Fabrinet (FN) has reported a 27.72 percent rise in profit for the quarter ended Dec. 30, 2016. The company has earned $25.29 million, or $0.67 a share in the quarter, compared with $19.80 million, or $0.54 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $34.50 million, or $0.91 a share compared with $18.23 million or $0.50 a share, a year ago.

Revenue during the quarter surged 50.69 percent to $351.16 million from $233.04 million in the previous year period. Gross margin for the quarter expanded 3 basis points over the previous year period to 12.26 percent. Total expenses were 92.77 percent of quarterly revenues, down from 93.66 percent for the same period last year. This has led to an improvement of 89 basis points in operating margin to 7.23 percent.

Operating income for the quarter was $25.40 million, compared with $14.78 million in the previous year period.

Tom Mitchell, chief executive officer of Fabrinet, said: "We exceeded our guidance for the second quarter, with revenue that grew 51% from a year ago. We are enthusiastic about our continued business momentum, driven by on-going strength in the optical market and new customer programs. We're also excited to see the beginning of the transfer of programs from our new product introduction facility in Santa Clara to Thailand, and believe our growing NPI pipeline will support our growth in the years ahead." Mr. Mitchell added, "On a personal note, at my request, our board of directors has initiated a CEO succession plan. We have retained an executive search firm to assist in identifying and evaluating candidates. We have no set timeline for this process. I intend to continue to play a leadership role in the Company after we appoint a new CEO."

For the third-quarter 2017, Fabrinet forecasts revenue to be in the range of $360 million to $364 million. The company expects diluted earnings per share to be in the range of $0.66 to $0.68. On an adjusted basis, the company expects diluted earnings per share to be in the range of $0.87 to $0.89.

The company has spent $84.10 million cash to meet investing activities during the first six months as against cash outgo of $19.65 million in the last year period. It has incurred net capital expenditure of $44.60 million on net basis during the first six months, up 67.94 percent or $18.04 million from year ago period.

Cash flow from financing activities was $10.69 million for the first six months, down 28.51 percent or $4.26 million, when compared with the last year period.

Working capital increases

Fabrinet has recorded an increase in the working capital over the last year. It stood at $435.34 million as at Dec. 30, 2016, up 23.72 percent or $83.48 million from $351.87 million on Dec. 25, 2015. Current ratio was at 2.54 as on Dec. 30, 2016, down from 2.70 on Dec. 25, 2015.

Cash conversion cycle (CCC) has decreased to 36 days for the quarter from 67 days for the last year period. Days sales outstanding went down to 49 days for the quarter compared with 56 days for the same period last year.

Days inventory outstanding has decreased to 32 days for the quarter compared with 63 days for the previous year period. At the same time, days payable outstanding went down to 45 days for the quarter from 52 for the same period last year.