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Fabrinet Announces First Quarter Fiscal Year 2022 Financial Results

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  • Record First Quarter Revenue of $543.3 Million Exceeds Guidance

BANGKOK, November 01, 2021--(BUSINESS WIRE)--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 first fiscal quarter ended September 24, 2021.

Seamus Grady, Chief Executive Officer of Fabrinet, said, "We had a strong start to fiscal 2022 with revenue and profitability that exceeded our guidance. By working in close partnership with our customers and suppliers, our supply chain team was effective at reducing the impact of component shortages on our business, particularly in the optical communications market."

Grady continued, "We are optimistic about continued strong demand across our business and are anticipating healthy sequential growth despite ongoing supply chain headwinds."

First Quarter Fiscal Year 2022 Financial Highlights

GAAP Results

  • Revenue for the first quarter of fiscal year 2022 was $543.3 million, compared to $436.6 million in the first quarter of fiscal year 2021.

  • GAAP net income for the first quarter of fiscal year 2022 was $44.7 million, compared to GAAP net income of $33.1 million for the first quarter of fiscal year 2021.

  • GAAP net income per diluted share for the first quarter of fiscal year 2022 was $1.20, compared to GAAP net income per diluted share of $0.88 for the first quarter of fiscal year 2021.

Non-GAAP Results

  • Non-GAAP net income for the first quarter of fiscal year 2022 was $54.2 million, compared to non-GAAP net income of $39.3 million for the first quarter of fiscal year 2021.

  • Non-GAAP net income per diluted share for the first quarter of fiscal year 2022 was $1.45, compared to non-GAAP net income per diluted share of $1.05 for the first quarter of fiscal year 2021.

Business Outlook

Based on information available as of November 1, 2021, Fabrinet is issuing guidance for its second fiscal quarter ending December 24, 2021, as follows:

  • Fabrinet expects second quarter revenue to be in the range of $540 million to $560 million.

  • GAAP net income per diluted share is expected to be in the range of $1.24 to $1.31, 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 $1.42 to $1.49, based on approximately 37.6 million fully diluted shares outstanding.

Conference Call Information

What:

Fabrinet First Quarter Fiscal Year 2022 Financial Results Call

When:

Monday, November 1, 2021

Time:

5:00 p.m. ET

Live Call:

(888) 357-3694, domestic

(253) 237-1137, international

Passcode: 2790505

Replay:

(855) 859-2056, domestic

(404) 537-3406, international

Passcode: 2790505

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 about continued strong demand across our business and sequential growth; 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 second 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 Annual Report on Form 10-K filed with the SEC on August 17, 2021. 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)

September 24,
2021

June 25,
2021

Assets

Current assets

Cash and cash equivalents

$

269,911

$

302,969

Short-term investments

258,501

244,963

Trade accounts receivable, net of allowance for doubtful accounts of $99 and $100 respectively

346,689

336,547

Contract assets

13,120

11,878

Inventories

465,251

422,133

Prepaid expenses

10,404

11,398

Other current assets

24,729

22,619

Total current assets

1,388,605

1,352,507

Non-current assets

Long-term restricted cash

155

154

Property, plant and equipment, net

271,659

241,129

Intangibles, net

4,107

4,371

Operating right-of-use assets

6,086

6,699

Deferred tax assets

9,491

9,428

Other non-current assets

518

1,834

Total non-current assets

292,016

263,615

Total Assets

1,680,621

1,616,122

Liabilities and Shareholders’ Equity

Current liabilities

Long-term borrowings, current portion, net

12,156

12,156

Trade accounts payable

373,663

346,555

Fixed assets payable

24,174

19,206

Contract liabilities

1,755

1,680

Operating lease liabilities, current portion

2,613

2,593

Income tax payable

2,776

3,612

Accrued payroll, bonus and related expenses

19,336

20,464

Accrued expenses

20,147

17,134

Other payables

22,599

20,958

Total current liabilities

479,219

444,358

Non-current liabilities

Long-term borrowings, non-current portion, net

24,319

27,358

Deferred tax liability

5,425

5,107

Operating lease liability, non-current portion

3,220

3,850

Severance liabilities

19,157

19,485

Other non-current liabilities

3,279

3,444

Total non-current liabilities

55,400

59,244

Total Liabilities

534,619

503,602

Shareholders’ equity

Preferred shares (5,000,000 shares authorized, $0.01 par value; no shares issued and outstanding as of September 24, 2021 and June 25, 2021)

Ordinary shares (500,000,000 shares authorized, $0.01 par value; 39,000,843 shares and 38,749,045 shares issued at September 24, 2021 and June 25, 2021, respectively; and 37,017,254 shares and 36,765,456 shares outstanding at September 24, 2021 and June 25, 2021, respectively)

390

388

Additional paid-in capital

179,670

189,445

Less: Treasury shares (1,983,589 shares and 1,983,589 shares as of September 24, 2021 and June 25, 2021, respectively)

(87,343)

(87,343)

Accumulated other comprehensive income (loss)

(7,662)

(6,266)

Retained earnings

1,060,947

1,016,296

Total Shareholders’ Equity

1,146,002

1,112,520

Total Liabilities and Shareholders’ Equity

$

1,680,621

$

1,616,122

FABRINET

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited)

(in thousands of U.S. dollars, except per share data)

Three Months Ended

September 24,
2021

September 25,
2020

Revenues

$

543,322

$

436,639

Cost of revenues

(479,725)

(386,159)

Gross profit

63,597

50,480

Selling, general and administrative expenses

(20,587)

(16,863)

Operating income

43,010

33,617

Interest income

761

1,104

Interest expense

(36)

(251)

Foreign exchange gain (loss), net

1,772

128

Other income (expense), net

(260)

121

Income before income taxes

45,247

34,719

Income tax expense

(596)

(1,668)

Net income

44,651

33,051

Other comprehensive income (loss), net of tax:

Change in net unrealized gain (loss) on available-for-sale securities

(213)

(325)

Change in net unrealized gain (loss) on derivative instruments

(1,217)

(3,208)

Change in net retirement benefits plan – prior service cost

198

173

Change in foreign currency translation adjustment

(164)

603

Total other comprehensive income (loss), net of tax

(1,396)

(2,757)

Net comprehensive income (loss)

$

43,255

$

30,294

Earnings per share

Basic

$

1.21

$

0.90

Diluted

$

1.20

$

0.88

Weighted-average number of ordinary shares outstanding (thousands of shares)

Basic

36,877

36,818

Diluted

37,328

37,383

FABRINET

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands of U.S. dollars)

Three Months Ended

September 24,
2021

September 25,
2020

Cash flows from operating activities

Net income for the period

$

44,651

$

33,051

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

9,535

8,570

(Gain) loss on disposal of property, plant and equipment

(98)

(19)

(Gain) loss from sales and maturities of available-for-sale securities

(13)

Amortization of investment discount

1,109

481

Amortization of deferred debt issuance costs

8

8

(Reversal of) allowance for doubtful accounts

(1)

(257)

Unrealized (gain) loss on exchange rate and fair value of foreign currency forward contracts

(1,436)

(890)

Amortization of fair value at hedge inception of interest rate swaps

(268)

(359)

Share-based compensation

9,292

6,027

Deferred income tax

(104)

56

Other non-cash expenses

257

96

Changes in operating assets and liabilities

Trade accounts receivable

(10,160)

(16,497)

Contract assets

(1,242)

1,499

Inventories

(43,135)

(29,643)

Other current assets and non-current assets

(385)

7,812

Trade accounts payable

27,541

33,546

Contract liabilities

75

(590)

Income tax payable

(747)

871

Severance liabilities

893

745

Other current liabilities and non-current liabilities

3,243

(10,001)

Net cash provided by operating activities

39,015

34,506

Cash flows from investing activities

Purchase of short-term investments

(78,101)

(79,103)

Proceeds from sales of short-term investments

19,463

Proceeds from maturities of short-term investments

43,791

33,750

Purchase of property, plant and equipment

(34,616)

(12,572)

Purchase of intangibles

(321)

(530)

Proceeds from disposal of property, plant and equipment

145

21

(49,639)

(58,434)

Cash flows from financing activities

Repayment of long-term borrowings

(3,047)

(3,047)

Repayment of finance lease liability

(100)

Withholding tax related to net share settlement of restricted share units

(19,065)

(9,920)

Net cash used in financing activities

(22,112)

(13,067)

Net increase (decrease) in cash, cash equivalents and restricted cash

(32,736)

(36,995)

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

(32,736)

(36,995)

Effect of exchange rate on cash, cash equivalents and restricted cash

(321)

766

Cash, cash equivalents and restricted cash at the end of period

270,066

196,603

Non-cash investing and financing activities

Construction, software and equipment-related payables

$

24,174

$

9,616

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

September 24,

September 25,

(amount in thousands)

2021

2020

Cash and cash equivalents

$

269,911

$

189,201

Restricted cash

155

7,402

Cash, cash equivalents and restricted cash

$

270,066

$

196,603

FABRINET

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(in thousands of U.S. dollars, except per share data)

Three Months Ended

September 24,
2021

September 25,
2020

Net income

Diluted
EPS

Net income

Diluted
EPS

GAAP measures

$

44,651

$

1.20

$

33,051

$

0.88

Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:

Related to cost of revenues:

Share-based compensation expenses

1,975

0.05

1,825

0.05

Depreciation of fair value uplift

92

0.00

84

0.00

Total related to gross profit

2,067

0.05

1,909

0.05

Related to selling, general and administrative expenses:

Share-based compensation expenses

7,317

0.20

4,202

0.11

Amortization of intangibles

119

0.00

131

0.00

Total related to selling, general and administrative expenses

7,436

0.20

4,333

0.12

Related to other incomes and other expenses:

Amortization of deferred debt issuance costs

8

0.00

8

0.00

Total related to other incomes and other expenses

8

0.00

8

0.00

Total related to net income & EPS

9,511

0.25

6,250

0.17

Non-GAAP measures

54,162

$

1.45

39,301

$

1.05

Shares used in computing diluted net income per share (thousands of shares)

GAAP diluted shares

37,328

37,383

Non-GAAP diluted shares

37,328

37,383

FABRINET

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

(amount in thousands)

Three Months Ended

September 24,

September 25,

2021

2020

Net cash provided by operating activities

$

39,015

$

34,506

Less: Purchase of property, plant and equipment

(34,616)

(12,572)

Non-GAAP free cash flow

$

4,399

$

21,934

FABRINET

GUIDANCE FOR QUARTER ENDING DECEMBER 24, 2021

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

Diluted
EPS

GAAP net income per diluted share:

$1.24 to $1.31

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

0.14

Total related to selling, general and administrative expenses

0.14

Total related to net income & EPS

0.18

Non-GAAP net income per diluted share

$1.42 to $1.49

View source version on businesswire.com: https://www.businesswire.com/news/home/20211101005989/en/

Contacts

Investor Contact:
Garo Toomajanian
ir@fabrinet.com

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