- Published: 11 March 2010
- Written by Editor
SMTC Reports Fourth Quarter Sequential Growth
SMTC Corporation (Nasdaq: SMTX, TSE: SMX), 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 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
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(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
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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
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Operating earnings 2,503 1,595 4,008 4,647
Interest expense 622 672 1,960 2,914
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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)
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(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)
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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)
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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)
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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)
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(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
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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
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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
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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
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