Industry Press Releases

Fabrinet announces Third Quarter Fiscal 2015 Financial Results

Tuesday, May 05, 2015
Pressreleases

Fabrinet, 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 the third quarter ended March 27, 2015.

“Our third quarter results were solid, with revenue and EPS ahead of our expectations. Our initiatives to expand our new product introduction and advanced packaging capabilities are well underway and we are on track to ship our first products from our new west coast facility in the current quarter.”

Fabrinet reported total revenue of $189.5 million for the third quarter of fiscal 2015, an increase of 13% compared to total revenue of $167.7 million for the comparable period in fiscal 2014. GAAP net income for the third quarter of fiscal 2015 was $10.8 million, or $0.30 per diluted share, compared to GAAP net income of $47.7 million, or $1.33 per diluted share, in the third quarter of fiscal 2014. GAAP net income for the third quarter of fiscal 2014 was positively impacted by $38.2 million, or $1.07 per diluted share, due to the collection of final insurance proceeds. Non-GAAP net income in the third quarter of fiscal 2015 was $13.0 million, or $0.36 per diluted share, compared to non-GAAP net income of $12.3 million, or $0.34 per diluted share, in the same period a year ago.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “Our third quarter results were solid, with revenue and EPS ahead of our expectations. Our initiatives to expand our new product introduction and advanced packaging capabilities are well underway and we are on track to ship our first products from our new west coast facility in the current quarter.”

Business Outlook

Based on information available as of May 4, 2015, Fabrinet is issuing guidance for the fourth quarter of fiscal 2015 as follows:

Fabrinet expects fourth quarter revenue to be in the range of $195 million to $199 million. GAAP net income per share is expected to be in the range of $0.33 to $0.35 with expected non-GAAP net income per share of $0.37 to $0.39, based on approximately 36 million fully diluted shares outstanding.

Conference Call Information

What:       Fabrinet Third Quarter 2015 Financial Results Conference Call
When:       Monday, May 4, 2015
Time:       5:00 p.m. ET
Live Call:       (888) 357-3694, domestic
        (253) 237-1137, international
        Passcode: 18428518
Replay:       (855) 859-2056, domestic
        (404) 537-3406, international
        Passcode: 18428518
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 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, 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 test. 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 People’s Republic of China and the United States. For more information visit: www.fabrinet.com.

Fabrinet              
Consolidated Balance Sheets              
As of March 27, 2015 and June 27, 2014              
(in thousands of U.S. dollars, except share data)      

March 27,
2015

   

June 27,
2014

Assets              
Current assets              
Cash and cash equivalents     $ 128,946   $ 233,477
Marketable securities       125,398     -
Trade accounts receivable, net       120,054     101,168
Inventory, net       126,660     124,570
Deferred tax assets       1,486     1,561
Prepaid expenses       2,272     1,691
Other current assets       1,822     2,010
Total current assets       506,638     464,477
Non-current assets              
Property, plant and equipment, net       133,998     97,244
Intangibles, net       45     72
Deferred tax assets       1,690     1,775
Deferred debt issuance cost       2,573     989
Total non-current assets       138,306     100,080
Total assets     $ 644,944   $ 564,557
Liabilities and Shareholders’ Equity              
Current liabilities              
Bank borrowings, including revolving loan and current portion of long-term loan from banks   $ 36,000   $ 6,000
Trade accounts payable       103,053     94,853
Equipment-related payable       4,170     1,130
Income tax payable       979     1,024
Accrued payroll, bonus and related expenses       9,977     8,612
Accrued expenses       7,120     4,345
Other payables       6,258     4,665
Total current liabilities       167,557     120,629
Non-current liabilities              
Long-term loans from bank, non-current portion       6,000     10,500
Deferred tax liability       1,017     1,040
Severance liabilities       5,001     4,453
Other non-current liabilities       1,691     1,099
Total non-current liabilities       13,709     17,092
Total liabilities       181,266     137,721
Commitments and contingencies              
Shareholders’ equity              
Preferred shares (5,000,000 shares authorized, $0.01 par value;              
no shares issued and outstanding as of March 27, 2015 and June 27, 2014)     -     -
Ordinary shares (500,000,000 shares authorized, $0.01 par value;              
35,426,140 shares and 35,152,772 shares issued and              
outstanding as of March 27, 2015 and June 27, 2014, respectively)       354     352
Additional paid-in capital       87,088     80,882
Retained earnings       376,210     345,602
Accumulated other comprehensive income       26     -
Total shareholders’ equity       463,678     426,836
Total Liabilities and Shareholders’ Equity     $ 644,944   $ 564,557

 

Fabrinet
Consolidated Statements of Operations and Comprehensive Income
For the three and nine months ended March 27, 2015 and March 28, 2014

           
      Three Months Ended   Nine Months Ended
      March 27,   March 28,   March 27,   March 28,
(in thousands of U.S. dollars, except share data)     2015   2014   2015   2014
                   
Revenues   $ 189,453 $ 167,657 $ 567,131 $ 517,770
Cost of revenues     (167,796)   (150,374)   (503,907)   (461,312)
Gross profit     21,657   17,283   63,224   56,458
Selling, general and administrative expenses     (9,670)   (7,352)   (28,721)   (20,959)
Expenses related to reduction in workforce     -   -   (1,153)   -
Income related to flooding, net     -   38,151   -   44,748
Operating income     11,987   48,082   33,350   80,247
Interest income     258   560   956   1,262
Interest expense     (125)   (172)   (375)   (566)
Foreign exchange (loss) gain, net     (87)   (254)   (110)   46
Other (expense) income     (75)   173   (106)   544
Income before income taxes     11,958   48,389   33,715   81,533
Income tax expense     (1,113)   (727)   (3,108)   (135)
Net income     10,845   47,662   30,607   81,398
Other comprehensive income, before tax:                  
Change in fair value of marketable securities     450   -   (43)   -
Less: Reclassification adjustment for net loss realized                  
and included in net income     62   -   69   -
Total change in unrealized gain on marketable                  
securities, before tax     512   -   26   -
Income tax expense related to items of other                  
comprehensive income     -   -   -   -
Total other comprehensive income, net of tax     512   -   26   -
Net comprehensive income   $ 11,357 $ 47,662 $ 30,633 $ 81,398
                   
Earnings per share                  
Basic   $ 0.31 $ 1.36 $ 0.87 $ 2.33
Diluted   $ 0.30 $ 1.33 $ 0.85 $ 2.29
Weighted-average number of ordinary shares outstanding (thousands of shares)    
Basic     35,406   35,078   35,328   34,878
Diluted     36,110   35,790   35,871   35,504

 

Fabrinet
Consolidated Statements of Cash Flows
For the nine months ended March 27, 2015 and March 28, 2014

           
        Nine Months Ended
        March 27,     March 28,
(in thousands of U. S. dollars)     2015     2014
             
Cash flows from operating activities            
Net income for the period   $ 30,607   $ 81,398
Adjustments to reconcile net income to net cash provided by operating activities        
  Depreciation     9,261     7,685
  Amortization of intangibles     61     72
  Loss from sales and maturities of available-for-sale securities     62     -
  Gain on disposal of property, plant and equipment     (41)     (1)
  Amortization of investment premium     757     -
  Amortization of deferred debt issuance costs     377     -
  Income related to flooding     -     (45,211)
  Proceeds from insurers for inventory losses related to flooding     -     7,416
  Reversal of allowance for doubtful accounts     3     (62)
  Unrealized (gain) loss on exchange rate and fair value of derivative     (55)     1,027
  Share-based compensation     5,806     4,538
  Deferred income tax     137     (132)
  Other non-cash expenses     1,141     255
  Reversal of uncertain tax positions     -     (1,538)
  Inventory obsolescence     332     673
Changes in operating assets and liabilities            
  Trade accounts receivable     (18,889)     37
  Inventory     (2,422)     (19,537)
  Other current assets and non-current assets     (574)     (889)
  Trade accounts payable     8,200     24,392
  Income tax payable     (45)     351
  Other current liabilities and non-current liabilities     5,763     5,642
  Liabilities to third parties due to flood losses     -     (7,512)
  Net cash provided by operating activities     40,481     58,604
Cash flows from investing activities            
Purchase of available-for-sale securities     (159,396)     -
Proceeds from sales of available-for-sale securities     22,873     -
Proceeds from maturities of available-for-sale securities     10,332     -
Purchase of property, plant and equipment     (42,980)     (7,280)
Purchase of intangibles     (34)     (1)
Proceeds from disposal of property, plant and equipment     46     1
Proceeds from insurers in settlement of claims related to flood damage     -     37,795
  Net cash (used in) provided by investing activities     (169,159)     30,515
Cash flows from financing activities            
Payment of debt issuance costs     (1,780)     -
Proceed from revolving loan

 

 

30,000

    -
Repayment of long-term loans from bank

 

 

(4,500)

    (7,251)
Proceeds from issuance of ordinary shares under employee share option plans

 

 

736

    3,956
Withholding tax related to net share settlement of restricted share units     (334)     (198)
  Net cash provided by (used in) financing activities     24,122     (3,493)
Net (decrease) increase in cash and cash equivalents   $ (104,556)   $ 85,626
Fabrinet
Consolidated Statements of Cash Flows (continued)
For the nine months ended March 27, 2015 and March 28, 2014
               
        Nine Months Ended
        March 27,     March 28,
(in thousands of U.S. dollars)     2015     2014
               
Movement in cash and cash equivalents            
Cash and cash equivalents at beginning of period   $ 233,477   $ 149,716
(Decrease) increase in cash and cash equivalents     (104,556)     85,626
Effect of exchange rate on cash and cash equivalents     25     (1,678)
Cash and cash equivalents at end of period   $ 128,946   $ 233,664
Fabrinet
Reconciliation of GAAP measures to non-GAAP measures
(in thousands of U.S. dollars, except per share data)
(unaudited)
 
    Three Months Ended   Nine Months Ended
    March 27,   March 27,   March 28,   March 28,   March 27,   March 27,   March 28,   March 28,
    2015   2015   2014   2014   2015   2015   2014   2014
    Net income   Diluted EPS   Net income   Diluted EPS   Net income   Diluted EPS   Net income   Diluted EPS
             

 

                 
GAAP measures   10,845   0.30   47,662   1.33   30,607   0.85   81,398   2.29

Items reconciling GAAP net income & EPS to non-GAAP
net income & EPS:

                               
Related to cost of revenues:                                
Share-based compensation expenses   379   0.01   290   0.01   1,107   0.03   888   0.03
Total related to gross profit   379   0.01   290   0.01   1,107   0.03   888   0.03
                                 
Related to selling, general and administrative expenses:                                
Share-based compensation expenses   1,630   0.05   1,188   0.03   4,699   0.13   3,650   0.10
Executive separation cost   -   -   547   0.02   -   -   547   0.02
Investigation costs   -   -   -   -   4,100   0.11   -   -
Total related to selling, general and administrative expenses   1,630   0.05   1,735   0.05   8,799   0.25   4,197   0.12
                                 
Related to other incomes and other expenses:                                
Income related to flooding, net   -   -   (38,151)   (1.07)   -   -   (44,748)   (1.26)

Unrealized loss on exchange, net of interest income
incurred from income related to flooding

  -   -   744   0.02   -   -   744   0.02
Expenses related to reduction in workforce   -   -   -   -   1,153   0.03   -   -

Amortization of debt issuance costs

  149   0.00   -   -   377   0.01   -   -
Total related to other incomes and other expenses   149   0.00   (37,407)   (1.05)   1,530   0.04   (44,004)   (1.24)
                                 
Related to income tax benefit                                
Income tax benefit   -   -   -   -   (187)   (0.01)   -   -
Total related to income tax benefit   -   -   -   -   (187)   (0.01)   -   -
                                 
Total related to net income & EPS   2,158   0.06   (35,382)   (0.99)   11,249   0.31   (38,919)   (1.10)
                                 
Non-GAAP measures   13,003   0.36   12,280   0.34   41,856   1.16   42,479   1.20
                                 
Shares used in computing diluted net income per share                                
GAAP diluted shares       36,110       35,790       35,871       35,504
Non-GAAP diluted shares       36,110       35,790       35,871       35,504

Contacts:

Fabrinet
Investor:
Jennifer Predmore, 215-428-1797
ir@fabrinet.com

 

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