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PI

PHOTRONICS INC (PLAB)·Q3 2025 Earnings Summary

Executive Summary

  • PLAB delivered a solid quarter: revenue $210.4M (-0.3% y/y; -0.3% q/q) and non-GAAP EPS $0.51, both ahead of internal expectations and above S&P Global consensus, while GAAP EPS was $0.39 as FX impacts were excluded in non-GAAP adjustments . Q3 Street: revenue $204.3M*, EPS $0.385*; Actual: $210.4M and $0.51 non-GAAP (beat). Values retrieved from S&P Global.*
  • Mix: IC revenue softened (-5% y/y/-5% q/q) amid Asia geopolitical/tariff uncertainty, offset by strong FPD (+14% y/y/+14% q/q) on Korea/China mobile and larger AMOLED panels; high-end recovery in the U.S. aided margins .
  • Balance sheet and cash flow remained strong: cash & short-term investments $575.8M, operating cash flow $50.1M (24% of revenue), capex $24.8M; buybacks $20.7M and authorization increased by $25M .
  • Q4 FY25 guide brackets Street: revenue $201–$209M vs $204.5M* and non-GAAP EPS $0.42–$0.48 vs $0.445*; operating margin guided to 20–22%. Two fewer selling days q/q and six fewer y/y temper near-term outlook. Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • “Revenue, profitability and EPS ahead of expectations,” with non-GAAP EPS of $0.51 and better-than-expected gross/operating margins; U.S. high-end recovery and Korea/China FPD strength drove upside .
  • Strong cash generation and disciplined allocation: $50.1M operating cash flow; $24.8M capex (on U.S. capacity, tool replacements); $20.7M buybacks; authorization +$25M .
  • Strategic capability build: first U.S. merchant multi‑beam writer installed in Boise; unique U.S. merchant capability for advanced/EUV masks; 3–5 customers qualified, broader ramp over ~6 months .

What Went Wrong

  • IC weakness persisted: mainstream IC -12% y/y (Q2) and continued Asia softness in Q3 due to geopolitical trade restrictions and tariff uncertainty affecting customer design releases .
  • Margins compressed q/q from mix: gross margin 33.7% vs 36.9% in Q2; management cited mix effects primarily in Asia; rounded commentary referenced ~34% .
  • Limited near-term visibility: inherently uneven demand with 1–3 week backlog; Q4 has two fewer selling days than Q3 and six fewer than Q4 last year; management remains cautious .

Financial Results

Headline P&L vs Prior Periods and Estimates

MetricQ3 2024Q2 2025Q3 2025 (Actual)Q3 2025 Consensus*vs Consensus
Revenue ($USD Millions)$211.0 $211.0 $210.4 $204.3*Beat
Gross Margin %35.6% 36.9% 33.7% ——
Operating Margin %24.7% 26.4% 22.9% ——
GAAP Diluted EPS ($)$0.55 $0.15 $0.39 ——
Non-GAAP Diluted EPS ($)$0.51 $0.40 $0.51 $0.385*Beat

Values retrieved from S&P Global.*

Segment Revenue

Segment ($USD Millions)Q1 2025Q2 2025Q3 2025
IC$154.0 $155.9 $147.8
FPD$58.1 $55.1 $62.6

Product Mix Detail (High-End vs Mainstream)

Product ($USD Millions)Q1 2025Q2 2025Q3 2025
IC High-End$60.1 $59.3 $53.6
IC Mainstream$93.9 $96.6 $94.2
FPD High-End$49.7 $43.6 $53.5
FPD Mainstream$8.5 $11.5 $9.1

KPIs and Balance Sheet/Cash Flow

KPI ($USD Millions unless noted)Q3 2024Q2 2025Q3 2025
Cash & Short-term Investments$606.4 $558.4 $575.8
Debt$20.1 $0.03 $0.03
Operating Cash Flow$75.1 $31.5 $50.1
Capital Expenditures$24.4 $60.5 $24.8
Share Repurchases—$72.1 $20.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 2025N/A$201–$209M New
Operating MarginQ4 2025N/A20–22% New
Non-GAAP EPS (Diluted)Q4 2025N/A$0.42–$0.48 New
Diluted Shares (M)Q4 2025~59 (for Q3 guide) ~58 New (lower)
FY CapexFY 2025~$200M (reiterated in Q1/Q2) ~$200M Maintained
Buyback AuthorizationN/A—+$25M increase; $28M remaining Increased

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
AI/tech initiatives & high-end nodesExposure tied to ASICs, custom ICs, fast interconnects; initial G8.6 AMOLED orders Continued node migration; higher-end mobile; larger G8.6 panels entering production Boise multi-beam installed; exploring Asia capability down to 6–8nm; edge AI processors/EVs/memory demand Accelerating capability build
Supply chain, tariffs, macroCautious 2025 tone “Negligible exposure to tariffs” in overall positioning Geopolitical/tariff uncertainty muted Asia designs; some tariff costs on Japan-sourced materials into U.S., but not material Persistent headwind
Product performance (FPD)Strong demand; technology-led share gains Seasonal uplift; higher-end mobile, larger panels FPD +14% y/y and q/q on Korea/China demand; G8.6 ASP/margin uplift expected Strengthening
Regional trendsPortfolio aligned to regionalization; strong balance sheet JV strength (China/Taiwan) Mix: Taiwan 33%, China 24%, Korea 21%, U.S.+Europe 22%; U.S. high-end recovery U.S. high-end improving
Capex & capacityInvesting for AI, node migration; $200M FY capex $200M FY capex; U.S. expansion; elevated Q2 capex Elevated capex for ~3 years (tools end-of-life + advanced nodes); Boise multi-beam ramp Elevated near term

Management Commentary

  • “Photronics delivered very good results in our fiscal third quarter with revenue, profitability and EPS ahead of expectations… we will further accelerate internal investment efforts to enhance geographic revenue diversification.” — George Macricostas, CEO .
  • “We recognize a recovery in our high-end business resulting from strong order patterns in the U.S.… FPD revenue increased 14% y/y led by strength in Korea.” — Eric Rivera, CFO .
  • “This installation marks the first multi-beam writer in production for the merchant market in the U.S.… capable to write the finest resolution EUV and nanoimprint masks.” — George Macricostas and Chris Progler, CTO .
  • “We are evaluating capability extensions at a Photronics facility in Asia to extend from 14 down to six nanometer and eight production… expected to contribute to revenue in the latter half of 2027 or 2028.” — George Macricostas .

Q&A Highlights

  • Q4 mix expected similar to Q3; geopolitical/tariff issues mainly affect customers’ demand timing; some tariffs on Japan-sourced materials into U.S., not material to date .
  • High-end node investments (including multi-beam) target customers like Samsung and other top-tier fabs; Asia 6–8nm expansion planned outside China (e.g., Taiwan/Korea) due to restrictions .
  • Multi-beam qualification: 3–5 customers already qualified; about six more months to complete first-pass qualifications; only U.S. merchant multi-beam capability drives strong interest .
  • Capital allocation: elevated capex for ~3 years (advanced nodes plus end‑of‑life tool replacements); opportunistic buybacks continue, dividends evaluated but buybacks preferred currently .
  • U.S. policy/Intel: stronger Intel and U.S. government work could increase merchant outsourcing; PLAB is the only high-end commercial mask maker in the U.S. and is qualified on trusted products .

Estimates Context

  • Q3 2025: Revenue $210.4M vs $204.3M* consensus; Non-GAAP EPS $0.51 vs $0.385* consensus — both beats. Values retrieved from S&P Global.*
  • Q4 2025: Guide revenue $201–$209M vs $204.5M* consensus; guide non-GAAP EPS $0.42–$0.48 vs $0.445* consensus — guidance brackets Street. Values retrieved from S&P Global.*
  • FY 2025: Consensus revenue $838.1M* and EPS $1.87*; nine-month revenue $633.5M, implying Q4 in line with guidance mid-point. Values retrieved from S&P Global.*

Estimates and Guidance Snapshot

ItemConsensus*Company (Q3 Actual/Q4 Guide)Result
Q3 Revenue ($M)204.3*210.4 Beat
Q3 EPS (non-GAAP)0.385*0.51 Beat
Q4 Revenue ($M)204.5*201–209 In-line (bracket)
Q4 EPS (non-GAAP)0.445*0.42–0.48 In-line (bracket)

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Quality beat on Q3 revenue and EPS despite IC softness; FPD strength and U.S. high-end recovery were the swing factors .
  • Near-term tone cautious (geopolitics/tariffs, fewer selling days), but guidance brackets Street, limiting negative estimate revisions risk .
  • Strategic moats strengthening: unique U.S. merchant multi-beam capability and planned Asia 6–8nm extensions should expand PLAB’s serviceable high-end TAM and support share gains over multi-year horizon .
  • Margin puts/takes: mix pressured gross/operating margins q/q; watch U.S. high-end mix and FPD G8.6 uptake for margin tailwinds; management cited better-than-expected profitability contribution in U.S./Korea .
  • Capital deployment balanced: reiteration of ~$200M FY25 capex and authorization increase for buybacks provides both growth investment and shareholder returns; expect elevated capex for ~3 years .
  • Regional risk management: business is diversified (Taiwan 33%, China 24%, Korea 21%, U.S.+Europe 22%); tariff impacts on materials modest so far, but Asia demand timing remains sensitive to policy .
  • Trading setup: positive beat-and-bracket quarter with visible capability catalysts (multi-beam, U.S. expansion) versus macro/geopolitics headwinds; watch Q4 mix, order timing, and any updates on Asia 6–8nm plan for next leg of the narrative .

Notes:

  • All consensus figures marked with an asterisk (*) are Values retrieved from S&P Global.