Fabrinet — First Quarter Fiscal Year 2027 Earnings Summary

Financial Performance:

• Revenue for the first quarter of fiscal year 2027 was $1,474.5 million, a 51% increase from $978.1 million in the first quarter of fiscal year 2026.
• GAAP net income was $103.5 million, compared to $95.9 million in the prior year quarter.
• GAAP net income per diluted share was $2.86, compared to $2.66 in the prior year quarter.
• Non-GAAP net income was $157.4 million, compared to $105.3 million in the prior year quarter.
• Non-GAAP net income per diluted share was $4.34, compared to $2.92 in the prior year quarter.
• GAAP gross profit was $173.8 million (11.8% margin) compared to $116.4 million (11.9% margin) in the prior year; Non-GAAP gross profit was $178.0 million (12.1% margin) compared to $119.9 million (12.3% margin).
• GAAP operating income was $146.0 million (9.9% margin) compared to $94.2 million (9.6% margin) in the prior year; Non-GAAP operating income was $158.5 million (10.8% margin) compared to $103.6 million (10.6% margin).
• Net cash provided by operating activities was $21.3 million, compared to $102.6 million in the prior year.
• Capital expenditures (purchase of property, plant and equipment) were $158.7 million, compared to $45.3 million in the prior year.
• Non-GAAP free cash flow was $(137.4) million, compared to $57.3 million in the prior year.
• Cash and cash equivalents were $392.3 million as of September 25, 2026, compared to $346.7 million as of June 26, 2026.
• Total assets were $4,317.6 million as of September 25, 2026, compared to $3,911.0 million as of June 26, 2026.
• Total liabilities were $1,801.6 million as of September 25, 2026, compared to $1,456.7 million as of June 26, 2026.
• Long-term borrowings, current portion, were $11.2 million, and non-current portion were $63.5 million as of September 25, 2026; no long-term borrowings were outstanding as of June 26, 2026.
• Trade accounts receivable increased to $1,161.4 million from $1,017.9 million; Inventories increased to $1,193.1 million from $1,021.2 million.

Guidance and Future Outlook:

• Second quarter fiscal year 2027 revenue is expected to be in the range of $1.6 billion to $1.65 billion.
• Second quarter fiscal year 2027 GAAP net income per diluted share is expected to be in the range of $3.81 to $3.96.
• Second quarter fiscal year 2027 Non-GAAP net income per diluted share is expected to be in the range of $4.77 to $4.92.
• Guidance assumes approximately 36.2 million fully diluted shares outstanding.
• Management expressed confidence in delivering another strong performance in the second quarter due to exceptional momentum.

Business Segments and Product Lines:

• Broad-based demand across multiple significant programs drove the results.
• New product ramps further supported growth.
• Fabrinet provides advanced optical packaging and precision optical, electro-mechanical, and electronic manufacturing services for optical communication components, automotive components, medical devices, industrial lasers, and sensors.

Market and Competitive Landscape:

• The press release notes broad-based demand across multiple significant programs but does not provide specific market share data or detailed competitor analysis.

Risks and Challenges:

• Potential risks include changes in general economic conditions, recession risks, and supply chain disruptions.
• Risks include less customer demand than forecasted, slower growth in data center, communications infrastructure, automotive, and industrial markets than forecasted.
• Challenges include difficulties expanding into additional markets (semiconductor processing, biotechnology, metrology, materials processing), increased competition, and reliance on a small number of customers and suppliers.
• Risks also include difficulties managing operating costs and operating across multiple countries (Thailand, China, Israel, U.S.).

Management Commentary and Tone:

• Seamus Grady, Chairman and CEO, stated fiscal year 2027 is off to an excellent start with record revenue and non-GAAP EPS well above guidance ranges.
• Management highlighted broad-based demand and new product ramps as key drivers.
• The tone was confident, with management stating they enter the second quarter with exceptional momentum.

Other Key Points:

• The Board of Directors approved an expansion of the share repurchase program, authorizing the repurchase of up to an additional $103.0 million of ordinary shares.
• The aggregate authorization under the existing share repurchase program is now $637.3 million.
• During the quarter, the company repurchased ordinary shares for $29.1 million.
• Non-GAAP measures exclude share-based compensation, severance payments, restructuring costs, legal and litigation costs, non-marketable equity securities revaluation, and charges related to the OECD Pillar Two global minimum tax framework.
• A significant non-recurring item impacting the quarter was a $21.5 million loss on non-marketable equity securities, which was added back to arrive at Non-GAAP net income.
• The company incurred $1.0 million in restructuring and other related costs.
• Inventory obsolescence impairment was $6.3 million.
• Construction, software, and equipment-related payables increased to $96.0 million from $50.9 million.