First Quarter Fiscal-Year 2017 Financial Highlights
GAAP Results
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Revenue for the first quarter of fiscal year 2017, which was a 14-week
quarter, was
$332.0 million , an increase of 53% compared to revenue of$216.4 million for the comparable period in fiscal year 2016, which was a 13-week quarter. -
GAAP net income for the first quarter of fiscal year 2017 was
$22.8 million , compared to GAAP net income of$1.6 million in the first quarter of fiscal year 2016, which was impacted by a$(10.9) million unrealized foreign exchange loss for the mark-to-market adjustment of forward contracts. -
GAAP net income per diluted share for the first quarter of fiscal year
2017 was
$0.61 , compared to GAAP net income per diluted share of$0.04 in the first quarter of fiscal year 2016.
Non-GAAP Results
-
Non-GAAP net income in the first quarter of fiscal 2017 was
$29.7 million , an increase of 83% compared to non-GAAP net income of$16.2 million in the same period a year ago. -
Non-GAAP net income per diluted share in the first quarter of fiscal
2017 was
$0.80 , an increase from non-GAAP net income per diluted share of$0.45 in the same period a year ago.
Business Outlook
Based on information available as of
-
Fabrinet expects revenue for the second quarter, which is a 13-week quarter, to be in the range of$332 million to$336 million . -
GAAP net income per diluted share is expected to be in the range of
$0.65 to$0.67 , based on approximately 37.8 million fully diluted shares outstanding. -
Non-GAAP net income per diluted share is expected to be in the range
of
$0.78 to$0.80 , based on approximately 37.8 million fully diluted shares outstanding.
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Conference Call Information |
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| What: |
Fabrinet First Quarter Fiscal-Year 2017 |
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| When: |
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| Time: |
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| Live Call: | (888) 357-3694, domestic | |||
| (253) 237-1137, international | ||||
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Passcode: 1372730 |
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| Replay: | (855) 859-2056, domestic | |||
| (404) 537-3406, international | ||||
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Passcode: 1372730 |
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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 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
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 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
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.
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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
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(in thousands of |
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| 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 | ||||||
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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 |
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269,243 |
255,725 | |||||
| Non-current liabilities | ||||||||
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Long-term loan from bank, non-current portion, net of unamortized |
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| 32,759 | 36,100 | |||||||
| Deferred tax liability | — | 854 | ||||||
| Capital lease liability, non-current portion |
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1,556 |
— | |||||
| Deferred liability in connection with business acquisition |
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3,379 |
— | |||||
| Severance liabilities |
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7,154 |
6,684 | |||||
| Other non-current liabilities |
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2,179 |
2,075 | |||||
| Total non-current liabilities |
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47,027 |
45,713 | |||||
| Total Liabilities | 316,270 | 301,438 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders' equity | ||||||||
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Preferred shares (5,000,000 shares authorized, |
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— |
— | ||||||
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Ordinary shares (500,000,000 shares authorized, |
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| 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 |
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585,033 |
554,419 | |||||
| Total Liabilities and Shareholders' Equity | $ | 901,303 | $ | 855,857 | ||||
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND |
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| Three Months Ended | ||||||||
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(in thousands of |
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| 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 | ||||||
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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| Three Months Ended | ||||||||
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(in thousands of |
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| 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 | ||||
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Reconciliation of GAAP measures to non-GAAP measures |
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(in thousands of |
Three Months Ended | ||||||||||||
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Net |
Diluted |
Net |
Diluted |
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| 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 | |||||||||||
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Fabrinet Guidance for Quarter Ending
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Diluted |
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| GAAP net income per diluted share: |
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| Related to cost of revenues: | ||||
| Share-based compensation expenses | 0.03 | |||
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Related to selling, general and administrative expenses: |
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| Share-based compensation expenses | 0.09 | |||
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Related to other incomes and other expenses: |
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| Amortization of debt issuance costs | 0.01 | |||
| Total related to net income & EPS | 0.13 | |||
| Non-GAAP net income per diluted share |
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View source version on businesswire.com: http://www.businesswire.com/news/home/20161107006407/en/
Investor Contact:
ir@fabrinet.com
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