[Financial Information](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Condensed Consolidated Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for the quarter ended August 1, 2021, including balance sheets, income, comprehensive income, equity, and cash flows, with detailed notes [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of August 1, 2021, total assets increased to **$1.28 billion** from **$1.19 billion** at fiscal year-end 2020, with total equity rising to **$994.5 million** and total liabilities to **$287.3 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | August 1, 2021 | October 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $530,464 | $500,139 | | **Total Assets** | $1,281,757 | $1,188,182 | | **Total Current Liabilities** | $167,617 | $142,939 | | **Total Liabilities** | $287,296 | $225,916 | | **Total Equity** | $994,461 | $962,266 | [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q3 2021 revenue increased to **$170.6 million** from **$157.9 million** year-over-year, with net income attributable to shareholders rising to **$17.1 million**, while nine-month revenue grew to **$482.5 million** with net income at **$35.6 million** Income Statement Summary (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $170,643 | $157,895 | $482,473 | $460,405 | | **Gross Profit** | $45,325 | $37,734 | $115,103 | $102,769 | | **Operating Income** | $28,462 | $19,936 | $61,035 | $48,943 | | **Net Income to Photronics, Inc.** | $17,076 | $10,776 | $35,638 | $27,360 | | **Diluted EPS** | $0.28 | $0.17 | $0.57 | $0.42 | [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income attributable to shareholders significantly decreased to **$6.8 million** in Q3 2021 from **$19.5 million** in Q3 2020, primarily due to a **$10.5 million** loss from foreign currency translation adjustments - Foreign currency translation adjustments resulted in a loss of **$(10,482) thousand** in Q3 2021, compared to a gain of **$10,659 thousand** in Q3 2020, significantly impacting comprehensive income[22](index=22&type=chunk) [Condensed Consolidated Statements of Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity increased to **$994.5 million** by August 1, 2021, from **$962.3 million** at October 31, 2020, driven by **$50.2 million** in net income, partially offset by **$35.8 million** in treasury stock purchases - Key changes in equity for the nine months ended August 1, 2021, include **$50.2 million** in net income and **$35.8 million** used for treasury stock purchases[26](index=26&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first nine months of fiscal 2021, net cash from operating activities increased to **$113.1 million**, while cash used in investing activities rose to **$86.7 million**, and financing activities used **$26.4 million** for share repurchases Cash Flow Summary (Nine Months Ended, in thousands) | Cash Flow Activity | August 1, 2021 | August 2, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $113,096 | $78,264 | | **Net cash used in investing activities** | $(86,696) | $(31,569) | | **Net cash (used in) provided by financing activities** | $(26,355) | $4,093 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail key accounting policies and events, including the company's role as a leading photomask manufacturer, the consolidation of the PDMCX joint venture, revenue recognition, new finance leases, and the share repurchase program - The company is a leading global manufacturer of photomasks, essential for integrated circuits (ICs) and flat-panel displays (FPDs), operating eleven manufacturing facilities worldwide[30](index=30&type=chunk) - The PDMCX joint venture in Xiamen, China, is identified as a Variable Interest Entity (VIE) for which Photronics is the primary beneficiary, necessitating consolidation of its financial results[46](index=46&type=chunk) Revenue by Geography (Nine Months Ended, in thousands) | Geography | 2021 | 2020 | | :--- | :--- | :--- | | Taiwan | $179,441 | $182,463 | | Korea | $118,597 | $116,485 | | United States | $78,447 | $78,276 | | China | $77,391 | $58,374 | | Europe | $27,269 | $23,562 | - In fiscal 2021, the company entered into two major finance leases for high-end equipment, including a **$7.2 million** lease for an inspection tool and a **$35.5 million** lease for a lithography tool[76](index=76&type=chunk)[77](index=77&type=chunk) - Under a **$100 million** share repurchase program authorized in September 2020, the company has repurchased **4.7 million** shares for **$53.3 million** since inception[107](index=107&type=chunk)[108](index=108&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reports strong Q3 2021 results with an **8.1%** year-over-year revenue increase to **$170.6 million**, improved gross margin to **26.6%**, and a solid liquidity position of **$283.2 million** in cash, with a positive business outlook [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q3 2021 revenue grew **8.1%** year-over-year to **$170.6 million**, driven by **8.4%** IC revenue growth and **7.4%** FPD revenue growth, with gross margin expanding to **26.6%** and operating income boosted by a **$3.5 million** gain Revenue Change by Product Type (Q3 FY21 vs Q3 FY20) | Product Type | Revenue in Q3 FY21 (M) | Increase (M) | Percent Change | | :--- | :--- | :--- | :--- | | **Total IC** | $117.8 | $9.1 | 8.4% | | **Total FPD** | $52.9 | $3.6 | 7.4% | | **Total Revenue** | $170.6 | $12.7 | 8.1% | - IC revenue growth was primarily driven by strong demand from node migrations and increased outsourcing of non-EUV production from captive suppliers[131](index=131&type=chunk) - FPD revenue increased due to strong demand for high-end AMOLED displays in mobile applications and new designs for G10.5+ panels[132](index=132&type=chunk) - Gross margin increased by **2.7 percentage points** in Q3 FY21 compared to Q3 FY20, primarily due to higher revenue and improved pricing for certain mainstream IC nodes[134](index=134&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity position in Q3 2021 with **$283.2 million** in cash, access to a **$50 million** credit facility, **$22.9 million** in China borrowing capacity, and **$56.9 million** in capital expenditure commitments - As of August 1, 2021, cash and cash equivalents totaled **$283.2 million**, with **$217.2 million** held by foreign subsidiaries[149](index=149&type=chunk) - Capital expenditure commitments for high-end and mainstream tools totaled approximately **$56.9 million**[151](index=151&type=chunk) - The share repurchase program authorized in September 2020 had approximately **$46.8 million** remaining under its authorization as of August 1, 2021[152](index=152&type=chunk) [Business Outlook](index=37&type=section&id=Business%20Outlook) Management anticipates continued strength in IC design activity and FPD market growth, driven by increased capital spending from semiconductor and panel makers and broader AMOLED adoption - The company anticipates favorable trends in IC, including strong high-end logic and mainstream demand, to continue through Q4 and potentially beyond[157](index=157&type=chunk) - FPD growth is expected from recent capacity expansions and increased mobile demand as more devices adopt high-value AMOLED technology[157](index=157&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are foreign currency exchange rate fluctuations and interest rate changes, with a hypothetical **10%** adverse currency movement potentially resulting in a **$36.0 million** pre-tax loss - The company's financial performance may be affected by fluctuations in the exchange rates of several major international currencies[159](index=159&type=chunk) - As of August 1, 2021, a hypothetical **10%** adverse currency movement would have resulted in a net unrealized pre-tax loss of **$36.0 million**, with significant exposures to the Chinese renminbi, South Korean won, and New Taiwan Dollar[161](index=161&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of August 1, 2021, due to an un-remediated material weakness in internal control over financial reporting related to debt covenant compliance monitoring - Management concluded that disclosure controls and procedures were not effective as of August 1, 2021, due to a material weakness in internal control over financial reporting[164](index=164&type=chunk) - The un-remediated material weakness pertains to the accuracy and completeness of information used for monitoring compliance with debt agreement covenants[165](index=165&type=chunk) - Despite the material weakness, management concluded that the financial statements in the Form 10-Q are fairly presented in all material respects[166](index=166&type=chunk) [Other Information](index=38&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company reported a favorable appellate court decision in South Korea regarding a 2016 tax filing, with other ongoing legal claims deemed immaterial to financial statements - An appellate court in South Korea decided on August 26, 2021, not to impose a **$0.03 million** fine related to a 2016 tax filing dispute[111](index=111&type=chunk) [Issuer Purchases of Equity Securities](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's common stock repurchases during Q3 2021, including **1.0 million** shares repurchased at an average price of **$12.97** per share under its publicly announced program Share Repurchase Activity (Q3 2021) | Period | Total Shares Purchased (millions) | Average Price Paid Per Share | Dollar Value Remaining (millions) | | :--- | :--- | :--- | :--- | | May 3 – May 30, 2021 | 0.8 | $12.86 | $49.3 | | May 31 – June 27, 2021 | 0.2 | $13.43 | $46.8 | | **Total** | **1.0** | **$12.97** | **-** | [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley Act Sections 302 and 906, and Inline XBRL financial data files - The exhibits filed with this report include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, along with Inline XBRL documents[173](index=173&type=chunk)

Financial Data and Key Metrics Changes - The company achieved record revenue of $171 million in Q3 2021, which was a 7% increase over Q2 and an 8% increase year-over-year [21] - Gross margin improved to 26.6%, supported by better pricing in mainstream IC and a favorable product mix [26] - Operating margin was 16.7%, including a one-time gain of $3.5 million from the sale of a lithography tool [26] - Earnings per diluted share were $0.28, including approximately $0.06 from the gain on the sale of the tool [27] - Cash and equivalents increased to $283 million, with net cash of $165 million after accounting for $118 million in debt [27] Business Line Data and Key Metrics Changes - Integrated Circuit (IC) revenue reached nearly $118 million, up 5% quarter-over-quarter and 8% year-over-year, driven by strong logic demand, particularly in Taiwan and China [22] - Flat Panel Display (FPD) revenue was nearly $53 million, an 11% increase from Q2 and a 7% increase year-over-year, primarily due to growth in AMOLED displays for mobile applications [24] - FPD revenue into China represented 53% of total FPD revenue, up 9% sequentially and 2% year-over-year [25] Market Data and Key Metrics Changes - Revenue from China was a record, 10% better than the previous quarter and 46% higher than the same quarter last year, representing 29% of total IC revenue [23] - The company noted a significant increase in demand for AMOLED technology, which is expanding beyond smartphones into larger devices [13] - The mainstream photomask market is experiencing tight supply, with competitors adding point tools to increase output rather than new lines [41] Company Strategy and Development Direction - The company is focused on aligning operations with high-growth sectors, particularly in FPD and IC, and has invested in geographic expansion into China [11] - The strategy includes securing long-term purchase agreements to ensure rapid ramp-up of newly installed tools, which helps improve return on invested capital [9] - The company anticipates a prolonged period of growth in photomask demand due to various macro trends, including increased nationalism and capacity buildup in multiple regions [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the semiconductor and display industries, expecting continued strong demand and revenue growth into 2022 and beyond [23][19] - The company is on track to achieve its fourth consecutive year of record revenue, with a compound annual growth rate of 10% since repositioning the business in 2017 [10] - Management highlighted the importance of maintaining a strong balance sheet to support ongoing investments in organic growth [9] Other Important Information - The company completed its strategic capacity expansion in FPD ahead of schedule, enabling larger production output [21] - Operating cash flow for the quarter was $55 million, with year-to-date operating cash flow of $113 million [28] - The company repurchased close to 1 million shares during the quarter, bringing the total year-to-date to 3 million shares [29] Q&A Session Summary Question: Supply chain issues or COVID-related impacts - Management acknowledged challenges with tool suppliers but emphasized effective supply chain management and internal maintenance capabilities [36][37] Question: Capacity limitations in the flat panel display market - Management noted that while the FPD market is growing, competitors have excess capacity, leading to a conservative investment approach [39] Question: Mainstream market capacity additions - Management indicated that competitors are adding point tools to increase output rather than new lines, with the mainstream market strengthening globally [41][42] Question: Captive versus merchant market dynamics - Management discussed the historical shift from captive to merchant markets, noting that the captive business has doubled since 2017 and is expected to continue growing [46][47] Question: Future earnings potential - Management expressed confidence in exceeding the $1 earnings per share target, with potential for further growth based on revenue increases and pricing power [78][79]

Photronics, Inc. Q3 2021 Financial Results Conference Call August 25, 2021 PHOTRONICS, INC. PHOTRONICS, INC. Safe Harbor Statement 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 li ...

Global Merchant Photomask Leader Stifel 2021 Virtual Cross Sector Insight Conference June 8, 2021 PHOTRONICS, INC. PHOTRONICS, INC. Safe Harbor Statement 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 sta ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 2, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission file number 0-15451 PHOTRONICS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organiz ...

Photronics, Inc. (NASDAQ:PLAB) Q2 2021 Earnings Conference Call May 26, 2021 8:30 AM ET Company Participants Troy Dewar – Vice President-Investor Relations Peter Kirlin – Chief Executive Officer John Jordan – Chief Financial Officer Chris Progler – Chief Technology Officer Conference Call Participants Patrick Ho – Stifel Gus Richard – Northland Tom Diffely – D.A. Davidson Orin Hirschman – AIGH Operator Good morning, ladies and gentlemen, and welcome to the Photronics Q2 2021 Earnings Results Conference Call ...

Photronics, Inc. Q2 2021 Financial Results Conference Call May 26, 2021 PHOTRONICS, INC. PHOTRONICS, INC. Safe Harbor Statement 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 ...

Financial Performance - In Q1 FY21, the company's revenue was $152.1 million, with a gross margin of 20.1% compared to 21.4% in Q4 FY20[122] - The total revenue from IC photomasks decreased by $1.0 million, or 0.9%, from Q4 FY20, while FPD photomasks increased by $3.7 million, or 8.6%[125] - The company's operating income for Q1 FY21 was $11.7 million, representing 7.7% of revenue, down from 10.0% in Q4 FY20[122] - The company experienced a decrease in net income attributable to shareholders, which was 5.3% in Q1 FY21 compared to 4.3% in Q4 FY20[122] - Revenue decreased by 4.8% in Q1 FY21 compared to Q1 FY20, with IC demand declining by 1.9% and FPD demand falling by 10.7%[129] - Gross margin decreased by 1.3 percentage points in Q1 FY21 from Q4 FY20, primarily due to an unfavorable product mix and increased material costs[130] - Gross profit for Q1 FY21 was $30.5 million, down from $31.9 million in Q4 FY20 and $34.6 million in Q1 FY20[130] - Selling, general and administrative expenses were $14.1 million in Q1 FY21, an increase from $12.8 million in Q4 FY20[132] - Net cash provided by operating activities was $26.3 million in Q1 FY21, a decrease of $4.5 million from $30.8 million in Q1 FY20[139] - Cash and cash equivalents at the end of Q1 FY21 were $278.5 million, a slight decrease from $278.7 million at the end of fiscal 2020[138] - Net income attributable to noncontrolling interests was $1.5 million in Q1 FY21, down from $2.1 million in Q4 FY20, mainly due to decreased net income at the Taiwan-based IC facility[137] Investments and Financing - The company entered into a five-year finance lease for a high-end lithography tool valued at $35.6 million, with monthly payments starting at $0.04 million[110] - The interest rate for the finance lease of the high-end inspection tool is 1.09%[111] - The company received initial proceeds of approximately $6.3 million from a loan approved for 200 million RMB (approximately $30.9 million) in Q4 FY20[112] - A dividend of approximately $16.2 million was paid to noncontrolling interests from the company's majority-owned IC subsidiary in Taiwan[115] - The company authorized a stock repurchase program of up to $100 million in Q4 FY20, repurchasing 2.5 million shares at an average price of $11.34 per share[120] Research and Development - Research and development expenses increased to 3.1% of revenue in Q1 FY21, up from 2.8% in Q4 FY20[122] - Research and development expenses rose to $4.7 million in Q1 FY21, compared to $4.1 million in both Q4 FY20 and Q1 FY20, reflecting increased development activities in the U.S.[133] Future Outlook - The company expects Q4 FY20 revenue to increase in the high single digits as a percentage of FY20 revenue[146] - Operating profit is anticipated to grow at a rate similar to the 23% increase experienced in FY20[146] - Growth drivers for IC include added capacity from the China IC facility, increased demand for semiconductor masks, and recovery in high-end IC logic[146] - FPD revenue is expected to rise due to increased demand for AMOLED displays and the transition from LCD to OLED technologies[146] - The company has invested in three additional FPD write tools to support the anticipated increase in demand for high-end display masks[146] Market and Economic Conditions - A 10% adverse movement in foreign currencies could result in a net unrealized pre-tax loss of $32.5 million, with significant exposures to the Chinese renminbi and South Korean won[152] - The company does not expect a material effect from a 10% adverse movement in interest rates on variable rate borrowings[153] - The majority of growth in the IC and FPD markets is expected to come from the Asia region, predominantly China[148] - The company is continually assessing its global manufacturing strategy, which may lead to future facility closures or expansions based on market conditions[148] - Recent changes in U.S. leadership may improve trade relations with China, potentially affecting the company's operations[147]

Photronics, Inc. (NASDAQ:PLAB) Q1 2021 Earnings Conference Call February 24, 2021 8:30 AM ET Company Participants Peter Kirlin - CEO John Jordan - CFO Troy Dewar - VP, IR Conference Call Participants Tom Diffely - D.A. Davidson & Co. Patrick Ho - Stifel Nicolaus Gus Richard - Northland Capital Markets Operator Good morning, ladies and gentlemen, and welcome to the Photronics First Quarter Fiscal Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will cond ...

Photronics, Inc. Q1 2021 Financial Results Conference Call February 24, 2021 PHOTRONICS, INC. PHOTRONICS, INC. Safe Harbor Statement 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 ...