Fabrinet Announces Third Quarter 2012 Financial Results

BANGKOK--()--Fabrinet (NYSE: FN), a provider of precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, today announced its financial results for the third quarter of fiscal 2012, ended March 30, 2012.

Fabrinet reported total revenue of $139.0 million for the third quarter of fiscal 2012, a decrease of 28.7% compared to revenue of $194.9 million for the comparable period in fiscal 2011. GAAP net loss in the third quarter was $(46.3) million, or $(1.35) per diluted share compared to GAAP net income of $16.7 million, or $0.49 per diluted share in the third quarter of 2011. Non-GAAP net income in the third quarter was $9.9 million, or $0.28 per diluted share, a decrease of 48.0% compared to non-GAAP net income of $19.0 million, or $0.55 per share in the third quarter of 2011.

Tom Mitchell, Chief Executive Officer of Fabrinet, said, “I am pleased to report that through the continued hard work and dedication of our staff, we remain on a strong recovery path. We are excited that building 6 is complete and fully available for customers. Despite the recent flooding, we continue to win new business and customer confidence in our value proposition remains solid.”

Business Outlook

Based on information available as of May 7, 2012, Fabrinet is issuing guidance for the fourth quarter of fiscal 2012 as follows:

The company expects fourth quarter revenue to be in the range of $139 million to $143 million. Non-GAAP net income per share is expected to be in the range of $0.25 to $0.27, based on approximately 34.9 million fully diluted, weighted average shares outstanding.

Conference Call Information

What:   Fabrinet Third Quarter 2012 Financial Results Conference Call
When: Monday, May 7, 2012
Time: 5:00 p.m. ET
Live Call: (888) 357-3694, domestic
(253) 237-1137, international
Passcode 73411596
Replay: (855) 859-2056, domestic
(404) 537-3406, international
Passcode 73411596
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 provides precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, such as optical communication components, modules and sub-systems, 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, 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: http://www.fabrinet.com.

Safe Harbor

“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 all of the statements under the “Business Outlook” section relating to our forecasted operating results for the fourth quarter of fiscal year 2012 and our statements regarding our recovery and customer demand for our products and services. 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: difficulties in realizing recoveries from our insurance carriers in the amounts and within the timeframes that we expect; 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 new markets; our reliance on a limited number of customers and suppliers; difficulties in accurately forecasting demand for our services; and other important factors as described in Fabrinet reports and documents filed from time to time with the Securities and Exchange Commission (SEC), including the factors described under the sections captioned “Risk Factors” in our quarterly report on Form 10-Q, filed on February 8, 2012 and our annual report on Form 10-K, filed on August 31, 2011. 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

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 stock-based compensation expenses and other expenses in relation to flood. We have excluded these items in order to enhance investors’ understanding of our ongoing 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.

 
Fabrinet
Unaudited Condensed Consolidated Balance Sheets
As of March 30, 2012 and June 24, 2011
(in thousands of U.S. dollars, except share data)    

March 30,
2012

   

June 24,
2011

Assets
Current assets
Cash and cash equivalents $ 125,410 $ 127,282
Trade accounts receivable, net 118,484 117,705
Inventories, net 98,877 106,467
Investment in leases - 448
Deferred tax assets 3,948 1,308
Prepaid expenses and other current assets 7,046 4,466
Total current assets 353,765 357,676
Non-current assets
Property, plant and equipment, net 96,391 75,410
Intangibles, net 466 892
Investment in leases - 1,163
Deferred tax assets 1,871 1,953
Deposits and other non-current assets 662 681
Total non-current assets 99,390 80,099
Total assets $ 453,155 $ 437,775
Liabilities and Shareholders’ Equity
Current liabilities
Long-term loans from banks, current portion $ 9,668 $ 4,398
Trade accounts payable 75,274 92,563
Construction payable 4,236 2,475
Income tax payable 820 1,858
Deferred tax liability 1,283 1,056
Accrued payroll, profit sharing and related expenses 6,997 7,677
Accrued expenses 4,412 3,986
Other payables 8,353 3,796
Liabilities to third parties due to flood losses 61,198 -
Total current liabilities 172,241 117,809
Non-current liabilities
Long-term loans from banks, non-current portion 31,328 11,979
Severance liabilities 5,015 4,478
Other non-current liabilities 2,054 1,982
Total non-current liabilities 38,397 18,439
Total liabilities 210,638 136,248
Commitments and contingencies
Shareholders’ equity
Preferred shares (5,000,000 shares authorized, $0.01 par value;
no shares issued and outstanding as of March 30, 2012 and June 24, 2011, respectively) - -
Ordinary shares (500,000,000 shares authorized, $0.01 par value;
34,466,754 shares and 34,207,579 shares issued and
outstanding as of March 30, 2012 and June 24, 2011, respectively) 345 342
Additional paid-in capital 64,727 59,816
Retained earnings 177,445 241,369
Total shareholders’ equity 242,517 301,527
Total Liabilities and Shareholders’ Equity $ 453,155 $ 437,775
 
Fabrinet
Unaudited Condensed Consolidated Statements of Operations
For the three and nine months ended March 30, 2012 and March 25, 2011
 
Three Months Ended Nine Months Ended
March 30, March 25, March 30, March 25,
(in thousands of U.S. dollars) 2012 2011 2012 2011
 
Revenues $ 139,019 $ 194,851 $ 421,975 $ 553,222
Cost of revenues (124,138 ) (169,528 ) (375,281

)

 

(482,460 )
 
Gross profit 14,881 25,323 46,694 70,762
Selling, general and administrative expenses (6,586 ) (7,516 ) (18,543

)

 

(18,294 )
Other expenses in relation to flood (55,623 ) -   (95,888

)

 

-  
 
Operating (loss) income (47,328 ) 17,807 (67,737

)

 

52,468
 
Interest income 209 143 628 355
Interest expense (64 ) (81 ) (206

)

 

(282 )
Foreign exchange gain (loss), net 714 342 1,314 (706 )
Other income 57   65   213     80  
 
(Loss) income before income taxes (46,412 ) 18,276 (65,788

)

 

51,915
Income tax benefit (expense) 87   (1,613 ) 1,864     (4,241 )
 
Net (loss) income $ (46,325 ) $ 16,663   $ (63,924

)

 

$ 47,674  
 
(Loss) earnings per share
Basic $ (1.35 ) $ 0.49 $ (1.86

)

 

$ 1.41
Diluted $ (1.35 ) $ 0.49 $ (1.86

)

 

$ 1.39
 
Weighted average number of ordinary shares outstanding
(thousands of shares)
Basic 34,440* 33,969 34,353* 33,833
Diluted 34,440* 34,232 34,353* 34,345

* In accordance with the antidilutive provisions of ASC 260-10-45, basic and dilutive shares are the same for the period ended March 30, 2012. Page

 
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 30,   March 30,   March 25,   March 25, March 30,   March 30,   March 25,   March 25,
2012   2012 2011   2011 2012   2012 2011   2011
Net loss Diluted EPS Net income Diluted EPS Net loss Diluted EPS Net income Diluted EPS
 
GAAP measures (46,325 ) (1.35 ) 16,663 0.49 (63,924 ) (1.86 ) 47,674 1.39
Items reconciling GAAP net (loss) income & EPS to non-GAAP net income & EPS:
Related to cost of revenues:
Share-based compensation expenses 381   0.01   440 0.01 1,292   0.04   918 0.03
Total related to gross profit 381   0.01   440 0.01 1,292   0.04   918 0.03
 
Related to selling, general and administrative expenses:
Share-based compensation expenses 958 0.03 798 0.02 2,638 0.08 1,740 0.05
Executive separation cost - - 438 0.01 - - 438 0.01
Follow-on offering expenses -   -   617 0.02 -   -   617 0.02
Total related to selling, general and administrative expenses 958   0.03   1,853 0.05 2,638   0.08   2,795 0.08
 
Related to other expenses:
Other expenses in relation to flood 55,623   1.59   - - 95,888   2.76   - -
Total related to other expenses 55,623   1.59   - - 95,888   2.76   - -
 
Related to income tax (benefit) expense
Income tax (benefit) expense (780 ) (0.02 ) - - (3,202 ) (0.09 ) - -
Total related to income tax (benefit) expense (780 ) (0.02 ) - - (3,202 ) (0.09 ) - -
 
Total related to net income & EPS 56,182   1.61   2,293 0.07 96,616   2.78   3,713 0.11
 
Non-GAAP measures 9,857   0.28   18,956 0.55 32,692   0.94   51,387 1.49
Shares used in computing diluted net income per share
GAAP diluted shares 34,440 34,232 34,353 34,345
Non-GAAP diluted shares 34,915 34,431 34,777 34,494

Contacts

ICR, Inc.
Abhi Kanitkar, 617-956-6735
ir@fabrinet.com

Sharing

Contacts

ICR, Inc.
Abhi Kanitkar, 617-956-6735
ir@fabrinet.com