Photronics, Inc. · NASDAQ:PLAB
Photronics — 20th Annual Needham Growth Conference (January 2018)
24 slides from Photronics's conference presentation, Jan 17, 2018
Slide 1: Photronics, Inc. Merchant Photomask Leader
Photronics, Inc.Merchant Photomask Leader 20th Annual Needham Growth ConferenceJanuary 17, 2018
Slide 2: Safe Harbor Statement
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
Slide 3: A Compelling Investment Thesis
Global merchant photomask market and technology leader#1 merchant market share positionDelivering high-end growth through technology leadershipInvestment strategy aligned with secular growth trendsChina industry expansionTechnology inflection from LCD to AMOLEDExpect +40% organic revenue growth over
Slide 4: Agenda
BackgroundGrowth DriversFinancial Summary Agenda 4
Slide 5: Background
BackgroundGrowth DriversFinancial Summary Agenda 5
Slide 6: Photronics at a Glance
Largest merchant photomask manufacturerExpanding global footprint to supply increasingly global customer baseInvesting to extend high end leadershipStrong and flexible balance sheet to fund growth Photronics at a Glance 6 Key StatsMarket Symbol: PLABStock Exchange: NASDAQHeadquarters: Brookfield, CT
Slide 7: All Electronic Devices Need Photomasks
All Electronic Devices Need Photomasks 7 Design End User Photomask Manufacturing Process SmartphoneTabletPCVirtual Reality Automotive TVIoTIndustrialAppliance Transports component design to manufacturing process Device manufacturing and end product assembly Component Design Unique, proprietary IC &
Slide 8: Growth Drivers
BackgroundGrowth DriversFinancial Summary Agenda 8
Slide 9: Extending Leadership Through High-End Investments
Extending Leadership ThroughHigh-End Investments 9 High-End30% Mainstream70% High-End68% Mainstream32% Growth Investment Cycle
Slide 10: Leveraging Technology Leadership for Mobile Display AMOLED Adoption
Mobile devices moving from LCD to AMOLEDSuperior visual characteristicsLower power consumptionEnables flexible formatIncreases mask complexityMore mask layers per setTighter specs on each layerInstalling P-800 in H1181st to install this advanced mask writerProduces highest resolution AMOLED masks Le
Slide 11: G10.5+ Delivers Greater Glass Efficiency
G10.5+ Delivers Greater Glass Efficiency 11 65” 65” 75” 75” 65” 65” 65” 75” 75” 75” 75” 75” 75” 65” 65” 65” 65” 65” 65” 65” 65” 3370 mm x 2940 mm 2200 mm x 2500 mm 1950 mm x 2250 mm 1500 mm x 1850 mm 73% 88% 64% 94% 95%
Slide 12: Made in China 2025 Driving Growth in FPD Market
China represents fastest growing display region~40 fabs in production, under construction or being plannedExpected to be largest display producer within next few yearsPhotomask opportunities in China are attractiveWide range of technology, including AMOLED & G10.5+No strong merchant producer “Made i
Slide 13: ...and IC Market
China represents fastest growing semiconductor regionAccommodative government policy (Made in China 2025)Growing domestic producersInvestments by multi-nationalsPhotomask opportunities in China are attractiveWide range of nodes in logic and memoryNo strong domestic merchant mask producer …and IC Mar
Slide 14: Successfully Developing China Business
We already have meaningful business in ChinaStrong 5-year growth (IC +28% CAGR; FPD +73% CAGR)10% of 2017 revenue (8% of IC; 19% of FPD)Manufacturing presence in China should accelerate growthCustomer contracts will help quickly ramp facilitiesInvestment incentives reduce risk and improve returnsIC
Slide 15: Investing in China Operations
IC FPD Announced August 2016 August 2017 Location Xiamen Hefei Investment ($M) $160M $160M Structure Majority-owned JV Wholly-owned Investment time period 5 years 5 years Technology High-end, mainstream, logic, memory Up to G10.5+, AMOLED Production start Early 2019 Spring 2019 Projected sales $150M
Slide 16: Expanding Global Network to Serve Global Customers
Expanding Global Network to Serve Global Customers 16 ICFPD China plants under construction; plan to begin production in 2019
Slide 17: Financial Summary
BackgroundGrowth DriversFinancial Summary Agenda 17
Slide 18: Finished 2017 with Momentum
Q4 best quarter of yearImproving customer demand trendsSequential growth in all high-end sectorsHigh-End IC +49%High-End FPD +2%Strong operating cash flow each quarterAnticipate trends to continue in 2018 Finished 2017 with Momentum 18
Slide 19: Solid Financial Fundamentals
Tremendous operating leverage: 50% targetPositive Free Cash Flow since 2009Strong balance sheetSignificant net cash positionFinancial flexibility enables growth investments Solid Financial Fundamentals 19
Slide 20: Generating Cash to Fund Investments
Generating Cash to Fund Investments 20 2018 capex:China IC & FPD expansionFPD P-800 mask writer~50% planned for Q418
Slide 21: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet 21 Clear capital deployment prioritiesFund organic growthExplore strategic M&AReduce debt (converts become due in 2019)Anticipate minimum $75M net cash throughout China investment periodExcellent liquidity positionOperating cash generatorMay use credit facilities to
Slide 22: A Compelling Investment Thesis
Global merchant photomask market and technology leader#1 merchant market share positionDelivering high-end growth through technology leadershipInvestment strategy aligned with secular growth trendsChina industry expansionTechnology inflection from LCD to AMOLEDExpect +40% organic revenue growth over
Slide 23: Thank you for your interest!
Thank you for your interest! For Additional Information:R. Troy Dewar, CFADirector, Investor Relations203.740.5610tdewar@photronics.com
Slide 24: Reconciliation of GAAP Net Income to Non-GAAP EBITDA
PHOTRONICS, INC. AND SUBSIDIARIES Non-GAAP Financial Measure Reconciliation of GAAP Net Income to Non-GAAP EBITDA (in thousands) (Unaudited) ‘Twelve Months Ended October 29, October 30, November1, November 2, November 3, 2017 2016 2015 2014 2013 GAAP Net Income (a) $ 21,289 $ 55676 $ 56,859 $ 32,035
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