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 22, 2018

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) 755-900

(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. ☐

Item 2.02 Results of Operation and Financial Condition

On May 22, 2018, the Corporation issued a press release reporting second quarter fiscal 2018 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 22, 2018, 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 April 29, 2018 may be disclosed. This information is set forth in Exhibit 99.5.

EBITDA is a non-GAAP financial measure that the Company defines pursuant to its credit agreement. The Company believes that EBITDA is generally accepted as providing useful information regarding the operational strength and performance of its business, including the ability of the Company to pay interest, service debt and fund capital expenditures. The Company’s method for calculating EBITDA may not be comparable to methods used by other companies but is the same method the Company uses for calculating EBITDA under its credit facility. The Company has included in the press release certain reconciliation information for EBITDA to its most directly comparable financial measure of net income calculated and reported in accordance with GAAP.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

99.1 Press Release dated May 22, 2018.

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 2018 Financial Results Conference Call May 22, 2018 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: Vice President, General Counsel and Secretary
Date: May 22, 2018

EX-99.1

Exhibit 99.1

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

Photronics Reports Second Quarter Fiscal 2018 Results

• Second quarter 2018 revenue was $130.8 million, up 6% sequentially and 21% year-over-year

• High-end IC revenue surged 83% year-over-year on strong demand from Asia foundries

• Net income attributable to Photronics, Inc. shareholders was $10.7 million ($0.15 per diluted share)

• Third quarter 2018 guidance: revenue between $128 and $136 million with diluted EPS between $0.12 and $0.18

BROOKFIELD, Conn. May 22, 2018 (Globe Newswire) — Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in supplying innovative imaging technology solutions for the global electronics industry, today reported financial results for its fiscal 2018 second quarter ended April 29, 2018.

Second quarter revenue was $130.8 million, increases of 6% sequentially and 21% compared with the same quarter prior year. Integrated circuit (IC) revenue was $102.3 million, up 7% sequentially and 24% compared with last year. Flat panel display (FPD) revenue was $28.5 million, up 3% sequentially and 11% compared with last year.

Net income attributable to Photronics, Inc. shareholders was $10.7 million ($0.15 per diluted share), compared with $5.9 million ($0.09 per diluted share) for the first quarter of 2018 and $1.8 million ($0.03 per diluted share) for the second quarter of 2017.

"Performance strengthened again in the second quarter, continuing the sequential revenue growth of the past four quarters,” said Peter Kirlin, chief executive officer. “High-end IC was especially strong year-over-year, up 83%. Sequentially, IC continued to improve in both logic and memory, as customers, particularly Asia foundries, released new designs. High-end FPD was down slightly on soft AMOLED demand, but mainstream improved due to growth in LTPS LCD displays. Operating margin improved with the growth in revenue, although tempered slightly by higher operating expenses. Minority interest increased due to strong earnings from our Taiwan JV, and a foreign exchange gain contributed to the bottom line, resulting in net income of $10.7 million. We ended the quarter with a cash balance of $321 million, which will be very important as we anticipate a ramp of capital expenditures later this year for our new facilities in China.”

Third Quarter 2018 Guidance

For the third quarter of 2018, Photronics expects revenue to be between $128 million and $136 million, and net income attributable to Photronics, Inc. shareholders to be between $0.12 and $0.18 per diluted share.

Conference Call

A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Tuesday, May 22, 2018. 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.

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.

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
	April 29, 2018			January 28, 2018			April 30, 2017			April 29, 2018			April 30, 2017
Revenue	$	130,779		$	123,446		$	108,297		$	254,225		$	218,128
Cost of goods sold		(97,960	)		(95,784	)		(88,140	)		(193,744	)		(174,972	)
Gross profit		32,819			27,662			20,157			60,481			43,156
Operating Expenses:
Selling, general and administrative		(13,637	)		(11,750	)		(10,894	)		(25,387	)		(21,765	)
Research and development		(3,817	)		(4,104	)		(3,726	)		(7,921	)		(7,211	)
Total Operating Expenses		(17,454	)		(15,854	)		(14,620	)		(33,308	)		(28,976	)
Operating income		15,365			11,808			5,537			27,173			14,180
Other income (expense), net		3,332			(4,105	)		(3,622	)		(774	)		(5,705	)
Income before income taxes		18,697			7,703			1,915			26,399			8,475
Income tax (provision) benefit		(3,508	)		1,778			(431	)		(1,729	)		(2,481	)
Net income		15,189			9,481			1,484			24,670			5,994
Net income attributable to noncontrolling interests		(4,524	)		(3,583	)		313			(8,107	)		(2,251	)
Net income attributable to Photronics, Inc. shareholders	$	10,665		$	5,898		$	1,797		$	16,563		$	3,743
Earnings per share:
Basic	$	0.15		$	0.09		$	0.03		$	0.24		$	0.05
Diluted	$	0.15		$	0.09		$	0.03		$	0.23		$	0.05
Weighted-average number of common shares outstanding:
Basic		69,293			68,755			68,426			69,024			68,301
Diluted		75,190			69,372			69,385			75,052			69,277

EX-99.3

Exhibit 99.3

PHOTRONICS, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

	April 29, 2018		October 29, 2017
Assets
Current assets:
Cash and cash equivalents	$	321,246	$	308,021
Accounts receivable		124,331		105,320
Inventories		31,936		23,703
Other current assets		22,786		12,080
Total current assets		500,299		449,124
Property, plant and equipment, net		563,313		535,197
Intangible assets, net		14,708		17,122
Other assets		23,961		19,351
Total assets	$	1,102,281	$	1,020,794
Liabilities and Equity
Current liabilities:
Current portion of long-term borrowings	$	59,263	$	4,639
Accounts payable and accrued liabilities		107,245		77,137
Total current liabilities		166,508		81,776
Long-term borrowings		-		57,337
Other liabilities		17,707		16,386
Photronics, Inc. shareholders' equity		783,380		744,564
Noncontrolling interests		134,686		120,731
Total equity		918,066		865,295
Total liabilities and equity	$	1,102,281	$	1,020,794

EX-99.4

Exhibit 99.4

PHOTRONICS,  INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Six Months Ended
	April 29, 2018			April 30, 2017
Cash flows from operating activities:
Net income	$	24,670		$	5,994
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		44,429			42,241
Changes in operating assets, liabilities and other		(31,191	)		(1,328	)
Net cash provided by operating activities		37,908			46,907
Cash flows from investing activities:
Purchases of property, plant and equipment		(44,129	)		(14,152	)
Acquisition of business		-			(5,400	)
Proceeds from sale of investments		-			167
Other		436			(462	)
Net cash used in investing activities		(43,693	)		(19,847	)
Cash flows from financing activities:
Repayments of long-term borrowings		(2,771	)		(2,695	)
Contribution from noncontrolling interest		11,998			-
Proceeds from share-based arrangements		3,776			2,311
Other		(267	)		(23	)
Net cash provided by (used in) financing activities		12,736			(407	)
Effect of exchange rate changes on cash		6,274			4,997
Net increase in cash and cash equivalents		13,225			31,650
Cash and cash equivalents, beginning of period		308,021			314,074
Cash and cash equivalents, end of period	$	321,246		$	345,724

EX-99.5

Exhibit 99.5

 Photronics, Inc.  Q2 2018 Financial Results Conference CallMay 22, 2018 

 Safe Harbor Statement  2  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”, “should”, “plan”, “project” 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, specifically our most recent Form 10K and Form 10Q.Non-GAAP Financial MeasuresThis presentation and some of our comments may reference non-GAAP financial measures. These non-GAAP financial measures exclude certain income or expense items, and are consistent with another way management internally analyzes our results of operations. Non-GAAP information should be considered to be a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. Please see the “Reconciliation of GAAP to Non-GAAP Financial Information” in this presentation. 

 Revenue grew 21% Y/Y and 6% Q/QHigh-end IC biggest growth factor (+83% Y/Y)China revenue doubled Y/Y; up 18% Q/QGross and operating margins expanded on higher revenue and operating leverageNet income attributable to Photronics, Inc. shareholders of $10.7M ($0.15/share)Cash balance of $321M; capex increased to $33M as we invest in growthChina investments on trackConstruction to be completed later this yearProduction to begin first half of 2019  Q2 2018 Summary  3  Investing in long-term, profitable growth to increase shareholder value 

 $M (except EPS)  Q218  Q118  Q/Q  Q217  Y/Y  Revenue  $ 130.8  $ 123.4  6%  $ 108.3  21%  Gross Profit  $ 32.8  $ 27.7  19%  $ 20.2  63%  Gross Margin  25.1%  22.4%  270 bps  18.6%  650 bps  Operating Income  $ 15.4  $ 11.8  30%  $ 5.5  178%  Operating Margin  11.7%  9.6%  210 bps  5.1%  660 bps  Net Income*  $ 10.7  $ 5.9  80%  $ 1.8  493%  Diluted EPS*  $ 0.15  $ 0.09  $ 0.06  $ 0.03  $ 0.12  Higher revenue as we achieved growth in both IC & FPDGross margin improved due to effect of revenue increaseOperating margin increased as higher gross margin and lower R&D offset impact of higher SG&A due to compensationNet income includes foreign exchange gain, net of tax and non-controlling interest, of $1.5M ($0.02/share) in Q218; and a loss of $2.7M ($0.04/share) in Q118Q118 tax expense includes $4.2M ($0.06/share) benefits, primarily for recognition of accumulated AMT credits resulting from the tax reform act  Income Statement Summary  4  *Net income attributable to Photronics, Inc. shareholders 

 Strong high-end growthHigh-end logic growth driven by Asia foundriesMemory demand from Asia continues to be strongChina revenue more that doubled Y/Y; represents 11% of Q218 IC revenueExpect demand trends to continue in Q3High-end logic improvingHigh-end memory flat to upMainstream stable  $M  Q218  Q118  Q/Q  Q217  Y/Y  High-End*  $ 41.5  $ 33.4  24%  $ 22.7  83%  Mainstream  $ 60.8  $ 62.3  (2%)  $ 59.9  1%  Total  $ 102.3  $ 95.7  7%  $ 82.6  24%  IC Photomask Revenue  5  *28nm and smaller  Total may differ due to rounding 

 High-end down Q/Q primarily due to lower AMOLED demandMainstream strengthened as demand for LTPS LCD displays increasedChina represents 36% of Q218 FPD revenueExpect customers to ramp new AMOLED designs to improve fab utilizationQualifying P-800 in Korea to maintain AMOLED technology leadership  $M  Q218  Q118  Q/Q  Q217  Y/Y  High-End*  $ 18.2  $ 18.8  (3%)  $ 16.8  9%  Mainstream  $ 10.3   $ 9.0  14%   $ 8.9  16%  Total  $ 28.5  $ 27.8  3%  $ 25.7  11%  FPD Photomask Revenue  6  *≥G8 and AMOLED  Total may differ due to rounding 

 $M  Q218  Q118  Q217  Cash  $ 321  $ 349  $ 346  Debt  $ 59  $ 61  $ 65  Net Cash*  $ 262  $ 288  $ 281  Operating Cash Flow  $ 7  $ 31  $ 15  Capital Expenditures  $ 33  $ 11  $ 5  LTM EBITDA  $ 138  $ 122  $ 120  Cash balance lower on higher capex and lower operating cash flowOperating cash flow lower due to increase in net working capital and other current assets, driven by revenue growth2018 capex expected to be ~$250M, primarily for China IC & FPD investmentsBalance sheet able to fund planned investments and strategic M&A opportunities  Select Financial Data  7  *Net cash defined as cash and cash equivalents less long-term borrowings (including current portion), as reported in accordance with GAAP 

 Revenue ($M)  $128 - $136  Taxes ($M)  $2 - $3  EPS  $0.12 - $0.18  Diluted Shares (M)  ~75  High-end demand expectations are positiveHigh-end IC logic up on Asia foundry demandHigh-end IC memory stable to improvingHigh-end FPD mask demand should improve as customers release new designs to maintain utilizationSome high-end litho tools schedule for PM in Q3, limiting revenue growthExpect margin headwinds in H218 as China operations begin to ramp ahead of production in first half of 2019  Q318 Guidance   8 

 Thank you for your interest!  For Additional Information:R. Troy Dewar, CFADirector, Investor Relations203.740.5610tdewar@photronics.com  

 Appendix 

 IC Photomask Revenue  11  Mainstream$250.2M66%  High-End$129.0M34%  High-End: 28nm and smaller; total may differ due to rounding 

 FPD Photomask Revenue  12  Mainstream$36.7M34%  High-End$70.9M66%  High-End: ≥G8 and AMOLED; total may differ due to rounding  Mainstream$32.5M32%  High-End$67.9M68% 

 Non-GAAP Reconciliation 

 14