Photronics (PLAB) Q3 earnings best estimates, revenue up year-over-year

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Phototronics PLAB reported non-GAAP earnings of 51 cents per share for the third quarter of fiscal 2022, which beat Zacks’ consensus estimate by 2% and improved 82.1% from a year to year.

Revenue of $219.9 million topped the consensus mark of 4.74% and jumped 29% year-over-year. This performance reflects the positive impact of Photronics’ growth strategy of investing heavily in market-driving technologies and partnering with customers by establishing long-term agreements.

This allows the company to rapidly increase returns on its investments, as evidenced by the results of the reported quarter.

Photronics, Inc. Price, Consensus and EPS Surprise

Photronics, Inc. price-consensus-eps-surprise-chart | Quote from Photronics, Inc.

Quarter Details

During the third fiscal quarter, photomask demand remained strong for ICs and flat panel displays for both high-end and consumer applications.

Integrated circuit revenue (73.2% of total revenue) increased 11% sequentially and 37% year-over-year to $161 million, reflecting strong demand for photomasks. In addition to EUV applications, demand for semiconductor content in consumer goods such as electronics, automobiles, and household appliances has driven demand for integrated circuits among foundries in Asia and the United States.

Flat panel revenue (26.8% of total revenue) increased 11% year-over-year to $59 million, driven by strong high-end demand in the quarter as AMOLED for mobile screens and G10.5+ for super-widescreen TVs grew in solid double-digit percentages from the second fiscal quarter and last year.

Gross margin for the third quarter of fiscal 2022 increased to 38.1% from 26.6% a year ago.

Research and development expense, as a percentage of revenue, decreased 120 basis points (bps) year over year to 1.9%. Selling and marketing expenses, as a percentage of revenue, decreased 160 basis points year over year to 7.3%.

Operating profit was $63.7 million, up 123.9% year-on-year. Operating margin increased 1,230 basis points from the prior year quarter to 29%.

Gross and operating margins improved during the fiscal third quarter, benefiting from the strong leverage of the company’s operating model and lower costs.

Balance sheet and cash flow

As of July 31, 2022, cash and cash equivalents were $380.8 million, compared to $329 million as of May 1, 2022.

As of July 31, 2022, operating cash flow was $195.9 million, compared to $113.09 million in the prior year quarter.

Capital expenditure for the fiscal third quarter was $12 million, bringing year-to-date capital expenditure to $45 million net of government grants. The company expects to spend approximately $100 million this fiscal year, although some of the remaining spending may be deferred to next fiscal year.

Tips

For the fourth fiscal quarter of 2022, Photronics expects revenue of between $205 million and $215 million.

Earnings per share for the third quarter are expected between 44 cents and 52 cents.

Zacks Ranking and Stocks to Consider

Photronics currently carries a Zacks rank #3 (Hold). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PLAB shares are down 11.8% year-to-date, compared to industry Zacks Semiconductor Equipment – Photomasks, which is up 15.5%. At the same time, the computer and technology sector fell 27.3%.

Here are some top-ranked stocks to consider in the broader IT and technology sector.

ASE technology ASX carries a Zacks Rank #2 (Buy) at present.

ASX shares have fallen 22.4% year-to-date compared to the 21.8% drop in industry Zacks Electronics – Semiconductors.

Monolithic power systems MPWR carries a Zacks rank of 2, currently.

Shares of MPWR are up 3.5% year-to-date compared to the industry’s 11.4% decline Zacks Semiconductor – Analog and Mixed.

Arista Networks ANET currently sports a Zacks rank of 1.

ANET shares have fallen 12.9% year-to-date compared to the 12.7% drop in the industry Zacks Communication – Components.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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