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SMTC Reports Third Quarter Results



SMTC Reports Third Quarter Results

  * Reports third quarter revenues of $72.9 million up by 12.3% from prior
    quarter.
  * Achieved positive adjusted EBITDA of $2.1 million versus $(1.3) million in
    the prior quarter.
  * Working capital essentially unchanged from prior quarter.
  * Third quarter net income was $0.6 million and was negatively affected by
    two non-recurring legacy items totaling $0.51 million.
  * In compliance with bank covenants.

TORONTO, Nov. 12, 2013 (GLOBE NEWSWIRE) -- SMTC Corporation (Nasdaq:SMTX)
("SMTC"), a global electronics manufacturing services provider, today
announced third quarter 2013 unaudited results.

Revenue for the quarter was $72.9 million, or 12.3% increase sequentially from
the second quarter of 2013, and a 3.6% decrease from the third quarter of
2012. The increase was mainly due to two customers. Gross margin was 8.0%
compared to 1.9% in the prior quarter and 7.9% in the third quarter of 2012.
However, when removing the effects of unrealized foreign exchange on
derivatives, the negative gross margin from the closed Markham manufacturing
facility and all non-recurring expenses, the gross margins were 8.6% in the
third quarter compared to 9.1% in the prior quarter and 7.7% in the third
quarter of 2012. Adjusted EBITDA was $2.1 million in the third quarter
compared to $(1.3) million in the prior quarter and $1.4 million in the third
quarter of 2012. Once again, when removing the gross margin from the now
closed Markham manufacturing facility and the non-recurring expenses, adjusted
EBITDA was $2.7 million in the third quarter compared to $2.2 million in the
prior quarter and $2.3 million in the third quarter of 2012. Working capital
increased slightly to $16.6 million in the third quarter of 2013 up from $16.4
million in prior quarter and compared to $22.9 million in the third quarter of
2012. Total debt including capital lease obligations net of cash increased
from $22.5 million in the prior quarter to $26.5 million principally due to
higher receivables resulting from higher sales and timing of receipts.

"We are pleased with the improvement in revenue over the prior quarter and our
order book remains strong. Significant gains have been made across our
business resulting in improved customer satisfaction. We will now put
additional emphasis on our operational effectiveness leading to margin
improvement through increasing productivity, third party supplier actions and
lean initiatives," stated Interim President and Chief Executive Officer Larry
Silber.

Executive Chairman Clarke Bailey stated, "we continue to focus on the
reduction of working capital, specifically receivables and inventory, and
remain confident that it will decrease in the near future. I am pleased to
report that we are once again in compliance with our bank covenants."

Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is computed as net
income from continuing operations excluding depreciation, restructuring
charges, loss on extinguishment of debt, unrealized foreign exchange
gains/losses on derivative financial instruments, acquisition expenses,
interest and income tax expense. SMTC Corporation has provided in this release
a non-GAAP calculation of adjusted EBITDA as supplemental information
regarding the operational performance of SMTC's core business. Management uses
this non-GAAP financial measure internally in analyzing SMTC'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 believes that both management
and investors benefit from referring to this non-GAAP financial measure in
assessing SMTC's performance and when planning, forecasting and analyzing
future periods. SMTC believes this non-GAAP financial measure is useful to
investors because it allows for greater transparency with respect to key
financial metrics we use in making operating decisions and because our
investors and analysts use it 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 along with other financial performance measures, including revenue, net
income and SMTC'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. 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 SMTC's most recent filings with securities regulators in
the United States. The forward-looking statements contained in this release
are made as of the date hereof and SMTC 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, Mexico, and China, with more than 2,220 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 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
(Unaudited)
                       Three months ended          Nine months ended
(Expressed in
thousands of U.S.      September 29, September 30, September 29, September 30,
dollars, except number 2013          2012          2013          2012
of shares and per
share amounts)
                                                                  
Revenue                 $ 72,893      $ 75,575      $ 203,236     $ 223,149
Cost of sales           67,055        69,567        189,203       202,335
Gross profit            5,838         6,008         14,033        20,814
Selling, general and
administrative          4,533         4,238         14,602        12,599
expenses
Gain on sale of
property, plant and     --            --            (101)         --
equipment
Contingent              --            --            250           (650)
consideration
Restructuring charges   289           --            1,443         451
Operating earnings      1,016         1,770         (2,161)       8,414
(loss)
Interest expense        432           526           1,261         1,531
Earnings (loss) before  584           1,244         (3,422)       6,883
income taxes
Income tax expense                                                
(recovery)
Current                 (35)          (45)          811           374
Deferred                --            (33)          (16)          (46)
                        (35)          (78)          795           328
Net earnings (loss),
also being              $ 619         $ 1,322       $ (4,217)     $ 6,555
comprehensive income
(loss)
                                                                  
Basic earnings(loss)    $ 0.04        $ 0.08        $ (0.26)      $ 0.40
per share
Diluted earnings        $ 0.04        $ 0.08        $ (0.26)      $ 0.40
(loss) per share
                                                                  
Weighted average
number of shares                                                  
outstanding
Basic                  16,360,860    16,319,225    16,350,359    16,283,803
Diluted                16,390,378    16,444,053    16,350,359    16,419,272

                                                              
                                                              
                                                              
Consolidated Balance Sheets                                   
(Unaudited)                                                   
                                                              
(Expressed in thousands of U.S. dollars)  September 29, 2013 December 30, 2012
Assets                                                        
                                                              
Current assets:                                               
Cash                                       $ 2,526            $ 2,203
Accounts receivable - net                  39,647             36,301
Inventories                                49,016             54,806
Prepaid expenses                           1,104              2,431
Income taxes receivable                    510                357
Current portion of deferred income taxes   1,967              2,237
                                           94,770             98,335
Property, plant and equipment              18,840             19,410
Deferred financing costs                   378                564
Deferred income taxes                      3,684              3,398
                                           $ 117,672          $ 121,707
Liabilities and Shareholders' Equity                          
                                                              
Current liabilities:                                          
Accounts payable                           $ 42,452           $ 48,766
Accrued liabilities                        6,996              9,220
Income taxes payable                       576                566
Revolving credit facility                  25,470             12,896
Term facility                              1,158              4,631
Current portion of capital lease           1,513              1,628
obligations
                                           78,165             77,707
Capital lease obligations                  865                1,292
                                                              
Shareholders' equity:                                         
Capital stock                              389                389
Additional paid-in capital                 263,575            263,424
Deficit                                    (225,322)          (221,105)
                                           38,642             42,708
                                           $ 117,672          $ 121,707

                                                                  
                                                                  
                                                                  
Consolidated
Statements of Cash                                                
Flows
(Unaudited)                                                       
                       Three months ended          Nine months ended
(Expressed in
thousands of U.S.                                                 
dollars)
Cash provided by (used September 29, September 30, September 29, September 30,
in):                   2013          2012          2013          2012
Operations:                                                       
Net earnings (loss)     $ 619         $ 1,322       $ (4,217)     $ 6,555
Items not involving                                               
cash:
Depreciation            901           786           2,818         2,310
Unrealized (gain) loss
on derivative           (139)         (1,119)       965           (1,126)
financial instrument
Gain on sale of
property, plant and     --            --            (101)         --
equipment
Deferred income taxes   --            (33)          (16)          (46)
Non-cash interest       101           98            286           303
Stock-based             (41)          55            140           257
compensation
Contingent              --            --            250           (650)
consideration
Change in non-cash
operating working                                                 
capital:
Accounts receivable     (7,317)       (2,169)       (3,346)       (4,111)
Inventories             102           4,396         5,790         (3,656)
Prepaid expenses        131           867           813           (507)
Income taxes payable    (162)         (266)         (143)         (525)
Accounts payable        4,870         (5,528)       (6,314)       (3,851)
Accrued liabilities     (1,817)       (925)         (2,127)       (1,585)
                        (2,752)       (2,516)       (5,202)       (6,632)
Financing:                                                        
Increase in revolving   5,328         2,150         12,574        12,784
debt
Repayment of term       (1,158)       --            (3,473)       (2,161)
facility
Principal payment of
capital lease           (623)         (391)         (1,767)       (1,295)
obligations
Proceeds from sales     --            --            988           170
leaseback
Payment of contingent   (234)         (171)         (798)         (742)
consideration
Proceeds from issuance  --            27            11            220
of common stock
Payment of financing    (50)          --            (100)         --
fees
                        3,263         1,615         7,435         8,976
Investing:                                                        
Purchase of property,   (974)         (513)         (2,316)       (4,024)
plant and equipment
Proceeds from sale of
property, plant and     --            --            406           --
equipment
                        (974)         (513)         (1,910)       (4,024)
Increase (decrease) in  (463)         (1,414)       323           (1,680)
cash
Cash, beginning of      2,989         2,369         2,203         2,635
period
Cash, end of the        $ 2,526       $ 955         $ 2,526       $ 955
period

                                                              
                                                              
                                                              
Supplementary Information:                                    
Reconciliation of Adjusted                                    
EBITDA
                                                                              
                              Three months ended  Nine months ended
                              September September September  September
                              29, 2013  30, 2012  29, 2013   30, 2012
Net earnings (loss)            $ 619     $ 1,322   $ (4,217)  $ 6,555
Add:                                                          
Unrealized foreign exchange
(gain)/loss on derivative      (139)     (1,119)   965        (1,126)
financial instruments
Interest                       432       526       1,261      1,531
Income tax expense             (35)      (78)      795        328
Depreciation                   901       786       2,818      2,310
Restructuring charges          289       --        1,443      451
Adjusted EBITDA                2,067     1,437     3,065      10,049

CONTACT: Investor Relations Information:
         Larry Silber
         Interim President and Chief Executive Officer
         Telephone: (905) 413.1190
         Email: investorrelations@smtc.com
        
         Public Relations Information:
         Tom Reilly
         Director of Marketing
         Telephone: (905) 413.1188
         Email: publicrelations@smtc.com

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