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) December 9, 2020

PHOTRONICS, INC.

(Exact name of registrant as specified in its charter)

Connecticut	0-15451	06-0854886
(Incorporation State or Other Jurisdiction of)	(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 December 9, 2020, Photronics, Inc. (the “Company”) issued a press release reporting fourth 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.

Additionally, the Company will host an investor and analyst day on December 14, 2020.  The event will be conducted virtually and feature updates from management and a Q&A session.

Item 9.01. Financial Statements and Exhibits.

(d)	Exhibits
99.1	Press Release dated December 9, 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 Q4 2020 Financial Results Conference Call December 9, 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:  December 9, 2020

EX-99.1

Exhibit 99.1

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

Photronics Reports Full Year and Fourth Quarter Fiscal 2020 Results

• 2020 revenue was a record $609.7 million, an increase of 11% compared with 2019 and the third consecutive year of record annual revenue

• Fourth quarter 2020 revenue was $149.3 million, down 5% sequentially and 4% year-over-year

• Net income attributable to Photronics, Inc. shareholders was $33.8 million, or $0.52 per diluted share, for the full year of 2020; and $6.5 million, or $0.10 per diluted share, for the fourth quarter of 2020

• During the fourth quarter, cash provided by operating activities was $64.8 million, capex was $34.1 million, share repurchases were $17.5 million, and ending cash balance was $278.7 million

• First quarter 2021 guidance: revenue between $145 and $155 million with diluted EPS between $0.07 and $0.14

BROOKFIELD, Conn. December 9, 2020 (GLOBE NEWSWIRE) — Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its fiscal 2020 full year and fourth quarter ended October 31, 2020.

Full year revenue was a record $609.7 million, up 11% compared with 2019. IC revenue was $418.4 million, up 3% compared with last year; and FPD revenue was a record $191.3 million, up 32% compared with last year.

Fourth quarter revenue was $149.3 million, down 5% compared with the previous quarter and 4% compared with the same quarter last year. Integrated circuit (IC) revenue was $105.9 million, down 3% sequentially and 6% compared with the fourth quarter of last year. Flat panel display (FPD) revenue was $43.4 million, down 12% compared with last quarter and 1% compared with the same period last year.

Net income attributable to Photronics, Inc. shareholders was $33.8 million ($0.52 per diluted share) compared with $29.8 million ($0.44 per diluted share) in 2019; fourth quarter net income was $6.5 million ($0.10 per diluted share), compared with $10.8 million ($0.17 per diluted share) for the third quarter of 2020 and $9.7 million ($0.15 per diluted share) for the fourth quarter of 2019.

"We achieved record annual revenue for the third consecutive year in 2020, overcoming tremendous global and regional challenges,” said Peter Kirlin, chief executive officer. “Fourth quarter revenue declined 5% sequentially as typical seasonality was worsened by geopolitical factors and softness in some sectors. With the decrease in quarterly revenue, profit margins contracted due to the effect of operating leverage on our income. We increased our cash balance while investing in organic growth and returning cash to our shareholders through share repurchases, ending 2020 in a strong financial position. Our expectations are for another growth year in 2021, with high single-digit percent growth in revenue and an up-tick in operating profit similar to the 23% increase achieved in 2020.”

First Quarter 2021 Guidance

For the first quarter of 2021, Photronics expects revenue to be between $145 million and $155 million, and net income attributable to Photronics, Inc. shareholders to be between $0.07 and $0.14 per diluted share.

Conference Call

A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, December 9, 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.

Investor and Analyst Day

Photronics will host an investor and analyst day on December 14, 2020. The event will be conducted virtually and feature updates from management and a Q&A session. More information can be found on the Investors section of Photronics' website at www.photronics.com.

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, 2020, the company had 1,728 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” 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 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, compliance with local, State and Federal laws, rules and regulations including, but not limited to, import and export controls, tariffs and penalties, fines and violations related thereto, 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									Year Ended
	October 31, 2020			August 2, 2020			October 31, 2019			October 31, 2020			October 31, 2019
Revenue	$	149,286		$	157,895		$	156,257		$	609,691		$	550,660
Cost of goods sold		117,401			120,161			118,098			475,037			429,819
Gross profit		31,885			37,734			38,159			134,654			120,841
Operating Expenses:
Selling, general and administrative		12,790			13,306			12,140			53,582			52,326
Research and development		4,110			4,492			4,543			17,144			16,394
Total Operating Expenses		16,900			17,798			16,683			70,726			68,720
Operating income		14,985			19,936			21,476			63,928			52,121
Other  (expense) income, net		(2,937	)		(2,135	)		(6,111	)		(2,327	)		(1,420	)
Income before income tax provision		12,048			17,801			15,365			61,601			50,701
Income tax provision		3,469			4,937			2,327			21,258			10,210
Net income		8,579			12,864			13,038			40,343			40,491
Net income attributable to noncontrolling interests		2,119			2,088			3,338			6,523			10,698
Net income attributable to Photronics, Inc. shareholders	$	6,460		$	10,776		$	9,700		$	33,820		$	29,793
Earnings per share:
Basic	$	0.10		$	0.17		$	0.15		$	0.52		$	0.45
Diluted	$	0.10		$	0.17		$	0.15		$	0.52		$	0.44
Weighted-average number of common shares outstanding:
Basic		64,193			64,780			66,230			64,866			66,347
Diluted		64,768			65,247			66,862			65,470			69,155

EX-99.3

Exhibit 99.3

PHOTRONICS, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

	October 31, 2020		October 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	278,665	$	206,530
Accounts receivable		134,470		134,454
Inventories		57,269		48,155
Other current assets		29,735		38,388
Total current assets		500,139		427,527
Property, plant and equipment, net		631,475		632,441
Intangible assets, net		3,437		7,870
Other assets		53,131		50,827
Total assets	$	1,188,182	$	1,118,665
Liabilities and Equity
Current liabilities:
Debt	$	13,678	$	10,873
Accounts payable and accrued liabilities		129,261		141,081
Total current liabilities		142,939		151,954
Long-term debt		54,980		41,887
Other liabilities		27,997		13,732
Photronics, Inc. shareholders' equity		804,962		769,892
Noncontrolling interests		157,304		141,200
Total equity		962,266		911,092
Total liabilities and equity	$	1,188,182	$	1,118,665

EX-99.4

Exhibit 99.4

PHOTRONICS,  INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Year Ended
	October 31, 2020			October 31, 2019
Cash flows from operating activities:
Net income	$	40,343		$	40,491
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		93,814			83,879
Share-based compensation		4,927			3,680
Changes in operating assets, liabilities and other		3,962			(59,664	)
Net cash provided by operating activities		143,046			68,386
Cash flows from investing activities:
Purchases of property, plant and equipment		(70,815	)		(178,375	)
Government incentive		5,263			27,003
Other		(159	)		(34	)
Net cash used in investing activities		(65,711	)		(151,406	)
Cash flows from financing activities:
Proceeds from debt		20,340			54,633
Contributions from noncontrolling interest		17,596			29,394
Purchases of treasury stock		(34,394	)		(21,696	)
Dividends paid to noncontrolling interests		(16,151	)		(45,050	)
Repayments of debt		(7,392	)		(61,319	)
Proceeds from share-based arrangements		4,239			2,071
Other		(248	)		(92	)
Net cash used in financing activities		(16,010	)		(42,059	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		10,986			2,381
Net increase (decrease) in cash, cash equivalents, and restricted cash		72,311			(122,698	)
Cash, cash equivalents, and restricted cash, beginning of period		209,291			331,989
Cash, cash equivalents, and restricted cash, end of period	$	281,602		$	209,291

EX-99.5

Exhibit 99.5

 Q4 2020 Financial Results Conference CallDecember 9, 2020  Photronics, Inc. 

 Safe Harbor Statement  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.  12/8/2020  2 

 Please Join Us  Photronics’ 2020 Investor and Analyst Day (Virtual)December 14, 202010:00 AM ETDetails available on “Investors” section of our website: www.photronics.com   12/8/2020  3 

 2020 Summary  Revenue was $609.7M; up 11%3rd consecutive year of record revenueFPD revenue was record $191.3M, up 32%Revenue of product shipped to China was a record, improving 40%Operating income improved 23%Generated $143M in cash from operating activities, invested $71M in capex, and returned $34M in cash to shareholdersChina facilities contributed $79M in revenue with operating loss of $2M; Hefei was profitable for the year2021 expectationsRevenue up high single-digit percentOperating income Y/Y growth similar to 2020  12/8/2020  4 

 Q4 2020 Summary  Revenue was $149.3M, down 5% Q/Q and 4% Y/YDemand lower across IC and FPD Revenue to China was flat Q/Q, down 2% Y/Y; IC achieved record China revenue; FPD was down on Huawei-related disruptionsNet income attributable to Photronics, Inc. shareholders of $6.5M ($0.10/share)Cash balance grew to $279M$65M generated from operating activity$34M invested in capex$18M returned to investors through share repurchasesChina facilities contributed $21M in revenue and $1M in operating profitNext phase of FPD capacity investment on track for tool delivery in 2021  12/8/2020  5  Strategic investments driving long-term, profitable growth 

 Income Statement Summary  $M (except EPS)  Q420  Q320  Q/Q  Q419  Y/Y  Revenue  $ 149.3  $ 157.9  (5%)  $ 156.3  (4%)  Gross Profit  $ 31.9  $ 37.7  (16%)  $ 38.2  (16%)  Gross Margin  21.4%  23.9%  (250 bps)  24.4%  (300 bps)  Operating Income  $ 15.0  $ 19.9  (25%)  $ 21.5  (30%)  Operating Margin  10.0%  12.6%  (260 bps)  13.7%  (370 bps)  Other income (expense)  ($ 2.9)  ($ 2.1)  ($ 0.8)  ($ 6.1)  $ 3.2  Income tax provision  $ 3.5  $ 4.9  ($ 1.5)  $ 2.3  $ 1.1  Minority interest  $ 2.1  $ 2.1  -  $ 3.3  ($ 1.2)  Net Income*  $ 6.5  $ 10.8  (40%)  $ 9.7  (33%)  Diluted EPS*  $ 0.10  $ 0.17  ($ 0.07)  $ 0.15  ($ 0.05)  Days in quarter  90  91  (1)  91  (1)  Gross and operating margin down on lower revenue (operating leverage)China operations contributed $1M to operating incomeOther income / (expense) primarily due to FX gain / (loss)Minority interest includes IC JVs in Taiwan and China  12/8/2020  6  *Net income attributable to Photronics, Inc. shareholders 

 $M  Q420  Q320  Q/Q  Q419  Y/Y  High-End*  $ 38.2  $ 38.7  (1%)  $ 45.0  (15%)  Mainstream  $ 67.8  $ 70.0  (3%)  $ 67.6  -  Total  $ 105.9  $ 108.7  (3%)  $ 112.5  (6%)  IC Photomask Revenue  12/8/2020  7  Improvement at some logic foundries in US and Asia; memory demand softRecord China revenue in Q420Up 14% Q/Q and 6% Y/YRepresents 25% of Q420 IC revenueOutlookSome sectors benefiting from remote work and educationTrade uncertainty remains post US electionPotential headwinds if governments escalate shelter-in-place mandates  *28nm and smaller  Total may differ due to rounding 

 FPD Photomask Revenue  12/8/2020  8  High-end down Q/Q on lower AMOLED (Huawei) and G10.5+Strong LCD market causes panel makers to run current product, limiting new design activityChina revenue Down 12% Q/Q and 10% Y/YRepresents 56% of Q420 FPD revenueOutlookDynamic market environmentRecovery underway as supply chain adjusts to Huawei restrictions  *≥G10.5, AMOLED and LTPS  $M  Q420  Q320  Q/Q  Q419  Y/Y  High-End*  $ 31.3  $ 36.7  (15%)  $ 25.4  23%  Mainstream  $ 12.1  $ 12.6  (4%)  $ 18.3  (34%)  Total  $ 43.4  $ 49.2  (12%)  $ 43.7  (1%)  Total may differ due to rounding 

 Select Financial Data  $M  Q420  Q320  Q419  Cash  $ 279  $ 261  $ 207  Debt  $ 69  $ 53  $ 53  Net Cash*  $ 210  $ 208  $ 154  Operating Cash Flow  $ 65  $ 17  $ 45  Capital Expenditures  $ 34  $ 7  $ 18  Government Incentives for Capital Equipment  -  -  $ 9  Share repurchase  $ 18  -  $ 11  Debt is mostly local China borrowing to finance fixed assets, working capital and VAT2020 capex was $71M; expect 2021 capex to be ~$100MBalance sheet able to fund investments, share repurchases, and strategic M&A opportunities  12/8/2020  9  *Net cash defined as cash and cash equivalents less long-term borrowings (including current portion), as reported in accordance with GAAP 

 Q121 Guidance   Revenue ($M)  $145 - $155  Operating Margin  8% - 12%  Taxes ($M)  $4 - $5  EPS  $0.07 - $0.14  Diluted Shares (M)  ~64.5  Positive industry demand trends due to remote work and learning offset by typical seasonalityOutlook clouded by geopolitical uncertaintyCoronavirus reactionUS/China trade policiesWe remain focused on expanding margins and improving cash flows  12/8/2020  10 

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

 Appendix   

 Total Revenue  12/8/2020  13      IC  FPD  Total may differ due to rounding 

 IC Photomask Revenue  12/8/2020  14      Mainstream  High-End  High-End: 28nm and smaller; total may differ due to rounding 

 FPD Photomask Revenue  12/8/2020  15      Mainstream  High-End  High-End: ≥G10.5, AMOLED and LTPS; total may differ due to rounding 

XML

Document and Entity Information	Dec. 09, 2020
Entity Listings [Line Items]
Document Type	8-K
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Document Period End Date	Dec. 09, 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
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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
PREFERRED STOCK PURCHASE RIGHTS [Member]
Entity Listings [Line Items]
Title of 12(b) Security	PREFERRED STOCK PURCHASE RIGHTS
Trading Symbol	N/A
Security Exchange Name	NONE