Fabrinet Announces Second Quarter Fiscal Year 2025 Financial Results

Record Second Quarter Revenue and Earnings Per Share Above Guidance Ranges February 03, 2025 16:15 ET | Source: Fabrinet BANGKOK, Feb. 03, 2025 (GLOBE NEWSWIRE) -- 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 27, 2024. Seamus Grady, Chief Executive Officer of Fabrinet, said, “With continued business momentum, we exceeded our guidance for revenue and net income per share in the second quarter. Our telecom performance was very strong and benefited from both increasing demand for datacenter interconnect products as well as early progress from recent systems wins. While datacom demand has slightly moderated near-term we continue to anticipate more rapid growth as next-generation products ramp production. With several positive trends, we are very optimistic as we look to the third quarter and beyond.” Second Quarter Fiscal Year 2025 Financial Highlights GAAP Results Revenue for the second quarter of fiscal year 2025 was $833.6 million, compared to $712.7 million for the second quarter of fiscal year 2024.GAAP net income for the second quarter of fiscal year 2025 was $86.6 million, compared to $69.1 million for the second quarter of fiscal year 2024.GAAP net income per diluted share for the second quarter of fiscal year 2025 was $2.38, compared to $1.89 for the second quarter of fiscal year 2024. Non-GAAP Results Non-GAAP net income for the second quarter of fiscal year 2025 was $95.1 million, compared to $76.1 million for the second quarter of fiscal year 2024.Non-GAAP net income per diluted share for the second quarter of fiscal year 2025 was $2.61, compared to $2.08 for the second quarter of fiscal year 2024. Share Repurchase Program Expanded Fabrinet also announced that its Board of Directors has approved an expansion of its share repurchase program, authorizing the repurchase of up to an additional $100.0 million of Fabrinet’s ordinary shares. The addition brings the aggregate authorization under Fabrinet’s existing share repurchase program to $534.3 million. Business Outlook Based on information available as of February 3, 2025, Fabrinet is issuing guidance for its third fiscal quarter ending March 28, 2025, as follows: Fabrinet expects third quarter revenue to be in the range of $850 million to $870 million.GAAP net income per diluted share is expected to be in the range of $2.32 to $2.40, based on approximately 36.3 million fully diluted shares outstanding.Non-GAAP net income per diluted share is expected to be in the range of $2.55 to $2.63, based on approximately 36.3 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 Second Quarter Fiscal Year 2025 Financial Results CallWhen: February 3, 2025Time: 5:00 p.m. ETLive 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 StatementsThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include: (1) our anticipation that datacom revenue will see more rapid growth as next-generation products ramp production; 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 2025. 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: changes in general economic conditions, either globally or in our markets, and the risk of recession or an 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, automotive, 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 November 5, 2024. We disclaim any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise. Non-GAAP Financial Measures In addition to reporting financial results in accordance with GAAP, we provide investors with certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. We believe these non-GAAP financial measures provide investors with useful supplemental information 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, we use some of these non-GAAP financial measures to measure company performance for the purposes of determining employee incentive plan compensation. Non-GAAP gross profit, non-GAAP operating profit, non-GAAP net income and non-GAAP net income per diluted share exclude: share-based compensation expenses; 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. Non-GAAP free cash flow is net cash provided by (used in) operating activities, minus capital expenditures (purchase of property, plant and equipment). We use free cash flow to measure our ability to generate additional cash from our business operations. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. We urge you to review the reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business. Investor Contact:Garo Toomajanianir@fabrinet.com FABRINETCONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars, except share data and par value)December 27,2024 June 28,2024 (unaudited) Assets Current assets Cash and cash equivalents$403,662 $409,973 Short-term investments 530,969 448,630 Trade accounts receivable, net of allowance for expected credit losses of $1,245 and $1,629, respectively 680,094 592,452 Inventories 489,159 463,206 Prepaid expenses 17,734 10,620 Other current assets 77,394 87,810 Total current assets 2,199,012 2,012,691 Non-current assets Property, plant and equipment, net 323,648 307,240 Intangibles, net 2,062 2,321 Operating right-of-use assets 6,397 5,336 Deferred tax assets 10,694 10,446 Other non-current assets 592 485 Total non-current assets 343,393 325,828 Total Assets$2,542,405 $2,338,519 Liabilities and Shareholders’ Equity Current liabilities Trade accounts payable 529,016 441,835 Fixed assets payable 20,594 14,380 Operating lease liabilities, current portion 1,676 1,355 Income tax payable 8,214 3,937 Accrued payroll, bonus and related expenses 20,598 22,116 Accrued expenses 29,112 19,916 Other payables 53,950 54,403 Total current liabilities 663,160 557,942 Non-current liabilities Deferred tax liability 1,039 4,895 Operating lease liability, non-current portion 4,417 3,635 Severance liabilities 27,572 24,093 Other non-current liabilities 3,246 2,209 Total non-current liabilities 36,274 34,832 Total Liabilities 699,434 592,774 Shareholders’ equity Preferred shares (5,000,000 shares authorized, $0.01 par value; no shares issued and outstanding as of December 27, 2024 and June 28, 2024) — — Ordinary shares (500,000,000 shares authorized, $0.01 par value; 39,585,188 shares and 39,457,462 shares issued as of December 27, 2024 and June 28, 2024, respectively; and 35,981,188 shares and 36,145,242 shares outstanding as of December 27, 2024 and June 28, 2024, respectively) 396 395 Additional paid-in capital 218,449 222,044 Less: Treasury shares (3,604,000 shares and 3,312,220 shares as of December 27, 2024 and June 28, 2024, respectively) (303,023) (234,323)Accumulated other comprehensive income (loss) 2,349 (3,141)Retained earnings 1,924,800 1,760,770 Total Shareholders’ Equity 1,842,971 1,745,745 Total Liabilities and Shareholders’ Equity$2,542,405 $2,338,519 FABRINETCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended Six Months Ended (in thousands of U.S. dollars, except per share data)December 27,2024 December 29,2023 December 27,2024 December 29,2023Revenues$833,608 $712,694 $1,637,836 $1,398,171 Cost of revenues (732,759) (624,364) (1,437,961) (1,225,437)Gross profit 100,849 88,330 199,875 172,734 Selling, general and administrative expenses (21,206) (19,316) (43,237) (39,745)Restructuring and other related costs (46) — (103) — Operating income 79,597 69,014 156,535 132,989 Interest income 11,314 7,748 22,247 13,646 Interest expense — (36) — (81)Foreign exchange gain (loss), net 4,042 (3,788) (3,053) (3,373)Other income (expense), net (62) (35) (81) (115)Income before income taxes 94,891 72,903 175,648 143,066 Income tax expense (8,255) (3,793) (11,618) (8,867)Net income 86,636 69,110 164,030 134,199 Other comprehensive income (loss), net of tax: Change in net unrealized gain (loss) on available-for-sale securities (521) 2,946 6,297 3,894 Change in net unrealized gain (loss) on derivative instruments (9,416) 8,951 (883) 8,390 Change in net retirement benefits plan – prior service cost — 8 — 134 Change in foreign currency translation adjustment 428 (206) 76 (106)Total other comprehensive income (loss), net of tax (9,509) 11,699 5,490 12,312 Net comprehensive income$77,127 $80,809 $169,520 $146,511 Earnings per share Basic$2.40 $1.90 $4.53 $3.70 Diluted$2.38 $1.89 $4.51 $3.67 Weighted-average number of ordinary shares outstanding (in thousands of shares) Basic 36,163 36,328 36,183 36,292 Diluted 36,402 36,639 36,405 36,560 FABRINETCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended(in thousands of U.S. dollars)December 27,2024 December 29,2023Cash flows from operating activities Net income for the period$164,030 $134,199 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 25,796 24,186 (Gain) loss on disposal of property, plant and equipment and intangibles (37) (111)Amortization of discount (premium) of short-term investments (2,225) (1,397)(Reversal of) allowance for expected credit losses (384) 1,776 Unrealized loss (gain) on exchange rate and fair value of foreign currency forward contracts 1,345 3,287 Amortization of fair value at hedge inception of interest rate swaps — (154)Share-based compensation 17,120 14,714 Deferred income tax expense (benefit) (3,493) 1,117 Other non-cash expenses 30 89 Changes in operating assets and liabilities Trade accounts receivable (87,178) (53,873)Inventories (25,953) 104,818 Other current assets and non-current assets 9,536 (16,360)Trade accounts payable 88,272 (6,980)Income tax payable 4,304 1,531 Accrued expenses 8,124 4,272 Other payables 186 20,700 Severance liabilities 1,565 1,395 Other current liabilities and non-current liabilities (1,952) (3,995) Net cash provided by operating activities 199,086 229,214 Cash flows from investing activities Purchase of short-term investments (155,936) (164,971)Proceeds from sales of short-term investments — 10,000 Proceeds from maturities of short-term investments 82,129 72,824 Purchase of property, plant and equipment (42,150) (21,236)Purchase of intangibles (227) (518)Proceeds from disposal of property, plant and equipment 110 2,048 Net cash used in investing activities (116,074) (101,853)Cash flows from financing activities Repayment of long-term borrowings — (6,094)Repurchase of ordinary shares (68,700) (6,372)Withholding tax related to net share settlement of restricted share units (20,714) (12,352) Net cash used in financing activities (89,414) (24,818)Net increase (decrease) in cash and cash equivalents$(6,402) $102,543 Movement in cash and cash equivalents Cash and cash equivalents at the beginning of period$409,973 $231,368 Increase (decrease) in cash and cash equivalents (6,402) 102,543 Effect of exchange rate on cash and cash equivalents 91 142 Cash and cash equivalents at the end of period$403,662 $334,053 Non-cash investing and financing activities Construction, software and equipment-related payables$20,594 $12,983 FABRINETRECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED) Reconciliation of GAAP Gross Profit and GAAP Gross Margin to Non-GAAP Gross Profit and Non-GAAP Gross Margin Three Months Ended Six Months Ended(in thousands of U.S. dollars)December 27,2024 December 29,2023 December 27,2024 December 29,2023Revenues$833,608 $712,694 $1,637,836 $1,398,171 Gross profit (GAAP)$100,849 12.1% $88,330 12.4% $199,875 12.2% $172,734 12.4%Share-based compensation expenses 2,764 1,701 5,662 3,866 Gross profit (Non-GAAP)$103,613 12.4% $90,031 12.6% $205,537 12.5% $176,600 12.6% Reconciliation of GAAP Operating Profit and GAAP Operating Margin to Non-GAAP Operating Profit and Non-GAAP Operating Margin Three Months Ended Six Months Ended(in thousands of U.S. dollars)December 27,2024 December 29,2023 December 27,2024 December 29,2023Revenues$833,608 $712,694 $1,637,836 $1,398,171 Operating profit (GAAP)$79,597 9.5% $69,014 9.7% $156,535 9.6% $132,989 9.5%Share-based compensation expenses 8,438 6,981 17,120 14,714 Severance payment and others 18 — 748 — Restructuring and other related costs 46 — 103 — Operating profit (Non-GAAP)$88,099 10.6% $75,995 10.7% $174,506 10.7% $147,703 10.6% FABRINETRECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED) Reconciliation of GAAP Net Income and EPS to Non-GAAP Net Income and EPS Three Months Ended Six Months Ended December 27,2024 December 29,2023 December 27,2024 December 29,2023(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 EPSGAAP measures$86,636 $2.38 $69,110 $1.89 $164,030 $4.51 $134,199 $3.67Items reconciling GAAP net income & EPS to non-GAAP net income & EPS: Related to cost of revenues: Share-based compensation expenses 2,764 0.08 1,701 0.05 5,662 0.16 3,866 0.11Total related to cost of revenues 2,764 0.08 1,701 0.05 5,662 0.16 3,866 0.11Related to selling, general and administrative expenses: Share-based compensation expenses 5,674 0.15 5,280 0.14 11,458 0.31 10,848 0.30Severance payment and others 18 0.00 — — 748 0.02 — —Total related to selling, general and administrative expenses 5,692 0.15 5,280 0.14 12,206 0.33 10,848 0.30Related to other income and expense: Restructuring and other related costs 46 0.00 — — 103 0.00 — —Amortization of deferred debt issuance costs — — 8 0.00 — — 16 0.00Total related to other income and expense 46 0.00 8 0.00 103 0.00 16 0.00Total related to net income & EPS 8,502 0.23 6,989 0.19 17,971 0.49 14,730 0.41Non-GAAP measures$95,138 $2.61 $76,099 $2.08 $182,001 $5.00 $148,929 $4.08Shares used in computing diluted net income per share (in thousands of shares) GAAP diluted shares 36,402 36,639 36,405 36,560Non-GAAP diluted shares 36,402 36,639 36,405 36,560 FABRINETRECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW (UNAUDITED) (in thousands of U.S. dollars) Three Months Ended Six Months Ended December 27,2024 December 29,2023 December 27,2024 December 29,2023Net cash provided by operating activities $115,904 $84,165 $199,086 $229,214 Less: Purchase of property, plant and equipment (21,900) (9,801) (42,150) (21,236)Non-GAAP free cash flow $94,004 $74,364 $156,936 $207,978 FABRINETGUIDANCE FOR QUARTER ENDING MARCH 28, 2025RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES DilutedEPSGAAP net income per diluted share$2.32 to $2.40Related to cost of revenues: Share-based compensation expenses0.08Total related to cost of revenues0.08Related to selling, general and administrative expenses: Share-based compensation expenses0.15Total related to selling, general and administrative expenses0.15Total related to net income & EPS0.23Non-GAAP net income per diluted share$2.55 to $2.63

Fabrinet Announces Second Quarter Fiscal Year 2025 Financial Results

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