Analysis FN
Fabrinet's sales jumped 51%. Cash from operations fell 79%.
Fabrinet's sales rose 51%, while operating cash flow fell 79%. Our analysis traces inventory, investment funding and the gap between reported and adjusted earnings.
Ticker Byline
Fabrinet
Fabrinet manufactures complex optical and electronic products for equipment companies. Rapid growth is consuming working capital and capacity investment, while reported and adjusted earnings face different tax and investment effects.
- Ticker
- FN
- Exchange
- XNYS
- SEC CIK
- 0001408710
Fabrinet (NYSE: FN) manufactures complex optical, electro-mechanical and electronic products for equipment companies. Its services cover engineering, supply chains, precision assembly, packaging and testing. It operates in Thailand, the United States, China and Israel.
Fiscal first-quarter results
Fiscal Q1 2027 ended September 25, 2026; the comparable fiscal 2026 quarter ended September 26, 2025. Amounts are USD millions except diluted earnings per share. Diluted earnings per share allow for potential additional shares. Free cash flow is the company’s operating cash flow less purchases of property and equipment.
| Results | FY2027 Q1 | FY2026 Q1 |
|---|---|---|
| Revenue | 1,474.5 | 978.1 |
| Operating income, GAAP | 146.0 | 94.2 |
| Net income, GAAP | 103.5 | 95.9 |
| Diluted earnings per share, GAAP | $2.86 | $2.66 |
| Adjusted earnings per share | $4.34 | $2.92 |
| Operating cash flow | 21.3 | 102.6 |
| Capital purchases | 158.7 | 45.3 |
| Free cash flow | -137.4 | 57.3 |
Earlier promises and the next quarter
On August 17, Fabrinet forecast September-quarter revenue of $1.375 billion to $1.425 billion, reported earnings of $3.39 to $3.54 per share and adjusted earnings of $4.10 to $4.25. Actual sales and adjusted earnings exceeded those ranges; reported earnings fell below them.
The current adjusted profit removes $21.5 million of investment valuation losses, $19.9 million of global minimum tax expense, stock compensation and specified other costs. For the quarter ending December 25, revenue guidance is $1.60 billion to $1.65 billion. Reported earnings guidance is $3.81 to $3.96 per share, versus $4.77 to $4.92 adjusted. The 96-cent difference consists of 36 cents of stock compensation and 60 cents of global minimum tax expense.
Cash, borrowing and capacity
Quarterly changes in operating assets and liabilities used a net $149.3 million of cash, versus $19.0 million a year earlier. Receivables and inventories used cash, partly offset by trade payables.
At September 25, cash was $392.3 million and short-term investments $363.4 million, a combined $755.8 million. At June 26, the corresponding total was $875.1 million. The balance sheet recorded $74.7 million of loan borrowing after financing costs, compared with none at June 26. The company spent $29.1 million on share repurchases during the quarter. On November 2, the board authorized another $103 million of buybacks, bringing cumulative authorizations to $637.3 million.
The August annual report already anticipated higher fiscal 2027 capital spending for California and Thailand expansion and disclosed a roughly $75 million term loan for capital investment. Future results can test how cash collection and inventory needs develop as new capacity supports rising sales.
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