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 20, 2019

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	PLAB	NASDAQ Global Select Market

Item 2.02 Results of Operation and Financial Condition

On August 20, 2019, the Corporation issued a press release reporting third quarter fiscal 2019 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 20, 2019, 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 28, 2019 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 August 20, 2019.

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 2019 Financial Results Conference Call August 20, 2019 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: August 20, 2019

EX-99.1

Exhibit 99.1

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

Photronics Reports Third Quarter Fiscal 2019 Results

• Third quarter 2019 revenue was $138.1 million, up 5% sequentially and 1% year-over-year

• Net income attributable to Photronics, Inc. shareholders was $6.3 million, or $0.10 per diluted share

• Strong cash generation increased cash to $197 million, even as investments in China expansion continue

• Fourth quarter 2019 guidance: revenue between $143 and $151 million with diluted EPS between $0.11 and $0.17

BROOKFIELD, Conn. August 20, 2019 (GLOBE NEWSWIRE) — Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask technologies and solutions, today reported financial results for its fiscal 2019 third quarter ended July 28, 2019.

Financial Results Summary
$ Millions, except per share data	Q319	Q219	Q318	Q/Q		Y/Y
Revenue	138.1	131.6	136.4	5	%	1	%
Integrated circuit (IC) revenue	100.2	98.6	107.2	2	%	(7	%)
Flat panel display (FPD) revenue	37.9	33.0	29.1	15	%	30	%
Net income attributable to Photronics, Inc. shareholders	6.3	8.5	13.0	(25	%)	(51	%)
Diluted earnings per share	0.10	0.13	0.18	(0.03	)	(0.08	)

"We performed well during the third quarter of 2019, achieving record FPD revenue and delivering our eighth consecutive quarter of year-over-year revenue growth,” said Peter Kirlin, chief executive officer. “FPD revenue growth was driven by continued strength in AMOLED display for mobile applications and ramping shipments from our new China facility. IC revenue grew sequentially due to improved demand from Asian foundries for mainstream nodes. Gross and operating margins improved sequentially as we were able to control costs despite China startup activity. Our cash balance grew during the quarter, demonstrating our ability to generate cash as we continue to invest in China. We are on pace to have an outstanding year in 2019 and positioned to perform even better in 2020 and beyond.”

Fourth Quarter 2019 Guidance

For the fourth quarter of 2019, Photronics expects revenue to be between $143 million and $151 million, and net income attributable to Photronics, Inc. shareholders to be between $0.11 and $0.17 per diluted share.

Conference Call

A conference call to discuss these results is scheduled for 8:30 a.m. Eastern time on Tuesday, August 20, 2019. 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 for instant replay access.

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 50 years. As of October 31, 2018, the company had 1,575 employees across 11 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 the company and its subsidiaries. The forward-looking statements contained in this press release 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, political, 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.  There is no assurance that the company’s expectations will be realized. For additional information please see the company’s quarterly and annual reports filed with the Securities and Exchange Commission. 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							Nine Months Ended
	July 28, 2019			April 28, 2019		July 29, 2018		July 28, 2019		July 29, 2018
Revenue	$	138,112		$	131,580	$	136,391	$	394,404	$	390,616
Cost of goods sold		107,542			105,570		100,794		311,721		294,538
Gross profit		30,570			26,010		35,597		82,683		96,078
Operating Expenses:
Selling, general and administrative		13,124			13,269		12,504		40,186		37,891
Research and development		4,046			3,542		2,653		11,852		10,574
Total Operating Expenses		17,170			16,811		15,157		52,038		48,465
Operating income		13,400			9,199		20,440		30,645		47,613
Other income (expense), net		(348	)		3,931		1,411		4,692		637
Income before income taxes		13,052			13,130		21,851		35,337		48,250
Income tax provision		3,218			3,278		2,054		7,883		3,783
Net income		9,834			9,852		19,797		27,454		44,467
Net income attributable to noncontrolling interests		3,487			1,373		6,792		7,361		14,899
Net income attributable to Photronics, Inc. shareholders	$	6,347		$	8,479	$	13,005	$	20,093	$	29,568
Earnings per share:
Basic	$	0.10		$	0.13	$	0.19	$	0.30	$	0.43
Diluted	$	0.10		$	0.13	$	0.18	$	0.30	$	0.41
Weighted-average number of common shares outstanding:
Basic		66,313			66,261		69,374		66,386		69,141
Diluted		66,570			70,597		75,258		69,919		75,121

EX-99.3

Exhibit 99.3

PHOTRONICS, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

	July 28, 2019		October 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	197,243	$	329,277
Accounts receivable		134,369		120,515
Inventories		39,982		29,180
Other current assets		48,873		23,759
Total current assets		420,467		502,731
Property, plant and equipment, net		636,743		571,781
Intangible assets, net		9,013		12,368
Other assets		47,972		23,129
Total assets	$	1,114,195	$	1,110,009
Liabilities and Equity
Current liabilities:
Debt	$	6,100	$	57,453
Accounts payable and accrued liabilities		153,174		133,623
Total current liabilities		159,274		191,076
Long-term debt		43,015		-
Other liabilities		11,568		14,364
Photronics, Inc. shareholders' equity		763,394		759,671
Noncontrolling interests		136,944		144,898
Total equity		900,338		904,569
Total liabilities and equity	$	1,114,195	$	1,110,009

EX-99.4

Exhibit 99.4

PHOTRONICS,  INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Nine Months Ended
	July 28, 2019			July 29, 2018
Cash flows from operating activities:
Net income	$	27,454		$	44,467
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		60,387			64,485
Changes in operating assets, liabilities and other		(64,337	)		(21,995	)
Net cash provided by operating activities		23,504			86,957
Cash flows from investing activities:
Purchases of property, plant and equipment		(160,149	)		(64,372	)
Government incentive		17,694			-
Other		(24	)		313	*
Net cash used in investing activities		(142,479	)		(64,059	)*
Cash flows from financing activities:
Proceeds from debt		53,227			-
Contribution from noncontrolling interest		29,394			17,997
Repayments of debt		(61,319	)		(4,170	)
Dividends paid to noncontrolling interests		(26,102	)		(8,166	)
Purchase of treasury stock		(10,696	)		(6,787	)
Proceeds from share-based arrangements		1,314			4,028
Other		(92	)		(274	)
Net cash (used in) provided by financing activities		(14,274	)		2,628
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		1,206			(975	)*
Net (decrease) increase in cash, cash equivalents, and restrcited cash		(132,043	)		24,551	*
Cash, cash equivalents, and restricted cash, beginning of period		331,989	*		310,936	*
Cash, cash equivalents, and restricted cash, end of period	$	199,946		$	335,487	*

* Amount has been modified to reflect the adoption of ASU 2016-18

EX-99.5

Exhibit 99.5

 Photronics, Inc.  Q3 2019 Financial Results Conference CallAugust 20, 2019 

 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”, “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.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 up 5% Q/Q and 1% Y/YRecord FPD revenue driven by mobile AMOLED displays and increasing production from new Hefei, China facilitySequential IC growth on Asia foundry demand for mainstream nodesRecord revenue of products shipped to China, representing 25% of total revenueNet income attributable to Photronics, Inc. shareholders of $6.3M ($0.10/share)Cash balance grew to $197M, strengthening the balance sheet as investments in China expansion continuesProduction ramping at both China facilities; total China production contributed ~$6M to revenueOn track for 2020 targets: $630M revenue & $0.80 EPS  Q3 2019 Summary  3  Successfully repositioned the business; China investments driving long-term, profitable growth 

 $M (except EPS)  Q319  Q219  Q/Q  Q318  Y/Y  Revenue  $ 138.1  $ 131.6  5%  $ 136.4  1%  Gross Profit  $ 30.6  $ 26.0  18%  $ 35.6  (14%)  Gross Margin  22.1%  19.8%   230 bps  26.1%  (400 bps)  Operating Income  $ 13.4  $ 9.2  46%  $ 20.4  (34%)  Operating Margin  9.7%  7.0%  270 bps  15.0%  (530 bps)  Other income (expense)  ($ 0.3)  $ 3.9  ($ 4.3)  $ 1.4  ($ 1.8)  Income tax provision  $ 3.2  $ 3.3  ($ 0.1)  $ 2.1  $ 1.2  Minority interest  $ 3.5  $ 1.4  $ 2.1  $ 6.8  ($ 3.3)  Net Income*  $ 6.3  $ 8.5  (25%)  $ 13.0  (51%)  Diluted EPS*  $ 0.10  $ 0.13  ($ 0.03)  $ 0.18  ($ 0.08)  Days in quarter  91  91  -  91  -  Gross and operating margin improved Q/Q on favorable mix and cost controls, despite China startup activityChina operations were $6.0M negative impact to operating incomeOther income primarily attributable to FX gain (Q219, Q318)Minority interest reflects Taiwan JV gain partially offset by China JV lossQ318 income tax includes $2M ($0.01/share) one-time tax benefit  Income Statement Summary  4  *Net income attributable to Photronics, Inc. shareholders 

 Revenue grew Q/Q on Asian foundry demand for mainstream nodesChina revenue softened on macro concerns-19% Q/Q; -14% Y/YRepresents 15% of Q319 IC revenueOutlookExpect stable to improving high-end demandProduction ramping in XiamenPotential impact from US-China trade discussions  $M  Q319  Q219  Q/Q  Q318  Y/Y  High-End*  $ 38.5  $ 38.4  0%  $ 46.1  (17%)  Mainstream  $ 61.7  $ 60.2  3%   $ 61.2  1%  Total  $ 100.2  $ 98.6  2%  $ 107.2  (7%)  IC Photomask Revenue  5  *28nm and smaller  Total may differ due to rounding 

 Record FPD revenue driven by mobile AMOLED displays and China production ramp, including G10.5+China revenue +31% Q/Q; +61% Y/YRepresents 53% of Q319 FPD revenueOutlookAMOLED technology expected to remain in high demandHefei shipments should continue to ramp  $M  Q319  Q219  Q/Q  Q318  Y/Y  High-End*  $ 25.9  $ 23.0  13%  $ 17.1  52%  Mainstream  $ 12.0  $ 10.0  19%  $ 12.1  (1%)  Total  $ 37.9  $ 33.0  15%  $ 29.1  30%  FPD Photomask Revenue  6  *≥G8 and AMOLED  Total may differ due to rounding 

 $M  Q319  Q219  Q318  Cash  $ 197  $ 167  $ 333  Debt  $ 49  $ 36  $ 58  Net Cash*  $ 148  $ 131  $ 275  Operating Cash Flow  $ 26  $ 17  $ 49  Capital Expenditures  $ 20  $ 34  $ 20  Share repurchase  -  -  $ 7  LTM EBITDA  $141   $ 148  $ 153  Deploying cash balance to fund China investmentsDebt is local China borrowing to finance fixed assetsYTD capex $160M; anticipate FY capex ~ $185MBalance sheet able to fund planned investments, strategic M&A opportunities, and potential share repurchases  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)  $143 - $151  Taxes ($M)  $2 - $3.5  EPS  $0.11 - $0.17  Diluted Shares (M)  ~67  Anticipate sequential growth in Q4High-end IC markets stable to improvingFPD demand growing (AMOLED, G10.5+)Ramping China production (IC & FPD)Potential macro headwind & impact from trade policy  Q419 Guidance   8 

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

 Appendix 

 IC Photomask Revenue  11  Mainstream$253.6M63%  High-End$150.9M37%  High-End: 28nm and smaller; total may differ due to rounding  Mainstream$255.7M61%  High-End$160.3M39% 

 FPD Photomask Revenue  12  Mainstream$42.2M31%  High-End$92.4M69%  High-End: ≥G8 and AMOLED; total may differ due to rounding  Mainstream$43.1M36%  High-End$76.1M64% 

 Non-GAAP Reconciliation 

 14