Fabrinet

Good afternoon. Welcome to Fabrinet's Financial Results Conference call for the third quarter of financial year 2023. At this time, all participants are in listen-only mode. Later, we'll 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 conference to the host, Gerald Tumajanian, Vice President of Investor Relations. Please go ahead.

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 third quarter of fiscal year 2023, which ended March 31, 2023. 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 February 7, 2023. We will begin the call with remarks from Seamus and Chava, followed by time for questions. I would now like to turn the call over to Fabrinet's CEO, Seamus Grady. Seamus?

Thank you, Garo. Good afternoon, everyone, and thank you for joining us on our call today. We exceeded our guidance for both revenue and non-GAAP EPS in the third quarter. Total revenue in the quarter was $665.3 million, an increase of 18% from a year ago. During the second quarter, supply headwinds impacted revenue by $30 to $35 million, as anticipated. We continue to see a gradual loosening of component supply and we expect further improvements in availability over the next few quarters. Our strong revenue performance and solid execution produced non-GAAP EPS of $1.94 in the quarter, above our guidance range and up 44 cents from a year ago. Looking at the quarter in more detail, revenue was essentially flat sequentially for both optical and non-optical communications and was a little better than our expectations. Within optical communications, telecom revenue decreased sequentially as anticipated. This was primarily due to specific component constraints we called out last quarter impacting silicon photonics programs and to a lesser degree from ongoing commodity semiconductor constraints. Datacom revenue was similarly affected by supply constraints, but the supply impact was more than offset by growth from some next-generation non-silicon photonics programs. As a result, we had a record Datacom performance, producing strong quarterly and year-over-year growth. For non-optical communications, our business was up more than 30% from a year ago and was relatively stable with the second quarter, as we maintained strong automotive revenue levels. Looking to the fourth quarter and beyond, we are not immune from the near-term inventory corrections being experienced in the broader optical ecosystem. While we are not a proxy for the industry, we expect the impact of inventory absorption in some product areas to be a headwind to our revenue in the fourth quarter. On the other hand, we continue to see gradual improvements in component availability. Longer term, we believe end market growth drivers remain intact and we continue to be optimistic about our position in the market and our ability to execute efficiently. In summary, We delivered strong third quarter results with revenue and non-GAAP EPS that exceeded our guidance. We are seeing some demand variability as a result of inventory adjustments in the industry, as well as persistent but improving supply constraints. We remain confident in our ability to execute in this environment and deliver strong financial results. Now I'd like to turn the call over to Chaba for additional financial details on our third quarter and our guidance for the fourth quarter of fiscal 2023. Shaba.