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Photronics, Inc.$11.33$.131.16%

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 Photronics Reports Fourth Quarter Fiscal 2017 Results
   Wednesday, November 29, 2017 6:00:24 AM ET

BROOKFIELD, CT--(Marketwired - November 29, 2017) -

Fourth quarter fiscal 2017 revenue was $121.0 million, up 8% sequentially and 13% year-over-year

Net income attributable to Photronics, Inc. shareholders was $5.4 million ($0.08 per diluted share)

Capital expenditures of $53 million led to cash of $308 million at year end; balance sheet remains strong while funding strategic growth initiatives

First quarter fiscal 2018 guidance: revenue between $110 and $118 million with diluted EPS between $0.02 and $0.09

Photronics, Inc. (PLAB ), a worldwide leader in supplying innovative imaging technology solutions for the global electronics industry, today reported financial results for its fiscal 2017 fourth quarter ended October 29, 2017.

Fourth quarter revenue was $121.0 million, increases of 8% sequentially and 13% compared with last year. Integrated circuit (IC) revenue was $96.1 million, up 13% sequentially and 17% compared with last year. Flat panel display (FPD) revenue was $24.9 million, decreases of 6% sequentially and 1% compared with last year.

Net income attributable to Photronics, Inc. shareholders was $5.4 million ($0.08 per diluted share), compared with $4.0 million ($0.06 per diluted share) for the third quarter of 2017 and $5.3 million ($0.08 per diluted share) for the fourth quarter of 2016. The results for fourth quarter 2016 included a non-recurring tax benefit of $1.8 million ($0.03 per diluted share).

"Revenue improved this quarter on the strength of high-end mask sales, particularly in IC where high-end memory continued the positive trend of the last four quarters, and high-end logic advanced on growing Asia foundry 28 nm demand," said Peter Kirlin, chief executive officer. "High-end FPD also improved due in part to continued growth in demand for AMOLED in China. Operating margin improved to 10.3% due to our operating leverage and effective cost control. Continued strong cash generation supports our ability to fund planned investments, including the two China projects. The capex forecast of approximately $250 million in 2018 will be the most the Company has spent in one year. We believe the China investments, when complete and fully operational, will provide attractive returns and will make significant contributions to revenue and profit growth."

Full Year Results

Full year revenue in fiscal 2017 was $450.7 million, 7% less than fiscal 2016 full-year revenue. Revenue from IC photomasks of $350.3 million was 4% less than prior year, and FPD revenue was $100.4 million, 16% less than prior year FPD revenue.

Full year net income attributable to Photronics, Inc. shareholders was $13.1 million in fiscal 2017 ($0.19 per diluted share), compared with $46.2 million ($0.64 per diluted share) in 2016. Non-GAAP net income attributable to Photronics, Inc. shareholders was $13.1 million in fiscal 2017 ($0.19 per diluted share), compared with $32.6 million ($0.47 per diluted share) in fiscal 2016.

First Quarter 2018 Guidance

Kirlin continued, "For fiscal 2018 first quarter, underlying high-end IC demand drivers still appear healthy, potentially tempered by anticipated seasonal softness. We expect high-end FPD demand to remain flat. Our cash balance will likely decrease during the quarter as we ramp up investments for the China expansion. For the first quarter of fiscal 2018, Photronics expects revenues to be between $110 million and $118 million, and net income attributable to Photronics, Inc. shareholders to be between $0.02 and $0.09 per diluted share."

Conference Call

A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, November 29, 2017. The call can be accessed by logging onto Photronics’ web site 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’ web site for instant replay access.

Non-GAAP Financial Measures

Non-GAAP net income attributable to Photronics, Inc. shareholders, non-GAAP earnings per share, and non-GAAP EBITDA are "non-GAAP financial measures" as such term is defined by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. The attached financial supplement reconciles Photronics, Inc.’s financial results under GAAP to non-GAAP financial information. Photronics, Inc. believes these non-GAAP financial measures that exclude certain non-cash or non-recurring income or expense items are useful for analysts and investors to evaluate Photronics, Inc.’s future on-going performance because they enable a more meaningful comparison of Photronics, Inc.’s projected earnings and performance with its historical results of prior periods. These non-GAAP metrics are not intended to represent funds available for Photronics, Inc.’s discretionary use and are not intended to represent, or be used as a substitute for, operating income, net income or cash flows from operations data as measured under GAAP. The items excluded from these non-GAAP metrics, but included in the calculation of their closest GAAP equivalent, are significant components of the condensed consolidated statements of income and must be considered in performing a comprehensive assessment of overall financial performance. Non-GAAP financial information is adjusted for the following items:

Non-recurring tax benefit in fiscal 2016 related to the recognition of certain tax benefits in Taiwan that were determined to be realizable in filings for future tax periods

Non-recurring net gain on sale of investment in fiscal 2016

Interest expense, income tax expense/(benefit), depreciation and amortization, and other items are added to GAAP net income to derive non-GAAP EBITDA

About Photronics

Photronics is a leading worldwide manufacturer of photomasks. Photomasks are high precision quartz plates that contain microscopic images of electronic circuits. A key element in the manufacture of semiconductors and flat panel displays, photomasks are used to transfer circuit patterns onto semiconductor wafers and flat panel display substrates during the fabrication of integrated circuits, a variety of flat panel displays and, to a lesser extent, other types of electrical and optical components. They are produced in accordance with product designs provided by customers at strategically located manufacturing facilities in Asia, Europe, and North America. Additional information on the Company can be accessed at www.photronics.com

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements made by or on behalf of Photronics, Inc. and its subsidiaries (the Company). The forward-looking statements contained in this press release and other parts of Photronics’ web site involve risks and uncertainties that may affect the Company’s operations, markets, products, services, prices, and other factors. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental, and technological factors as well as decisions we may make in the future regarding our business, capital structure and other matters. These forward-looking statements generally can be identified by phrases such as "believes", "expects", "anticipates", "plans", "projects", and similar expressions. Accordingly, there is no assurance that the Company’s expectations will be realized. For a fuller discussion of the factors that may affect the Company’s operations, see "Forward Looking Statements" in the Company’s Quarterly and Annual Reports to the Securities and Exchange Commission on Forms 10-Q and 10-K. The Company assumes no obligation to provide revisions to any forward-looking statements.

                                                                                                                                                                                                                             
PHOTRONICS, INC. AND SUBSIDIARIES                                                                                                                                                                                                   
Condensed Consolidated Statements of Income                                                                                                                                                                                  
(in thousands, except per share amounts)                                                                                                                                                                                            
(Unaudited)                                                                                                                                                                                                                         
                                                                                                                                                                                                                             
                                                                                                                                                                                   
                                                          Three Months Ended                                                                     Year Ended                                             
                                                          October 29,           July 30,              October 30,           October 29,           October 30,        
                                                          2017                  2017                  2016                  2017                  2016               
                                                                                               
Revenue                                                          $        120,971      $        111,579      $        107,368      $        450,678      $        483,456   
                                                                                               
Cost of goods sold                                                 (94,529  )            (89,862  )            (86,835  )            (359,363 )            (364,750 )
                                                                                               
                        Gross profit                 26,442         21,717         20,533         91,315         118,706   
                                                                                               
Operating Expenses:                                                                                   
                                                                                               
            Selling, general and administrative             (10,182  )            (11,639  )            (10,191  )            (43,585  )            (44,577  )
                                                                                               
            Research and development                        (3,838   )            (4,812   )            (5,041   )            (15,862  )            (21,654  )
                                                                                               
Total Operating Expenses                                           (14,020  )            (16,451  )            (15,232  )            (59,447  )            (66,231  )
                                                                                               
                        Operating income             12,422         5,266          5,301          31,868         52,475    
                                                                                               
Gain on sale of investment                                         -              -              -              -              8,940     
                                                                                               
Other income (expense), net                                        536            (134     )            (69      )            (5,303   )            (941     )
                                                                                               
                        Income before income taxes   12,958         5,132          5,232          26,565         60,474    
                                                                                               
Income tax (provision) benefit                                     (2,462   )            (333     )            1,337          (5,276   )            (4,798   )
                                                                                               
                        Net income                   10,496         4,799          6,569          21,289         55,676    
                                                                                               
Net income attributable to noncontrolling interests                (5,110   )            (798     )            (1,313   )            (8,159   )            (9,476   )
                                                                                               
Net income attributable to Photronics, Inc. shareholders         $        5,386        $        4,001        $        5,256        $        13,130       $        46,200    
                                                                                               
Earnings per share:                                                                                   
                        Basic                      $        0.08         $        0.06         $        0.08         $        0.19         $        0.68      
                                                                                               
                        Diluted                    $        0.08         $        0.06         $        0.08         $        0.19         $        0.64      
                                                                                               
Weighted-average number of common shares outstanding:                                                 
                        Basic                        68,615         68,525         68,025         68,436         67,539    
                                                                                               
                        Diluted                      69,218         69,380         68,906         69,288         76,354    
 
 
PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
 
                                                                    
                                                     October 29,          October 30,
                                                     2017                 2016
                                                               
Assets                                                                
                                                               
Current assets:                                                       
      Cash and cash equivalents                      $        308,021     $        314,074
      Accounts receivable                              105,320       92,636
      Inventories                                      23,703        22,081
      Other current assets                             12,080        12,795
                                                               
                    Total current assets        449,124       441,586
                                                               
Property, plant and equipment, net                            535,197       506,434
Intangible assets, net                                        17,122        19,854
Other assets                                                  19,351        20,114
                                                               
Total assets                                                $        1,020,794   $        987,988
                                                               
                                                               
                                                               
Liabilities and Equity                                                
                                                               
Current liabilities:                                                  
      Current portion of long-term borrowings        $        4,639       $        5,428
      Accounts payable and accrued liabilities         77,137        75,889
                                                               
                    Total current liabilities   81,776        81,317
                                                               
Long-term borrowings                                          57,337        61,860
Other liabilities                                             16,386        19,337
                                                               
Photronics, Inc. shareholders’ equity                         744,564       710,363
Noncontrolling interests                                      120,731       115,111
                    Total equity                865,295       825,474
                                                               
Total liabilities and equity                                $        1,020,794   $        987,988
                                                                                                                                                                     
                                                                                                                                                                     
PHOTRONICS, INC. AND SUBSIDIARIES                                                                                                                                           
Condensed Consolidated Statements of Cash Flows                                                                                                                      
(in thousands)                                                                                                                                                              
(Unaudited)                                                                                                                                                                 
                                                                                                                                  
                                                                                                                                  
                                                                                                       Year Ended                                             
                                                                                                       October 29,           October 30,        
                                                                                                       2017                  2016               
                                                                                                                    
Cash flows from operating activities:                                                                                      
           Net income                                                                                  $        21,289       $        55,676    
           Adjustments to reconcile net income to net cash provided by operating activities:                 
                                                 Depreciation and amortization                    86,573         82,406    
                                                 Gain on sale of investment                       -              (8,940   )
                                                 Changes in assets, liabilities and other         (11,029  )            (7,005   )
                                                                                                                    
Net cash provided by operating activities                                                                       96,833         122,137   
                                                                                                                    
Cash flows from investing activities:                                                                                      
                                                 Purchases of property, plant and equipment       (91,965  )            (50,147  )
                                                 Acquisition of Business                          (5,400   )            -         
                                                 Proceeds from sale of investments                167            101,853   
                                                 Other                                            (868     )            584       
                                                                                                                    
Net cash (used in) provided by investing activities                                                             (98,066  )            52,290    
                                                                                                                    
Cash flows from financing activities:                                                                                      
                                                 Repayments of long-term borrowings               (5,428   )            (57,609  )
                                                 Payments to noncontrolling interests             (8,298   )            (12,856  )
                                                 Proceeds from share-based arrangements           2,830          3,463     
                                                 Other                                            (32      )            (20      )
                                                                                                                    
Net cash used in financing activities                                                                           (10,928  )            (67,022  )
                                                                                                                    
Effect of exchange rate changes on cash                                                                         6,108          802       
                                                                                                                    
Net (decrease) increase in cash and cash equivalents                                                            (6,053   )            108,207   
Cash and cash equivalents, beginning of period                                                                  314,074        205,867   
                                                                                                                    
Cash and cash equivalents, end of period                                                                      $        308,021      $        314,074   
                                                                                                                                                                                                                 
                                                                                                                                                                                                                 
PHOTRONICS, INC. AND SUBSIDIARIES                                                                                                                                                                                       
Non-GAAP Financial Measures                                                                                                                                                                                      
Reconciliation of GAAP to Non-GAAP Financial Information                                                                                                                                                         
(in thousands, except per share data)                                                                                                                                                                            
(Unaudited)                                                                                                                                                                                                             
                                                                                                                                           
                                                                         Three Months Ended                                                          Year Ended                                    
                                                                         October 29,         July 30,            October 30,           October 29,         October 30,        
                                                                         2017                2017                2016                  2017                2016               
                                                                                                        
Reconciliation of GAAP to Non-GAAP Net Income                                                           
Attributable to Photronics, Inc. Shareholders and EPS data                                              
                                                                                                        
GAAP net income attributable to Photronics, Inc. shareholders            $        5,386      $        4,001      $        5,256        $        13,130     $        46,200    
                              Income tax benefit (a)                       -            -            (1,834   )            -            (4,838   )
                              Gain on sale of investment, net of tax (b)   -            -            -              -            (8,753   )
                                                                                                        
Non-GAAP net income attributable to Photronics, Inc. shareholders        $        5,386      $        4,001      $        3,422        $        13,130     $        32,609    
                                                                                                        
Weighted average number of diluted shares outstanding                                                   
                                                                                                        
                              GAAP                                         69,218       69,380       68,906         69,288       76,354    
                                                                                                        
                              Non-GAAP                                     69,218       69,380       68,906         69,288       76,354    
                                                                                                        
Net income per diluted share                                                                            
                                                                                                        
                              GAAP                                       $        0.08       $        0.06       $        0.08         $        0.19       $        0.64      
                                                                                                        
                              Non-GAAP                                   $        0.08       $        0.06       $        0.05         $        0.19       $        0.47      
                                                                                                        
                                                                                                        
Reconciliation of GAAP Net Income to Non-GAAP EBITDA                                                    
                                                                                                        
GAAP Net Income (c)                                                      $        10,496     $        4,799      $        6,569        $        21,289     $        55,676    
                              Interest expense                             578          550          616            2,235        3,366     
                              Income tax expense                           2,462        333          (1,337   )            5,276        4,798     
                              Depreciation and amortization                22,492       21,840       22,304         86,573       82,406    
                              Other items (d)                              785          984          980            3,627        3,828     
                                                                                                        
Non-GAAP EBITDA                                                          $        36,813     $        28,506     $        29,132       $        119,000    $        150,074   
                                                                                                        
                                                                                                        
   
Notes:
(a)      Represents tax benefit primarily related to the recognition of prior period tax benefits and other tax positions no longer deemed necessary in Taiwan
(b)      Represents gain on sale of investment in a foreign entity
(c)      Includes net income attributable to noncontrolling interests, and in 2016 includes gain on sale of investment in a foreign entity
(d)      Consists of stock compensation expense

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



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