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Fabrinet Announces First Quarter Fiscal Year 2025 Financial Results
Globe Newswire 4-Nov-2024 4:15 PM
BANGKOK, Nov. 04, 2024 (GLOBE NEWSWIRE) -- 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 fiscal first quarter ended September 27, 2024.
Seamus Grady, Chief Executive Officer of Fabrinet, said, "We started fiscal year 2025 with significant momentum across our business. Record revenue of $804 million increased 17% from a year ago and was above our guidance range. We saw revenue growth from every product area, including our first telecom revenue growth in several quarters. Strong margins coupled with our revenue performance helped produce earnings per share at the upper end of our guidance range. We are optimistic that our strong business momentum and execution will extend into the fiscal second quarter as we continue to expand on our leadership in the market."
First Quarter Fiscal Year 2025 Financial Highlights
GAAP Results
Revenue for the first quarter of fiscal year 2025 was $804.2 million, compared to $685.5 million for the first quarter of fiscal year 2024.
GAAP net income for the first quarter of fiscal year 2025 was $77.4 million, compared to $65.1 million for the first quarter of fiscal year 2024.
GAAP net income per diluted share for the first quarter of fiscal year 2025 was $2.13, compared to $1.78 for the first quarter of fiscal year 2024.
Non-GAAP Results
Non-GAAP net income for the first quarter of fiscal year 2025 was $86.9 million, compared to $72.8 million for the first quarter of fiscal year 2024.
Non-GAAP net income per diluted share for the first quarter of fiscal year 2025 was $2.39, compared to $2.00 for the first quarter of fiscal year 2024.
Business Outlook
Based on information available as of November 4, 2024, Fabrinet is issuing guidance for its second fiscal quarter ending December 27, 2024, as follows:
Fabrinet expects second quarter revenue to be in the range of $800 million to $820 million.
GAAP net income per diluted share is expected to be in the range of $2.20 to $2.28, based on approximately 36.4 million fully diluted shares outstanding.
Non-GAAP net income per diluted share is expected to be in the range of $2.44 to $2.52, based on approximately 36.4 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 First Quarter Fiscal Year 2025 Financial Results Call
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 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
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 numerous drivers position us to extend our track record of success into the fiscal 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 2025. 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, automotive, 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 20, 2024. We disclaim any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with GAAP, we provide investors with certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. We believe these non-GAAP financial measures provide investors with useful supplemental information 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, we use some of these non-GAAP financial measures to measure company performance for the purposes of determining employee incentive plan compensation.
Non-GAAP gross profit, non-GAAP operating profit, non-GAAP net income and non-GAAP net income per diluted share exclude: share-based compensation expenses; 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.
Non-GAAP free cash flow is net cash provided by (used in) operating activities, minus capital expenditures (purchase of property, plant and equipment). We use free cash flow to measure our ability to generate additional cash from our business operations.
There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. We urge you to review the reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.
(in thousands of U.S. dollars, except share data and par value)
September 27, 2024
June 28, 2024
(unaudited)
Assets
Current assets
Cash and cash equivalents
$
400,684
$
409,973
Short-term investments
508,193
448,630
Trade accounts receivable, net of allowance for expected credit losses of $1,954 and $1,629, respectively
662,692
592,452
Inventories
440,405
463,206
Prepaid expenses
9,426
10,620
Other current assets
87,538
87,810
Total current assets
2,108,938
2,012,691
Non-current assets
Property, plant and equipment, net
311,241
307,240
Intangibles, net
2,201
2,321
Operating right-of-use assets
5,133
5,336
Deferred tax assets
10,902
10,446
Other non-current assets
598
485
Total non-current assets
330,075
325,828
Total Assets
$
2,439,013
$
2,338,519
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable
427,892
441,835
Fixed assets payable
10,166
14,380
Operating lease liabilities, current portion
1,416
1,355
Income tax payable
4,377
3,937
Accrued payroll, bonus and related expenses
26,658
22,116
Accrued expenses
30,519
19,916
Other payables
74,950
54,403
Total current liabilities
575,978
557,942
Non-current liabilities
Deferred tax liability
2,023
4,895
Operating lease liability, non-current portion
3,434
3,635
Severance liabilities
28,053
24,093
Other non-current liabilities
2,925
2,209
Total non-current liabilities
36,435
34,832
Total Liabilities
612,413
592,774
Shareholders' equity
Preferred shares ($5,000,000 shares authorized, $0.01 par value; no shares issued and outstanding as of September 27, 2024 and June 28, 2024)
—
—
Ordinary shares ($500,000,000 shares authorized, $0.01 par value; 39,579,859 shares and 39,457,462 shares issued as of September 27, 2024 and June 28, 2024, respectively; and 36,267,639 shares and 36,145,242 shares outstanding as of September 27, 2024 and June 28, 2024, respectively)
396
395
Additional paid-in capital
210,505
222,044
Less: Treasury shares (3,312,220 shares as of September 27, 2024 and June 28, 2024)
(234,323
)
(234,323
)
Accumulated other comprehensive income (loss)
11,858
(3,141
)
Retained earnings
1,838,164
1,760,770
Total Shareholders' Equity
1,826,600
1,745,745
Total Liabilities and Shareholders' Equity
$
2,439,013
$
2,338,519
FABRINET CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
Three Months Ended
(in thousands of U.S. dollars, except per share data)
September 27, 2024
September 29, 2023
Revenues
$
804,228
$
685,477
Cost of revenues
(705,202
)
(601,073
)
Gross profit
99,026
84,404
Selling, general and administrative expenses
(22,031
)
(20,429
)
Restructuring and other related costs
(57
)
—
Operating income
76,938
63,975
Interest income
10,933
5,898
Interest expense
—
(45
)
Foreign exchange gain (loss), net
(7,095
)
415
Other income (expense), net
(19
)
(80
)
Income before income taxes
80,757
70,163
Income tax expense
(3,363
)
(5,074
)
Net income
77,394
65,089
Other comprehensive income (loss), net of tax:
Change in net unrealized gain (loss) on available-for-sale securities
6,818
948
Change in net unrealized gain (loss) on derivative instruments
8,533
(561
)
Change in net retirement benefits plan – prior service cost
—
126
Change in foreign currency translation adjustment
(352
)
100
Total other comprehensive income (loss), net of tax
14,999
613
Net comprehensive income
$
92,393
$
65,702
Earnings per share
Basic
$
2.14
$
1.80
Diluted
$
2.13
$
1.78
Weighted-average number of ordinary shares outstanding (in thousands of shares)
Basic
36,203
36,256
Diluted
36,408
36,481
FABRINET CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended
(in thousands of U.S. dollars)
September 27, 2024
September 29, 2023
Cash flows from operating activities
Net income for the period
$
77,394
$
65,089
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization
12,752
11,961
(Gain) loss on disposal of property, plant and equipment and intangibles
10
12
Amortization of discount (premium) of short-term investments
(1,087
)
(596
)
(Reversal of) allowance for expected credit losses
325
803
Unrealized loss (gain) on exchange rate and fair value of foreign currency forward contracts
6,204
(52
)
Amortization of fair value at hedge inception of interest rate swaps
—
(88
)
Share-based compensation
8,682
7,733
Deferred income tax expense (benefit)
(2,721
)
1,377
Other non-cash expenses
9
222
Changes in operating assets and liabilities
Trade accounts receivable
(69,396
)
(4,138
)
Inventories
22,801
79,481
Other current assets and non-current assets
1,205
3,238
Trade accounts payable
(17,412
)
(24,397
)
Income tax payable
467
963
Accrued expenses
21,902
2,668
Other payables
18,236
543
Severance liabilities
639
706
Other current liabilities and non-current liabilities
3,172
(476
)
Net cash provided by operating activities
83,182
145,049
Cash flows from investing activities
Purchase of short-term investments
(95,572
)
(77,692
)
Proceeds from maturities of short-term investments
43,914
35,909
Purchase of property, plant and equipment
(20,250
)
(11,435
)
Purchase of intangibles
(122
)
(180
)
Proceeds from disposal of property, plant and equipment
36
318
Net cash used in investing activities
(71,994
)
(53,080
)
Cash flows from financing activities
Repayment of long-term borrowings
—
(3,047
)
Withholding tax related to net share settlement of restricted share units
(20,220
)
(12,147
)
Net cash used in financing activities
(20,220
)
(15,194
)
Net increase (decrease) in cash and cash equivalents
$
(9,032
)
$
76,775
Movement in cash and cash equivalents
Cash and cash equivalents at the beginning of period
$
409,973
$
231,368
Increase (decrease) in cash and cash equivalents
(9,032
)
76,775
Effect of exchange rate on cash and cash equivalents
(257
)
195
Cash and cash equivalents at the end of period
$
400,684
$
308,338
Non-cash investing and financing activities
Construction, software and equipment-related payables
$
10,166
$
9,313
FABRINET RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED)
Reconciliation of GAAP Gross Profit and GAAP Gross Margin to Non-GAAP Gross Profit and Non-GAAP Gross Margin
Three Months Ended
(in thousands of U.S. dollars)
September 27, 2024
September 29, 2023
Revenues
$
804,228
$
685,477
Gross profit (GAAP)
$
99,026
12.3
%
$
84,404
12.3
%
Share-based compensation expenses
2,898
2,165
Gross profit (Non-GAAP)
$
101,924
12.7
%
$
86,569
12.6
%
Reconciliation of GAAP Operating Profit and GAAP Operating Margin to Non-GAAP Operating Profit and Non-GAAP Operating Margin
Three Months Ended
(in thousands of U.S. dollars)
September 27, 2024
September 29, 2023
Revenues
$
804,228
$
685,477
Operating profit (GAAP)
$
76,938
9.6
%
$
63,975
9.3
%
Share-based compensation expenses
8,682
7,733
Severance payment and others
730
—
Restructuring and other related costs
57
—
Operating profit (Non-GAAP)
$
86,407
10.7
%
$
71,708
10.5
%
FABRINET RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED)
Reconciliation of GAAP Net Income and EPS to Non-GAAP Net Income and EPS
Three Months Ended
September 27, 2024
September 29, 2023
(in thousands of U.S. dollars, except per share data)
Net income
Diluted EPS
Net income
Diluted EPS
GAAP measures
$
77,394
$
2.13
$
65,089
$
1.78
Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses
2,898
0.08
2,165
0.06
Total related to cost of revenues
2,898
0.08
2,165
0.06
Related to selling, general and administrative expenses:
Share-based compensation expenses
5,784
0.16
5,568
0.16
Severance payment and others
730
0.02
—
—
Total related to selling, general and administrative expenses
6,514
0.18
5,568
0.16
Related to other income and expense:
Restructuring and other related costs
57
0.00
—
—
Amortization of deferred debt issuance costs
—
—
8
0.00
Total related to other income and expense
57
0.00
8
0.00
Total related to net income & EPS
9,469
0.26
7,741
0.22
Non-GAAP measures
$
86,863
$
2.39
$
72,830
$
2.00
Shares used in computing diluted net income per share (in thousands of shares)
GAAP diluted shares
36,408
36,481
Non-GAAP diluted shares
36,408
36,481
FABRINET RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW (UNAUDITED)
(in thousands of U.S. dollars)
Three Months Ended
September 27, 2024
September 29, 2023
Net cash provided by operating activities
$
83,182
$
145,049
Less: Purchase of property, plant and equipment
(20,250
)
(11,435
)
Non-GAAP free cash flow
$
62,932
$
133,614
FABRINET GUIDANCE FOR QUARTER ENDING DECEMBER 27, 2024 RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
Diluted EPS
GAAP net income per diluted share
$2.20 to $2.28
Related to cost of revenues:
Share-based compensation expenses
0.08
Total related to cost of revenues
0.08
Related to selling, general and administrative expenses:
Share-based compensation expenses
0.16
Total related to selling, general and administrative expenses
