Third Quarter Fiscal Year 2020 Financial Highlights
GAAP Results
-
Revenue for the third quarter of fiscal year 2020 was
$411.2 million , compared to revenue of$399.0 million for the comparable period in fiscal year 2019. -
GAAP net income for the third quarter of fiscal year 2020 was
$28.3 million , compared to GAAP net income of$28.6 million for the third quarter of fiscal year 2019. GAAP net income for the third quarter of fiscal year 2020 included a foreign exchange loss of$8 thousand , or$0.00 per diluted share, compared to a foreign exchange loss of$3.1 million , or$0.08 per diluted share, for the third quarter of fiscal year 2019. -
GAAP net income per diluted share for the third quarter of fiscal year 2020 was
$0.75 , compared to GAAP net income per diluted share of$0.76 for the third quarter of fiscal year 2019.
Non-GAAP Results
-
Non-GAAP net income for the third quarter of fiscal year 2020 was
$34.8 million , compared to non-GAAP net income of$34.3 million for the third quarter of fiscal year 2019. Non-GAAP net income for the third quarter of fiscal year 2020 included a foreign exchange loss of$8 thousand , or$0.00 per diluted share, compared to a foreign exchange loss of$3.1 million , or$0.08 per diluted share, for the third quarter of fiscal year 2019. -
Non-GAAP net income per diluted share for the third quarter of fiscal year 2020 was
$0.92 , compared to non-GAAP net income per diluted share of$0.92 for the same period a year ago.
Business Outlook
Based on information available as of
-
Fabrinet expects fourth quarter revenue to be in the range of$370.0 million to$400.0 million . -
GAAP net income per diluted share is expected to be in the range of
$0.64 to$0.76 , 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
$0.80 to$0.92 , based on approximately 37.6 million fully diluted shares outstanding.
Conference Call Information
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What: |
Fabrinet Third Quarter Fiscal-Year 2020 Financial Results Call |
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When: |
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Time: |
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Live Call: |
(888) 357-3694, domestic |
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(253) 237-1137, international |
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Passcode: 2794510 |
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Replay: |
(855) 859-2056, domestic |
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(404) 537-3406, international |
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Passcode: 2794510 |
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Webcast: |
http://investor.fabrinet.com/ (live and replay) |
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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
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include: (1) our expectations that we will continue to benefit from our flexible operating model to generate solid results; (2) our ability to reinforce our reputation and leadership position; and (3) 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 2020. 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
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; severance liabilities; expenses related to our CFO search; amortization of intangibles; business combination expenses; amortization of deferred debt issuance costs; expenses related to reduction in workforce; and ASC 606 adjustments. 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.
|
|
||||||
|
(in thousands of |
2020 |
2019 |
||||
|
|
|
|
||||
|
Assets |
|
|
||||
|
Current assets |
|
|
||||
|
Cash and cash equivalents |
$ |
224,138 |
$ |
180,839 |
||
|
Short-term restricted cash |
|
7,402 |
— |
|||
|
Short-term investments |
|
233,622 |
|
256,493 |
||
|
Trade accounts receivable, net |
|
283,467 |
|
260,602 |
||
|
Contract assets |
|
16,413 |
|
12,447 |
||
|
Inventories |
|
290,208 |
|
293,612 |
||
|
Other receivable |
|
24,310 |
— |
|||
|
Prepaid expenses |
|
4,524 |
|
8,827 |
||
|
Other current assets |
|
8,774 |
|
11,015 |
||
|
Total current assets |
|
1,092,858 |
|
1,023,835 |
||
|
Non-current assets |
|
|
||||
|
Long-term restricted cash |
— |
|
7,402 |
|||
|
Property, plant and equipment, net |
|
218,043 |
|
210,686 |
||
|
Intangibles, net |
|
3,999 |
|
3,887 |
||
|
Operating right-of-use assets |
|
7,175 |
— |
|||
|
|
|
3,571 |
|
3,705 |
||
|
Deferred tax assets |
|
4,353 |
|
5,679 |
||
|
Other non-current assets |
|
262 |
|
124 |
||
|
Total non-current assets |
|
237,403 |
|
231,483 |
||
|
Total Assets |
$ |
1,330,261 |
$ |
1,255,318 |
||
|
Liabilities and Shareholders’ Equity |
|
|
||||
|
Current liabilities |
|
|
||||
|
Long-term borrowings, current portion, net |
$ |
12,156 |
$ |
3,250 |
||
|
Trade accounts payable |
|
240,028 |
|
257,617 |
||
|
Contract liabilities |
|
1,941 |
|
2,239 |
||
|
Operating lease liabilities, current portion |
|
1,893 |
— |
|||
|
Income tax payable |
|
2,857 |
|
1,801 |
||
|
Accrued payroll, bonus and related expenses |
|
19,959 |
|
16,510 |
||
|
Accrued expenses |
|
19,798 |
|
8,997 |
||
|
Other payables |
|
28,819 |
|
22,634 |
||
|
Total current liabilities |
|
327,451 |
|
313,048 |
||
|
Non-current liabilities |
|
|
||||
|
Long-term borrowings, non-current portion, net |
|
42,553 |
|
57,688 |
||
|
Deferred tax liability |
|
3,684 |
|
3,561 |
||
|
Operating lease liabilities, non-current portion |
|
5,024 |
— |
|||
|
Severance liabilities |
|
16,143 |
|
15,209 |
||
|
Other non-current liabilities |
|
1,997 |
|
2,713 |
||
|
Total non-current liabilities |
|
69,401 |
|
79,171 |
||
|
Total Liabilities |
|
396,852 |
|
392,219 |
||
|
Commitments and contingencies |
|
|
||||
|
Shareholders’ equity |
|
|
||||
|
Preferred shares (5,000,000 shares authorized,
and |
|
— |
|
— |
||
|
Ordinary shares (500,000,000 shares authorized, |
|
385 |
|
382 |
||
|
Additional paid-in capital |
|
171,870 |
|
158,299 |
||
|
|
|
|
||||
|
Less: |
|
(68,501) |
|
(47,779) |
||
|
Accumulated other comprehensive loss |
|
(10,383) |
|
(2,386) |
||
|
Retained earnings |
|
840,038 |
|
754,583 |
||
|
Total Shareholders’ Equity |
|
933,409 |
|
863,099 |
||
|
Total Liabilities and Shareholders’ Equity |
$ |
1,330,261 |
$ |
1,255,318 |
||
|
|
||||||||||||
|
|
Three Months Ended |
Nine Months Ended |
||||||||||
|
(in thousands of |
2020 |
2019 |
2020 |
2019 |
||||||||
|
Revenues |
$ |
411,210 |
$ |
398,951 |
$ |
1,236,723 |
$ |
1,179,208 |
||||
|
Cost of revenues |
|
(366,874) |
|
(352,193) |
|
(1,097,242) |
|
(1,046,610) |
||||
|
Gross profit |
|
44,336 |
|
46,758 |
|
139,481 |
|
132,598 |
||||
|
Selling, general and administrative expenses |
|
(17,111) |
|
(14,132) |
|
(50,189) |
|
(41,296) |
||||
|
Expenses related to reduction in workforce |
|
— |
|
(323) |
|
(16) |
|
(727) |
||||
|
Operating income |
|
27,225 |
|
32,303 |
|
89,276 |
|
90,575 |
||||
|
Interest income |
|
2,042 |
|
2,144 |
|
6,080 |
|
4,770 |
||||
|
Interest expense |
|
(238) |
|
(1,423) |
|
(2,812) |
|
(3,673) |
||||
|
Foreign exchange loss, net |
|
(8) |
|
(3,055) |
|
(2,949) |
|
(408) |
||||
|
Other income, net |
|
203 |
|
159 |
|
977 |
|
798 |
||||
|
Income before income taxes |
|
29,224 |
|
30,128 |
|
90,572 |
|
92,062 |
||||
|
Income tax expense |
|
(957) |
|
(1,493) |
|
(5,117) |
|
(4,064) |
||||
|
Net income |
|
28,267 |
|
28,635 |
|
85,455 |
|
87,998 |
||||
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
||||
|
Change in net unrealized (loss) gain on available-for-sale securities |
|
(1,356) |
|
513 |
|
(1,403) |
|
1,399 |
||||
|
Change in net unrealized loss on derivative instruments |
|
(6,569) |
|
(1) |
|
(6,719) |
|
(2) |
||||
|
Change in net retirement benefits plan – prior service cost |
|
294 |
|
— |
|
478 |
|
— |
||||
|
Change in foreign currency translation adjustment |
|
(600) |
|
486 |
|
(353) |
|
(219) |
||||
|
Total other comprehensive (loss) income, net of tax |
|
(8,231) |
|
998 |
|
(7,997) |
|
1,178 |
||||
|
Net comprehensive income |
$ |
20,036 |
$ |
29,633 |
$ |
77,458 |
$ |
89,176 |
||||
|
|
|
|
|
|
|
|
|
|
||||
|
Earnings per share |
|
|
|
|
|
|
|
|
||||
|
Basic |
$ |
0.76 |
$ |
0.78 |
$ |
2.31 |
$ |
2.39 |
||||
|
Diluted |
$ |
0.75 |
$ |
0.76 |
$ |
2.27 |
$ |
2.35 |
||||
|
|
|
|
||||||||||
|
Weighted-average number of ordinary shares outstanding (thousands of shares) |
|
|||||||||||
|
Basic |
|
36,987 |
|
36,891 |
|
36,970 |
|
36,786 |
||||
|
Diluted |
|
37,797 |
|
37,539 |
|
37,696 |
|
37,383 |
||||
|
|
||||||
|
|
|
|
|
|
||
|
|
Nine Months Ended |
|||||
|
(in thousands of |
2020 |
2019 |
||||
|
|
|
|
|
|
||
|
Cash flows from operating activities |
|
|
|
|
||
|
Net income for the period |
$ |
85,455 |
$ |
87,998 |
||
|
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
|
||
|
Depreciation and amortization |
|
23,115 |
|
22,521 |
||
|
Loss on disposal of property, plant and equipment |
|
444 |
|
81 |
||
|
Loss on disposal of intangibles |
|
— |
|
149 |
||
|
Gain from sales and maturities of available-for-sale securities |
|
(93) |
|
(196) |
||
|
Accretion of premiums on short-term investments |
|
(624) |
|
(604) |
||
|
Amortization of deferred debt issuance costs |
|
18 |
|
— |
||
|
(Reversal) allowance for doubtful accounts |
|
(17) |
|
12 |
||
|
Unrealized loss (gain) on exchange rate and fair value of foreign currency forward contracts |
|
942 |
|
(5,351) |
||
|
Unrealized loss on fair value of interest rate swaps |
|
1,672 |
|
1,564 |
||
|
Amortization of fair value at hedge inception of interest rate swaps |
|
(838) |
|
— |
||
|
Share-based compensation |
|
18,301 |
|
13,373 |
||
|
Deferred income tax |
|
1,335 |
|
438 |
||
|
Other non-cash expenses |
|
(559) |
|
(699) |
||
|
Changes in operating assets and liabilities |
|
|
|
|
||
|
Trade accounts receivable |
|
(23,136) |
|
(17,942) |
||
|
Contract assets |
|
(3,966) |
|
(666) |
||
|
Inventories |
|
3,404 |
|
(36,418) |
||
|
Other current assets and non-current assets |
|
5,830 |
|
(1,568) |
||
|
Trade accounts payable |
|
(15,571) |
|
37,576 |
||
|
Contract liabilities |
|
(298) |
|
— |
||
|
Income tax payable |
|
1,056 |
|
1,942 |
||
|
Severance liabilities |
|
2,266 |
|
1,841 |
||
|
Other current liabilities and non-current liabilities |
|
5,712 |
|
1,453 |
||
|
Net cash provided by operating activities |
|
104,448 |
|
105,504 |
||
|
|
|
|
|
|
||
|
Cash flows from investing activities |
|
|
|
|
||
|
Purchase of short-term investments |
|
(123,980) |
|
(202,328) |
||
|
Proceeds from sales of short-term investments |
|
48,808 |
|
85,941 |
||
|
Proceeds from maturities of short-term investments |
|
97,358 |
|
50,370 |
||
|
Funds provided to customer to support transfer of manufacturing operations |
|
(24,310) |
|
— |
||
|
Purchase of property, plant and equipment |
|
(27,482) |
|
(13,211) |
||
|
Purchase of intangibles |
|
(797) |
|
(290) |
||
|
Proceeds from disposal of property, plant and equipment |
|
1,482 |
|
473 |
||
|
Net cash used in investing activities |
|
(28,921) |
|
(79,045) |
||
|
|
|
|
|
|
||
|
Cash flows from financing activities |
|
|
|
|
||
|
Payment of debt issuance costs |
|
(153) |
|
— |
||
|
Proceeds from long-term borrowings |
|
60,938 |
|
— |
||
|
Repayment of long-term borrowings |
|
(67,032) |
|
(2,438) |
||
|
Repayment of finance lease liabilities |
|
(304) |
|
(342) |
||
|
Repurchase of ordinary shares |
|
(20,722) |
|
(5,378) |
||
|
Release of restricted cash held in connection with business acquisition |
|
— |
|
(3,478) |
||
|
Withholding tax related to net share settlement of restricted share units |
|
(4,727) |
|
(10,427) |
||
|
Net cash used in financing activities |
|
(32,000) |
|
(22,063) |
||
|
Net increase in cash, cash equivalents and restricted cash |
|
43,527 |
|
4,396 |
||
|
|
|
|
|
|
||
|
Movement in cash, cash equivalents and restricted cash |
|
|
|
|
||
|
Cash, cash equivalents and restricted cash at beginning of period |
|
188,241 |
|
161,433 |
||
|
Increase in cash, cash equivalents and restricted cash |
|
43,527 |
|
4,396 |
||
|
Effect of exchange rate on cash, cash equivalents and restricted cash |
|
(228) |
|
578 |
||
|
Cash, cash equivalents and restricted cash at end of period |
$ |
231,540 |
$ |
166,407 |
||
|
|
|
|
|
|
||
|
Non-cash investing and financing activities |
|
|
|
|
||
|
Construction, software and equipment-related payables |
$ |
11,906 |
$ |
3,286 |
||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (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:
|
(amount in thousands) |
As of
|
As of
|
||||
|
|
|
|
||||
|
Cash and cash equivalents |
$ |
224,138 |
$ |
166,407 |
||
|
Restricted cash |
|
7,402 |
|
— |
||
|
Cash, cash equivalents and restricted cash |
$ |
231,540 |
$ |
166,407 |
||
|
|
|
|
||||
|
|
||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
|
2020 |
2019 |
2020 |
2019 |
|||||||||||||
|
(in thousands of |
Net income |
Diluted EPS |
Net income |
Diluted EPS |
Net income |
Diluted EPS |
Net income |
Diluted EPS |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP measures |
28,267 |
|
0.75 |
|
28,635 |
|
0.76 |
|
85,455 |
|
2.27 |
|
87,998 |
|
2.35 |
|
|
Items reconciling GAAP net (loss) income & EPS to non-GAAP net income & EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related to cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expenses |
1,489 |
|
0.04 |
|
1,237 |
|
0.03 |
|
4,800 |
|
0.13 |
|
4,384 |
|
0.12 |
|
|
Depreciation of fair value uplift |
86 |
|
0.00 |
|
82 |
|
0.00 |
|
247 |
|
0.01 |
|
255 |
|
0.01 |
|
|
ASC 606 adoption impact on gross profit |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(31) |
|
(0.00) |
|
|
Total related to gross profit |
1,575 |
|
0.04 |
|
1,319 |
|
0.04 |
|
5,047 |
|
0.13 |
|
4,608 |
|
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related to selling, general and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expenses |
4,629 |
|
0.12 |
|
3,187 |
|
0.08 |
|
13,501 |
|
0.36 |
|
8,989 |
|
0.24 |
|
|
Expenses related to CFO search |
- |
|
- |
|
285 |
|
0.01 |
|
- |
|
- |
|
857 |
|
0.02 |
|
|
Amortization of intangibles |
145 |
|
0.00 |
|
163 |
|
0.00 |
|
431 |
|
0.01 |
|
531 |
|
0.01 |
|
|
Business combination expenses and consulting fee |
- |
|
- |
|
88 |
|
0.00 |
|
- |
|
- |
|
328 |
|
0.01 |
|
|
Severance liabilities |
150 |
|
0.00 |
|
348 |
|
0.01 |
|
150 |
|
0.00 |
|
949 |
|
0.03 |
|
|
Total related to selling, general and administrative expenses |
4,924 |
|
0.13 |
|
4,071 |
|
0.11 |
|
14,082 |
|
0.37 |
|
11,654 |
|
0.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related to other incomes and other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses in relation to reduction in workforce |
- |
|
- |
|
323 |
|
0.01 |
|
16 |
|
0.00 |
|
727 |
|
0.02 |
|
|
Amortization of debt issuance costs |
8 |
|
0.00 |
|
- |
|
- |
|
18 |
|
0.00 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total related to other incomes and other expenses |
8 |
|
0.00 |
|
323 |
|
0.01 |
|
34 |
|
0.00 |
|
727 |
|
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total related to net income & EPS |
6,507 |
|
0.17 |
|
5,713 |
|
0.15 |
|
19,163 |
|
0.51 |
|
16,989 |
|
0.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP measures |
34,774 |
|
0.92 |
|
34,348 |
|
0.92 |
|
104,618 |
|
2.78 |
|
104,987 |
|
2.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing diluted net income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted shares |
|
|
37,797 |
|
|
|
37,539 |
|
|
|
37,696 |
|
|
|
37,383 |
|
|
Non-GAAP diluted shares |
|
|
37,797 |
|
|
|
37,539 |
|
|
|
37,696 |
|
|
|
37,383 |
|
|
|
||||||||||||
|
(amount in thousands) |
Three Months Ended |
Nine Months Ended |
||||||||||
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
||||||||
|
Net cash provided by operating activities |
$ |
51,838 |
$ |
36,206 |
$ |
104,448 |
$ |
105,504 |
||||
|
Less: Purchase of property, plant and equipment |
(12,071) |
(3,479) |
(27,482) |
(13,211) |
||||||||
|
Non-GAAP free cash flow |
$ |
39,767 |
$ |
32,727 |
$ |
76,966 |
$ |
92,293 |
||||
|
|
||
|
|
Diluted |
|
|
|
EPS |
|
|
GAAP net income per diluted share: |
|
|
|
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 |
0.12 |
|
|
Total related to selling, general and administrative expenses |
0.12 |
|
|
|
|
|
|
Total related to net income & EPS |
0.16 |
|
|
Non-GAAP net income per diluted share |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200504005719/en/
Investor Contact:
ir@fabrinet.com
Source: