Semiconductor equipment supplier Photronics Inc (NASDAQ:PLAB) had little to impress investors at today’s third-quarter earnings call, with quarterly revenues coming to $224.2 million with gross profits of $86.8 million, representing year-on-year increases of 1.9% and 3.5% respectively.
Photronics managed to reduce research and development costs, though this was offset by a 12% increase in general expenses.
Statutory net income fell from $31.2 million in the third quarter of 2022 to $27 million this quarter, or from $0.51 to $0.44 on a per-share basis.
Gross profit margins remained consistent at 38% plus.
Photronics operates in a niche corner of the semiconductor supply line, producing photomasks, the high-precision quartz plates used in the manufacturing of integrated circuits, as well as flat-panel displays (FPD).
Though the majority of Photronics’ income is generated from integrated circuits, the FPD segment provided a strong income tailwind this quarter.
Integrated circuits witnessed a slight annual increase of 1% in its revenue, amounting to $163.1 million, while FPD enjoyed a more substantial year-over-year growth of 4%, reaching $61.1 million in revenue.
Photronics’ results were less flattering on a sequential basis, with total revenues declining 2% and statutory earnings falling more than 17% sequentially, primarily due to a lack of non-operating income.
“Despite lower revenue, we maintained good profit margins and once again drove strong cash flow generation, further strengthening the balance sheet to fund our strategic growth initiatives and navigate the industry downturn,” said chief executive Frank Lee.
Lee contended that the long-term photomask demand outlook “remains positive”, driven by “several secular drivers that support robust design activity for new devices and ongoing trends to onshore semiconductor production in response to rising geopolitical risks”.
But near-term guidance is underwhelming, with fourth-quarter revenues expected to fall flat at worst and incrementally at best (somewhere between $222 million and $232 million, specifically), though earnings per share are expected to show a rebound to somewhere between $0.51 and $0.59.