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 8, 2021

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 December 8, 2021, Photronics, Inc. issued a press release reporting fourth quarter fiscal 2021 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 December 8, 2021.

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 2021 Financial Results Conference Call December 8, 2021 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 8, 2021

EX-99.1

Exhibit 99.1

For Further Information: John P. Jordan Executive Vice President & CFO 203.740.5671 jjordan@photronics.com

Press Release

Photronics Reports Full Year and Fourth Quarter Fiscal 2021 Results

BROOKFIELD, Conn. December 8, 2021 (GLOBE NEWSWIRE) — Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its full year and fourth quarter fiscal 2021 ended October 31, 2021.

“Photronics achieved a fourth consecutive year of record revenue, as demand for our design-driven products accelerated and we fully ramped new flat panel display capacity,” said Peter Kirlin, chief executive officer.  “We made strategic investments in 2021 that have positioned us to achieve organic growth as market trends such as the increase in demand from Asia foundries and the adoption of advanced display technologies in mobile applications have driven the market higher.”

Full Year 2021 Results

• Revenue of $663.8 million was a record for the fourth consecutive year, up 9% compared with 2020

• Net income attributable to Photronics, Inc. shareholders was $55.4 million, or $0.89 per diluted share

• Cash provided by operating activities was $150.8 million, capex was $103.5 million, share repurchases were $48.3 million, and ending cash balance was $276.7 million

Fourth Quarter 2021 Results

• Revenue was $181.3 million, the third consecutive quarterly record, up 6% sequentially and 21% year-over-year

• Net income attributable to Photronics, Inc. shareholders was $19.8 million ($0.33 per diluted share), compared with $17.1 million ($0.28 per diluted share) for the third quarter of 2021 and $6.5 million ($0.10 per diluted share) for the fourth quarter of 2020

Full year integrated circuit (IC) revenue was $460.2 million, up 10% compared with last year; flat panel display (FPD) revenue was $203.6 million, 6% over the same quarter last year.

IC revenue in the fourth quarter was $125.4 million, up 7% sequentially and 18% compared with the fourth quarter of last year; FPD revenue was $55.8 million, up 6% over last quarter and 29% over the same period last year.

“Past investments in targeted technologies are paying off, as margin expansion is accompanying top-line growth,” added Kirlin.  “We are generating gross and operating margins already at the high-end of the three-year target model we presented last year, and our strong cash flow enables us to invest in the business while we also return cash to shareholders as part of our disciplined capital allocation.  With strong end market demand, solid balance sheet, broad geographic presence, and a team with a proven track record, we are excited about our future and optimistic we can deliver on our long-term target model objectives.”

First Quarter 2022 Guidance

For the first quarter of 2022, Photronics expects revenue to be between $178 million and $186 million, and net income attributable to Photronics, Inc. shareholders to be between $0.27 and $0.34 per diluted share.

Conference Call

A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, December 8, 2021.  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 over 50 years.  As of October 31, 2021, 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, 2021		August 1, 2021		October 31, 2020			October 31, 2021		October 31, 2020
Revenue	$	181,288	$	170,643	$	149,286		$	663,761	$	609,691
Cost of goods sold		129,347		125,318		117,401			496,717		475,037
Gross Profit		51,941		45,325		31,885			167,044		134,654
Operating Expenses:
Selling, general and administrative		14,322		15,083		12,790			57,525		53,582
Research and development		4,100		5,305		4,110			18,490		17,144
Total Operating Expenses		18,422		20,388		16,900			76,015		70,726
Other operating income, net		-		3,525		-			3,525		-
Operating Income		33,519		28,462		14,985			94,554		63,928
Non-operating income (expense), net		3,809		3,735		(2,937	)		7,452		(2,327	)
Income Before Income Tax Provision		37,328		32,197		12,048			102,006		61,601
Income tax provision		8,697		7,842		3,469			23,190		21,258
Net Income		28,631		24,355		8,579			78,816		40,343
Net income attributable to noncontrolling interests		8,820		7,279		2,119			23,367		6,523
Net income attributable to Photronics, Inc. shareholders	$	19,811	$	17,076	$	6,460		$	55,449	$	33,820
Earnings per share:
Basic	$	0.33	$	0.28	$	0.10		$	0.90	$	0.52
Diluted	$	0.33	$	0.28	$	0.10		$	0.89	$	0.52
Weighted-average number of common shares outstanding:
Basic		60,216		60,884		64,193			61,407		64,866
Diluted		60,908		61,515		64,768			61,999		65,470

EX-99.3

Exhibit 99.3

PHOTRONICS, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

	October 31, 2021		October 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	276,670	$	278,665
Accounts receivable		174,447		134,470
Inventories		55,249		57,269
Other current assets		44,250		29,735
Total current assets		550,616		500,139
Property, plant and equipment, net		696,553		631,475
Intangible assets, net		774		3,437
Other assets		46,259		53,131
Total assets	$	1,294,202	$	1,188,182
Liabilities and Equity
Current liabilities:
Debt	$	22,248	$	13,678
Accounts payable and accrued liabilities		153,900		129,261
Total current liabilities		176,148		142,939
Long-term debt		89,446		54,980
Other liabilities		28,046		27,997
Photronics, Inc. shareholders' equity		823,692		804,962
Noncontrolling interests		176,870		157,304
Total equity		1,000,562		962,266
Total liabilities and equity	$	1,294,202	$	1,188,182

EX-99.4

Exhibit 99.4

PHOTRONICS,  INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Year Ended
	October 31, 2021			October 31, 2020
Cash flows from operating activities:
Net income	$	78,816		$	40,343
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		90,396			93,814
Share-based compensation		5,348			4,927
Changes in operating assets, liabilities and other		(23,788	)		3,962
Net cash provided by operating activities		150,772			143,046
Cash flows from investing activities:
Purchases of property, plant and equipment		(109,099	)		(70,815	)
Government incentives		5,775			5,263
Purchases of intangible assets		(170	)		(159	)
Net cash used in investing activities		(103,494	)		(65,711	)
Cash flows from financing activities:
Proceeds from long-term debt		20,858			20,340
Purchases of treasury stock		(48,250	)		(34,394	)
Repayments of debt		(20,352	)		(7,392	)
Dividends paid to noncontrolling interests		(9,597	)		(16,151	)
Proceeds from share-based arrangements		3,874			4,239
Contribution from noncontrolling interest		-			17,596
Net settlements of restricted stock awards		(436	)		(248	)
Net cash used in financing activities		(53,903	)		(16,010	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		4,703			10,986
Net (decrease) increase in cash, cash equivalents, and restricted cash		(1,922	)		72,311
Cash, cash equivalents, and restricted cash, beginning of period		281,602			209,291
Cash, cash equivalents, and restricted cash, end of period	$	279,680		$	281,602

EX-99.5

Exhibit 99.5

 Q4 2021 Financial Results Conference CallDecember 8, 2021  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.  12/8/2021  2 

 2021 Summary  Revenue was a record $663.8M, up 9%IC and FPD both achieved record revenue, up 10% and 6%, respectivelyRecord revenue to China, up 20%Net income attributable to Photronics, Inc. shareholders of $55.4M ($0.89/share)Cash balance $277M100% of free cash flow returned to investors through share repurchases$151M generated from operating activity$109M invested in capex ($103M net of government incentives)Completed FPD capacity expansion ahead of schedule  12/8/2021  3  Another year with record revenue and improved performance in a challenging environment 

 Q4 2021 Summary  Revenue was a record $181.3M, up 6% Q/Q and 21% Y/YIC (+7% Q/Q, +18% Y/Y) and FPD (+6% Q/Q, +29% Y/Y) both achieved record revenueRecord revenue to China, up 26% Q/Q and 55% Y/YNet income attributable to Photronics, Inc. shareholders of $19.8M ($0.33/share)Cash balance $277M$38M generated from operating activity$17M invested in capex$13M returned to investors through share repurchasesInvesting in mainstream IC capacity to capitalize on market growth trendsReceived 2021 UMC Excellent Collaboration and Partnership Award  12/8/2021  4  Strategic investments driving long-term, profitable growth 

 Next phase of investment strategy  Revenue growthWin lion’s share of “Made in China 2025” TAM growthSupplement new factories with point tool investmentsCapture captive outsourcing opportunity created by EUVCapitalize on technology leadership in AMOLED to continue improving mixMargin expansionSustained pricing strength in mainstream IC going into 2022Optimize asset tool set to match end-market demandIncreasing benefit from operating leverageExplore strategic partnerships  12/8/2021  5 

 Illustrative Target Model  $M (except EPS)  2019  2020  2021  12/2020 Illustrative FY2023 Target Model      Revenue  $551  $610  $664  $7005% CAGR  $7256% CAGR  $7507% CAGR  Gross Margin  22%  22%  25%  24-26%  26-28%  27-29%  Operating Margin  9%  10%  14%  13-15%  15-17%  17-19%  Operating Cash Flow  $68  $143  $151  $150-160  $160-170  $175-185  Free Cash Flow  ($83)  $77  $47  $80-90  $90-100  $100-110  EPS  $0.44  $0.52  $0.89  $1.00-1.05  $1.15-1.25  $1.25-1.35  12/8/2021  6 

 Income Statement Summary  $M (except EPS)  Q421  Q321  Q/Q  Q420  Y/Y  Revenue  $ 181.3  $ 170.6  6%  $ 149.3  21%  Gross Profit  $ 51.9  $ 45.3  15%  $ 31.9  63%  Gross Margin  28.7%  26.6%  210 bps  21.4%  730 bps  Operating Income  $ 33.5  $ 28.5  18%  $ 15.0  124%  Operating Margin  18.5%  16.7%  180 bps  10.0%  850 bps  Other non-operating income (expense)  $ 3.8  $ 3.7  $ 0.1  ($ 2.9)  $ 6.7  Income tax provision  $ 8.7  $ 7.8  $ 0.9  $ 3.5  $ 5.2  Minority interest  $ 8.8  $ 7.3  $ 1.5  $ 2.1  $ 6.7  Net Income*  $ 19.8  $ 17.1  16%  $ 6.5  207%  Diluted EPS*  $ 0.33  $ 0.28  $ 0.05  $ 0.10  $ 0.23  Days in quarter  91  91  -  90  1  Margins improved on higher revenue (IC & FPD), better mainstream IC pricing and high-end mixAsia price increases already in placeRolling out price increases in other marketsQ321 operating income includes $3.5M gain on sale of fixed assetOther non-operating income (expense) primarily due to FX gain (loss)Minority interest is IC JVs in Taiwan and China  12/8/2021  7  *Net income attributable to Photronics, Inc. shareholders 

 $M  Q421  Q321  Q/Q  Q420  Y/Y  High-End*  $ 42.6  $ 42.4  1%  $ 38.2  12%  Mainstream  $ 82.9  $ 75.4  10%  $ 67.8  22%  Total  $ 125.4  $ 117.8  7%  $ 105.9  18%  IC Photomask Revenue  12/8/2021  8  High-end growth driven by strong logic demand in AsiaMainstream up on proliferation of chips in IoT, 5G, Crypto and consumer products creating support for higher ASPsOutlookContinued strength from remote work and educationMainstream demand strong, expanding ASPs  *28nm and smaller  Total may differ due to rounding 

 FPD Photomask Revenue  12/8/2021  9  High-end improved on mobile demandMainstream recovery continues Full quarter benefit of new litho toolsOutlookDynamic market environmentMobile demand strength and mainstream LCD recovery expected to continueTechnology development drives demand for higher-value masks  *≥G10.5, AMOLED and LTPS  $M  Q421  Q321  Q/Q  Q420  Y/Y  High-End*  $ 41.0  $ 40.6  1%  $ 31.3  31%  Mainstream  $ 14.9  $ 12.2  21%  $ 12.1  23%  Total  $ 55.8  $ 52.9  6%  $ 43.4  29%  Total may differ due to rounding 

 Select Financial Data  $M  Q421  Q321  Q420  Cash  $ 277  $ 283  $ 279  Debt  $ 112  $ 118  $ 69  Net Cash*  $ 165  $ 165  $ 210  Operating Cash Flow  $ 38  $ 55  $ 65  Capital Expenditures  $ 17  $ 19  $ 34  Share repurchase  $ 13  $ 13  $ 18  Debt is US equipment lease and local China loansFull-year net 2021 capex was $104MTotal share repurchases of $66M under current (Sep 2020) $100M planBalance sheet able to fund investments, share repurchases, and strategic M&A opportunities  12/8/2021  10  *Net cash defined as cash and cash equivalents less long-term borrowings (including current portion), as reported in accordance with GAAP 

 Q122 Guidance   Revenue ($M)  $178 - $186  Operating Margin  18% - 20%  Taxes ($M)  $9 - $10  EPS  $0.27 - $0.34  Diluted Shares (M)  ~60  Full-year Capex (M)  ~$100  Incorporation of chips in IoT, 5G, Crypto and consumer products Remote work and learningAdvanced display technologiesGrowing nationalism spurs investmentOutlook clouded by geopolitical uncertainty and supply chain challengesDriving margin expansion and improved cash flowsCapex mostly mainstream IC capacity & facility expansion  12/8/2021  11 

 For Additional Information:John P. JordanExecutive Vice President & CFO203.740.5671jjordan@photronics.com   Thank you for your interest! 

 Appendix   

 Total Revenue  12/8/2021  14      IC  FPD  Total may differ due to rounding 

 IC Photomask Revenue  12/8/2021  15      Mainstream  High-End  High-End: 28nm and smaller; total may differ due to rounding 

 FPD Photomask Revenue  12/8/2021  16      Mainstream  High-End  High-End: ≥G10.5, AMOLED and LTPS; total may differ due to rounding 

XML

Document and Entity Information	Dec. 08, 2021
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Document Type	8-K
Amendment Flag	false
Document Period End Date	Dec. 08, 2021
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
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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