MRO Magazine

Photronics Reports Fourth Quarter Fiscal 2015 Results


December 2, 2015
By Business Wire News

BROOKFIELD, Conn.

Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in supplying innovative imaging technology solutions for the global electronics industry, today reported financial results for the fiscal 2015 fourth quarter and fiscal year ended November 1, 2015.

Fourth quarter sales were $141.7 million, a sequential increase of 8% and up 14% compared with last year. Sales of semiconductor photomasks were $111.5 million, up 12% compared with the fourth quarter of 2014, and sales of flat panel display (FPD) photomasks were $30.2 million, up 21% compared with last year. Net income attributable to Photronics, Inc. shareholders was $18.6 million, or $0.25 per diluted share, compared with $4.3 million, or $0.07 per diluted share, for the fourth quarter of 2014.

“We benefited from very strong demand for High–End photomasks in both IC and FPD,” stated Peter Kirlin, chief executive officer. “High-End memory and flat panel display have been strong all year, and those trends continued through the fourth quarter. High-End logic also contributed as customers introduced new designs at advanced nodes. Coupled with these strong demand drivers, we realized a high level of operating leverage, allowing us to deliver strong bottom line growth. Finally, our net cash position expanded to $73 million, providing additional flexibility as we look to invest in our future and increase shareholder value. Needless to say, I’m very pleased with these results and the performance by everyone in the organization to achieve them.”

Full Year Results

Sales for fiscal year 2015 were a record $524.2 million, growing 15% over fiscal year 2014. Sales of IC photomasks increased 19% while sales of FPD photomasks were up 1%. Non-GAAP net income attributable to Photronics, Inc. shareholders for fiscal 2015 was a record $45.5 million, or $0.64 per diluted share, compared with $12.1 million, or $0.19 per diluted share, in fiscal 2014.

Non-GAAP Financial Measures

Non-GAAP net income attributable to Photronics, Inc. shareholders and non-GAAP earnings per share 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 non-GAAP financial information with Photronics, Inc.’s financial results under GAAP. Photronics, Inc. believes that non-GAAP net income attributable to Photronics, Inc. shareholders and non-GAAP earnings per share 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, in particular non-GAAP net income attributable to Photronics, Inc. shareholders and non-GAAP earnings per share 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 consolidated statements of operations and must be considered in performing a comprehensive assessment of overall financial performance. Non-GAAP financial information is adjusted for the following items:

  • Financing expenses in fiscal 2015 related to the exchange of convertible senior notes are excluded because they are not a part of ongoing operations.
  • Non-cash acquisition gain and transaction expenses in fiscal 2014 related to the joint venture, PDMC, in Taiwan are excluded because they are not part of ongoing operations.

The presentation of this financial information should not be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States. The attached financial supplement reconciles non-GAAP financial information with Photronics, Inc.’s financial results under GAAP.

Conference Call

A conference call with investors and the media to discuss these results is scheduled for 8:30 a.m. Eastern Time on Thursday, December 3, 2015. The call can be accessed by logging onto Photronics’ web site at www.photronics.com. The live dial-in number is (408) 774-4601. 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 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.

18-2015

 
PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
       
 
Three Months EndedYear Ended
November 1,November 2,November 1,November 2,
 2015    2014    2015    2014  
 
Net sales $ 141,692 $ 124,251 $ 524,206 $ 455,527
 
Costs and expenses:
 
Cost of sales (97,078 ) (97,626 ) (381,070 ) (355,181 )
 
Selling, general and administrative (12,189 ) (11,547 ) (48,983 ) (49,638 )
 
Research and development   (5,177 )   (5,801 )   (21,920 )   (21,913 )
 
Operating income 27,248 9,277 72,233 28,795
 
Gain on acquisition 16,372
 
Other income (expense), net   308     (574 )   (2,193 )   (3,837 )
 
Income before income taxes 27,556 8,703 70,040 41,330
 
Income tax provision   (5,406 )   (2,004 )   (13,181 )   (9,295 )
 
Net income 22,150 6,699 56,859 32,035
 
Net income attributable to noncontrolling interests   (3,527 )   (2,422 )   (12,234 )   (6,039 )
 
Net income attributable to Photronics, Inc. shareholders $ 18,623   $ 4,277   $ 44,625   $ 25,996  
 
Earnings per share:
Basic$0.28  $0.07  $0.67  $0.42  
 
Diluted$0.25  $0.07  $0.63  $0.41  
 
Weighted-average number of common shares outstanding:
Basic  66,575    63,106    66,331    61,779  
 
Diluted  78,631    64,085    78,383    66,679  
 
 
PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
   
 
November 1,November 2,
 2015  2014
 
Assets
 
Current assets:
Cash and cash equivalents $ 205,867 $ 192,929
Accounts receivable 110,056 94,515
Inventories 24,157 22,478
Other current assets   24,034   26,570
 
Total current assets 364,114 336,492
 
Property, plant and equipment, net 547,284 550,069
Investment in joint venture 93,021 93,122
Intangible assets, net 24,616 30,294
Other assets   16,520   19,206
 
$ 1,045,555 $ 1,029,183
 
 
 
Liabilities and Equity
 
Current liabilities:
Current portion of long-term borrowings $ 65,495 $ 10,381
Accounts payable and accrued liabilities   127,197   128,736
 
Total current liabilities 192,692 139,117
 
Long-term borrowings 67,120 131,805
Other liabilities 23,677 18,767
 
Photronics, Inc. shareholders’ equity 646,555 628,050
Noncontrolling interests   115,511   111,444
Total equity   762,066   739,494
 
$ 1,045,555 $ 1,029,183
 
 
PHOTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
   
 
Year Ended
November 1,November 2,
 2015    2014  
 
Cash flows from operating activities:
Net income $ 56,859 $ 32,035
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 82,413 80,136
Gain on acquisition (16,372 )
Changes in assets and liabilities and other   (6,077 )   562  
 
Net cash provided by operating activities   133,195     96,361  
 
Cash flows from investing activities:
Purchases of property, plant and equipment (104,033 ) (91,085 )
Cash from acquisition 4,508
Other   (272 )   (908 )
 
Net cash used in investing activities   (104,305 )   (87,485 )
 
Cash flows from financing activities:
Repayments of long-term borrowings (9,571 ) (29,782 )
Payment of deferred financing fees (346 )
Proceeds from share-based arrangements 2,651 1,298
Other   (179 )   (711 )
 
Net cash used in financing activities   (7,099 )   (29,541 )
 
Effect of exchange rate changes on cash   (8,853 )   (2,021 )
 
Net increase (decrease) in cash and cash equivalents 12,938 (22,686 )
Cash and cash equivalents, beginning of period   192,929     215,615  
 
Cash and cash equivalents, end of period $ 205,867   $ 192,929  
 
 
Noncash net assets from acquisition $ $ 110,211
 
 
PHOTRONICS, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands, except per share data)
(Unaudited)
         
 
Three Months EndedYear Ended
November 1,November 2,November 1,November 2,
2015201420152014
 

Reconciliation of GAAP to Non-GAAP Net Income

Attributable to Photronics, Inc. Shareholders

 
GAAP net income attributable to Photronics, Inc. shareholders $ 18,623 $ 4,277 $ 44,625 $ 25,996
 
(a) Financing expenses, net of tax 901
 
(b) Gain on acquisition, net of tax (16,372 )
 
(c) Acquisition transaction expenses, net of tax 2,455
       
 
Non-GAAP net income attributable to Photronics, Inc. shareholders $ 18,623 $ 4,277 $ 45,526 $ 12,079  
 

Reconciliation of GAAP to Non-GAAP Net Income

Applicable to Common Shareholders

 
Weighted average number of diluted shares outstanding

 

GAAP   78,631   64,085   78,383   66,679  
 
Non-GAAP   78,631   64,085   78,383   62,734  
 
Net income per diluted share
 
GAAP $ 0.25 $ 0.07 $ 0.63 $ 0.41  
 
Non-GAAP $ 0.25 $ 0.07 $ 0.64 $ 0.19  
 
 
(a) Represents financing expenses related to the exchange of $57.5 million of 3.25% convertible senior notes, recorded in other expense, net
 
(b) Represents gain on acquisition of DNP Photomask Technology Taiwan Co., Ltd (DPTT), a wholly-owned subsidiary of Dai Nippon Printing Co., Ltd.
 

(c) Represents transaction expenses in connection with the acquisition of DPTT

 
 
PHOTRONICS, INC. AND SUBSIDIARIES
Non-GAAP Financial Measure
Reconciliation of GAAP Net Income to Non-GAAP EBITDA
(in thousands)
(Unaudited)
     
Three Months EndedYear Ended
November 1,November 2,November 1,November 2,
2015201420152014
 
GAAP Net Income (a) $ 22,150 $ 6,699 $ 56,859 $ 32,035
 
Add: interest expense 1,178 1,638 4,991 7,247
Add: income tax expense 5,406 2,004 13,181 9,295
Add: depreciation and amortization 20,777 21,421 81,653 78,685
Add (less): special items (b)   905   941   4,590   (9,846 )
Non-GAAP EBITDA $ 50,416 $ 32,703 $ 161,274 $ 117,416  
 
(a) Includes net income attributable to noncontrolling interests.
 
(b) Special items consist of stock compensation expense, and in 2015 financing expenses in connection with the exchange
of $57.5 million of 3.25% convertible senior notes, and in 2014 noncash gain on acquisition of DNP Photomask Technology
Taiwan, Co., Ltd., a wholly-owned subsidiary of Dai Nippon Printing Co., Ltd., and related acquisition transaction expenses.
 

Photronics
R. Troy Dewar, CFA, (203) 740-5610
Director, Investor Relations
tdewar@photronics.com