TORONTO, Nov. 5 /PRNewswire-FirstCall/ -- SMTC Corporation , a global electronics manufacturing services provider, today reported 2009 third quarter results. Revenue for the quarter increased sequentially by $5.0 million or 13% to $44.2 million. In comparison to the pre-recession third quarter of 2008, revenue was $8.9 million lower.
Net income for the quarter at $0.2 million compares with net loss of $3.4 million in the second quarter of 2009 and net income of $0.1 million for the comparable period last year. Net income includes a $0.3 million net loss from discontinued operations, the result of the closure of the Company''s Boston facility in the second quarter of 2009. Consequently, the Company recorded net income from continuing operations of $0.5 million. The second quarter of 2009 was also adversely affected by various write-offs and operational losses associated with the now closed Boston operation, without which the Company posted a modest profit. Gross profit for the third quarter was $3.7 million or 8.5% of revenue compared with $4.0 million or 10.2% for the previous quarter and $5.3 million or 9.9% for the third quarter of 2008 reflecting changes in customer and product mix.
"As expected, our third quarter results improved over the second quarter, thought to be the low point of the economic cycle. Earlier in the year, we took aggressive cost reduction actions including the closure of the Boston site to significantly lower our cost structure as we entered the global recession. As evidenced by this quarter''s results, we successfully reduced our break-even cost position to remain profitable at a much lower revenue level," stated John Caldwell, President and Chief Executive Officer.
"As stated previously, given the uncertainty in the current economic climate and limited visibility in our customers'' end markets, the Company will not be providing specific financial guidance. However, there are some early signs that the economy is showing some modest improvement. We continue to expect volatility quarter to quarter. We expect sequential growth in the fourth quarter through improved demand from certain longstanding customers and modest revenue from new customers that are ramping to full production in 2010. Our focus will continue to be on solid customer service, new customer acquisition, tight cost containment and working capital management," stated Mr. Caldwell.
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 1,000 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 is a public company incorporated in Delaware with its shares traded on the Nasdaq National Market System under the symbol SMTX and on the Toronto Stock Exchange under the symbol SMX. For further information on SMTC Corporation, please visit our website at http://www.smtc.com/ (http://www.smtc.com/)
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.
Consolidated Statements of Operations and Comprehensive Income (Unaudited) Three months ended Nine months ended ------------------------------------------------------------------------- (Expressed in thousands of U.S. dollars, except number of shares and October September October September per share amounts) 4, 2009 28, 2008 4, 2009 28, 2008 ------------------------------------------------------------------------- Revenue $ 44,181 $ 53,089 $ 128,272 $ 152,077 Cost of sales 40,446 47,816 116,622 138,307 ------------------------------------------------------------------------- Gross profit 3,735 5,273 11,650 13,770 Selling, general and administrative expenses 2,760 3,053 9,362 9,591 Restructuring charges - - 783 443 Loss on extinguishment of debt - 613 - 613 ------------------------------------------------------------------------- Operating earnings 975 1,607 1,505 3,123 Interest expense 473 567 1,338 2,242 ------------------------------------------------------------------------- Earnings before income taxes 502 1,040 167 881 Income tax expense (recovery) Current 23 6 67 163 Deferred 17 23 129 (6) ------------------------------------------------------------------------- 40 29 196 157 ------------------------------------------------------------------------- Net earnings (loss) from continuing operations 462 1,011 (29) 724 Net loss from discontinued operations (297) (868) (5,744) (6,482) ------------------------------------------------------------------------- Net income (loss), also being comprehensive loss $ 165 $ 143 $ (5,773) $ (5,758) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic earnings (loss) per share - continuing operations $ 0.03 $ 0.07 $ 0.00 $ 0.05 - discontinued operations $ (0.02) $ (0.06) $ (0.39) $ (0.44) ------------------------------------------------------------------------- Basic (loss) earnings per share $ 0.01 $ 0.01 $ (0.39) $ (0.39) Diluted earnings (loss) per share - continuing operations $ 0.03 $ 0.07 $ 0.00 $ 0.05 - discontinued operations $ (0.02) $ (0.06) $ (0.39) $ (0.44) ------------------------------------------------------------------------- Diluted (loss) earnings per share $ 0.01 $ 0.01 $ (0.39) $ (0.39) Weighted average number of shares outstanding Basic 14,646,333 14,646,333 14,646,333 14,646,333 Diluted 14,646,333 14,729,485 14,646,333 14,741,627 Consolidated Balance Sheets as of (Unaudited) ------------------------------------------------------------------------- October 4, January 4, (Expressed in thousands of U.S. dollars) 2009 2009 ------------------------------------------------------------------------- Assets Current assets: Cash $ 436 $ 2,623 Accounts receivable - net 30,133 28,648 Inventories 27,313 36,823 Prepaid expenses 1,458 1,203 ------------------------------------------------------------------------- 59,340 69,297 Property, plant and equipment 15,001 16,743 Deferred financing fees 745 786 Deferred income taxes 350 479 ------------------------------------------------------------------------- $ 75,436 $ 87,305 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders'' Equity Current liabilities: Accounts payable $ 29,710 $ 37,209 Accrued liabilities 6,645 6,909 Income taxes payable 578 504 Current portion of long-term debt 5,338 2,738 Current portion of capital lease obligations 845 1,101 ------------------------------------------------------------------------- 43,116 48,461 Long-term debt 15,905 15,943 Capital lease obligations 657 1,587 Shareholders'' equity: Capital stock 7,211 7,456 Warrants - 10,372 Additional paid-in capital 252,872 249,655 Deficit (244,325) (246,169) ------------------------------------------------------------------------- 15,758 21,314 ------------------------------------------------------------------------- $ 75,436 $ 87,305 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Cash Flows (Unaudited) Three months ended Nine months ended ------------------------------------------------------------------------- (Expressed in thousands of U.S. dollars) ------------------------------------------------------------------------- Cash provided by October September October September (used in): 4, 2009 28, 2008 4, 2009 28, 2008 ------------------------------------------------------------------------- Operations: Net earnings (loss) $ 165 $ 143 $ (5,773) $ (5,758) Items not involving cash: Depreciation 695 724 2,093 2,588 Gain on disposition of property, plant and equipment - - (224) - Impairment of property, plant and equipment - - - 4,921 Deferred income taxes 17 23 129 (6) Non-cash interest 64 91 192 295 Stock-based compensation 68 (279) 256 217 Loss on extinguishment of debt - 613 - 613 ------------------------------------------------------------------------- 1,009 1,315 (3,327) 2,870 Change in non-cash operating working capital: Accounts receivable (3,987) 9,364 (1,485) 8,219 Inventories 173 (2,631) 9,510 (9,771) Prepaid expenses (384) (392) (255) (855) Income taxes payable 61 (22) 74 (44) Accounts payable 1,322 (169) (7,499) 3,485 Accrued liabilities (675) 640 (276) 1,366 ------------------------------------------------------------------------- (2,481) 8,105 (3,258) 5,270 Financing: Borrowings of long-term debt - net 2,554 (5,316) 2,562 (1,807) Principal payment of capital lease obligations (207) (245) (1,186) (654) Debt issuance and deferred financing costs - (250) (151) (250) ------------------------------------------------------------------------- 2,347 (5,811) 1,225 (2,711) Investing: Purchase of property, plant and equipment (702) (294) (984) (1,009) Proceeds from sale of property, plant and equipment - - 830 268 ------------------------------------------------------------------------- (702) (294) (154) (741) ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (836) 2,000 (2,187) 1,818 Cash and cash equivalents, beginning of period 1,272 - 2,623 182 ------------------------------------------------------------------------- Cash, end of the period $ 436 $ 2,000 $ 436 $ 2,000 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplementary Information: Reconciliation of EBITDA ------------------------------------------------------------------------- Three months ended Nine months ended ----------------------- ----------------------- October September October September 4, 2009 28, 2008 4, 2009 28, 2008 ------------------------------------------------------------------------- Operating earnings $ 975 $ 1,607 $ 1,505 $ 3,123 Add: Depreciation 695 724 2,093 2,588 Restructuring charges - - 783 443 Loss on extinguishment of debt - 613 - 613 ------------------------------------------------------------------------- EBITDA 1,670 2,944 4,381 6,767 ------------------------------------------------------------------------- -------------------------------------------------------------------------
SMTC Corporation
CONTACT: Jane Todd, Senior Vice President, Finance and Chief Financial
Officer, (905) 413-1300, Email: jane.todd@smtc.com