Key Highlights

● Fourth-quarter revenue was a record US$1.316 billion, up about 45% year on year.

● Fiscal 2026 revenue reached US$4.64 billion, up 36%.

● Full-year free cash flow was only US$4.2 million as inventories rose to US$1.02 billion.

● First-quarter fiscal 2027 revenue is guided at US$1.375 billion to US$1.425 billion.

Latest verified development

Fabrinet (NYSE:FN), an electronics manufacturing services provider, announced fourth-quarter fiscal 2026 results on 17 August 2026 for the quarter ended 26 June. Revenue was US$1.316 billion, up about 45% from US$909.7 million a year earlier, a record that exceeded the company's guidance range. GAAP net income was US$139.3 million, or US$3.83 per diluted share, against US$2.42 a year earlier.

Non-GAAP net income was US$149.1 million, or US$4.10 per diluted share, up from US$2.65, which management described as an all-time high. Gross margin was 12.0% on a GAAP basis and 12.2% non-GAAP, while operating margin was 10.2% GAAP and 10.9% non-GAAP.

Using the reported figures, fourth-quarter GAAP net income was about 10.6% of revenue. Earnings per share grew by about 58% on a GAAP basis (US$3.83 from US$2.42) while revenue grew by about 45%, so earnings rose faster than sales. Thin gross margins of around 12% are characteristic of contract manufacturing, which means volume growth and cost control matter greatly to profitability.

Full-year results and cash flow

For fiscal 2026 as a whole, revenue was US$4.64 billion, up 36% from US$3.42 billion. GAAP net income was US$473.0 million, or US$13.05 per diluted share, and non-GAAP net income was US$510.9 million, or US$14.09 per diluted share.

Cash conversion was weak. Fourth-quarter free cash flow was negative US$36.9 million because capital expenditure of US$91.9 million exceeded operating cash flow of US$55.0 million. For the year, operating cash flow was US$256.7 million and free cash flow only US$4.2 million, down from US$207.3 million, as capital spending rose to US$252.5 million.

Inventories rose to US$1.02 billion from US$581.0 million, a build that ties up cash. Cash was US$346.7 million and short-term investments US$528.3 million, a combined liquidity position of US$875.0 million.

Guidance and commentary

For the first quarter of fiscal 2027, ending 25 September 2026, Fabrinet guided to revenue of US$1.375 billion to US$1.425 billion, GAAP earnings per share of US$3.39 to US$3.54 and non-GAAP earnings per share of US$4.10 to US$4.25, based on about 36.3 million diluted shares.

At the midpoint, guided revenue of US$1.400 billion would be about 6% above the fourth-quarter level. Chief executive Seamus Grady called the fourth quarter exceptional and said he was optimistic about the durability of growth into fiscal 2027.

Fabrinet's inventory build and cash conversion

Margins near 12% at the gross level leave little cushion in a contract manufacturing model, and while full-year capital spending of US$252.5 million stayed just below operating cash flow of US$256.7 million, it exceeded operating cash flow outright in the fourth quarter.

Against GAAP net income of US$473.0 million, full-year free cash flow of US$4.2 million is the starkest contrast in the fiscal 2026 results.