Highlights

  • Fabrinet increased fourth-quarter revenue to a record level and reported higher diluted earnings per share than last year.
  • Capital expenditure exceeded quarterly operating cash flow, leaving Fabrinet with negative free cash flow despite reported accounting profits.
  • Inventories increased substantially during the fiscal year, while cash and short-term investments together provided significant reported liquidity.
  • Management forecast another sequential revenue increase for the following quarter, although the supplied document contains no confirmed results date.

Record sales did not translate into comparable cash generation at Fabrinet (NYSE:FN), whose fourth-quarter fiscal 2026 results combined rapid earnings growth with heavier investment. Revenue reached USD 1.316 billion for the quarter ended 26 June, but free cash flow was negative USD 36.9 million. The contrast places capital expenditure and working capital alongside the manufacturing group’s expanding sales.

Quarterly Earnings Outpace Revenue Growth

Results announced on 17 August showed revenue rising approximately 45% from USD 909.7 million a year earlier. The quarterly total exceeded the company’s guidance range and represented a reported record.

GAAP net income reached USD 139.3 million, with diluted earnings per share of USD 3.83 compared with USD 2.42 a year earlier. Non-GAAP net income was USD 149.1 million, or USD 4.10 per diluted share, against USD 2.65 previously.

The distinction between GAAP and non-GAAP results remains relevant because they are separate measures. Management described the non-GAAP earnings-per-share figure as an all-time high, while expressing confidence in the continuation of growth into fiscal 2027.

Margins Accompany the Expansion

GAAP gross margin was 12.0%, compared with 12.2% on a non-GAAP basis. Operating margins were 10.2% and 10.9%, respectively. Those reported margins provide a more detailed view of profitability than the revenue record alone.

For fiscal 2026, revenue totalled USD 4.64 billion, up 36% from USD 3.42 billion. GAAP net income was USD 473.0 million, equivalent to USD 13.05 per diluted share. Non-GAAP net income reached USD 510.9 million, or USD 14.09 per diluted share.

Investment Constrains Cash Conversion

Quarterly capital expenditure of USD 91.9 million exceeded operating cash flow of USD 55.0 million. That produced the negative free-cash-flow result despite positive net income.

Across the full year, operating cash flow was USD 256.7 million and capital expenditure was USD 252.5 million. Free cash flow consequently totalled USD 4.2 million, down from USD 207.3 million a year earlier.

Inventories rose to USD 1.02 billion from USD 581.0 million. The original document does not explain the increase, so it cannot be attributed to a specific demand forecast, supply constraint or customer arrangement. Cash stood at USD 346.7 million, with short-term investments of USD 528.3 million, giving combined reported liquidity of USD 875.0 million.

Guidance Remains a Forward-Looking Measure

For the first quarter of fiscal 2027, ending 25 September 2026, Fabrinet guided to revenue between USD 1.375 billion and USD 1.425 billion. The earnings outlook called for GAAP diluted earnings per share of USD 3.39–3.54 and non-GAAP earnings per share of USD 4.10–4.25.

Those ranges assumed approximately 36.3 million diluted shares. They remain forecasts in the supplied material, which does not contain the quarter’s actual results or confirm the announcement date.

The financial picture therefore combines record revenue, higher earnings and a sharply reduced annual free-cash-flow total. Subsequent disclosure would be needed to establish whether the inventory build and investment spending have eased.