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 30, 2022

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 30, 2022, Photronics, Inc. (the “Company”) issued a press release reporting third quarter fiscal 2022 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.

On August 30, 2022, the Company will conduct a conference call during which certain unaudited, non-GAAP financial information related to the Company’s operations for the three months ended July 31, 2022 may be disclosed. This information is set forth in Exhibit 99.5.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

99.1	Press Release dated August 30, 2022.
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 2022 Financial Results Conference Call August 30, 2022 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 30, 2022

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 Third Quarter Fiscal 2022 Results

BROOKFIELD, Conn. August 30, 2022 (GLOBE NEWSWIRE) — Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its fiscal 2022 third quarter ended July 31, 2022.

“We achieved our sixth consecutive quarter of record revenue due to strong end market demand, favorable pricing dynamics, and outstanding performance by the entire organization,” said Frank Lee, chief executive officer. “Customers continue to place their trust in Photronics to support their technology roadmap by supplying the high-quality photomasks required for innovative designs that meet consumer demand. We are expanding capacity and growing volumes while controlling costs and capitalizing on operating leverage to deliver higher margins. We are also taking pricing action where appropriate to capture the full value that we are delivering to our customers. Our cash balance grew as we generated strong cash flow from operations, positioning us for continued investments in growth to expand our market-leading presence. I am proud of how the global Photronics team has responded as we look to close out another record year.”

Third Quarter 2022 Results

• Revenue was $219.9 million, up 8% sequentially and 29% compared with the same period of last year

• Net income attributable to Photronics, Inc. shareholders was $31.2 million ($0.51 per diluted share), compared with $27.4 million ($0.45 per diluted share) in the second quarter of 2022 and $17.1 million ($0.28 per diluted share) in the third quarter 2021

• Integrated circuit (IC) revenue was $161.3 million, up 11% sequentially and up 37% compared with the same period of last year

• Flat panel display (FPD) revenue was $58.7 million, flat sequentially and up 11% compared with the same period of last year

• Cash balance increased to $381 million with $93 million generated from operating activities and $12 million invested in growth through capital expenditures

Fourth Quarter 2022 Guidance

For the fourth quarter of 2022, Photronics expects revenue to be between $205 million and $215 million and net income attributable to Photronics, Inc. shareholders to be between $0.44 and $0.52 per diluted share.

Webcast

A webcast to discuss these results is scheduled for 8:30 a.m. Eastern time on Tuesday, August 30, 2022.  The event can be accessed through the Investors page of Photronics' website (www.photronics.com) or directly at https://register.vevent.com/register/BI5f5ea35d921040438cfa995c228f1b08. The webcast 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” 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.

09.22

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
	July 31, 2022			May 1, 2022		August 1, 2021		July 31, 2022			August 1, 2021
Revenue	$	219,948		$	204,509	$	170,643	$	614,283		$	482,473
Cost of goods sold		136,085			134,289		125,318		400,338			367,370
Gross Profit		83,863			70,220		45,325		213,945			115,103
Operating Expenses:
Selling, general and administrative		15,960			16,613		15,083		48,306			43,203
Research and development		4,151			4,206		5,305		14,297			14,390
Total Operating Expenses		20,111			20,819		20,388		62,603			57,593
Other operating (loss) income, net		(23	)		-		3,525		(17	)		3,525
Operating Income		63,729			49,401		28,462		151,325			61,035
Non-operating income, net		3,641			8,021		3,735		16,370			3,643
Income Before Income Tax Provision		67,370			57,422		32,197		167,695			64,678
Income tax provision		18,146			14,393		7,842		43,717			14,493
Net Income		49,224			43,029		24,355		123,978			50,185
Net income attributable to noncontrolling interests		17,994			15,597		7,279		42,252			14,547
Net income attributable to Photronics, Inc. shareholders	$	31,230		$	27,432	$	17,076	$	81,726		$	35,638
Earnings per share:
Basic	$	0.51		$	0.45	$	0.28	$	1.35		$	0.58
Diluted	$	0.51		$	0.45	$	0.28	$	1.34		$	0.57
Weighted-average number of common shares outstanding:
Basic		60,701			60,606		60,884		60,488			61,804
Diluted		61,299			61,145		61,515		61,127			62,362

EX-99.3

Exhibit 99.3

PHOTRONICS, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

	July 31, 2022		October 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	380,833	$	276,670
Accounts receivable		206,495		174,447
Inventories		50,313		55,249
Other current assets		40,414		44,250
Total current assets		678,055		550,616
Property, plant and equipment, net		640,805		696,553
Other assets		30,737		47,033
Total assets	$	1,349,597	$	1,294,202
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	10,727	$	22,248
Accounts payable and accrued liabilities		186,387		153,900
Total current liabilities		197,114		176,148
Long-term debt		46,589		89,446
Other liabilities		25,936		28,046
Photronics, Inc. shareholders' equity		850,318		823,692
Noncontrolling interests		229,640		176,870
Total equity		1,079,958		1,000,562
Total liabilities and equity	$	1,349,597	$	1,294,202

EX-96.4

Exhibit 99.4

PHOTRONICS,  INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Nine Months Ended
	July 31, 2022			August 1, 2021
Cash flows from operating activities:
Net income	$	123,978		$	50,185
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		61,210			69,305
Share-based compensation		4,623			4,034
Changes in operating assets, liabilities and other		6,110			(10,428	)
Net cash provided by operating activities		195,921			113,096
Cash flows from investing activities:
Purchases of property, plant and equipment		(46,337	)		(92,301	)
Government incentives		1,394			5,775
Other		(179	)		(170	)
Net cash used in investing activities		(45,122	)		(86,696	)
Cash flows from financing activities:
Repayments of debt		(51,917	)		(13,311	)
Purchases of treasury stock		(2,522	)		(35,750	)
Contributions from noncontrolling interest		24,995			-
Proceeds from share-based arrangements		5,505			2,251
Proceeds from long-term debt		-			20,858
Net settlements of restricted stock awards		(1,463	)		(403	)
Net cash used in financing activities		(25,402	)		(26,355	)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash		(21,308	)		4,602
Net increase in cash, cash equivalents, and restricted cash		104,089			4,647
Cash, cash equivalents, and restricted cash, beginning of period		279,680			281,602
Cash, cash equivalents, and restricted cash, end of period	$	383,769		$	286,249

EX-99.5

Exhibit 99.5

 Q3 2022 Financial Results Conference Call  August 30, 2022  Photronics, Inc. 

 Safe Harbor Statement  This presentation and some of our comments during this presentation 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. We refer you to the documents the Company files from time to time with the Securities and Exchange Commission. These documents contain and identify important factors that could cause the actual results for the Company to differ materially from those contained in our projections or 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 the accuracy of any forecasts or estimates, and we are not obligated to update any forward-looking statements if our expectations change.  8/30/2022  2 

 Net income attributable to Photronics, Inc. shareholders of $31.2M ($0.51/share)  Investing in mainstream IC capacity to capitalize on market growth trends  IC: +11% Q/Q, +37% Y/Y  FPD: Flat Q/Q, +11% Y/Y  To China: +13% Q/Q; +63% Y/Y  Committed to driving long-term, profitable growth through strategic investments  $93M generated from operating activity  $12M invested in capex  $57M total long-term debt; reduced $54M YTD  Cash balance  $381M  Revenue was a record  $219.9M  up 8%Q/Q  up 29%Y/Y  8/30/2022  3  Q3 2022 Summary 

 Investment Strategy  Revenue Growth  Win lion’s share of the impressive growth in TAM for China IC and FPD  Supplement capacity with point tool investments and targeted expansions  Capitalize on technology leadership in AMOLED to continue improving mix  Leverage global footprint to exploit growth in “legacy foundry” business  Margin Expansion  Sustainable pricing strength in high-end and mainstream IC   Optimize asset tool set to match end-market demand  Increasing benefit from operating leverage  Explore Strategic Partnerships  Targeting partnerships that extend market leadership position  8/30/2022  4 

 Delivering on Updated Target Model  $M (except EPS)  2020  2021  Q3 2022 LTM  Illustrative 2-Year Target Model   (Updated 5/25/2022)  Revenue  $610  $664  $796  $900  $950  $975  Gross Margin  22%  25%  33%  38-40%  40-42%  42-43%  Operating Margin  10%  14%  23%  28-30%  30-32%  32-33%  Operating Cash Flow  $143  $151  $234  $350-375  $365-380  $375-400  Free Cash Flow*  $77  $47  $172  $250-275  $235-280  $275-300  Diluted EPS  $0.52  $0.89  $1.67  $2.35-2.45  $2.50-2.55  $2.60-2.65  8/30/2022  5  *Free Cash Flow is a non-GAAP term; see reconciliation included in this presentation 

 Income Statement Summary  $M (except EPS)  Q322  Q222  Q/Q  Q321  Y/Y  Revenue  $ 219.9  $ 204.5  8%  $ 170.6  29%  Gross Profit  $ 83.9  $ 70.2  19%  $ 45.3  85%  Gross Margin  38.1%  34.3%  380 bps  26.6%  1,150 bps  Operating Income  $ 63.7  $ 49.4  29%  $ 28.5  124%  Operating Margin  29.0%  24.2%  480 bps  16.7%  1,230 bps  Non-operating income  $ 3.6  $ 8.0  ($ 4.4)  $ 3.7  ($ 0.1)  Income tax provision  $ 18.1  $ 14.4  $ 3.7  $ 7.8  $ 10.3  Minority interest  $ 18.0  $ 15.6  $ 2.4  $ 7.3  $ 10.7  Net income*  $ 31.2  $ 27.4  14%  $ 17.1  83%  Diluted EPS*  $ 0.51  $ 0.45  $ 0.06  $ 0.28  $ 0.23  Days in quarter  91  91  -  91  -  Margins improved on operating leverage, disciplined cost management, and IC price realization  Non-operating income primarily consists of unrealized FX gain  Minority interest from strong net income of IC JVs in Taiwan and China  8/30/2022  6  *Net income attributable to Photronics, Inc. shareholders 

 $M  Q322  Q222  Q/Q  Q321  Y/Y  High-End*  $ 52.7  $ 51.4  3%  $ 42.4  24%  Mainstream  $ 108.6  $ 94.4  15%  $ 75.4  44%  Total  $ 161.3  $ 145.8  11%  $ 117.8  37%  IC Photomask Revenue  8/30/2022  High-end growth driven by strong demand in Asia and US and better pricing  Continued mainstream growth from chip proliferation in consumer products, IoT, 5G, and Crypto supporting higher ASPs  Outlook  Continued strength from remote work and education  Regionalization driving investments for global chip capacity  Expanding ASPs on positive supply/demand balance  *28nm and smaller  Total may differ due to rounding  7 

 FPD Photomask Revenue  8/30/2022  Strong high-end demand for mobile AMOLED displays and G10.5+ for ultra-large screen TVs  Mainstream production lower as we prioritized higher-margin high-end demand  Outlook  Mobile demand strength should continue  Technology development drives demand for higher-value masks  *≥G10.5, AMOLED and LTPS  $M  Q322  Q222  Q/Q  Q321  Y/Y  High-End*  $ 50.7  $ 46.6  9%  $ 40.6  25%  Mainstream  $ 8.0  $ 12.1  (34%)  $ 12.2  (34%)  Total  $ 58.7  $ 58.7  -  $ 52.9  11%  Total may differ due to rounding  8 

 Select Financial Data  $M  Q322  Q222  Q321  Cash  $ 381  $ 329  $ 283  Debt  $ 57  $ 83  $ 118  Net Cash*  $ 324  $ 247  $ 165  Operating Cash Flow  $ 93  $ 44  $ 55  Capital Expenditures  $ 12  $ 16  $ 19  Share repurchase  -  -  $ 13  Debt primarily comprised of US equipment leases and local China loans; reduced debt $54M YTD  Capex mostly mainstream IC capacity & facility expansion  Balance sheet able to fund investments, share repurchases, and strategic M&A opportunities  Total share repurchases of $68M under current (Sep 2020) $100M authorization  8/30/2022  *Net cash defined is a non-GAAP term; see reconciliation included in this presentation  9 

 Q4 2022 Guidance   Revenue ($M)  $205 - $215  Operating Margin  25% - 29%  Taxes ($M)  $12 - $15  Diluted EPS  $0.44 - $0.52  Diluted Shares (M)  ~61  Full-year Capex (M)  ~$100  Incorporation of chips in IoT, 5G, Crypto and consumer products   Remote work and learning  Advanced display technologies  Growing nationalism spurs regional investments in capacity  Outlook clouded by geopolitical uncertainty, rising inflation and supply chain challenges  Driving margin expansion and cash flows to achieve long-term target model  8/30/2022  10 

 For Additional Information:  Please contact  John P. Jordan  Executive Vice President & CFO  203.740.5671  jjordan@photronics.com   Thank you for your interest! 

 Appendix 

 Total Revenue  8/30/2022  13  IC  FPD  Total may differ due to rounding 

 IC Photomask Revenue  8/30/2022  14  Mainstream  High-End  High-End: 28nm and smaller; total may differ due to rounding 

 FPD Photomask Revenue  8/30/2022  15  Mainstream  High-End  High-End: ≥G10.5, AMOLED and LTPS; total may differ due to rounding 

 Non-GAAP Financial Measures  8/30/2022  16 

 Non-GAAP Financial Measures  8/30/2022  17 

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Document Period End Date	Aug. 30, 2022
Entity File Number	0-15451
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Entity Address, Address Line One	15 Secor Road
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Entity Address, State or Province	CT
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Entity Listings [Line Items]
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Trading Symbol	PLAB
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