Photronics Reports Second Quarter Fiscal 2019 Results - Photronics (NASDAQ:PLAB)

Second quarter 2019 revenue was $131.6 million, up 6% sequentially and 1% year-over-year
Net income attributable to Photronics, Inc. shareholders was $8.5 million, or $0.13 per diluted share
Cash balance was $167.1 million, with capital expenditures of $33.5 million primarily to fund China investments
Repaid $57.5 million convertible security, reducing total debt and eliminating 5.5 million potentially dilutive shares
Celebrated grand opening of new Xiamen and Hefei facilities in China
Shipped first G10.5+ photomask, marking entry into new, growing market
Third quarter 2019 guidance: revenue between $132 and $142 million with diluted EPS between $0.05 and $0.14

BROOKFIELD, Conn., May 22, 2019 (GLOBE NEWSWIRE) -- Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its fiscal 2019 second quarter ended April 28, 2019.

Second quarter revenue was $131.6 million, 6% better than the previous quarter and 1% better than the same quarter last year. Integrated circuit (IC) revenue was $98.6 million, up 4% sequentially and down 4% compared with the second quarter of last year. Flat panel display (FPD) revenue was $33.0 million, up 11% compared with last quarter and 16% compared with the same period last year.

Net income attributable to Photronics, Inc. shareholders was $8.5 million ($0.13 per diluted share), compared with $5.3 million ($0.08 per diluted share) for the first quarter of 2019 and $10.7 million ($0.15 per diluted share) for the second quarter of 2018.

"We performed well in the second quarter despite a challenging industry environment, delivering sequential growth in IC and strong sequential and year-over-year growth in FPD," said Peter Kirlin, chief executive officer. "The double-digit FPD growth resulted from a strong market for masks for mobile displays, including AMOLED and LTPS LCD, with a contribution from our first shipment of a G10.5+ photomask. In IC, we achieved sequential growth with the anticipated recovery in high-end memory. Startup activity in China impacted operating profit, resulting in operating margin of 7.0%. Cash at the end of the quarter was $167.1 million after repayment of $57.5 million in convertible debt, which eliminated 5.5 million potentially dilutive shares, and $33.5 million in capital expenditures, primarily in China. Besides solid financial results, we celebrated the grand opening of our new Xiamen and Hefei facilities in China. We are excited to serve our customers in mainland China with locally produced reticles. With these milestones, we are on track to meet our 2020 targets of $630 million revenue and $0.80 earnings per share."

Third Quarter 2019 Guidance

For the third quarter of 2019, Photronics expects revenue to be between $132 million and $142 million, and net income attributable to Photronics, Inc. shareholders to be between $0.05 and $0.14 per diluted share.

Conference Call

About Photronics

For Further Information:
R. Troy Dewar, CFA
Vice President, Investor Relations
(203) 740-5610
[email protected]

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Second quarter 2019 revenue was $131.6 million, up 6% sequentially and 1% year-over-year
Net income attributable to Photronics, Inc. shareholders was $8.5 million, or $0.13 per diluted share
Cash balance was $167.1 million, with capital expenditures of $33.5 million primarily to fund China investments
Repaid $57.5 million convertible security, reducing total debt and eliminating 5.5 million potentially dilutive shares
Celebrated grand opening of new Xiamen and Hefei facilities in China
Shipped first G10.5+ photomask, marking entry into new, growing market
Third quarter 2019 guidance: revenue between $132 and $142 million with diluted EPS between $0.05 and $0.14

Third Quarter 2019 Guidance

Conference Call

A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, May 22, 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, 2018, the company had 1,575 employees across 11 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 the company and its subsidiaries. The forward-looking statements contained in this press release 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, political, 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", and similar expressions. There is no assurance that the company's expectations will be realized. For additional information please see the company's quarterly and annual reports filed with the Securities and Exchange Commission. The company assumes no obligation to provide revisions to any forward-looking statements.

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

	Three Months Ended						Six Months Ended
	April 28,		January 27,		April 29,		April 28,		April 29,
	2019		2019		2018		2019		2018

Revenue	$	131,580	$	124,712	$	130,779	$	256,291	$	254,225

Cost of goods sold		105,570		98,610		97,960		204,179		193,744

Gross profit		26,010		26,102		32,819		52,112		60,481

Operating Expenses:

Selling, general and administrative		13,269		13,792		13,637		27,061		25,387

Research and development		3,542		4,263		3,817		7,805		7,921

Total Operating Expenses		16,811		18,055		17,454		34,866		33,308

Operating income		9,199		8,047		15,365		17,246		27,173

Other income (expense), net		3,931		1,108		3,332		5,039		(774	)

Income before income taxes		13,130		9,155		18,697		22,285		26,399

Income tax provision		3,278		1,387		3,508		4,665		1,729

Net income		9,852		7,768		15,189		17,620		24,670

Net income attributable to noncontrolling interests		1,373		2,501		4,524		3,874		8,107

Net income attributable to Photronics, Inc. shareholders	$	8,479	$	5,267	$	10,665	$	13,746	$	16,563

Earnings per share:

Basic	$	0.13	$	0.08	$	0.15	$	0.21	$	0.24

Diluted	$	0.13	$	0.08	$	0.15	$	0.20	$	0.23

Weighted-average number of common shares outstanding:

Basic		66,261		66,583		69,293		66,422		69,024

Diluted		70,597		67,047		75,190		71,593		75,052

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


	April 28,		October 31,
	2019		2018

Assets

Current assets:
Cash and cash equivalents	$	167,066	$	329,277
Accounts receivable		123,371		120,515
Inventories		34,696		29,180
Other current assets		76,555		23,759

Total current assets		401,688		502,731

Property, plant and equipment, net		654,357		571,781
Intangible assets, net		10,182		12,368
Other assets		19,011		23,129

Total assets	$	1,085,238	$	1,110,009



Liabilities and Equity

Current liabilities:
Current portion of long-term debt	$	505	$	57,453
Accounts payable and accrued liabilities		138,779		133,623

Total current liabilities		139,284		191,076

Long-term debt		35,921		-
Other liabilities		11,705		14,364

Photronics, Inc. shareholders' equity		763,568		759,671
Noncontrolling interests		134,760		144,898
Total equity		898,328		904,569

Total liabilities and equity	$	1,085,238	$	1,110,009

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


	Six Months Ended
	April 28,				April 29,
		2019				2018

Cash flows from operating activities:
Net income	$	17,620			$	24,670
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		38,515				44,429
Changes in operating assets, liabilities and other		(58,422	)			(31,191	)

Net cash (used in) provided by operating activities		(2,287	)			37,908

Cash flows from investing activities:
Purchases of property, plant and equipment		(140,436	)			(44,129	)
Government incentive		5,698				-
Other		(23	)			296		*

Net cash used in investing activities		(134,761	)			(43,833	)	*

Cash flows from financing activities:
Proceeds from debt		39,633				-
Contribution from noncontrolling interest		29,394				11,998
Repayments of debt		(61,220	)			(2,771	)
Dividends paid to noncontrolling interests		(26,102	)			-
Purchase of treasury stock		(10,696	)			-
Proceeds from share-based arrangements		1,033				3,776
Other		(45	)			(267	)

Net cash (used in) provided by financing activities		(28,003	)			12,736

Effect of exchange rate changes on cash, cash equivalents, and restricted cash		2,843				6,330		*

Net (decrease) increase in cash, cash equivalents, and restricted cash		(162,208	)			13,141		*
Cash, cash equivalents, and restricted cash, beginning of period		331,989		*		310,936		*

Cash, cash equivalents, and restricted cash, end of period	$	169,781			$	324,077		*

* Amount has been modified to reflect the adoption of ASU 2016-18

For Further Information:
R. Troy Dewar, CFA
Vice President, Investor Relations
(203) 740-5610
[email protected]

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