EX-99.1 2 brhc10046572_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1
25th Annual Needham Growth Conference January 12, 2023 Global Merchant Photomask Leader

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 subject to predictions and contain risks and uncertainties. We refer you to the documents the Company files from time to time with the Securities and Exchange Commission. These documents contain and identify important factors that could cause the actual results for the Company to differ materially from those contained in our projections or forward-looking statements. Certain of these factors can be found at www.photronics.com/riskfactors. Although we believe that the expectations reflected in the forward-looking statements are reasonable, 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. 2

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 A GLOBAL LEADER in the merchant photomask industry INVESTMENT GROWTH strategy targeting EPS growth +35%* TECHNOLOGY ALIGNED with secular growth trends 3

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

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 “legacy foundry” business Margin Expansion Sustaining pricing strength in high-end and mainstream IC Optimizing asset tool set to match end-market demand Increasing benefit from operating leverage Explore Strategic Partnerships

Investment strategy is working 29% operating margin during H2 2022 5th consecutive year of record revenue 6

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% 28-30% 30-32% 32-33% Operating Cash Flow $143 $151 $275 $350-375 $365-380 $375-400 Free Cash Flow* $77 $47 $166 $250-275 $235-280 $275-300 Diluted EPS $0.52 $0.89 $1.94 $2.35-2.45 $2.50-2.55 $2.60-2.65

“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

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% CAGR 9

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 revenue of 3% in mainstream vs 1% for over-all semiconductor market Pricing leverage Double digit increases implemented in Taiwan and China Pricing environment improved globally. 10

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 deployment priorities to improve ROIC

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 investments $79M generated from operating activity $66M invested in capex $42M total long-term debt; reduced debt $69M Y/Y Cash balance $320M Revenue was $210.3M -4%Q/Q +16%Y/Y 12/13/2022 12 Q4 2022 Summary $ 39M S-T Investments

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 consecutive year of record revenue, demonstrating effectiveness of investment strategy $275M generated from operating activity $112M invested in capex $166M in free cash flow* Cash balance $320M Revenue was a record $824.5M +24% 12/13/2022 13 2022 Summary *Free Cash Flow is a non-GAAP term; see reconciliation included in this presentation $ 39M S-T Investments

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 bps Non-operating income $ 10.8 $ 3.6 $ 7.2 $ 3.8 $ 7.0 Income tax provision $ 16.1 $ 18.1 ($ 2.0) $ 8.7 $ 7.4 Minority interest $ 18.2 $ 18.0 $ 0.2 $ 8.8 $ 9.4 Net income* $ 37.1 $ 31.2 19% $ 19.8 87% Diluted EPS* $ 0.60 $ 0.51 $ 0.09 $ 0.33 $ 0.27 Days in quarter 92 91 1 91 1 Margins essentially flat Q/Q as cost management and IC price realization offset impact of lower revenue Non-operating income primarily consists of unrealized FX gain Minority interest from strong net income of IC JVs in Taiwan and China 12/13/2022 14 *Net income attributable to Photronics, Inc. shareholders

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 China 12/13/2022 15 *Net income attributable to Photronics, Inc. shareholders

$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 consumer products, IoT, 5G, and Crypto supporting higher ASPs Outlook New designs by customers to gain market share and support technology roadmap Regionalization driving investments for global chip capacity Expanding ASPs on positive supply/demand balance *28nm and smaller Total may differ due to rounding 16

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 higher-value masks *≥G10.5, AMOLED and LTPS $M Q422 Q322 Q/Q Q421 Y/Y High-End* $ 43.4 $ 50.7 (14%) $ 41.0 6% Mainstream $ 10.6 $ 8.0 33% $ 14.9 (28%) Total $ 54.1 $ 58.7 (8%) $ 55.8 (3%) Total may differ due to rounding 17

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 investments, share repurchases, and strategic M&A opportunities Total share repurchases of $68M under current (Sep 2020) $100M authorization 12/13/2022 *Net cash defined is a non-GAAP term; see reconciliation included in this presentation 18

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 generation Strategic use of cash to fund growth and enhance shareholder returns Moving forward, investment focus is to drive accretive growth

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 A GLOBAL LEADER in the merchant photomask industry INVESTMENT GROWTH strategy targeting EPS growth +35%* TECHNOLOGY ALIGNED with secular growth trends 20

For Additional Information: John P. Jordan Executive Vice President & CFO 203.740.5671 jjordan@photronics.com Thank you for your interest!

Appendix

Total Revenue 12/13/2022 23 IC FPD Total may differ due to rounding

IC Photomask Revenue 12/13/2022 24 Mainstream High-End High-End: 28nm and smaller; total may differ due to rounding

FPD Photomask Revenue 12/13/2022 25 Mainstream High-End High-End: ≥G10.5, AMOLED and LTPS; total may differ due to rounding

Non-GAAP Financial Measures 12/13/2022 26

Non-GAAP Financial Measures 12/13/2022 27