- Fourth Quarter Revenue and Earnings 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
fourth quarter and fiscal year ended June 30, 2023.
Seamus Grady, Chief Executive Officer of Fabrinet, said, “We
exceeded our guidance for revenue and earnings per share in the
fourth quarter. During the quarter we saw very strong growth in
datacom revenue, driven by new AI products, which more than offset
anticipated headwinds from inventory adjustments at some customers.
Our strong fourth quarter results helped produce record
performances for revenue, profitability and cash flow in fiscal
2023. As we look to the first quarter of fiscal 2024, we are
optimistic that new datacom programs can continue to offset
inventory absorption in the industry, and that we can extend our
track record of strong execution.”
Fourth Quarter Fiscal Year 2023 Financial Highlights
GAAP Results
- Revenue for the fourth quarter of fiscal year 2023 was $655.9
million, compared to $587.9 million for the fourth quarter of
fiscal year 2022.
- GAAP net income for the fourth quarter of fiscal year 2023 was
$60.8 million, compared to $56.2 million for the fourth quarter of
fiscal year 2022.
- GAAP net income per diluted share for the fourth quarter of
fiscal year 2023 was $1.65, compared to $1.51 for the fourth
quarter of fiscal year 2022.
Non-GAAP Results
- Non-GAAP net income for the fourth quarter of fiscal year 2023
was $68.4 million, compared to $62.6 million for the fourth quarter
of fiscal year 2022.
- Non-GAAP net income per diluted share for the fourth quarter of
fiscal year 2023 was $1.86, compared to $1.68 for the fourth
quarter of fiscal year 2022.
Fiscal Year 2023 Financial Highlights
GAAP Results
- Revenue for fiscal year 2023 was $2.65 billion, compared to
$2.26 billion for fiscal year 2022.
- GAAP net income for fiscal year 2023 was $247.9 million,
compared to $200.4 million for fiscal year 2022.
- GAAP net income per diluted share for fiscal year 2023 was
$6.73, compared to $5.36 for fiscal year 2022.
Non-GAAP Results
- Non-GAAP net income for fiscal year 2023 was $282.7 million,
compared to $229.2 million for fiscal year 2022.
- Non-GAAP net income per diluted share for fiscal year 2023 was
$7.67, compared to $6.13 for fiscal year 2022.
Share Repurchase Program Expanded
Fabrinet also announced that its Board of Directors has approved
the repurchase of up to an additional $47.6 million of Fabrinet’s
ordinary shares, bringing the aggregate authorization under
Fabrinet’s existing share repurchase program to $294.8 million,
with $100.0 million currently remaining.
Business Outlook
Based on information available as of August 21, 2023, Fabrinet
is issuing guidance for its first fiscal quarter ending September
29, 2023, as follows:
- Fabrinet expects first quarter revenue to be in the range of
$650 million to $670 million.
- GAAP net income per diluted share is expected to be in the
range of $1.60 to $1.67, based on approximately 36.5 million fully
diluted shares outstanding.
- Non-GAAP net income per diluted share is expected to be in the
range of $1.83 to $1.90, based on approximately 36.5 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 Fourth Quarter Fiscal Year 2023
Financial Results Call
When:
August 21, 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 new datacom
programs can continue to offset inventory absorption and that we
can extend our track record of strong execution; 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 first quarter of fiscal year
2024. 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 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 Quarterly Report
on Form 10-Q filed with the SEC on May 9, 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 CONSOLIDATED BALANCE
SHEETS
(in thousands of U.S. dollars, except share data and par
value)
June 30, 2023
June 24, 2022
(unaudited)
Assets Current assets Cash and cash equivalents
$
231,368
$
197,996
Short-term restricted cash
—
220
Short-term investments
319,100
280,157
Trade accounts receivable, net of allowance for doubtful
accounts of $965 and $1,271, respectively
531,767
452,670
Inventories
519,576
557,145
Prepaid expenses
7,849
11,626
Other current assets
42,880
25,357
Total current assets
1,652,540
1,525,171
Non-current assets Long-term restricted cash
—
149
Property, plant and equipment, net
310,350
292,277
Intangibles, net
2,394
3,508
Operating right-of-use assets
1,634
4,084
Deferred tax assets
12,095
9,800
Other non-current assets
635
652
Total non-current assets
327,108
310,470
Total Assets
$
1,979,648
$
1,835,641
Liabilities and Shareholders’ Equity Current liabilities
Long-term borrowings, current portion, net
$
12,156
$
12,156
Trade accounts payable
381,129
439,684
Fixed assets payable
13,526
9,085
Operating lease liabilities, current portion
1,201
2,319
Income tax payable
6,024
2,898
Accrued payroll, bonus and related expenses
23,748
20,374
Accrued expenses
20,447
24,758
Other payables
23,654
27,213
Total current liabilities
481,885
538,487
Non-current liabilities Long-term borrowings, non-current portion,
net
—
15,202
Deferred tax liability
4,799
6,001
Operating lease liabilities, non-current portion
66
1,476
Severance liabilities
22,159
18,384
Other non-current liabilities
2,081
2,409
Total non-current liabilities
29,105
43,472
Total Liabilities
510,990
581,959
Shareholders’ equity Preferred shares (5,000,000 shares authorized,
$0.01 par value; no shares issued and outstanding as of
June 30, 2023 and June 24, 2022)
—
—
Ordinary shares (500,000,000 shares authorized, $0.01 par value;
39,284,176 shares and 39,048,700 shares issued as of June 30,
2023 and June 24, 2022, respectively; and 36,183,682 shares
and 36,436,683 shares outstanding as of June 30, 2023 and
June 24, 2022, respectively)
393
390
Additional paid-in capital
206,624
196,667
Less: Treasury shares (3,100,494 shares and 2,612,017 shares as of
June 30, 2023 and June 24, 2022, respectively)
(194,833
)
(147,258
)
Accumulated other comprehensive income (loss)
(8,115
)
(12,793
)
Retained earnings
1,464,589
1,216,676
Total Shareholders’ Equity
1,468,658
1,253,682
Total Liabilities and Shareholders’ Equity
$
1,979,648
$
1,835,641
FABRINET CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Three Months Ended
Year Ended
(in thousands of U.S. dollars, except per share data)
June 30, 2023
June 24, 2022
June 30, 2023
June 24, 2022
(unaudited)
(unaudited)
(unaudited)
Revenues
$
655,871
$
587,874
$
2,645,237
$
2,262,224
Cost of revenues
(573,576
)
(512,941
)
(2,308,964
)
(1,983,630
)
Gross profit
82,295
74,933
336,273
278,594
Selling, general and administrative expenses
(19,869
)
(18,529
)
(77,673
)
(73,941
)
Restructuring and other related costs
(1,024
)
—
(6,896
)
(135
)
Operating income
61,402
56,404
251,704
204,518
Interest income
4,024
735
11,234
2,205
Interest expense
(293
)
(85
)
(1,472
)
(432
)
Foreign exchange gain (loss), net
1,911
1,304
(1,211
)
2,302
Other income (expense), net
19
(276
)
(159
)
(1,627
)
Income before income taxes
67,063
58,082
260,096
206,966
Income tax expense
(6,277
)
(1,893
)
(12,183
)
(6,586
)
Net income
60,786
56,189
247,913
200,380
Other comprehensive income (loss), net of tax Change in net
unrealized gain (loss) on available-for-sale securities
971
(2,711
)
2,739
(6,326
)
Change in net unrealized gain (loss) on derivative instruments
(2,894
)
(3,321
)
1,541
(578
)
Change in net retirement benefits plan – prior service cost
135
174
473
622
Change in foreign currency translation adjustment
(46
)
(47
)
(75
)
(245
)
Total other comprehensive income (loss), net of tax
(1,834
)
(5,905
)
4,678
(6,527
)
Net comprehensive income
$
58,952
$
50,284
$
252,591
$
193,853
Earnings per share Basic
$
1.67
$
1.53
$
6.79
$
5.43
Diluted
$
1.65
$
1.51
$
6.73
$
5.36
Weighted-average number of ordinary shares outstanding
(thousands of shares) Basic
36,337
36,668
36,515
36,876
Diluted
36,737
37,222
36,855
37,394
FABRINET CONSOLIDATED
STATEMENTS OF CASH FLOWS
Year Ended
(in thousands of U.S. dollars)
June 30, 2023
June 24, 2022
(unaudited)
Cash flows from operating activities Net income
$
247,913
$
200,380
Adjustments to reconcile net income to net cash provided by
operating activities Depreciation and amortization
43,832
38,738
Non-cash restructuring charges and other related costs
2,201
—
(Gain) loss on disposal and impairment of property, plant and
equipment
(1,506
)
(101
)
(Gain) loss from sales and maturities of available-for-sale
securities
92
13
Amortization of discount (premium) of short-term investments
280
3,691
Amortization of deferred debt issuance costs
31
32
(Reversal of) allowance for doubtful accounts
(307
)
1,171
Unrealized loss (gain) on exchange rate and fair value of foreign
currency forward contracts
175
(2,832
)
Amortization of fair value at hedge inception of interest rate
swaps
(587
)
(937
)
Share-based compensation
28,127
28,048
Deferred income tax
(3,484
)
(191
)
Other non-cash expenses
601
1,390
Changes in operating assets and liabilities Trade accounts
receivable
(76,917
)
(105,550
)
Inventories
37,449
(135,011
)
Other current assets and non-current assets
(13,568
)
(6,430
)
Trade accounts payable
(58,596
)
93,499
Income tax payable
2,977
(761
)
Severance liabilities
3,753
1,033
Other current liabilities and non-current liabilities
844
8,064
Net cash provided by operating activities
213,310
124,246
Cash flows from investing activities Purchase of short-term
investments
(217,005
)
(198,318
)
Proceeds from sales of short-term investments
30,179
19,463
Proceeds from maturities of short-term investments
150,252
133,632
Purchase of property, plant and equipment
(61,360
)
(89,588
)
Purchase of intangibles
(911
)
(995
)
Proceeds from disposal of property, plant and equipment
128
263
Net cash used in investing activities
(98,717
)
(135,543
)
Cash flows from financing activities Repayment of long-term
borrowings
(15,233
)
(12,188
)
Repayment of finance lease liability
(9
)
(7
)
Repurchase of ordinary shares
(47,575
)
(59,915
)
Withholding tax related to net share settlement of restricted share
units
(18,167
)
(20,824
)
Net cash used in financing activities
(80,984
)
(92,934
)
Net increase (decrease) in cash, cash equivalents and
restricted cash
$
33,609
$
(104,231
)
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
33,609
(104,231
)
Effect of exchange rate on cash, cash equivalents and restricted
cash
(606
)
(527
)
Cash, cash equivalents and restricted cash at the end of
period
$
231,368
$
198,365
Non-cash investing and financing activities Construction,
software and equipment related payables
$
13,526
$
9,085
FABRINET CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)
Supplemental disclosures
Year Ended
(in thousands of U.S. dollars)
June 30, 2023
June 24, 2022
(unaudited)
Cash paid for Interest
$
2,377
$
2,244
Taxes
$
14,158
$
9,296
Cash received for interest
$
11,048
$
1,603
Non-cash investing and financing activities Construction,
software and equipment related payables
$
13,526
$
9,085
The following table provides a
reconciliation of cash, cash equivalents and restricted cash
reported within the consolidated balance sheets that sum to the
total of the same amounts shown in the consolidated statements of
cash flows:
As of
(in thousands of U.S. dollars)
June 30, 2023
June 24, 2022
(unaudited)
Cash and cash equivalents
$
231,368
$
197,996
Restricted cash
—
369
Cash, cash equivalents and restricted cash
$
231,368
$
198,365
FABRINET RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED)
Three Months Ended
Year Ended
June 30, 2023
June 24, 2022
June 30, 2023
June 24, 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
$
60,786
$
1.65
$
56,189
$
1.51
$
247,913
$
6.73
$
200,380
$
5.36
Items reconciling GAAP net income & EPS to non-GAAP net income
& EPS: Related to cost of revenues: Share-based compensation
expenses
1,636
0.05
1,388
0.04
6,664
0.18
5,967
0.16
Depreciation of fair value uplift
—
—
—
—
—
—
92
0.00
Total related to gross profit
1,636
0.05
1,388
0.04
6,664
0.18
6,059
0.16
Related to selling, general and administrative expenses:
Share-based compensation expenses
4,936
0.13
4,959
0.13
20,939
0.57
22,081
0.59
Amortization of intangibles
—
—
94
0.00
224
0.01
422
0.01
Severance payment and others
—
—
—
—
—
—
105
0.00
Total related to selling, general and administrative expenses
4,936
0.13
5,053
0.13
21,163
0.58
22,608
0.60
Related to other income and expense: Restructuring and other
related costs
1,024
0.03
—
—
6,896
0.18
135
0.01
Amortization of deferred debt issuance costs
8
0.00
8
0.00
32
0.00
32
0.00
Total related to other income and expense
1,032
0.03
8
0.00
6,928
0.18
167
0.01
Total related to net income & EPS
7,604
0.21
6,449
0.17
34,755
0.94
28,834
0.77
Non-GAAP measures
$
68,390
$
1.86
$
62,638
$
1.68
$
282,668
$
7.67
$
229,214
$
6.13
Shares used in computing diluted net income per share GAAP diluted
shares
36,737
37,222
36,855
37,394
Non-GAAP diluted shares
36,737
37,222
36,855
37,394
FABRINET RECONCILIATION OF NET
CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(UNAUDITED)
(in thousands)
Three Months Ended
Year Ended
June 30, 2023
June 24, 2022
June 30, 2023
June 24, 2022
Net cash provided by operating activities
71,088
$
16,349
$
213,310
$
124,246
Less: Purchase of property, plant and equipment
(17,938
)
(14,261
)
(61,360
)
(89,588
)
Non-GAAP free cash flow
53,150
$
2,088
$
151,950
$
34,658
FABRINET GUIDANCE FOR QUARTER
ENDING SEPTEMBER 29, 2023 RECONCILIATION OF GAAP MEASURES TO
NON-GAAP MEASURES
Diluted EPS
GAAP net income per diluted share:
$1.60 to $1.67
Related to cost of revenues:
Share-based compensation expenses
0.07
Total related to gross profit
0.07
Related to selling, general and administrative expenses:
Share-based compensation expenses
0.16
Total related to selling, general and administrative expenses
0.16
Total related to net income & EPS
0.23
Non-GAAP net income per diluted share
$1.83 to $1.90
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230821543363/en/
Investors: Garo Toomajanian ir@fabrinet.com
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