- Record Third Quarter Revenue
of $665.3 Million Exceeds Guidance
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
third fiscal quarter ended March 31, 2023.
Seamus Grady, Chief Executive Officer of Fabrinet, said,
“Revenue in the third quarter was above our guidance range, and we
demonstrated the operating leverage inherent in our business model.
While near-term inventory adjustments are affecting some parts of
our business, the impacts are being somewhat offset by growth from
other customer programs and continued gradual improvements in
component availability. Our strong execution continues to benefit
our bottom line results and we remain well-positioned to extend our
success.”
Third Quarter Fiscal Year 2023 Financial Highlights
GAAP Results
- Revenue for the third quarter of fiscal year 2023 was $665.3
million, compared to $564.4 million for the third quarter of fiscal
year 2022.
- GAAP net income for the third quarter of fiscal year 2023 was
$59.4 million, compared to $50.7 million for the third quarter of
fiscal year 2022.
- GAAP net income per diluted share for the third quarter of
fiscal year 2023 was $1.60, compared to $1.35 for the third quarter
of fiscal year 2022.
Non-GAAP Results
- Non-GAAP net income for the third quarter of fiscal year 2023
was $71.8 million, compared to $56.2 million for the third quarter
of fiscal year 2022.
- Non-GAAP net income per diluted share for the third quarter of
fiscal year 2023 was $1.94, compared to $1.50 for the third quarter
of fiscal year 2022.
Business Outlook
Based on information available as of May 8, 2023, Fabrinet is
issuing guidance for its fourth fiscal quarter ending June 30,
2023, as follows:
- Fabrinet expects fourth quarter revenue to be in the range of
$630 million to $650 million.
- GAAP net income per diluted share is expected to be in the
range of $1.57 to $1.64, based on approximately 37.0 million fully
diluted shares outstanding.
- Non-GAAP net income per diluted share is expected to be in the
range of $1.76 to $1.83, based on approximately 37.0 million fully
diluted shares outstanding.
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 Third Quarter Fiscal Year 2023
Financial Results Call
When:
May 8, 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 success; 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 fourth quarter of fiscal year 2023. 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: the growing global 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, the U.S. and the U.K.); 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 February 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; depreciation of fair value uplift; amortization of
intangibles; severance payment and others; restructuring and other
related costs; 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, 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)
March 31, 2023
June 24, 2022
Assets
Current assets
Cash and cash equivalents
$230,743
$197,996
Short-term restricted cash
—
220
Short-term investments
307,980
280,157
Trade accounts receivable, net of
allowance for doubtful accounts of $1,031 and $1,271,
respectively
540,343
439,330
Contract assets
21,081
13,464
Inventories
554,247
557,145
Prepaid expenses
10,606
11,626
Other current assets
39,610
25,233
Total current assets
1,704,610
1,525,171
Non-current assets
Long-term restricted cash
—
149
Property, plant and equipment, net
308,365
292,277
Intangibles, net
2,471
3,508
Operating right-of-use assets
2,210
4,084
Deferred tax assets
10,487
9,800
Other non-current assets
658
652
Total non-current assets
324,191
310,470
Total Assets
$2,028,801
$1,835,641
Liabilities and Shareholders’
Equity
Current liabilities
Long-term borrowings, current portion,
net
$12,156
$12,156
Trade accounts payable
436,085
439,684
Fixed assets payable
20,116
9,085
Contract liabilities
3,249
1,982
Operating lease liabilities, current
portion
1,634
2,319
Income tax payable
2,785
2,898
Accrued payroll, bonus and related
expenses
28,899
20,374
Accrued expenses
23,428
24,758
Other payables
26,637
25,231
Total current liabilities
554,989
538,487
Non-current liabilities
Long-term borrowings, non-current portion,
net
3,039
15,202
Deferred tax liability
6,159
6,001
Operating lease liability, non-current
portion
235
1,476
Severance liabilities
21,267
18,384
Other non-current liabilities
1,531
2,409
Total non-current liabilities
32,231
43,472
Total Liabilities
587,220
581,959
Shareholders’ equity
Preferred shares (5,000,000 shares
authorized, $0.01 par value; no shares issued and outstanding as of
March 31, 2023 and June 24, 2022)
—
—
Ordinary shares (500,000,000 shares
authorized, $0.01 par value; 39,274,783 shares and 39,048,700
shares issued at March 31, 2023 and June 24, 2022, respectively;
and 36,578,909 shares and 36,436,683 shares outstanding at March
31, 2023 and June 24, 2022, respectively)
393
390
Additional paid-in capital
200,141
196,667
Less: Treasury shares (2,695,874 shares
and 2,612,017 shares as of March 31, 2023 and June 24, 2022,
respectively)
(156,475)
(147,258)
Accumulated other comprehensive income
(loss)
(6,281)
(12,793)
Retained earnings
1,403,803
1,216,676
Total Shareholders’ Equity
1,441,581
1,253,682
Total Liabilities and Shareholders’
Equity
$2,028,801
$1,835,641
FABRINET
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(unaudited)
Three Months Ended
Nine Months Ended
(in thousands of U.S. dollars, except per
share data)
March 31, 2023
March 25, 2022
March 31, 2023
March 25, 2022
Revenues
$665,281
$564,395
$1,989,366
$1,674,350
Cost of revenues
(579,274)
(493,702)
(1,735,388)
(1,470,689)
Gross profit
86,007
70,693
253,978
203,661
Selling, general and administrative
expenses
(18,309)
(17,034)
(57,804)
(55,412)
Restructuring and other related costs
(5,872)
—
(5,872)
(135)
Operating income
61,826
53,659
190,302
148,114
Interest income
3,317
414
7,210
1,470
Interest expense
(399)
(73)
(1,179)
(347)
Foreign exchange gain (loss), net
(1,303)
(410)
(3,122)
998
Other income (expense), net
31
(36)
(178)
(1,351)
Income before income taxes
63,472
53,554
193,033
148,884
Income tax expense
(4,117)
(2,893)
(5,906)
(4,693)
Net income
59,355
50,661
187,127
144,191
Other comprehensive income (loss), net of
tax:
Change in net unrealized gain (loss) on
available-for-sale securities
2,046
(2,455)
1,768
(3,615)
Change in net unrealized gain (loss) on
derivative instruments
(5,535)
666
4,435
2,743
Change in net retirement benefits plan –
prior service cost
113
124
338
448
Change in foreign currency translation
adjustment
(191)
(34)
(29)
(198)
Total other comprehensive income (loss),
net of tax
(3,567)
(1,699)
6,512
(622)
Net comprehensive income
$55,788
$48,962
$193,639
$143,569
Earnings per share
Basic
$1.62
$1.37
$5.12
$3.90
Diluted
$1.60
$1.35
$5.07
$3.85
Weighted-average number of ordinary
shares outstanding (thousands of shares)
Basic
36,608
36,940
36,575
36,945
Diluted
36,989
37,473
36,895
37,451
FABRINET
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended
(in thousands of U.S. dollars)
March 31, 2023
March 25, 2022
Cash flows from operating
activities
Net income for the period
$187,127
$144,191
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization
32,504
28,907
Non-cash restructuring charges and other
related costs
2,201
—
(Gain) loss on disposal and impairment of
property, plant and equipment
(1,630)
(175)
(Gain) loss from sales and maturities of
available-for-sale securities
92
(13)
Amortization of discount (premium) of
short-term investments
300
3,038
Amortization of deferred debt issuance
costs
24
24
(Reversal of) allowance for doubtful
accounts
(240)
(39)
Unrealized loss (gain) on exchange rate
and fair value of foreign currency forward contracts
693
(1,422)
Amortization of fair value at hedge
inception of interest rate swaps
(478)
(736)
Share-based compensation
21,217
21,701
Deferred income tax
(276)
563
Other non-cash expenses
(151)
1,067
Changes in operating assets and
liabilities
Trade accounts receivable
(98,212)
(109,334)
Contract assets
(7,617)
(1,690)
Inventories
2,720
(30,503)
Other current assets and non-current
assets
(11,807)
(11,221)
Trade accounts payable
(5,028)
55,333
Contract liabilities
1,267
243
Income tax payable
(262)
(872)
Severance liabilities
1,917
1,883
Other current liabilities and non-current
liabilities
17,861
6,952
Net cash provided by operating
activities
142,222
107,897
Cash flows from investing
activities
Purchase of short-term investments
(154,033)
(119,853)
Proceeds from sales of short-term
investments
30,179
19,463
Proceeds from maturities of short-term
investments
97,408
92,862
Purchase of property, plant and
equipment
(43,422)
(75,327)
Purchase of intangibles
(698)
(592)
Proceeds from disposal of property, plant
and equipment
117
229
Net cash used in investing activities
(70,449)
(83,218)
Cash flows from financing
activities
Repayment of long-term borrowings
(12,187)
(9,141)
Repayment of finance lease liability
(7)
—
Repurchase of ordinary shares
(9,217)
(28,624)
Withholding tax related to net share
settlement of restricted share units
(17,740)
(20,439)
Net cash used in financing activities
(39,151)
(58,204)
Net increase (decrease) in cash, cash
equivalents and restricted cash
$32,622
$(33,525)
Movement in cash, cash equivalents and
restricted cash
Cash, cash equivalents and restricted cash
at the beginning of period
$198,365
$303,123
Increase (decrease) in cash, cash
equivalents and restricted cash
32,622
(33,525)
Effect of exchange rate on cash, cash
equivalents and restricted cash
(244)
(301)
Cash, cash equivalents and restricted
cash at the end of period
$230,743
$269,297
Non-cash investing and financing
activities
Construction, software and
equipment-related payables
$20,116
$14,060
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)
March 31, 2023
March 25, 2022
Cash and cash equivalents
$230,743
$269,140
Restricted cash
—
157
Cash, cash equivalents and restricted
cash
$230,743
$269,297
FABRINET
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
Three Months Ended
Nine Months Ended
March 31, 2023
March 25, 2022
March 31, 2023
March 25, 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
$59,355
$1.60
$50,661
$1.35
$187,127
$5.07
$144,191
$3.85
Items reconciling GAAP net income &
EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses
1,453
0.04
1,183
0.03
5,028
0.14
4,579
0.12
Depreciation of fair value uplift
—
—
—
—
—
—
92
0.00
Total related to gross profit
1,453
0.04
1,183
0.03
5,028
0.14
4,671
0.12
Related to selling, general and
administrative expenses:
Share-based compensation expenses
5,080
0.14
4,540
0.12
16,003
0.43
17,122
0.46
Amortization of intangibles
70
0.00
101
0.00
224
0.01
328
0.01
Severance payment and others
—
—
(250)
0.00
—
—
105
0.00
Total related to selling, general and
administrative expenses
5,150
0.14
4,391
0.12
16,227
0.44
17,555
0.47
Related to other income and expense:
Restructuring and other related costs
5,872
0.16
—
—
5,872
0.16
135
0.01
Amortization of deferred debt issuance
costs
8
0.00
8
0.00
24
0.00
24
0.00
Total related to other income and
expense
5,880
0.16
8
0.00
5,896
0.16
159
0.01
Total related to net income & EPS
12,483
0.34
5,582
0.15
27,151
0.74
22,385
0.60
Non-GAAP measures
$71,838
$1.94
$56,243
$1.50
$214,278
$5.81
$166,576
$4.45
Shares used in computing diluted net
income per share
GAAP diluted shares
36,989
37,473
36,895
37,451
Non-GAAP diluted shares
36,989
37,473
36,895
37,451
FABRINET
RECONCILIATION OF NET CASH
PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(in thousands)
Three Months Ended
Nine Months Ended
March 31, 2023
March 25, 2022
March 31, 2023
March 25, 2022
Net cash provided by operating
activities
$37,122
$50,329
$142,222
$107,897
Less: Purchase of property, plant and
equipment
(19,779)
(23,410)
(43,422)
(75,327)
Non-GAAP free cash flow
$17,343
$26,919
$98,800
$32,570
FABRINET
GUIDANCE FOR QUARTER ENDING
JUNE 30, 2023
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
Diluted EPS
GAAP net income per diluted
share:
$1.57 to $1.64
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
$1.76 to $1.83
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230508005049/en/
Investor: Garo Toomajanian ir@fabrinet.com
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