BROOKFIELD, CT --(Marketwired - February 15, 2017) -
- First quarter sales were $109.8 million, up 2% sequentially on improved IC sales
- Net income attributable to Photronics, Inc. shareholders was $1.9 million ($0.03 per diluted share)
- Net cash 1 improved to $264 million, providing additional financial strength and flexibility to fund growth
- Plan to break ground on new, state-of-the-art IC photomask facility in China by the end of February
- Second quarter 2017 guidance: sales between $105 and $115 million; diluted EPS between $0.01 and $0.07
Photronics, Inc. (
First quarter sales were $109.8 million, up 2% sequentially and down 15% compared with last year. Sales of integrated circuits (IC) photomasks were $86.4 million, an improvement of 5% sequentially and down 13% compared with last year, while sales of flat panel display (FPD) photomasks were $23.4 million, down 7% sequentially and 23% compared with last year.
Net income attributable to Photronics, Inc. shareholders was $1.9 million ($0.03 per diluted share), compared with $21.0 million ($0.28 per diluted share), for the first quarter of 2016, which included a non-recurring net gain of $8.8 million ($0.11 per diluted share); and $5.3 million ($0.08 per diluted share) for the fourth quarter of 2016, which included a non-recurring tax benefit of $1.8 million ($0.03 per diluted share).
"We achieved improved sales compared with the fourth quarter of 2016 as an increase in IC sales was partially offset by lower FPD demand," said Peter Kirlin, chief executive officer. "IC sales were up, despite seasonal headwinds. FPD was lower as growth in high-end was more than offset by a decline in mainstream as customers focused on supporting current production, which limited new product releases. With the top line improvement, we achieved higher operating income and cash from operations through continued cost management and financial discipline. Progress continues on our two strategic investments this year, with ground breaking scheduled to take place for our China IC facility by the end of February, and we expect to receive new FPD tools soon, with the installation to begin in the third quarter."
Second Quarter 2017 Guidance
Kirlin continued, "Looking ahead to the second quarter, we anticipate improved mainstream IC sales, mixed results in high-end IC, and flat FPD revenues, with orders for new AMOLED displays ramping at quarter end." For the second quarter of 2017, Photronics expects revenues to be between $105 million and $115 million and net income attributable to Photronics, Inc. shareholders to be between $0.01 and $0.07 per diluted share.
Conference Call
A conference call with investors and the media to discuss these results is scheduled for 8:30 a.m. Eastern time on Wednesday, February 15, 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
Note:
1. Net cash defined as cash and cash equivalents less long-term borrowings (including current portion), as reported in accordance with GAAP.
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 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 | ||||||||||||||
| January 29, | October 30, | January 31, | ||||||||||||
| 2017 | 2016 | 2016 | ||||||||||||
| Net sales | $ | 109,831 | $ | 107,368 | $ | 129,956 | ||||||||
| Costs and expenses: | ||||||||||||||
| Cost of sales | (86,832 | ) | (86,835 | ) | (94,520 | ) | ||||||||
| Gross profit | 22,999 | 20,533 | 35,436 | |||||||||||
| Selling, general and administrative | (10,871 | ) | (10,191 | ) | (12,198 | ) | ||||||||
| Research and development | (3,485 | ) | (5,041 | ) | (5,700 | ) | ||||||||
| Operating income | 8,643 | 5,301 | 17,538 | |||||||||||
| Gain on sale of investment | - | - | 8,785 | |||||||||||
| Other income (expense), net | (2,083 | ) | (69 | ) | 878 | |||||||||
| Income before income taxes | 6,560 | 5,232 | 27,201 | |||||||||||
| Income tax provision | (2,050 | ) | 1,337 | (3,700 | ) | |||||||||
| Net income | 4,510 | 6,569 | 23,501 | |||||||||||
| Net income attributable to noncontrolling interests | (2,564 | ) | (1,313 | ) | (2,499 | ) | ||||||||
| Net income attributable to Photronics, Inc. shareholders | $ | 1,946 | $ | 5,256 | $ | 21,002 | ||||||||
| Earnings per share: | ||||||||||||||
| Basic | $ | 0.03 | $ | 0.08 | $ | 0.31 | ||||||||
| Diluted | $ | 0.03 | $ | 0.08 | $ | 0.28 | ||||||||
| Weighted-average number of common shares outstanding: | ||||||||||||||
| Basic | 68,176 | 68,025 | 66,807 | |||||||||||
| Diluted | 69,169 | 68,906 | 79,136 | |||||||||||
| PHOTRONICS, INC. AND SUBSIDIARIES | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (in thousands) | ||||||||
| (Unaudited) | ||||||||
| January 29, | October 30, | |||||||
| 2017 | 2016 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 329,696 | $ | 314,074 | ||||
| Accounts receivable | 86,025 | 92,636 | ||||||
| Inventories | 23,573 | 22,081 | ||||||
| Other current assets | 11,244 | 12,795 | ||||||
| Total current assets | 450,538 | 441,586 | ||||||
| Property, plant and equipment, net | 496,676 | 506,434 | ||||||
| Intangible assets, net | 20,094 | 19,854 | ||||||
| Other assets | 20,160 | 20,114 | ||||||
| Total assets | $ | 987,468 | $ | 987,988 | ||||
| Liabilities and Equity | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term borrowings | $ | 5,465 | $ | 5,428 | ||||
| Accounts payable and accrued liabilities | 69,872 | 75,889 | ||||||
| Total current liabilities | 75,337 | 81,317 | ||||||
| Long-term borrowings | 60,508 | 61,860 | ||||||
| Other liabilities | 20,215 | 19,337 | ||||||
| Photronics, Inc. shareholders' equity | 712,476 | 710,363 | ||||||
| Noncontrolling interests | 118,932 | 115,111 | ||||||
| Total equity | 831,408 | 825,474 | ||||||
| Total liabilities and equity | $ | 987,468 | $ | 987,988 | ||||
| PHOTRONICS, INC. AND SUBSIDIARIES | ||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| (in thousands) | ||||||||||
| (Unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| January 29, | January 31, | |||||||||
| 2017 | 2016 | |||||||||
| Cash flows from operating activities: | ||||||||||
| Net income | $ | 4,510 | $ | 23,501 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 20,965 | 20,628 | ||||||||
| Gain on sale of investment | - | (8,785 | ) | |||||||
| Changes in assets, liabilities and other | 6,064 | 8,044 | ||||||||
| Net cash provided by operating activities | 31,539 | 43,388 | ||||||||
| Cash flows from investing activities: | ||||||||||
| Purchases of property, plant and equipment | (9,600 | ) | (21,539 | ) | ||||||
| Acquisition of Business | (5,400 | ) | - | |||||||
| Proceeds from sale of investments | - | 8,785 | ||||||||
| Other | (396 | ) | 193 | |||||||
| Net cash used in investing activities | (15,396 | ) | (12,561 | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Repayments of long-term borrowings | (1,343 | ) | (2,437 | ) | ||||||
| Proceeds from share-based arrangements | 1,113 | 2,063 | ||||||||
| Other | (16 | ) | - | |||||||
| Net cash used in financing activities | (246 | ) | (374 | ) | ||||||
| Effect of exchange rate changes on cash | (275 | ) | (4,876 | ) | ||||||
| Net increase in cash and cash equivalents | 15,622 | 25,577 | ||||||||
| Cash and cash equivalents, beginning of period | 314,074 | 205,867 | ||||||||
| Cash and cash equivalents, end of period | $ | 329,696 | $ | 231,444 | ||||||
| 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 | ||||||||||||
| January 29, | October 30, | January 31, | ||||||||||
| 2017 | 2016 | 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 | $ | 1,946 | $ | 5,256 | $ | 21,002 | ||||||
| Income tax expense/(benefit) (a) | - | (1,834 | ) | - | ||||||||
| Gain on sale of investment, net of tax (b) | - | - | (8,753 | ) | ||||||||
| Non-GAAP net income attributable to Photronics, Inc. shareholders | $ | 1,946 | $ | 3,422 | $ | 12,249 | ||||||
| Weighted average number of diluted shares outstanding | ||||||||||||
| GAAP | 69,169 | 68,906 | 79,136 | |||||||||
| Non-GAAP | 69,169 | 68,906 | 79,136 | |||||||||
| Net income per diluted share | ||||||||||||
| GAAP | $ | 0.03 | $ | 0.08 | $ | 0.28 | ||||||
| Non-GAAP | $ | 0.03 | $ | 0.05 | $ | 0.17 | ||||||
| Reconciliation of GAAP Net Income to Non-GAAP EBITDA | ||||||||||||
| GAAP Net Income (c) | $ | 4,510 | $ | 6,569 | $ | 23,501 | ||||||
| Interest expense | 559 | 616 | 1,174 | |||||||||
| Income tax expense/(benefit) | 2,050 | (1,337 | ) | 3,700 | ||||||||
| Depreciation and amortization | 20,896 | 22,304 | 20,457 | |||||||||
| Other items (d) | 937 | 980 | 897 | |||||||||
| Non-GAAP EBITDA | $ | 28,952 | $ | 29,132 | $ | 49,729 | ||||||
| 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
