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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 | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 219.77 | 2 | 12:05:57 |
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 second fiscal quarter ended December 29, 2023.
Seamus Grady, Chief Executive Officer of Fabrinet, said, “Our strong second quarter results exceeded our guidance ranges and also represented record levels for revenue and net income per share. We continued to see strong datacom revenue growth, which helped drive our overall top line performance. We remain confident that newer datacom programs will significantly contribute to our results as we look ahead. Telecom revenue moderated by a smaller amount than anticipated in the quarter, and we are optimistic that the impact of ongoing inventory adjustments in the telecom market could continue to diminish. With continued business momentum, we are well-positioned to extend our track record of strong execution into the third quarter.”
Second Quarter Fiscal Year 2024 Financial Highlights
GAAP Results
Non-GAAP Results
Business Outlook
Based on information available as of February 5, 2024, Fabrinet is issuing guidance for its third fiscal quarter ending March 29, 2024, 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 Second Quarter Fiscal Year 2024 Financial Results Call
When:
February 5, 2024
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 confidence that newer datacom programs will significantly contribute to future results; (2) our optimism that the impact of ongoing inventory adjustments in the telecom market could continue to diminish; (3) our ability to extend our strong execution into the third quarter of fiscal year 2024; and (4) 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 third 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 Quarterly Report on Form 10-Q filed with the SEC on November 7, 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)
December 29, 2023
June 30, 2023
Assets
Current assets
Cash and cash equivalents
$
334,053
$
231,368
Short-term investments
406,540
319,100
Trade accounts receivable, net of allowance for expected credit losses of $2,741 and $965, respectively
584,614
531,767
Inventories
414,758
519,576
Prepaid expenses
5,952
7,849
Other current assets
60,446
42,880
Total current assets
1,806,363
1,652,540
Non-current assets
Property, plant and equipment, net
306,019
310,350
Intangibles, net
2,549
2,394
Operating right-of-use assets
5,767
1,634
Deferred tax assets
11,804
12,095
Other non-current assets
636
635
Total non-current assets
326,775
327,108
Total Assets
$
2,133,138
$
1,979,648
Liabilities and Shareholders’ Equity
Current liabilities
Long-term borrowings, current portion, net
$
6,078
$
12,156
Trade accounts payable
376,556
381,129
Fixed assets payable
12,983
13,526
Operating lease liabilities, current portion
1,425
1,201
Income tax payable
7,581
6,024
Accrued payroll, bonus and related expenses
20,174
23,748
Accrued expenses
16,119
20,447
Other payables
45,861
23,654
Total current liabilities
486,777
481,885
Non-current liabilities
Deferred tax liability
4,546
4,799
Operating lease liability, non-current portion
3,956
66
Severance liabilities
24,505
22,159
Other non-current liabilities
1,972
2,081
Total non-current liabilities
34,979
29,105
Total Liabilities
521,756
510,990
Shareholders’ equity
Preferred shares (5,000,000 shares authorized, $0.01 par value; no shares issued and outstanding as of December 29, 2023 and June 30, 2023)
—
—
Ordinary shares (500,000,000 shares authorized, $0.01 par value; 39,435,354 shares and 39,284,176 shares issued as of December 29, 2023 and June 30, 2023, respectively; and 36,296,621 shares and 36,183,682 shares outstanding as of December 29, 2023 and June 30, 2023, respectively)
394
393
Additional paid-in capital
209,208
206,624
Less: Treasury shares (3,138,733 shares and 3,100,494 shares as of December 29, 2023 and June 30, 2023, respectively)
(201,205
)
(194,833
)
Accumulated other comprehensive income (loss)
4,197
(8,115
)
Retained earnings
1,598,788
1,464,589
Total Shareholders’ Equity
1,611,382
1,468,658
Total Liabilities and Shareholders’ Equity
$
2,133,138
$
1,979,648
FABRINET
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited)
Three Months Ended
Six Months Ended
(in thousands of U.S. dollars, except per share data)
December 29, 2023
December 30, 2022
December 29, 2023
December 30, 2022
Revenues
$
712,694
$
668,656
$
1,398,171
$
1,324,085
Cost of revenues
(624,364
)
(583,441
)
(1,225,437
)
(1,156,114
)
Gross profit
88,330
85,215
172,734
167,971
Selling, general and administrative expenses
(19,316
)
(18,930
)
(39,745
)
(39,495
)
Operating income
69,014
66,285
132,989
128,476
Interest income
7,748
2,334
13,646
3,893
Interest expense
(36
)
(389
)
(81
)
(780
)
Foreign exchange gain (loss), net
(3,788
)
(3,904
)
(3,373
)
(1,819
)
Other income (expense), net
(35
)
(68
)
(115
)
(209
)
Income before income taxes
72,903
64,258
143,066
129,561
Income tax expense
(3,793
)
(1,101
)
(8,867
)
(1,789
)
Net income
69,110
63,157
134,199
127,772
Other comprehensive income (loss), net of tax:
Change in net unrealized gain (loss) on available-for-sale securities
2,946
1,183
3,894
(278
)
Change in net unrealized gain (loss) on derivative instruments
8,951
11,188
8,390
9,970
Change in net retirement benefits plan – prior service cost
8
57
134
225
Change in foreign currency translation adjustment
(206
)
(84
)
(106
)
162
Total other comprehensive income (loss), net of tax
11,699
12,344
12,312
10,079
Net comprehensive income
$
80,809
$
75,501
$
146,511
$
137,851
Earnings per share
Basic
$
1.90
$
1.73
$
3.70
$
3.50
Diluted
$
1.89
$
1.71
$
3.67
$
3.47
Weighted-average number of ordinary shares outstanding (thousands of shares)
Basic
36,328
36,589
36,292
36,558
Diluted
36,639
36,939
36,560
36,848
FABRINET
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six Months Ended
(in thousands of U.S. dollars)
December 29, 2023
December 30, 2022
Cash flows from operating activities
Net income for the period
$
134,199
$
127,772
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization
24,186
21,596
(Gain) loss on disposal and impairment of property, plant and equipment and intangibles
(111
)
(337
)
(Gain) loss from sales and maturities of available-for-sale securities
(1
)
92
Amortization of discount (premium) of short-term investments
(1,397
)
565
(Reversal of) allowance for expected credit losses
1,776
251
Unrealized loss (gain) on exchange rate and fair value of foreign currency forward contracts
3,287
3,086
Amortization of fair value at hedge inception of interest rate swaps
(154
)
(346
)
Share-based compensation
14,714
14,498
Deferred income tax
1,117
(1,338
)
Other non-cash expenses
90
(305
)
Changes in operating assets and liabilities
Trade accounts receivable
(53,873
)
(80,054
)
Inventories
104,818
20,475
Other current assets and non-current assets
(16,360
)
(11,837
)
Trade accounts payable
(6,980
)
(4,176
)
Income tax payable
1,531
(577
)
Severance liabilities
1,395
1,269
Other current liabilities and non-current liabilities
20,977
14,466
Net cash provided by operating activities
229,214
105,100
Cash flows from investing activities
Purchase of short-term investments
(164,971
)
(74,482
)
Proceeds from sales of short-term investments
10,000
30,000
Proceeds from maturities of short-term investments
72,824
46,925
Purchase of property, plant and equipment
(21,236
)
(23,643
)
Purchase of intangibles
(518
)
(412
)
Proceeds from disposal of property, plant and equipment
2,048
32
Net cash used in investing activities
(101,853
)
(21,580
)
Cash flows from financing activities
Repayment of long-term borrowings
(6,094
)
(9,140
)
Repayment of finance lease liability
—
(5
)
Repurchase of ordinary shares
(6,372
)
(5,104
)
Withholding tax related to net share settlement of restricted share units
(12,352
)
(16,796
)
Net cash used in financing activities
(24,818
)
(31,045
)
Net increase (decrease) in cash, cash equivalents and restricted cash
$
102,543
$
52,475
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
102,543
52,475
Effect of exchange rate on cash, cash equivalents and restricted cash
142
(11
)
Cash, cash equivalents and restricted cash at the end of period
$
334,053
$
250,829
Non-cash investing and financing activities
Construction, software and equipment-related payables
$
12,983
$
18,920
FABRINET
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
Three Months Ended
Six Months Ended
December 29, 2023
December 30, 2022
December 29, 2023
December 30, 2022
(in thousands of U.S. dollars, except share data)
Net income
Diluted EPS
Net income
Diluted EPS
Net income
Diluted EPS
Net income
Diluted EPS
GAAP measures
$
69,110
$
1.89
$
63,157
$
1.71
$
134,199
$
3.67
$
127,772
$
3.47
Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses
1,701
0.05
1,660
0.05
3,866
0.11
3,576
0.10
Total related to gross profit
1,701
0.05
1,660
0.05
3,866
0.11
3,576
0.10
Related to selling, general and administrative expenses:
Share-based compensation expenses
5,280
0.14
5,115
0.14
10,848
0.30
10,922
0.29
Amortization of intangibles
—
—
71
0.00
—
—
154
0.01
Total related to selling, general and administrative expenses
5,280
0.14
5,186
0.14
10,848
0.30
11,076
0.30
Related to other income and expense:
Amortization of deferred debt issuance costs
8
0.00
8
0.00
16
0.00
16
0.00
Total related to other income and expense
8
0.00
8
0.00
16
0.00
16
0.00
Total related to net income & EPS
6,989
0.19
6,854
0.19
14,730
0.41
14,668
0.40
Non-GAAP measures
$
76,099
$
2.08
$
70,011
$
1.90
$
148,929
$
4.08
$
142,440
$
3.87
Shares used in computing diluted net income per share
GAAP diluted shares
36,639
36,939
36,560
36,848
Non-GAAP diluted shares
36,639
36,939
36,560
36,848
FABRINET
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(in thousands)
Three Months Ended
Six Months Ended
December 29, 2023
December 30, 2022
December 29, 2023
December 30, 2022
Net cash provided by operating activities
$
84,165
$
44,466
$
229,214
$
105,100
Less: Purchase of property, plant and equipment
(9,801
)
(13,385
)
(21,236
)
(23,643
)
Non-GAAP free cash flow
$
74,364
$
31,081
$
207,978
$
81,457
FABRINET
GUIDANCE FOR QUARTER ENDING MARCH 29, 2024
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
Diluted EPS
GAAP net income per diluted share:
$1.89 to $1.96
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
0.14
Total related to selling, general and administrative expenses
0.14
Total related to net income & EPS
0.19
Non-GAAP net income per diluted share
$2.08 to $2.15
View source version on businesswire.com: https://www.businesswire.com/news/home/20240205945777/en/
Investor Contact: Garo Toomajanian ir@fabrinet.com
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