- Quarterly sales of $124.9 million; at
high-end of guidance of $120 - $125 million
- GAAP and non-GAAP diluted EPS of $0.07;
at high-end of guidance of $0.02 - $0.07
- High end IC sales of $36.6 million, a
new quarterly high
- Gross margin increases 170 bps
sequentially
- Operating margin improves sequentially
to 8.9%
- EBITDA of $34 million, up $9 million
sequentially
Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in supplying
innovative imaging technology solutions for the global electronics
industry, today reported financial results for the fiscal 2014
third quarter ended August 3, 2014.
Constantine ("Deno") Macricostas, Photronics' chairman and chief
executive officer, commented: "This quarter represents the first
full quarter including our PDMC joint venture and the results
reflect the strength in that business. In addition, during the
quarter we completed our 14nm qualification with a key foundry
customer in Asia and are now benefitting from high-end business
ramps across our leading edge customer base. High-end semiconductor
revenues of $36.6 million set a new record for the company and we
expect continued growth as our customers begin to ramp new designs.
Higher sales volumes led to solid bottom line returns with
operating margin improving to 8.9% and non-GAAP earnings per share
of $0.07 at the high end of our guidance. Overall, our business is
strong and we are optimistic about the balance of the fiscal year
as our investments in high-end capability are being utilized more
robustly by our customers.”
Sales for the third quarter of fiscal 2014 were $124.9 million,
an increase of 13.9% compared with $109.7 million for the third
quarter of fiscal 2013. Sales of semiconductor photomasks were
$100.6 million, or 81% of revenues, during the third quarter of
fiscal 2014, and sales of flat panel display photomasks were $24.3
million, or 19% of revenues. GAAP net income attributable to
Photronics, Inc. shareholders for the third quarter of fiscal 2014
was $4.2 million, or $0.07 per diluted share, compared with $5.9
million, or $0.10 per diluted share in the third quarter of fiscal
2013.
Sales for the first nine months of fiscal 2014 increased 4.8% to
$331.3 million, compared with $316.2 million for the first nine
months of fiscal 2013. For the first nine months of fiscal 2014,
sales of semiconductor photomasks were $253.4 million, or 76% of
revenues, and sales of FPD photomasks were $77.9 million, or 24% of
revenues. GAAP net income attributable to Photronics, Inc.
shareholders for the first nine months of fiscal 2014 was $21.7
million, or $0.34 per diluted share, and non-GAAP net income
attributable to Photronics, Inc. shareholders for the first nine
months of fiscal 2014 was $7.8 million, or $0.13 per diluted share,
compared with the first nine months of fiscal 2013 GAAP and
non-GAAP net income attributable to Photronics, Inc. shareholders
of $13.1 million, or $0.21 per diluted share. Non-GAAP net income
attributable to Photronics, Inc. shareholders for the first nine
months of fiscal 2014 excludes the acquisition gain and expenses
related to the joint venture.
The section below entitled "Non-GAAP Financial Measures"
provides a definition and information about the use of non-GAAP
financial measures in this press release, and the attached
financial supplement reconciles non-GAAP financial information with
Photronics, Inc.'s financial results under GAAP.
Non-GAAP Financial Measures
Non-GAAP net income attributable to Photronics, Inc.
shareholders and non-GAAP earnings per share are "non-GAAP
financial measures," as such term is defined by the Securities and
Exchange Commission, and may differ from non-GAAP financial
measures used by other companies. Photronics, Inc. believes that
non-GAAP net income attributable to Photronics, Inc. shareholders
and non-GAAP earnings per share that exclude certain non-cash or
non-recurring income or expense items are useful for analysts and
investors to evaluate Photronics, Inc.'s future on-going
performance because they enable a more meaningful comparison of
Photronics, Inc.'s projected earnings and performance with its
historical results of prior periods. These non-GAAP metrics, in
particular non-GAAP net income attributable to Photronics, Inc.
shareholders and non-GAAP earnings per share are not intended to
represent funds available for Photronics, Inc.'s discretionary use
and are not intended to represent, or be used as a substitute for,
operating income, net income or cash flows from operations data 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 consolidated
statements of operations and must be considered in performing a
comprehensive assessment of overall financial performance. Non-GAAP
financial information is adjusted for the following items:
- Non-cash acquisition gain and
transaction expenses related to the joint venture, PDMC, in Taiwan
are excluded because they are not part of ongoing operations.
The presentation of this financial information should not be
considered in isolation or as a substitute for the financial
information prepared and presented in accordance with accounting
principles generally accepted in the United States. The attached
financial supplement reconciles non-GAAP financial information with
Photronics, Inc.'s financial results under GAAP.
A conference call with investors and the media to discuss these
results is scheduled for 8:30 a.m. Eastern time on Wednesday,
August 20, 2014. The live dial-in number is (408) 774-4601. The
call can also be accessed by logging onto Photronics' web site at
www.photronics.com. The call will be archived for instant replay
access until the Company reports its fiscal 2014 fourth quarter
results.
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 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, 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”, “could”, “estimate”, “intend”, “may”, “will”
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.
09-2014
PLAB – E
PHOTRONICS, INC.
AND SUBSIDIARIES
Condensed
Consolidated Statements of Income
(in thousands, except per share amounts) (Unaudited)
Three Months Ended Nine Months Ended August 3,
July 28, August 3, July 28, 2014
2013 2014
2013 Net sales $ 124,852 $ 109,652 $ 331,276 $
316,171 Costs and expenses: Cost of sales (96,202 )
(82,574 ) (257,554 ) (243,206 ) Selling, general and
administrative (12,394 ) (12,068 ) (38,092 ) (35,286 )
Research and development (5,199 ) (4,985 )
(16,111 ) (14,380 ) Operating income 11,057 10,025
19,519 23,299 Gain on acquisition - - 16,372 - Other
expense, net (1,168 ) (972 ) (3,264 )
(2,479 ) Income before income taxes 9,889 9,053 32,627
20,820 Income tax provision (2,545 ) (2,689 )
(7,291 ) (6,155 ) Net income 7,344 6,364
25,336 14,665 Net income attributable to noncontrolling
interests (3,158 ) (424 ) (3,617 )
(1,539 ) Net income attributable to Photronics, Inc.
shareholders $ 4,186 $ 5,940 $ 21,719 $ 13,126
Earnings per share: Basic
$
0.07 $ 0.10
$ 0.35 $
0.22 Diluted
$
0.07 $ 0.10
$ 0.34 $
0.21 Weighted-average number of common
shares outstanding: Basic
61,436 60,746
61,336 60,505 Diluted
62,432 66,177 77,706
61,478
PHOTRONICS, INC.
AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets
(in thousands) (Unaudited)
August 3,
November 3, 2014 2013
Assets
Current assets: Cash and cash equivalents $ 196,338 $
215,615 Accounts receivable 102,899 73,357 Inventories 23,661
18,849 Other current assets 30,939 10,645
Total current assets 353,837 318,466 Property, plant and
equipment, net 547,377 422,740 Investment in joint venture 93,141
93,124 Intangible assets, net 31,277 34,080 Other assets
19,794 17,519 $ 1,045,426 $ 885,929
Liabilities and
Equity
Current liabilities: Current portion of long-term borrowings
$ 10,306 $ 11,818 Accounts payable and accrued liabilities
138,695 92,769 Total current liabilities 149,001
104,587 Long-term borrowings 156,283 182,203 Other
liabilities 19,881 11,308 Photronics, Inc. shareholders'
equity 609,938 585,314 Noncontrolling interests 110,323
2,517 Total equity 720,261 587,831 $
1,045,426 $ 885,929
PHOTRONICS, INC.
AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows
(in thousands) (Unaudited)
Nine Months Ended August 3, July 28,
2014 2013 Cash flows from operating
activities: Net income $ 25,336 $ 14,665 Adjustments to reconcile
net income to net cash provided by operating activities: Gain on
acquisition (16,372 ) - Depreciation and amortization 58,412 55,081
Changes in assets and liabilities and other (5,538 )
(2,192 ) Net cash provided by operating activities
61,838 67,554 Cash flows from investing
activities: Purchases of property, plant and equipment (58,278 )
(47,281 ) Cash from acquisition 4,508 - Other (759 )
(2,630 ) Net cash used in investing activities
(54,529 ) (49,911 ) Cash flows from financing
activities: Repayments of long-term borrowings (27,432 ) (4,990 )
Payment of deferred financing fees (336 ) (40 ) Purchase of common
stock of subsidiary - (31,627 ) Proceeds from share-based
arrangements 1,043 715 Other (597 ) -
Net cash used in financing activities (27,322 )
(35,942 ) Effect of exchange rate changes on cash 736
(2,473 ) Net decrease in cash and cash
equivalents (19,277 ) (20,772 ) Cash and cash equivalents,
beginning of period 215,615 218,043
Cash and cash equivalents, end of period $ 196,338 $
197,271 Noncash net assets from acquisition $
110,211 $ -
PHOTRONICS, INC.
AND SUBSIDIARIES
Reconciliation of
GAAP to Non-GAAP Financial Information
(in thousands, except per share data) (Unaudited)
Three Months Ended
Nine Months Ended August 3, July 28, August
3, July 28, 2014 2013 2014
2013
Reconciliation of
GAAP to Non-GAAP Net Income
Attributable to
Photronics, Inc. Shareholders
GAAP net income attributable to Photronics, Inc.
shareholders $ 4,186 $ 5,940 $ 21,719 $ 13,126
(a)
Gain on acquisition, net of tax - - (16,372 ) -
(b)
Acquisition transaction expenses, net of tax - - 2,455 -
Non-GAAP net income attributable to
Photronics, Inc. shareholders $ 4,186 $ 5,940 $ 7,802 $
13,126
Reconciliation of
GAAP to Non-GAAP Net Income
Applicable to
Common Shareholders
Weighted average number of diluted shares outstanding
GAAP 62,432 66,177 77,706 61,478
Non-GAAP 62,432 66,177 62,283
61,478 Net income per diluted share GAAP $
0.07 $ 0.10 $ 0.34 $ 0.21 Non-GAAP $ 0.07 $ 0.10 $
0.13 $ 0.21
(a) Represents gain on acquisition of DNP
Photomask Technology Taiwan Co., Ltd (DPTT), a wholly-owned
subsidiary of Dai Nippon Printing Co., Ltd.
(b)
Represents transaction expenses in connection with the acquisition
of DPTT
Photronics, Inc.Pete Broadbent, 203-775-9000Vice President,
Investor Relations & Marketingpbroadbent@photronics.com
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