Good afternoon. Welcome to Fabrinet's Financial Results Conference Call for the Second Quarter of 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 call over to your host, Garo Toomajanian, Vice President of Investor Relations. You may begin. 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 2023, which ended December 30, 2022. With me on the call today are Seamus Grady, Chief Executive Officer, and Csaba Sverha, 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 10-Q filed on November 8, 2022. We will begin the call with remarks from Seamus and Csaba, 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, thank you for joining us on our call today. We had a strong second quarter with revenue above our guidance range at $668.7 million. This new quarterly record was an increase of 18% from a year ago and 2% from the first quarter. After adjusting for the 14-week period in Q1, revenue would have grown 5% sequentially. Supply constraints continue to act as a revenue headwind. While we continue to see pockets of relief in some areas, we have also seen increasing supply constraints in other areas. In aggregate, the revenue impact of supply constraints during the second quarter was approximately $20 million, a little smaller than anticipated. That said, we continue to face supply issues with certain commodity components. These supply constraints could worsen before they get better, we continue to anticipate a better supply environment later this calendar year. Our team executed very well in the second quarter, delivering non-GAAP operating margins of 10.9%, setting a new quarterly performance record. Including the impact of an $0.11 foreign currency loss, non-GAAP EPS of $1.90 was in the upper end of our guidance and would have been well above the range were it not for the foreign exchange impact. Looking at the quarter in more detail, both optical and non-optical communications saw quarterly and year-over-year revenue increases to new record levels. Within optical communications, telecom demand continues to be strong, revenue decreased slightly sequentially, primarily due to recent component shortages. On the other hand, in Datacom, we reached a new quarterly revenue record and also experienced our fastest sequential growth in 10 years. Turning to non-optical communications, we had another record quarter for automotive revenue as supply improvements from the first quarter continued, driving strong growth in newer automotive programs. This growth in automotive more than offset declines in industrial laser revenue in the quarter. Investing in our long-term growth remains a top priority for Fabrinet. As you know, our recently opened Building 9 provides us with significant capacity to continue to scale our business over the next several years, we continue to ramp new programs for our customers in this state-of-the-art 1 million sq ft facility. Looking ahead to the third quarter, we remain optimistic that the industries we serve can remain relatively resilient despite broader global economic trends, this is reflected in healthy demand trends that we continue to see across our business. As I noted earlier, the supply environment is still challenging. We continue to successfully mitigate the impact of supply shortages, we do expect greater revenue impact from supply headwinds in the third quarter than in Q2, and this is reflected in the guidance that Csaba will detail in a moment. Our business model remains very agile, flexible and resilient. Over the years, our ability to respond quickly to changing market dynamics has helped us to optimize our business in the face of changes in supply or demand. We're confident that we can continue to operate very effectively in a dynamic global environment to the benefit of all our stakeholders. We delivered strong second quarter results with revenue above guidance and record operating margins. The supply environment remains volatile, our demonstrated ability to execute reinforces our optimism that we remain well-positioned to continue producing strong financial results as we look ahead. Now I'd like to turn the call over to Csaba for additional financial details on our second quarter and our guidance for the third quarter of fiscal 2023. Csaba. Thank you, Seamus, and good afternoon, everyone. We delivered record revenue in the second quarter that was above our guidance. Revenue was $668.7 million, which was up 18% from a year ago and up 2% from the first quarter, which you will recall was a 14-week quarter with an extra $20 million revenue contribution. Adjusting for this extra week, sequential revenue growth would have been 5%. After delivering record operating margin in Q1, we again reached a new high point with non-GAAP operating margin of 10.9% in the second quarter. Our foreign currency hedging program continues to dampen the impact of FX fluctuation on operating margins, but our bottom line results were negatively impacted by foreign exchange evaluation loss of $3.9 million, or $0.11 per share in the second quarter. As a result, non-GAAP earnings per share was $1.90 in the upper half of our guidance range. Without this $0.11 foreign exchange loss, non-GAAP EPS would have been well above our guidance. Looking at the revenue in more detail, optical communications revenue was $506.1 million, up both sequentially and from a year-ago to a new record. Within optical, Telecom revenue was $392.9 million, which was up 11% from a year-ago, but a decline of 3% from the first quarter, primarily due to increased supply constraints for certain commodity semiconductors used in these products. Datacom revenue, on the other hand, was very strong at $113.2 million. This record Datacom revenue was up 15% from a year ago and 22% from Q1 due to combination of continued positive demand trends and better component availability for these products. By technology, Silicon Photonics revenue was $123.4 million, an 11% sequential decrease due to the same supply constraint that impacted Telecom revenue. The impacted telecom products are also primarily newer, faster speed-rated products, and as a result, revenue from products rated at 400 gig or more also declined 11% sequentially to $173.6 million. I want to emphasize that we believe demand for these products remains robust and that this decline was primarily supply related. Revenue from 100G products, on the other hand, was the highest we have seen in over two years, at $153.4 million, up 10% both from a year-ago and from Q1. Non-optical communications revenue was also another record at $162.6 million and represented 24% of total revenue. As in Q1, growth in non-optical communications was driven primarily by automotive revenue, which was a record $94.8 million, more than double from a year-ago and up 9% from Q1. In addition to a better supply environment for these products, we also benefited from continued demand strength for newer automotive products. Industrial laser revenue was $30.9 million, down 13% sequentially. Other non-optical communications revenue increased from a year ago and from last quarter to $36.8 million. As I discussed the details of our P&L, expense and profitability metrics provided are on a non-GAAP basis, unless otherwise noted. A reconciliation of GAAP to non-GAAP measures is included in our earnings press release and investor presentation, which you can find in the Investor Relations section of our website. Our execution was very strong in the second quarter, as reflected in our gross margins, which tied our prior record of 13%. Tailwinds from foreign exchange hedges contributed approximately 20 basis point to this performance, based on current FX levels, we anticipate that these tailwinds could turn into mild headwinds over the next few quarters. Operating expenses in the quarter were $13.7 million, or 2.1% of revenue. This produced record operating income of $73.1 million, or 10.9% of revenue. As I indicated in my introduction, a strong Thai baht and weaker US dollar resulted in a foreign exchange loss of $3.9 million, or $0.11 per share, primarily due to asset and liability revaluations at the end of the quarter. Thanks to our strong balance sheet, we continue to benefit from a higher interest rate environment, with net interest income of $2 million, or approximately $0.05 per diluted share, which partially offset FX losses. non-GAAP net income was $70 million, or $1.90 per diluted share. On a GAAP basis, net income was $1.71 per diluted share. Effective tax rate was 1.7% in the second quarter. We continue to anticipate an effective tax rate in the low to mid-single digits for the year. Turning to the balance sheet and cash flow statements. At the end of the second quarter, cash equivalents, restricted cash, and short-term investments were $527.6 million, up $27.7 million from the end of the first quarter. Operating cash flow was $44.5 million. With CapEx of $13.4 million, free cash flow was $31.1 million. We will continue to execute on our plan to return surplus cash to shareholders, though buyback activity was low during the quarter. Approximately $94.9 million remains in our share repurchase authorization. On an operational note, earlier in the third quarter, we made the decision to exit our business in the U.K. Unlike our new product introduction facilities at Fabrinet West and Fabrinet Israel, our U.K. operation has not become a meaningful on-ramp to volume manufacturing in Thailand. Since the U.K. facility also operates at a relatively small scale, serving mostly local customers, we estimate that the impact on non-GAAP financial results will be immaterial. We expect the ramp-down to be substantially completed by the end of the fiscal year, during which we will help ensure a smooth transition for our customers. We expect to incur restructuring costs of approximately $3.5 million, which will be excluded from our non-GAAP results. I will turn to our guidance for the third quarter. We remain optimistic about the long-term demand trends across our business and our ability to manage supply constraints as effectively as possible. At the same time, while general supply environment has improved, the availability of certain components worsened in Q2, impacting Telecom revenue. From what we are currently seeing, we expect these constraints to be even tighter in Q3. Therefore, our guidance assumes a supply chain headwind of $30 million-$35 million, which is about $10 million-$15 million greater than what we saw in Q2. With this incremental supply constraints and typical Q3 seasonality in mind, we anticipate revenue in the range of $640 million-$660 million. We anticipate non-GAAP net income to be in the range of $1.86-$1.93 per diluted share. In summary, we had a strong second quarter performance with record revenue and margins. While the supply environment is gradually improving, a small number of components continue to constrain our ability to meet customer demand. Nevertheless, we remain confident in our ability to continue to execute well in Q3 and over the long term. Operator, we are now ready to open the call for questions. Thank you. Ladies and gentlemen, to ask the question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Samik Chatterjee with JP Morgan. Your line is open. Yep. Hi, thanks for taking the question. I have a couple, maybe, if we can start with the Telecom and the supply constraints you're seeing there. Wondering if you can give us a bit more details about which kind of components you're seeing, sort of the more worsening constraints on, because it seems like it's a bit counter to what investor expectations are at this point for a broader sort of easing of the supply chain. Definitely would be curious about sort of where you're seeing these incremental constraints. Is it more about not really buying from those sort of broker market or just sort of not, the part not being available or the supplier not being able to ship to it? I have a follow-up. Thank you. Hi, Samik. It's an unusual situation. I mean, overall, we're seeing the supply situation begin to improve in certain areas with certain suppliers, you know, who have been, let's say, problematic historically for the last several quarters. We've also seen some new suppliers pop up. You know, because the majority of our business is Telecom, it's about, you know, 75% telecom, 25% datacom. You know, the shortages that we're seeing are in about the same proportion. The specific devices are components that we see in short supply. They're to support very specific products used in certain telecom transceivers where demand continues to be healthy, but we still have a couple of, you know, outlier components. I know it's a bit of a mixed message. Overall, we see things improving, and we especially see things improving, as you said before, in the second half of this year. Last quarter, we did have some, and this quarter again, we continue to have some component shortages that are specific to Telecom. Yeah. For my follow-up, maybe if you can spend a bit more time on the Datacom side. Understand you're still supply constrained there, but, we've seen a lot more sort of pull back in the big customers and their CapEx sort of their overall spending plan. When you think about sort of the current sort of pipeline there, are you seeing any softening of the pipeline, outside of the supply constraints that you are still sort of navigating when you sort of look, three to six months out? Are you seeing any softening of the demand pipeline? I mean, as you know, Samik, we guide one quarter at a time. We don't comment really on six months out in our guidance. We haven't seen any particular softening. You know, we're still primarily supply constrained on the Datacom side. Obviously, we grew very nicely in the quarter and our Datacom business, you know, remains quite strong. We, you know, we're primarily a supply constrained on the Datacom side and our business there continues to grow nicely. You know, we had some good strong results for 100G products. Our 400G remains strong, again, somewhat supply constrained, but the demand remains strong for, you know- Across the product categories that we serve in the Datacom side of the business. Okay. Thank you. Thanks. Thank you, Suneet. Thank you. Please stand by for our next question. Our next question comes from the line of Alex Henderson with Needham & Company. Your line is open. Great, thanks. I'm definitely equally puzzled on the supply side because we had expected it to improve, not erode here. You know, there's clearly a semiconductor company or two from the United States that are cited frequently as the source of a lot of the consternation in the supply chain. Is it that typical source that is now improving and we're seeing a shift to a different geography, perhaps, you know, the COVID lockdowns or other issues shifting it to a different geography? Is that? Where's the nexus of this particular supply chain located? It's really twofold. Some of it is, you know, again, we've called out a slightly higher supply headwind number in Q3. I think we've called it $30 million-$35 million versus $20 million of about actual in Q2. Some of that is it's a combination of really two areas. One is, supply constraints that are COVID related, I would say, in China. Some of the suppliers who, you know, had gone through some lockdowns and whatnot in China, we are seeing a slight, not huge, but a slight headwind due to component related supply constraints coming out of China this quarter. Secondly, you know, we have a couple of some of the... Again, I really don't wanna get into naming specific suppliers. Some of the component manufacturers who historically, you know, certainly for the last several quarters, have been problematic, you know, have really improved. We are actually back to more normal lead times with many of the suppliers who historically were problematic. Unfortunately, one or two new ones have popped up. You know, I think they'll go through the same cycle as the other ones. They'll increase capacity, they'll improve output, and, you know, they'll get things improved. We are seeing that supply headwind this quarter. I understand, Alex, it's a kind of a confusing message. On the one hand, we have certain commodities where things have improved, things have stabilized, and we're back to more normal lead times. Unfortunately, we have, as I say, some of these new component suppliers who've cropped up as problematic, coupled with, a certain amount of supply headwind coming out of China because of COVID. If I'm looking at the guide for the upcoming quarter, could you give us any granularity on the assumptions between Datacom and Telecom, sequential or year-over-year growth or sequentially, any way you wanna phrase it? Do you mean in terms of the component headwinds or? No, in terms of, you know, the aggregate. What are you assuming in terms of the revenue growth by segment? Yeah, we have. Hi, Alex. Yeah, go ahead. Go ahead, Csaba. Hi, Alex. We typically don't break this out in our guidance, but as you can see, we are calling out a slight downward trends on a quarter-on-quarter basis. There have been these, primarily supply related, as we have discussed. We will expect the Telecom to be moderating slightly. Also Datacom, while have been very strong in the last quarter, it's gonna probably moderate slightly quarter-on-quarter basis. Both segments are continuing to be strong from demand perspective. Nevertheless, the incremental headwinds are mostly concentrated around these two segments. Overall demand side seems to be strong and robust, but our ability to fill that demand is really constrained around the material. In both cases, I think we would expect a slight moderation or flat quarter-over-quarter in these two segments. The $30 million-$35 million, is that all in the optical piece? Is it evenly split or between the two categories? Yes. It's primarily around optical communication. Our Automotive and Laser segment have been somewhat stable in the last two quarters. There has been significant improvement on the supply side in those segments. The 30%-35% is mostly around optical communication and split around as a proportion of the revenue. Probably 75% is telecom, about 25% is datacom related. Great. Thank you so much. I'll cede the floor. Thanks, Alex. Thanks, Alex. Thank you. Please stand by for our next question. Our next question comes from the line of Fahad Najam with Loop Capital. Your line is open. Hey, thanks for taking my question. Further, needling for specifics on the headwinds on components. If I look at your sub 100G revenue, it's growing pretty nicely in the quarter, even 100G. Is the 75% of the $30 million headwind mostly on 400G and above speeds? That is correct, Fahad. In the last quarter, it was mostly in the higher data rates. Yeah. I don't know if it was my end, but I couldn't make out what you said, Csaba. Can you please repeat again? I'm sorry. Yes, the impact was in last quarter and this quarter mostly in our 400G and above product segments in the higher data rate segments. Both in Q2 and Q3, the expected headwinds are mostly going to be in that area, in that space. Again, these are very specific components impacting a couple of handful of products in that range. All right. My next question was, I know in the past you said that 400G ZR was at the high single digit precent of your revenue. One, does this component headwind impact 400ZR modules versus line card, or systems? Second is, can you also update us on where 400ZR revenue is as a% of revenue? Fahad, yeah, 400ZR we're quite happy with the progress we've made there. We think we're a leader in our industry in supporting 400ZR. We're very happy with, you know, let's say our penetration rate in 400ZR and our ability to grow our business with our customers in 400ZR. Yeah, the shortages we talked about, you know, we, as Csaba said, they break out approximately. First of all, let's say the Automotive and the Laser business, I don't want to say the shortages are behind us because it's too early to declare victory, but certainly they've become much more predictable. The improvements we made, especially in automotive in the prior quarter, seem to have continued, you know, in Q3. The shortages we've called out in Q3 are primarily related to optical communications. And that breaks out, you know, 75% telecom, approximately 25% datacom. You know, 400ZR, depending on the application, a lot of our 400ZR business is categorized in our Telecom number. Yeah, 400ZR would be impacted. You know, again, we wouldn't be prepared to break out, you know, the split between 400ZR and other types of products that we make. Again, the DCI, Data Center Interconnect products would be categorized in our Telecom business, so they would be included in that 75% number. Got it. If I could also ask you had previously mentioned that you had one prominent customer for 400ZR. I think you most recently said it was two. Any color on how many customers are now ramping 400ZR volume? We have more than two. We have two who are, I would say ramping nicely. We have another couple of customers who are still in the earlier stages, new product introduction stages. We have more than two customers, I would say more than two, less than five. You know, we feel we have a very good selection of customers there. You know, we're very happy with the growth in that business. Appreciate the answer. Thank you. Thank you, Fahad. Thank you. Please stand by for our next question. Our next question comes from the line of Tim Savageaux with Northland Capital Markets. Your line is open. Hi, good afternoon. Hi, Tim. Nice quarter. A question on your kind of non-speed graded portion of your business, which is at least the way I'm looking at the numbers, up pretty nicely, both sequentially and year-over-year. Something like 45% year-over-year. You know, I think historically we might associate that with kind of optical telecom ROADM and amplifiers. You know, currently, I think you've got something else to add to the mix in terms of the PON business. That's a long way for me of looking for an update on, you know, the recent relationship with DZS. To what extent was that a major contributor to that growth in, you know, non-speed rated business or sub 100G, however you wanna call it? What is your current assessment there in terms of getting up to kind of an initial full run rate? Has your perception of the opportunity at DZS, you know, changed at all over the last little while? Thanks. Tim, I'll let Csaba go through the specifics in a moment. you know, overall in relation to DZS, you know, we're very happy with the relationship, very happy with the pace at which the business is moving. We're just looking forward to doing a very good job for DZS. They're a great company, and we're very happy to be participating in their supply chain. Certainly, in terms of transfer activity, we're nicely along and, you know, we've completed the bulk of the transfers, I would say, and we're really looking to start ramping to volume now. We're probably a little bit ahead of even though, you know, the total revenue, let's say last quarter was not so huge from DZS. We're happy with the progress we're making on the transfers and really looking forward to ramping that over the next few quarters. As you rightly point out, the non-speed rated business, it's a, you know, an eclectic mix of several type of products. Maybe I'll let Csaba talk to the details of that. Hi, Tim. This is Csaba. Again, on the non-speed rated business, we don't break it out. It is a combination of lower than 100G products and non-speed data rate amplifier ROADM type of business. We also have some other category there. What we have seen, particularly on year-on-year basis, I think it's mostly supply related situation have improved significantly if you look at the year-on-year basis. The growth is really in the amplifier space that, I would say if I look back a year ago, probably that area was in the year ago. Since then, I think the supply situation have significantly improved in that space. Again, the growth is indeed coming from on the ROADM and amplifier space. The other category of the below sub 100 products remain stable. That's pretty much the color I can offer in this area. Well, if I can follow up on that briefly, since you kind of pointed to the year-on-year compare as, you know, being driven by ROADM and amplifiers, does that imply that there's some other driver of the sequential compare? I'll leave it there. Thanks. I think what we see is really the supply environment have been, again, I think it's overall the team has been over the last year, this business have been probably harder hit in the early part of the last couple of quarters. The situation have been somewhat improving, but I wouldn't wanna speak on behalf of our customers how this businesses breaks out on a sequential basis. We do see supply constraints improving, and the demand seems to be robust, again, both sequentially and year-on-year basis. Okay, thanks. Thank you, Tim. Thanks. Thank you. Please stand by for our next question. We have a follow-up from the line of Fahad Najam. Your line is open. Thanks for taking my question again. I wanted to clarify 'cause a number of investors couldn't understand the response to my earlier question. More explicitly, the Telecom component shortages that you're seeing on the 400G, are they more on the ZR side versus non-ZR? Can you clarify? I think, Fahad, if, you know, what I said was we're not going to break that out any further than we have already. We're not going to specify, you know, whether it's ZR or other products. It's in, you know, approximately of the $30 million-$35 million we've called out, approximately 75% of that is Telecom products. I was just pointing out that Telecom includes, obviously pure telecom products, but also our DCI, our Data Center Interconnect products, which would include 400ZR. Got it. Thank you for the clarification. Thank you, Fahad. Thank you. I'm showing no further questions in the queue. I will now like to turn the call back over to Seamus for closing remarks. Thank you. Thank you for joining our call today. We delivered strong second quarter results. As we look ahead, we remain confident that we can continue to perform well based on strong broad-based demand and our demonstrated ability to execute through all kinds of market conditions. We look forward to speaking with you again soon and seeing those of you who will be attending the OFC conference in San Diego next month. Goodbye. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.