Photronics Posts Flat Quarter and Cautious Q3 Outlook as IC Demand Falls

Weaker integrated-circuit orders trimmed revenue and prompted management to call the headwinds temporary while it presses ahead with capacity investments.

Overview

Photronics reported second-quarter revenue of $209.9 million with GAAP net income of $31.4 million, or $0.54 per diluted share, and non-GAAP net income of $24.9 million, or $0.42 per diluted share.
The integrated-circuit segment drove the slowdown, with IC revenue of $147.5 million down 5% year-over-year and 11% sequentially, while flat-panel display revenue rose to $62.4 million, up 13% year-over-year.
For fiscal third quarter the company guided revenue of $207 million to $215 million, an operating margin of 18% to 20%, and non-GAAP diluted EPS of $0.39 to $0.45.
Management attributed the near-term weakness to delayed design releases, elevated fab utilization, memory supply constraints and geopolitical uncertainty and said the effects are temporary as it continues investments in U.S. and Korean capacity.
Photronics ended the quarter with $637.7 million in cash and short-term investments, of which $477.3 million is held in 50.01% joint ventures, and the company reported positive operating cash flow while maintaining significant capital spending.