- Record Second Quarter Revenue of $453.8 million Exceeds
Guidance
- Record GAAP and Non-GAAP Net Income per Share Exceed
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
second fiscal quarter ended December 25, 2020.
Seamus Grady, Chief Executive Officer of Fabrinet, said, “We
delivered record revenue and profitability that exceeded our
guidance ranges in the second quarter. Newer programs helped drive
revenue upside while margin improvement contributed to strong
profitability in the quarter.”
Grady continued, “Based on our anticipated growth, we have
broken ground on construction for an additional building at our
Chonburi campus. As we look ahead, we are optimistic that the third
quarter will represent another record-breaking quarter for the
company.”
Second Quarter Fiscal Year 2021 Financial Highlights
GAAP Results
- Revenue for the second quarter of fiscal year 2021 was $453.8
million, compared to $426.2 million in the second quarter of fiscal
year 2020.
- GAAP net income for the second quarter of fiscal year 2021 was
$35.4 million, compared to GAAP net income of $31.2 million for the
second quarter of fiscal year 2020.
- GAAP net income per diluted share for the second quarter of
fiscal year 2021 was $0.94, compared to GAAP net income per diluted
share of $0.83 for the second quarter of fiscal year 2020.
Non-GAAP Results
- Non-GAAP net income for the second quarter of fiscal year 2021
was $41.5 million, compared to non-GAAP net income of $37.7 million
for the second quarter of fiscal year 2020.
- Non-GAAP net income per diluted share for the second quarter of
fiscal year 2021 was $1.10, compared to non-GAAP net income per
diluted share of $1.00 for the second quarter of fiscal year
2020.
Business Outlook
Based on information available as of February 1, 2021, Fabrinet
is issuing guidance for its third fiscal quarter ending March 26,
2021, as follows:
- Fabrinet expects third quarter revenue to be in the range of
$455 million to $475 million.
- GAAP net income per diluted share is expected to be in the
range of $0.94 to $1.01, 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 $1.10 to $1.17, based on approximately 37.6 million fully
diluted shares outstanding.
Conference Call Information
What:
Fabrinet Second Quarter Fiscal Year 2021
Financial Results Call
When:
Monday, February 1, 2021
Time:
5:00 p.m. ET
Live Call:
(888) 357-3694, domestic (253) 237-1137,
international Passcode: 3296178
Replay:
(855) 859-2056, domestic (404) 537-3406,
international Passcode: 3296178
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 third
quarter will represent another record-breaking quarter for the
company; 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
third 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 coronavirus 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 outbreak 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 outbreak intensifies or
returns in various geographic areas, and (4) regional downward
demand adjustments from our customers, particularly those in areas
affected by the outbreak; 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 November 3,
2020. 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)
December 25,
2020
June 26, 2020
Assets
Current assets
Cash and cash equivalents
$
219,221
$
225,430
Short-term restricted cash
7,402
7,402
Short-term investments
261,817
262,693
Trade accounts receivable, net of
allowance for doubtful accounts of $123 and $336 respectively
318,430
272,665
Contract assets
16,223
13,256
Inventories
371,996
309,786
Other receivable
24,310
24,310
Prepaid expenses
3,141
5,399
Other current assets
29,187
14,508
Total current assets
1,251,727
1,135,449
Non-current assets
Long-term restricted cash
153
—
Property, plant and equipment, net
227,670
228,274
Intangibles, net
4,367
4,312
Operating right-of-use assets
7,271
8,068
Deferred tax assets
6,213
5,675
Other non-current assets
236
202
Total non-current assets
245,910
246,531
Total Assets
1,497,637
1,381,980
Liabilities and Shareholders’
Equity
Current liabilities
Long-term borrowings, current portion,
net
12,156
12,156
Trade accounts payable
296,948
251,603
Fixed assets payable
7,748
15,127
Contract liabilities
1,804
1,556
Operating lease liabilities, current
portion
2,277
1,979
Income tax payable
2,806
2,242
Accrued payroll, bonus and related
expenses
17,633
19,265
Accrued expenses
14,504
8,979
Other payables
39,159
21,514
Total current liabilities
395,035
334,421
Non-current liabilities
Long-term borrowings, non-current portion,
net
33,436
39,514
Deferred tax liability
4,592
4,729
Operating lease liability, non-current
portion
4,737
5,873
Severance liabilities
19,011
17,379
Other non-current liabilities
4,156
5,655
Total non-current liabilities
65,932
73,150
Total Liabilities
460,967
407,571
Shareholders’ equity
Preferred shares (5,000,000 shares
authorized, $0.01 par value; no shares issued and outstanding as of
December 25, 2020 and June 26, 2020)
—
—
Ordinary shares (500,000,000 shares
authorized, $0.01 par value; 38,698,068 shares and 38,471,967
shares issued at December 25, 2020 and June 26, 2020, respectively;
and 36,852,416 shares and 36,727,864 shares outstanding at December
25, 2020 and June 26, 2020, respectively)
387
385
Additional paid-in capital
177,125
175,610
Less: Treasury shares (1,845,652 shares
and 1,744,103 shares as of December 25, 2020 and June 26, 2020,
respectively)
(75,575)
(68,501)
Accumulated other comprehensive income
(loss)
(1,657)
(1,147)
Retained earnings
936,390
868,062
Total Shareholders’ Equity
1,036,670
974,409
Total Liabilities and Shareholders’
Equity
$
1,497,637
$
1,381,980
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
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 25,
2020
December 27,
2019
December 25,
2020
December 27,
2019
Revenues
$
453,827
$
426,217
$
890,466
$
825,513
Cost of revenues
(400,806)
(377,059)
(786,965)
(730,368)
Gross profit
53,021
49,158
103,501
95,145
Selling, general and administrative
expenses
(17,156)
(17,078)
(34,019)
(33,078)
Expenses related to reduction in
workforce
—
(16)
—
(16)
Operating income
35,865
32,064
69,482
62,051
Interest income
1,111
1,940
2,215
4,038
Interest expense
(265)
(181)
(516)
(2,574)
Foreign exchange gain (loss), net
(533)
(988)
(405)
(2,941)
Other income (expense), net
158
397
279
774
Income before income taxes
36,336
33,232
71,055
61,348
Income tax expense
(952)
(2,001)
(2,620)
(4,160)
Net income
35,384
31,231
68,435
57,188
Other comprehensive income (loss), net of
tax:
Change in net unrealized gain (loss) on
available-for-sale securities
(42)
(82)
(367)
(47)
Change in net unrealized gain (loss) on
derivative instruments
2,385
(189)
(823)
(150)
Change in net retirement benefits plan –
prior service cost
50
101
223
184
Change in foreign currency translation
adjustment
(146)
616
457
247
Total other comprehensive income (loss),
net of tax
2,247
446
(510)
234
Net comprehensive income (loss)
$
37,631
$
31,677
$
67,925
$
57,422
Earnings per share
Basic
$
0.96
$
0.84
$
1.86
$
1.55
Diluted
$
0.94
$
0.83
$
1.83
$
1.52
Weighted-average number of ordinary
shares outstanding (thousands of shares)
Basic
36,936
37,011
36,877
36,962
Diluted
37,551
37,763
37,467
37,646
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
FABRINET
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
Six Months Ended
(in thousands of U.S. dollars)
December 25,
2020
December 27,
2019
Cash flows from operating
activities
Net income for the period
$
68,435
$
57,188
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization
17,650
15,279
(Gain) loss on disposal of property, plant
and equipment
(24)
242
(Gain) loss from sales and maturities of
available-for-sale securities
(86)
(79)
Amortization of investment discount
1,003
117
Amortization of deferred debt issuance
costs
16
10
(Reversal of) allowance for doubtful
accounts
(321)
6
Unrealized (gain) loss on exchange rate
and fair value of foreign currency forward contracts
(290)
1,205
Unrealized loss (gain) on fair value of
interest rate swaps
—
1,672
Amortization of fair value at hedge
inception of interest rate swaps
(695)
(433)
Share-based compensation
11,878
12,183
Deferred income tax
(461)
1,543
Other non-cash expenses
(657)
(851)
Changes in operating assets and
liabilities
Trade accounts receivable
(45,410)
(24,970)
Contract assets
(2,967)
1,333
Inventories
(62,211)
(767)
Other current assets and non-current
assets
(11,983)
7,471
Trade accounts payable
45,179
(22,816)
Contract liabilities
248
121
Income tax payable
548
1,336
Severance liabilities
1,350
2,015
Other current liabilities and non-current
liabilities
20,112
805
Net cash provided by operating
activities
41,314
52,610
Cash flows from investing
activities
Purchase of short-term investments
(126,701)
(101,727)
Proceeds from sales of short-term
investments
57,486
72,664
Proceeds from maturities of short-term
investments
68,807
62,666
Funds provided to customer to support
transfer of manufacturing operations
—
(24,310)
Purchase of property, plant and
equipment
(22,693)
(15,411)
Purchase of intangibles
(1,271)
(808)
Proceeds from disposal of property, plant
and equipment
26
1,195
Net cash used in investing activities
(24,346)
(5,731)
Cash flows from financing
activities
Payment of debt issuance costs
—
(153)
Proceeds from long-term borrowings
—
60,938
Repayment of long-term borrowings
(6,094)
(63,985)
Repayment of finance lease liability
(100)
(189)
Repurchase of ordinary shares
(7,074)
—
Withholding tax related to net share
settlement of restricted share units
(10,361)
(4,377)
Net cash used in financing activities
(23,629)
(7,766)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(6,661)
39,113
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
(6,661)
39,113
Effect of exchange rate on cash, cash
equivalents and restricted cash
605
351
Cash, cash equivalents and restricted
cash at the end of period
226,776
227,705
Non-cash investing and financing
activities
Construction, software and
equipment-related payables
$
7,748
$
14,307
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
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)
December 25,
2020
December 27,
2019
Cash and cash equivalents
$
219,221
$
220,031
Restricted cash
7,555
7,674
Cash, cash equivalents and restricted
cash
$
226,776
$
227,705
FABRINET
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
Three Months Ended
Six Months Ended
December 25,
2020
December 27,
2019
December 25,
2020
December 27,
2019
(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
$
35,384
$
0.94
$
31,231
$
0.83
$
68,435
$
1.83
$
57,188
$
1.52
Items reconciling GAAP net income &
EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses
1,592
0.04
1,591
0.04
3,417
0.09
3,311
0.09
Depreciation of fair value uplift
83
—
82
—
167
—
161
—
Total related to gross profit
1,675
0.04
1,673
0.04
3,584
0.10
3,472
0.09
Related to selling, general and
administrative expenses:
Share-based compensation expenses
4,259
0.11
4,597
0.12
8,461
0.23
8,872
0.24
Amortization of intangibles
124
—
143
—
255
0.01
286
0.01
Total related to selling, general and
administrative expenses
4,383
0.12
4,740
0.13
8,716
0.23
9,158
0.24
Related to other incomes and other
expenses:
Other expenses in relation to reduction in
workforce
—
—
16
—
—
—
16
—
Amortization of deferred debt issuance
costs
8
—
8
—
16
—
10
—
Total related to other incomes and other
expenses
8
—
24
—
16
—
26
—
Total related to net income & EPS
6,066
0.16
6,437
0.17
12,316
0.33
12,656
0.34
Non-GAAP measures
$
41,450
$
1.10
$
37,668
$
1.00
$
80,751
$
2.16
$
69,844
$
1.86
Shares used in computing diluted net
income per share
GAAP diluted shares
37,551
37,763
37,467
37,646
Non-GAAP diluted shares
37,551
37,763
37,467
37,646
FABRINET
RECONCILIATION OF NET CASH
PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(amount in thousands)
Three Months Ended
Six Months Ended
December 25,
2020
December 27,
2019
December 25,
2020
December 27,
2019
Net cash provided by operating
activities
$
6,808
$
49,963
$
41,314
$
52,610
Less: Purchase of property, plant and
equipment
(10,121)
(9,068)
(22,693)
(15,411)
Non-GAAP free cash flow
$
(3,313)
$
40,895
$
18,621
$
37,199
FABRINET
GUIDANCE FOR QUARTER ENDING
MARCH 26, 2021
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
Diluted
EPS
GAAP net income per diluted
share:
$0.94 to $1.01
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
$1.10 to $1.17
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210201005894/en/
Investor Contact: Garo Toomajanian ir@fabrinet.com
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