SMTC Reports Second Quarter Growth, Highest Earnings from Continuing Operations Since 2000
TORONTO, Aug. 5 /PRNewswire-FirstCall/ - SMTC Corporation (Nasdaq: SMTX, TSE: SMX), a global electronics manufacturing services provider, today reported 2010 second quarter results. Revenue for the quarter increased quarter over quarter by 82% to $71.2 million and up sequentially by $9.8 million or 16% over the first quarter of 2010. Net income for the quarter at $3.2 million is $1.1 million or 52% higher than the preceding quarter. For the second quarter of 2009, the Company incurred a net loss of $3.4 million.
Gross profit for the second quarter was $8.4 million or 11.8% of revenue compared with $6.4 million or 10.4% for the previous quarter and $4.0 million or 10.2% for the second quarter of 2009, and increased primarily due to the increase in revenue.
"SMTC achieved an extremely strong quarterly result with second quarter revenue increasing sequentially by 16% and 82% higher than the comparable quarter of 2009. Nine of our ten top customers increased orders above the first quarter of 2010 and the comparable period last year in response to end customer demand and to rebuild inventory levels. We also generated additional revenue from five new customers in the early stage of ramping production" stated John Caldwell, President and Chief Executive Officer. "Our solid earnings performance reflects the combination of higher revenue and the continuing effect of last year's cost and capacity reduction initiatives to measurably increase margins and overall profitability."
"In the quarter, our working capital and debt levels increased by $5.7 million and $1.8 million respectively largely due to the timing of customer receipts and the effect of industry wide component shortages causing a continuing higher level of customer order backlog," stated Jane Todd, SVP Finance and Chief Financial Officer. "Through the later part of 2010 we expect to increase cash generation and lower debt levels through continued profitability and reduced working capital as supply chain issues abate and timing issues reverse."
"We enter the third quarter with a solid order backlog and continuing demand from our customers. However, we will take a cautious approach given continuing economic uncertainty and lack of visibility into customer end markets and into remaining customer inventory builds. We expect continued profitability through the remainder of the year but as has been our policy, we are not providing specific full year guidance." 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 1500 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 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 Six months ended
-------------------------------------------------------------------------
(Expressed in thousands
of U.S. dollars, except
number of shares and July 4, July 5, July 4, July 5,
per share amounts) 2010 2009 2010 2009
-------------------------------------------------------------------------
Revenue $ 71,215 $ 39,153 $ 132,569 $ 84,091
Cost of sales 62,854 35,178 117,842 76,176
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Gross profit 8,361 3,975 14,727 7,915
Selling, general and
administrative expenses 4,648 3,083 8,378 6,602
Restructuring charges
(recovery) - (32) - 783
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Operating earnings 3,713 924 6,349 530
Interest expense 451 539 940 865
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Earnings (loss) before
income taxes 3,262 385 5,409 (335)
Income tax expense
(recovery)
Current 69 15 164 44
Deferred 16 (23) 1 112
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85 (8) 165 156
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Net earnings (loss) from
continuing operations 3,177 393 5,244 (491)
Net loss from
discontinued operations - (3,843) - (5,447)
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Net earnings (loss), also
being comprehensive
income (loss) $ 3,177 $ (3,450) $ 5,244 $ (5,938)
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Basic earnings (loss)
per share
- continuing operations $ 0.21 $ 0.03 $ 0.36 $ (0.03)
- discontinued
operations $ - $ (0.27) $ - $ (0.38)
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Basic earnings(loss)
per share $ 0.21 $ (0.24) $ 0.36 $ (0.41)
Diluted earnings (loss)
per share
- continuing operations $ 0.20 $ 0.03 $ 0.34 $ (0.03)
- discontinued
operations $ - $ (0.27) $ - $ (0.38)
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Diluted earnings (loss)
per share $ 0.20 $ (0.24) $ 0.34 $ (0.41)
Weighted average number
of shares outstanding
Basic 14,820,961 14,646,333 14,737,676 14,646,333
Diluted 15,704,178 14,646,333 15,368,658 14,646,333
Consolidated Balance Sheets as of
(Unaudited)
-------------------------------------------------------------------------
July 4, January 3,
(Expressed in thousands of U.S. dollars) 2010 2010
-------------------------------------------------------------------------
Assets
Current assets:
Cash $ 2,103 $ 1,589
Accounts receivable - net 44,268 37,688
Inventories 46,473 37,026
Prepaid expenses 1,646 2,122
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94,490 78,425
Property, plant and equipment 13,835 14,266
Deferred financing fees 590 627
Deferred income taxes 291 290
-------------------------------------------------------------------------
$ 109,206 $ 93,608
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 51,134 $ 41,589
Accrued liabilities 7,453 6,218
Income taxes payable 518 540
Current portion of long-term debt 2,053 5,013
Current portion of capital lease obligations 793 789
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61,951 54,149
Long-term debt 22,840 20,666
Capital lease obligations 156 543
Shareholders' equity:
Capital stock 6,099 7,093
Additional paid-in capital 255,063 253,304
Deficit (236,903) (242,147)
-------------------------------------------------------------------------
24,259 18,250
-------------------------------------------------------------------------
$ 109,206 $ 93,608
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Consolidated Statements of Cash Flows
(Unaudited)
Three months ended Six months ended
-------------------------------------------------------------------------
(Expressed in thousands
of U.S. dollars)
-------------------------------------------------------------------------
Cash provided by July 4, July 5, July 4, July 5,
(used in): 2010 2009 2010 2009
-------------------------------------------------------------------------
Operations:
Net earnings (loss) $ 3,177 $ (3,450) $ 5,244 $ (5,938)
Items not involving cash:
Depreciation 642 681 1,249 1,398
Gain on disposition of
property, plant and
equipment (224) (224)
Deferred income taxes 14 (23) (1) 112
Non-cash interest 61 64 137 128
Stock-based compensation 74 178 648 188
Change in non-cash
operating working
capital:
Accounts receivable (10,888) 1,740 (6,580) 2,502
Inventories (967) 2,797 (9,447) 9,337
Prepaid expenses (198) 494 476 129
Income taxes recoverable (60) 30 (22) 13
Accounts payable 5,177 (3,728) 9,545 (8,821)
Accrued liabilities 1,261 1,838 702 399
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(1,707) 397 1,951 (777)
Financing:
Increase (decrease) in
long-term debt 1,876 714 (636) 808
Repayment of long-term debt (75) (400) (150) (800)
Principal payment of
capital lease obligations (217) (595) (383) (979)
Proceeds from issuance
of common stock 633 - 668 -
Deferred financing costs (100) - (100) (151)
-------------------------------------------------------------------------
2,117 (281) (601) (1,122)
Investing:
Purchase of property,
plant and equipment (144) (119) (836) (282)
Proceeds from sale of
property, plant and
equipment - 830 - 830
-------------------------------------------------------------------------
(144) 711 (836) 548
-------------------------------------------------------------------------
Increase (decrease) in cash 266 827 514 (1,351)
Cash, beginning of period 1,837 445 1,589 2,623
-------------------------------------------------------------------------
Cash, end of the period $ 2,103 $ 1,272 $ 2,103 $ 1,272
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Supplementary Information:
Reconciliation of EBITDA
-------------------------------------------------------------------------
Three months ended Six months ended
-----------------------------------------------
July 4, July 5, July 4, July 5,
2010 2009 2010 2009
-------------------------------------------------------------------------
Operating earnings $ 3,713 $ 924 $ 6,349 $ 530
Add:
Depreciation 642 681 1,249 1,398
Restructuring charges
(recoveries) - (32) - 783
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EBITDA 4,355 1,573 7,598 2,711
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SOURCE SMTC Corporation
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