Fabrinet

Good afternoon. Welcome to the Fibonacci Financials Resource Conference call for the fourth quarter and fiscal year 2023. At this time, all participants are on 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 conference over to your host, Guy Rowe Tumajinyan, Vice President of Investor Relations.

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 fourth quarter of the fiscal year 2023, which ended June 30, 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 May 9, 2023. 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, Gareth. Good afternoon, everyone, and thank you for joining us on our call today. Our fourth quarter financial performance exceeded our guidance for both revenue and earnings per share. Revenue of $655.9 million grew 12% from a year ago. We continued to generate double-digit operating margins, which helped produce non-GAAP earnings per share of $1.86 in the quarter. Our financial results for the year reflect our ability to grow and execute through supply headwinds that we experienced early in the year and the inventory adjustments that we encountered in the second half of the year. Revenue of over $2.6 billion increased 17% year over year. Non-GAAP operating margin expanded more than 50 basis points to 10.8% for the year. and we generated record non-GAAP earnings per share of $7.67, an increase of 25% from fiscal 2022, as we continue to demonstrate strong execution. Looking at the fourth quarter in more detail, revenue was essentially flat sequentially for optical communications. Within optical communications, telecom revenue saw a sizable decrease as a result of inventory digestion at our customers and their customers. The decline in telecom revenue was offset by record revenue growth in Datacom on both a year-over-year and sequential basis. In fact, Datacom revenue more than doubled from a year ago and grew more than 50% sequentially. This Datacom growth was primarily driven by an 800 gig AI data center transceiver program for one of our customers. In our non-optical communications business, revenue increased almost 25% from a year ago but declined slightly sequentially. Looking to the first quarter and beyond, we expect the near-term inventory correction that our customers are experiencing to persist. However, we are confident that the very strong Datacom performance we saw in the fourth quarter will continue to largely offset these inventory-related headwinds in our fiscal first quarter. In fact, we are very optimistic about our overall market position including the potential for continued growth in AI-related programs as we look ahead. In summary, our solid fourth quarter performance contributed to record results for the full fiscal year. We are excited about our strong industry position and are confident that we can continue to deliver excellent financial results in the coming year. Now I'd like to turn the call over to Chaba for additional financial details on our fourth quarter and fiscal 2023. and our guidance for the first quarter of fiscal 2024.