SMTC Reports Unaudited Fourth Quarter and 2012 Results

SMTC Reports Unaudited Fourth Quarter and 2012 Results

  *Reports unaudited fourth quarter results of $73.2 million in revenue, $1.8
    million in adjusted EBITDA^1 and net income of $1.0 million, including an
    unrealized loss of $536 thousand from foreign exchange contracts, and
    $0.06 in EPS, $0.17 in adjusted EPS^2 including a $0.15 income tax
    adjustment related to the expected future usage of tax loss
  *Reports year-end bank debt net of cash^3 of $15.3 million, down from $28.9
    million in the third quarter. Total debt decreased to $20.4 million from
    $33.2 million in the third quarter. Total debt includes capital lease
  *Reports full year 2012 results of $296.3 million in revenue, $13.0 million
    in adjusted EBITDA^1, and $0.46 EPS, $0.60 adjusted EPS^2 including a
    $0.15 income tax adjustment related to the expected future usage of tax
    loss carry-forwards.
  *Will cease production operations in Markham in the second quarter of 2013,
    recorded $1.7 million in charges in Q4 associated with the closure.
  *Completes the integration of assets purchased from Seksun Array
    Electronics (Suzhou) Co.
  *Presents 2013 guidance of $270 - $285 million in revenue, $14 - $15
    million in adjusted EBITDA^1, $0.45 - $0.55 adjusted EPS2, and total debt
    net of cash of $15 - $16 million. 2013 guidance includes the Markham
    operations that are planned to cease operations in the second quarter, and
    excludes the effects of unrealized foreign exchange gains or losses.
  *Reclassifies its revolving credit facility from long-term debt to current
    liabilities due to consideration of ASC 470 "Debt", a technical accounting
    issue. The reclassification does not accelerate the maturity of the
    revolver or affect its availability, and has no impact on previously
    reported net cash flows, cash, revenues, or net income, but requires a
    restatement of consolidated financial results since October 2, 2011 to
    reflect reclassification to a current liability.

^1 Adjusted EBITDA is a non- GAAP measure, see below
^2Adjusted EPS is a non-GAAP measure, see page 3
^3 Bank debt net of cash is a non-GAAP measure, see page 3

TORONTO, March 14, 2013 (GLOBE NEWSWIRE) -- SMTC Corporation (Nasdaq:SMTX)
("SMTC"), a global electronics manufacturing services provider, today
announced fourth quarter 2012 unaudited results.

Revenue for the year was $296 million, a 35% increase over 2011 revenue of
$220 million. Adjusted EBITDA was $13.0 million, or $12.3 million when
factoring out unrealized foreign exchange gains, a 32% increase over 2011
adjusted EBITDA of $9.3 million. Adjusted EPS was $0.60 and included a $0.15
income tax adjustment related to the expected future usage of tax loss
carry-forwards. Up from 2011 adjusted EPS of $0.24.

Revenue for the quarter was $73.2 million, a 3% increase over fourth quarter
2011, and a 3% decrease over third quarter 2012 revenue. Factoring out
unrealized foreign exchange gains/losses gross margins were 8.6%, compared to
6.5% in the third quarter. Adjusted EBITDA in the fourth quarter was $2.3
million after removing a $536 thousand loss from unrealized foreign exchange
contracts, compared to $1.4 million in the third quarter.

Adjusted EPS for the quarter was $0.17, and benefited $0.15 from a $2.4
million recognition of deferred income tax assets related to the expected
future usage of certain tax loss carry-forwards. This compares to adjusted EPS
of $0.08 in the third quarter of 2012, and $0.17 in the fourth quarter 2011.
Bank debt, net of cash, decreased to $15.3 million, from $28.9 million in the
third quarter. Total debt net of cash decreased to $18.2 million, from $32.3
million in the third quarter.

"Fourth quarter adjusted EBITDA improved over the third quarter, but missed
our expectations and reflected that we are only partially through our
operational turnaround. Our Q4 gross margin percentage, factoring out the
unrealized foreign exchange loss on derivative instruments was 8.6%, which
although improved over Q3 gross margins of 6.5% remains lower than our target
gross margins of 10% – 11%. In 2013 our efforts will be focused on improving
our gross margins through the lean transformation of our manufacturing plants,
especially our Mexican plant, and we anticipate improvement in this area
through the year. The closing of our Markham manufacturing operation,
scheduled for Q2 2013, will also help improve margins. We also had a strong
quarter on working capital performance as evidenced by our lower debt levels.
We will continue to focus on optimizing working capital levels throughout the
year in combination with our gross margin improvement initiatives" stated
Co-Chief Executive Officer, Alex Walker. "Lastly, we were able to increase our
deferred tax asset in Q4 demonstrating continued confidence in our future
earnings potential. This should serve as a reminder to investors that there is
real value to our net operating loss carry-forwards."

Co-Chief Executive Officer Claude Germain stated, "From a commercial
perspective, 2012 was a successful year. Revenues, adjusted EBITDA and
adjusted EPS all grew substantially over 2011. In 2012 we managed to position
both the West Coast and China markets for growth, and were one of the fastest
growing EMS companies in the industry as recognized by Frost and Sullivan. The
major theme for 2013 is moderate top line growth coupled with improved gross
margins and cash flow generation. Note, our 2013 revenue guidance reflects the
discontinuation of our Markham manufacturing operations. Taking this into
account, we are guiding for mid to high single digit growth in revenues. "

The company received a waiver and amendment from PNC associated with
compliance with certain covenants of its loan agreement for the quarter ended
December 30, 2012. In the process of reviewing the amendment to its loan
agreement with PNC, the company reevaluated certain terms of the agreement and
based on its consideration of ASC 470 "Debt", the Company's management, with
the agreement of the Audit Committee of the Board of Directors, determined
that the Company will need to restate certain of its consolidated financial
statements for the year ended January 2, 2012 in order to reclassify its
revolving credit facility as a current liability. The reclassification will
have no impact on previously reported net cash flows, cash, revenues, or net
income. As a result, the Company determined that because of the pending
reclassification, the balance sheets included in the consolidated financial
statements for the quarter ended October 2, 2011, year ended January 2, 2012
and the first three fiscal quarters of the fiscal year 2012 must be restated
to reflect a decrease in long-term debt and a corresponding increase in
current liabilities for said periods. The reclassification will have no impact
on maturity of the facility, which matures on September 22, 2014 or the
Company's ability to draw on the revolving credit facility.

The Company has filed its Form 8K addressing the reclassification, and will
file its Annual Report on Form 10-K for the year ended December 30, 2012,
which will include the restated consolidated comparative balance sheet as of
January 2, 2012 as soon as is practicable and no later than March 29, 2013.The
Company will also restate the consolidated comparative balance sheets for the
third fiscal quarter of 2011 and the first three fiscal quarters of 2012 in
subsequent filings as soon as practicable."

Adjusted Financial Results and Non-GAAP Measures: Adjusted EBITDA, adjusted
EPS and bank debt net of cash 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. 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. Bank debt net of cash is computed as total bank debt less cash.
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, Mexico, and China, with more than 2,300 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 and 2013 with the North American Growth Leadership Award in the EMS
industry, as one of the fastest growth companies in 2012.

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

The SMTC Corporation logo is available at

Consolidated Statements of
Operations and Comprehensive                                     
                              Three months ended      Twelve months ended
(Expressed in thousands of     December 30, January 1, December 30, January 1,
U.S. dollars, except number of 2012         2012       2012         2012
shares and per share amounts)
Revenue                        $73,156    $71,108  $296,305   $220,351
Cost of sales                  67,430      63,293    269,765     199,051
Gross profit                   5,726       7,815     26,540      21,300
Selling, general and           4,726       4,201     17,325      14,812
administrative expenses
Restructuring charges          1,729       (115)     2,180       2,678
Loss on extinguishment of debt --          --        --         300
Acquisition expenses           --          87        --          87
Gain on contingent             --          --        (650)       --
Operating earnings             (729)       3,642     7,685       3,423
Interest expense               426         487       1,957       1,468
Earnings (loss) before income  (1,155)     3,155     5,728       1,955
Income tax expense (recovery)                                    
Current                        247         121       621         583
Deferred                       (2,389)     179       (2,435)     222
                              (2,142)     300       (1,814)     805
Net earnings, also being       $987       $2,855   $7,542     $1,150
comprehensive income
Basic earnings per share       $0.06      $0.18    $0.46      $0.07
Diluted earnings per share     $0.06      $0.18    $0.46      $0.07
Weighted average number of                                       
shares outstanding
Basic                          16,333,252   16,202,861 16,294,893   16,136,114
Diluted                        16,409,361   16,291,976 16,415,846   16,242,010

Consolidated Balance Sheets                              

(Expressed in thousands of U.S. dollars)     December 30, January 1,
                                             2012         2012
Current assets:                                          
Cash                                         $2,203     $2,635
Accounts receivable - net                    36,301      37,904
Inventories                                  54,806      52,648
Prepaid expenses                             2,431       1,638
Income taxes receivable                      357         --
Current portion of deferred income taxes     2,237       278
                                            98,335      95,103
Property, plant and equipment                19,410      15,355
Deferred financing costs                     564         916
Deferred income taxes                        3,398       2,922
                                            $121,707   $114,296
Liabilities and Shareholders' Equity                     
Current liabilities:                                     
Accounts payable                             $48,766    $46,352
Accrued liabilities                          9,220       10,164
Income taxes payable                         566         367
Current portion of long-term debt            17,527      16,468
Current portion of capital lease obligations 1,628       1,449
                                            77,707      74,800
Long-term debt                               --          2,779
Capital lease obligations                    1,292       2,150
Shareholders' equity:                                    
Capital stock                                389         5,631
Additional paid-in capital                   263,424     257,583
Deficit                                      (221,105)   (228,647)
                                            42,708      34,567
                                            $121,707   $114,296

Consolidated Statements of                                       
Cash Flows
                              Three months ended      Twelve months ended
(Expressed in thousands of     
U.S. dollars)
Cash provided by (used in):    December 30, January 1, December 30, January 1,
                               2012         2012       2012         2012
Net earnings                   $987       $2,855   $7,542     $1,150
Items not involving cash:                                        
Depreciation                   848         735       3,158       2,794
Loss on extinguishment of debt --          --        --          300
Unrealized (gain) loss on
derivative financial           536         (82)      (590)       43
Gain on contingent             --          --        (650)       --
Deferred income taxes          (2,389)     179       (2,435)     222
Non-cash interest              49          119       352         285
Stock-based compensation       122         154       379         250
Gain on acquisition of         --          --        --          (22)
Change in non-cash operating                                     
working capital:
Accounts receivable            5,714       (8,385)   1,603       1,349
Inventories                    1,498       (156)     (2,158)     (3,248)
Prepaid expenses               71          (88)      (436)       738
Income taxes payable           367         (424)     (158)       (466)
Accounts payable               6,265       10,512    2,414       388
Accrued liabilities            2,489       77        904         (1,750)
                              16,557      5,496     9,925       2,033
Increase (decrease) in         (12,343)    (1,235)   442         8,204
revolving debt
Repayment of long-term debt    --          (2,509)   (2,162)     (2,470)
Principal payment of capital   (432)       (242)     (1,727)     (1,416)
lease obligations
Proceeds from sale and         --          --        170         --
Proceeds from issuance of      --          --        220         317
common stock
Payment of contingent          (223)       --        (965)       --
Debt issuance and deferred     --          --        --          (1,021)
financing costs
                              (12,998)    (3,986)   (4,022)     3,614
Purchase of property, plant    (2,311)     (478)     (6,335)     (912)
and equipment
Acquistion of business, net of --          --                    (3,033)
cash acquired
                              (2,311)     (478)     (6,335)     (3,945)
Increase in cash               1,248       1,032     (432)       1,702
Cash, beginning of period      955         1,603     2,635       933
Cash, end of the period        $2,203     $2,635   $2,203     $2,635

Supplementary Information:                                       
Reconciliation of Adjusted EBITDA                                

                              Three months ended      Twelve months ended
                              December 30, January 1, December 30, January 1,
                               2012         2012       2012         2012
Net earnings                   $987       $2,855   $7,542     $1,150
Interest                       426         487       1,957       1,468
Income tax expense (recovery)  (2,142)     300       (1,814)     805
Depreciation                   848         735       3,158       2,794
Restructuring charges          1,729       (115)     2,180       2,678
Loss on extinguishment of debt --          --        --         300
Acquisition expenses           --          87        --          87
Adjusted EBITDA                1,848       4,349     13,023      9,282

CONTACT: Investor Relations Information:
         Alex Walker
         President and Chief Executive Officer
         Telephone: (905) 413.1272
         John Nesbett / Jennifer Belodeau
         Institutional Marketing Services (IMS)
         Telephone: (203) 972-9200
         Public Relations Information:
         Tom Reilly
         Director of Marketing
         Telephone: (905) 413.1188

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