Fabrinet Announces Second Quarter Fiscal Year 2021 Financial Results
Fabrinet (NYSE: FN) reported strong financial results for Q2 FY2021, achieving record revenue of $453.8 million, up from $426.2 million in Q2 FY2020. GAAP net income rose to $35.4 million or $0.94 per diluted share, compared to $31.2 million and $0.83 in the prior year. Non-GAAP net income was $41.5 million or $1.10 per diluted share. The company anticipates Q3 revenue between $455 million and $475 million, with net income per diluted share guidance at $0.94 to $1.01. A new building is under construction to support growth.
- Record revenue of $453.8 million, up 6.0% year-over-year.
- GAAP net income increased to $35.4 million, a 13.4% rise from the previous year.
- Non-GAAP net income grew to $41.5 million, reflecting strong operational performance.
- Guidance for Q3 revenue of $455 million to $475 million indicates continued growth.
- None.
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 25, 2020.
Seamus Grady, Chief Executive Officer of Fabrinet, said, “We delivered record revenue and profitability that exceeded our guidance ranges in the second quarter. Newer programs helped drive revenue upside while margin improvement contributed to strong profitability in the quarter.”
Grady continued, “Based on our anticipated growth, we have broken ground on construction for an additional building at our Chonburi campus. As we look ahead, we are optimistic that the third quarter will represent another record-breaking quarter for the company.”
Second Quarter Fiscal Year 2021 Financial Highlights
GAAP Results
-
Revenue for the second quarter of fiscal year 2021 was
$453.8 million , compared to$426.2 million in the second quarter of fiscal year 2020. -
GAAP net income for the second quarter of fiscal year 2021 was
$35.4 million , compared to GAAP net income of$31.2 million for the second quarter of fiscal year 2020. -
GAAP net income per diluted share for the second quarter of fiscal year 2021 was
$0.94 , compared to GAAP net income per diluted share of$0.83 for the second quarter of fiscal year 2020.
Non-GAAP Results
-
Non-GAAP net income for the second quarter of fiscal year 2021 was
$41.5 million , compared to non-GAAP net income of$37.7 million for the second quarter of fiscal year 2020. -
Non-GAAP net income per diluted share for the second quarter of fiscal year 2021 was
$1.10 , compared to non-GAAP net income per diluted share of$1.00 for the second quarter of fiscal year 2020.
Business Outlook
Based on information available as of February 1, 2021, Fabrinet is issuing guidance for its third fiscal quarter ending March 26, 2021, as follows:
-
Fabrinet expects third quarter revenue to be in the range of
$455 million to$475 million . -
GAAP net income per diluted share is expected to be in the range of
$0.94 t o$1.01 , 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
$1.10 t o$1.17 , based on approximately 37.6 million fully diluted shares outstanding.
Conference Call Information
What: |
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Fabrinet Second Quarter Fiscal Year 2021 Financial Results Call |
When: |
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Monday, February 1, 2021 |
Time: |
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5:00 p.m. ET |
Live Call: |
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(888) 357-3694, domestic
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Replay: |
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(855) 859-2056, domestic
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Webcast: |
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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 that the third quarter will represent another record-breaking quarter for the company; 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 2021. 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 coronavirus 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 outbreak 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 outbreak intensifies or returns in various geographic areas, and (4) regional downward demand adjustments from our customers, particularly those in areas affected by the outbreak; 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 November 3, 2020. 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) |
December 25,
|
|
June 26,
|
||||
Assets |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
219,221 |
|
|
$ |
225,430 |
|
Short-term restricted cash |
7,402 |
|
|
7,402 |
|
||
Short-term investments |
261,817 |
|
|
262,693 |
|
||
Trade accounts receivable, net of allowance for doubtful accounts of |
318,430 |
|
|
272,665 |
|
||
Contract assets |
16,223 |
|
|
13,256 |
|
||
Inventories |
371,996 |
|
|
309,786 |
|
||
Other receivable |
24,310 |
|
|
24,310 |
|
||
Prepaid expenses |
3,141 |
|
|
5,399 |
|
||
Other current assets |
29,187 |
|
|
14,508 |
|
||
Total current assets |
1,251,727 |
|
|
1,135,449 |
|
||
Non-current assets |
|
|
|
||||
Long-term restricted cash |
153 |
|
|
— |
|
||
Property, plant and equipment, net |
227,670 |
|
|
228,274 |
|
||
Intangibles, net |
4,367 |
|
|
4,312 |
|
||
Operating right-of-use assets |
7,271 |
|
|
8,068 |
|
||
Deferred tax assets |
6,213 |
|
|
5,675 |
|
||
Other non-current assets |
236 |
|
|
202 |
|
||
Total non-current assets |
245,910 |
|
|
246,531 |
|
||
Total Assets |
1,497,637 |
|
|
1,381,980 |
|
||
Liabilities and Shareholders’ Equity |
|
|
|
||||
Current liabilities |
|
|
|
||||
Long-term borrowings, current portion, net |
12,156 |
|
|
12,156 |
|
||
Trade accounts payable |
296,948 |
|
|
251,603 |
|
||
Fixed assets payable |
7,748 |
|
|
15,127 |
|
||
Contract liabilities |
1,804 |
|
|
1,556 |
|
||
Operating lease liabilities, current portion |
2,277 |
|
|
1,979 |
|
||
Income tax payable |
2,806 |
|
|
2,242 |
|
||
Accrued payroll, bonus and related expenses |
17,633 |
|
|
19,265 |
|
||
Accrued expenses |
14,504 |
|
|
8,979 |
|
||
Other payables |
39,159 |
|
|
21,514 |
|
||
Total current liabilities |
395,035 |
|
|
334,421 |
|
||
Non-current liabilities |
|
|
|
||||
Long-term borrowings, non-current portion, net |
33,436 |
|
|
39,514 |
|
||
Deferred tax liability |
4,592 |
|
|
4,729 |
|
||
Operating lease liability, non-current portion |
4,737 |
|
|
5,873 |
|
||
Severance liabilities |
19,011 |
|
|
17,379 |
|
||
Other non-current liabilities |
4,156 |
|
|
5,655 |
|
||
Total non-current liabilities |
65,932 |
|
|
73,150 |
|
||
Total Liabilities |
460,967 |
|
|
407,571 |
|
||
|
|
|
|
||||
Shareholders’ equity |
|
|
|
||||
Preferred shares (5,000,000 shares authorized, |
— |
|
|
— |
|
||
Ordinary shares (500,000,000 shares authorized, |
387 |
|
|
385 |
|
||
Additional paid-in capital |
177,125 |
|
|
175,610 |
|
||
Less: Treasury shares (1,845,652 shares and 1,744,103 shares as of December 25, 2020 and June 26, 2020, respectively) |
(75,575) |
|
|
(68,501) |
|
||
Accumulated other comprehensive income (loss) |
(1,657) |
|
|
(1,147) |
|
||
Retained earnings |
936,390 |
|
|
868,062 |
|
||
Total Shareholders’ Equity |
1,036,670 |
|
|
974,409 |
|
||
Total Liabilities and Shareholders’ Equity |
$ |
1,497,637 |
|
|
$ |
1,381,980 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
FABRINET CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
(in thousands of U.S. dollars, except per share data) |
December 25,
|
|
December 27,
|
|
December 25,
|
|
December 27,
|
||||||||
Revenues |
$ |
453,827 |
|
|
$ |
426,217 |
|
|
$ |
890,466 |
|
|
$ |
825,513 |
|
Cost of revenues |
(400,806) |
|
|
(377,059) |
|
|
(786,965) |
|
|
(730,368) |
|
||||
Gross profit |
53,021 |
|
|
49,158 |
|
|
103,501 |
|
|
95,145 |
|
||||
Selling, general and administrative expenses |
(17,156) |
|
|
(17,078) |
|
|
(34,019) |
|
|
(33,078) |
|
||||
Expenses related to reduction in workforce |
— |
|
|
(16) |
|
|
— |
|
|
(16) |
|
||||
Operating income |
35,865 |
|
|
32,064 |
|
|
69,482 |
|
|
62,051 |
|
||||
Interest income |
1,111 |
|
|
1,940 |
|
|
2,215 |
|
|
4,038 |
|
||||
Interest expense |
(265) |
|
|
(181) |
|
|
(516) |
|
|
(2,574) |
|
||||
Foreign exchange gain (loss), net |
(533) |
|
|
(988) |
|
|
(405) |
|
|
(2,941) |
|
||||
Other income (expense), net |
158 |
|
|
397 |
|
|
279 |
|
|
774 |
|
||||
Income before income taxes |
36,336 |
|
|
33,232 |
|
|
71,055 |
|
|
61,348 |
|
||||
Income tax expense |
(952) |
|
|
(2,001) |
|
|
(2,620) |
|
|
(4,160) |
|
||||
Net income |
35,384 |
|
|
31,231 |
|
|
68,435 |
|
|
57,188 |
|
||||
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
||||||||
Change in net unrealized gain (loss) on available-for-sale securities |
(42) |
|
|
(82) |
|
|
(367) |
|
|
(47) |
|
||||
Change in net unrealized gain (loss) on derivative instruments |
2,385 |
|
|
(189) |
|
|
(823) |
|
|
(150) |
|
||||
Change in net retirement benefits plan – prior service cost |
50 |
|
|
101 |
|
|
223 |
|
|
184 |
|
||||
Change in foreign currency translation adjustment |
(146) |
|
|
616 |
|
|
457 |
|
|
247 |
|
||||
Total other comprehensive income (loss), net of tax |
2,247 |
|
|
446 |
|
|
(510) |
|
|
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FAQ
What was Fabrinet's revenue for Q2 FY2021?
Fabrinet reported revenue of $453.8 million for Q2 FY2021.
How much did Fabrinet earn in net income for Q2 FY2021?
Fabrinet's net income for Q2 FY2021 was $35.4 million.
What is Fabrinet's guidance for Q3 FY2021?
Fabrinet expects Q3 FY2021 revenue between $455 million and $475 million.
What was the non-GAAP net income per diluted share for Q2 FY2021?
The non-GAAP net income per diluted share for Q2 FY2021 was $1.10.
When will Fabrinet's conference call for Q2 results take place?
Fabrinet's conference call for Q2 results is scheduled for February 1, 2021, at 5:00 p.m. ET.
Fabrinet
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