Fabrinet ( NYSE: FN ) stock gained 13% premarket on Tuesday after the firm reported Q4 earnings beat and issued Q1 guidance that handily beat Street estimates.
FN expects Q1 adj. EPS of $1.72-$1.79, well above consensus estimate of $1.35.
Q1 revenue is expected to be $620M-$640M vs. consensus estimate of $606.60M.
"We anticipate supply chain headwinds will be slightly lower than in Q4 at ~$25M-$30M," said CFO Csaba Sverha in a post-earnings call .
Q1 will have 1 week longer than a typical quarter and the impact of this extra week is projected to be $20M of additional revenue in Q1.
FN reported Q4 adj. EPS of $1.68 vs. $1.31 in Q4 2021, reflecting strong margins. Adj. operating margin was a record 10.7% vs. 9.9% in Q4 2021.
Revenue grew 15.4% Y/Y to $587.87M, driven by strong demand across key end markets.
Optical communications revenue was $464.7M, up 20%, led by 20% growth in telecom revenue. Non-optical communications revenue was $123.2M.
Gross margin was 13%, with a forex tailwind contributing ~20 bps. "We expect gross margin to moderate in Q1, due primarily to annual merit increases," said Sverha.
CEO Seamus Grady said the biggest constraint for FN's growth is the supply environment. FN has been constructing its largest ever manufacturing building - Building 9 at the Chonburi Campus - to counter this.
"This building expands our global footprint by ~50%... we could start to see revenue from this facility by the end of Q1," Grady added.
FN also said its board approved repurchase of up to an additional $78.7M of shares.
This brings the total authorization under its existing stock buyback program to $247.2M, with $100M currently remaining.
Shares of FN fell 17.3% YTD but gained 12.5% in the last 1 year.
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Fabrinet stock gains premarket on earnings beat, bright outlook