Fabrinet

Welcome to FabriNet's Financial Results Conference Call for the second quarter of fiscal year 2021. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions on how to participate will be provided at that time. As a reminder, today's call is being recorded. I would now like to turn the call over to your host, Garo Tumajanian.

Thank you, Operator, and good afternoon, everyone. Thank you for joining us on today's conference call to discuss Fabrinet's financial and operating results for the second quarter of fiscal year 2021, which ended December 25, 2020. With me on the call today are Seamus Grady, Chief Executive Officer, and Chavez Ferra, Chief Financial Officer. This call is being webcast, and a replay will be available on the Investor section of our website, located at investor.fabrinet.com. Please refer to our website for important information, including our earnings press release and investor presentation, which include our gap to non-gap reconciliation. I would like to remind you that today's discussion will contain forward-looking statements about the future financial performance of the company. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from management's current expectations. These statements reflect our opinions only as of the date of this presentation and and we undertake no obligation to revise them in light of new information or future events, except as required by law. For a description of the risk factors that may affect our results, please refer to our recent SEC filings, in particular, the section captioned, Risk Factors, in our Form 10Q, filed on November 3, 2020. We will begin the call with remarks from Seamus and Chaba, followed by time for questions. I would now like to turn the call over to Fabrinet's CEO, Seamus Grady. Seamus?

Thank you, Garo, and good afternoon, everyone. We had another record quarter with Q2 results that exceeded our guidance and support our longer-term optimism. In fact, based on our current outlook, we are positioned to deliver another record quarter in Q3 with strength across all key areas of our business. Revenue in the second quarter was a record $453.8 million, representing year-over-year as well as sequential growth, We remain focused on driving efficiencies which helped generate margins that were at their highest levels in over a year. As a result, EPS also increased year over year and sequentially to a record $1.10. On today's call, I will focus my comments on the broader themes that drove our strong performance and support our outlook, and Chava will provide more details on our financial results and guidance. second quarter played out largely as anticipated combined with an unexpected positive surprise from automotive programs which represented the most significant driver of upside in the quarter in fact automotive revenue grew more than 30 percent from the first quarter and more than doubled from a year ago we continue to see a recovery from traditional automotive customers and even stronger growth from new automotive programs such as lidar which are beginning to contribute to our growth in a more meaningful way. We are optimistic that this momentum in the automotive space will continue into the third quarter. Revenue from industrial lasers was approximately flat and was slightly better than expected. We expect industrial laser revenue to improve in the third quarter, and we remain optimistic about the longer-term potential for increased outsourcing from this market. In optical communications, we had anticipated that continued telecom strength would offset continuing softness from Datacom products that are deployed inside the data center. In fact, we saw modest growth in optical communications revenue in the second quarter. Datacom revenue did moderate, as we anticipated. However, this was more than offset by stronger telecom revenue. We are optimistic that Datacom revenue will show an improvement in the third quarter and that both Datacom and telecom revenue should increase sequentially. Part of our telecom growth was driven by our optical transport systems program at Cisco, which we have discussed on past calls. This transfer has been progressing very well and is ahead of plan. We had been anticipating that the transfer would be largely complete by the end of our fourth quarter, and we now believe we are nearly a full quarter ahead of expectations. This faster ramp will also contribute to our anticipated growth in optical communications revenue in the third quarter. Due to the combination of the earlier Cisco ramp, growth from new automotive customers, and continuing optimism as we execute on our strategy, we are advancing our plans to expand our manufacturing footprint. We recently broke ground on a new 1 million square foot building at our campus in Chonburi, Thailand. This is twice the size of our originally contemplated expansion, reflecting confidence in our ability to further scale our business over the longer term. This expansion will roughly triple our footprint in Chonbury and will increase our global footprint by approximately 50% to 3 million square feet, providing us with considerable capacity to serve our anticipated growth. We expect construction to take approximately one and a half years, which means we could start to see revenue from this facility in approximately two years. To summarize, we are very pleased that our second quarter represented record revenue and earnings with results that once again exceeded our guidance. Our continual focus on efficiency helps produce improvements in gross margin and operating margin in the quarter. As we continue to expand on our market leadership, we're optimistic that Q3 will be another record-breaking quarter for the company. And we believe that growth from new products and programs will continue to demonstrate the success of our growth strategy as we look ahead. Now I'd like to turn the call over to Chaba for additional financial details and our guidance for the third quarter of fiscal 2021. Shabba.