8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of report (Date of earliest event reported) March 4, 2020

PHOTRONICS, INC.

(Exact name of registrant as specified in its charter)

Connecticut	000-15451	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

Item 2.02. Results of Operations and Financial Condition.

On March 4, 2020, Photronics, Inc. (the “Company”) issued a press release reporting first 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.

Item9.01. Financial Statements and Exhibits.

(d)	Exhibits
99.1	Press Release dated March 4, 2020.
99.2	Condensed Consolidated Statements of Income.
99.3	Condensed Consolidated Balance Sheets.
99.4	Condensed Consolidated Statements of Cash Flows.
99.5	Photronics Q1 2020 Financial Results Conference Call March 4, 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:  March 4, 2020

EX-99.1

Exhibit 99.1

Press Release For Further Information: R. Troy Dewar, CFA Vice President, Investor Relations (203) 740-5610 tdewar@photronics.com

Photronics Reports First Quarter Fiscal 2020 Results

• First quarter 2020 revenue of $159.7 million was a record, up 2% sequentially and 28% year-over-year

• Net income attributable to Photronics, Inc. shareholders was $10.3 million, or $0.16 per diluted share

• Cash provided by operating activities was $30.8 million, resulting in a cash balance of $218.3 million

• 0.9 million shares were repurchased for $11.0 million

• Second quarter 2020 guidance: revenue between $145 and $155 million with diluted EPS between $0.11 and $0.17

BROOKFIELD, Conn. March 4, 2020 (GLOBE NEWSWIRE) — Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its fiscal 2020 first quarter ended February 2, 2020.

First quarter revenue was a record $159.7 million, 2% better than the previous quarter and 28% better than the same quarter last year. Integrated circuit (IC) revenue was $107.0 million, down 5% sequentially and up 13% compared with the first quarter of last year. Flat panel display (FPD) revenue of $52.8 million was also a record, up 21% compared with last quarter and 77% compared with the same period last year.

Net income attributable to Photronics, Inc. shareholders was $10.3 million ($0.16 per diluted share), compared with $9.7 million ($0.15 per diluted share) for the fourth quarter of 2019 and $5.3 million ($0.08 per diluted share) for the first quarter of 2019.

“We continued to perform well in the first quarter, achieving record revenues for the second consecutive quarter, as design activity remained high and we were able to extend our FPD leadership by bringing more capacity to the market,” said Peter Kirlin, chief executive officer. “IC revenues were up year-over-year, but down sequentially due to seasonal softness. An uptick in operating expenses associated with ramping our two new facilities drove operating margins below fourth quarter levels. Below the operating line, a foreign exchange gain and other one-time effects resulted in earnings of $0.16 per share. We generated $30.8 million cash flow from operating activities, resulting in a cash position of $218.3 million. Despite potential short-term impact that may result from the coronavirus, we are optimistic that our long-term goals for 2020 are still on track. We continue to develop investment plans to drive further profitable growth across our operations.”

Second Quarter 2020 Guidance

For the second 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, March 4, 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, 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 and Quarterly filings with the Securities 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, 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.

03-20

EX-99.2

Exhibit 99.2

PHOTRONICS, INC.

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	February 2, 2020		October 31, 2019			January 27, 2019
Revenue	$	159,736	$	156,257		$	124,712
Cost of goods sold		125,134		118,098			98,610
Gross profit		34,602		38,159			26,102
Operating Expenses:
Selling, general and administrative		14,219		12,140			13,792
Research and development		4,080		4,543			4,263
Total Operating Expenses		18,299		16,683			18,055
Operating income		16,303		21,476			8,047
Other income (expense), net		3,697		(6,111	)		1,108
Income before income taxes		20,000		15,365			9,155
Income tax provision		9,072		2,327			1,387
Net income		10,928		13,038			7,768
Net income attributable to noncontrolling interests		628		3,338			2,501
Net income attributable to Photronics, Inc. shareholders	$	10,300	$	9,700		$	5,267
Earnings per share:
Basic	$	0.16	$	0.15		$	0.08
Diluted	$	0.16	$	0.15		$	0.08
Weighted-average number of common shares outstanding:
Basic		65,554		66,230			66,583
Diluted		66,449		66,862			67,047

EX-99.3

Exhibit 99.3

PHOTRONICS, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

	February 2, 2020		October 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	218,309	$	206,530
Accounts receivable		141,720		134,454
Inventories		49,673		48,155
Other current assets		31,202		38,388
Total current assets		440,904		427,527
Property, plant and equipment, net		619,935		632,441
Intangible assets, net		6,847		7,870
Other assets		57,774		50,827
Total assets	$	1,125,460	$	1,118,665
Liabilities and Equity
Current liabilities:
Debt	$	17,934	$	10,873
Accounts payable and accrued liabilities		139,720		141,081
Total current liabilities		157,654		151,954
Long-term debt		36,449		41,887
Other liabilities		18,556		13,732
Photronics, Inc. shareholders' equity		770,676		769,892
Noncontrolling interests		142,125		141,200
Total equity		912,801		911,092
Total liabilities and equity	$	1,125,460	$	1,118,665

EX-99.4

Exhibit 99.4

PHOTRONICS,  INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Three Months Ended
	February 2, 2020			January 27, 2019
Cash flows from operating activities:
Net income	$	10,928		$	7,768
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		24,626			18,781
Share-based compensation		1,356			1,062
Changes in operating assets, liabilities and other		(6,125	)		(46,897	)
Net cash provided by (used in) operating activities		30,785			(19,286	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(13,807	)		(106,925	)
Government incentive		2,417			5,029
Other		(139	)		19
Net cash used in investing activities		(11,529	)		(101,877	)
Cash flows from financing activities:
Proceeds from long-term debt		1,140			28,180
Purchase of treasury stock		(11,000	)		(10,696	)
Repayments of long-term debt		(389	)		-
Proceeds from share-based arrangements		2,886			650
Contribution from noncontrolling interest		-			29,394
Dividends paid to noncontrolling interests		-			(26,102	)
Other		(248	)		(45	)
Net cash (used in) provided by financing activities		(7,611	)		21,381
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		149			2,961
Net increase (decrease) in cash, cash equivalents, and restrcited cash		11,794			(96,821	)
Cash, cash equivalents, and restricted cash, beginning of period		209,291			331,989
Cash, cash equivalents, and restricted cash, end of period	$	221,085		$	235,168

EX-99.5

Exhibit 99.5

 Photronics, Inc.  Q1 2020 Financial Results Conference CallMarch 4, 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. 

 Photronics Investor DayFriday, May 29, 2020New York Hilton Midtown ManhattanNew York CityDetails to follow. Contact Troy Dewar (tdewar@photronics.com) with questions.  Save the Date 

 Record revenue of $159.7M, up 2% Q/Q and 28% Y/YRecord FPD revenue driven by mobile displays and Hefei production rampIC revenue up Y/Y as design activity remains strong; seasonal softness in memory Q/QRecord revenue of products shipped to China, up 13% Q/Q; represents 37% of total revenueNet income attributable to Photronics, Inc. shareholders of $10.3M ($0.16/share)Cash balance grew to $218M; $31M operating cash generationRepurchased 0.9M shares for $11MChina production contributed $20M to revenue; Hefei facility generated operating profit and positive operating cash flowPotential impact in Q2 due to coronavirus  Q1 2020 Summary  4  Successfully repositioned the business; China investments driving long-term, profitable growth 

 $M (except EPS)  Q120  Q419  Q/Q  Q119  Y/Y  Revenue  $ 159.7  $ 156.3  2%  $ 124.7  28%  Gross Profit  $ 34.6  $ 38.2  (9%)  $ 26.1  33%  Gross Margin  21.7%  24.4%  (270 bps)  20.9%  80 bps  Operating Income  $ 16.3  $ 21.5  (24%)  $ 8.0  103%  Operating Margin  10.2%  13.7%  (350 bps)  6.5%  370 bps  Other income (expense)  $ 3.7  ($ 6.1)  $ 9.8  $ 1.1  $ 2.6  Income tax provision  $ 9.1  $ 2.3  $ 6.7  $ 1.4  $ 7.7  Minority interest  $ 0.6  $ 3.3  ($ 2.7)  $ 2.5  ($ 1.9)  Net Income*  $ 10.3  $ 9.7  6%  $ 5.3  96%  Diluted EPS*  $ 0.16  $ 0.15  $ 0.01  $ 0.08  $ 0.08  Days in quarter  94  95  (1)  88  6  Gross and operating margin negatively affected by higher ramp and compensation expenseChina operations were $2.9M negative impact to operating income; Hefei facility achieved operating profitOther income includes FX gain and higher China interest expenseMinority interest reflects Taiwan JV gain offset by China JV loss  Income Statement Summary  5  *Net income attributable to Photronics, Inc. shareholders 

 High-end down Q/Q on seasonal softness; Y/Y driven by strong logic and memoryChina revenue strong as design activity remains robust+3% Q/Q; +74% Y/YRepresents 24% of Q120 IC revenueOutlookHigh uncertainty related to coronavirus reactionOtherwise, expect stable to improving high-end demandAnticipate production ramping in Xiamen  $M  Q120  Q419  Q/Q  Q119  Y/Y  High-End*  $ 41.0  $ 45.0  (9%)  $ 34.6  19%  Mainstream  $ 65.9  $ 67.6  (2%)  $ 60.3  9%  Total  $ 107.0  $ 112.5  (5%)  $ 94.9  13%  IC Photomask Revenue  6  *28nm and smaller  Total may differ due to rounding 

 Record FPD revenue driven by mobile displays and China production ramp, including G10.5+China revenue +22% Q/Q; +154% Y/YRepresents 62% of Q120 FPD revenueOutlookHigh uncertainty related to coronavirus reactionMobile display demand expected to remain highProduction should remain at capacity  $M  Q120  Q419  Q/Q  Q119  Y/Y  High-End*  $ 39.8  $ 25.4  56%  $ 15.4  159%  Mainstream  $ 13.0  $ 18.3  (29%)  $ 14.5  (10%)  Total  $ 52.8  $ 43.7  21%  $ 29.8  77%  FPD Photomask Revenue  7  *≥G10.5, AMOLED and LTPS  Total may differ due to rounding 

   Full-year 2018  Q119  Q219  Q319  Q419  Full-year 2019  High-End FPD  52,942   15,350    22,051    23,088    25,435   85,924  Mainstream FPD  66,270   14,482    10,942    14,839    18,283   58,546  Total FPD  119,212   29,832    32,993    37,927    43,718   144,470  To align with industry trends and reflect our new operating environment, we redefined high-end FPD photomasksOld definition: AMOLED, G8.5 or greater (includes G10.5+)New definition: AMOLED, G10.5+ (G8.5 now mainstream), LTPSTable shows revenue splits per new definition  New FPD High-End Definition  8 

 $M  Q120  Q419  Q119  Cash  $ 218  $ 207  $ 232  Debt  $ 54  $ 53  $ 86  Net Cash*  $ 164  $ 154  $ 146  Operating Cash Flow  $ 31  $ 45  ($ 19)  Capital Expenditures  $ 14  $ 18  $ 107  Government Incentives  $ 2  $ 9  $ 5  Share repurchase  $ 11  $ 11  $ 11  Debt is local China borrowing to finance fixed assetsFY 2020 capex ~ $100M (includes 2019 carryover & $35M capital lease)Repurchased 0.9M shares for $11MBalance sheet able to fund planned investments, share repurchases, and strategic M&A opportunities  Select Financial Data  9  *Net cash defined as cash and cash equivalents less long-term borrowings (including current portion), as reported in accordance with GAAP 

 Revenue ($M)  $145 - $155  Operating Margin  7% - 11%  Taxes ($M)  $3.5 - $4.5  EPS  $0.11 - $0.17  Diluted Shares (M)  ~66  High uncertainty related to coronavirus reactionFPD demand growing (AMOLED, LTPS, G10.5+)High-end IC markets stable to improvingRamping China production (IC & FPD)Potential geopolitical headwind  Q220 Guidance   10 

 Thank you for your interest!  For Additional Information:R. Troy Dewar, CFAVice President, Investor Relations203.740.5610tdewar@photronics.com  

 Appendix 

 Total Revenue  13      IC  FPD 

 IC Photomask Revenue  14      Mainstream  High-End  High-End: 28nm and smaller; total may differ due to rounding 

 FPD Photomask Revenue  15      Mainstream  High-End  High-End: ≥G10.5, AMOLED and LTPS; total may differ due to rounding 

XML

Document and Entity Information	Mar. 04, 2020
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Mar. 04, 2020
Entity Registrant Name	PHOTRONICS, INC.
Entity Incorporation, State or Country Code	CT
Entity File Number	000-15451
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
Title of 12(b) Security	COMMON STOCK, $0.01 par value per share
Trading Symbol	PLAB
Security Exchange Name	NASDAQ