BANGKOK--(BUSINESS WIRE)--Aug 20, 2018--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 29, 2018.

Seamus Grady, Chief Executive Officer of Fabrinet, said, “Our financial results for the fourth quarter exceeded our guidance for revenue and profitability. Our sequential revenue growth was driven by modest growth from optical communications products, and strong growth from non-optical communications products, with a particularly notable performance in the industrial laser and automotive markets. We are encouraged by the broadly improving demand dynamics we see and are optimistic that we will see continued sequential growth in the first quarter of fiscal year 2019 as we expand our leadership as a manufacturer of complex products.”

Toh-Seng Ng, Chief Financial Officer of Fabrinet, added, “On a personal note, at my request, our board of directors has initiated a CFO succession plan. We have retained an executive search firm to assist in identifying and evaluating candidates, and there is no set timeline for this process.”

Fourth Quarter Fiscal Year 2018 Financial Highlights

GAAP Results

Revenue for the fourth quarter of fiscal year 2018 was $345.3 million, compared to revenue of $370.5 million for the comparable period in fiscal year 2017. GAAP net income for the fourth quarter of fiscal year 2018 was $22.8 million, compared to GAAP net income of $27.4 million for the fourth quarter of fiscal year 2017. GAAP net income for the fourth quarter of fiscal year 2018 included a foreign exchange loss of $0.9 million, or $0.02 per diluted share, compared to a foreign exchange loss of $1.0 million, or $0.03 per diluted share, for the fourth quarter of fiscal year 2017. GAAP net income per diluted share for the fourth quarter of fiscal year 2018 was $0.60, compared to GAAP net income per diluted share of $0.72 for the fourth quarter of fiscal year 2017.

Non-GAAP Results

Non-GAAP net income for the fourth quarter of fiscal year 2018 was $30.7 million, compared to non-GAAP net income of $32.8 million for the fourth quarter of fiscal year 2017. Non-GAAP net income for the fourth quarter of fiscal year 2018 included a foreign exchange loss of $0.9 million, or $0.02 per diluted share, compared to a foreign exchange loss of $1.0 million, or $0.03 per diluted share, for the fourth quarter of fiscal year 2017. Non-GAAP net income per diluted share for the fourth quarter of fiscal year 2018 was $0.81, compared to non-GAAP net income per diluted share of $0.86 for the same period a year ago.

Fiscal Year 2018 Financial Highlights

GAAP Results

Revenue for fiscal year 2018 was $1,371.9 million, compared to revenue of $1,420.5 million for fiscal year 2017. GAAP net income for fiscal year 2018 was $84.2 million, compared to GAAP net income of $97.1 million for fiscal year 2017. GAAP net income for fiscal year 2018 included a foreign exchange loss of $6.6 million, or $0.17 per diluted share, compared to a foreign exchange loss of $1.1 million, or $0.03 per diluted share, for fiscal year 2017. GAAP net income per diluted share for fiscal year 2018 was $2.21, compared to GAAP net income per diluted share of $2.57 for fiscal year 2017.

Non-GAAP Results

Non-GAAP net income for fiscal year 2018 was $113.5 million, compared to non-GAAP net income of $127.4 million for fiscal year 2017. Non-GAAP net income for fiscal year 2018 included a foreign exchange loss of $6.6 million, or $0.17 per diluted share, compared to a foreign exchange loss of $2.9 million, or $0.08 per diluted share, for fiscal year 2017. Non-GAAP net income per diluted share for fiscal year 2018 was $2.98, compared to non-GAAP net income per diluted share of $3.37 for fiscal year 2017.

Share Repurchase Program Update

Fabrinet repurchased approximately 551,000 ordinary shares at an average price of $36.31 during the fourth quarter. As of June 29, 2018, Fabrinet had a remaining authorization to purchase up to an additional $17.6 million worth of its ordinary shares.

Business Outlook

The guidance provided below is based on ASC 605. In the first quarter of fiscal 2019, Fabrinet will report results under ASC 606, which it is adopting for fiscal year 2019 on a modified retrospective transition method, and will provide a reconciliation to ASC 605 at that time.

Based on information available as of August 20, 2018, Fabrinet is issuing guidance for its first fiscal quarter of 2019 ending September 28, 2018, as follows:

Fabrinet expects first quarter revenue to be in the range of $347 million to $355 million. GAAP net income per diluted share is expected to be in the range of $0.58 to $0.61, based on approximately 37.9 million fully diluted shares outstanding. Non-GAAP net income per diluted share is expected to be in the range of $0.80 to $0.83, based on approximately 37.9 million fully diluted shares outstanding.

Conference Call Information

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, 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 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 United States of America, the People’s Republic of China 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) statements regarding improving demand and our ability to achieve sequential growth in the first quarter of fiscal year 2019, as well as our ability to expand our leadership as a manufacturer of complex products; 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 2019. 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 Thailand, the People's Republic of China, 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 on May 8, 2018. 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; severance payments; expenses related to our CEO search; debt administration expense; amortization of intangibles; business combination expenses; loss (gain) on foreign currency contracts; amortization of debt issuance costs; and restructuring charges. 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.

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