Fabrinet

Good afternoon. Welcome to FabriNet's Financial Results Conference Call for the second quarter of fiscal year 2025. 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, 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 second quarter of fiscal year 2025, which ended December 27, 2024. 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, as well as additional details of our revenue breakdown. 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 10-Q, filed on November 5, 2024. 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, Gero. Good afternoon, and thanks to those of you joining our call today. Our strong business momentum continued in the second quarter and represented a record quarter for both revenue and profitability, with growth that exceeded our expectations. Revenue of $834 million was an increase of 17% from a year ago and 4% from Q1. Our team executed well to produce record non-GAAP earnings per share of $2.61. While this is a remarkable performance, we are also very excited to see the positive trends in key areas of our business extending into the third quarter. This reflects both increasing demand in the high growth markets we serve, as well as our ability to further deepen relationships with existing customers and gain additional market share. As a result, we are confident that our strong revenue growth will extend into the third quarter, along with the corresponding increase in profitability. We are excited about these growth trends and have ample capacity to meet our near- to medium-term requirements and commitments to our customers. That said, with our continued growth, we will need additional capacity in the future, which is why we are pleased to announce that last month we broke ground on Building 10, a new 2 million square foot facility at our Chanbury campus, adding more than 50% to our total footprint. This new building will provide us with plenty of capacity to support our anticipated growth over the longer term. Also reflecting our confidence, during the second quarter, we repurchased more than one third of our $200 million authorized for share repurchases. And our board just authorized an additional $100 million for share buybacks. Looking at the dynamics of the quarter in more detail, within optical communications, Datacom experienced some bumpiness ahead of the ramp in next generation products at a major customer and grew 4% from a year ago but declined 9% from the first quarter. While we believe datacom demand could see a slight decrease in the third quarter, we remain confident that datacom revenue trends will improve as next generation technologies at the 1.6 terabit data rates begin to ramp later this calendar year. Meanwhile, we were pleased to see telecom revenue perform even better than anticipated in the quarter, increasing 24% from a year ago and 17% sequentially. Our telecom revenue strength was driven primarily by increasing demand for data center interconnect products and by early success with recent telecom system wins. We're optimistic that this positive trend will extend into the third quarter. Turning to non-optical communications, we experienced another healthy performance in automotive, with revenue up 32% from a year ago and roughly flat from Q1. Also contributing to our growth in the quarter, industrial laser revenue was up 24% from a year ago and 6% from last quarter. In summary, with the confluence of several positive growth drivers ahead of us, we are more confident than ever in our business. In the coming quarters, we expect our Datacom business to return to faster growth. In Telecom, we anticipate further growth driven by increasing momentum from recent system wins coupled with rising demand for data center interconnect products. Collectively, we are very optimistic as we look to the third quarter and beyond. Now I'll turn the call over to Chaba for more financial details on our second quarter and our guidance for the third quarter of fiscal 2025. Chaba.