Business Outlook
Based on information available as of
Conference Call Information
| What: | Fabrinet First Quarter 2015 Financial Results Conference Call | ||||
| When: |
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| Time: |
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| Live Call: | (888) 357-3694, domestic | ||||
| (253) 237-1137, international | |||||
| Passcode: 25412759 | |||||
| Replay: | (855) 859-2056, domestic | ||||
| (404) 537-3406, international | |||||
| Passcode: 25412759 | |||||
| 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
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 all of the statements under the "Business Outlook"
section relating to our forecasted operating results for the second
quarter of fiscal 2015. 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 the U.S.,
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, investigation costs and income related to flooding. We have excluded these items in order to enhance investors' understanding of our ongoing 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.
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| Consolidated Balance Sheets | |||||||||||
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As of |
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| (in thousands of U.S. dollars, except share data) |
2014 |
2014 |
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| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 244,683 | $ | 233,477 | |||||||
| Trade accounts receivable, net | 107,943 | 101,168 | |||||||||
| Inventory, net | 128,672 | 124,570 | |||||||||
| Deferred tax assets | 1,642 | 1,561 | |||||||||
| Prepaid expenses | 1,638 | 1,691 | |||||||||
| Other current assets | 2,467 | 2,010 | |||||||||
| Total current assets | 487,045 | 464,477 | |||||||||
| Non-current assets | |||||||||||
| Property, plant and equipment, net | 98,058 | 97,244 | |||||||||
| Intangibles, net | 51 | 72 | |||||||||
| Deferred tax assets | 1,775 | 1,775 | |||||||||
| Deferred debt issuance costs | 2,559 | 989 | |||||||||
| Total non-current assets | 102,443 | 100,080 | |||||||||
| Total assets | $ | 589,488 | $ | 564,557 | |||||||
| Liabilities and Shareholders' Equity | |||||||||||
| Current liabilities | |||||||||||
| Long-term loans from bank, current portion | $ | 6,000 | $ | 6,000 | |||||||
| Trade accounts payable | 101,783 | 94,853 | |||||||||
| Income tax payable | 1,484 | 1,024 | |||||||||
| Accrued payroll, bonus and related expenses | 10,919 | 8,612 | |||||||||
| Accrued expenses | 5,238 | 4,345 | |||||||||
| Other payables | 8,445 | 5,795 | |||||||||
| Total current liabilities | 133,869 | 120,629 | |||||||||
| Non-current liabilities | |||||||||||
| Long-term loans from bank, non-current portion | 9,000 | 10,500 | |||||||||
| Deferred tax liability | 1,128 | 1,040 | |||||||||
| Severance liabilities | 4,671 | 4,453 | |||||||||
| Other non-current liabilities | 1,268 | 1,099 | |||||||||
| Total non-current liabilities | 16,067 | 17,092 | |||||||||
| Total liabilities | 149,936 | 137,721 | |||||||||
| Commitments and contingencies | |||||||||||
| Shareholders' equity | |||||||||||
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Preferred shares (5,000,000 shares authorized, |
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no shares issued and outstanding as of |
- | - | |||||||||
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Ordinary shares (500,000,000 shares authorized, |
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| 35,319,755 shares and 35,152,772 shares issued and | |||||||||||
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outstanding as of |
353 | 352 | |||||||||
| Additional paid-in capital | 82,561 | 80,882 | |||||||||
| Retained earnings | 356,638 | 345,602 | |||||||||
| Total shareholders' equity | 439,552 | 426,836 | |||||||||
| Total Liabilities and Shareholders' Equity | $ | 589,488 | $ | 564,557 | |||||||
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| Consolidated Statements of Operations and Comprehensive Income | |||||||||||||
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For the three months ended |
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| Three Months Ended | |||||||||||||
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| (in thousands of U.S. dollars, except share data) | 2014 | 2013 | |||||||||||
| Revenues | $ | 189,325 | $ | 171,551 | |||||||||
| Cost of revenues | (168,819 | ) | (152,906 | ) | |||||||||
| Gross profit | 20,506 | 18,645 | |||||||||||
| Selling, general and administrative expenses | (8,737 | ) | (6,694 | ) | |||||||||
| Income related to flooding | - | 6,597 | |||||||||||
| Operating income | 11,769 | 18,548 | |||||||||||
| Interest income | 374 | 364 | |||||||||||
| Interest expense | (133 | ) | (206 | ) | |||||||||
| Foreign exchange (loss) gain, net | (106 | ) | 1,088 | ||||||||||
| Other income | 103 | 184 | |||||||||||
| Income before income taxes | 12,007 | 19,978 | |||||||||||
| Income tax expense | (971 | ) | (781 | ) | |||||||||
| Net income | 11,036 | 19,197 | |||||||||||
| Other comprehensive income | - | - | |||||||||||
| Net comprehensive income | $ | 11,036 | $ | 19,197 | |||||||||
| Earnings per share | |||||||||||||
| Basic | $ | 0.31 | $ | 0.55 | |||||||||
| Diluted | $ | 0.31 | $ | 0.55 | |||||||||
| Weighted average number of ordinary shares outstanding (thousands of shares) | |||||||||||||
| Basic | 35,230 | 34,674 | |||||||||||
| Diluted | 35,587 | 35,138 | |||||||||||
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| Consolidated Statements of Cash Flows | ||||||||||||
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For the three months ended |
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| Three Months Ended | ||||||||||||
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| (in thousands of U. S. dollars) | 2014 | 2013 | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net income for the period | $ | 11,036 | $ | 19,197 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||
| Depreciation | 2,887 | 2,509 | ||||||||||
| Amortization of intangibles | 21 | 28 | ||||||||||
| Gain on disposal of property, plant and equipment | (46 | ) | - | |||||||||
| Income related to flooding | - | (6,597 | ) | |||||||||
| Proceeds from insurers for inventory losses related to flooding | - | 6,597 | ||||||||||
| Reversal of allowance for doubtful accounts | (1 | ) | (53 | ) | ||||||||
| Unrealized gain on exchange rate and fair value of derivative | (208 | ) | (808 | ) | ||||||||
| Share-based compensation | 1,867 | 1,563 | ||||||||||
| Deferred income tax | 6 | 438 | ||||||||||
| Other non-cash expenses | 387 | 218 | ||||||||||
| Inventory obsolescence | 515 | - | ||||||||||
| Changes in operating assets and liabilities | ||||||||||||
| Trade accounts receivable | (6,773 | ) | (7,348 | ) | ||||||||
| Inventory | (4,617 | ) | (5,566 | ) | ||||||||
| Other current assets and non-current assets | (404 | ) | 60 | |||||||||
| Trade accounts payable | 6,930 | 13,189 | ||||||||||
| Income tax payable | 460 | 124 | ||||||||||
| Other current liabilities and non-current liabilities | 3,773 | 550 | ||||||||||
| Liabilities to third parties due to flood losses | - | (5,964 | ) | |||||||||
| Net cash provided by operating activities | 15,833 | 18,137 | ||||||||||
| Cash flows from investing activities | ||||||||||||
| Purchase of property, plant and equipment | (1,510 | ) | (1,253 | ) | ||||||||
| Proceeds from insurers in settlement of claims related to flood damage | 46 | - | ||||||||||
| Net cash used in investing activities | (1,464 | ) | (1,253 | ) | ||||||||
| Cash flows from financing activities | ||||||||||||
| Payment of debt issuance costs | (1,570 | ) | - | |||||||||
| Repayment of long-term loans from bank | (1,500 | ) | (2,417 | ) | ||||||||
| Proceeds from issuance of ordinary shares under employee share option plans |
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2 |
43 |
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| Withholding tax related to net share settlement of restricted share units | (189 | ) | (90 | ) | ||||||||
| Net cash used in financing activities | (3,257 | ) | (2,464 | ) | ||||||||
| Net increase in cash and cash equivalents | $ | 11,112 | $ | 14,420 | ||||||||
| Movement in cash and cash equivalents | ||||||||||||
| Cash and cash equivalents at beginning of period | $ | 233,477 | $ | 149,716 | ||||||||
| Increase in cash and cash equivalents | 11,112 | 14,420 | ||||||||||
| Effect of exchange rate on cash and cash equivalents | 94 | (276 | ) | |||||||||
| Cash and cash equivalents at end of period | $ | 244,683 | $ | 163,860 | ||||||||
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| Reconciliation of GAAP measures to non-GAAP measures | |||||||||||||||
| (in thousands of U.S. dollars, except per share data) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
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| 2014 | 2014 | 2013 | 2013 | ||||||||||||
| Net income | Diluted EPS | Net income | Diluted EPS | ||||||||||||
| GAAP measures | 11,036 | 0.31 | 19,197 | 0.55 | |||||||||||
| Items reconciling GAAP net income & EPS to non-GAAP net income & EPS: | |||||||||||||||
| Related to cost of revenues: | |||||||||||||||
| Share-based compensation expenses | 368 | 0.01 | 307 | 0.01 | |||||||||||
| Total related to gross profit | 368 | 0.01 | 307 | 0.01 | |||||||||||
| Related to selling, general and administrative expenses: | |||||||||||||||
| Share-based compensation expenses | 1,499 | 0.04 | 1,256 | 0.04 | |||||||||||
| Investigation costs | 1,600 | 0.05 | - | - | |||||||||||
| Total related to selling, general and administrative expenses | 3,099 | 0.09 | 1,256 | 0.04 | |||||||||||
| Related to other incomes and other expenses: | |||||||||||||||
| Income related to flooding | - | - | (6,597 | ) | (0.19 | ) | |||||||||
| Total related to other incomes and other expenses | - | - | (6,597 | ) | (0.19 | ) | |||||||||
| Total related to net income & EPS | 3,467 | 0.10 | (5,034 | ) | (0.14 | ) | |||||||||
| Non-GAAP measures | 14,503 | 0.41 | 14,163 | 0.40 | |||||||||||
| Shares used in computing diluted net income per share | |||||||||||||||
| GAAP diluted shares | 35,587 | 35,138 | |||||||||||||
| Non-GAAP diluted shares | 35,587 | 35,138 | |||||||||||||
Investors:
ir@fabrinet.com
Source:
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