Photronics 2025 Q2 Earnings Misses Targets with Net Income Down 57%

Photronics (PLAB) reported its fiscal 2025 Q2 earnings on Jun 11th, 2025. Despite achieving second-quarter sales of $211 million, results fell short of consensus estimates, with a revenue miss of $1.01 million and non-GAAP EPS missing by $0.08. The company also issued a cautious outlook for Q3, projecting revenue between $200 million and $208 million, below consensus estimates of $220 million. Non-GAAP EPS is expected to range from $0.35 to $0.41. The leadership transition, with George Macricostas stepping in as the new CEO, adds further uncertainty amid challenging market conditions.

Revenue

Photronics experienced a 2.8% decrease in total revenue for 2025 Q2, settling at $210.99 million, compared to $217 million in 2024 Q2. The Integrated Circuits (IC) segment contributed $155.88 million, while Flat Panel Display (FPD) revenue amounted to $55.12 million, culminating in the total revenue figure.

Earnings/Net Income

Photronics's EPS dropped drastically by 74.6% to $0.15 in 2025 Q2 from $0.59 in the prior year, with net income declining 57.0% to $24.22 million. Despite setting a fiscal Q2 net income record high, this EPS performance indicates significant challenges.

Price Action

The stock price of Photronics edged down 0.10% during the latest trading day, rose 6.22% over the past week, and decreased 1.59% month-to-date.

Post-Earnings Price Action Review

The strategy of buying PLAB shares when revenue exceeds expectations and holding for 30 days has shown strong returns, yielding a 135.67% return and a 46.91% excess return, significantly outperforming the benchmark. However, it also posed a high maximum drawdown of -37.83% and a Sharpe ratio of 0.40, indicating considerable risk and moderate returns. Despite the promising return figures, the strategy carries substantial risk, underscored by the notable drawdown and relatively low Sharpe ratio. Investors should weigh these factors carefully when considering similar post-earnings strategies, as the potential for high returns comes with an equally high level of risk.

CEO Commentary

Frank Lee, CEO, highlighted Photronics's alignment with guidance in achieving $211 million in sales and a non-GAAP EPS of $0.40. He pointed to opportunities arising from the transition to higher-end nodes, especially in Asia, while acknowledging ongoing challenges in mainstream markets due to underutilization and macroeconomic uncertainties.

Guidance

For the third quarter of fiscal 2025, Photronics projects revenue between $200 million and $208 million, with non-GAAP EPS anticipated to range from $0.35 to $0.41. The company is set to invest $200 million in capital expenditures for fiscal 2025, focusing on expansion and enhancement amid market uncertainties.

Additional News

Photronics, Inc. recently underwent a significant leadership change with CEO Frank Lee stepping down, effective immediately, as he plans to retire within two years. Chairman George Macricostas has assumed the CEO role, continuing his leadership as Chairman. The company remains focused on its strategic operations in Asia, where Lee will continue to oversee activities as Chairman and President of the Photronics PDMC subsidiary in Taiwan. Additionally, Photronics executed a substantial stock repurchase program, buying back $72 million in shares during Q2, reflecting confidence in its long-term business model despite current market challenges. This move aligns with their capital allocation strategy, aiming to balance organic growth, strategic investments, and shareholder returns amidst ongoing industry shifts.