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) May 25, 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 May 25, 2022, Photronics, Inc. (the “Company”) issued a press release reporting second 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 May 25, 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 May 1, 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 May 25, 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 Q2 2022 Financial Results Conference Call May 25, 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:  May 25, 2022

EX-99.1

Exhibit 99.1

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

Photronics Reports Second Quarter Fiscal 2022 Results and Updates Long-Term Target Model

BROOKFIELD, Conn. May 25, 2022 (GLOBE NEWSWIRE) — Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its fiscal 2022 second quarter ended May 1, 2022.

“Second quarter was another excellent quarter, as strong end-market demand and higher pricing across both mainstream and high-end IC products propelled us to our fifth consecutive quarter of record revenue,” said Frank Lee, chief executive officer. “As revenue grew, our operating leverage and disciplined cost management expanded gross and operating margins to 36% and 25%, respectively. Our balance sheet continues to strengthen and support our growth strategy of investing to align our operations and technology to serve the strongest sectors of the market. We expect favorable demand trends to continue for advanced mobile displays, high-end logic devices and mainstream IC applications as our customers release new designs and build out new capacity.”

Second Quarter 2022 Results

• Revenue was $204.5 million, up 8% sequentially and 28% year-over-year

• Net income attributable to Photronics, Inc. shareholders was $29.8 million ($0.49 per diluted share), up 29% over first quarter 2022 net income of $23.1 million ($0.38 per diluted share) and nearly triple the second quarter 2021 net income of $10.5 million ($0.17 per diluted share)

• Integrated circuit (IC) revenue in the second quarter was $145.8 million, up 12% sequentially and 30% compared with the second quarter of last year

• Flat panel display (FPD) revenue was $58.7 million, down 2% from last quarter and up 23% over the same period last year

Lee continued, “As I begin my tenure as CEO, Photronics is in a very strong place with a strong global team, leading technology, quality products, and growing market share.  We expect to continue to grow sequentially throughout 2022.  In fact, market dynamics and Photronics execution have again driven profitability levels that propelled the Company well beyond the projections in the target model we provided just last quarter.” Lee concluded, “Significant indicators from the market and other market participants are that these conditions will continue well into the future.  We have therefore included an updated target model in the supplemental information issued in connection with our conference call later today.”

Third Quarter 2022 Guidance

For the third 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 $0.45 and $0.55 per diluted share.

Conference Call

A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, May 25, 2022.  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							Six Months Ended
	May 1, 2022		January 30, 2022		May 2, 2021			May 1, 2022		May 2, 2021
Revenue	$	204,509	$	189,827	$	159,763		$	394,336	$	311,830
Cost of goods sold		131,582		129,964		120,514			261,546		242,052
Gross Profit		72,927		59,863		39,249			132,790		69,778
Operating Expenses:
Selling, general and administrative		16,613		15,727		14,067			32,340		28,120
Research and development		4,206		5,939		4,375			10,145		9,085
Total Operating Expenses		20,819		21,666		18,442			42,485		37,205
Operating Income		52,108		38,197		20,807			90,305		32,573
Non-operating income (expense), net		8,021		4,707		(772	)		12,728		(92	)
Income Before Income Tax Provision		60,129		42,904		20,035			103,033		32,481
Income tax provision		14,689		11,178		3,714			25,867		6,651
Net Income		45,440		31,726		16,321			77,166		25,830
Net income attributable to noncontrolling interests		15,597		8,662		5,795			24,259		7,268
Net income attributable to Photronics, Inc. shareholders	$	29,843	$	23,064	$	10,526		$	52,907	$	18,562
Earnings per share:
Basic	$	0.49	$	0.38	$	0.17		$	0.88	$	0.30
Diluted	$	0.49	$	0.38	$	0.17		$	0.87	$	0.30
Weighted-average number of common shares outstanding:
Basic		60,606		60,158		62,054			60,382		62,265
Diluted		61,145		60,936		62,568			61,041		62,786

EX-99.3

Exhibit 99.3

PHOTRONICS, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

	May 1, 2022		October 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	329,282	$	276,670
Accounts receivable		190,259		174,447
Inventories		58,437		55,249
Other current assets		52,864		44,250
Total current assets		630,842		550,616
Property, plant and equipment, net		659,881		696,553
Other assets		41,661		47,033
Total assets	$	1,332,384	$	1,294,202
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	12,410	$	22,248
Accounts payable and accrued liabilities		172,205		153,900
Total current liabilities		184,615		176,148
Long-term debt		70,138		89,446
Other liabilities		25,048		28,046
Photronics, Inc. shareholders’ equity		836,752		823,692
Noncontrolling interests		215,831		176,870
Total equity		1,052,583		1,000,562
Total liabilities and equity	$	1,332,384	$	1,294,202

EX-99.4

Exhibit 99.4

PHOTRONICS,  INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Six Months Ended
	May 1, 2022			May 2, 2021
Cash flows from operating activities:
Net income	$	77,166		$	25,830
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		41,405			47,121
Share-based compensation		3,041			2,723
Changes in operating assets, liabilities and other		(18,323	)		(17,455	)
Net cash provided by operating activities		103,289			58,219
Cash flows from investing activities:
Purchases of property, plant and equipment		(34,809	)		(73,516	)
Government incentives		1,394			5,775
Other		(199	)		(157	)
Net cash used in investing activities		(33,614	)		(67,898	)
Cash flows from financing activities:
Repayments of debt		(27,571	)		(8,636	)
Purchases of treasury stock		(2,522	)		(23,250	)
Contribution from noncontrolling interest		24,995			-
Proceeds from share-based arrangements		4,384			1,180
Proceeds from long-term debt		-			12,439
Net settlements of restricted stock awards		(1,452	)		(371	)
Net cash used in financing activities		(2,166	)		(18,638	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(14,917	)		5,686
Net increase (decrease) in cash, cash equivalents, and restricted cash		52,592			(22,631	)
Cash, cash equivalents, and restricted cash, beginning of period		279,680			281,602
Cash, cash equivalents, and restricted cash, end of period	$	332,272		$	258,971

EX-99.5

Exhibit 99.5

 Q2 2022 Financial Results Conference Call  May 25, 2022  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.  5/25/2022  2 

 Net income attributable to Photronics, Inc. shareholders of $29.8M ($0.49/share)  Appointment of Frank Lee as CEO; 42+ years industry experience; 16+ years with PLAB  Investing in mainstream IC capacity to capitalize on market growth trends  IC: +12% Q/Q, +30% Y/Y  FPD: -2% Q/Q, +23% Y/Y  To China: +8% Q/Q; +58% Y/Y  Committed to driving long-term, profitable growth through strategic investments  $44M generated from operating activity  $16M invested in capex  $10M contribution from JV partner  Cash balance  $329M  Revenue was a record  $204.5M  up 8%Q/Q  up 28%Y/Y  5/25/2022  3  Q2 2022 Summary 

 Investment Strategy  Revenue Growth  Win lion’s share of “Made in China 2025” TAM growth  Supplement new factories with point tool investments  Capitalize on technology leadership in AMOLED to continue improving mix  Leverage global footprint to exploit growth in “legacy foundry” business  Margin Expansion  Sustained pricing strength in 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  Building on successful history of M&A and joint ventures  5/25/2022  4 

 Delivering on Updated Target Model  5/25/2022  5  *Free Cash Flow is a non-GAAP term; see reconciliation included in this presentation 

 Income Statement Summary  $M (except EPS)  Q222  Q122  Q/Q  Q221  Y/Y  Revenue  $ 204.5  $ 189.8  8%  $ 159.8  28%  Gross Profit  $ 72.9  $ 59.9  22%  $ 39.2  86%  Gross Margin  35.7%  31.5%  420 bps  24.6%  1,110 bps  Operating Income  $ 52.1  $ 38.2  36%  $ 20.8  150%  Operating Margin  25.5%  20.1%  540 bps  13.0%  1,250 bps  Other non-operating income (expense)  $ 8.0  $ 4.7  $ 3.3  ($ 0.8)  $ 8.8  Income tax provision  $ 14.7  $ 11.2  $ 3.5  $ 3.7  $ 11.0  Minority interest  $ 15.6  $ 8.7  $ 6.9  $ 5.8  $ 9.8  Net income*  $ 29.8  $ 23.1  29%  $ 10.5  184%  Diluted EPS*  $ 0.49  $ 0.38  $ 0.11  $ 0.17  $ 0.32  Days in quarter  91  91  -  91  -  Margins improved on operating leverage, disciplined cost management, and IC price realization  Other non-operating income/expense primarily due to unrealized FX gain/loss  Minority interest from IC JVs in Taiwan and China  5/25/2022  6  *Net income attributable to Photronics, Inc. shareholders 

 $M  Q222  Q122  Q/Q  Q221  Y/Y  High-End*  $ 51.4  $ 46.5  10%  $ 41.3  24%  Mainstream  $ 94.4  $ 83.2  13%  $ 70.7  34%  Total  $ 145.8  $ 129.8  12%  $ 112.0  30%  IC Photomask Revenue  5/25/2022  High-end growth driven by strong demand in Asia and US and higher price  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  Mainstream demand strong, expanding ASPs  *28nm and smaller  Total may differ due to rounding  7 

 FPD Photomask Revenue  5/25/2022  High-end demand up Q/Q as mobile growth offset soft G10.5+  Mainstream demand remains solid, with Q/Q decline associated with Chinese New Year holiday  Outlook  Dynamic market environment  Mobile demand strength and mainstream LCD recovery expected to continue  Technology development drives demand for higher-value masks  *≥G10.5, AMOLED and LTPS  $M  Q222  Q122  Q/Q  Q221  Y/Y  High-End*  $ 46.6  $ 46.3  1%  $ 39.4  18%  Mainstream  $ 12.1  $ 13.8  (12%)  $ 8.4  45%  Total  $ 58.7  $ 60.1  (2%)  $ 47.8  23%  Total may differ due to rounding  8 

 Select Financial Data  $M  Q222  Q122  Q221  Cash  $ 329  $ 314  $ 256  Debt  $ 83  $ 97  $ 114  Net Cash*  $ 247  $ 217  $ 142  Operating Cash Flow  $ 44  $ 59  $ 32  Capital Expenditures  $ 16  $ 19  $ 56  Share repurchase  -  $ 3  $ 10  Debt is US equipment lease and local China loans; reduced debt $29M 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 plan  5/25/2022  *Net cash defined is a non-GAAP term; see reconciliation included in this presentation  9 

 Q3 2022 Guidance   Revenue ($M)  $205 - $215  Operating Margin  27% - 29%  Taxes ($M)  $13 - $15  Diluted EPS  $0.45 - $0.55  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 investment  Outlook clouded by geopolitical uncertainty, rising inflation and supply chain challenges  Driving margin expansion and improved cash flows to hit long-term target model  5/25/2022  10 

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

 Appendix 

 Total Revenue  5/25/2022  13  IC  FPD  Total may differ due to rounding 

 IC Photomask Revenue  5/25/2022  14  Mainstream  High-End  High-End: 28nm and smaller; total may differ due to rounding 

 FPD Photomask Revenue  5/25/2022  15  Mainstream  High-End  High-End: ≥G10.5, AMOLED and LTPS; total may differ due to rounding 

 Non-GAAP Financial Measures  2/23/2022  16 

XML

Document and Entity Information	May 25, 2022
Entity Listings [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 25, 2022
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
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 [Member]
Entity Listings [Line Items]
Title of 12(b) Security	PREFERRED STOCK PURCHASE RIGHTS
Trading Symbol	N/A