UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

graphic

 Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

Date of report (Date of earliest event reported)
  
May 27, 2020
  

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
PREFERRED STOCK PURCHASE RIGHTS
 N/A
N/A

Item 2.02.
Results of Operations and Financial Condition.
 
On May 27, 2020, Photronics, Inc. (the “Company”) issued a press release reporting second quarter fiscal 2020 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, and 99.5, 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.

Item 9.01.
 Financial Statements and Exhibits.
 
 
(d)
Exhibits
     
 
Press Release dated May 27, 2020.
 
Condensed Consolidated Statements of Income.
 
Condensed Consolidated Balance Sheets.
 
Condensed Consolidated Statements of Cash Flows.
 
Photronics Q2 2020 Financial Results Conference Call May 27, 2020 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 27, 2020
  


Exhibit 99.1

 
Press Release
For Further Information:
R. Troy Dewar, CFA
Vice President, Investor Relations
(203) 740-5610
tdewar@photronics.com
Photronics Reports Second Quarter Fiscal 2020 Results
 

 •
Second quarter 2020 revenue was $142.8 million, down 11% sequentially and up 9% year-over-year
 

 •
Net income attributable to Photronics, Inc. shareholders was $6.3 million, or $0.10 per diluted share
 

 •
Cash provided by operating activities was $30.5 million, resulting in a cash balance of $237.8 million
 

 •
Third quarter 2020 guidance: revenue between $145 and $155 million with diluted EPS between $0.11 and $0.17
 
BROOKFIELD, Conn. May 27, 2020 (GLOBE NEWSWIRE) — Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its fiscal 2020 second quarter ended May 3, 2020.
 
Second quarter revenue was $142.8 million, 11% lower than the previous quarter and 9% better than the same quarter last year. Integrated circuit (IC) revenue was $96.8 million, down 9% sequentially and down 2% compared with the second quarter of last year. Flat panel display (FPD) revenue was $45.9 million, down 13% compared with last quarter and up 39% compared with the same period last year.
 
Net income attributable to Photronics, Inc. shareholders was $6.3 million ($0.10 per diluted share), compared with $10.3 million ($0.16 per diluted share) for the first quarter of 2020 and $8.5 million ($0.13 per diluted share) for the second quarter of 2019.
 
“Our entire organization performed well, working hard to meet customer needs during an unprecedented period characterized by supply chain challenges and growing uncertainty,” said Peter Kirlin, chief executive officer. “Our business was soft in China, due primarily to shelter-in-place directives that caused some customers to push out orders, particularly for IC foundries and high-end display panel production. As we ended the quarter, most of these directives were lifted and demand began strengthening. Our low-cost focus and strong balance sheet are helping us to navigate the uncertainty. We remain focused on compelling long-term growth opportunities and are committed to investing to expand market share and maintain technology leadership, primarily in mobile display applications, which we anticipate will continue to grow.”

Third Quarter 2020 Guidance
 
For the third quarter of 2020, Photronics expects revenue to be between $145 million and $155 million, and net income attributable to Photronics, Inc. shareholders to be between $0.11 and $0.17 per diluted share.
 
Conference Call
 
A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, May 27, 2020. 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.
 
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 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 and Quarterly filings with the Securities and Exchange Commission 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, the current pandemic and future recurrences and other developments with respect thereto, governmental responses to the pandemic and related matters, changes in end markets resulting therefrom, changes in investment, tax, trade, exchange and other laws and regulations, as well as economic, competitive, legal, governmental, political, monetary and fiscal policy, and technological factors and 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 or, except as required to be disclosed in filings or furnishings with the Securities and Exchange Commission, to report events or to report the occurrence of unanticipated events. There is no assurance that Photronics’ expectations will be realized.


Exhibit 99.2

PHOTRONICS, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)

   
Three Months Ended
    
Six Months Ended
  
    
May 3,
2020
    
February 2,
2020
    
April 28,
2019
    
May 3,
2020
    
April 28,
2019
  
                               
Revenue
  
$
142,774
    
$
159,736
    
$
131,580
    
$
302,510
    
$
256,291
  
                                         
Cost of goods sold
    
112,341
      
125,134
      
105,570
      
237,475
      
204,179
  
                                         
Gross profit
    
30,433
      
34,602
      
26,010
      
65,035
      
52,112
  
                                         
Operating Expenses:
                                        
                                         
Selling, general and administrative
    
13,267
      
14,219
      
13,269
      
27,486
      
27,061
  
                                         
Research and development
    
4,462
      
4,080
      
3,542
      
8,541
      
7,805
  
                                         
Total Operating Expenses
    
17,729
      
18,299
      
16,811
      
36,027
      
34,866
  
                                         
Operating income
    
12,704
      
16,303
      
9,199
      
29,008
      
17,246
  
                                         
Other income (expense), net
    
(951
)
    
3,697
      
3,931
      
2,745
      
5,039
  
                                         
Income before income taxes
    
11,753
      
20,000
      
13,130
      
31,753
      
22,285
  
                                         
Income tax provision
    
3,781
      
9,072
      
3,278
      
12,853
      
4,665
  
                                         
Net income
    
7,972
      
10,928
      
9,852
      
18,900
      
17,620
  
                                         
Net income attributable to noncontrolling interests
    
1,688
      
628
      
1,373
      
2,316
      
3,874
  
                                         
Net income attributable to Photronics, Inc. shareholders
  
$
6,284
    
$
10,300
    
$
8,479
    
$
16,584
    
$
13,746
  
                                         
Earnings per share:
                                        
                                         
Basic
  
$
0.10
    
$
0.16
    
$
0.13
    
$
0.25
    
$
0.21
  
                                         
Diluted
  
$
0.10
    
$
0.16
    
$
0.13
    
$
0.25
    
$
0.20
  
                                         
Weighted-average number of common shares outstanding:
                                        
                                         
Basic
    
64,937
      
65,554
      
66,261
      
65,246
      
66,422
  
                                         
Diluted
    
65,417
      
66,449
      
70,597
      
65,933
      
71,593
  


Exhibit 99.3

PHOTRONICS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)

   
May 3,
2020
    
October 31,
2019
  
 
             
Assets
            
             
Current assets:
            
Cash and cash equivalents
  
$
237,790
    
$
206,530
  
Accounts receivable
    
135,035
      
134,454
  
Inventories
    
56,968
      
48,155
  
Other current assets
    
42,478
      
38,388
  
                 
Total current assets
    
472,271
      
427,527
  
                 
Property, plant and equipment, net
    
604,545
      
632,441
  
Intangible assets, net
    
5,690
      
7,870
  
Other assets
    
51,382
      
50,827
  
                 
Total assets
  
$
1,133,888
    
$
1,118,665
  
                 
Liabilities and Equity
                
                 
Current liabilities:
                
Debt
  
$
17,671
    
$
10,873
  
Accounts payable and accrued liabilities
    
135,701
      
141,081
  
                 
Total current liabilities
    
153,372
      
151,954
  
                 
Long-term debt
    
35,783
      
41,887
  
Other liabilities
    
23,075
      
13,732
  
                 
Photronics, Inc. shareholders’ equity
    
769,191
      
769,892
  
Noncontrolling interests
    
152,467
      
141,200
  
Total equity
    
921,658
      
911,092
  
                 
Total liabilities and equity
  
$
1,133,888
    
$
1,118,665
  


Exhibit 99.4

PHOTRONICS,  INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

   
Six Months Ended
  
    
May 3,
2020
    
April 28,
2019
  
             
Cash flows from operating activities:
            
Net income
  
$
18,900
    
$
17,620
  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
    
47,896
      
38,515
  
Share-based compensation
    
2,576
      
1,962
  
Changes in operating assets, liabilities and other
    
(8,049
)
    
(60,384
)
                 
Net cash provided by (used in) operating activities
    
61,323
      
(2,287
)
                 
Cash flows from investing activities:
                
Purchases of property, plant and equipment
    
(30,127
)
    
(140,436
)
Government incentive
    
5,260
      
5,698
  
Other
    
(139
)
    
(23
)
                 
Net cash used in investing activities
    
(25,006
)
    
(134,761
)
                 
Cash flows from financing activities:
                
Proceeds from long-term debt
    
1,140
      
39,633
  
Contribution from noncontrolling interest
    
7,600
      
29,394
  
Purchase of treasury stock
    
(16,894
)
    
(10,696
)
Repayments of long-term debt
    
(389
)
    
(61,220
)
Proceeds from share-based arrangements
    
3,423
      
1,033
  
Dividends paid to noncontrolling interests
    
-
      
(26,102
)
Other
    
(251
)
    
(45
)
                 
Net cash used in financing activities
    
(5,371
)
    
(28,003
)
                 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
    
475
      
2,843
  
                 
Net increase (decrease) in cash, cash equivalents, and restrcited cash
    
31,421
      
(162,208
)
Cash, cash equivalents, and restricted cash, beginning of period
    
209,291
      
331,989
  
                 
Cash, cash equivalents, and restricted cash, end of period
  
$
240,712
    
$
169,781
  


Exhibit 99.5

 Photronics, Inc.  Q2 2020 Financial Results Conference CallMay 27, 2020 
 
 Safe Harbor Statement  2  This presentation and some of our comments 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. Actual events or results may differ materially from those presented. These statements include words like “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “may”, “plan”, “project”, “in our view” or the negative thereto. 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. If you would like more information on the risks involved in forward-looking statements, please see the documents we file from time to time with the Securities and Exchange Commission. 
 
 Employee healthHealth monitoringAdoption of best practicesGlobal visitor policyRaw material supplyWeekly meetings to monitor global supply chainConstant contact with suppliersCustomer supportOpen communications with customers to understand needsConstant contact with logistic partnersTool maintenanceEngagement with virtual service technicians where feasibleReliance on self-service expertise  Response to COVID-19: Four Key Focus Areas  3 
 
 Revenue was $142.8M, down 11% Q/Q and up 9% Y/YFPD production remained at capacity, with sequential mix shift away from G10.5+ and AMOLED as customers in China pushed out ordersIC revenue impacted by order push out from China customersRevenue of products shipped to China improved 39% Y/Y, but fell 20% Q/QNet income attributable to Photronics, Inc. shareholders of $6.3M ($0.10/share)Cash balance grew to $238M; $31M operating cash generationRepurchased 0.5M shares for $6M; program terminated 3/26/2020China production contributed $17M to revenue; Hefei facility generated operating profit and positive operating cash flow despite significant drop in G10.5+ demandRemain committed to growth strategy with commencement of next phase of FPD investment  Q2 2020 Summary  4  Successfully repositioned the business; China investments driving long-term, profitable growth 
 
 $M (except EPS)  Q220  Q120  Q/Q  Q219  Y/Y  Revenue  $ 142.8  $ 159.7  (11%)  $ 131.6  9%  Gross Profit  $ 30.4  $ 34.6  (12%)  $ 26.0  17%  Gross Margin  21.3%  21.7%  (40 bps)  19.8%  150 bps  Operating Income  $ 12.7  $ 16.3  (22%)  $ 9.2  38%  Operating Margin  8.9%  10.2%  (130 bps)  7.0%  190 bps  Other income (expense)  ($ 1.0)  $ 3.7  ($ 4.6)  $ 3.9  ($ 4.9)  Income tax provision  $ 3.8  $ 9.1  ($ 5.3)  $ 3.3  $ 0.5  Minority interest  $ 1.7  $ 0.6  $ 1.1  $ 1.4  $ 0.3  Net Income*  $ 6.3  $ 10.3  (39%)  $ 8.5  (26%)  Diluted EPS*  $ 0.10  $ 0.16  ($ 0.06)  $ 0.13  ($ 0.03)  Days in quarter  91  94  (3)  91  -  Gross and operating margin moved in line with revenue (up Y/Y; down Q/Q)China operations were $1.0M negative impact to operating incomeOther income / (expense) primarily due to FX gain / (loss)Minority interest reflects Taiwan JV gain offset by China JV loss  Income Statement Summary  5  *Net income attributable to Photronics, Inc. shareholders 
 
 High-end flat Y/Y; sequential decline primarily due to Chinese order push outsChina revenue +14% Y/YQ/Q down 21% on soft foundry demandRepresents 21% of Q220 IC revenueOutlookDemand trends improvingGovernment restrictions and trade policy developments create uncertainty  $M  Q220  Q120  Q/Q  Q219  Y/Y  High-End*  $ 38.3  $ 41.0  (7%)  $ 38.4  --  Mainstream  $ 58.6  $ 65.9  (11%)  $ 60.2  (3%)  Total  $ 96.8  $ 107.0  (9%)  $ 98.6  (2%)  IC Photomask Revenue  6  *28nm and smaller  Total may differ due to rounding 
 
 Y/Y growth due to production ramp in Hefei; Q/Q decline due to China order push out (G10.5+ & AMOLED)China revenue -20% Q/Q; +69% Y/YRepresents 57% of Q220 FPD revenueOutlookDemand trends improving for G10.5+ and AMOLEDGovernment restrictions create uncertainty, especially for mobile demandProduction should remain at capacity  $M  Q220  Q120  Q/Q  Q219  Y/Y  High-End*  $ 31.8  $ 39.8  (20%)  $ 22.1  44%  Mainstream  $ 14.1  $ 13.0  9%  $ 10.9  29%  Total  $ 45.9  $ 52.8  (13%)  $ 33.0  39%  FPD Photomask Revenue  7  *≥G10.5, AMOLED and LTPS  Total may differ due to rounding 
 
 $M  Q220  Q120  Q219  Cash  $ 238  $ 218  $ 167  Debt  $ 53  $ 54  $ 36  Net Cash*  $ 184  $ 164  $ 131  Operating Cash Flow  $ 31  $ 31  $ 17  Capital Expenditures  $ 16  $ 14  $ 34  Government Incentives for Capital Equipment  $ 3  $ 2  $ 1  Share repurchase  $ 6  $ 11  -  Debt is local China borrowing to finance fixed assetsFY 2020 capex ~ $100M (includes $35M capital lease)Repurchased 0.5M shares for $6M (1.5M shares for $17M YTD); program terminated 3/26/2020Balance sheet able to fund planned investments, share repurchases, and strategic M&A opportunities  Select Financial Data  8  *Net cash defined as cash and cash equivalents less long-term borrowings (including current portion), as reported in accordance with GAAP 
 
 Revenue ($M)  $145 - $155  Operating Margin  9% - 12%  Taxes ($M)  $4.5 - $5.5  EPS  $0.11 - $0.17  Diluted Shares (M)  ~65  High uncertainty related to coronavirus reactionFPD demand growing (AMOLED, LTPS, G10.5+)High-end IC markets stable to improving; ramping Xiamen productionPotential geopolitical headwind due to trade policy decisionsDue to end-market demand uncertainty, we are withdrawing previously established 2020 targets  Q320 Guidance   9 
 
 Thank you for your interest!  For Additional Information:R. Troy Dewar, CFAVice President, Investor Relations203.740.5610tdewar@photronics.com  
 
 Appendix 
 
 Total Revenue  12      IC  FPD  Total may differ due to rounding 
 
 IC Photomask Revenue  13      Mainstream  High-End  High-End: 28nm and smaller; total may differ due to rounding 
 
 FPD Photomask Revenue  14      Mainstream  High-End  High-End: ≥G10.5, AMOLED and LTPS; total may differ due to rounding 
 

v3.20.1
Document and Entity Information
May 27, 2020
Entity Listings [Line Items]  
Document Type 8-K
Amendment Flag false
Document Period End Date May 27, 2020
Entity Registrant Name PHOTRONICS, INC.
Entity Incorporation, State or Country Code CT
Entity File Number 0-15451
Entity Tax Identification Number 06-0854886
Entity Address, Address Line One 15 Secor Road
Entity Address, City or Town Brookfield
Entity Address, State or Province CT
Entity Address, Postal Zip Code 06804
City Area Code 203
Local Phone Number 775-9000
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Entity Central Index Key 0000810136
Preferred Stock [Member]  
Entity Listings [Line Items]  
Title of 12(b) Security PREFERRED STOCK PURCHASE RIGHTS
Trading Symbol N/A
The Nasdaq Global Select Market [Member] | Common Stock [Member]  
Entity Listings [Line Items]  
Title of 12(b) Security COMMON STOCK, $0.01 par value per share
Trading Symbol PLAB
Security Exchange Name NASDAQ