Fabrinet
Nov 7, 2016

Fabrinet Announces First Quarter Fiscal-Year 2017 Financial Results

BANGKOK--(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 the first fiscal quarter ended September 30, 2016.

Tom Mitchell, Chief Executive Officer of Fabrinet, said: "We are off to a strong start in fiscal 2017 with first quarter revenue that exceeded our expectations and grew more than 50% from a year ago. We are benefiting from positive trends in the optical industry, including increasing activity from new and existing customer programs. We believe we are in a strong position to serve industry demand with new capacity from the first building at our new campus in Chonburi, Thailand, and our growing new product introduction (NPI) operation in Santa Clara. Our recent acquisition of Exception EMS, U.K. extends our NPI capabilities while diversifying our customer base. With continued momentum, we are optimistic we can again deliver strong growth in the second quarter, as reflected in our business outlook."

First Quarter Fiscal-Year 2017 Financial Highlights

GAAP Results

Non-GAAP Results

Business Outlook

Based on information available as of November 7, 2016, Fabrinet is issuing guidance for the second quarter of fiscal-year 2017 ending December 30, 2016, as follows:

 

Conference Call Information

 
What:       Fabrinet First Quarter Fiscal-Year 2017 Financial Results Conference Call
When: Monday, November 7, 2016
Time: 5:00 p.m. ET
Live Call: (888) 357-3694, domestic
(253) 237-1137, international

 

Passcode: 1372730

Replay: (855) 859-2056, domestic
(404) 537-3406, international

 

Passcode: 1372730

Webcast:

http://investor.fabrinet.com (live and replay)

 

This press release and any other information related to the call also will 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, 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 test. 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 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 our expectation that we will continue to achieve profitable growth and scale our business, as well as all of the statements under the "Business Outlook" section regarding our expected revenue and GAAP and non-GAAP net income per share for the second quarter of fiscal-year 2017. 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: 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, 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 on August 17, 2016. 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

The Company refers to the non-GAAP financial measures cited above in making operating decisions because they provide meaningful supplemental information regarding the Company's ongoing operational performance. Non-GAAP net income excludes share-based compensation expenses, executive separation costs, investigation costs, income related to flooding, expenses related to reduction in workforce, amortization of debt issuance costs, unrealized gain or loss on foreign currency, business combination expenses and one time cost resulting from a non-recurring warranty charge. 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 financial and operational decision making. In addition, these non-GAAP financial measures are used to measure company performance for the purposes of determining employee incentive plan compensation.

 

FABRINET

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

September 30,
2016

June 24,
2016

 
Assets
Current assets
Cash and cash equivalents $

105,860

$ 142,804
Marketable securities 147,702 141,709
Trade accounts receivable, net 212,684 196,145
Inventory, net 205,484 181,499
Deferred tax assets 1,358
Prepaid expenses 3,511 3,114
Other current assets   5,210   6,662
Total current assets   680,451   673,291
Non-current assets
Restricted cash in connection with business acquisition 3,379
Property, plant and equipment, net 205,845 178,410
Intangibles, net 5,091 499
Goodwill 2,994
Deferred tax assets 2,503 1,806
Deferred debt issuance costs on revolving loan and other non-current assets   1,040   1,851
Total non-current assets   220,852   182,566
Total Assets $ 901,303 $ 855,857
 
Liabilities and Shareholders' Equity
Current liabilities
Bank borrowings, net of unamortized debt issuance costs $ 37,516 $ 24,307
Trade accounts payable 179,741 172,052
Fixed assets payable 19,694 20,628
Capital lease liability, current portion 122
Income tax payable 3,077 2,010
Accrued payroll, bonus and related expenses 12,417 12,300
Accrued expenses 6,462 8,072
Other payables   10,214   16,356
Total current liabilities

 

269,243

255,725
Non-current liabilities

Long-term loan from bank, non-current portion, net of unamortized
debt issuance costs

32,759 36,100
Deferred tax liability 854
Capital lease liability, non-current portion

 

1,556

Deferred liability in connection with business acquisition

 

3,379

Severance liabilities

 

7,154

6,684
Other non-current liabilities

 

2,179

2,075
Total non-current liabilities

 

47,027

45,713
Total Liabilities   316,270 301,438
Commitments and contingencies
Shareholders' equity

Preferred shares (5,000,000 shares authorized, $0.01 par value; no shares
issued and outstanding as of September 30, 2016 and June 24, 2016)

 

Ordinary shares (500,000,000 shares authorized, $0.01 par value;
36,700,468 shares and 36,156,446 shares issued and outstanding as of
September 30, 2016 and June 24, 2016, respectively)

367 362
Additional paid-in capital 109,772 102,325
Accumulated other comprehensive income 987 591
Retained earnings   473,907 451,141
Total Shareholders' Equity

 

585,033

554,419
Total Liabilities and Shareholders' Equity $ 901,303 $ 855,857
 
   

FABRINET

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME

 
Three Months Ended
(in thousands of U.S. dollars, except per share amounts)

September 30,
2016

   

September 25,
2015

Revenues $ 332,043 $ 216,433
Cost of revenues   (292,435)   (190,422)
Gross profit 39,608 26,011
Selling, general and administrative expenses (15,832) (11,900)
Other expense related to flooding     (864)
Operating income 23,776 13,247
Interest income 437 442
Interest expense (1,322) (402)
Foreign exchange gain (loss), net 1,657 (10,492)
Other income   143   103
Income before income taxes 24,691 2,898
Income tax expense   (1,925)   (1,295)
Net income   22,766   1,603
Other comprehensive income, net of tax:
Change in net unrealized (loss) gains on marketable securities (187) 87
Change in net unrealized loss on derivative instruments (158)
Change in foreign exchange currency translation adjustment   741  
Total other comprehensive income, net of tax   396   87
Net comprehensive income $ 23,162 $ 1,690
 
Earnings per share
Basic $ 0.63 $ 0.05
Diluted $ 0.61 $ 0.04
 
Weighted-average number of ordinary shares outstanding (thousands of shares)
Basic 36,404 35,579
Diluted 37,330 36,315
 
   

FABRINET

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
Three Months Ended
(in thousands of U.S. dollars)

September 30,
2016

   

September 25,
2015

 
Cash flows from operating activities
Net income for the period $ 22,766 $ 1,603
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 5,113 4,063
Gain on disposal of property, plant and equipment (40) (26)
Loss from sales and maturities of available-for-sale securities 100 92
Amortization of investment premium 166 298
Amortization of deferred debt issuance costs 908 171
Allowance for doubtful accounts (reversal of) 3 (4)
Unrealized (gain) loss on exchange rate and fair value of derivative instruments (1,913) 10,855
Share-based compensation 5,611 2,673
Deferred income tax 311 157
Other non-cash expenses 453 386
(Reversal of) inventory obsolescence (62) 150
Loss from written-off inventory due to flood loss 233
Changes in operating assets and liabilities
Trade accounts receivable (11,876) (4,948)
Inventory (21,290) (13,150)
Other current assets and non-current assets 3,285 (668)
Trade accounts payable 3,103 3,053
Income tax payable 1,035 707
Other current liabilities and non-current liabilities   (8,675)   (1,106)
Net cash (used in) provided by operating activities   (1,002)   4,539
Cash flows from investing activities
Purchase of marketable securities (32,737) (38,773)
Proceeds from sales of marketable securities 13,061 16,687
Proceeds from maturities of marketable securities 13,230 12,528
Payments in connection with business acquisition, net of cash acquired (9,664)
Restricted cash in connection with business acquisition (3,379)
Purchase of property, plant and equipment (27,090) (8,452)
Purchase of intangibles (178) (68)
Deposits for land purchase (2,352)
Proceeds from disposal of property, plant and equipment   107   28
Net cash used in investing activities   (46,650)   (20,402)
Cash flows from financing activities
Payment of debt issuance costs (353)
Proceeds from revolving loans 13,500
Repayment of long-term loans from bank (4,900) (1,500)
Proceeds from issuance of ordinary shares under employee share option plans 2,708 1,547
Withholding tax related to net share settlement of restricted share units   (867)   (878)
Net cash provided by (used in) financing activities   10,441   (1,184)
Net decrease in cash and cash equivalents   (37,211)   (17,047)
 
Movement in cash and cash equivalents
Cash and cash equivalents at beginning of period 142,804 112,978
Decrease in cash and cash equivalents (37,211) (17,047)
Effect of exchange rate on cash and cash equivalents   267   (466)
Cash and cash equivalents at end of period $ 105,860 $ 95,465
 
Non-cash investing and financing activities
Construction and equipment-related payables $ 19,694 $ 5,123
 
 

FABRINET

Reconciliation of GAAP measures to non-GAAP measures

     
(in thousands of U.S. dollars, except per share data) Three Months Ended
September 30, 2016     September 25, 2015

Net
income

 

Diluted
EPS

Net
income

 

Diluted
EPS

 
GAAP measures 22,766 0.61 1,603 0.04
Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses 1,014 0.03 537 0.01
       
Total related to gross profit 1,014   0.03   537 0.01
 
Related to selling, general and administrative expenses:
Share-based compensation expenses 4,598 0.12 2,136 0.06
Executive separation cost 577 0.02 - -
Business combination expenses 1,411 0.04 - -
       
Total related to selling, general and administrative expenses 6,586   0.18   2,136 0.06
 
Related to other incomes and other expenses:
Expenses related to flooding - - 864 0.02
Amortization of debt issuance costs 1,063 0.03 171 0.01
(Gain)/loss on foreign currency (1,713 ) (0.05 ) 10,897 0.30
       
Total related to other incomes and other expenses (650 ) (0.02 ) 11,932 0.33
 
Total related to net income & EPS 6,950   0.19   14,605 0.40
 
Non-GAAP measures 29,716   0.80   16,208 0.45
 
Shares used in computing diluted net income per share
GAAP diluted shares 37,330 36,315
Non-GAAP diluted shares 37,330 36,315
 
 

Fabrinet Guidance for Quarter Ending December 30, 2016
Items reconciling GAAP EPS to non-GAAP EPS:

 

     

Diluted
EPS

GAAP net income per diluted share:   $0.65 to $0.67
Related to cost of revenues:
Share-based compensation expenses   0.03

Related to selling, general and administrative expenses:

Share-based compensation expenses   0.09

Related to other incomes and other expenses:

Amortization of debt issuance costs   0.01
 
Total related to net income & EPS   0.13
Non-GAAP net income per diluted share   $0.78 to $0.80
 

Investor Contact:
Fabrinet
Garo Toomajanian
ir@fabrinet.com

Source: Fabrinet

News Provided by Acquire Media