EX-99.1 6 fn-20220502xex991q322.htm EX-99.1 Document


Exhibit 99.1
Fabrinet Announces Third Quarter Fiscal Year 2022 Financial Results
Solid Third Quarter Revenue of $564.4 Million
Record GAAP and Non-GAAP Net Income per Share
BANGKOK, Thailand – May 2, 2022 – 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 third fiscal quarter ended March 25, 2022.

Seamus Grady, Chief Executive Officer of Fabrinet, said, “With strong execution we delivered solid revenue and non-GAAP EPS that were within our guidance ranges in the third quarter. We are optimistic that we can continue to effectively manage supply chain constraints amid growing demand to deliver strong fourth quarter results.”
Third Quarter Fiscal Year 2022 Financial Highlights
GAAP Results
Revenue for the third quarter of fiscal year 2022 was $564.4 million, compared to $479.3 million in the third quarter of fiscal year 2021.
GAAP net income for the third quarter of fiscal year 2022 was $50.7 million, compared to GAAP net income of $37.5 million for the third quarter of fiscal year 2021.
GAAP net income per diluted share for the third quarter of fiscal year 2022 was $1.35, compared to GAAP net income per diluted share of $1.00 for the third quarter of fiscal year 2021.
Non-GAAP Results
Non-GAAP net income for the third quarter of fiscal year 2022 was $56.2 million, compared to non-GAAP net income of $45.4 million for the third quarter of fiscal year 2021.
Non-GAAP net income per diluted share for the third quarter of fiscal year 2022 was $1.50, compared to non-GAAP net income per diluted share of $1.21 for the third quarter of fiscal year 2021.
Business Outlook
Based on information available as of May 2, 2022, Fabrinet is issuing guidance for its fourth fiscal quarter ending
June 24, 2022, as follows:
Fabrinet expects fourth quarter revenue to be in the range of $570 million to $590 million.
GAAP net income per diluted share is expected to be in the range of $1.35 to $1.42, 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 $1.52 to $1.59, based on approximately 37.6 million fully diluted shares outstanding.
Conference Call Information
What:
Fabrinet Third Quarter Fiscal Year 2022 Financial Results Call
When:
Monday, May 2, 2022
Time:5:00 p.m. ET
Live Call:(888) 357-3694, domestic
(253) 237-1137, international
Conference ID: 8682742
Replay:(855) 859-2056, domestic
(404) 537-3406, international
Conference ID: 8682742
Webcast:
http://investor.fabrinet.com/ (live and replay)




A recorded version of this webcast will be available approximately two hours after the call and accessible at http://investor.fabrinet.com. The webcast 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 about our ability to manage supply chain constraints amid growing demand; 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 fourth quarter of fiscal year 2022. 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 COVID-19 pandemic 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 pandemic 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 pandemic intensifies or returns in various geographic areas, and (4) regional downward demand adjustments from our customers, particularly those in areas affected by the pandemic; 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 February 1, 2022. 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; severance payment and others; other expenses in relation to reduction in workforce; 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.
Investor Contact:
Garo Toomajanian
ir@fabrinet.com




FABRINET
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands of U.S. dollars, except share data and par value)March 25,
2022
June 25,
2021
Assets
Current assets
Cash and cash equivalents$269,140 $302,969 
Short-term investments245,852 244,963 
Trade accounts receivable, net of allowance for doubtful accounts of $61 and $100, respectively
446,052 336,547 
Contract assets13,568 11,878 
Inventories452,638 422,133 
Prepaid expenses13,729 11,398 
Other current assets29,169 22,619 
Total current assets1,470,148 1,352,507 
Non-current assets
Long-term restricted cash157 154 
Property, plant and equipment, net291,767 241,129 
Intangibles, net3,593 4,371 
Operating right-of-use assets4,790 6,699 
Deferred tax assets9,171 9,428 
Other non-current assets513 1,834 
Total non-current assets309,991 263,615 
Total Assets$1,780,139 $1,616,122 
Liabilities and Shareholders’ Equity
Current liabilities
Long-term borrowings, current portion, net$12,156 $12,156 
Trade accounts payable402,581 346,555 
Fixed assets payable14,060 19,206 
Contract liabilities1,923 1,680 
Operating lease liabilities, current portion2,593 2,593 
Income tax payable2,794 3,612 
Accrued payroll, bonus and related expenses21,396 20,464 
Accrued expenses21,144 17,134 
Other payables24,012 20,958 
Total current liabilities502,659 444,358 
Non-current liabilities
Long-term borrowings, non-current portion, net18,241 27,358 
Deferred tax liability5,771 5,107 
Operating lease liability, non-current portion1,922 3,850 
Severance liabilities20,352 19,485 
Other non-current liabilities2,467 3,444 
Total non-current liabilities48,753 59,244 
Total Liabilities551,412 503,602 
Commitments and contingencies
Shareholders’ equity
Preferred shares (5,000,000 shares authorized, $0.01 par value; no shares issued and outstanding as of March 25, 2022 and June 25, 2021)
— — 
Ordinary shares (500,000,000 shares authorized, $0.01 par value; 39,039,725 shares and 38,749,045 shares issued at March 25, 2022 and June 25, 2021, respectively; and 36,780,528 shares and 36,765,456 shares outstanding at March 25, 2022 and June 25, 2021, respectively)
390 388 
Additional paid-in capital190,705 189,445 
Less: Treasury shares (2,259,197 shares and 1,983,589 shares as of March 25, 2022 and June 25, 2021, respectively)
(115,967)(87,343)
Accumulated other comprehensive income (loss)(6,888)(6,266)
Retained earnings1,160,487 1,016,296 
Total Shareholders’ Equity1,228,727 1,112,520 
Total Liabilities and Shareholders’ Equity$1,780,139 $1,616,122 









FABRINET
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited)

Three Months EndedNine Months Ended
(in thousands of U.S. dollars, except per share data)March 25,
2022
March 26,
2021
March 25,
2022
March 26,
2021
Revenues$564,395 $479,317 $1,674,350 $1,369,783 
Cost of revenues(493,702)(422,539)(1,470,689)(1,209,504)
        Gross profit70,693 56,778 203,661 160,279 
Selling, general and administrative expenses(17,034)(19,059)(55,412)(53,078)
Expenses related to reduction in workforce— (43)(135)(43)
Operating income53,659 37,676 148,114 107,158 
Interest income414 941 1,470 3,156 
Interest expense(73)(282)(347)(798)
Foreign exchange gain (loss), net(410)629 998 224 
Other income (expense), net(36)124 (1,351)403 
Income before income taxes53,554 39,088 148,884 110,143 
Income tax expense(2,893)(1,595)(4,693)(4,215)
Net income50,661 37,493 144,191 105,928 
Other comprehensive income (loss), net of tax:
       Change in net unrealized gain (loss) on available-for-sale securities(2,455)(570)(3,615)(937)
       Change in net unrealized gain (loss) on derivative instruments666 (5,000)2,743 (5,823)
       Change in net retirement benefits plan – prior service cost124 198 448 421 
       Change in foreign currency translation adjustment(34)90 (198)547 
Total other comprehensive income (loss), net of tax(1,699)(5,282)(622)(5,792)
Net comprehensive income (loss)$48,962 $32,211 $143,569 $100,136 
Earnings per share
       Basic$1.37 $1.02 $3.90 $2.87 
       Diluted$1.35 $1.00 $3.85 $2.82 
Weighted-average number of ordinary shares outstanding (thousands of shares)
       Basic36,940 36,875 36,945 36,876 
       Diluted37,473 37,609 37,451 37,514 












FABRINET
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended
(in thousands of U.S. dollars)March 25,
2022
March 26,
2021
Cash flows from operating activities
Net income for the period$144,191 $105,928 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization28,907 26,781 
Gain on disposal of property, plant and equipment(175)(24)
Gain from sales and maturities of available-for-sale securities(13)(187)
Amortization of investment discount3,038 1,479 
Amortization of deferred debt issuance costs24 24 
(Reversal of) allowance for doubtful accounts(39)(317)
Unrealized gain on exchange rate and fair value of foreign currency forward contracts(1,422)(825)
Amortization of fair value at hedge inception of interest rate swaps(736)(1,009)
Share-based compensation21,701 18,742 
Deferred income tax563 (382)
Other non-cash expenses1,067 (614)
Changes in operating assets and liabilities
Trade accounts receivable(109,334)(36,437)
Contract assets(1,690)(3,874)
Inventories(30,503)(43,497)
Other current assets and non-current assets(11,221)(18,433)
Trade accounts payable55,333 25,589 
Contract liabilities243 (147)
Income tax payable(872)911 
Severance liabilities1,883 2,204 
Other current liabilities and non-current liabilities6,952 3,404 
Net cash provided by operating activities107,897 79,316 
Cash flows from investing activities
Purchase of short-term investments(119,853)(183,041)
Proceeds from sales of short-term investments19,463 84,049 
Proceeds from maturities of short-term investments92,862 97,721 
Purchase of property, plant and equipment(75,327)(33,269)
Purchase of intangibles(592)(1,912)
Proceeds from disposal of property, plant and equipment229 38 
Net cash used in investing activities(83,218)(36,414)
Cash flows from financing activities
Repayment of long-term borrowings(9,141)(9,141)
Repayment of finance lease liability— (100)
Repurchase of ordinary shares(28,624)(8,312)
Withholding tax related to net share settlement of restricted share units(20,439)(11,362)
Net cash used in financing activities(58,204)(28,915)
Net increase (decrease) in cash, cash equivalents and restricted cash$(33,525)$13,987 
Movement in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at the beginning of period$303,123 $232,832 
Increase (decrease) in cash, cash equivalents and restricted cash(33,525)13,987 
Effect of exchange rate on cash, cash equivalents and restricted cash(301)345 
Cash, cash equivalents and restricted cash at the end of period$269,297 $247,164 
Non-cash investing and financing activities
Construction, software and equipment-related payables$14,060 $11,060 




FABRINET
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (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
March 25, 2022
As of
March 26, 2021
Cash and cash equivalents$269,140 $247,011 
Restricted cash157 153 
Cash, cash equivalents and restricted cash$269,297 $247,164 




FABRINET
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

Three Months EndedNine Months Ended
March 25,
2022
March 26,
2021
March 25,
2022
March 26,
2021
(in thousands of U.S. dollars, except share data and par value)Net incomeDiluted EPSNet incomeDiluted EPSNet incomeDiluted EPSNet incomeDiluted EPS
GAAP measures$50,661 $1.35 $37,493 $1.00 $144,191 $3.85 $105,928 $2.82 
Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses1,183 0.03 1,388 0.04 4,579 0.12 4,805 0.13 
Depreciation of fair value uplift— — 89 0.0092 0.00256 0.00
Total related to gross profit1,183 0.03 1,477 0.04 4,671 0.12 5,061 0.13 
Related to selling, general and administrative expenses:
Share-based compensation expenses4,540 0.12 5,476 0.15 17,122 0.46 13,937 0.37 
Amortization of intangibles101 0.00 127 0.00 328 0.01 382 0.01 
Severance payment and others(250)0.00 755 0.02 105 0.00 755 0.02 
Total related to selling, general and administrative expenses4,391 0.12 6,358 0.17 17,555 0.47 15,074 0.40 
Related to other incomes and other expenses:
Other expenses in relation to reduction in workforce— — 43 0.00135 0.0143 0.00
Amortization of deferred debt issuance costs0.000.0024 0.0024 0.00
Total related to other incomes and other expenses8 0.0051 0.00159 0.0167 0.00
Total related to net income & EPS5,582 0.15 7,886 0.21 22,385 0.60 20,202 0.54 
Non-GAAP measures$56,243 $1.50 $45,379 $1.21 $166,576 $4.45 $126,130 $3.36 
Shares used in computing diluted net income per share
GAAP diluted shares37,473 37,609 37,45137,514
Non-GAAP diluted shares37,473 37,609 37,45137,514




FABRINET
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(amount in thousands)Three Months EndedNine Months Ended
March 25,
2022
March 26,
2021
March 25,
2022
March 26,
2021
Net cash provided by operating activities$50,329 $38,002 $107,897 $79,316 
Less: Purchase of property, plant and equipment(23,410)(10,576)(75,327)(33,269)
Non-GAAP free cash flow$26,919 $27,426 $32,570 $46,047 

FABRINET
GUIDANCE FOR QUARTER ENDING JUNE 24, 2022
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
Diluted
EPS
GAAP net income per diluted share:$1.35 to $1.42
Related to cost of revenues:
Share-based compensation expenses0.04
Total related to gross profit0.04
Related to selling, general and administrative expenses:
Share-based compensation expenses0.13
Total related to selling, general and administrative expenses0.13
Total related to net income & EPS0.17
Non-GAAP net income per diluted share$1.52 to $1.59