Fabrinet Announces Fourth Quarter and Fiscal Year 2024 Financial Results

· *Record Fourth Quarter Revenue and Earnings Per Share Exceed Guidance*

BANGKOK, Thailand, Aug. 19, 2024 (GLOBE NEWSWIRE) -- 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 fourth quarter and fiscal year ended June 28, 2024.Seamus Grady, Chief Executive Officer of Fabrinet, said, “Our strong fourth quarter results capped a remarkable fiscal year, representing our fourth quarter in a row of record revenue, and record earnings per share, both of which were above our guidance ranges. We remain optimistic about our future, with numerous drivers that position us to extend our track record of success into fiscal year 2025.”

*Fourth Quarter Fiscal Year 2024 Fi**nancial Highlights*

*GAAP Results*

· Revenue for the fourth quarter of fiscal year 2024 was $753.3 million, compared to $655.9 million for the fourth quarter of fiscal year 2023.
· GAAP net income for the fourth quarter of fiscal year 2024 was $81.1 million, compared to $60.8 million for the fourth quarter of fiscal year 2023.
· GAAP net income per diluted share for the fourth quarter of fiscal year 2024 was $2.22, compared to $1.65 for the fourth quarter of fiscal year 2023.

*Non-GAAP Results*

· Non-GAAP net income for the fourth quarter of fiscal year 2024 was $88.0 million, compared to $68.4 million for the fourth quarter of fiscal year 2023.
· Non-GAAP net income per diluted share for the fourth quarter of fiscal year 2024 was $2.41, compared to $1.86 for the fourth quarter of fiscal year 2023.

*Fiscal Year 2024 Financial Highlights*

*GAAP Results*

· Revenue for fiscal year 2024 was $2.88 billion, compared to $2.65 billion for fiscal year 2023.
· GAAP net income for fiscal year 2024 was $296.2 million, compared to $247.9 million for fiscal year 2023.
· GAAP net income per diluted share for fiscal year 2024 was $8.10, compared to $6.73 for fiscal year 2023.

*Non-GAAP Results*

· Non-GAAP net income for fiscal year 2024 was $324.6 million, compared to $282.7 million for fiscal year 2023.
· Non-GAAP net income per diluted share for fiscal year 2024 was $8.88, compared to $7.67 for fiscal year 2023.

*Share Repurchase Program Expanded*

Fabrinet also announced that its Board of Directors has approved an expansion of its share repurchase program, authorizing the repurchase of up to an additional $139.5 million of Fabrinet’s ordinary shares. The addition brings the aggregate authorization under Fabrinet’s existing share repurchase program to $434.3 million, with $200.0 million currently remaining.

*Business Outlook*

Based on information available as of August 19, 2024, Fabrinet is issuing guidance for its first fiscal quarter ending September 27, 2024, as follows:

· Fabrinet expects first quarter revenue to be in the range of $760 million to $780 million.
· GAAP net income per diluted share is expected to be in the range of $2.10 to $2.17, based on approximately 36.5 million fully diluted shares outstanding.
· Non-GAAP net income per diluted share is expected to be in the range of $2.33 to $2.40, based on approximately 36.5 million fully diluted shares outstanding.        

Guidance for non-GAAP net income per diluted share excludes share-based compensation expenses and certain non-recurring items. A reconciliation of non-GAAP net income per diluted share to the corresponding GAAP measure is available at the end of this press release.

*Conference Call Information*

What: Fabrinet Fourth Quarter Fiscal Year 2024 Financial Results Call
When: August 19, 2024
Time: 5:00 p.m. ET
Live Call and Replay: https://investor.fabrinet.com/events-and-presentations/events  

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, and Israel. For more information visit: www.fabrinet.com.

*Forward-Looking Statements*

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 that numerous drivers position us to extend our track record of success into fiscal year 2025; 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 first quarter of fiscal year 2025. 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: changes in general economic conditions, either globally or in our markets, and the risk of recession or an economic downturn; continued disruption to our supply chain, which could increase our costs and affect our ability to procure parts and materials; less customer demand for our products and services than forecasted; less growth in the optical communications, automotive, 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 and the U.S.); 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 May 7, 2024. We disclaim any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

*Non-GAAP Financial Measures*

In addition to reporting financial results in accordance with GAAP, we provide investors with certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. We believe these non-GAAP financial measures provide investors with useful supplemental information 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, we use some of these non-GAAP financial measures to measure company performance for the purposes of determining employee incentive plan compensation.

Non-GAAP gross profit, non-GAAP operating profit, non-GAAP net income and non-GAAP net income per diluted share exclude: share-based compensation expenses; amortization of intangibles; and amortization of deferred debt issuance costs. We have excluded these items in order to enhance investors’ understanding of our underlying operations.

Non-GAAP free cash flow is net cash provided by (used in) operating activities, minus capital expenditures (purchase of property, plant and equipment). We use free cash flow to measure our ability to generate additional cash from our business operations.

There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. We urge you to review the reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

*Investor Contact:*
Garo Toomajanian
ir@fabrinet.com

*FABRINET*
*CONSOLIDATED BALANCE SHEETS*
(in thousands of U.S. dollars, except share data and par value) *June 28,*
*2024*   *June 30,*
*2023* (unaudited)    
*Assets*      
Current assets      
Cash and cash equivalents $ 409,973     $ 231,368  
Short-term investments   448,630       319,100  
Trade accounts receivable, net of allowance for expected credit losses of $1,629 and $965, respectively   592,452       531,767  
Inventories   463,206       519,576  
Prepaid expenses   10,620       7,849  
Other current assets   87,810       42,880  
Total current assets   2,012,691       1,652,540  
Non-current assets      
Property, plant and equipment, net   307,240       310,350  
Intangibles, net   2,321       2,394  
Operating right-of-use assets   5,336       1,634  
Deferred tax assets   10,446       12,095  
Other non-current assets   485       635  
Total non-current assets   325,828       327,108  
*Total Assets* $ 2,338,519     $ 1,979,648  
*Liabilities and Shareholders’ Equity*      
Current liabilities      
Long-term borrowings, current portion, net $ —     $ 12,156  
Trade accounts payable   441,835       381,129  
Fixed assets payable   14,380       13,526  
Operating lease liabilities, current portion   1,355       1,201  
Income tax payable   3,937       6,024  
Accrued payroll, bonus and related expenses   22,116       23,748  
Accrued expenses   19,916       20,447  
Other payables   54,403       23,654  
Total current liabilities   557,942       481,885  
Non-current liabilities      
Deferred tax liability   4,895       4,799  
Operating lease liabilities, non-current portion   3,635       66  
Severance liabilities   24,093       22,159  
Other non-current liabilities   2,209       2,081  
Total non-current liabilities   34,832       29,105  
*Total Liabilities*   592,774       510,990  
Shareholders’ equity      
Preferred shares (5,000,000 shares authorized, $0.01 par value; no shares issued and outstanding as of June 28, 2024 and June 30, 2023)   —       —  
Ordinary shares (500,000,000 shares authorized, $0.01 par value; 39,457,462 shares and 39,284,176 shares issued as of June 28, 2024 and June 30, 2023, respectively; and 36,145,242 shares and 36,183,682 shares outstanding as of June 28, 2024 and June 30, 2023, respectively)   395       393  
Additional paid-in capital   222,044       206,624  
Less: Treasury shares (3,312,220 shares and 3,100,494 shares as of June 28, 2024 and June 30, 2023, respectively)   (234,323 )     (194,833 )
Accumulated other comprehensive income (loss)   (3,141 )     (8,115 )
Retained earnings   1,760,770       1,464,589  
*Total Shareholders’ Equity*   1,745,745       1,468,658  
*Total Liabilities and Shareholders’ Equity* $ 2,338,519     $ 1,979,648  

*FABRINET*
*CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME* *Three Months Ended*   *Year Ended*
(in thousands of U.S. dollars, except per share data) *June 28,*
*2024*   *June 30,*
*2023*   *June 28,*
*2024*   *June 30,*
*2023* (unaudited)   (unaudited)   (unaudited)    
Revenues $ 753,261     $ 655,871     $ 2,882,967     $ 2,645,237  
Cost of revenues   (660,812 )     (573,576 )     (2,526,849 )     (2,308,964 )
Gross profit   92,449       82,295       356,118       336,273  
Selling, general and administrative expenses   (19,108 )     (19,869 )     (78,481 )     (77,673 )
Restructuring and other related costs   (32 )     (1,024 )     (32 )     (6,896 )
Operating income   73,309       61,402       277,605       251,704  
Interest income   11,049       4,024       33,204       11,234  
Interest expense   (17 )     (293 )     (124 )     (1,472 )
Foreign exchange gain (loss), net   407       1,911       382       (1,211 )
Other income (expense), net   227       19       287       (159 )
Income before income taxes   84,975       67,063       311,354       260,096  
Income tax expense   (3,909 )     (6,277 )     (15,173 )     (12,183 )
Net income   81,066       60,786       296,181       247,913  
Other comprehensive income (loss), net of tax              
Change in net unrealized gain (loss) on available-for-sale securities   (55 )     971       2,100       2,739  
Change in net unrealized gain (loss) on derivative instruments   1,499       (2,894 )     2,561       1,541  
Change in net retirement benefits plan – prior service cost   59       135       330       473  
Change in foreign currency translation adjustment   14       (46 )     (17 )     (75 )
Total other comprehensive income (loss), net of tax   1,517       (1,834 )     4,974       4,678  
Net comprehensive income $ 82,583     $ 58,952     $ 301,155     $ 252,591  
*Earnings per share*              
Basic $ 2.24     $ 1.67     $ 8.17     $ 6.79  
Diluted $ 2.22     $ 1.65     $ 8.10     $ 6.73  
*Weighted-average number of ordinary shares outstanding (thousands of shares)*              
Basic   36,150       36,337       36,246       36,515  
Diluted   36,533       36,737       36,564       36,855  

*FABRINET*
*CONSOLIDATED STATEMENTS OF CASH FLOWS* *Year Ended*
(in thousands of U.S. dollars) *June 28,*
*2024*   *June 30,*
*2023* (unaudited)    
*Cash flows from operating activities*      
Net income $ 296,181     $ 247,913  
Adjustments to reconcile net income to net cash provided by operating activities      
Depreciation and amortization   49,017       43,832  
Non-cash restructuring charges and other related costs   —       2,201  
(Gain) loss on disposal and impairment of property, plant and equipment   62       (1,506 )
(Gain) loss from sales and maturities of available-for-sale securities   (1 )     92  
Amortization of discount (premium) of short-term investments   (3,399 )     280  
(Reversal of) allowance for expected credit losses   664       (307 )
Unrealized loss (gain) on exchange rate and fair value of foreign currency forward contracts   (849 )     175  
Amortization of fair value at hedge inception of interest rate swaps   (220 )     (587 )
Share-based compensation   28,374       28,127  
Deferred income tax   1,672       (3,484 )
Other non-cash expenses   311       632  
Changes in operating assets and liabilities      
Trade accounts receivable   (61,279 )     (76,917 )
Inventories   56,370       37,449  
Other current assets and non-current assets   (46,715 )     (13,568 )
Trade accounts payable   60,040       (58,596 )
Income tax payable   (1,960 )     2,977  
Severance liabilities   2,771       3,753  
Other current liabilities and non-current liabilities   32,107       844  
Net cash provided by operating activities   413,146       213,310  
*Cash flows from investing activities*      
Purchase of short-term investments   (435,905 )     (217,005 )
Proceeds from sales of short-term investments   40,000       30,179  
Proceeds from maturities of short-term investments   271,877       150,252  
Purchase of property, plant and equipment   (47,528 )     (61,360 )
Purchase of intangibles   (889 )     (911 )
Proceeds from disposal of property, plant and equipment   2,694       128  
Net cash used in investing activities   (169,751 )     (98,717 )
*Cash flows from financing activities*      
Repayment of long-term borrowings   (12,188 )     (15,233 )
Repayment of finance lease liability   —       (9 )
Repurchase of ordinary shares   (39,490 )     (47,575 )
Withholding tax related to net share settlement of restricted share units   (13,175 )     (18,167 )
Net cash used in financing activities   (64,853 )     (80,984 )
Net increase (decrease) in cash, cash equivalents and restricted cash $ 178,542     $ 33,609  
*Movement in cash, cash equivalents and restricted cash*      
Cash, cash equivalents and restricted cash at the beginning of period $ 231,368     $ 198,365  
Increase (decrease) in cash, cash equivalents and restricted cash   178,542       33,609  
Effect of exchange rate on cash, cash equivalents and restricted cash   63       (606 )
*Cash, cash equivalents and restricted cash at the end of period* $ 409,973     $ 231,368  
*Non-cash investing and financing activities*      
Construction, software and equipment related payables $ 14,380     $ 13,526  

*FABRINET*
*CONSOLIDATED STATEMENTS OF CASH FLOWS**(Continued)*
*Supplemental disclosures* *Year Ended*
(in thousands of U.S. dollars) *June 28,*
*2024*   *June 30,*
*2023* (unaudited)    
Cash paid for      
Interest $ 312     $ 2,377  
Taxes $ 16,452     $ 14,158  
Cash received for interest $ 29,783     $ 11,048  
*Non-cash investing and financing activities*      
Construction, software and equipment related payables $ 14,380     $ 13,526  

*FABRINET*
*RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED)*

*Reconciliation of GAAP Gross Profit and GAAP Gross Margin to Non-GAAP Gross Profit and Non-GAAP Gross Margin*
*Three Months Ended*   *Year Ended*
(in thousands of U.S. dollars, except share data) *June 28,*
*2024*   *June 30,*
*2023*   *June 28,*
*2024*   *June 30,*
*2023*
*Revenues* $ 753,261         $ 655,871         $ 2,882,967         $ 2,645,237                                    
*Gross profit (GAAP)* $ 92,449       12.3 %   $ 82,295       12.5 %   $ 356,118       12.4 %   $ 336,273       12.7 %
Share-based compensation expenses   1,776           1,636           7,203           6,664      
*Gross profit (Non-GAAP)* $ 94,225       12.5 %   $ 83,931       12.8 %   $ 363,321       12.6 %   $ 342,937       13.0 %

*
*

*Reconciliation of GAAP Operating Profit and GAAP Operating Margin to Non-GAAP Operating Profit and Non-GAAP Operating Margin*
*Three Months Ended*   *Year Ended*
(in thousands of U.S. dollars, except share data) *June 28,*
*2024*   *June 30,*
*2023*   *June 28,*
*2024*   *June 30,*
*2023*
*Revenues* $ 753,261         $ 655,871         $ 2,882,967         $ 2,645,237                                    
*Operating profit (GAAP)* $ 73,309       9.7 %   $ 61,402       9.4 %   $ 277,605       9.6 %   $ 251,704       9.5 %
Share-based compensation expenses   6,934           6,572           28,374           27,603      
Restructuring and other related costs   32           1,024           32           6,896      
Amortization of intangibles   —           —           —           224      
*Operating profit (Non-GAAP)* $ 80,275       10.7 %   $ 68,998       10.5 %   $ 306,011       10.6 %   $ 286,427       10.8 %

*FABRINET*
*RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED)* *Three Months Ended*   *Year Ended* *June 28,*
*2024*   *June 30,*
*2023*   *June 28,*
*2024*   *June 30,*
*2023*
(in thousands of U.S. dollars, except share data) *Net income*   *Diluted EPS*   *Net income*   *Diluted EPS*   *Net income*   *Diluted EPS*   *Net income*   *Diluted EPS*
*GAAP measures* *$* *81,066*     *$* *2.22*     *$* *60,786*     *$* *1.65*     *$* *296,181*     *$* *8.10*     *$* *247,913*     *$* *6.73*  
Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:                              
Related to cost of revenues:                              
Share-based compensation expenses   1,776       0.05       1,636       0.05       7,203       0.20       6,664       0.18  
Total related to gross profit   1,776       0.05       1,636       0.05       7,203       0.20       6,664       0.18  
Related to selling, general and administrative expenses:                              
Share-based compensation expenses   5,158       0.14       4,936       0.13       21,171       0.58       20,939       0.57  
Amortization of intangibles   —       —       —       —       —       —       224       0.01  
Total related to selling, general and administrative expenses   5,158       0.14       4,936       0.13       21,171       0.58       21,163       0.58  
Related to other income and expense:                              
Restructuring and other related costs   32       0.00       1,024       0.03       32       0.00       6,896       0.18  
Amortization of deferred debt issuance costs   8       0.00       8       0.00       32       0.00       32       0.00  
Total related to other income and expense   40       0.00       1,032       0.03       64       0.00       6,928       0.18  
Total related to net income & EPS   6,974       0.19       7,604       0.21       28,438       0.78       34,755       0.94  
*Non-GAAP measures* *$* *88,040*     *$* *2.41*     *$* *68,390*     *$* *1.86*     *$* *324,619*     *$* *8.88*     *$* *282,668*     *$* *7.67*  
Shares used in computing diluted net income per share                              
GAAP diluted shares       36,533           36,737           36,564           36,855  
Non-GAAP diluted shares       36,533           36,737           36,564           36,855  

*FABRINET
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW (UNAUDITED)*
(in thousands of U.S. dollars) *Three Months Ended*   *Year Ended* *June 28,*
*2024*   *June 30,*
*2023*   *June 28,*
*2024*   *June 30,*
*2023*
Net cash provided by operating activities $ 83,062     $ 71,088     $ 413,146     $ 213,310  
Less: Purchase of property, plant and equipment   (12,703 )     (17,938 )     (47,528 )     (61,360 )
Non-GAAP free cash flow $ 70,359     $ 53,150     $ 365,618     $ 151,950  

*FABRINET*
*GUIDANCE FOR QUARTER ENDING SEPTEMBER 27, 2024*
*RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES* *Diluted*
*EPS*
*GAAP net income per diluted share:* *$2.10 **to **$2.17*
*Related to cost of revenues:*  
Share-based compensation expenses 0.07
Total related to gross profit 0.07
*Related to selling, general and administrative expenses:*  
Share-based compensation expenses 0.15
Severance payment and others 0.01
Total related to selling, general and administrative expenses 0.16
*Total related to net income & EPS* *0.23*
*Non-GAAP net income per diluted share* *$2.33 **to **$2.40*