TORONTO, March 10 /PRNewswire-FirstCall/ -- SMTC Corporation , a global electronics manufacturing services provider, today reported 2009 fourth quarter unaudited results. Revenue for the quarter was $51.2 million increasing $7.0 million or 16% sequentially. Net earnings from continuing operations for the quarter of $2.4 million compares with $0.5 million in the third quarter of 2009 and $1.0 million for the comparable period last year. Net earnings after discontinued operations for the quarter of $2.2 million compares with net earnings of $0.2 million in the third quarter of 2009 and a net loss of $0.1 million for the fourth quarter of 2008. Net earnings for the fourth quarter included a $0.5 million income tax recovery. The Company produced $55.3 million in revenue in the fourth quarter of 2008, a period largely unaffected by the global recession.
Gross profit for the fourth quarter was $5.9 million or 11.5% of revenue compared with $3.7 million or 8.5% for the previous quarter and $4.8 million or 8.6% for the fourth quarter of 2008.
Despite an extremely challenging economic environment in which SMTC's revenue declined from $206.9 million to $179.5 million, the Company produced net earnings from continuing operations for the full 2009 year of $2.4 million increasing $0.8 million or 46% over 2008 results. Gross profit also increased to 9.8% from 8.9% of revenues in the corresponding period.
In spite of continuing North American economic headwinds, SMTC produced strong fourth quarter results with revenue and earnings from continuing operations increasing sequentially by 16% and over 400% respectively above the third quarter of 2009." stated John Caldwell, President and Chief Executive Officer. "Our revenue growth came from seven of our top ten customers together with five new customers at the early stage of ramping production. Our solid earnings performance reflects the effect of previous quarters' expense reduction initiatives and continuing cost containment measures. Unquestionably, 2009 was a difficult year as our customers' end markets were significantly adversely affected by the recession that ultimately impacted our revenue. However, through this period we were able to reduce costs and substantially increase overall profitability and margins."
"In the quarter our working capital, excluding cash, and net debt levels increased by $5.4 million and $3.1 million, respectively, due to increased revenue, the delay in receipt of a significant customer payment until immediately subsequent to quarter end and the effect of industry wide component shortages that caused a substantially higher end of quarter customer order backlog," stated Jane Todd, SVP Finance and Chief Financial Officer. "We expect to improve our working capital and lower debt through the later part of 2010 as supply chain issues abate and timing issues reverse."
"Historically, the Company has not provided specific full year financial guidance. However, in the first quarter there are signs of some economic recovery and customer inventory rebuilding. Accordingly, we are experiencing continued strong order flow from longstanding and newer customers together with a strong opening backlog, which should result in continued sequential revenue growth in the first quarter, and continuing strength through the first half of the year." 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, except as required by law.
Consolidated Statements of Operations and Comprehensive Income (Unaudited) Three months ended Twelve months ended ------------------------------------------------------------------------- (Expressed in thousands of U.S. dollars, except number of shares and January 3, January 4, January 3, January 4, per share amounts) 2010 2009 2010 2009 ------------------------------------------------------------------------- Revenue $ 51,237 $ 55,260 $ 179,509 $ 206,879 Cost of sales 45,329 50,499 161,951 188,419 ------------------------------------------------------------------------- Gross profit 5,908 4,761 17,558 18,460 Selling, general and administrative expenses 3,405 3,301 12,767 12,892 Other recoveries - (185) - (185) Restructuring charges - 50 783 493 Loss on extinguishment of debt - - - 613 ------------------------------------------------------------------------- Operating earnings 2,503 1,595 4,008 4,647 Interest expense 622 672 1,960 2,914 ------------------------------------------------------------------------- Earnings from continuing operations before income taxes 1,881 923 2,048 1,733 Income tax expense (recovery) Current (567) (44) (500) 119 Deferred 62 4 191 (2) ------------------------------------------------------------------------- (505) (40) (309) 117 ------------------------------------------------------------------------- Net earnings from continuing operations 2,386 963 2,357 1,616 Net loss from discontinued operations (208) (1,100) (5,952) (7,511) ------------------------------------------------------------------------- Net earnings (loss), also being comprehensive income (loss) $ 2,178 $ (137) $ (3,595) $ (5,895) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic earnings (loss) per share - continuing operations $ 0.16 $ 0.07 $ 0.16 $ 0.11 - discontinued operations $ (0.02) $ (0.08) $ (0.41) $ (0.51) ------------------------------------------------------------------------- Basic (loss) earnings per share $ 0.14 $ (0.01) $ (0.25) $ (0.40) Diluted earnings (loss) per share - continuing operations $ 0.16 $ 0.07 $ 0.16 $ 0.11 - discontinued operations $ (0.02) $ (0.08) $ (0.41) $ (0.51) ------------------------------------------------------------------------- Diluted (loss) earnings per share $ 0.14 $ (0.01) $ (0.25) $ (0.40) Weighted average number of shares outstanding Basic 14,646,333 14,646,333 14,646,333 14,646,333 Diluted 14,646,333 14,646,333 14,646,333 14,798,731 Consolidated Balance Sheets as of (Unaudited) ------------------------------------------------------------------------- (Expressed in thousands of January 3, January 4, U.S. dollars) 2010 2009 ------------------------------------------------------------------------- Assets Current assets: Cash $ 1,589 $ 2,623 Accounts receivable - net 37,688 28,648 Inventories 37,026 36,823 Prepaid expenses 2,122 1,203 ------------------------------------------------------------------------- 78,425 69,297 Property, plant and equipment 14,266 16,743 Deferred financing fees 627 786 Deferred income taxes 290 479 ------------------------------------------------------------------------- $ 93,608 $ 87,305 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 41,589 $ 37,209 Accrued liabilities 6,218 6,909 Income taxes payable 540 504 Current portion of long-term debt 5,013 2,738 Current portion of capital lease obligations 789 1,101 ------------------------------------------------------------------------- 54,149 48,461 Long-term debt 20,666 15,943 Capital lease obligations 543 1,587 Shareholders' equity: Capital stock 7,093 7,456 Warrants - 10,372 Additional paid-in capital 253,304 249,655 Deficit (242,147) (246,169) ------------------------------------------------------------------------- 18,250 21,314 ------------------------------------------------------------------------- $ 93,608 $ 87,305 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Cash Flows (Unaudited) Three months ended Twelve months ended ------------------------------------------------------------------------- (Expressed in thousands of U.S. dollars) ------------------------------------------------------------------------- Cash provided by January 3, January 4, January 3, January 4, (used in): 2010 2009 2010 2009 ------------------------------------------------------------------------- Operations: Net earnings (loss) $ 2,178 $ (137) $ (3,595) $ (5,895) Items not involving cash: Depreciation 784 714 2,877 3,302 Gain on disposition of property, plant and equipment - (185) (224) (185) Other - 100 - 100 Impairment of property, plant and equipment - - - 4,921 Deferred income taxes 60 10 189 4 Non-cash interest 118 57 310 352 Stock-based compensation 326 (84) 582 133 Loss on extinguishment of debt - - - 613 ------------------------------------------------------------------------- 3,466 475 139 3,345 Change in non-cash operating working capital: Accounts receivable (7,555) 1,976 (9,040) 10,195 Inventories (9,713) 3,827 (203) (5,944) Prepaid expenses (664) 592 (919) (263) Income taxes payable (38) (56) 36 (100) Accounts payable 11,879 (3,448) 4,380 37 Accrued liabilities (430) (1,528) (706) (162) ------------------------------------------------------------------------- (3,055) 1,838 (6,313) 7,108 Financing: Borrowings of long-term debt - net 5,811 304 9,736 19,149 Repayment of long-term debt (1,375) (800) (2,738) (21,452) Principal payment of capital lease obligations (170) (254) (1,356) (908) Debt issuance and deferred financing costs - (145) (151) (395) ------------------------------------------------------------------------- 4,266 (895) 5,491 (3,606) Investing: Purchase of property, plant and equipment (58) (320) (1,042) (1,329) Proceeds from sale of property, plant and equipment - - 830 268 ------------------------------------------------------------------------- (58) (320) (212) (1,061) ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents 1,153 623 (1,034) 2,441 Cash, beginning of period 436 2,000 2,623 182 ------------------------------------------------------------------------- Cash, end of the period $ 1,589 $ 2,623 $ 1,589 $ 2,623 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplementary Information: Reconciliation of EBITDA ------------------------------------------------------------------------- Three months ended Twelve months ended ------------------------- -------------------------- January 3, January 4, January 3, January 4, 2010 2009 2010 2009 ------------------------------------------------------------------------- Operating earnings $ 2,503 $ 1,595 $ 4,008 $ 4,647 Add: Depreciation 784 714 2,877 3,302 Restructuring charges - 50 783 493 Loss on extinguishment of debt - - - 613 ------------------------------------------------------------------------- EBITDA 3,287 2,359 7,668 9,055 ------------------------------------------------------------------------- -------------------------------------------------------------------------
SMTC Corporation
CONTACT: Jane Todd, Senior Vice President, Finance and Chief Financial
Officer, (905) 479-1877, ext 2465, Email: jane.todd@smtc.com
