EXHIBIT 99.1
SMTC Reports First Quarter Results
- Reports first quarter revenue of $58.0 million.
- Reports $1.2 million in adjusted EBITDA after absorbing approximately $530 thousand of additional professional service fees as a result of the year-end physical inventory adjustment.
- Gross profit was 7.6%, compared to 2.0% in the prior quarter or 7.3% when eliminating the effects of the inventory adjustment.
TORONTO, May 2, 2014 (GLOBE NEWSWIRE) -- SMTC Corporation (Nasdaq:SMTX) ("SMTC"), a global electronics manufacturing services provider, today announced first quarter 2014 unaudited results.
Revenue for the first quarter was $58.0 million, a 14.0% decrease from the prior quarter due to seasonality and severe winter weather affecting one of our industrial sector customers; however gross profit and adjusted EBITDA have both improved.
Adjusted EBITDA for the first quarter was $1.2 million compared to a loss of ($2.2) million in the prior quarter. However, when removing costs related to additional professional service fees as a result of the year-end physical inventory count adjustment the adjusted EBITDA was $1.7 million in the first quarter compared to $1.3 million in the prior quarter when removing costs related to the inventory adjustment as well as additional provisions for a legacy customer.
Net loss for the quarter was $1.1 million compared to $7.7 million in the prior quarter.
Interim Chief Financial Officer Jim Currie stated, "Even with lower revenue levels, our cost reduction program has led to improved margins. These efficiency improvement efforts will continue for the balance of the year and should help us achieve industry margins by year-end."
Chief Executive Officer Sushil Dhiman stated, "I am pleased that the first quarter was a good start to the year for SMTC. With the year-end physical inventory adjustment, we believe we have identified and are in the process of remediating past issues which now allows us to focus on increasing revenues, profitability and shareholder value. Although revenue has decreased in the quarter, we have a strong sales pipeline and anticipate new customer wins. We had three new customer wins and four new program awards with an existing customer in the quarter."
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, interest and income tax expense. SMTC Corporation provides adjusted EBITDA as a measure of 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 our investors and analysts use it to help assess the health of our business. Non-GAAP measures are subject to material limitations as these measures are not in accordance with, or an alternative for, Generally Accepted Accounting Principles and may be different from similar non-GAAP measures used by other companies. Because of these limitations, investors should consider adjusted EBITDA along with other financial performance measures, including revenue, gross profit and net income, presented in accordance with 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 these 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, our ability to remediate our previous disclosed internal control weaknesses and others discussed in SMTC's periodic reports filed 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.
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 more than 1,800 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 Income |
| (Unaudited) | | |
| | |
| | Three months ended |
| (Expressed in thousands of U.S. dollars, except number of shares and per share amounts) | March 30, 2014 | March 31, 2013 |
| | | |
| Revenue | $ 58,023 | $ 65,447 |
| Cost of sales | 53,638 | 58,503 |
| Gross profit | 4,385 | 6,944 |
| Selling, general and administrative expenses | 4,243 | 4,514 |
| Restructuring charges | 670 | 452 |
| Operating earnings (loss) | (528) | 1,978 |
| Interest expense | 394 | 384 |
| Earnings (loss) before income taxes | (922) | 1,594 |
| Current | 180 | 461 |
| Deferred | 3 | (33) |
| | 183 | 428 |
| Net earnings (loss), also being comprehensive income | $ (1,105) | $ 1,166 |
| | | |
| Basic earnings per share | $ (0.07) | $ 0.07 |
| Diluted earnings per share | $ (0.07) | $ 0.07 |
| | | |
| Weighted average number of shares outstanding | | |
| Basic | 16,417,270 | 16,344,193 |
| Diluted | 16,417,270 | 16,408,579 |
| |
| |
| Consolidated Balance Sheets |
| (Unaudited) | | |
| |
| (Expressed in thousands of U.S. dollars) | March 30,
2014 | December 29,
2013 |
| Assets | | |
| | | |
| Current assets: | | |
| Cash | $ 3,732 | $ 3,295 |
| Accounts receivable - net | 28,631 | 30,821 |
| Inventories | 36,868 | 36,776 |
| Prepaid expenses | 1,366 | 1,632 |
| Income taxes receivable | 472 | 472 |
| Current portion of deferred income taxes | 1,486 | 1,486 |
| | 72,555 | 74,482 |
| Property, plant and equipment | 17,343 | 18,219 |
| Deferred financing costs | 171 | 275 |
| Deferred income taxes | 815 | 818 |
| | $ 90,884 | $ 93,794 |
| Liabilities and Shareholders' Equity | | |
| | | |
| Current liabilities: | | |
| Accounts payable | $ 33,710 | $ 33,231 |
| Accrued liabilities | 5,023 | 6,443 |
| Income taxes payable | 602 | 775 |
| Revolving credit facility | 19,853 | 20,222 |
| Current portion of capital lease obligations | 1,235 | 1,482 |
| | 60,423 | 62,153 |
| | | |
| Capital lease obligations | 399 | 519 |
| | | |
| Shareholders' equity: | | |
| Capital stock | 390 | 390 |
| Additional paid-in capital | 263,777 | 263,732 |
| Deficit | (234,105) | (233,000) |
| | 30,062 | 31,122 |
| | $ 90,884 | $ 93,794 |
| |
| |
| Consolidated Statements of Cash Flows |
| (Unaudited) | | |
| | Three months ended |
| (Expressed in thousands of U.S. dollars) |
| | | |
| Cash provided by (used in): | March 30, 2014 | March 31, 2013 |
| Operations: | | |
| Net earnings | $ (1,105) | $ 1,166 |
| Items not involving cash: | | |
| Depreciation | 1,128 | 909 |
| Unrealized gain on derivative financial instrument | (92) | (1,019) |
| Deferred income taxes | 3 | (33) |
| Non-cash interest | 104 | 91 |
| Stock-based compensation | 45 | 100 |
| Change in non-cash operating working capital: | | |
| Accounts receivable | 2,190 | (3,697) |
| Inventories | (92) | (3,988) |
| Prepaid expenses | 266 | (29) |
| Income taxes payable | (173) | 159 |
| Accounts payable | 479 | (5,484) |
| Accrued liabilities | (1,328) | (191) |
| | 1,425 | (12,016) |
| Financing: | | |
| Increase (Decrease) in revolving debt | (369) | 14,956 |
| Repayment of term facility | -- | (1,158) |
| Principal payment of capital lease obligations | (367) | (641) |
| Proceeds from sale and leaseback | -- | 988 |
| Payment of contingent consideration | -- | (291) |
| | (736) | 13,854 |
| Investing: | | |
| Purchase of property, plant and equipment | (252) | (657) |
| | (252) | (657) |
| Increase in cash | 437 | 1,181 |
| Cash, beginning of period | 3,295 | 2,203 |
| Cash, end of the period | $ 3,732 | $ 3,384 |
| | |
| | |
| Supplementary Information: | |
| | | |
| Reconciliation of Adjusted EBITDA | | |
| |
| | Three months ended |
| | March 30,
2014 | March 31,
2013 |
| Net earnings | $ (1,105) | $ 1,166 |
| Add: | | |
| Interest | 394 | 384 |
| Unrealized (gain)/loss on derivative instrument | (92) | (1,019) |
| Income tax expense | 183 | 428 |
| Depreciation | 1,128 | 909 |
| Restructuring charges | 670 | 452 |
| Adjusted EBITDA | 1,178 | 2,320 |
CONTACT: Investor Relations Information:
Sushil Dhiman
President and Chief Executive Officer
Telephone: (905) 413.1190
Email: investorrelations@smtc.com
Public Relations Information:
Tom Reilly
Director of Marketing
Telephone: (905) 413.1188
Email: publicrelations@smtc.com