Photronics, Inc. (PLAB) shares experienced a significant surge on Wednesday, soaring 9.79% in premarket trading to $27.80. This dramatic increase followed the release of the company’s fourth-quarter earnings report, which exceeded Wall Street expectations. The positive results provided a much-needed boost after a challenging year for the company, marked by three consecutive quarters of failing to meet revenue and EPS consensus estimates.
The company reported adjusted earnings per share (EPS) of 59 cents, surpassing the anticipated 52 cents. While quarterly revenues reached $222.63 million, a 2% year-over-year decrease, this figure still outperformed analyst predictions of $218 million. Importantly, the company showcased sequential growth, with a 6% quarter-over-quarter (Q/Q) revenue increase.
Analyzing the segments, Integrated Circuits (IC) revenue contributed $163.7 million, representing a 1% year-over-year decline but a positive 5% Q/Q growth. This growth was driven primarily by strong sales in the high-end segment, particularly within the U.S. market. Flat Panel Displays (FPD) revenue, at $58.9 million, showed a 7% year-over-year drop but a respectable 7% Q/Q increase. This positive sequential movement was attributed to robust mainstream demand.
Photronics’ financial health appears robust. The company reported operating cash flow of $68.4 million for the quarter, with $43.2 million invested in organic growth through capital expenditures. Ending the quarter with a strong cash position, the company held $640.7 million in cash and short-term investments, offset by a relatively modest $18.0 million in debt.
CEO Frank Lee attributed the sequential revenue growth to increased sales in both the IC and FPD sectors. He highlighted the strength of high-end IC sales in the U.S. as a key driver and noted the importance of mainstream demand in the FPD segment. Looking ahead, Lee expressed optimism about photomask demand trends extending into 2025, citing megatrends such as artificial intelligence (AI), supply chain regionalization, and edge computing as significant growth catalysts.
The company provided its outlook for the first quarter, projecting revenue between $208 million and $216 million (analyst estimate: $210 million) and adjusted EPS in the range of $0.43 to $0.49 (analyst estimate: $0.46). This positive guidance, coupled with the exceeding of Q4 expectations, clearly influenced investor sentiment, leading to the significant premarket stock price increase. The recent performance stands in contrast to the previous three quarters, during which market softness in certain segments and increased semiconductor channel inventory impacted photomask demand and limited chip design activity, resulting in an 18% year-to-date decline in PLAB stock price prior to this positive news.
