Photronics ( PLAB Quick Quote PLAB - Free Report) reported second-quarter 2022 non-GAAP earnings of 49 cents per share, which surpassed the Zacks Consensus Estimate by 40% and improved a whopping 188.2% year over year.
The rise in diluted EPS was due to changes in foreign exchange rates that resulted in a gain of $ 8 million, i.e., 7 cents per share.
Revenues of $204.5 million beat the consensus mark by 6.21% and surged 28% year over year. The performance reflects the positive impact of Photronics’ growth strategy of investing extensively in technologies that are market drivers and partnering with customers by establishing long-term agreements.
This enables the company to ramp up returns from investments quickly, as reflected in the reported quarter’s results.
Integrated Circuit (71.3% of total revenues) revenues climbed 12% sequentially and 30% year over year to $145.8 million, reflecting strong demand for photo masks. Demand for semiconductor content in consumer goods like electronics, automotive and appliances drove demand for the integrated circuit by foundries in Asia and the United States.
Flat Panel Display (28.7% of total revenues) revenues dropped 2% sequentially but rose 23% year over year to $58.7 million. FPD revenues were slightly down quarter over quarter due to a decrease in demand for mainstream LCD.
Second-quarter 2022 gross margin expanded 1,110 basis points (bps) from the year-ago quarter to 35.7%.
Research & development expenses, as a percentage of revenues, decreased 70 bps year over year to 2.1%. Sales and marketing expenses, as a percentage of revenues, declined 70 bps year over year to 8.1%.
Operating income was $52.1 million, up 150% year over year. Operating margin expanded 1,250 bps from the year-ago quarter to 25.5%.
Gross and operating margin improved in the second quarter benefiting from the high leverage in the company’s operating model and declining costs.
Balance Sheet& Cash Flow
As of May 1, 2022, cash and cash equivalents were $329 million compared with $314.195 million as of Jan 30, 2022.
As of May 1, 2022, cash flow from operation was $44 million compared with $32 million from the year-ago quarter.
In the second quarter, 2022, capex was $16 million, and the company received government subsidies of over a million for investments in China compared with $56 million in capex in the year-ago quarter. Total capex for the year net of subsidies is $33 million, and Photronics expects capex of $100 million as the company increases its IC capacity and the size of its facility in Taiwan.
For the third quarter of 2022, Photronics expects revenues between $205 million and $215 million.
Diluted EPS for the third quarter is expected between 45 cents and 55 cents.
Zacks Rank and Stocks to consider
Photronics currently carries a Zacks Rank #3 (Hold). You can see
. the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
PLAB’s shares have increased 5.1% in the year-to-date period, in line with the Zacks
Semiconductor Equipment - Photomasks industry. Meanwhile, the Computer and Technology sector declined 28.4%.
Here are some better-ranked stocks worth considering in the broader Computer and Technology Sector.
Analog Devices ( ADI Quick Quote ADI - Free Report) currently carries a Zacks Rank #2 (Buy).
ADI’s shares have fallen 7.9% in the year-to-date period compared with the Zacks
Semiconductor - Analog and Mixed industry’s decline of 18.7%. Avnet ( AVT Quick Quote AVT - Free Report) flaunts a Zacks Rank of 1.
Avnet’s shares have increased 10.1% in the year-to-date period against the Zacks
Electronics - Parts Distribution industry’s decline of 9.8%. Axcelis Technologies ( ACLS Quick Quote ACLS - Free Report) carries a Zacks Rank #2.
ACLS’ shares have fallen 27.4% in the year-to-date period compared with the Zacks
Electronics - Manufacturing Machinery industry’s decline of 29.6%.