- Record First Quarter Revenue of $543.3 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
first fiscal quarter ended September 24, 2021.
Seamus Grady, Chief Executive Officer of Fabrinet, said, “We had
a strong start to fiscal 2022 with revenue and profitability that
exceeded our guidance. By working in close partnership with our
customers and suppliers, our supply chain team was effective at
reducing the impact of component shortages on our business,
particularly in the optical communications market.”
Grady continued, “We are optimistic about continued strong
demand across our business and are anticipating healthy sequential
growth despite ongoing supply chain headwinds.”
First Quarter Fiscal Year 2022 Financial Highlights
GAAP Results
- Revenue for the first quarter of fiscal year 2022 was $543.3
million, compared to $436.6 million in the first quarter of fiscal
year 2021.
- GAAP net income for the first quarter of fiscal year 2022 was
$44.7 million, compared to GAAP net income of $33.1 million for the
first quarter of fiscal year 2021.
- GAAP net income per diluted share for the first quarter of
fiscal year 2022 was $1.20, compared to GAAP net income per diluted
share of $0.88 for the first quarter of fiscal year 2021.
Non-GAAP Results
- Non-GAAP net income for the first quarter of fiscal year 2022
was $54.2 million, compared to non-GAAP net income of $39.3 million
for the first quarter of fiscal year 2021.
- Non-GAAP net income per diluted share for the first quarter of
fiscal year 2022 was $1.45, compared to non-GAAP net income per
diluted share of $1.05 for the first quarter of fiscal year
2021.
Business Outlook
Based on information available as of November 1, 2021, Fabrinet
is issuing guidance for its second fiscal quarter ending December
24, 2021, as follows:
- Fabrinet expects second quarter revenue to be in the range of
$540 million to $560 million.
- GAAP net income per diluted share is expected to be in the
range of $1.24 to $1.31, based on approximately 37.6 million fully
diluted shares outstanding.
- Non-GAAP net income per diluted share is expected to be in the
range of $1.42 to $1.49, based on approximately 37.6 million fully
diluted shares outstanding.
Conference Call Information
What:
Fabrinet First Quarter Fiscal Year 2022
Financial Results Call
When:
Monday, November 1, 2021
Time:
5:00 p.m. ET
Live Call:
(888) 357-3694, domestic
(253) 237-1137, international
Passcode: 2790505
Replay:
(855) 859-2056, domestic
(404) 537-3406, international
Passcode: 2790505
Webcast:
http://investor.fabrinet.com/ (live and
replay)
This press release and any other information related to the call
will also be posted on Fabrinet’s website at http://
investor.fabrinet.com. A recorded version of this webcast will be
available approximately two hours after the call and 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,
Israel and the United Kingdom. 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 about continued
strong demand across our business and sequential growth; 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 2022. 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
effects of the COVID-19 pandemic on our business, particularly the
possibility of (1) the growing global economic downturn, (2)
extended shutdowns at any of our manufacturing facilities,
especially if the pandemic intensifies or returns in various
geographic areas, (3) continued disruption to our supply chain,
which could increase our costs and affect our ability to procure
parts and materials, especially if the pandemic intensifies or
returns in various geographic areas, and (4) regional downward
demand adjustments from our customers, particularly those in areas
affected by the pandemic; 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 Annual
Report on Form 10-K filed with the SEC on August 17, 2021. 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; 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)
September 24,
2021
June 25, 2021
Assets
Current assets
Cash and cash equivalents
$
269,911
$
302,969
Short-term investments
258,501
244,963
Trade accounts receivable, net of
allowance for doubtful accounts of $99 and $100 respectively
346,689
336,547
Contract assets
13,120
11,878
Inventories
465,251
422,133
Prepaid expenses
10,404
11,398
Other current assets
24,729
22,619
Total current assets
1,388,605
1,352,507
Non-current assets
Long-term restricted cash
155
154
Property, plant and equipment, net
271,659
241,129
Intangibles, net
4,107
4,371
Operating right-of-use assets
6,086
6,699
Deferred tax assets
9,491
9,428
Other non-current assets
518
1,834
Total non-current assets
292,016
263,615
Total Assets
1,680,621
1,616,122
Liabilities and Shareholders’ Equity
Current liabilities
Long-term borrowings, current portion,
net
12,156
12,156
Trade accounts payable
373,663
346,555
Fixed assets payable
24,174
19,206
Contract liabilities
1,755
1,680
Operating lease liabilities, current
portion
2,613
2,593
Income tax payable
2,776
3,612
Accrued payroll, bonus and related
expenses
19,336
20,464
Accrued expenses
20,147
17,134
Other payables
22,599
20,958
Total current liabilities
479,219
444,358
Non-current liabilities
Long-term borrowings, non-current portion,
net
24,319
27,358
Deferred tax liability
5,425
5,107
Operating lease liability, non-current
portion
3,220
3,850
Severance liabilities
19,157
19,485
Other non-current liabilities
3,279
3,444
Total non-current liabilities
55,400
59,244
Total Liabilities
534,619
503,602
Shareholders’ equity
Preferred shares (5,000,000 shares
authorized, $0.01 par value; no shares issued and outstanding as of
September 24, 2021 and June 25, 2021)
Ordinary shares (500,000,000 shares
authorized, $0.01 par value; 39,000,843 shares and 38,749,045
shares issued at September 24, 2021 and June 25, 2021,
respectively; and 37,017,254 shares and 36,765,456 shares
outstanding at September 24, 2021 and June 25, 2021,
respectively)
390
388
Additional paid-in capital
179,670
189,445
Less: Treasury shares (1,983,589 shares
and 1,983,589 shares as of September 24, 2021 and June 25, 2021,
respectively)
(87,343)
(87,343)
Accumulated other comprehensive income
(loss)
(7,662)
(6,266)
Retained earnings
1,060,947
1,016,296
Total Shareholders’ Equity
1,146,002
1,112,520
Total Liabilities and Shareholders’
Equity
$
1,680,621
$
1,616,122
FABRINET
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(unaudited)
(in thousands of U.S. dollars,
except per share data)
Three Months Ended
September 24, 2021
September 25, 2020
Revenues
$
543,322
$
436,639
Cost of revenues
(479,725)
(386,159)
Gross profit
63,597
50,480
Selling, general and administrative
expenses
(20,587)
(16,863)
Operating income
43,010
33,617
Interest income
761
1,104
Interest expense
(36)
(251)
Foreign exchange gain (loss), net
1,772
128
Other income (expense), net
(260)
121
Income before income taxes
45,247
34,719
Income tax expense
(596)
(1,668)
Net income
44,651
33,051
Other comprehensive income (loss), net of
tax:
Change in net unrealized gain (loss) on
available-for-sale securities
(213)
(325)
Change in net unrealized gain (loss) on
derivative instruments
(1,217)
(3,208)
Change in net retirement benefits plan –
prior service cost
198
173
Change in foreign currency translation
adjustment
(164)
603
Total other comprehensive income (loss),
net of tax
(1,396)
(2,757)
Net comprehensive income (loss)
$
43,255
$
30,294
Earnings per share
Basic
$
1.21
$
0.90
Diluted
$
1.20
$
0.88
Weighted-average number of ordinary
shares outstanding (thousands of shares)
Basic
36,877
36,818
Diluted
37,328
37,383
FABRINET
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
(in thousands of U.S. dollars)
Three Months Ended
September 24, 2021
September 25, 2020
Cash flows from operating
activities
Net income for the period
$
44,651
$
33,051
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization
9,535
8,570
(Gain) loss on disposal of property, plant
and equipment
(98)
(19)
(Gain) loss from sales and maturities of
available-for-sale securities
(13)
—
Amortization of investment discount
1,109
481
Amortization of deferred debt issuance
costs
8
8
(Reversal of) allowance for doubtful
accounts
(1)
(257)
Unrealized (gain) loss on exchange rate
and fair value of foreign currency forward contracts
(1,436)
(890)
Amortization of fair value at hedge
inception of interest rate swaps
(268)
(359)
Share-based compensation
9,292
6,027
Deferred income tax
(104)
56
Other non-cash expenses
257
96
Changes in operating assets and
liabilities
Trade accounts receivable
(10,160)
(16,497)
Contract assets
(1,242)
1,499
Inventories
(43,135)
(29,643)
Other current assets and non-current
assets
(385)
7,812
Trade accounts payable
27,541
33,546
Contract liabilities
75
(590)
Income tax payable
(747)
871
Severance liabilities
893
745
Other current liabilities and non-current
liabilities
3,243
(10,001)
Net cash provided by operating
activities
39,015
34,506
Cash flows from investing
activities
Purchase of short-term investments
(78,101)
(79,103)
Proceeds from sales of short-term
investments
19,463
Proceeds from maturities of short-term
investments
43,791
33,750
Purchase of property, plant and
equipment
(34,616)
(12,572)
Purchase of intangibles
(321)
(530)
Proceeds from disposal of property, plant
and equipment
145
21
(49,639)
(58,434)
Cash flows from financing
activities
Repayment of long-term borrowings
(3,047)
(3,047)
Repayment of finance lease liability
(100)
Withholding tax related to net share
settlement of restricted share units
(19,065)
(9,920)
Net cash used in financing activities
(22,112)
(13,067)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(32,736)
(36,995)
Movement in cash, cash equivalents and
restricted cash
Cash, cash equivalents and restricted cash
at the beginning of period
303,123
232,832
Increase (decrease) in cash, cash
equivalents and restricted cash
(32,736)
(36,995)
Effect of exchange rate on cash, cash
equivalents and restricted cash
(321)
766
Cash, cash equivalents and restricted
cash at the end of period
270,066
196,603
Non-cash investing and financing
activities
Construction, software and
equipment-related payables
$
24,174
$
9,616
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 unaudited condensed consolidated balance sheets
that sum to the total of the same amounts shown in the unaudited
condensed consolidated statements of cash flows:
As of
September 24,
September 25,
(amount in thousands)
2021
2020
Cash and cash equivalents
$
269,911
$
189,201
Restricted cash
155
7,402
Cash, cash equivalents and restricted
cash
$
270,066
$
196,603
FABRINET
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
(in thousands of U.S. dollars, except per
share data)
Three Months Ended
September 24, 2021
September 25, 2020
Net income
Diluted EPS
Net income
Diluted EPS
GAAP measures
$
44,651
$
1.20
$
33,051
$
0.88
Items reconciling GAAP net income &
EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses
1,975
0.05
1,825
0.05
Depreciation of fair value uplift
92
0.00
84
0.00
Total related to gross profit
2,067
0.05
1,909
0.05
Related to selling, general and
administrative expenses:
Share-based compensation expenses
7,317
0.20
4,202
0.11
Amortization of intangibles
119
0.00
131
0.00
Total related to selling, general and
administrative expenses
7,436
0.20
4,333
0.12
Related to other incomes and other
expenses:
Amortization of deferred debt issuance
costs
8
0.00
8
0.00
Total related to other incomes and other
expenses
8
0.00
8
0.00
Total related to net income & EPS
9,511
0.25
6,250
0.17
Non-GAAP measures
54,162
$
1.45
39,301
$
1.05
Shares used in computing diluted net
income per share (thousands of shares)
GAAP diluted shares
37,328
37,383
Non-GAAP diluted shares
37,328
37,383
FABRINET
RECONCILIATION OF NET CASH
PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(amount in thousands)
Three Months Ended
September 24,
September 25,
2021
2020
Net cash provided by operating
activities
$
39,015
$
34,506
Less: Purchase of property, plant and
equipment
(34,616)
(12,572)
Non-GAAP free cash flow
$
4,399
$
21,934
FABRINET
GUIDANCE FOR QUARTER ENDING
DECEMBER 24, 2021
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
Diluted EPS
GAAP net income per diluted share:
$1.24 to $1.31
Related to cost of revenues:
Share-based compensation expenses
0.04
Total related to gross profit
0.04
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
0.18
Non-GAAP net income per diluted share
$1.42 to $1.49
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version on businesswire.com: https://www.businesswire.com/news/home/20211101005989/en/
Investor Contact: Garo Toomajanian ir@fabrinet.com
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