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) August 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 August 27, 2020, Photronics, Inc. (the “Company”) issued a press release reporting third 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

99.1 Press Release dated August 27, 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 Q3 2020 Financial Results Conference Call August 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:  August 27, 2020

EX-99.1

Exhibit 99.1

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

Photronics Reports Third Quarter Fiscal 2020 Results

• Third quarter 2020 revenue was $157.9 million, up 11% sequentially and 14% year-over-year

• Net income attributable to Photronics, Inc. shareholders was $10.8 million, or $0.17 per diluted share

• Cash provided by operating activities was $16.9 million, resulting in a cash balance of $260.6 million

• Fourth quarter 2020 guidance: revenue between $148 and $158 million with diluted EPS between $0.12 and $0.19

BROOKFIELD, Conn. August 27, 2020 (GLOBE NEWSWIRE) — Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its fiscal 2020 third quarter ended August 2, 2020.

Third quarter revenue was $157.9 million, 11% better than the previous quarter and 14% better than the same quarter last year. Integrated circuit (IC) revenue was $108.7 million, up 12% sequentially and 8% compared with the third quarter of last year. Flat panel display (FPD) revenue was $49.2 million, up 7% compared with last quarter and 30% compared with the same period last year.

Net income attributable to Photronics, Inc. shareholders was $10.8 million ($0.17 per diluted share), compared with $6.3 million ($0.10 per diluted share) for the second quarter of 2020 and $6.3 million ($0.10 per diluted share) for the third quarter of 2019.

"Customer demand improved this quarter, and we achieved double-digit revenue growth rates compared with last quarter and last year due to our diverse market position and technology leadership,” said Peter Kirlin, chief executive officer. “China demand recovered for both IC and FPD, with total revenue of product shipped to China increasing 10% compared with the previous quarter. From a market perspective, mainstream IC and high-end FPD were notable areas of strength. We were able to leverage the growth in revenues to expand profit margins, while also managing expenses, resulting in 12.6% operating margin and $0.17 earnings per diluted share. Our cash balance grew to $260.6 million, providing us with financial strength and flexibility as we look to continue our strategic growth investments. We are well placed to pursue attractive organic growth opportunities and expand our leadership position.”

Fourth Quarter 2020 Guidance

For the fourth quarter of 2020, Photronics expects revenue to be between $148 million and $158 million, and net income attributable to Photronics, Inc. shareholders to be between $0.12 and $0.19 per diluted share.

Conference Call

A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Thursday, August 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.

EX-99.2

Exhibit 99.2

PHOTRONICS, INC.

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended									Nine Months Ended
	August 2, 2020			May 3, 2020			July 28, 2019			August 2, 2020		July 28, 2019
Revenue	$	157,895		$	142,774		$	138,112		$	460,405	$	394,404
Cost of goods sold		120,161			112,341			107,542			357,636		311,721
Gross profit		37,734			30,433			30,570			102,769		82,683
Operating Expenses:
Selling, general and administrative		13,306			13,267			13,124			40,792		40,186
Research and development		4,492			4,462			4,046			13,034		11,852
Total Operating Expenses		17,798			17,729			17,170			53,826		52,038
Operating income		19,936			12,704			13,400			48,943		30,645
Other  (expense) income, net		(2,135	)		(951	)		(348	)		610		4,692
Income before income taxes		17,801			11,753			13,052			49,553		35,337
Income tax provision		4,937			3,781			3,218			17,789		7,883
Net income		12,864			7,972			9,834			31,764		27,454
Net income attributable to noncontrolling interests		2,088			1,688			3,487			4,404		7,361
Net income attributable to Photronics, Inc. shareholders	$	10,776		$	6,284		$	6,347		$	27,360	$	20,093
Earnings per share:
Basic	$	0.17		$	0.10		$	0.10		$	0.42	$	0.30
Diluted	$	0.17		$	0.10		$	0.10		$	0.42	$	0.30
Weighted-average number of common shares outstanding:
Basic		64,780			64,937			66,313			65,090		66,386
Diluted		65,247			65,417			66,570			65,704		69,919

EX-99.3

Exhibit 99.3

PHOTRONICS, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

	August 2, 2020		October 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	260,597	$	206,530
Accounts receivable		146,843		134,454
Inventories		54,733		48,155
Other current assets		48,468		38,388
Total current assets		510,641		427,527
Property, plant and equipment, net		623,247		632,441
Intangible assets, net		4,535		7,870
Other assets		57,419		50,827
Total assets	$	1,195,842	$	1,118,665
Liabilities and Equity
Current liabilities:
Debt	$	14,683	$	10,873
Accounts payable and accrued liabilities		160,626		141,081
Total current liabilities		175,309		151,954
Long-term debt		38,183		41,887
Other liabilities		25,665		13,732
Photronics, Inc. shareholders' equity		790,242		769,892
Noncontrolling interests		166,443		141,200
Total equity		956,685		911,092
Total liabilities and equity	$	1,195,842	$	1,118,665

EX-99.4

Exhibit 99.4

PHOTRONICS,  INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Nine Months Ended
	August 2, 2020			July 28, 2019
Cash flows from operating activities:
Net income	$	31,764		$	27,454
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		71,120			60,387
Share-based compensation		3,773			2,871
Changes in operating assets, liabilities and other		(28,393	)		(67,208	)
Net cash provided by operating activities		78,264			23,504
Cash flows from investing activities:
Purchases of property, plant and equipment		(36,693	)		(160,149	)
Government incentive		5,263			17,694
Other		(139	)		(24	)
Net cash used in investing activities		(31,569	)		(142,479	)
Cash flows from financing activities:
Proceeds from long-term debt		5,699			53,227
Contribution from noncontrolling interest		17,596			29,394
Purchase of treasury stock		(16,894	)		(10,696	)
Repayments of debt		(5,929	)		(61,319	)
Proceeds from share-based arrangements		3,869			1,314
Dividends paid to noncontrolling interests		-			(26,102	)
Other		(248	)		(92	)
Net cash provided by (used in) financing activities		4,093			(14,274	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		3,486			1,206
Net increase (decrease) in cash, cash equivalents, and restricted cash		54,274			(132,043	)
Cash, cash equivalents, and restricted cash, beginning of period		209,291			331,989
Cash, cash equivalents, and restricted cash, end of period	$	263,565		$	199,946

EX-99.5

Exhibit 99.5

 Photronics, Inc.  Q3 2020 Financial Results Conference CallAugust 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. 

 Revenue was $157.9M, up 11% Q/Q and 14% Y/Y12th consecutive quarter of YOY revenue growthFPD production remained at capacity, with sequential growth across all high-end technologiesIC revenue grew on China recoveryRevenue of products shipped to China improved 10% Q/Q and 46% Y/YNet income attributable to Photronics, Inc. shareholders of $10.8M ($0.17/share)Cash balance grew to $261M$17M generated from operating activity$10M contribution from JV partnerChina production contributed $21M in revenue and $1M in operating profitNext phase of FPD capacity investment on track for tool delivery in 2021Daniel Liao (Senior Advisor, Lam Research Corp.) joined Board of Directors  Q3 2020 Summary  3  Successfully repositioned the business; strategic investments driving long-term, profitable growth 

 $M (except EPS)  Q320  Q220  Q/Q  Q319  Y/Y  Revenue  $ 157.9  $ 142.8  11%  $ 138.1  14%  Gross Profit  $ 37.7  $ 30.4  24%  $ 30.6  23%  Gross Margin  23.9%  21.3%  260 bps  22.1%  180 bps  Operating Income  $ 19.9  $ 12.7  57%  $ 13.4  49%  Operating Margin  12.6%  8.9%  370 bps  9.7%  290 bps  Other income (expense)  ($ 2.1)  ($ 1.0)  ($ 1.2)  ($ 0.3)  ($ 1.8)  Income tax provision  $ 4.9  $ 3.8  $ 1.2  $ 3.2  $ 1.7  Minority interest  $ 2.1  $ 1.7  $ 0.4  $ 3.5  ($ 1.4)  Net Income*  $ 10.8  $ 6.3  71%  $ 6.3  70%  Diluted EPS*  $ 0.17  $ 0.10  $ 0.07  $ 0.10  $ 0.07  Days in quarter  91  91  -  91  -  Gross and operating margin moved up with revenue (operating leverage, cost controls)China operations contributed $1.0M to operating incomeOther income / (expense) primarily due to FX gain / (loss)Minority interest includes IC JVs in Taiwan and China  Income Statement Summary  4  *Net income attributable to Photronics, Inc. shareholders 

 High-end flat; mainstream up on China foundry recoveryChina revenue Up 15% Q/Q and 60% Y/YRepresents 22% of Q320 IC revenueOutlookNew US restrictions on Huawei (8/17) creating greater uncertaintyPotential headwinds if governments escalate shelter-in-place mandates  $M  Q320  Q220  Q/Q  Q319  Y/Y  High-End*  $ 38.7  $ 38.3  1%  $ 38.5  1%  Mainstream  $ 70.0  $ 58.6  19%  $ 61.7  13%  Total  $ 108.7  $ 96.8  12%  $ 100.2  8%  IC Photomask Revenue  5  *28nm and smaller  Total may differ due to rounding 

 High-end revenue growth across all technologies (AMOLED, G10.5+, LTPS)China revenue Up 5% Q/Q and 36% Y/YRepresents 56% of Q320 FPD revenueOutlookDynamic market environmentTemporary dislocation as supply chain reacts to Huawei restrictionsPlanned annual PM in Hefei  $M  Q320  Q220  Q/Q  Q319  Y/Y  High-End*  $ 36.7  $ 31.8  15%  $ 23.1  59%  Mainstream  $ 12.6  $ 14.1  (11%)  $ 14.8  (15%)  Total  $ 49.2  $ 45.9  7%  $ 37.9  30%  FPD Photomask Revenue  6  *≥G10.5, AMOLED and LTPS  Total may differ due to rounding 

 $M  Q320  Q220  Q319  Cash  $ 261  $ 238  $ 197  Debt  $ 53  $ 53  $ 49  Net Cash*  $ 208  $ 184  $ 148  Operating Cash Flow  $ 17  $ 31  $ 26  Capital Expenditures  $ 7  $ 16  $ 20  Government Incentives for Capital Equipment  -  $ 3  $ 12  Share repurchase  -  $ 6  -  Debt is mostly local China borrowing to finance fixed assets, working capital and VATYTD capex is $37M; expect FY 2020 capex ~$80MBalance sheet able to fund planned investments, share repurchases, and strategic M&A opportunities  Select Financial Data  7  *Net cash defined as cash and cash equivalents less long-term borrowings (including current portion), as reported in accordance with GAAP 

 Revenue ($M)  $148 - $158  Operating Margin  10% - 14%  Taxes ($M)  $4 - $5  EPS  $0.12 - $0.19  Diluted Shares (M)  ~65  Huawei restrictions creates uncertainty across IC & FPD supply chainsAnnual PM planned for Hefei plantFocus on expanding margins and improving cash flowsPotential geopolitical headwind due to coronavirus reaction and trade policy decisions  Q420 Guidance   8 

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

 Appendix 

 Total Revenue  11      IC  FPD  Total may differ due to rounding 

 IC Photomask Revenue  12      Mainstream  High-End  High-End: 28nm and smaller; total may differ due to rounding 

 FPD Photomask Revenue  13      Mainstream  High-End  High-End: ≥G10.5, AMOLED and LTPS; total may differ due to rounding 

XML

Document and Entity Information	Aug. 27, 2020
Entity Listings [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 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
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
NONE [Member] | Preferred Stock [Member]
Entity Listings [Line Items]
Title of 12(b) Security	PREFERRED STOCK PURCHASE RIGHTS
Trading Symbol	N/A