Photronics Reports Fourth Quarter Fiscal 2019 Results
December 11 2019 - 6:00AM
Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask
technologies and solutions, today reported financial results for
its fiscal 2019 fourth quarter ended October 31, 2019.
Fourth quarter revenue was $156.3 million, 13%
better than the previous quarter and 8% better than the same
quarter last year. Integrated circuit (IC) revenue was a record
$112.5 million, up 12% sequentially and 1% compared with the fourth
quarter of last year. Flat panel display (FPD) revenue of $43.7
million was also a record, up 15% compared with last quarter and
29% compared with the same period last year.
Net income attributable to Photronics, Inc.
shareholders was $9.7 million ($0.15 per diluted share), compared
with $6.3 million ($0.10 per diluted share) for the third quarter
of 2019 and $12.5 million ($0.18 per diluted share) for the fourth
quarter of 2018.
"Fourth quarter revenue was a record for us,
marking the ninth consecutive quarter of year-over-year revenue
growth and propelling us to record annual revenues for the second
successive year. Design activity was robust across the majority of
our customer base, and we continued to ramp production at two new
manufacturing facilities in China,” said Peter Kirlin, chief
executive officer. “IC and FPD revenues were both a record. FPD
benefited from strong mobile display markets and growing G10.5+
production, and IC saw an acceleration of design activity in China.
Gross and operating margins improved sequentially due to high
operating leverage and tight cost controls. During the quarter, we
resumed our share repurchase activity while also growing our cash
balance on strong operating cash generation. 2019 was a great year
for Photronics, achieving record revenue, maintaining a strong
balance sheet, demonstrating a commitment to return cash to our
shareholders, and establishing a solid manufacturing presence in
the rapidly growing China market. We are well positioned to build
on this strength in 2020 and beyond.”
First Quarter 2020 Guidance
For the first quarter of 2020, Photronics
expects revenue to be between $146 million and $154 million, and
net income attributable to Photronics, Inc. shareholders to be
between $0.13 and $0.18 per diluted share.
Conference Call
A conference call to discuss these results is
scheduled for 8:30 a.m. Eastern time on Wednesday, December 11,
2019. The call can be accessed by logging onto Photronics' website
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’ website for instant replay
access.
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 50 years. As of October 31, 2019,
the company had 1,775 employees. The company has 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” within the meaning of the
Private Securities Litigation Reform Act of 1995. The Private
Securities Litigation Reform Act of 1995 provides a “safe harbor”
for forward-looking statements made by or on behalf of the company
and its subsidiaries. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of Photronics to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Statements preceded by, followed by or that otherwise
include the words “believes,” “expects,” “anticipates,” “intends,”
“projects,” “estimates,” “plans,” “may increase,” “may fluctuate,”
“will,” “should,” “would,” “may” and “could” or similar words or
expressions are generally forward-looking in nature and not
historical facts. Any statements that refer to outlook,
expectations or other characterizations of future events,
circumstances or results, including all statements related to the
operation or effects of the Section 382 Rights Plan and to the use
of NOLs to offset future taxable income, are also forward-looking
statements. Important risks, assumptions and other important
factors that could cause future results to differ materially from
those expressed in the forward-looking statements are specified in
Photronics’ Annual Report on Form 10-K for the year ended October
31, 2018 and its most recent Quarterly Report on Form 10-Q for the
period ended July 28, 2019 under headings such as “Forward-Looking
Statements”, “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and in
other filings and furnishings made by Photronics with the
Securities and Exchange Commission from time to time. 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. Photronics
undertakes no obligation to release publicly any revisions to any
forward-looking statements, to report events or to report the
occurrence of unanticipated events. There is no assurance that
Photronics’ expectations will be realized.
For Further Information:R. Troy
Dewar, CFAVice President, Investor Relations(203)
740-5610tdewar@photronics.com
PHOTRONICS, INC.
Condensed Consolidated Statements of Income(in
thousands, except per share amounts)(Unaudited)
|
Three Months Ended |
|
Year Ended |
|
October
31, |
|
July
28, |
|
October
31, |
|
October
31, |
|
October
31, |
|
|
2019 |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
156,257 |
|
|
$ |
138,112 |
|
|
$ |
144,660 |
|
$ |
550,660 |
|
|
$ |
535,276 |
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold |
|
118,098 |
|
|
|
107,542 |
|
|
|
109,236 |
|
|
429,819 |
|
|
|
403,773 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
38,159 |
|
|
|
30,570 |
|
|
|
35,424 |
|
|
120,841 |
|
|
|
131,503 |
|
|
|
|
|
|
|
|
|
|
Operating
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
12,140 |
|
|
|
13,124 |
|
|
|
13,504 |
|
|
52,326 |
|
|
|
51,395 |
|
|
|
|
|
|
|
|
|
|
Research and development |
|
4,543 |
|
|
|
4,046 |
|
|
|
3,906 |
|
|
16,394 |
|
|
|
14,481 |
|
|
|
|
|
|
|
|
|
|
Total
Operating Expenses |
|
16,683 |
|
|
|
17,170 |
|
|
|
17,410 |
|
|
68,720 |
|
|
|
65,876 |
|
|
|
|
|
|
|
|
|
|
Operating income |
|
21,476 |
|
|
|
13,400 |
|
|
|
18,014 |
|
|
52,121 |
|
|
|
65,627 |
|
|
|
|
|
|
|
|
|
|
Other
(expense) income, net |
|
(6,111 |
) |
|
|
(348 |
) |
|
|
2,307 |
|
|
(1,420 |
) |
|
|
2,944 |
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
15,365 |
|
|
|
13,052 |
|
|
|
20,321 |
|
|
50,701 |
|
|
|
68,571 |
|
|
|
|
|
|
|
|
|
|
Income tax
provision |
|
2,327 |
|
|
|
3,218 |
|
|
|
3,552 |
|
|
10,210 |
|
|
|
7,335 |
|
|
|
|
|
|
|
|
|
|
Net income |
|
13,038 |
|
|
|
9,834 |
|
|
|
16,769 |
|
|
40,491 |
|
|
|
61,236 |
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests |
|
3,338 |
|
|
|
3,487 |
|
|
|
4,282 |
|
|
10,698 |
|
|
|
19,181 |
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Photronics, Inc. shareholders |
$ |
9,700 |
|
|
$ |
6,347 |
|
|
$ |
12,487 |
|
$ |
29,793 |
|
|
$ |
42,055 |
|
|
|
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.15 |
|
|
$ |
0.10 |
|
|
$ |
0.18 |
|
$ |
0.45 |
|
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
0.15 |
|
|
$ |
0.10 |
|
|
$ |
0.18 |
|
$ |
0.44 |
|
|
$ |
0.59 |
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
66,230 |
|
|
|
66,313 |
|
|
|
67,894 |
|
|
66,347 |
|
|
|
68,829 |
|
|
|
|
|
|
|
|
|
|
Diluted |
|
66,862 |
|
|
|
66,570 |
|
|
|
73,921 |
|
|
69,155 |
|
|
|
74,821 |
|
|
|
|
|
|
|
|
|
|
PHOTRONICS,
INC.Condensed Consolidated Balance
Sheets(in thousands)(Unaudited)
|
October
31, |
|
October
31, |
|
2019 |
|
2018 |
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
206,530 |
|
$ |
329,277 |
Accounts receivable |
|
134,454 |
|
|
120,515 |
Inventories |
|
48,155 |
|
|
29,180 |
Other current assets |
|
49,634 |
|
|
23,759 |
|
|
|
|
Total current assets |
|
438,773 |
|
|
502,731 |
|
|
|
|
Property,
plant and equipment, net |
|
621,195 |
|
|
571,781 |
Intangible
assets, net |
|
7,870 |
|
|
12,368 |
Other
assets |
|
50,827 |
|
|
23,129 |
|
|
|
|
Total
assets |
$ |
1,118,665 |
|
$ |
1,110,009 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
Debt |
$ |
10,873 |
|
$ |
57,453 |
Accounts payable and accrued liabilities |
|
141,081 |
|
|
133,623 |
|
|
|
|
Total current liabilities |
|
151,954 |
|
|
191,076 |
|
|
|
|
Long-term
debt |
|
41,887 |
|
|
- |
Other
liabilities |
|
13,732 |
|
|
14,364 |
|
|
|
|
Photronics,
Inc. shareholders' equity |
|
769,892 |
|
|
759,671 |
Noncontrolling interests |
|
141,200 |
|
|
144,898 |
Total equity |
|
911,092 |
|
|
904,569 |
|
|
|
|
Total
liabilities and equity |
$ |
1,118,665 |
|
$ |
1,110,009 |
|
|
|
|
PHOTRONICS,
INC.Condensed Consolidated Statements of Cash
Flows(in thousands)(Unaudited)
|
Year Ended |
|
October
31, |
|
October
31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
Cash flows
from operating activities: |
|
|
|
Net income |
$ |
40,491 |
|
|
$ |
61,236 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
83,879 |
|
|
|
84,333 |
|
Share-based compensation |
|
3,680 |
|
|
|
3,180 |
|
Changes in operating assets, liabilities and other |
|
(56,210 |
) |
|
|
(18,182 |
) |
|
|
|
|
Net cash
provided by operating activities |
|
71,840 |
|
|
|
130,567 |
|
|
|
|
|
Cash flows
from investing activities: |
|
|
|
Purchases of property, plant and equipment |
|
(177,191 |
) |
|
|
(92,585 |
) |
Government incentives |
|
22,364 |
|
|
|
1,005 |
|
Other |
|
(33 |
) |
|
|
711 |
|
|
|
|
|
Net cash
used in investing activities |
|
(154,860 |
) |
|
|
(90,869 |
) |
|
|
|
|
Cash flows
from financing activities: |
|
|
|
Proceeds from debt |
|
54,633 |
|
|
|
- |
|
Contribution from noncontrolling interest |
|
29,394 |
|
|
|
17,996 |
|
Repayments of debt |
|
(61,319 |
) |
|
|
(4,639 |
) |
Dividends paid to noncontrolling interests |
|
(45,050 |
) |
|
|
(8,166 |
) |
Purchase of treasury stock |
|
(21,696 |
) |
|
|
(23,111 |
) |
Proceeds from share-based arrangements |
|
2,071 |
|
|
|
4,634 |
|
Other |
|
(92 |
) |
|
|
(519 |
) |
|
|
|
|
Net cash
used in financing activities |
|
(42,059 |
) |
|
|
(13,805 |
) |
|
|
|
|
Effect of
exchange rate changes on cash, cash equivalents, and restricted
cash |
|
2,381 |
|
|
|
(4,840 |
) |
|
|
|
|
Net
(decrease) increase in cash, cash equivalents, and restricted
cash |
|
(122,698 |
) |
|
|
21,053 |
|
Cash, cash
equivalents, and restricted cash, beginning of period |
|
331,989 |
|
|
|
310,936 |
|
|
|
|
|
Cash, cash
equivalents, and restricted cash, end of period |
$ |
209,291 |
|
|
$ |
331,989 |
|
|
|
|
|
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