Photronics, Inc. (PLAB) Warns for Q4

Photronics, Inc. (NASDAQ: PLAB) is down sharply after-hours after the company provided preliminary results for the fourth quarter of fiscal 2016, ended October 30, 2016.

Based upon preliminary financial results, Photronics now expects fourth quarter sales to be approximately $107 million, and diluted earnings per share (EPS) to be in the range of $0.02 to $0.03. These expectations compare with the previously announced guidance range of $118 to $128 million in sales and diluted EPS of $0.09 to $0.17. The consensus is $123.4 million and $0.13.

"Unfortunately, the demand environment we encountered during our fourth quarter was weak across nearly all of our markets, resulting in sales below the guidance we provided in August," stated Peter Kirlin, chief executive officer. "We had anticipated weak demand trends for both high end memory and high end FPD, with improvement in high end logic. However, the markets we projected to decline experienced more weakness than we anticipated, and the markets we expected to improve did not do so. With lower sales, earnings fell due to the high amount of operating leverage in our model, particularly for our high end operations. Despite the lower profit levels, we did build our cash position, with net cash reaching over $245 million."

Kirlin continued, "While it is still early, and we typically run with only a few weeks of backlog, it appears that we should return to sequential quarterly growth beginning in our second quarter of 2017. End market fundamentals for our IC business should begin to show marked improvement, and we anticipate taking delivery of new tools for FPD, which should increase capacity as industry demand for new AMOLED displays is ramping. Additionally, we are moving forward with construction on our new facility in China for IC photomask manufacturing, which should provide growth opportunities beyond 2017. Even though our short term environment is challenging, we remain optimistic regarding our long term growth outlook."

Photronics is scheduled to announce financial results for the fourth quarter of fiscal 2016 on December 6, 2016, before the market opens, and will host a public conference call on that same day at 8:30 a.m. Eastern Time. During the call,

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