Earnings Highlights and Review: Photronics’ Reported Quarterly Results Below Expectations

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LONDON, UK / ACCESSWIRE / June 6, 2017 / Pro-Trader Daily publishes post-earnings coverage on Photronics, Inc. (NASDAQ: PLAB) following the Company’s disclosure of its second quarter fiscal 2017 financial results on May 17, 2017. The electronics imaging Company reported a y-o-y decline in both sales and earnings. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:

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Earnings Reviewed

For the quarter ended April 30, 2017, Photronics’ sales were $108.29 million, essentially flat sequentially and down 12% compared with sales of $122.92 million in Q2 FY16. The Company’s revenue number lagged behind analysts’ consensus of $111.8 million.

For Q2 FY17, Photronics’ sales of integrated circuits (IC) photomasks were $82.6 million, down 4% sequentially and down 9% compared with last year. During Q2 FY17, Photronics’ sales of flat panel display (FPD) photomasks totaled $25.7 million for the reported quarter, up 10% sequentially and down 20% compared with the year ago same quarter. The segment’s high-end sales were essentially flat sequentially, while mainstream’s mask increased $2.7 million sequentially.

For Q2 FY17, Photronics’ minority interest income was $300,000 as its JV in Taiwan was impacted by the reduced high-end logic demand in Taiwan. The Company’s EBIT was $25 million in the reported quarter and represented EBIT of $120 million for the last 12 months.

Net income attributable to Photronics, Inc.’s shareholders was $1.8 million, or $0.03 per diluted share, for Q2 FY17 compared with $1.9 million, or $0.03 per diluted share, for Q1 FY17 and $11.9 million, or $0.16 per diluted share, for Q2 FY16, which included a non-recurring tax benefit of $3.0 million or $0.03 per diluted share. The Company’s earnings also missed Wall Street’s expectations of $0.05 per share.

JV in China

In a separate press release issued on the day of its earnings, Photronics announced an agreement with Dai Nippon Printing Co., Ltd (DNP to form a joint venture focused on serving semiconductor manufacturers in China. The agreement states that a subsidiary of DNP will acquire 49.99% of Photronics’ wholly foreign owned entity in Xiamen, China, with Photronics maintaining an ownership of 50.01%. The joint venture’s financial statements will be included in the consolidated financial statements of Photronics. The joint venture, which will be called Photronics DNP Mask Corporation Xiamen (PDMCX), is subject to regulatory approvals and customary closing conditions, and is expected to close by the end of Photronics’ fiscal year 2017.

Cash Flow

During Q2 FY17, Photronics’ operating cash generation was $15 million, while it spent $4.6 million on CapEx in the reported quarter. As a result, at the end of Q2 FY17, Photronics cash balance stood at $346 million, with net cash at $281 million.

At the end of Q2 FY17, Photronics’ had total working capital of $380 million. Based on its latest projections, the Company anticipate spending $80 million to $100 million in CapEx in FY17, including the balance of its FPD investment and $20 million to $30 million towards the Company’s China IC investment.

Guidance

For Q3 FY17, Photronics expects revenues to be between $110 million and $120 million and net income attributable to Photronics, Inc.’s shareholders to be between $0.05 and $0.12 per diluted share.

Stock Performance

At the closing bell, on Monday, June 05, 2017, Photronics’ stock fell 1.18%, ending the trading session at $10.48. A total volume of 452.17 thousand shares were traded at the end of the day, which was higher than the 3-month average volume of 397.62 thousand shares. In the last six months and previous twelve months, shares of the Company have advanced 8.55% and 8.61%, respectively. Shares of the Company have a PE ratio of 27.21. At Monday’s closing price, the stock’s net capitalization stands at $716.76 million.

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