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PLAB Lags Earnings & Revenue in 2Q13

Zacks Equity Research

A leading provider of photomask, Photronics Inc. (PLAB) reported fiscal second-quarter 2013 adjusted earnings per share of 8 cents, down 42.9% from a year-ago earnings of 14 cents. The results missed the Zacks Consensus Estimate of 9 cents by a penny.


Net sales in the reported quarter were approximately $106.7 million, down 9.2% year over year as well as below the Zacks Consensus Estimate of $109.0 million. The company operates in two segments: Integrated Chips (ICs) and Flat Panel Displays (:FPD).

In the fiscal second quarter, revenues from the ICs business were recorded at $82.2 million and accounted for 77.0% of total revenue. Revenues from the FPD business were roughly 23.0% of total revenue amounting to $24.5 million.

From a geographical perspective, Asia generated 56.0% of the total revenue, with North America and Europe generating 35.0% and 9.0%, respectively.


Photronics' reported gross margin in the fiscal second quarter decreased 220 basis points year over year to 23.2% based on reduced sales. Research and development expense, as a percentage of sales, was recorded at 4.3% to settle at $4.6 million. Compared with the year-ago quarter, selling, general and administrative expense remained almost flat at $12.2 million, and represented 11.4% as a percentage of sales.

Operating margin in the quarter was 7.6%, decreasing 360 basis points from the year-ago quarter.

Balance Sheet

Exiting the fiscal second quarter, Photronics’ cash and cash equivalents stood at $210.6 million compared with $217.8 million in the previous quarter. Long-term borrowings were $169.3 million, down from $167.3 million in the previous quarter.


Photronics expects capital expenditure in the range of $70.0 million to $90.0 million during fiscal 2013. The company also expects to utilize its available cash on some strategic alternatives such as reduction of debt.

Revenues in the fiscal third quarter of 2013 are expected in the range of $107.0 million to $111.0 million. Along with this, earnings per share in the next quarter are expected to lie within the band of 8 cents to 11 cents.

Photronics currently carries a Zacks Rank #3 (Hold). Other stocks to watch out for in the industry are Amkor Technology, Inc. (AMKR), Broadcom Corp. (BRCM) and Anadigics, Inc. (ANAD). All these stocks carry a Zacks Rank #2 (Buy).

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