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SMTC Reports First Quarter Results

  • Reports revenue of $48.7 million, a 16.0% decline compared to $58.0 million in the prior year.
  • Reports $1.4 million or 2.9% in adjusted EBITDA, a 14.2% increase compared to prior year of $1.2 million or 2.1%.
  • Reports gross profit of 7.4% compared to 8.1% in the prior year. When excluding the effects of the unrealized portion of foreign exchange on derivative financial instruments, gross profit was 8.1% compared to 7.7% in the prior year.
  • Reports net loss of $0.4 million compared to net loss of $0.8 million in the prior year, reflecting continued operating improvement.
  • Positive cash flow from operations of $1.8 million compared to $1.4 million in the prior year.
  • Debt, net of cash of $16.4 million, lowest level since Q2, 2011.

TORONTO, April 28, 2015 (GLOBE NEWSWIRE) -- SMTC Corporation (Nasdaq:SMTX) ("SMTC"), a global electronics manufacturing services provider, today announced first quarter 2015 unaudited results.

Revenue for the first quarter was $48.7 million compared to $58.0 million in the prior year. As mentioned in previous earnings calls, decreased revenue was due to reduced volumes from two large prior customers. This was partially offset by increased revenues from existing customers and a new customer.

Chief Executive Officer Sushil Dhiman stated, "While our first quarter revenue declined from the prior year, I expect to see growth from both existing and new customers driving improved revenue and factory utilization for the remainder of 2015. We are optimistic regarding our pipeline of potential new customers going forward, as the late stage customer pipeline is up versus last year."

Net loss was reduced to $0.4 million compared to a net loss of $0.8 million in the prior year. When excluding the effects of the unrealized portion of foreign exchange on derivative financial instruments, the net loss was $0.1 million compared to a net loss of $1.0 million in the first quarter of the prior year, despite the significant decrease in revenue compared to the prior year.

Chief Financial Officer Jim Currie stated, "Our cost reduction initiatives allows us to achieve an improved bottom line compared to the prior year despite lower revenue."

Please note that certain figures presented for the first quarter of 2014 have been revised from those previously issued. Please refer to Note 2 in our March 29, 2015 Form 10Q for further details.

Non-GAAP information

Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is computed as net income from continuing operations excluding depreciation, restructuring charges, unrealized foreign exchange gains/losses on derivative financial instruments, stock based compensation, interest and income tax expense. Commencing in the first quarter of 2015, management has expanded the definition of adjusted EBITDA to exclude stock based compensation which is consistent with the definition as recognized by our lender and therefore management utilizes this to monitor compliance with bank covenants. 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. A reconciliation of adjusted EBITDA to net earnings (loss) is included in the attachment. 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 investors and analysts use it to help assess the health of our business. Non-GAAP measures are subject to 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 and adjusted gross profit along with other financial performance measures, including revenue, gross profit and net income, as reflected in SMTC's consolidated financial statements prepared in accordance with US 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 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 risks and uncertainties discussed in SMTC's most recent filings with the SEC. 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 approximately 1,290 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. 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 Loss
(Unaudited)
Three months ended
Note 1
(Expressed in thousands of U.S. dollars, except number of shares and per share amounts) March 29,
2015
March 30,
2014
Revenue $ 48,714 $ 58,023
Cost of sales 45,086 53,312
Gross profit 3,628 4,711
Selling, general and administrative expenses 3,665 4,243
Restructuring charges -- 670
Operating loss (37) (202)
Interest expense 310 394
Loss before income taxes (347) (596)
Income tax expense
Current 172 180
Deferred (95) 3
77 183
Net loss, and comprehensive loss $ (424) $ (779)
Basic loss per share $ (0.03) $ (0.05)
Diluted loss per share $ (0.03) $ (0.05)
Weighted average number of shares outstanding
Basic 16,417,276 16,417,270
Diluted 16,417,276 16,417,270
Note 1: Revised from amounts previously filed to adjust for prior period errors. More information is included in our Quarter Report on Form 10-Q.
Consolidated Balance Sheets
(Unaudited)
Note 1
(Expressed in thousands of U.S. dollars) March 29,
2015
December 28,
2014
Assets
Current assets:
Cash $ 5,172 $ 5,447
Accounts receivable - net 26,060 31,024
Inventories 34,806 31,590
Prepaid expenses and other assets 2,087 2,135
Income taxes receivable 335 359
Deferred income taxes - net 523 428
68,983 70,983
Property, plant and equipment - net 17,054 17,590
Deferred financing costs - net 82 90
$ 86,119 $ 88,663
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 28,189 $ 29,425
Accrued liabilities 7,424 7,080
Derivative liabilities 3,021 2,703
Income taxes payable 409 449
Revolving credit facility 20,131 21,370
Current portion of capital lease obligations 833 980
60,007 62,007
Capital lease obligations 656 866
Shareholders' equity:
Capital stock 390 390
Additional paid-in capital 264,086 263,996
Deficit (239,020) (238,596)
25,456 25,790
$ 86,119 $ 88,663
Note 1: Revised from amounts previously filed to adjust for prior period errors. More information is included in our Quarter Report on Form 10-Q.
Consolidated Statements of Cash Flows
(Unaudited)
Three months ended
(Expressed in thousands of U.S. dollars) Note 1
Cash provided by (used in): March 29,
2015
March 30,
2014
Operations:
Net loss $ (424) $ (779)
Items not involving cash:
Depreciation 1,026 953
Unrealized (gain) loss on derivative financial instrument 318 (243)
Deferred income taxes (95) 3
Amortization of deferred financing fees 8 104
Stock-based compensation 90 45
Change in non-cash operating working capital:
Accounts receivable 4,964 2,190
Inventories (3,216) (92)
Prepaid expenses 48 266
Income taxes payable (16) (173)
Accounts payable (1,286) 554
Accrued liabilities 355 (1,392)
1,772 1,436
Financing:
Net repayment of revolving credit facility (1,239) (369)
Principal payment of capital lease obligations (357) (367)
(1,596) (736)
Investing:
Purchase of property, plant and equipment (451) (263)
(451) (263)
Increase (decrease) in cash (275) 437
Cash, beginning of period 5,447 3,295
Cash, end of the period $ 5,172 $ 3,732
Note 1: Revised from amounts previously filed to adjust for prior period errors. More information is included in our Quarter Report on Form 10-Q.
Supplementary Information:
Reconciliation of Adjusted EBITDA Note 1
Three months ended
March 29,
2015
March 30,
2014
Net earnings (loss) $ (424) $ (779)
Add:
Stock Compensation Expense $ 90 $ 45
Interest 310 394
Unrealized (gain)/loss on derivative instrument 318 (243)
Income tax expense 77 183
Depreciation 1,026 953
Restructuring charges -- 670
Adjusted EBITDA 1,397 1,223
Note 1: Revised from amounts previously filed to adjust for prior period errors. More information is included in our Quarter Report on Form 10-Q.

CONTACT: Investor Relations Information: Blair McInnis Corporate Controller Telephone: (905) 413.1222 Email: blair.mcinnis@smtc.com Public Relations Information: Tom Reilly Director of Marketing Telephone: (905) 413.1188 Email: publicrelations@smtc.com

Source:SMTC Corporation