TORONTO, March 13 /PRNewswire-FirstCall/ -- SMTC Corporation ("SMTC"), a global electronics manufacturing services provider, announced today its results for the fourth quarter and year ended December 31, 2006 which are expressed in US dollars.
Fourth quarter and full year highlights
- Growth in fourth quarter revenue to $76.1 million, a 31% increase
over fourth quarter 2005.
- Net income of $2.1 million for the fourth quarter, an increase of 49%
compared to the fourth quarter of 2005.
- EBITDA(x) of $5.3 million in the quarter, representing a 66% increase
over the fourth quarter of 2005.
- Growth led by strengthening diversified customer base of both
long-standing and new customers.
- Full year revenue of $262.8 million, an increase of $34.0 million, or
15% over 2005.
- Record net income for the full year 2006 of $10.5 million, including
one-time items of $5.0 million compared with a loss of $0.1 million
for 2005
- EBITDA(x) of $16.0 million for the full year 2006, representing a 78%
increase over 2005. The full year EBITDA(x) for 2006 excludes the
impact of one-time items.
SMTC Corporation reported revenue of $76.1 million and net income of $2.1 million, or $0.14 per share, for the fourth quarter ended December 31, 2006, compared with revenue of $58.1 million and net income of $1.4 million, or $0.10 per share, for the fourth quarter of 2005. Revenue for the year ended December 31, 2006 was $262.8 million and net income was $10.5 million, or $0.71 per share compared with revenue of $228.8 million and net loss of $0.1 million, or $0.01 per share for 2005.
Gross profit was $7.7 million, or 10.1% of revenue, and $26.4 million, or 10.1%, for the fourth quarter of 2006 and year ended December 31, 2006, respectively. This compared with $4.9 million, or 8.4% of revenue, and $17.1 million, or 7.5% of revenue, for the fourth quarter and year ended December 31, 2005, respectively.
"Our strong fourth quarter results cap a very successful year for SMTC. For the first time since the year 2000, the Company grew year over year revenue reflecting a combination of growth from long-standing customers and the effect of new customer additions in 2005 and 2006", stated John Caldwell, President and Chief Executive Officer. "As important, SMTC produced seven consecutive quarters of profitability culminating in record net income for 2006."
"Strong fourth quarter and full year gross margins reflect the strength of our business model and continuing diligent cost containment measures", stated Jane Todd, Senior Vice President Finance and Chief Financial Officer. "The Company generated significant cash flow from operations which was invested in working capital and assets to support current and anticipated future growth."
The 2006 full year net income contains certain one time items aggregating $5.0 million including an income tax refund, gain on a sale of surplus real estate, final proceeds from operations discontinued in 2002 and a net adjustment to restructuring accruals.
"We expect continuing revenue and earnings growth in 2007 with improved working capital management to generate positive cash flow to be applied to debt reduction. However, the unpredictable nature of our customers' order patterns may affect our quarterly results. Therefore, we intend to only provide overall and directional guidance on an annual basis. We will continue to monitor and update this guidance on a quarterly basis", stated John Caldwell.
(x) EBITDA is a non-GAAP measure. EBITDA is computed as Net income from
continuing operations excluding depreciation, amortization, interest and
income tax expense. SMTC Corporation provides this non-GAAP calculation
of EBITDA as supplemental information regarding the operational
performance of SMTC Corporation's core business. EBITDA is used by SMTC
Corporation to provide a consistent method of comparison to historical
periods and to the performance of competitors and peer group companies.
SMTC Corporation believes that providing non-GAAP measures that
management uses in its assessment of the business will allow its
investors to better understand SMTC Corporation's financial performance
and to evaluate SMTC Corporation's performance using the same methodology
and information used by SMTC Corporation's management. 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.
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About the Company: 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 over 1300 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, including our expectations regarding continued revenue and earnings growth in 2007, 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.
SMTC Corporation
Consolidated Balance Sheets as of
(Expressed in thousands of U.S. dollars)
December December
31, 2005 31, 2006
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Assets
Current assets:
Accounts receivable - net 26,899 45,160
Inventories 33,168 42,851
Prepaid expenses 1,698 1,280
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61,765 89,291
Property, plant and equipment - net 25,651 24,804
Other assets 2,010 1,310
Deferred income taxes 619 557
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$ 90,045 $ 115,962
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 30,939 $ 36,730
Accrued liabilities 13,849 10,253
Income taxes payable 1,203 1,979
Current portion of long-term debt 4,633 18,494
Current portion of capital lease obligations 1,542 541
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52,166 67,997
Long-term debt 23,857 22,543
Capital lease obligations - 1,531
Commitments and contingencies
Shareholders' equity:
Capital stock 16,986 11,969
Warrants 10,372 10,372
Loans receivable (5) (5)
Additional paid-in capital 239,380 244,502
Deficit (252,711) (242,947)
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14,022 23,891
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$ 90,045 $ 115,962
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SMTC Corporation
Consolidated Statements of Operations for the periods ended (Expressed in
thousands of U.S. dollars, except number of shares and per share amounts)
Three months ended Years ended
December 31, December 31,
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2005 2006 2005 2006
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Revenue $ 58,061 $ 76,055 $ 228,766 $ 262,782
Cost of sales 53,155 68,386 211,619 236,351
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Gross profit 4,906 7,669 17,147 26,431
Selling, general
and administrative
expenses 2,908 3,640 13,139 15,162
Amortization - - - -
Restructuring
(recoveries)
charges 20 - 99 (1,350)
Gain on sale of
assets - - (12) (1,228)
Other expenses - - - 826
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Operating earnings 1,978 4,029 3,921 13,021
Interest expense 1,190 1,995 4,589 5,395
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Earnings (loss) from
continuing before
income taxes 788 2,034 (668) 7,626
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Income tax
(recovery) expense (629) (79) (556) (1,961)
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Net (loss) earnings
from continuing
operations 1,417 2,113 (112) 9,587
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Net earnings from
discontinued
operations - - - 874
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Net earnings (loss),
also being
comprehensive
income (loss) $ 1,417 $ 2,113 $ (112) $ 10,461
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Basic earnings
(loss) per share
- continuing
operations $ 0.10 $ 0.14 $ (0.01) $ 0.65
- discontinued
operations $ - $ - $ - $ 0.06
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Basic earnings
(loss) per share $ 0.10 $ 0.14 $ (0.01) $ 0.71
Diluted earnings
(loss) per share
- continuing
operations $ 0.10 $ 0.14 $ (0.01) $ 0.64
- discontinued
operations $ - $ - $ - $ 0.06
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Diluted earnings
(loss) per share $ 0.10 $ 0.14 $ (0.01) $ 0.70
Weighted average
number of shares
outstanding
Basic 14,641,333 14,645,790 14,641,333 14,642,459
Diluted 14,838,754 14,921,634 14,641,333 15,025,047
SMTC Corporation
Consolidated Statements of Cash Flows for the periods ended
(Expressed in thousands of U.S. dollars)
Three months ended Years ended
December 31, December 31,
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2005 2006 2005 2006
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Cash provided by
(used in):
Operations:
Net earnings (loss) $ 1,417 $ 2,113 $ (112) $ 10,461
Items not involving
cash:
Depreciation 1,173 1,231 4,943 4,688
(Gain) loss on
disposition of
property, plant
and equipment 12 - 68 (1,228)
Other 247 (40) 1,131 6
Deferred income
taxes (479) 43 (484) 62
Non-cash interest 730 900 1,753 1,949
Stock-based compensation - 75 - 224
Discontinued operations - - - (874)
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3,100 4,322 7,299 15,288
Change in non-cash
operating working
capital:
Accounts receivable 3,769 (824) (2,963) (18,373)
Inventories (4,272) 6,903 (143) (9,595)
Prepaid expenses (62) 354 4 418
Income taxes
recoverable/payable 64 56 (368) 776
Accounts payable 3,148 (8,608) 4,996 5,791
Accrued liabilities 1,835 (960) 660 (3,847)
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7,582 1,243 9,485 (9,542)
Financing:
Increase (decrease)
in long-term debt (3,762) (265) - 14,972
Repayment of
long-term debt (3,227) (167) (6,115) (3,065)
Principal payment
of capital lease
obligations (418) (283) (1,897) (1,686)
Net proceeds from
issuance of capital
stock - 6 - 6
Debt issuance and
deferred financing
costs - - - (606)
Proceeds from
discontinued
operations - - - 874
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(7,407) (709) (8,012) 10,495
Investment:
Purchase of property,
plant and equipment (175) (534) (2,485) (2,181)
Proceeds from sale
of property, plant
and equipment - - 1,012 1,228
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(175) (534) (1,473) (953)
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(Decrease) Increase
in cash and cash
equivalents - - - -
Cash and cash
equivalents,
beginning of period - - - -
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Cash, end of the
period $ - $ - $ - $ -
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Supplementary Information:
Reconciliation of EBITDA
Three months ended Years ended
December 31, December 31,
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2005 2006 2005 2006
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Operating earnings $ 1,978 $ 4,029 $ 3,921 $ 13,021
Add:
Depreciation 1,173 1,231 4,943 4,688
Restructuring
charges
(recoveries) 20 - 99 (1,350)
Gain on sale
of assets - - (12) (1,228)
Other - - - 826
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EBITDA 3,171 5,260 8,951 15,957
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