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Fabrinet Announces Third Quarter Fiscal Year 2025 Financial Results

1. Fabrinet reported $872 million in Q3 revenue, exceeding guidance. 2. Non-GAAP EPS was $2.52, surpassing previous forecasts. 3. Telecom performance growth offset declines in datacom revenue. 4. Guidance for Q4 estimates revenue between $860 million and $900 million. 5. Long-term outlook remains optimistic for fiscal 2026.

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Why Bullish?

Fabrinet's robust revenue growth and guidance above expectations indicate strong market performance. For instance, a similar earnings beat in the past often led to upward price movements.

How important is it?

The article reflects positive financial performance, likely influencing investor sentiment and stock pricing. Historical trends show that higher earnings significantly uplift stock interest.

Why Short Term?

Strong quarterly results typically drive immediate investor interest and stock price increase but can normalize afterward. This is exemplified by Fabrinet's previous quarterly beats leading to post-release surges.

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May 05, 2025 16:15 ET  | Source: Fabrinet Record Third Quarter Revenue Exceeds Guidance Range BANGKOK, May 05, 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 third fiscal quarter ended March 28, 2025. Seamus Grady, Chief Executive Officer of Fabrinet, said, “We had a very strong third quarter with revenue of $872 million dollars, which was above our guidance range. We delivered another strong telecom performance with growth that more than offset an anticipated sequential decline in datacom revenue. Our team continued to execute very well, producing non-GAAP EPS that also exceeded our guidance. Looking ahead, we remain optimistic and confident in our ability to deliver strong execution in the fourth quarter and into fiscal 2026.” Third Quarter Fiscal Year 2025 Financial Highlights GAAP Results Revenue for the third quarter of fiscal year 2025 was $871.8 million, compared to $731.5 million for the third quarter of fiscal year 2024.GAAP net income for the third quarter of fiscal year 2025 was $81.3 million, compared to $80.9 million for the third quarter of fiscal year 2024.GAAP net income per diluted share for the third quarter of fiscal year 2025 was $2.25, compared to $2.21 for the third quarter of fiscal year 2024. Non-GAAP Results Non-GAAP net income for the third quarter of fiscal year 2025 was $91.2 million, compared to $87.7 million for the third quarter of fiscal year 2024.Non-GAAP net income per diluted share for the third quarter of fiscal year 2025 was $2.52, compared to $2.39 for the third quarter of fiscal year 2024. Business Outlook Based on information available as of May 5, 2025, Fabrinet is issuing guidance for its fourth fiscal quarter ending June 27, 2025, as follows: Fabrinet expects fourth quarter revenue to be in the range of $860 million to $900 million.GAAP net income per diluted share is expected to be in the range of $2.32 to $2.47, 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 $2.70, 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 Third Quarter Fiscal Year 2025 Financial Results CallWhen: May 5, 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 optimism and confidence in our ability to deliver strong execution in the fourth quarter and into fiscal 2026; 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 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 February 4, 2025. 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; legal and litigation; 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)March 28,2025 June 28,2024 (unaudited)  Assets   Current assets   Cash and cash equivalents$306,905  $409,973 Short-term investments 643,772   448,630 Trade accounts receivable, net of allowance for expected credit losses of $1,255 and $1,629, respectively 658,301   592,452 Inventories 531,338   463,206 Prepaid expenses 19,396   10,620 Other current assets 84,731   87,810 Total current assets 2,244,443   2,012,691 Non-current assets   Property, plant and equipment, net 354,489   307,240 Intangibles, net 2,173   2,321 Operating right-of-use assets 6,021   5,336 Deferred tax assets 11,589   10,446 Other non-current assets 586   485 Total non-current assets 374,858   325,828 Total Assets$2,619,301  $2,338,519 Liabilities and Shareholders’ Equity   Current liabilities   Trade accounts payable 521,226   441,835 Fixed assets payable 33,101   14,380 Operating lease liabilities, current portion 1,709   1,355 Income tax payable 8,090   3,937 Accrued payroll, bonus and related expenses 24,170   22,116 Accrued expenses 32,420   19,916 Other payables 54,331   54,403 Total current liabilities 675,047   557,942 Non-current liabilities   Deferred tax liability 1,371   4,895 Operating lease liability, non-current portion 4,012   3,635 Severance liabilities 28,337   24,093 Other non-current liabilities 3,340   2,209 Total non-current liabilities 37,060   34,832 Total Liabilities 712,107   592,774 Shareholders’ equity   Preferred shares (5,000,000 shares authorized, $0.01 par value; no shares issued and outstanding as of March 28, 2025 and June 28, 2024) —   — Ordinary shares (500,000,000 shares authorized, $0.01 par value; 39,596,609 shares and 39,457,462 shares issued as of March 28, 2025 and June 28, 2024, respectively; and 35,830,476 shares and 36,145,242 shares outstanding as of March 28, 2025 and June 28, 2024, respectively) 396   395 Additional paid-in capital 229,957   222,044 Less: Treasury shares (3,766,133 shares and 3,312,220 shares as of March 28, 2025 and June 28, 2024, respectively) (337,798)  (234,323)Accumulated other comprehensive income (loss) 8,549   (3,141)Retained earnings 2,006,090   1,760,770 Total Shareholders’ Equity 1,907,194   1,745,745 Total Liabilities and Shareholders’ Equity$2,619,301  $2,338,519   FABRINETCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)  Three Months Ended Nine Months Ended (in thousands of U.S. dollars, except per share data)March 28,2025 March 29,2024 March 28,2025 March 29,2024Revenues$871,799  $731,535  $2,509,635  $2,129,706 Cost of revenues (769,616)  (640,600)  (2,207,577)  (1,866,037)Gross profit 102,183   90,935   302,058   263,669 Selling, general and administrative expenses (22,063)  (19,628)  (65,300)  (59,373)Restructuring and other related costs (1,264)  —   (1,367)  — Operating income 78,856   71,307   235,391   204,296 Interest income 10,145   8,509   32,392   22,155 Interest expense —   (26)  —   (107)Foreign exchange gain (loss), net (2,675)  3,348   (5,728)  (25)Other income (expense), net (30)  175   (111)  60 Income before income taxes 86,296   83,313   261,944   226,379 Income tax expense (5,006)  (2,397)  (16,624)  (11,264)Net income 81,290   80,916   245,320   215,115 Other comprehensive income (loss), net of tax:       Change in net unrealized gain (loss) on available-for-sale securities 3,350   (1,739)  9,647   2,155 Change in net unrealized gain (loss) on derivative instruments 1,790   (7,328)  907   1,062 Change in net retirement benefits plan – prior service cost —   137   —   271 Change in foreign currency translation adjustment 1,060   75   1,136   (31)Total other comprehensive income (loss), net of tax 6,200   (8,855)  11,690   3,457 Net comprehensive income$87,490  $72,061  $257,010  $218,572 Earnings per share       Basic$2.26  $2.23  $6.80  $5.93 Diluted$2.25  $2.21  $6.75  $5.88 Weighted-average number of ordinary shares outstanding (in thousands of shares)       Basic 35,914   36,250   36,094   36,278 Diluted 36,172   36,603   36,327   36,574                  FABRINETCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  Nine Months Ended(in thousands of U.S. dollars)March 28,2025 March 29,2024Cash flows from operating activities   Net income for the period$245,320  $215,115 Adjustments to reconcile net income to net cash provided by operating activities   Depreciation and amortization 39,223   36,602 (Gain) loss on disposal of property, plant and equipment and intangibles (39)  (147)Amortization of discount (premium) of short-term investments (3,435)  (2,317)(Reversal of) allowance for expected credit losses (374)  1,874 Unrealized loss (gain) on exchange rate and fair value of foreign currency forward contracts 4,067   (2,135)Amortization of fair value at hedge inception of interest rate swaps —   (198)Share-based compensation 24,903   21,440 Customer warrant 3,929   — Deferred income tax expense (benefit) (4,182)  1,125 Other non-cash expenses 82   193 Changes in operating assets and liabilities   Trade accounts receivable (65,271)  (54,089)Inventories (68,132)  65,442 Other current assets and non-current assets (2,357)  (33,548)Trade accounts payable 79,196   48,268 Income tax payable 4,180   (1,068)Accrued expenses 12,643   1,493 Other payables (152)  29,309 Severance liabilities 2,131   2,249 Other current liabilities and non-current liabilities 1,540   476 Net cash provided by operating activities 273,272   330,084 Cash flows from investing activities   Purchase of short-term investments (304,189)  (268,461)Proceeds from sales of short-term investments —   10,000 Proceeds from maturities of short-term investments 122,129   173,120 Purchase of property, plant and equipment (70,668)  (34,825)Purchase of intangibles (514)  (768)Proceeds from disposal of property, plant and equipment 116   2,319 Net cash used in investing activities (253,126)  (118,615)Cash flows from financing activities   Repayment of long-term borrowings —   (9,141)Repurchase of ordinary shares         (103,475)          (35,943)Withholding tax related to net share settlement of restricted share units (20,918)  (12,716)Net cash used in financing activities (124,393)  (57,800)Net increase (decrease) in cash and cash equivalents$(104,247) $153,669 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 (104,247)  153,669 Effect of exchange rate on cash and cash equivalents 1,179   74 Cash and cash equivalents at the end of period$306,905  $385,111 Non-cash investing and financing activities   Construction, software and equipment-related payables$33,101  $9,229          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 Nine Months Ended(in thousands of U.S. dollars)March 28,2025 March 29,2024 March 28,2025 March 29,2024Revenues$871,799   $731,535   $2,509,635   $2,129,706                  Gross profit (GAAP)$102,183 11.7% $90,935 12.4% $302,058 12.0% $263,669 12.4%Share-based compensation expenses 2,221    1,561    7,883    5,427  Gross profit (Non-GAAP)$104,404 12.0% $92,496 12.6% $309,941 12.4% $269,096 12.6% Reconciliation of GAAP Operating Profit and GAAP Operating Margin to Non-GAAP Operating Profit and Non-GAAP Operating Margin  Three Months Ended Nine Months Ended(in thousands of U.S. dollars)March 28,2025 March 29,2024 March 28,2025 March 29,2024Revenues$871,799   $731,535   $2,509,635   $2,129,706                  Operating profit (GAAP)$78,856 9.0% $71,307 9.7% $235,391 9.4% $204,296 9.6%Share-based compensation expenses 7,783    6,726    24,903    21,440  Restructuring and other related costs 1,264    —    1,367    —  Legal and litigation 827    —    827    —  Severance payment and others —    —    748    —  Operating profit (Non-GAAP)$88,730 10.2% $78,033 10.7% $263,236 10.5% $225,736 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 Nine Months Ended March 28,2025 March 29,2024 March 28,2025 March 29,2024(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$81,290 $2.25 $80,916 $2.21 $245,320 $6.75 $215,115 $5.88Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:               Related to cost of revenues:               Share-based compensation expenses 2,221  0.06  1,561  0.04  7,883  0.22  5,427  0.15Total related to cost of revenues 2,221  0.06  1,561  0.04  7,883  0.22  5,427  0.15Related to selling, general and administrative expenses:               Share-based compensation expenses 5,562  0.16  5,165  0.14  17,020  0.47  16,013  0.44Legal and litigation 827  0.02  —  —  827  0.02  —  —Severance payment and others —  —  —  —  748  0.02  —  —Total related to selling, general and administrative expenses 6,389  0.18  5,165  0.14  18,595  0.51  16,013  0.44Related to other income and expense:               Restructuring and other related costs 1,264  0.03  —  —  1,367  0.04  —  —Amortization of deferred debt issuance costs —  —  8  0.00  —  —  24  0.00Total related to other income and expense 1,264  0.03  8  0.00  1,367  0.04  24  0.00Total related to net income & EPS 9,874  0.27  6,734  0.18  27,845  0.77  21,464  0.59Non-GAAP measures$91,164 $2.52 $87,650 $2.39 $273,165 $7.52 $236,579 $6.47Shares used in computing diluted net income per share (in thousands of shares)               GAAP diluted shares   36,172    36,603    36,327    36,574Non-GAAP diluted shares   36,172    36,603    36,327    36,574                     FABRINETRECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW (UNAUDITED) (in thousands of U.S. dollars) Three Months Ended Nine Months Ended   March 28,2025 March 29,2024 March 28,2025 March 29,2024Net cash provided by operating activities $74,186  $100,870  $273,272  $330,084 Less: Purchase of property, plant and equipment  (28,518)  (13,589)  (70,668)  (34,825)Non-GAAP free cash flow $45,668  $87,281  $202,604  $295,259   FABRINETGUIDANCE FOR QUARTER ENDING JUNE 27, 2025RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES  DilutedEPSGAAP net income per diluted share$2.32 to $2.47Related 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 $2.70

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