Photronics’ second quarter results were well received by the market, driven by stronger-than-expected profitability and robust performance in its flat panel display segment. Management attributed the quarter’s outcome to the company’s ability to offset ongoing weakness in integrated circuit demand with growth in high-end display applications, especially in Korea and China. CEO George Macricostas highlighted that the company’s “flat panel display business continues to perform well to offset more challenging demand in IC,” and noted that cash flow from operations supported ongoing investments and share repurchases. The company’s diversified geographic operations and focus on higher-value products contributed to the stability in a relatively muted semiconductor environment.
Is now the time to buy PLAB? Find out in our full research report (it’s free).
Photronics (PLAB) Q2 CY2025 Highlights:
- Revenue: $210.4 million vs analyst estimates of $204.3 million (flat year on year, 3% beat)
- Adjusted EPS: $0.51 vs analyst estimates of $0.39 (32.5% beat)
- Adjusted EBITDA: $110.5 million vs analyst estimates of $63.7 million (52.5% margin, 73.5% beat)
- Revenue Guidance for Q3 CY2025 is $205 million at the midpoint, below analyst estimates of $206.8 million
- Adjusted EPS guidance for Q3 CY2025 is $0.45 at the midpoint, above analyst estimates of $0.42
- Operating Margin: 22.9%, down from 24.7% in the same quarter last year
- Inventory Days Outstanding: 41, in line with the previous quarter
- Market Capitalization: $1.32 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Photronics’s Q2 Earnings Call
- Thomas Robert Diffely (D.A. Davidson): Asked if trade restrictions and tariffs impact Photronics directly or just its customers. CFO Eric Rivera confirmed most impact is indirect, primarily affecting customer demand and to a lesser extent, materials sourced from Japan.
- Christian David Schwab (Craig-Hallum Capital): Inquired about the impact of moving into 6- and 8-nanometer nodes on market share. CTO Christopher J. Progler said these investments could allow Photronics to gain share as commercial mask makers ramp up in these advanced nodes.
- Christian David Schwab (Craig-Hallum Capital): Asked if elevated capital expenditures are temporary or long-term. CEO George Macricostas explained that higher CapEx will last about three years, primarily for end-of-life tool replacement and advanced node investments.
- Christian David Schwab (Craig-Hallum Capital): Queried about the growth prospects and pricing for Gen 8.6 AMOLED technology. Head of Asia Operations KangJyh Lee confirmed that demand and pricing are both expected to be higher for this advanced display technology.
- Gowshihan Sriharan (Singular Research): Asked about Photronics’ ability to redeploy cash held in joint ventures. Rivera explained the company controls this cash and can allocate it for strategic needs, subject to partner agreements.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be watching (1) the pace of adoption and customer qualification for advanced mask technologies in the U.S. and Asia, (2) progress on geographic revenue diversification, particularly new capacity coming online in Texas and capability extensions in Asia, and (3) evidence that higher capital investments are translating into improved market share in both high-end ICs and flat panel displays. How Photronics navigates geopolitical risks and customer demand cycles will also be key indicators of future performance.
Photronics currently trades at $22.03, down from $22.28 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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