BROOKFIELD, Conn. - Photronics , Inc. (NASDAQ:PLAB), a key player in photomask technologies, reported a decrease in revenue for the third quarter of fiscal year 2024, which ended on July 28. The company cited reduced demand in certain market segments for both integrated circuits (IC) and flat panel displays (FPD), attributing the slowdown to regional variations in customer orders and a rise in semiconductor channel inventory that tempered chip design activities during the quarter.
Third-quarter revenue fell to $211.0 million, a 6% drop compared to the same period the previous year and a 3% decline from the second quarter of 2024. Despite the lower demand, CEO Frank Lee highlighted the company's efforts to optimize margins through strategic sales and product mix adjustments.
Photronics reported a GAAP net income of $34.4 million, or $0.55 per diluted share, an increase from $27.0 million, or $0.44 per diluted share, in the third quarter of 2023. Non-GAAP net income stood at $32.0 million, or $0.51 per diluted share, maintaining the same per-share earnings as the prior year and improving from $28.7 million, or $0.46 per diluted share, in the second quarter of 2024.
The company experienced a 4% year-over-year decrease in IC revenue to $155.9 million and a more significant 10% drop in FPD revenue to $55.1 million. Despite these challenges, Photronics generated $75.1 million in cash from operating activities and ended the quarter with $606.4 million in cash and short-term investments, against a debt of $20.1 million.
In a move to enhance shareholder returns, the Board of Directors has authorized an increase in the company's share repurchase program from the remaining $31.7 million to a total of $100 million. The repurchase plan will follow SEC Rule 10b5-1, although the company is not obligated to repurchase any specific number of shares and may suspend the program at any time.
Looking ahead to the fourth quarter of fiscal 2024, Photronics expects revenue to range between $213 million and $221 million, with non-GAAP net income per diluted share projected to be between $0.48 and $0.54.
The information in this article is based on a press release statement from Photronics.
In other recent news, Photronics Inc., a key player in the semiconductor industry, has recently undergone noteworthy changes. The company's Executive Vice President, Richelle E. Burr, has been placed on paid administrative leave amid an ongoing internal review concerning certain company transactions and unspecified matters. The specific details surrounding this leave and the transactions under review have not been disclosed.
Simultaneously, Photronics announced the appointment of Eric Rivera as the new Chief Financial Officer, a move expected to drive growth and shareholder value. Despite market challenges and an earthquake in Taiwan, Photronics reported steady Q2 sales of $217 million and projected third-quarter revenue between $221 million and $229 million. The company also anticipates non-GAAP earnings per share of $0.53 to $0.59.
In addition, Photronics plans to invest $140 million in capital expenditures this year to meet anticipated demand growth. Despite temporary market softness and the earthquake's impact, order rates are improving, and the company foresees a resurgence in photomask demand. These are the recent developments at Photronics, as the company navigates a dynamic global market environment.
InvestingPro Insights
As Photronics, Inc. (NASDAQ:PLAB) navigates a challenging quarter with reduced demand in key market segments, a closer look at the company's financial health and market performance through InvestingPro insights reveals a mixed picture. With a market capitalization of $1.51 billion and a Price/Earnings (P/E) ratio that stands at 11, Photronics presents an interesting valuation scenario. The company's P/E ratio has seen a slight increase to 11.39 over the last twelve months as of Q2 2024, which suggests a stable perception of its earnings potential among investors.
Despite the revenue decline noted in the recent quarterly report, one of the InvestingPro Tips highlights that Photronics holds more cash than debt on its balance sheet, which is a positive sign of financial stability. This is reflected in the company's substantial cash and short-term investments totaling $606.4 million against a comparatively modest debt of $20.1 million. Furthermore, the company's valuation implies a strong free cash flow yield, which could be appealing to investors looking for companies with the ability to generate cash.
Another key metric of interest is the company's gross profit margin, which stands at a healthy 37.31% over the last twelve months as of Q2 2024. This indicates that Photronics has been effective in maintaining profitability despite the revenue downturn. Additionally, the company has been profitable over the last twelve months, and analysts predict it will continue to be profitable this year, which may reassure investors about its financial performance in the near term.
For those interested in further insights and analysis, there are additional InvestingPro Tips available for Photronics at https://www.investing.com/pro/PLAB. These tips provide a deeper dive into the company's financial outlook and market positioning, helping investors make more informed decisions.
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