Fabrinet recently released its 10-Q report, providing a detailed insight into its operations and financial performance. Fabrinet, incorporated in 1999 and based in George Town, the Cayman Islands, offers optical packaging and precision optical, electro-mechanical, and electronic manufacturing services in North America, the Asia-Pacific, and Europe. The company caters to original equipment manufacturers (OEMs) of optical communication components, modules and sub-systems, industrial lasers, automotive components, medical devices, and sensors. Its product range includes switching products, transceivers, tunable lasers, and active optical cables, as well as solid state, diode-pumped, gas, and fiber lasers used in various industries. Additionally, Fabrinet designs and fabricates application-specific crystals, lenses, prisms, mirrors, laser components, and substrates, serving as a global leader in providing these services to complex industries.
In ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Fabrinet discusses various forward-looking statements related to its goals, strategies, revenues, expenses, capital requirements, and growth potential. The report emphasizes the company's ability to expand relationships with existing customers and attract new ones due to its broad range of complex engineering and manufacturing service offerings, flexible low-cost manufacturing platform, process optimization capabilities, advanced supply chain management, and experienced management team. It also highlights the challenges related to disruptions in the supply chain, fluctuations in the availability of parts and materials, and the impact of macroeconomic conditions and international political instability on its business, financial condition, and operating results.
The report further delves into the company's revenues, indicating that the percentage of revenues generated from a bill-to location outside of North America decreased from 66.1% in the three months ended December 29, 2023, to 55.3% in the three months ended December 27, 2024. It also provides a breakdown of revenues by geographic region, with North America accounting for 44.7%, Asia-Pacific and others for 47.3%, and Europe for 8.0% of total revenues in the three months ended December 27, 2024. Fabrinet expects the portion of future revenues attributable to customers in regions outside North America for the remainder of fiscal year 2025 to be in line with the portion of revenues attributable to such customers during the six months ended December 27, 2024.
Moreover, the report details the company's contracts, cost of revenues, selling, general and administrative expenses, and foreign exchange risk management. It highlights the key components of its cost of revenues, including material costs, employee costs, and infrastructure-related costs, and the expected increase in selling, general and administrative expenses in fiscal year 2025 compared to fiscal year 2024, primarily due to increases in employee costs and research and development expenses. Fabrinet also addresses its exposure to foreign exchange risk arising from various currency exposures, primarily with respect to the Thai baht, and its use of derivative instruments to manage the risks associated with fluctuations in foreign currency exchange rates. Following these announcements, the company's shares moved -9.1%, and are now trading at a price of $205.01. If you want to know more, read the company's complete 10-Q report here.
