SMTC Corporation Reports Fourth Quarter and Full Year Results



    Reports 24% Sequential Quarterly Revenue Growth; Generates $25 Million
    Cash Flow for the Year

    TORONTO, March 6 /CNW/ - SMTC Corporation (Nasdaq:   SMTX) (TSX: SMX), a
global electronics manufacturing services (EMS) provider, today reported
fourth quarter revenue of $66.8 million representing a 24% increase over third
quarter revenue of $54.0 million. Net earnings of $1.0 million, or $0.07 per
share, for the fourth quarter ended December 31, 2007 compares with a net loss
of $1.2 million, or ($0.08) in the third quarter. The fourth quarter of 2006
was a record quarter for SMTC with revenue of $76.1 million and net income of
$2.1 million, or $0.14 per share.
    Gross profit for the fourth quarter of 2007 was $6.4 million, or 9.5% of
revenue, compared with $3.4 million, or 6.3% of revenue for the previous
quarter and $7.7 million, or 10.1% of revenue, for the fourth quarter of 2006.
SMTC generated $2.3 million in positive cash flow from operations in the
fourth quarter.
    "Fourth quarter results reflect our customers' resumption of traditional
order levels that were unusually low in the previous quarter. As expected, our
results did not attain the record level in 2006; however our overall financial
performance was in line with our expectations", stated John Caldwell,
President and Chief Executive Officer. Notably, we have engaged with several
new customers that are now ramping to solid revenue levels. We also progressed
two important strategic initiatives to bring additional capability to our
customers by expanding our footprint in Mexico and China."
    "Largely through earnings and effective working capital management, we
produced $2.3 million in positive cash flow from operations while increasing
revenue by 24% in the quarter", stated Jane Todd, Senior Vice President
Finance and Chief Financial Officer. "We applied our cash flow to debt
reduction, lowering total indebtedness to $21.0 million, the lowest level in
eight years."
    Revenue for the year ended December 31, 2007 was $256.4 million and net
income was $2.7 million, or $0.18 per share, compared with revenue of
$262.8 million and net income of $10.5 million, or $0.71 per share for 2006.
One-time items recorded in net income were $0.9 million and $5.0 million,
respectively, for 2007 and 2006. Gross profit for the year was $22.1 million
or, 8.6% of revenue, compared with $26.4 million, or 10.0% for 2006. Largely
the result of improved working capital in 2007, cash generated from operations
was $24.7 million comparing favourably with cash usage of $9.5 million in
2006.
    "While our results did not attain the previous years' revenue and
earnings levels largely due to very soft order levels in the third quarter, we
generated approximately $25 million in positive cash flow. Overall we consider
2007 a successful year for the Company", stated John Caldwell. "We enter 2008
with the broadest capability in SMTC's history and with a much stronger
balance sheet. Our goals for 2008 are to achieve substantially higher earnings
on a growing revenue base as well as continuing to generate cash from
operations to further reduce debt. We expect results in the second half of the
year to be stronger with new customers ramping to higher volumes and
seasonality of certain of our long standing customers. However, the
unpredictable nature of our customers' order patterns may affect our quarterly
results. We will continue to monitor and update this guidance on a quarterly
basis", stated John 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, and Mexico, and a partnering relationship in 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 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 Balance Sheets as of
    (Unaudited)

    -------------------------------------------------------------------------
                                                    December 31, December 31,
    (Expressed in thousands of U.S. dollars)            2007         2006
    -------------------------------------------------------------------------
    Assets

    Current assets:
    Cash                                            $       182  $         -
    Accounts receivable - net                            38,658  $    45,160
    Inventories                                          30,879       42,851
    Prepaid expenses                                        940        1,280
    -------------------------------------------------------------------------
                                                         70,659       89,291
    Property, plant and equipment - net                  22,295       24,804
    Deferred financing fees                               1,410        1,310
    Deferred income taxes                                   483          557
    -------------------------------------------------------------------------
                                                    $    94,847  $   115,962
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities and Shareholders' Equity

    Current liabilities:

    Accounts payable                                $    37,172  $    36,730
    Accrued liabilities                                   7,272       10,253
    Income taxes payable                                    604        1,979
    Current portion of long-term debt                     3,071       22,405
    Current portion of capital lease obligations            736          541
    -------------------------------------------------------------------------
                                                         48,855       71,908

    Long-term debt                                       17,913       18,632
    Capital lease obligations                             1,244        1,531

    Shareholders' equity:
    Capital stock                                         7,854       11,969
    Warrants                                             10,372       10,372
    Loans receivable                                         (5)          (5)
    Additional paid-in capital                          248,888      244,501
    Deficit                                            (240,274)    (242,946)
    -------------------------------------------------------------------------
                                                         26,835       23,891
    -------------------------------------------------------------------------
                                                    $    94,847  $   115,962
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    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 per       December 31, December 31, December 31, December 31,
     share amounts)            2007         2006         2007         2006
    -------------------------------------------------------------------------
    Revenue               $    66,775  $    76,055  $   256,408  $   262,782
    Cost of sales              60,430       68,386      234,316      236,351
    -------------------------------------------------------------------------
    Gross profit                6,345        7,669       22,092       26,431
    Selling, general and
     administrative
     expenses                   4,198        3,640       14,564       15,162
    -------------------------------------------------------------------------
    Restructuring
     (recoveries)
     charges                        -            -          242       (1,350)
    Gain on sale of assets        (24)           -          (24)      (1,228)
    Loss on extinguishment
     of debt                        -            -          371            -
    Other expenses                  -            -            -          826
    -------------------------------------------------------------------------
    Operating earnings          2,171        4,029        6,939       13,021
    Interest expense            1,055        1,995        5,584        5,395
    -------------------------------------------------------------------------
    Earnings before
     income taxes               1,116        2,034        1,355        7,626
    Income tax (recovery)
     expense
    Current                        64         (141)      (1,317)      (2,023)
    Deferred                       98           62            -           62
    -------------------------------------------------------------------------
                                  162          (79)      (1,317)      (1,961)
    -------------------------------------------------------------------------
    Net (loss) earnings
     from continuing
     operations                   954        2,113        2,672        9,587
    Net earnings from
     discontinued
     operations                     -            -            -          874
    -------------------------------------------------------------------------
    Net earnings, also
     being comprehensive
     income               $       954  $     2,113  $     2,672  $    10,461
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic earnings per
     share                $      0.07  $      0.14  $      0.18  $      0.71
    Diluted earnings
     per share            $      0.06  $      0.14  $      0.18  $      0.70

    Weighted average
     number of shares
     outstanding
    Basic                  14,646,333   14,645,790   14,646,333   14,646,333
    Diluted                14,734,877   14,921,634   14,959,978   14,906,280




    Consolidated Statements of Cash Flows
    (Unaudited)

                              Three months ended       Twelve months ended
    -------------------------------------------------------------------------
    (Expressed in thousands
     of U.S. dollars)
    -------------------------------------------------------------------------
    Cash provided by      December 31, December 31, December 31, December 31,
     (used in):               2007         2006         2007         2006
    -------------------------------------------------------------------------
    Operations:
    Net earnings          $       954  $     2,113  $     2,672  $    10,461
    Items not involving
     cash:
    Depreciation                1,230        1,231        4,970       4,688
    Gain on disposition
     of property, plant
     and equipment                (49)           -          (24)     (1,228)
    Other                           -            -            -          46
    Deferred income taxes         169           43           74          62
    Non-cash interest              75          900        1,593       1,949
    Stock-based
     compensation                (161)        (205)         (26)        187
    Loss on extinguish-
     ment of debt                   -            -          269           -
    Discontinued operations         -            -            -        (874)
    -------------------------------------------------------------------------
                                2,218        4,082        9,528       15,291
    Change in non-cash
     operating working
     capital:
      Accounts receivable      (3,771)        (824)       6,502      (18,373)
      Inventories               5,973        6,903       11,972       (9,595)
      Prepaid expenses            557          354          340          418
      Income taxes
       recoverable/payable        192           56       (1,375)         776
      Accounts payable         (2,304)      (8,608)         442        5,791
      Accrued liabilities        (579)        (717)      (2,683)      (3,847)
    -------------------------------------------------------------------------
                                2,286        1,246       24,726       (9,539)
    Financing:

    Increase in long-term
     debt                           -        1,402       21,500       16,639
    Repayment of long-
     term debt                 (2,094)      (1,834)     (42,106)      (4,732)
    Principal payment of
     capital lease
     obligations                 (173)        (283)        (653)      (1,686)
    Net proceeds from
     issuance of shares             -            3            -            3
    Proceeds from dis-
     continued operations           -            -            -          874
    Debt issuance and
     deferred financing
     costs                        (47)           -       (1,409)        (606)
    -------------------------------------------------------------------------
                               (2,314)        (712)     (22,668)      10,492

    Investing:

    Purchase of property,
     plant and equipment         (156)        (534)      (1,914)      (2,181)
    Proceeds from sale of
     property, plant and
     equipment                     38            -           38        1,228
    -------------------------------------------------------------------------
                                 (118)        (534)      (1,876)        (953)
    -------------------------------------------------------------------------
    Increase in cash and
     cash equivalents            (146)           -          182            -
    Cash and cash
     equivalents,
     beginning of period          328            -            -            -
    -------------------------------------------------------------------------
    Cash, end of the
     period               $       182  $         -  $       182  $         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Supplementary Information:

    Reconciliation of EBITDA
    -------------------------------------------------------------------------
                             Three months ended        Twelve months ended
                             ------------------        -------------------
                          December 31, December 31, December 31, December 31,
                              2007         2006         2007         2006
    -------------------------------------------------------------------------
    Operating earnings    $     2,171  $     4,029  $     6,939  $    13,021
    Add:
      Depreciation              1,230        1,231        4,970        4,688
      Loss on extinguish-
       ment of debt                 -            -          371            -
    -------------------------------------------------------------------------
    EBITDA                      3,401        5,260       12,280       17,709
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Jane Todd, Senior Vice President, Finance and
Chief Financial Officer, (905) 413-1300, Email: jane.todd@smtc.com

Organization Profile

SMTC CORPORATION

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890