EX-99.1 2 brhc10017906_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1
Virtual Analyst and Investor DayDecember 14, 2020 Global Merchant Photomask Leader

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 “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “may”, “plan”, “project”, “in our view” 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. 12/14/2020 2

Overview & Strategy Peter Kirlin, CEO

Today’s objectives Present PLAB investment thesisReview progress since 2018 investor dayDescribe next growth phaseDemonstrate alignment with market trendsProvide long-term financial targetsAnswer your questions 12/14/2020 4

A Compelling Investment Thesis Global leader in merchant photomask industryDelivering growth by leveraging core competenciesGrowing more quickly than the marketTechnology aligned with secular growth trendsChina industry expansion (IC & FPD) – Made in China 2025Display technology inflectionsInvestment growth strategy to double EPSTop-line growing at twice industry growth rateOperating leverage expands marginsIncreasing cash flow to fund growth and share repurchase 12/14/2020 5

Leading merchant with unmatched global presence 12/14/2020 6 ICFPDIC & FPD Unmatched Global Footprint11 Strategically Located Manufacturing Facilities Sources: SEMI 2019 Photomask Characterization Study; internal estimates

Phases of Photronics revenue growth 12/14/2020 7 Phase I: 1969 – 1986Technology StartupOrganic GrowthMostly USPre-IPO Phase II: 1986 – 2002 M&A GrowthMerchant ConsolidationGlobal Expansion Phase III: 2003 – 2017Enter High-End MarketForm Strategic PartnershipsInvest in High-End CapabilityEstablish FPD PresenceImprove Balance Sheet Phase IV: 2018 and Beyond Leverage China 1st Mover AdvantageExtend Technology LeadershipIncrease Market ShareStrategic Capital Allocation

Investment focus driving financial results 12/14/2020 8 535 551 610 +11% CAGR

Delivering on commitments 2018 Investor Day Commitment Results Growth $630M revenues and $0.80 EPS $610M and $0.52, impacted by COVID lockdowns & trade war Market Position China production to start H119 Hefei delivered; Xiamen plan modified Enter G10.5+ market Market leader Grow market share Delivered Financial Strength Cash / net cash equal to pre-investment 2017: cash = $308M; net cash = $246M2020: cash = $279M; net cash = $210M plus $79M in share repurchases since 2018 Improve ROIC 2017 = 1.4%2020 = 3.9% 12/14/2020 9

Growing China business We have growing business in China34% of total revenue in 202023% of IC revenue58% of FPD revenueGrowing strong since 2017IC +67% CAGRFPD +71% CAGRLocal manufacturing accelerates growthCustomer contracts fosters sustainable resultsIC JV enables us to compete more effectively 12/14/2020 10 +69% CAGR

FPD nearly doubled over 3 years Targeted high-end investmentsG10.5+AMOLED & LTPS for mobilePartner with largest panel makersRunway left for advance display growthMobile platformsAdvanced TVMini & Micro LED2021 investments aligned with market trends 12/14/2020 11 +24% CAGR

Evolving investment focus 2018 Strategic Targets 2020 Strategic Targets G10.5+ Complete AMOLED inflection point Advanced display technologies: AMOLED for mobile; OLED for TV/IT; emerging Micro and Mini LED China geographic expansion Continues, driven by Made In China 2025 industrial policy and growing nationalism 12/14/2020 12

2021-2023 Targets Double industry growth rates: 5-7%Expanding gross and operating margins, reaching high twenties and high teens, respectivelyMore than doubling EPS to well in excess of $1 / share 12/14/2020 13

Summary We have sustained double digit growth in a very challenging environment over the past 3 yearsOur leadership position is expandingMoving forward our investment focus is narrowing to drive accretive growthWith a business model demonstrated to deliver increasing shareholder value 12/14/2020 14

Delivering Technology to the Market Chris Progler, CTO

Photomasks help enable the connected world Golden age of design and integration as differentiatorsGlobal dynamics enhance mask value: technology, yield, cost, speed, security, trustIncreasing barriers to entryLeadership through partnership: Process of Record, Long-Term Purchase Agreement, Joint Development ProjectsMarket pushing more technology into masks: customization, design activityMulti-node supply and demand trends favorableFocused and opportunity driven investments: region, customer, technology 12/14/2020 16 Mask Enables Robust Design  Market Win for Customer

Photomask opportunity transcends lithography design nodes LegacyCostCapacity Continuity High-EndChip enablementDesign integrationNew fab ramp 12/14/2020 17 Mid-RangeTime to marketDesign flexibilityYield

High-tech photomask demand drivers ICEUV – mask and litho tech still maturing, consumes heavy writing resourceMask complexity and count needed for advanced designsSoC trends – multi-function customization alongside SoC disaggregationCloud to edge computing migration and design activityFPDMask carrying more of lithography loadAMOLED migrating down from premium smartphonesTV display innovation: lighting, size, resolution, compensationsGaming, remote work and learning driving demand 12/14/2020 18

Speed of design turns takes center stage across the landscapeAdvanced mask complexity, level count and yieldCapacity constraints at mid and legacy nodesTechnologies that enable our photomask velocityCustomer collaboration tools to streamline process developmentHigh yielding, self-correcting and efficient mask processesRapid mask tuning connected to device and panel performanceProcess fan out and nanometer scale harmonization for tech localizationTechnology investments for IC are targeted at delivering world class mask velocityWe are developing technology to transform the speed at which first time right photomasks can be delivered to customers Photomask velocity: A key differentiator 12/14/2020 19

Technology as a tool to support our business growth 12/14/2020 Growth Investment Cycle +12% CAGR 20

How has China’s strategy energized served markets for growth? Domestic investments add local capacity to win share and support national agendaForeign competition must improve product innovation to sustain advantage and shareIntegrated circuits and displays elevated to center stage in economic and security landscapePhotomasks stand at crossroad of design and manufacturing enablementExamples:70% of LCD and 50% of AMOLED capacity to China by 2021Advanced TV shipments to double by 2024. Mask count per advanced TV on path to doubling.Foundry capital spending increased >35% in 2020 12/14/2020 21

“Made in China 2025” driving growth 12/14/2020 22 Source: Internal Estimates

Summary Photomasks are enabling technology for IC and display in the connected worldKey tech inflections driving growthChina investment and global share goals in IC and FPD: LCD to mobile pivot, multi-node IC design activitySweet spot mid-range IC nodes to support pervasive chip implementation. Capacity constraints.Leaders continue innovation driving advanced mask complexity and outsourcingIC and display take center stage for global economic and security independenceOur investment strategy is aligned with these market trendsWe develop focused processes and products to enhance customer yield and time to marketWe are the leading trusted partner in the marketplace 12/14/2020 23 Customer

Financial Model & Outlook John Jordan, CFO

2020 Summary Several revenue records establishedRevenue of $609.7MFPD revenue of $191.3MChina revenue of $207.5M (IC = $97.1M; FPD = $110.5M)Operating income improved 23% Y/YGenerated $143M in cash from operating activities, invested $71M in capex, and returned $34M in cash to shareholdersChina facilities contributed $79M in revenue with operating loss of $2M; Hefei was profitable for the year 12/14/2020 25

Illustrative Target Model 2018 2019 2020 Illustrative Target Model3-Year Horizon Revenue $535 $551 $610 $7005% CAGR $7256% CAGR $7507% CAGR Gross Margin 25% 22% 22% 24-26% 26-28% 27-29% Operating Margin 12% 9% 10% 13-15% 15-17% 17-19% Operating Cash Flow $131 $68 $143 $150-160 $160-170 $175-185 Free Cash Flow $39 ($83) $77 $80-90 $90-100 $100-110 EPS $0.59 $0.44 $0.52 $1.00-1.05 $1.15-1.25 $1.25-1.35 12/14/2020 26

Clear capital deployment priorities Fund organic growthGeographic expansion into ChinaInvestments to maintain technical leadershipCapacity expansion when reciprocated by customer commitmentFinancial discipline to improve ROICExplore strategic M&APhotomask industry – IC & FPDAdjacencies to increase revenue diversificationShare repurchaseRepurchased 7.9M shares ($79M) since 2018Redeemed $115M in convertible debt since 2016, eliminating 10.3M potentially dilutive shares 27 -27% 12/14/2020

Financial discipline improves shareholder value Targeted investments drive top-line growth in excess of marketOperating leverage and cost reductions expand marginsTarget operating margins mid- to high-teensTarget incremental margins 50%Strong cash flow generation fortifies balance sheetCapital deployment priorities to improve ROIC 12/14/2020 28

Summary Recent performance on upward trendGrowing more quickly than marketsMargin expansion creates earnings powerStrong cash flow generationStrategic use of cash to fund growth and enhance shareholder returns 12/14/2020 29

A Compelling Investment Thesis Global leader in merchant photomask industryDelivering growth by leveraging core competenciesGrowing more quickly than the marketTechnology aligned with secular growth trendsChina industry expansion (IC & FPD) – Made in China 2025Display technology inflectionsInvestment growth strategy to double EPSTop-line growing at twice industry growth rateOperating leverage expands marginsIncreasing cash flow to fund growth and share repurchase 12/14/2020 30

Questions?

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