- Solid Third Quarter Revenue of $564.4 Million
- Record GAAP and Non-GAAP Net Income per Share
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 25, 2022.
Seamus Grady, Chief Executive Officer of Fabrinet, said, “With
strong execution we delivered solid revenue and non-GAAP EPS that
were within our guidance ranges in the third quarter. We are
optimistic that we can continue to effectively manage supply chain
constraints amid growing demand to deliver strong fourth quarter
results.”
Third Quarter Fiscal Year 2022 Financial Highlights
GAAP Results
- Revenue for the third quarter of fiscal year 2022 was $564.4
million, compared to $479.3 million in the third quarter of fiscal
year 2021.
- GAAP net income for the third quarter of fiscal year 2022 was
$50.7 million, compared to GAAP net income of $37.5 million for the
third quarter of fiscal year 2021.
- GAAP net income per diluted share for the third quarter of
fiscal year 2022 was $1.35, compared to GAAP net income per diluted
share of $1.00 for the third quarter of fiscal year 2021.
Non-GAAP Results
- Non-GAAP net income for the third quarter of fiscal year 2022
was $56.2 million, compared to non-GAAP net income of $45.4 million
for the third quarter of fiscal year 2021.
- Non-GAAP net income per diluted share for the third quarter of
fiscal year 2022 was $1.50, compared to non-GAAP net income per
diluted share of $1.21 for the third quarter of fiscal year
2021.
Business Outlook
Based on information available as of May 2, 2022, Fabrinet is
issuing guidance for its fourth fiscal quarter ending June 24,
2022, as follows:
- Fabrinet expects fourth quarter revenue to be in the range of
$570 million to $590 million.
- GAAP net income per diluted share is expected to be in the
range of $1.35 to $1.42, 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 $1.52 to $1.59, based on approximately 37.6 million fully
diluted shares outstanding.
Conference Call Information
What:
Fabrinet Third Quarter Fiscal Year 2022
Financial Results Call
When:
Monday, May 2, 2022
Time:
5:00 p.m. ET
Live Call:
(888) 357-3694, domestic
(253) 237-1137, international
Conference ID: 8682742
Replay:
(855) 859-2056, domestic
(404) 537-3406, international
Conference ID: 8682742
Webcast:
http://investor.fabrinet.com/ (live and
replay)
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,
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 our ability
to manage supply chain constraints amid growing demand; 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 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
Quarterly Report on Form 10-Q filed with the SEC on February 1,
2022. 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; other expenses in
relation to reduction in workforce; 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 25, 2022
June 25, 2021
Assets
Current assets
Cash and cash equivalents
$
269,140
$
302,969
Short-term investments
245,852
244,963
Trade accounts receivable, net of
allowance for doubtful accounts of $61 and $100, respectively
446,052
336,547
Contract assets
13,568
11,878
Inventories
452,638
422,133
Prepaid expenses
13,729
11,398
Other current assets
29,169
22,619
Total current assets
1,470,148
1,352,507
Non-current assets
Long-term restricted cash
157
154
Property, plant and equipment, net
291,767
241,129
Intangibles, net
3,593
4,371
Operating right-of-use assets
4,790
6,699
Deferred tax assets
9,171
9,428
Other non-current assets
513
1,834
Total non-current assets
309,991
263,615
Total Assets
$
1,780,139
$
1,616,122
Liabilities and Shareholders’
Equity
Current liabilities
Long-term borrowings, current portion,
net
$
12,156
$
12,156
Trade accounts payable
402,581
346,555
Fixed assets payable
14,060
19,206
Contract liabilities
1,923
1,680
Operating lease liabilities, current
portion
2,593
2,593
Income tax payable
2,794
3,612
Accrued payroll, bonus and related
expenses
21,396
20,464
Accrued expenses
21,144
17,134
Other payables
24,012
20,958
Total current liabilities
502,659
444,358
Non-current liabilities
Long-term borrowings, non-current portion,
net
18,241
27,358
Deferred tax liability
5,771
5,107
Operating lease liability, non-current
portion
1,922
3,850
Severance liabilities
20,352
19,485
Other non-current liabilities
2,467
3,444
Total non-current liabilities
48,753
59,244
Total Liabilities
551,412
503,602
Commitments and contingencies
Shareholders’ equity
Preferred shares (5,000,000 shares
authorized, $0.01 par value; no shares issued and outstanding as of
March 25, 2022 and June 25, 2021)
—
—
Ordinary shares (500,000,000 shares
authorized, $0.01 par value; 39,039,725 shares and 38,749,045
shares issued at March 25, 2022 and June 25, 2021, respectively;
and 36,780,528 shares and 36,765,456 shares outstanding at March
25, 2022 and June 25, 2021, respectively)
390
388
Additional paid-in capital
190,705
189,445
Less: Treasury shares (2,259,197 shares
and 1,983,589 shares as of March 25, 2022 and June 25, 2021,
respectively)
(115,967
)
(87,343
)
Accumulated other comprehensive income
(loss)
(6,888
)
(6,266
)
Retained earnings
1,160,487
1,016,296
Total Shareholders’ Equity
1,228,727
1,112,520
Total Liabilities and Shareholders’
Equity
$
1,780,139
$
1,616,122
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 25, 2022
March 26, 2021
March 25, 2022
March 26, 2021
Revenues
$
564,395
$
479,317
$
1,674,350
$
1,369,783
Cost of revenues
(493,702
)
(422,539
)
(1,470,689
)
(1,209,504
)
Gross profit
70,693
56,778
203,661
160,279
Selling, general and administrative
expenses
(17,034
)
(19,059
)
(55,412
)
(53,078
)
Expenses related to reduction in
workforce
—
(43
)
(135
)
(43
)
Operating income
53,659
37,676
148,114
107,158
Interest income
414
941
1,470
3,156
Interest expense
(73
)
(282
)
(347
)
(798
)
Foreign exchange gain (loss), net
(410
)
629
998
224
Other income (expense), net
(36
)
124
(1,351
)
403
Income before income taxes
53,554
39,088
148,884
110,143
Income tax expense
(2,893
)
(1,595
)
(4,693
)
(4,215
)
Net income
50,661
37,493
144,191
105,928
Other comprehensive income (loss), net of
tax:
Change in net unrealized gain (loss) on
available-for-sale securities
(2,455
)
(570
)
(3,615
)
(937
)
Change in net unrealized gain (loss) on
derivative instruments
666
(5,000
)
2,743
(5,823
)
Change in net retirement benefits plan –
prior service cost
124
198
448
421
Change in foreign currency translation
adjustment
(34
)
90
(198
)
547
Total other comprehensive income (loss),
net of tax
(1,699
)
(5,282
)
(622
)
(5,792
)
Net comprehensive income (loss)
$
48,962
$
32,211
$
143,569
$
100,136
Earnings per share
Basic
$
1.37
$
1.02
$
3.90
$
2.87
Diluted
$
1.35
$
1.00
$
3.85
$
2.82
Weighted-average number of ordinary
shares outstanding (thousands of shares)
Basic
36,940
36,875
36,945
36,876
Diluted
37,473
37,609
37,451
37,514
FABRINET CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (unaudited)
Nine Months Ended
(in thousands of U.S. dollars)
March 25, 2022
March 26, 2021
Cash flows from operating
activities
Net income for the period
$
144,191
$
105,928
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization
28,907
26,781
Gain on disposal of property, plant and
equipment
(175
)
(24
)
Gain from sales and maturities of
available-for-sale securities
(13
)
(187
)
Amortization of investment discount
3,038
1,479
Amortization of deferred debt issuance
costs
24
24
(Reversal of) allowance for doubtful
accounts
(39
)
(317
)
Unrealized gain on exchange rate and fair
value of foreign currency forward contracts
(1,422
)
(825
)
Amortization of fair value at hedge
inception of interest rate swaps
(736
)
(1,009
)
Share-based compensation
21,701
18,742
Deferred income tax
563
(382
)
Other non-cash expenses
1,067
(614
)
Changes in operating assets and
liabilities
Trade accounts receivable
(109,334
)
(36,437
)
Contract assets
(1,690
)
(3,874
)
Inventories
(30,503
)
(43,497
)
Other current assets and non-current
assets
(11,221
)
(18,433
)
Trade accounts payable
55,333
25,589
Contract liabilities
243
(147
)
Income tax payable
(872
)
911
Severance liabilities
1,883
2,204
Other current liabilities and non-current
liabilities
6,952
3,404
Net cash provided by operating
activities
107,897
79,316
Cash flows from investing
activities
Purchase of short-term investments
(119,853
)
(183,041
)
Proceeds from sales of short-term
investments
19,463
84,049
Proceeds from maturities of short-term
investments
92,862
97,721
Purchase of property, plant and
equipment
(75,327
)
(33,269
)
Purchase of intangibles
(592
)
(1,912
)
Proceeds from disposal of property, plant
and equipment
229
38
Net cash used in investing activities
(83,218
)
(36,414
)
Cash flows from financing
activities
Repayment of long-term borrowings
(9,141
)
(9,141
)
Repayment of finance lease liability
—
(100
)
Repurchase of ordinary shares
(28,624
)
(8,312
)
Withholding tax related to net share
settlement of restricted share units
(20,439
)
(11,362
)
Net cash used in financing activities
(58,204
)
(28,915
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
$
(33,525
)
$
13,987
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
(33,525
)
13,987
Effect of exchange rate on cash, cash
equivalents and restricted cash
(301
)
345
Cash, cash equivalents and restricted
cash at the end of period
$
269,297
$
247,164
Non-cash investing and financing
activities
Construction, software and
equipment-related payables
$
14,060
$
11,060
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:
(amount in thousands)
As of
March 25, 2022
As of
March 26, 2021
Cash and cash equivalents
$
269,140
$
247,011
Restricted cash
157
153
Cash, cash equivalents and restricted
cash
$
269,297
$
247,164
FABRINET RECONCILIATION OF GAAP MEASURES TO
NON-GAAP MEASURES
Three Months Ended
Nine Months Ended
March 25, 2022
March 26, 2021
March 25, 2022
March 26, 2021
(in thousands of U.S. dollars, except
share data and par value)
Net income
Diluted EPS
Net income
Diluted EPS
Net income
Diluted EPS
Net income
Diluted EPS
GAAP measures
$
50,661
$
1.35
$
37,493
$
1.00
$
144,191
$
3.85
$
105,928
$
2.82
Items reconciling GAAP net income &
EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses
1,183
0.03
1,388
0.04
4,579
0.12
4,805
0.13
Depreciation of fair value uplift
—
—
89
0.00
92
0.00
256
0.00
Total related to gross profit
1,183
0.03
1,477
0.04
4,671
0.12
5,061
0.13
Related to selling, general and
administrative expenses:
Share-based compensation expenses
4,540
0.12
5,476
0.15
17,122
0.46
13,937
0.37
Amortization of intangibles
101
0.00
127
0.00
328
0.01
382
0.01
Severance payment and others
(250
)
0.00
755
0.02
105
0.00
755
0.02
Total related to selling, general and
administrative expenses
4,391
0.12
6,358
0.17
17,555
0.47
15,074
0.40
Related to other incomes and other
expenses:
Other expenses in relation to reduction in
workforce
—
—
43
0.00
135
0.01
43
0.00
Amortization of deferred debt issuance
costs
8
0.00
8
0.00
24
0.00
24
0.00
Total related to other incomes and other
expenses
8
0.00
51
0.00
159
0.01
67
0.00
Total related to net income & EPS
5,582
0.15
7,886
0.21
22,385
0.60
20,202
0.54
Non-GAAP measures
$
56,243
$
1.50
$
45,379
$
1.21
$
166,576
$
4.45
$
126,130
$
3.36
Shares used in computing diluted net
income per share
GAAP diluted shares
37,473
37,609
37,451
37,514
Non-GAAP diluted shares
37,473
37,609
37,451
37,514
FABRINET RECONCILIATION OF NET CASH PROVIDED
BY OPERATING ACTIVITIES TO FREE CASH FLOW
(amount in thousands)
Three Months Ended
Nine Months Ended
March 25, 2022
March 26, 2021
March 25, 2022
March 26, 2021
Net cash provided by operating
activities
$
50,329
$
38,002
$
107,897
$
79,316
Less: Purchase of property, plant and
equipment
(23,410
)
(10,576
)
(75,327
)
(33,269
)
Non-GAAP free cash flow
$
26,919
$
27,426
$
32,570
$
46,047
FABRINET GUIDANCE FOR QUARTER ENDING JUNE
24, 2022 RECONCILIATION OF GAAP MEASURES TO NON-GAAP
MEASURES
Diluted
EPS
GAAP net income per diluted
share:
$1.35 to $1.42
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
0.13
Total related to selling, general and
administrative expenses
0.13
Total related to net income &
EPS
0.17
Non-GAAP net income per diluted
share
$1.52 to $1.59
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220502005550/en/
Investor Contact: Garo Toomajanian ir@fabrinet.com
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