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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Fabrinet | NYSE:FN | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-1.88 | -0.84% | 220.85 | 224.41 | 220.70 | 224.41 | 75,841 | 15:13:03 |
Fabrinet (NYSE: FN), a leading provider of advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, today announced its financial results for its first fiscal quarter ended September 29, 2023.
Seamus Grady, Chief Executive Officer of Fabrinet, said, “We had a very strong start to the year with revenue and net income per share that were above our guidance ranges, and also marked new quarterly records. Industry-wide inventory adjustments continue to affect certain programs, but these declines were more than offset by quickly ramping new programs. We continue to carefully manage costs, which resulted in strong bottom-line results. We expect to extend our strong execution into the second quarter, as reflected in our guidance.”
First Quarter Fiscal Year 2024 Financial Highlights
GAAP Results
Non-GAAP Results
Business Outlook
Based on information available as of November 6, 2023, Fabrinet is issuing guidance for its second fiscal quarter ending December 29, 2023, as follows:
Guidance for non-GAAP net income per diluted share excludes share-based compensation expenses and certain non-recurring items. A reconciliation of non-GAAP net income per diluted share to the corresponding GAAP measure is available at the end of this press release.
Conference Call Information
What:
Fabrinet First Quarter Fiscal Year 2024 Financial Results Call
When:
November 6, 2023
Time:
5:00 p.m. ET
Live Call and Replay:
https://investor.fabrinet.com/events-and-presentations/events
A recorded version of this webcast will be available approximately two hours after the call and accessible at http://investor.fabrinet.com. The webcast will be archived on Fabrinet’s website for a period of one year.
About Fabrinet
Fabrinet is a leading provider of advanced optical packaging and precision optical, electro-mechanical, and electronic manufacturing services to original equipment manufacturers of complex products, such as optical communication components, modules and subsystems, automotive components, medical devices, industrial lasers and sensors. Fabrinet offers a broad range of advanced optical and electro-mechanical capabilities across the entire manufacturing process, including process design and engineering, supply chain management, manufacturing, advanced packaging, integration, final assembly and testing. Fabrinet focuses on production of high complexity products in any mix and any volume. Fabrinet maintains engineering and manufacturing resources and facilities in Thailand, the United States of America, the People’s Republic of China, and Israel. For more information visit: www.fabrinet.com.
Forward-Looking Statements
“Safe Harbor” Statement Under U.S. Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include: (1) our optimism that we will be able to extend our strong execution into the second quarter; and (2) all of the statements under the “Business Outlook” section regarding our expected revenue, GAAP and non-GAAP net income per share, and fully diluted shares outstanding for the second quarter of fiscal year 2024. These forward-looking statements involve risks and uncertainties, and actual results could vary materially from these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: changes in general economic conditions, either globally or in our markets, and the risk of recession or an economic downturn; continued disruption to our supply chain, which could increase our costs and affect our ability to procure parts and materials; less customer demand for our products and services than forecasted; less growth in the optical communications, industrial lasers and sensors markets than we forecast; difficulties expanding into additional markets, such as the semiconductor processing, biotechnology, metrology and materials processing markets; increased competition in the optical manufacturing services markets; difficulties in delivering products and services that compete effectively from a price and performance perspective; our reliance on a small number of customers and suppliers; difficulties in managing our operating costs; difficulties in managing and operating our business across multiple countries (including Thailand, the People’s Republic of China, Israel and the U.S.); and other important factors as described in reports and documents we file from time to time with the Securities and Exchange Commission (SEC), including the factors described under the section captioned “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on August 22, 2023. We disclaim any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.
Use of Non-GAAP Financials
We refer to the non-GAAP financial measures cited above in making operating decisions because they provide meaningful supplemental information regarding our ongoing operational performance. Non-GAAP net income excludes: share-based compensation expenses; amortization of intangibles; and amortization of deferred debt issuance costs. We have excluded these items in order to enhance investors’ understanding of our underlying operations. The use of these non-GAAP financial measures has material limitations because they should not be used to evaluate our company without reference to their corresponding GAAP financial measures. As such, we compensate for these material limitations by using these non-GAAP financial measures in conjunction with GAAP financial measures.
These non-GAAP financial measures are used to: (1) measure company performance against historical results, (2) facilitate comparisons to our competitors’ operating results, and (3) allow greater transparency with respect to information used by management in making financial and operational decisions. In addition, some of these non-GAAP financial measures are used to measure company performance for the purposes of determining employee incentive plan compensation.
FABRINET
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands of U.S. dollars, except share data and par value)
September 29, 2023
June 30, 2023
Assets
Current assets
Cash and cash equivalents
$
308,338
$
231,368
Short-term investments
362,428
319,100
Trade accounts receivable, net of allowance for doubtful accounts of $1,768 and $965, respectively
535,006
531,767
Inventories
440,095
519,576
Prepaid expenses
6,328
7,849
Other current assets
39,766
42,880
Total current assets
1,691,961
1,652,540
Non-current assets
Property, plant and equipment, net
306,665
310,350
Intangibles, net
2,598
2,394
Operating right-of-use assets
6,024
1,634
Deferred tax assets
11,363
12,095
Other non-current assets
610
635
Total non-current assets
327,260
327,108
Total Assets
$
2,019,221
$
1,979,648
Liabilities and Shareholders’ Equity
Current liabilities
Long-term borrowings, current portion, net
$
9,117
$
12,156
Trade accounts payable
357,106
381,129
Fixed assets payable
9,313
13,526
Operating lease liabilities, current portion
1,587
1,201
Income tax payable
7,013
6,024
Accrued payroll, bonus and related expenses
22,976
23,748
Accrued expenses
24,034
20,447
Other payables
24,287
23,654
Total current liabilities
455,433
481,885
Non-current liabilities
Deferred tax liability
5,117
4,799
Operating lease liability, non-current portion
4,052
66
Severance liabilities
22,269
22,159
Other non-current liabilities
2,181
2,081
Total non-current liabilities
33,619
29,105
Total Liabilities
489,052
510,990
Shareholders’ equity
Preferred shares (5,000,000 shares authorized, $0.01 par value; no shares issued and outstanding as of September 29, 2023 and June 30, 2023)
—
—
Ordinary shares (500,000,000 shares authorized, $0.01 par value; 39,430,970 shares and 39,284,176 shares issued at September 29, 2023 and June 30, 2023, respectively; and 36,330,476 shares and 36,183,682 shares outstanding at September 29, 2023 and June 30, 2023, respectively)
394
393
Additional paid-in capital
202,432
206,624
Less: Treasury shares (3,100,494 shares as of September 29, 2023 and June 30, 2023)
(194,833
)
(194,833
)
Accumulated other comprehensive income (loss)
(7,502
)
(8,115
)
Retained earnings
1,529,678
1,464,589
Total Shareholders’ Equity
1,530,169
1,468,658
Total Liabilities and Shareholders’ Equity
$
2,019,221
$
1,979,648
FABRINET
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited)
Three Months Ended
(in thousands of U.S. dollars, except per share data)
September 29, 2023
September 30, 2022
Revenues
$
685,477
$
655,429
Cost of revenues
(601,073
)
(572,673
)
Gross profit
84,404
82,756
Selling, general and administrative expenses
(20,429
)
(20,565
)
Operating income
63,975
62,191
Interest income
5,898
1,559
Interest expense
(45
)
(391
)
Foreign exchange gain (loss), net
415
2,085
Other income (expense), net
(80
)
(141
)
Income before income taxes
70,163
65,303
Income tax expense
(5,074
)
(688
)
Net income
65,089
64,615
Other comprehensive income (loss), net of tax:
Change in net unrealized gain (loss) on available-for-sale securities
948
(1,461
)
Change in net unrealized gain (loss) on derivative instruments
(561
)
(1,218
)
Change in net retirement benefits plan – prior service cost
126
168
Change in foreign currency translation adjustment
100
246
Total other comprehensive income (loss), net of tax
613
(2,265
)
Net comprehensive income
$
65,702
$
62,350
Earnings per share
Basic
$
1.80
$
1.77
Diluted
$
1.78
$
1.76
Weighted-average number of ordinary shares outstanding (thousands of shares)
Basic
36,256
36,528
Diluted
36,481
36,758
FABRINET
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three Months Ended
(in thousands of U.S. dollars)
September 29, 2023
September 30, 2022
Cash flows from operating activities
Net income for the period
$
65,089
$
64,615
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization
11,961
11,055
(Gain) loss on disposal and impairment of property, plant and equipment and intangibles
12
(9
)
(Gain) loss from sales and maturities of available-for-sale securities
—
92
Amortization of discount (premium) of short-term investments
(596
)
442
(Reversal of) allowance for doubtful accounts
803
(91
)
Unrealized loss (gain) on exchange rate and fair value of foreign currency forward contracts
(52
)
(386
)
Amortization of fair value at hedge inception of interest rate swaps
(88
)
(191
)
Share-based compensation
7,733
7,723
Deferred income tax
1,377
(219
)
Other non-cash expenses
222
(439
)
Changes in operating assets and liabilities
Trade accounts receivable
(4,138
)
(24,476
)
Inventories
79,481
28,808
Other current assets and non-current assets
3,238
(10,661
)
Trade accounts payable
(24,397
)
(29,774
)
Income tax payable
963
(276
)
Severance liabilities
706
617
Other current liabilities and non-current liabilities
2,735
13,804
Net cash provided by operating activities
145,049
60,634
Cash flows from investing activities
Purchase of short-term investments
(77,692
)
(25,609
)
Proceeds from sales of short-term investments
—
30,000
Proceeds from maturities of short-term investments
35,909
29,236
Purchase of property, plant and equipment
(11,435
)
(10,258
)
Purchase of intangibles
(180
)
(11
)
Proceeds from disposal of property, plant and equipment
318
9
Net cash used in investing activities
(53,080
)
23,367
Cash flows from financing activities
Repayment of long-term borrowings
(3,047
)
(6,094
)
Repayment of finance lease liability
—
(2
)
Repurchase of ordinary shares
—
(4,900
)
Withholding tax related to net share settlement of restricted share units
(12,147
)
(16,489
)
Net cash used in financing activities
(15,194
)
(27,485
)
Net increase (decrease) in cash, cash equivalents and restricted cash
$
76,775
$
56,516
Movement in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at the beginning of period
$
231,368
$
198,365
Increase (decrease) in cash, cash equivalents and restricted cash
76,775
56,516
Effect of exchange rate on cash, cash equivalents and restricted cash
195
520
Cash, cash equivalents and restricted cash at the end of period
$
308,338
$
255,401
Non-cash investing and financing activities
Construction, software and equipment-related payables
$
9,313
$
12,541
FABRINET
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Continued)
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:
As of
(in thousands)
September 29, 2023
September 30, 2022
Cash and cash equivalents
$
308,338
$
255,260
Restricted cash
—
141
Cash, cash equivalents and restricted cash
$
308,338
$
255,401
FABRINET
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
Three Months Ended
September 29, 2023
September 30, 2022
(in thousands of U.S. dollars, except share data)
Net income
Diluted EPS
Net income
Diluted EPS
GAAP measures
$
65,089
$
1.78
$
64,615
$
1.76
Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses
2,165
0.06
1,915
0.05
Total related to gross profit
2,165
0.06
1,915
0.05
Related to selling, general and administrative expenses:
Share-based compensation expenses
5,568
0.16
5,808
0.16
Amortization of intangibles
—
—
83
0.00
Total related to selling, general and administrative expenses
5,568
0.16
5,891
0.16
Related to other income and expense:
Amortization of deferred debt issuance costs
8
0.00
8
0.00
Total related to other income and expense
8
0.00
8
0.00
Total related to net income & EPS
7,741
0.22
7,814
0.21
Non-GAAP measures
$
72,830
$
2.00
$
72,429
$
1.97
Shares used in computing diluted net income per share
GAAP diluted shares
36,481
36,758
Non-GAAP diluted shares
36,481
36,758
FABRINET
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(in thousands)
Three Months Ended
September 29, 2023
September 30, 2022
Net cash provided by operating activities
$
145,049
$
60,634
Less: Purchase of property, plant and equipment
(11,435
)
(10,258
)
Non-GAAP free cash flow
$
133,614
$
50,376
FABRINET
GUIDANCE FOR QUARTER ENDING DECEMBER 29, 2023
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
Diluted
EPS
GAAP net income per diluted share:
$1.78 to $1.85
Related to cost of revenues:
Share-based compensation expenses
0.05
Total related to gross profit
0.05
Related to selling, general and administrative expenses:
Share-based compensation expenses
0.15
Total related to selling, general and administrative expenses
0.15
Total related to net income & EPS
0.20
Non-GAAP net income per diluted share
$1.98 to $2.05
View source version on businesswire.com: https://www.businesswire.com/news/home/20231106364428/en/
Investor Contact: Garo Toomajanian ir@fabrinet.com
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