Photronics Reports First Quarter Fiscal 2024 Results

Published

BROOKFIELD, Conn., Feb. 21, 2024 (GLOBE NEWSWIRE) -- Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its first quarter of fiscal year 2024 ended January 28, 2024.

“First quarter revenue increased year-over-year even though typically lower seasonal demand was weaker than anticipated, especially in the beginning of the quarter. Order rates improved through the quarter, continuing into second quarter,” said Frank Lee, chief executive officer. “High-end IC revenue increased both sequentially and year-over-year, primarily in 22nm and 28nm nodes, as customers continue migration to these nodes for improved performance and optimal cost. High-end FPD also increased over last year’s first quarter, but decreased from the fourth quarter due to typically lower seasonal demand for premium smartphone displays that use AMOLED technology. Operating margin increased year-over-year, but contracted sequentially, resulting from operating leverage in the year-over-year result and the impact of higher operating expenses in the sequential comparison. Cash generation remains strong, further strengthening our balance sheet with ample liquidity for our profitable growth investments. The Photronics team continues their outstanding performance, and with expectations for growth in the second quarter, we are building momentum for another record year in 2024.”

First Quarter Fiscal 2024 Results

  • Revenue was $216.3 million, up 2% year-over-year and down 5% sequentially
  • GAAP net income attributable to Photronics, Inc. shareholders was $26.2 million, or $0.42 per diluted share, compared with $14.0 million, or $0.23 per diluted share in the first quarter 2023 and $44.6 million, or $0.72 per diluted share in the fourth quarter of 2023
  • Non-GAAP net income attributable to Photronics, Inc. shareholders was $29.9 million, or $0.48 per diluted share, compared with $24.4 million, or $0.40 per diluted share in the first quarter 2023 and $37.2 million, or $0.60 per diluted share in the fourth quarter of 2023
  • IC revenue was $157.6 million, up 1% year-over-year and down 4% sequentially
  • FPD revenue was $58.7 million, up 8% from the same quarter last year and down 7% sequentially
  • Cash generated from operating activities was $41.5 million, and cash invested in organic growth through capital expenditures was $43.3 million; we received $1.1 million in government incentives for investments made
  • Cash balance at the end of the quarter was $508.5 million, with $13.0 million in short-term investments and $23.4 million in debt

Second Quarter Fiscal 2024 Guidance

For the second quarter of fiscal 2024, Photronics expects revenue to be between $226 million and $236 million and non-GAAP net income attributable to Photronics, Inc. shareholders to be between $0.50 and $0.58 per diluted share.

Webcast

A webcast to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, February 21, 2024. 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, 2023, the company had approximately 1,885 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, 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.

For Further Information:John P. JordanExecutive Vice President & CFO203.740.5671jjordan@photronics.com

PHOTRONICS, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
 
 
 Three Months Ended 
 January 28,2024 October 31,2023  January 29,2023 
             
Revenue$216,334  $227,473  $211,090  
             
Cost of goods sold 137,079   142,591   135,013  
             
Gross Profit 79,255   84,882   76,077  
             
Operating Expenses:            
             
Selling, general and administrative 18,321   16,731   16,818  
             
Research and development 3,445   3,367   3,302  
             
Total Operating Expenses 21,766   20,098   20,120  
             
Operating Income 57,489   64,784   55,957  
             
Non-operating (loss) income, net (3,747)  18,660   (14,425) 
             
Income Before Income Tax Provision 53,742   83,444   41,532  
             
Income tax provision 14,660   20,288   12,582  
             
Net Income 39,082   63,156   28,950  
             
Net income attributable to noncontrolling interests 12,902   18,545   14,964  
             
Net income attributable to Photronics, Inc. shareholders$26,180  $44,611  $13,986  
             
Earnings per share:            
             
Basic$0.43  $0.73  $0.23  
             
Diluted$0.42  $0.72  $0.23  
             
Weighted-average number of common shares outstanding:            
             
Basic 61,455   61,290   60,894  
             
Diluted 62,283   62,067   61,470  
             

PHOTRONICS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
 
 
 January 28,2024 October 31,2023 
       
Assets      
       
Current assets:      
Cash and cash equivalents$508,518 $499,292 
Short-term investments 12,996  12,915 
Accounts receivable 203,607  194,927 
Inventories 50,680  49,963 
Other current assets 31,876  28,353 
       
Total current assets 807,677  785,450 
       
Property, plant and equipment, net 742,671  709,244 
Other assets 32,488  31,527 
       
Total assets$1,582,836 $1,526,221 
       
       
       
Liabilities and Equity      
       
Current liabilities:      
Current portion of long-term debt$20,771 $6,621 
Accounts payable and accrued liabilities 164,518  178,602 
       
Total current liabilities 185,289  185,223 
       
Long-term debt 2,655  17,998 
Other liabilities 47,838  47,391 
       
Photronics, Inc. shareholders' equity 1,022,956  975,008 
Noncontrolling interests 324,098  300,601 
Total equity 1,347,054  1,275,609 
       
Total liabilities and equity$1,582,836 $1,526,221 
 

PHOTRONICS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
 
 Three Months Ended 
 January 28,2024  January 29,2023 
         
Cash flows from operating activities:        
Net income$39,082  $28,950  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization 20,702   19,105  
Share-based compensation 2,573   1,821  
Changes in operating assets, liabilities and other (20,849)  (22,196) 
         
Net cash provided by operating activities 41,508   27,680  
         
Cash flows from investing activities:        
Purchases of property, plant and equipment (43,314)  (31,097) 
Purchases of available-for-sale debt securities (2,436)  -  
Proceeds from maturities of available-for-sale debt securities 2,500   -  
Government incentives 1,091   1,014  
Other (56)  (87) 
         
Net cash used in investing activities (42,215)  (30,170) 
         
Cash flows from financing activities:        
Repayments of debt (1,194)  (9,218) 
Proceeds from share-based arrangements 936   672  
Net settlements of restricted stock awards (2,613)  (1,168) 
         
Net cash used in financing activities (2,871)  (9,714) 
         
Effects of exchange rate changes on cash, cash equivalents, and restricted cash 13,026   27,499  
         
Net increase in cash, cash equivalents, and restricted cash 9,448   15,295  
Cash, cash equivalents, and restricted cash, beginning of period 501,867   322,409  
         
Cash, cash equivalents, and restricted cash, end of period$511,315  $337,704  
 

PHOTRONICS, INC.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(Unaudited)
 
 
 Three Months ended
 January 28,2024 October 31,2023  January 29,2023 
Reconciliation of GAAP to Non-GAAP Non-operating (loss) Income:            
             
GAAP Non-operating (loss) income, net$(3,747) $18,660  $(14,425) 
FX (gain) loss 8,909   (13,234)  16,944  
Non-GAAP Non-operating (loss) income, net$5,162  $5,426  $2,519  
             
             
Reconciliation of GAAP to Non-GAAP Income tax provision:            
             
GAAP Income tax provision$14,660  $20,288  $12,582  
Estimated tax effects of FX (gain) loss (2,244)  3,437   (4,506) 
Non-GAAP Income tax provision$16,904  $16,851  $17,088  
             
             
Reconciliation of GAAP to Non-GAAP Noncontrolling interests:            
             
GAAP Noncontrolling interests$12,902  $18,545  $14,964  
Estimated noncontrolling interest effects of above (2,939)  2,431   (2,060) 
Non-GAAP Noncontrolling interests$15,841  $16,114  $17,024  
             
             
Reconciliation of GAAP to Non-GAAP Net Income:            
             
GAAP Net Income$26,180  $44,611  $13,986  
FX (gain) loss 8,909   (13,234)  16,944  
Estimated tax effects of above (2,244)  3,437   (4,506) 
Estimated noncontrolling interest effects of above (2,939)  2,431   (2,060) 
Non-GAAP Net Income$29,906  $37,245  $24,364  
             
Weighted-average number of common shares outstanding - Diluted 62,283   62,067   61,470  
             
Reconciliation of GAAP to Non-GAAP EPS:            
             
GAAP diluted earnings per share$0.42  $0.72  $0.23  
Effects of the above adjustments$0.06  $(0.12) $0.17  
Non-GAAP diluted earnings per share$0.48  $0.60  $0.40  
 

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        
 Three Months Ended       
 January 28,2024       
          
          
GAAP Net cash provided by operating activities$ 41,508        
          
Purchases of property, plant and equipment(43,314)       
          
Free Cash Flow$ (1,806)       
          
          
Reconciliation of Cash and cash equivalents to Net Cash:         
 As of  
 January 28,2024 October 31,2023 January 29,2023 
          
Cash and cash equivalents$ 508,518  $ 499,292  $ 334,792  
          
Current portion of Long-term debt(20,771) (6,621) (6,541) 
          
Long-term Debt(2,655) (17,998) (27,323) 
          
Net Cash$ 485,092  $ 474,673  $ 300,928  
          

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Source: Photronics, Inc.

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