | $ | 0.84 | ||
| Diluted | $ | 0.65 | $ | 0.23 | $ | 0.45 | $ | 0.88 | $ | 0.83 | ||
| Weighted-average number of common shares outstanding: | ||||||||||||
| Basic | 61,138 | 60,894 | 60,606 | 61,016 | 60,382 | |||||||
| Diluted | 61,507 | 61,470 | 61,145 | 61,489 | 61,041 |
Exhibit 99.3
PHOTRONICS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
| April 30,<br><br> <br>2023 | October 31,<br><br> <br>2022 | |||
|---|---|---|---|---|
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 367,485 | $ | 319,680 |
| Short-term investments | 45,431 | 38,820 | ||
| Accounts receivable | 214,464 | 198,147 | ||
| Inventories | 54,940 | 50,753 | ||
| Other current assets | 37,796 | 37,252 | ||
| Total current assets | 720,116 | 644,652 | ||
| Property, plant and equipment, net | 699,917 | 643,873 | ||
| Other assets | 30,992 | 27,305 | ||
| Total assets | $ | 1,451,025 | $ | 1,315,830 |
| Liabilities and Equity | ||||
| Current liabilities: | ||||
| Current portion of long-term debt | $ | 7,017 | $ | 10,024 |
| Accounts payable and accrued liabilities | 178,151 | 183,773 | ||
| Total current liabilities | 185,168 | 193,797 | ||
| Long-term debt | 21,322 | 32,310 | ||
| Other liabilities | 39,851 | 27,634 | ||
| Photronics, Inc. shareholders' equity | 928,047 | 831,527 | ||
| Noncontrolling interests | 276,637 | 230,562 | ||
| Total equity | 1,204,684 | 1,062,089 | ||
| Total liabilities and equity | $ | 1,451,025 | $ | 1,315,830 |
Exhibit 99.4
PHOTRONICS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
| Six Months Ended | ||||||
|---|---|---|---|---|---|---|
| April 30,<br><br> <br>2023 | May 1,<br><br> <br>2022 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 88,223 | $ | 74,755 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 39,085 | 41,405 | ||||
| Share-based compensation | 3,830 | 3,041 | ||||
| Changes in operating assets, liabilities and other | (21,461 | ) | (15,912 | ) | ||
| Net cash provided by operating activities | 109,677 | 103,289 | ||||
| Cash flows from investing activities: | ||||||
| Purchases of property, plant and equipment | (57,728 | ) | (34,809 | ) | ||
| Purchases of available-for-sale debt securities | (9,837 | ) | 0 | |||
| Proceeds from maturity of available-for-sale debt securities | 4,000 | 0 | ||||
| Government incentives | 1,393 | 1,394 | ||||
| Other | (88 | ) | (199 | ) | ||
| Net cash used in investing activities | (62,260 | ) | (33,614 | ) | ||
| Cash flows from financing activities: | ||||||
| Repayments of debt | (14,720 | ) | (27,571 | ) | ||
| Purchases of treasury stock | - | (2,522 | ) | |||
| Contributions from noncontrolling interest | - | 24,995 | ||||
| Proceeds from share-based arrangements | 730 | 4,384 | ||||
| Net settlements of restricted stock awards | (1,252 | ) | (1,452 | ) | ||
| Net cash used in financing activities | (15,242 | ) | (2,166 | ) | ||
| Effects of exchange rate changes on cash, cash equivalents, and restricted cash | 15,621 | (14,917 | ) | |||
| Net increase in cash, cash equivalents, and restricted cash | 47,796 | 52,592 | ||||
| Cash, cash equivalents, and restricted cash, beginning of period | 322,409 | 279,680 | ||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 370,205 | $ | 332,272 |
Exhibit 99.5
PHOTRONICS, INC.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(Unaudited)
| Three Months ended | Six Months ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| April 30,<br><br> <br>2023 | January 29,<br><br> <br>2023 | May 1,<br><br> <br>2022 | April 30,<br><br> <br>2023 | May 1,<br><br> <br>2022 | |||||||||||
| Reconciliation of GAAP to Non-GAAP Net Income: | |||||||||||||||
| GAAP Net Income | $ | 39,929 | $ | 13,986 | $ | 27,432 | $ | 53,915 | $ | 50,496 | |||||
| FX (gain) loss | (10,718 | ) | 16,944 | (7,844 | ) | 6,226 | (13,112 | ) | |||||||
| Estimated tax effects of above | 2,823 | (4,506 | ) | 1,947 | (1,683 | ) | 3,284 | ||||||||
| Estimated noncontrolling interest effects of above | 901 | (2,060 | ) | 1,543 | (1,159 | ) | 1,639 | ||||||||
| Non-GAAP Net Income | $ | 32,935 | $ | 24,364 | $ | 23,078 | $ | 57,299 | $ | 42,307 | |||||
| Weighted-average number of common shares outstanding - Diluted | 61,507 | 61,470 | 61,145 | 61,489 | 61,041 | ||||||||||
| Reconciliation of GAAP to Non-GAAP EPS: | |||||||||||||||
| GAAP diluted earnings per share | $ | 0.65 | $ | 0.23 | $ | 0.45 | $ | 0.88 | $ | 0.83 | |||||
| Effects of the above adjustments | $ | (0.11 | ) | $ | 0.17 | $ | (0.07 | ) | $ | 0.05 | $ | (0.14 | ) | ||
| Non-GAAP diluted earnings per share | $ | 0.54 | $ | 0.40 | $ | 0.38 | $ | 0.93 | $ | 0.69 |
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
| Six Months ended | Year ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| April 30,<br><br> <br>2023 | October 31,<br><br> <br>2022 | October 31,<br><br> <br>2021 | Target Model<br><br> <br>Two-year Horizon | |||||||||
| GAAP Net cash provided by operating activities | $ | 109,677 | $ | 275,187 | $ | 150,772 | $ | 350,000 - 400,000 | ||||
| Purchases of property, plant and equipment | (57,728 | ) | (112,338 | ) | (109,099 | ) | (100,000 | ) | ||||
| Free Cash Flow | $ | 51,949 | $ | 162,849 | $ | 41,673 | $ | 250,000 - 300,000 |
Reconciliation of Free Cash flow to LTM Free Cash Flow:
| Free Cash Flow | |||
|---|---|---|---|
| Six Months ended April 30, 2023 | $ | 51,949 | |
| Year-ended October 31, 2022 | 162,849 | ||
| Six Months ended May 1, 2022 | (68,480 | ) | |
| LTM April 30, 2023 | $ | 146,318 |
Reconciliation of Cash and cash equivalents to Net Cash:
| As of | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| April 30,<br><br> <br>2023 | October 31,<br><br> <br>2022 | May 1,<br><br> <br>2022 | |||||||
| Cash and cash equivalents | $ | 367,485 | $ | 319,680 | $ | 329,282 | |||
| Current portion of Long-term debt | (7,017 | ) | (10,024 | ) | (12,410 | ) | |||
| Long-term Debt | (21,322 | ) | (32,310 | ) | (70,138 | ) | |||
| Net Cash | $ | 339,146 | $ | 277,346 | $ | 246,734 |
Exhibit 99.7
Q2 2023 Financial Results Conference Call May 24, 2023 Photronics, Inc.
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. 5/24/2023 2
Committed to driving long-term, profitable growth through strategic investments 5/24/2023 3 Q2 2023 Summary Strong demand trends across markets and regions as design activity remains high Net income* was $39.9M ($0.65/share); non-GAAP was $32.9M ($0.54/share) Investing in mainstream IC capacity to capitalize on market growth trends IC: +7% Q/Q, +15% Y/Y FPD: +14% Q/Q, +6% Y/Y Revenue was a record $229.3M +9%Q/Q +12%Y/Y $82M generated from operating activity $27M invested in capex $28M total debt Cash balance $367M $45M Short-term investments *Net income attributable to Photronics, Inc. shareholders
CEO: First Year Observations Photronics wins with… A dedicated team laser focused on customer service Leading edge technology and process know-how to deliver top-quality photomasks Great market position as the leading photomask merchant Strong balance sheet to fund growth that creates differentiatingCore Competencies 5/24/2023 4 Operational Excellence Commercial Excellence Technology Leader Core Values
Clear Strategy for Sustainable, Long-Term Profitable Growth 5/24/2023 5 Revenue Growth Win lion’s share of the growth in TAM for IC and FPD Supplement capacity with point tool investments and targeted expansions Capitalize on technology leadership in AMOLED to continue improving mix Leverage global footprint to exploit expansion of “legacy foundry” business Margin Expansion Improved pricing environment in high-end and mainstream IC Optimizing asset tool set to match end-market demand Increasing benefit from operating leverage Explore Strategic Partnerships Long-term Purchase Agreements Joint-ventures and strategic alliances
Delivering on Updated Target Model $M (except EPS) 2021 2022 Q2 2023 LTM Illustrative FY 24 Target Model Revenue $664 $825 $871 $900 $950 $975 Gross Margin 25% 36% 38% 38-40% 40-42% 42-43% Operating Margin 14% 26% 28% 28-30% 30-32% 32-33% Operating Cash Flow $151 $275 $282 $350-375 $365-380 $375-400 Free Cash Flow* $42 $163 $146 $250-275 $235-280 $275-300 Diluted EPS $0.89 $1.94 $1.99 $2.35-2.45 $2.50-2.55 $2.60-2.65 5/24/2023 6 *Free Cash Flow is a non-GAAP term; see reconciliation included in this presentation
Income Statement Summary GAAP Non-GAAP1 $M (except EPS) Q223 Q123 Q222 Q223 Q123 Q222 Revenue 229.3 211.1 204.5 Gross Profit 88.4 76.1 70.2 Gross Margin 38.6% 36.0% 34.3% Operating Income 67.0 56.0 49.4 Operating Margin 29.2% 26.5% 24.2% Non-operating income 13.6 (14.4) 8.0 2.9 2.5 0.2 Income tax provision 21.3 12.6 14.4 18.5 17.1 12.5 Minority interest 19.3 15.0 15.6 18.4 17.0 14.1 Net income2 39.9 14.0 27.4 32.9 24.4 23.1 Diluted EPS2 0.65 0.23 0.45 0.54 0.40 0.38 Days in quarter 91 90 91 5/24/2023 7 1See reconciliation included in this presentation 2Net income attributable to Photronics, Inc. shareholders Margins improved due to volume leverage, sustained better pricing, and improved mix GAAP Non-operating income primarily consists of unrealized FX gain/loss Q2 benefitted from a $28M FX tailwind Q/Q Non-GAAP presentation removes effect of FX gain/loss Minority interest reflects strong net income of IC JVs in Taiwan and China
$M Q223 Q123 Q/Q Q222 Y/Y High-End* $ 43.9 $ 48.0 (9%) $ 51.4 (14%) Mainstream $ 123.1 $ 108.6 13% $ 94.4 30% Total $ 167.1 $ 156.6 7% $145.8 15% IC Photomask Revenue 5/24/2023 High-end decreased on lower foundry/logic demand in Asia Mainstream demand resumed at a high level during the quarter Outlook New designs by customers to gain market share and support technology roadmap contributed to improved high-end orders toward end of the quarter Regionalization driving investments for global chip capacity ASPs continue to expand, reflecting the demand/supply balance *28nm and smaller Note: Totals may differ due to rounding 8
FPD Photomask Revenue 5/24/2023 High-end grew as mobile display sustained high AMOLED demand Mainstream expanded with additional write capacity. Outlook Technology development drives demand for higher-value masks Mobile demand is expected continue strong with rollout of new designs *≥G10.5, AMOLED and LTPS Note: Totals may differ due to rounding. $M Q223 Q123 Q/Q Q222 Y/Y High-End* $ 51.9 $ 45.7 14% $ 46.6 11% Mainstream $ 10.4 $ 8.8 18% $ 12.1 (14%) Total $ 62.3 $ 54.5 14% $ 58.7 6% 9
Select Financial Data $M Q223 Q123 Q222 Cash $ 367 $ 335 $ 329 Short-term Investments $ 45 $ 39 - Debt $ 28 $ 34 $ 83 Net Cash* $ 339 $ 301 $ 247 Operating Cash Flow $ 82 $ 28 $ 44 Capital Expenditures $ 27 $ 31 $ 16 Continued strong operating cash flow from income generation and working capital management Debt primarily comprised of US equipment leases Capex targets growth in IC capacity & facility expansion Balance sheet resilient to economic contraction and able to fund investments, share repurchases, and strategic opportunities 5/24/2023 10 *Net cash defined is a non-GAAP term; see reconciliation included in this presentation
Q3 2023 Guidance Revenue ($M) $224 - $234 Operating Margin 28% - 30% Taxes ($M) $15 - $17 Diluted non-GAAP EPS $0.48 - $0.54 Diluted Shares (M) ~61 Full-year Capex (M) ~$130 Incorporation of chips in IoT, 5G, Crypto and consumer products New designs to capture market share Advanced display technologies Outlook clouded by geopolitical uncertainty, macro-economic headwinds and supply chain challenges Driving margin expansion and cash flows to achieve long-term target model 5/24/2023 11
For Additional Information: Please contact John P. Jordan Executive Vice President & CFO 203.740.5671 jjordan@photronics.com Thank you for your interest!
Appendix
Total Revenue ($M) 5/24/2023 14 IC FPD Total may differ due to rounding
IC Photomask Revenue ($M) 5/24/2023 15 Mainstream High-End High-End: 28nm and smaller; Total may differ due to rounding
FPD Photomask Revenue ($M) 5/24/2023 16 Mainstream High-End High-End: ≥G10.5, AMOLED and LTPS; Total may differ due to rounding
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 pages. 5/24/2023 17
Non-GAAP Financial Measures 5/24/2023 18
Non-GAAP Financial Measures 5/24/2023 19