Merchant Photomask Leader. Photronics, Inc. Jefferies 2017 Technology Conference May 9, 2017

Transcription

1 Merchant Photomask Leader Photronics, Inc. Jefferies 2017 Technology Conference May 9, 2017

2 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, should 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, specifically our most recent Form 10K and Form 10Q. Non-GAAP Financial Measures This presentation and some of our comments may reference non-gaap financial measures. These non-gaap financial measures exclude certain income or expense items, and are consistent with another way management internally analyzes our results of operations. Non-GAAP information should be considered to be a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. Please see the Reconciliation of GAAP to Non- GAAP Financial Information in this presentation. 2

3 A Compelling Investment Thesis Global merchant photomask market and technology leader Diverse markets with secular growth tailwinds Deploying financial position into growth investments 3

4 Agenda Background Growth Drivers Financial Summary 4

5 PLAB at a Glance Largest merchant photomask manufacturer Investing to extend high end leadership Demand driven by new device designs Global footprint to supply global customer base Strong and flexible balance sheet Sales ($M) Q LTM Sales by Product 35% 37% 45% 45% 42% IC 76% FPD 24% Q LTM Sales High-End % of Total 5

6 Photomasks: Critical Enabler for Advanced Electronics Manufacturing Transfer circuit pattern during lithography process onto substrate IC photomasks: used in fabrication of integrated circuits (semiconductors) FPD photomasks: used in the fabrication of flat panel displays (TV, monitors, mobile) FPD IC 6

7 Global Presence to Serve Global Customers China plant under construction; production planned to begin in 2018 IC FPD Q LTM Sales by Region North America 22% Europe 7% Asia 71% 7

8 Targeting High-End Sales Growth 35% High-End Sales Split 37% 45% 45% 42% IC Formed Taiwan JV Expanded High-End capacity and capability Investing $160M over 5 years to build China IC manufacturing facility Q LTM FPD First mask maker to install leading-edge litho tool Extended High-End technology leadership Investing $40M through 2017 to further expand capacity and capability 8

9 Agenda Background Growth Drivers Financial Summary 9

10 New Designs = New Photomasks Every new chip / display requires new mask set Mobile + IoT + Node migration = more IC Photomasks Display innovation + panel size variety = more FPD Photomasks Shorter product lifecycles drive rapid new design frequency 10

11 Moore's Law Drives Mask Complexity 45nm 28nm 14nm 10nm Lithography Process Single Patterning Double Patterning Multiple Patterning Multiple Patterning Mask Layers Double Patterning Device Layer Design Mask 1 Mask 2 Similar story in memory: Node shrink 3D NAND New architecture All drive new, complex designs 11

12 Upcoming AMOLED Growth 50% 40% 30% Smartphone OLED Adoption High end mobile devices moving from LCD to AMOLED Superior visual characteristics Lower power consumption Enables flexible format 20% 10% 0% Increases mask complexity More mask layers per set Tighter geometries on each layer Source: PLAB estimates; compilation of industry forecasts 12

13 IC Industry Growing in China China IC Production ($B) 29.0 Limited regions for IC growth China represents highest growing semiconductor region 13.2 Photomasks opportunities in China are attractive PLAB well positioned to benefit from this trend Source: IC Insights, July

14 Investing in China IC market Entered into investment agreement with Xiamen Torch Hi- Tech Industrial Development Zone Area of IC industry investment (e.g., USC Xiamen Fab 12X) Relatively close to Taiwan facility Attractive incentives Investing $160M over 5 years Includes land and building Mix of new, refurbished, and transferred tools Production beginning in late 2018 Focus on high-end logic with capability for mainstream and memory 14

15 Agenda Background Growth Drivers Financial Summary 15

16 Solid Financial Fundamentals Tremendous operating leverage: 50% target Positive Free Cash Flow since 2009 Strong and improving balance sheet Growing net cash position Increasing financial flexibility to invest 16

17 Stable EBITDA Margins $524 $422 $456 $483 $463 31% 31% 26% 26% 28% $110 $117 $161 $150 $ Q LTM Sales ($M) EBITDA ($M) EBITDA Margin 17

18 Cash Generation to Fund Investments Operating Cash Flow ($M) 133 Capex ($M) (with % of sales) % 20% % 10% % Q LTM Q LTM 2017 Estimated capex investments: FPD tools China IC plant

19 Balance Sheet Strength and Flexibility Cash & Debt ($M) 330 Cash 314 Debt Net Cash* Reducing debt and building cash balance Clear capital allocation priorities Fund organic growth Explore strategic M&A Reduce debt (converts become due in 2019) Option for future dividend or share repurchase Q Well positioned to fund profitable growth initiatives 19 *Net cash defined as cash and cash equivalents less long-term borrowings (including current portion), as reported in accordance with GAAP

20 Financial Summary We are a market leader in growing markets Operating model provides opportunity for margin expansion Strong cash generation to support growth Cash deployment strategy to enhance shareholder value 20

21 A Compelling Investment Thesis Global merchant photomask market and technology leader Diverse markets with secular growth tailwinds Deploying financial position into growth investments 21

22 Thank you for your interest! For Additional Information: R. Troy Dewar, CFA Director, Investor Relations