Photronics, Inc. · NASDAQ:PLAB
Photronics — 25th Annual Needham Growth Conference 2023
27 slides from Photronics's conference presentation, Jan 12, 2023
Slide 1: 25th Annual Needham Growth Conference: Global Merchant Photomask Leader
25th Annual Needham Growth Conference January 12, 2023 Global Merchant Photomask Leader
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation and some of our comments during this presentation may contain projections or other forward-looking statements such as statements regarding future events, our future financial performance, and/or the future performance of the industry. These statements are subj
Slide 3: A Compelling Investment Thesis
A Compelling Investment Thesis Delivering growth by leveraging core competencies *Upper range of 2024 target model compared with 2022 Operating margins in the low-thirties Free cash flow above $250M China industry expansion(IC & FPD) Display technology inflections Resurgence of legacy foundry sector
Slide 4: Leading merchant with unmatched global presence
Leading merchant with unmatched global presence IC FPD IC & FPD Unmatched Global Footprint 11 Strategically Located Manufacturing Facilities Sources: SEMI 2021 Photomask Characterization Study; internal estimates 4
Slide 5: Investment Strategy
Investment Strategy Revenue Growth Win lion’s share of the impressive growth in TAM for China IC and FPD Supplement capacity with point tool investments and targeted expansions Capitalize on technology leadership in AMOLED to continue improving mix Leverage global footprint to exploit growth in “leg
Slide 6: Investment strategy is working
Investment strategy is working 29% operating margin during H2 2022 5th consecutive year of record revenue 6
Slide 7: Delivering on Updated Target Model
Delivering on Updated Target Model *Free Cash Flow is a non-GAAP term; see reconciliation included in this presentation 7 $M (except EPS) 2020 2021 2022 Illustrative FY 24 Target Model Revenue $610 $664 $825 $900 $950 $975 Gross Margin 22% 25% 36% 38-40% 40-42% 42-43% Operating Margin 10% 14% 26% 28
Slide 8: "Made in China 2025" driving growth
“Made in China 2025” driving growth Source: Internal Estimates Forecast falling short of policy goals More investment needed to meet targets May 2022 We’re aligned with fastest growing sectors: AMOLED / LTPS & G10.5+ 8
Slide 9: Technology leadership improves FPD business mix
Technology leadership improves FPD business mix Investments aligned with secular growth trends AMOLED & LTPS for mobile New OLED TV technologies G10.5+ Partners with largest panel makers Runway left for advanced display growth Mobile platforms Advanced TV Mini & Micro LED +18% CAGR High-End: +37% CA
Slide 10: Growth in Legacy Foundry = Dynamic Mainstream Mask Market
Growth in Legacy Foundry = Dynamic Mainstream Mask Market Demand continues to exceed supply Delivery times expanded from legacy levels Industry cannot add capacity cost effectively Rebirth of the ASIC mask market Moore’s law economics no longer working for much of the logic market Mask to silicon re
Slide 11: Financial Discipline Improves Shareholder Value
Financial Discipline Improves Shareholder Value Targeted investments drive top-line growth in excess of market Operating leverage and cost reductions expand margins Target operating margins low-thirties Target incremental margins 50% Strong cash flow generation fortifies balance sheet Capital deploy
Slide 12: Q4 2022 Summary
Net income attributable to Photronics, Inc. shareholders of $37.1M ($0.60/share) Investing in mainstream IC capacity to capitalize on market growth trends IC: -3% Q/Q, +25% Y/Y FPD: -8% Q/Q, -3% Y/Y To China: +8% Q/Q; +39% Y/Y Committed to driving long-term, profitable growth through strategic inves
Slide 13: 2022 Summary
Fifth consecutive year of record revenue, as customers continue to trust us for their photomask needs Gross and operating margins in target model range during second half of 2022 Net income attributable to Photronics, Inc. shareholders of $118.8M ($1.94/share) IC: +29% FPD: +14% To China: +55% 5th c
Slide 14: Income Statement Summary - Quarter
Income Statement Summary - Quarter $M (except EPS) Q422 Q322 Q/Q Q421 Y/Y Revenue $ 210.3 $ 219.9 (4%) $ 181.3 16% Gross Profit $ 80.3 $ 83.9 (4%) $ 51.9 55% Gross Margin 38.2% 38.1% 10 bps 28.7% 950 bps Operating Income $ 60.5 $ 63.7 (5%) $ 33.5 81% Operating Margin 28.8% 29.0% (20 bps) 18.5% 1,030
Slide 15: Income Statement Summary – Full Year
Income Statement Summary – Full Year Margins continued improving through the year driven by improved demand profile and pricing environment combined with strong cost control Non-operating income primarily consists of unrealized FX gain Minority interest from strong net income of IC JVs in Taiwan and
Slide 16: IC Photomask Revenue
$M Q422 Q322 Q/Q Q421 Y/Y High-End* $ 44.3 $ 52.7 (16%) $ 42.6 4% Mainstream $ 111.9 $ 108.6 3% $ 82.9 35% Total $ 156.2 $ 161.3 (3%) $ 125.4 25% IC Photomask Revenue 12/13/2022 High-end declined Q/Q on lower foundry/logic demand in Asia Continued mainstream growth from chip proliferation in consume
Slide 17: FPD Photomask Revenue
FPD Photomask Revenue 12/13/2022 Lower Q/Q high-end demand for mobile displays and G10.5+ for ultra-large screen TVs Mainstream increased sequentially as we filled capacity from high-end decline Outlook Mobile demand should recover with rollout of new designs Technology development drives demand for
Slide 18: Select Financial Data
Select Financial Data Cash includes cash equivalents and long-term investments Debt primarily comprised of US equipment leases and local China loans; reduced debt $69M in 2022 Full-year capex (net of gov’t subsidies) mostly mainstream IC capacity & facility expansion Balance sheet able to fund inves
Slide 19: Summary
Summary 2022 was 5th consecutive year of record revenue, growing 13% CAGR over that period Our leadership position is expanding – growing more quickly than markets With a business model demonstrated to deliver increasing shareholder value Margin expansion creates earnings power Strong cash flow gene
Slide 20: A Compelling Investment Thesis
A Compelling Investment Thesis Delivering growth by leveraging core competencies *Upper range of 2024 target model compared with 2022 Operating margins in the low-thirties Free cash flow above $250M China industry expansion(IC & FPD) Display technology inflections Resurgence of legacy foundry sector
Slide 21: For Additional Information
For Additional Information: John P. Jordan Executive Vice President & CFO 203.740.5671 jjordan@photronics.com Thank you for your interest!
Slide 22: Appendix
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Slide 23: Total Revenue
Total Revenue 12/13/2022 23 IC FPD Total may differ due to rounding
Slide 24: IC Photomask Revenue
IC Photomask Revenue 12/13/2022 24 Mainstream High-End High-End: 28nm and smaller; total may differ due to rounding
Slide 25: FPD Photomask Revenue
FPD Photomask Revenue 12/13/2022 25 Mainstream High-End High-End: ≥G10.5, AMOLED and LTPS; total may differ due to rounding
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures 12/13/2022 26
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures 12/13/2022 27
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