Fabrinet

Good afternoon. Welcome to Fibonacci Financial Results conference call for the second quarter of fiscal year 2023. At this time, all participants are in 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, Gero Tomoginia, Vice President of Investor Relations. You may begin.

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 2023, which ended December 30, 2022. 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. During this call, we will present both GAAP and non-GAAP financial measures. Please refer to the investor section of our website for important information, including our earnings press release and investor presentation, which include our GAAP to non-GAAP reconciliation. In addition, 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 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 8, 2022. We will begin the call with remarks from Seamus and Chauva, followed by time for questions. I would now like to turn the call over to FabriNet's CEO, Seamus Grady. Seamus?

Thank you, Gero. Good afternoon, everyone, and thank you for joining us on our call today. We had a strong second quarter with revenue above our guidance range at $668.7 million. This new quarterly record was an increase of 18% from a year ago and 2% from the first quarter. After adjusting for the 14-week period in Q1, revenue would have grown 5% sequentially. Supply constraints continue to act as a revenue headwind. While we continue to see pockets of relief in some areas, we have also seen increasing supply constraints in other areas. In aggregate, the revenue impact of supply constraints during the second quarter was approximately $20 million, a little smaller than anticipated. That said, we continue to face supply issues with certain commodity components. While these supply constraints could worsen before they get better, we continue to anticipate a better supply environment later this calendar year. Our team executed very well in the second quarter, delivering non-GAAP operating margins of 10.9%, setting a new quarterly performance record. Including the impact of an $0.11 foreign currency loss, non-GAAP EPS of $1.90 was in the upper end of our guidance. and would have been well above the range were it not for the foreign exchange impact. Looking at the quarter in more detail, both optical and non-optical communications saw quarterly and year-over-year revenue increases to new record levels. Within optical communications, telecom demand continues to be strong, but revenue decreased slightly sequentially, primarily due to recent component shortages. On the other hand, In Datacom, we reached a new quarterly revenue record and also experienced our fastest sequential growth in 10 years. Turning to non-optical communications, we had another record quarter for automotive revenue, as supply improvements from the first quarter continued, driving strong growth in newer automotive programs. This growth in automotive more than offset declines in industrial laser revenue in the quarter. Investing in our long-term growth remains a top priority for Fabernet. As you know, our recently opened Building 9 provides us with significant capacity to continue to scale our business over the next several years, and we continue to ramp new programs for our customers in this state-of-the-art 1 million square foot facility. Looking ahead to the third quarter, we remain optimistic that the industries we serve can remain relatively resilient despite broader global economic trends. And this is reflected in healthy demand trends that we continue to see across our business. As I noted earlier, the supply environment is still challenging. Even though we continue to successfully mitigate the impact of supply shortages, we do expect greater revenue impact for supply headwinds in the third quarter than in Q2. And this is reflected in the guidance that Chaba will detail in a moment. Our business model remains very agile, flexible, and resilient. Over the years, our ability to respond quickly to changing market dynamics has helped us to optimize our business in the face of changes in supply or demand. As such, we're confident that we can continue to operate very effectively in a dynamic global environment to the benefit of all our stakeholders. In summary, we delivered strong second quarter results with revenue above guidance and record operating margins. While the supply environment remains volatile, our demonstrated ability to execute reinforces our optimism that we remain well-positioned to continue producing strong financial results as we look ahead. Now I'd like to turn the call over to Chaba for additional financial details on our second quarter and our guidance for the third quarter of fiscal 2023. Chaba.