Photronics, Inc.

Photronics reported fiscal Q3 revenue of $216 million, up 3% year over year and sequentially, and above the high end of guidance. Gross margin was 33%, operating margin was 21%, GAAP diluted EPS was $0.49, and non-GAAP diluted EPS was $0.50. IC revenue was $155 million, up nearly 5% year over year and sequentially, with high-end IC representing a record 44% of IC revenue; FPD revenue was $61 million. Operating cash flow was $76 million, CapEx was $37 million, and total cash and short-term investments rose $35 million to $673 million, including $504 million in JVs. For Q4, the company expects revenue of $207 million to $227 million, operating margin of 19% to 24%, and non-GAAP diluted EPS of $0.40 to $0.56. Fiscal 2026 CapEx guidance was updated to $255 million to $305 million from the prior $330 million, with some spending potentially shifting into fiscal 2027.

George Macricostas said the quarter reflected a gradual recovery in delayed semiconductor design releases, especially at the high end, where node migration at 28-nanometer, 22-nanometer, and 14-nanometer is benefiting the business. He highlighted the company’s regionalized investments in Allen, Texas and Korea, and said these projects are intended to support diversification, higher-node capabilities, and growth beyond 8-nanometer over the next 1.5 years. He also stressed a pragmatic EUV strategy, saying Photronics will expand EUV capabilities as the merchant market develops and opportunities become economically attractive.

Eric Rivera emphasized that the quarter benefited from recovered design releases, improved demand in Taiwan, the U.S., and Korea, and a better mix that lifted gross margin to 33%. He noted IC revenue of $155 million and FPD revenue of $61 million, while operating cash flow was $76 million and CapEx was $37 million. He also said total cash and short-term investments increased to $673 million, and reiterated that capital allocation remains focused on reinvesting in the business, pursuing strategic opportunities, and returning capital to shareholders. On CapEx, he reduced fiscal 2026 guidance to $255 million to $305 million due to timing of tools and vendor deliveries, with possible spillover into fiscal 2027.

Analysts focused on the company’s partnership strategy for EUV, the ramp and capacity contribution from the Allen facility, the extent of recovery from Q2 design delays, and the reasons for the wider Q4 revenue range. Management said partnerships are specifically tied to EUV, and that they are waiting for the merchant market to develop before making major turnkey EUV investments because the spend is significant and must clear return hurdles. On Allen, management declined to quantify capacity but said the facility expands higher-end mainstream capability and helps Boise focus more on high-end work; they also said much of the Q2-delayed design release activity did come through in Q3, but high fab utilization, memory costs, and geopolitical conditions still limit visibility.