Photronics Reports Second Quarter Fiscal 2023 Results
May 24 2023 - 6:00AM
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 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
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.
PHOTRONICS, INC. |
Condensed Consolidated Statements of Income |
(in thousands, except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
April 30, |
|
January 29, |
|
May 1, |
|
April 30, |
|
May 1, |
|
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
PHOTRONICS, INC. |
Condensed Consolidated Balance Sheets |
(in thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
April 30, |
|
October 31, |
|
|
2023 |
|
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 |
|
|
|
|
|
|
PHOTRONICS, INC. |
Condensed Consolidated Statements of Cash
Flows |
(in thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
April 30, |
|
May 1, |
|
|
|
2023 |
|
|
|
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 |
|
|
|
|
|
|
PHOTRONICS, INC. |
Reconciliation of GAAP to Non-GAAP Financial
Information |
(in thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended |
|
Six Months ended |
|
April 30, |
|
January 29, |
|
May 1, |
|
April 30, |
|
May 1, |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
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 |
|
|
|
|
|
|
|
|
|
|
|
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, |
|
October 31, |
|
October 31, |
|
Target Model |
|
2023 |
|
2022 |
|
2021 |
|
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, |
|
October 31, |
|
May 1, |
|
|
|
|
|
2023 |
|
2022 |
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Further Information:John P. JordanExecutive
Vice President & CFO203.740.5671jjordan@photronics.com
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