SMTC Reports Third Quarter Results

SMTC Reports Third Quarter Results

  *Reports third quarter results of $75.6 million in revenue, $1.3 million in
    net income, $2.6 million in adjusted EBITDA, and $0.08 adjusted EPS.
  *Presents Q4 guidance of $70 - $77 million in revenue, $3.0 - $3.5 million
    in adjusted EBITDA and $0.09 - $0.12 adjusted EPS, with expectation for
    $0.5 million non-recurring charges in Q4 related to Canadian
    restructuring.
  *Narrows 2012 adjusted EBITDA guidance from $14 - $16 million to $14 - $15
    million, up from actual $9.3 million in 2011.
  *Narrows 2012 adjusted EPS guidance from $0.53 - $0.65 to $0.50 - $0.55, up
    from actual $0.07 in 2011.

TORONTO, Nov. 8, 2012 (GLOBE NEWSWIRE) -- SMTC Corporation (Nasdaq:SMTX)
("SMTC"), a global electronics manufacturing services provider, today
announced third quarter 2012 unaudited results.

Revenue for the quarter was $75.6 million, a 71% increase over third quarter
2011, and a slight increase over the second quarter 2012 revenue. Gross
margins were $6.0 million or 7.9% including unrealized gains from foreign
currency forward contracts of $1.1 million. Adjusted EBITDA for the quarter
was $2.6 million, compared to the $0.7 million in the third quarter of 2011,
and $4.3 million in the second quarter 2012. Third quarter results have been
impacted by a number of factors that include:

  a.  $429 thousand non-recurring costs in China related to the acquisition
  of the assets from Alco Electronics.

  b. $303 thousand in severances and terminations incurred in response to
  reduced revenue levels in our Canadian manufacturing operation.

Adjusted EPS for the quarter was $0.08, and benefited $0.02/share from a
non-recurring $360 thousand tax recovery for taxes paid in 2011 and 2012.This
compares to $(0.09) in the third quarter of 2011, and $0.17 in the second
quarter 2012. Bank debt levels increased to $28.9 million, from $25.4 million
in the second quarter, largely due to $4.6 million of anticipated Q3
receivables that were collected shortly after quarter end.

Co-Chief Executive Officer Claude Germain stated, "It is worth noting that our
guidance does not include any effects of closing, before year end, the
previously announced asset purchase from Seksun Array Electronics, nor does it
consider any potential impacts from Hurricane Sandy. Note that the purchase of
the Seksun Array Electronics assets will cost approximately $2.0 million,
which will be funded through our bank debt facility. We expect it to be
immediately accretive."

"Overall, the third quarter was weaker than expected.We have initiated lean
manufacturing initiatives in our Mexican operation in order to improve
quality, consistency and planning. We are also reviewing our Canadian
operations in order to improve profitability," stated Co-Chief Executive
Officer, Alex Walker. "Although our revenue levels are higher than expected,
we've maintained our adjusted EBITDA guidance to the lower end of our range
largely due to a record number of New Program Introductions across our plants.
This new business comes with higher manufacturing complexity at the outset, we
are working through it and expect improved margins on these programs going
forward."

Added Claude Germain, "We also remain focused on reducing our debt through
free cash generation. Consistent with what we have stated previously, we
expect to achieve year end net debt of less than 1.5 times 2012 adjusted
EBITDA by year end."

Adjusted EBITDA and adjusted EPS are non-GAAP measures.Adjusted EBITDA is
computed as net income from continuing operations excluding depreciation,
restructuring charges, loss on extinguishment of debt, acquisition expenses,
interest and income tax expense. Adjusted EPS is GAAP EPS excluding the effect
of restructuring charges relating to the integration of the ZF Array
Technology acquisition. SMTC Corporation has provided in this release non-GAAP
calculations of adjusted EBITDA and adjusted EPS as supplemental information
regarding the operational performance of SMTC Corporation's core
business.Management uses these non-GAAP financial measures internally in
analyzing SMTC Corporation's financial results to assess operational
performance and liquidity as well as to provide a consistent method of
comparison to historical periods and to the performance of competitors and
peer group companies.SMTC Corporation believes that both management and
investors benefit from referring to these non-GAAP financial measures in
assessing SMTC Corporation's performance and when planning, forecasting and
analyzing future periods.SMTC Corporation believes these non-GAAP financial
measures are useful to investors because they allow for greater transparency
with respect to key financial metrics we use in making operating decisions and
because our investors and analysts use them to help assess the health of our
business.Non-GAAP measures are subject to material limitations as these
measures are not in accordance with or an alternative for, Generally Accepted
Accounting Principles and may be different from non-GAAP measures used by
other companies. Because of these limitations, investors should consider
adjusted EBITDA and adjusted EPS along with other financial performance
measures, including revenue, net income and SMTC Corporation's financial
results presented in accordance with GAAP.

Note for Investors: The statements contained in this release that are not
purely historical are forward-looking statements which involve risk and
uncertainties that could cause actual results to differ materially from those
expressed in the forward-looking statements. These statements may be
identified by their use of forward-looking terminology such as "believes,"
"expect," "may," "should," "would," "will," "intends," "plans," "estimates,"
"anticipates" and similar words, and include, but are not limited to,
statements regarding the expectations, intentions or strategies of SMTC
Corporation. For these statements, we claim the protection of the safe harbor
for forward-looking statements provisions contained in the Private Securities
Litigation Reform Act of 1995. Risks and uncertainties that may cause future
results to differ from forward looking statements include the challenges of
managing quickly expanding operations and integrating acquired companies,
fluctuations in demand for customers' products and changes in customers'
product sources, competition in the EMS industry, component shortages, and
others discussed in the Company's most recent filings with securities
regulators in the United States and Canada. The forward-looking statements
contained in this release are made as of the date hereof and the Company
assumes no obligation to update the forward-looking statements, or to update
the reasons why actual results could differ materially from those projected in
the forward-looking statements.

About SMTC Corporation:SMTC Corporation, founded in 1985, is a mid-size
provider of end-to-end electronics manufacturing services (EMS) including PCBA
production, systems integration and comprehensive testing services, enclosure
fabrication, as well as product design, sustaining engineering and supply
chain management services. SMTC facilities span a broad footprint in the
United States, Canada, and Mexico, and China, with more than 1,875 full-time
employees.SMTC services extend over the entire electronic product life cycle
from the development and introduction of new products through to the growth,
maturity and end-of-life phases. SMTC offers fully integrated contract
manufacturing services with a distinctive approach to global original
equipment manufacturers (OEMs) and emerging technology companies primarily
within industrial, computing and communication market segments. SMTC was
recognized in 2012 by Frost & Sullivan with the Global EMS Award for Product
Quality Leadership.

SMTC is a public company incorporated in Delaware with its shares traded on
the Nasdaq National Market System under the symbol SMTX. For further
information on SMTC Corporation, please visit our website at www.smtc.com
(http://www.smtc.com/).

The SMTC Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=9800

Consolidated Statements of Operations and                          
Comprehensive Income (Loss)
(Unaudited)                                                      
                            Three months ended       Nine months ended
(Expressed in thousands of
U.S. dollars, except number  September 30, October 2, September 30, October 2,
of shares and per share      2012          2011       2012          2011
amounts)
                                                                
Revenue                      $75,575     $44,082  $223,149    $149,243
Cost of sales                69,567       40,361    202,335      135,758
Gross profit                 6,008        3,721     20,814       13,485
Selling, general and         4,238        3,693     12,599       10,611
administrative expenses
Contingent consideration     --           --        (650)        --
Restructuring charges        --           686       451          2,793
Loss on extinguishment of    --           300       --           300
debt
Loss on derivative financial --           --        --           --
instruments
Operating earnings (loss)    1,770        (958)     8,414        (219)
Interest expense             526          326       1,531        981
Earnings (loss) before       1,244        (1,284)   6,883        (1,200)
income taxes
Income tax expense                                               
(recovery)
Current                      (45)         99        374          462
Deferred                     (33)         73        (46)         43
                            (78)         172       328          505
Net earnings (loss), also
being comprehensive income   $1,322      $(1,456) $6,555      $(1,705)
(loss)
                                                                
Basic earnings(loss) per     $0.08       $(0.09)  $0.40       $(0.11)
share
Diluted earnings (loss) per  $0.08       $(0.09)  $0.40       $(0.11)
share
                                                                
Weighted average number of                                       
shares outstanding
Basic                        16,319,255    16,200,575 16,283,803    16,113,866
Diluted                      16,444,053    16,200,575 16,419,272    16,113,866

Consolidated Balance Sheets                               
(Unaudited)                                               
                                                         
(Expressed in thousands of U.S. dollars)     September 30, January 1,
                                             2012          2012
Assets                                                    
                                                         
Current assets:                                           
Cash                                         $955        $2,635
Accounts receivable - net                    42,015       37,904
Inventories                                 56,304       52,648
Prepaid expenses                            3,100        1,638
Income taxes recoverable                     158          --
Current portion of deferred income taxes     278          278
                                            102,810      95,103
Property, plant and equipment                17,947       15,355
Deferred financing costs                     613          916
Deferred income taxes                        2,968        2,922
                                            $124,338    $114,296
Liabilities and Shareholders' Equity                      
                                                         
Current liabilities:                                      
Accounts payable                             $42,501     $46,352
Accrued liabilities                          7,016        10,164
Income taxes payable                         --           367
Current portion of long-term debt            3,473        4,014
Current portion of capital lease obligations 1,712        1,449
                                            54,702       62,346
                                                         
Long-term debt                               26,397       15,233
Capital lease obligations                    1,640        2,150
                                                         
Shareholders' equity:                                     
Capital stock                                389          5,631
Additional paid-in capital                   263,302      257,583
Deficit                                      (222,092)    (228,647)
                                            41,599       34,567
                                            $124,338    $114,296

Consolidated Statements of                                       
Cash Flows
(Unaudited)                                                      
                            Three months ended       Nine months ended
(Expressed in thousands of                                       
U.S. dollars)
Cash provided by (used in):  September 30, October 2, September 30, October 2,
                             2012          2011       2012          2011
Operations:                                                      
Net earnings (loss)          $1,322      $(1,456) $6,555      $(1,705)
Items not involving cash:                                        
Depreciation                786          704       2,310        2,059
Loss on extinguishment of   --           300       --           300
debt
Unrealized (gain)loss on
derivative financial         (1,119)      125       (1,126)      125
instrument
Deferred income taxes       (33)         73        (46)         43
Non-cash interest           98           57        303          166
Stock-based compensation    55           27        257          96
Contingent consideration    --           --        (650)        --
Gain on bargain purchase    --           (22)                   (22)
Change in non-cash operating                                     
working capital:
Accounts receivable          (2,169)      3,867     (4,111)      9,734
Inventories                  4,396        (10,906)  (3,656)      (3,092)
Prepaid expenses             867          (124)     (507)        826
Income taxes payable         (266)        3         (525)        (42)
Accounts payable             (5,528)      5,614     (3,851)      (10,124)
Accrued liabilities          (925)        1,353     (1,585)      (1,827)
                            (2,516)      (385)     (6,632)      (3,463)
Financing:                                                       
Increase in revolving debt   2,150        6,712     12,784       10,713
Repayment of long-term debt  --           (1,235)   (2,161)      (1,235)
Principal payment of capital (391)        (342)     (1,295)      (1,174)
lease obligations
Payment of contingent        (171)        --        (742)        --
consideration
Proceeds from sales          --           --        170          --
leaseback
Proceeds from issuance of    27           19        220          317
common stock
Deferred financing costs     --           (1,021)   --           (1,021)
                            1,615        4,133     8,976        7,600
Investing:                                                       
Purchase of property, plant  (513)        (125)     (4,024)      (434)
and equipment
Acquistion of business, net  --           (3,033)   --           (3,033)
of cash acquired
                            (513)        (3,158)   (4,024)      (3,467)
Increase (decrease)in cash  (1,414)      590       (1,680)      670
Cash, beginning of period    2,369        1,013     2,635        933
Cash, end of the period      $955        $1,603   $955        $1,603

Supplementary Information:                                       
                                                                
Reconciliation of Adjusted EBITDA                                
                                                                
                            Three months ended       Nine months ended
                            September 30, October 2, September 30, October 2,
                             2012          2011       2012          2011
Net earnings (loss)          $1,322      $(1,456) $6,555      $(1,705)
Add:                                                             
Interest                     526          326       1,531        981
Income tax expense           (78)         172       328          505
(recovery)
Depreciation                 786          704       2,310        2,059
Restructuring charges        --           686       451          2,793
Loss on extinguishment of    --           300       --           300
debt
Adjusted EBITDA              2,556        732       11,175       4,933

CONTACT: Alex Walker
         President and Co-Chief Executive Officer, SMTC Corporation
         (905) 413.1190
         Email: investorrelations@smtc.com
        
         Investor Relations Information:
         Alex Walker
         President and Chief Executive Officer
         Telephone: (905) 413.1272
         Email: investorrelations@smtc.com
        
         or
        
         John Nesbett / Jennifer Belodeau
         Institutional Marketing Services (IMS)
         Telephone: (203) 972-9200
         Email: mailto:jnesbett@institutionalms.com
        
         Public Relations Information:
        
         Tom Reilly
         Director of Marketing
         Telephone: (905) 413.1188
         Email: publicrelations@smtc.com

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