Record Third Quarter Revenue of $479.3
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 26, 2021.
Seamus Grady, Chief Executive Officer of Fabrinet, said, “For
the third quarter in a row, we delivered record revenue that
exceeded our guidance. Notably, we saw sequential revenue growth
from all the end markets that we track combined with improving
operating margins, both of which helped generate record net
income.”
Grady continued, “Based on our current outlook and continued
demand, we expect another record performance in the fourth quarter
and we remain well-positioned to continue to deliver strong results
over the longer-term.”
Third Quarter Fiscal Year 2021 Financial Highlights
GAAP Results
- Revenue for the third quarter of fiscal year 2021 was $479.3
million, compared to $411.2 million in the third quarter of fiscal
year 2020.
- GAAP net income for the third quarter of fiscal year 2021 was
$37.5 million, compared to GAAP net income of $28.3 million for the
third quarter of fiscal year 2020.
- GAAP net income per diluted share for the third quarter of
fiscal year 2021 was $1.00, compared to GAAP net income per diluted
share of $0.75 for the third quarter of fiscal year 2020.
Non-GAAP Results
- Non-GAAP net income for the third quarter of fiscal year 2021
was $45.4 million, compared to non-GAAP net income of $34.8 million
for the third quarter of fiscal year 2020.
- Non-GAAP net income per diluted share for the third quarter of
fiscal year 2021 was $1.21, compared to non-GAAP net income per
diluted share of $0.92 for the third quarter of fiscal year
2020.
Business Outlook
Based on information available as of May 3, 2021, Fabrinet is
issuing guidance for its fourth fiscal quarter ending June 25,
2021, as follows:
- Fabrinet expects fourth quarter revenue to be in the range of
$475 million to $495 million.
- GAAP net income per diluted share is expected to be in the
range of $1.02 to $1.09, 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 $1.18 to $1.25, based on approximately 37.6 million fully
diluted shares outstanding.
Conference Call Information
What:
Fabrinet Third Quarter Fiscal Year 2021
Financial Results Call
When:
Monday, May 3, 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 that the fourth
quarter will represent another record performance for the company
and that we remain well-positioned to continue to deliver strong
results over the longer-term; 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 2021. 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
Quarterly Report on Form 10-Q, filed with the SEC on February 2,
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)
March 26,
2021
June 26,
2020
Assets
Current assets
Cash and cash equivalents
$
247,011
$
225,430
Short-term restricted cash
—
7,402
Short-term investments
261,736
262,693
Trade accounts receivable, net of
allowance for doubtful accounts of $126 and $336 respectively
309,079
272,665
Contract assets
17,130
13,256
Inventories
353,283
309,786
Other receivable
24,310
24,310
Prepaid expenses
10,653
5,399
Other current assets
31,967
14,508
Total current assets
1,255,169
1,135,449
Non-current assets
Long-term restricted cash
153
—
Property, plant and equipment, net
228,767
228,274
Intangibles, net
4,576
4,312
Operating right-of-use assets
6,744
8,068
Deferred tax assets
6,195
5,675
Other non-current assets
226
202
Total non-current assets
246,661
246,531
Total Assets
1,501,830
1,381,980
Liabilities and Shareholders’
Equity
Current liabilities
Long-term borrowings, current portion,
net
12,156
12,156
Trade accounts payable
275,705
251,603
Fixed assets payable
11,060
15,127
Contract liabilities
1,409
1,556
Operating lease liabilities, current
portion
2,390
1,979
Income tax payable
2,882
2,242
Accrued payroll, bonus and related
expenses
21,639
19,265
Accrued expenses
12,651
8,979
Other payables
26,348
21,514
Total current liabilities
366,240
334,421
Non-current liabilities
Long-term borrowings, non-current portion,
net
30,397
39,514
Deferred tax liability
4,855
4,729
Operating lease liability, non-current
portion
4,098
5,873
Severance liabilities
19,006
17,379
Other non-current liabilities
3,728
5,655
Total non-current liabilities
62,084
73,150
Total Liabilities
428,324
407,571
Shareholders’ equity
Preferred shares (5,000,000 shares
authorized, $0.01 par value; no shares issued and outstanding as of
March 26, 2021 and June 26, 2020)
—
—
Ordinary shares (500,000,000 shares
authorized, $0.01 par value; 38,741,166 shares and 38,471,967
shares issued at March 26, 2021 and June 26, 2020, respectively;
and 36,880,160 shares and 36,727,864 shares outstanding at March
26, 2021 and June 26, 2020, respectively)
388
385
Additional paid-in capital
182,987
175,610
Less: Treasury shares (1,861,006 shares
and 1,744,103 shares as of March 26, 2021 and June 26, 2020,
respectively)
(76,813
)
(68,501
)
Accumulated other comprehensive income
(loss)
(6,939
)
(1,147
)
Retained earnings
973,883
868,062
Total Shareholders’ Equity
1,073,506
974,409
Total Liabilities and Shareholders’
Equity
$
1,501,830
$
1,381,980
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 26,
2021
March 27,
2020
March 26,
2021
March 27,
2020
Revenues
$
479,317
$
411,210
$
1,369,783
$
1,236,723
Cost of revenues
(422,539
)
(366,874
)
(1,209,504
)
(1,097,242
)
Gross profit
56,778
44,336
160,279
139,481
Selling, general and administrative
expenses
(19,059
)
(17,111
)
(53,078
)
(50,189
)
Expenses related to reduction in
workforce
(43
)
—
(43
)
(16
)
Operating income
37,676
27,225
107,158
89,276
Interest income
941
2,042
3,156
6,080
Interest expense
(282
)
(238
)
(798
)
(2,812
)
Foreign exchange gain (loss), net
629
(8
)
224
(2,949
)
Other income (expense), net
124
203
403
977
Income before income taxes
39,088
29,224
110,143
90,572
Income tax expense
(1,595
)
(957
)
(4,215
)
(5,117
)
Net income
37,493
28,267
105,928
85,455
Other comprehensive income (loss), net of
tax:
Change in net unrealized gain (loss) on
available-for-sale securities
(570
)
(1,356
)
(937
)
(1,403
)
Change in net unrealized gain (loss) on
derivative instruments
(5,000
)
(6,569
)
(5,823
)
(6,719
)
Change in net retirement benefits plan –
prior service cost
198
294
421
478
Change in foreign currency translation
adjustment
90
(600
)
547
(353
)
Total other comprehensive income (loss),
net of tax
(5,282
)
(8,231
)
(5,792
)
(7,997
)
Net comprehensive income (loss)
$
32,211
$
20,036
$
100,136
$
77,458
Earnings per share
Basic
$
1.02
$
0.76
$
2.87
$
2.31
Diluted
$
1.00
$
0.75
$
2.82
$
2.27
Weighted-average number of ordinary
shares outstanding (thousands of shares)
Basic
36,875
36,987
36,876
36,970
Diluted
37,609
37,797
37,514
37,696
FABRINET
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended
(in thousands of U.S. dollars)
March 26,
2021
March 27,
2020
Cash flows from operating
activities
Net income for the period
$
105,928
$
85,455
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization
26,781
23,115
(Gain) loss on disposal of property, plant
and equipment
(24
)
444
(Gain) loss from sales and maturities of
available-for-sale securities
(187
)
(93
)
Amortization of investment discount
1,479
(624
)
Amortization of deferred debt issuance
costs
24
18
(Reversal of) allowance for doubtful
accounts
(317
)
(17
)
Unrealized (gain) loss on exchange rate
and fair value of foreign currency forward contracts
(825
)
942
Unrealized loss (gain) on fair value of
interest rate swaps
—
1,672
Amortization of fair value at hedge
inception of interest rate swaps
(1,009
)
(838
)
Share-based compensation
18,742
18,301
Deferred income tax
(382
)
1,335
Other non-cash expenses
(614
)
(559
)
Changes in operating assets and
liabilities
Trade accounts receivable
(36,437
)
(23,136
)
Contract assets
(3,874
)
(3,966
)
Inventories
(43,497
)
3,404
Other current assets and non-current
assets
(22,919
)
5,830
Trade accounts payable
25,589
(15,571
)
Contract liabilities
(147
)
(298
)
Income tax payable
911
1,056
Severance liabilities
2,204
2,266
Other current liabilities and non-current
liabilities
3,731
5,712
Net cash provided by operating
activities
75,157
104,448
Cash flows from investing
activities
Purchase of short-term investments
(183,041
)
(123,980
)
Proceeds from sales of short-term
investments
84,049
48,808
Proceeds from maturities of short-term
investments
97,721
97,358
Funds provided to customer to support
transfer of manufacturing operations
—
(24,310
)
Purchase of property, plant and
equipment
(29,061
)
(27,482
)
Purchase of intangibles
(1,961
)
(797
)
Proceeds from disposal of property, plant
and equipment
38
1,482
Net cash used in investing activities
(32,255
)
(28,921
)
Cash flows from financing
activities
Payment of debt issuance costs
—
(153
)
Proceeds from long-term borrowings
—
60,938
Repayment of long-term borrowings
(9,141
)
(67,032
)
Repayment of finance lease liability
(100
)
(304
)
Repurchase of ordinary shares
(8,312
)
(20,722
)
Withholding tax related to net share
settlement of restricted share units
(11,362
)
(4,727
)
Net cash used in financing activities
(28,915
)
(32,000
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
13,987
43,527
Movement in cash, cash equivalents and
restricted cash
Cash, cash equivalents and restricted cash
at the beginning of period
232,832
188,241
Increase (decrease) in cash, cash
equivalents and restricted cash
13,987
43,527
Effect of exchange rate on cash, cash
equivalents and restricted cash
345
(228
)
Cash, cash equivalents and restricted
cash at the end of period
247,164
231,540
Non-cash investing and financing
activities
Construction, software and
equipment-related payables
$
11,060
$
11,906
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
(amount in thousands)
March 26,
2021
March 27,
2020
Cash and cash equivalents
$
247,011
$
224,138
Restricted cash
153
7,402
Cash, cash equivalents and restricted
cash
$
247,164
$
231,540
FABRINET
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
Three Months Ended
Nine Months Ended
March 26,
2021
March 27,
2020
March 26,
2021
March 27,
2020
(in thousands of U.S. dollars, except per
share data)
Net
income
Diluted
EPS
Net
income
Diluted
EPS
Net
income
Diluted
EPS
Net
income
Diluted
EPS
GAAP measures
$
37,493
$
1.00
$
28,267
$
0.75
$
105,928
$
2.82
$
85,455
$
2.27
Items reconciling GAAP net income &
EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses
1,388
0.04
1,489
0.04
4,805
0.13
4,800
0.13
Depreciation of fair value uplift
89
0.00
86
0.00
256
0.00
247
0.00
Total related to gross profit
1,477
0.04
1,575
0.04
5,061
0.13
5,047
0.13
Related to selling, general and
administrative expenses:
Share-based compensation expenses
5,476
0.15
4,629
0.12
13,937
0.37
13,501
0.36
Amortization of intangibles
127
0.00
145
0.00
382
0.01
431
0.01
Severance payment
755
0.02
150
0.00
755
0.02
150
0.00
Total related to selling, general and
administrative expenses
6,358
0.17
4,924
0.13
15,074
0.40
14,082
0.37
Related to other incomes and other
expenses:
Other expenses in relation to reduction in
workforce
43
0.00
—
—
43
0.00
16
0.00
Amortization of deferred debt issuance
costs
8
0.00
8
0.00
24
0.00
18
0.00
Total related to other incomes and other
expenses
51
—
8
—
67
—
34
—
Total related to net income & EPS
7,886
0.21
6,507
0.17
20,202
0.54
19,163
0.51
Non-GAAP measures
$
45,379
$
1.21
$
34,774
$
0.92
$
126,130
$
3.36
$
104,618
$
2.78
Shares used in computing diluted net
income per share
GAAP diluted shares
37,609
37,797
37,514
37,696
Non-GAAP diluted shares
37,609
37,797
37,514
37,696
FABRINET
RECONCILIATION OF NET CASH
PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(amount in thousands)
Three Months Ended
Nine Months Ended
March 26,
2021
March 27,
2020
March 26,
2021
March 27,
2020
Net cash provided by operating
activities
$
33,843
$
51,838
$
75,157
$
104,448
Less: Purchase of property, plant and
equipment
(6,368
)
(12,071
)
(29,061
)
(27,482
)
Non-GAAP free cash flow
$
27,475
$
39,767
$
46,096
$
76,966
FABRINET
GUIDANCE FOR QUARTER ENDING
JUNE 25, 2021
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
Diluted
EPS
GAAP net income per diluted
share:
$1.02 to $1.09
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
0.12
Total related to selling, general and
administrative expenses
0.12
Total related to net income &
EPS
0.16
Non-GAAP net income per diluted
share
$1.18 to $1.25
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210503005709/en/
Investor Contact: Garo Toomajanian ir@fabrinet.com
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