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Fabrinet reports ‘record’ Q2, 2023 financial results

09 Feb 2023

Quarter revenue of $669 million beats guidance; longer term supply and demand trends are “positive”.

Fabrinet, a developer of optical packaging and precision optical, electro-mechanical and electronic manufacturing services to high-tech OEMs, this week announced financial results for its second fiscal quarter ended December 30, 2022.

The majority of the company’s business is in the telecoms sector, split about 75% telecom and 25% datacom.

Seamus Grady, CEO of Fabrinet, said, “We delivered strong second quarter results with revenue that exceeded our guidance range, and record operating margins. We continue to effectively manage through a dynamic supply environment with component availability improving for some products, but tightening for others.

In the company’s published financial statement, Grady added, “Positive longer-term supply and demand trends, combined with our demonstrated track record of solid execution gives us confidence that we can continue to deliver strong financial results.”

Related news:Effect Photonics selects Fabrinet to manufacture its optical sub-assemblies.

Q2 2023 highlights

(Non-GAAP figures).

  • Net income for the quarter was $70.0m ($56.2m for Q2, 22).
  • Net income per diluted share for quarter was $1.90 ($1.50 for Q2, 22).
  • Febrinet’s revenue is forecast to grow 12% p.a. on average during the next three years, compared to a 5.4% growth forecast for the overall electronics industry in the US, the company stated.

Fabrinet gave guidance for its third quarter, 2023, as follows:

  • Q3 revenue will be in the range of $640m to $660m.
  • Non-GAAP net income per diluted share will be in the range $1.86 to $1.93.

Analysts conference

In the associated Q2 2023 Earnings Conference Call, on Monday, February 6th, CEO Seamus Grady commented, “We had a strong second quarter with revenue above our guidance range at $668.7 million. This new quarterly record was an increase of 18% from a year ago and 2% from the first quarter. After adjusting for the 14-week period in Q1, revenue would have grown 5% sequentially.

“Supply constraints continue to act as a revenue headwind, while we continue to see pockets of relief in some areas, we have also seen increase in supply constraints in other areas. In aggregates, the revenue impact of supply constraints during the second quarter was approximately $20 million, a little smaller than anticipated.”

Getting worse before it gets better?

Grady cautioned, “That said, we continue to face supply issues with certain commodity components. While these supply constraints could worsen before they get better, we continue to anticipate a better supply environment later this calendar year.”

Csaba Sverha, Fabrinet’s Chief Financial Officer, expanded on the forecast: “For the trhird quarter, our guidance assumes a supply chain headwind of $30 million to $35 million, which is about $10 million to $15 million greater than what we saw in the second quarter. With this incremental supply constraints, and typical Q3 seasonality in mind, we anticipate revenue in the range of $640 million to $660 million.”

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