SMTC (SMTX) 8-K SMTC Reports Third Quarter Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

Wednesday, November 5, 2008

SMTC Reports Third Quarter Results

11% Revenue Growth and $8.1 Million Cash from Operations

TORONTO – November 5, 2008 — SMTC Corporation (Nasdaq: SMTX, TSE: SMX), a global electronics manufacturing services provider, today reported 2008 third quarter revenue of $60.1 million and net income of $0.1 million, or $0.01 per share, after absorbing a $0.6 million write off of certain deferred financing costs. This compares with revenue of $54.0 million and a net loss of $1.2 million, or $0.08 per share, for the 2007 third quarter. In the second quarter of 2008, the Company reported revenue of $66.3 million and net loss of $6.3 million, or $0.43 per share after a $5.7 million restructuring charge.

Gross profit for the third quarter of 2008 was $4.8 million, or 8.0% of revenue, compared with $4.5 million, or 6.8% of revenue, for the previous quarter and $3.4 million, or 6.3% of revenue, for the third quarter of 2007.

“Third quarter results while positive, did not meet our internal targets in large part due to production delays as we transferred certain customer volumes from our Mexico to China site in the quarter. However, we ended the quarter with a strong order backlog”, stated John Caldwell, President and Chief Executive officer. “Despite lower than expected revenue, we remained profitable, reflecting the effect of restructuring activities in the second quarter and other cost containment measures. The net debt level was reduced to the lowest level in ten years.”

During the quarter SMTC signed amendments to its loan agreements improving certain covenants and other terms as well as lowering the effective interest rate on overall indebtedness.

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“We generated $8.1 million in cash from operations in the third quarter and $5.3 million year to date. This cash was primarily applied for debt reduction”, stated Jane Todd, Senior Vice President Finance and Chief Financial Officer. “In the quarter, we successfully closed a bank refinancing with a four year term and at lower interest rates, to support our customers and our long term growth requirements.”

“We expect fourth quarter revenue at or above the third quarter and higher earnings in part due to a stronger U.S. dollar”, stated John Caldwell, President and Chief Executive Officer.

Expressed in U.S. dollars

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 1000 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

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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.

For further information:

Jane Todd,

Senior Vice President, Finance and Chief Financial Officer,

(905) 413-1300,

Email:jane.todd@smtc.com

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Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

	Three months ended					Nine months ended
(Expressed in thousands of U.S. dollars, except number of shares and per share amounts)	September 28, 2008		September 30, 2007			September 28, 2008			September 30, 2007
Revenue	$	60,073	$	54,046		$	181,499		$	189,633
Cost of sales		55,258		50,621			167,829			173,886
Gross profit		4,815		3,425			13,670			15,747
Selling, general and administrative expenses		3,461		2,676			10,888			10,366
Restructuring charges		—		242			5,523			242
Loss on extinguishment of debt		613		371			613			371
Operating earnings (loss)		741		136			(3,354	)		4,768
Interest expense		569		1,265			2,247			4,529
Earnings (loss) before income taxes		172		(1,129	)		(5,601	)		239
Income tax expense (recovery)
Current		6		64			163			(1,381	)
Deferred		23		—			(6	)		(98	)
		29		64			157			(1,479	)
Net earnings (loss), also being comprehensive income (loss)	$	143	$	(1,193	)	$	(5,758	)	$	1,718
Basic earnings (loss) per share	$	0.01	$	(0.08	)	$	(0.39	)	$	0.12
Diluted earnings (loss) per share	$	0.01	$	(0.08	)	$	(0.39	)	$	0.11
Weighted average number of shares outstanding
Basic		14,646,333		14,646,333			14,646,333			14,646,333
Diluted		14,729,485		14,646,333			14,646,333			14,947,018

Consolidated Balance Sheets as of

(Unaudited)

(Expressed in thousands of U.S. dollars)	September 28, 2008			December 31, 2007
Assets
Current assets:
Cash	$	2,000		$	182
Accounts receivable—net		30,439			38,658
Inventories		40,650			30,879
Prepaid expenses		1,795			940
		74,884			70,659
Property, plant and equipment		16,617			22,295
Deferred financing fees		698			1,410
Deferred income taxes		489			483
	$	92,688		$	94,847
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	40,657		$	37,172
Accrued liabilities		8,624			7,272
Income taxes payable		560			604
Current portion of long-term debt		2,250			3,071
Current portion of capital lease obligations		917			736
		53,008			48,855
Long-term debt		16,927			17,913
Capital lease obligations		1,386			1,244
Shareholders’ equity:
Capital stock		7,482			7,854
Warrants		10,372			10,372
Loans receivable		(5	)		(5	)
Additional paid-in capital		249,550			248,888
Deficit		(246,032	)		(240,274	)
		21,367			26,835
	$	92,688		$	94,847

Consolidated Statements of Cash Flows

(Unaudited)

	Three months ended						Nine months ended
(Expressed in thousands of U.S. dollars)	September 28, 2008			September 30, 2007			September 28, 2008			September 30, 2007
Cash provided by (used in):
Operations:
Net earnings (loss)	$	143		$	(1,193	)	$	(5,758	)	$	1,718
Items not involving cash:
Depreciation		724			1,225			2,588			3,756
Gain on disposition of property, plant and equipment					9						9
Impairment of property, plant and equipment		—			—			4,921			—
Deferred income taxes		23			8			(6	)		(95	)
Non-cash interest		91			422			295			1,518
Stock-based compensation		(279	)		(1,003	)		217			135
Loss on extinguishment of debt		613			269			613			269
		1,315			(263	)		2,870			7,310
Change in non-cash operating working capital:
Accounts receivable		9,364			4,636			8,219			10,273
Inventories		(2,631	)		(310	)		(9,771	)		5,999
Prepaid expenses		(392	)		96			(855	)		(217	)
Income taxes recoverable		(22	)		58			(44	)		(1,567	)
Accounts payable		(169	)		5,057			3,485			2,746
Accrued liabilities		640			539			1,366			(2,104	)
		8,105			9,813			5,270			22,440
Financing:
Increase in long-term debt		13,800			21,500			13,800			21,500
Repayment of long-term debt—net		(19,116	)		(30,378	)		(15,607	)		(40,012	)
Principal payment of capital lease obligations		(245	)		(158	)		(654	)		(480	)
Debt issuance and deferred financing costs		(250	)		(1,362	)		(250	)		(1,362	)
		(5,811	)		(10,398	)		(2,711	)		(20,354	)
Investing:
Purchase of property, plant and equipment		(294	)		(287	)		(1,009	)		(1,758	)
Proceeds from sale of property, plant and equipment					—			268			—
		(294	)		(287	)		(741	)		(1,758	)
Increase in cash and cash equivalents		2,000			(872	)		1,818			328
Cash and cash equivalents, beginning of period					1,200			182			—
Cash and cash equivalents, end of the period	$	2,000		$	328		$	2,000		$	328

Supplementary Information:

Reconciliation of EBITDA

	Three months ended				Nine months ended
	September 28, 2008		September 30, 2007		September 28, 2008			September 30, 2007
Operating earnings (loss)	$	741	$	136	$	(3,354	)	$	4,768
Add:
Depreciation		724		1,225		2,588			3,756
Restructuring charges		—		242		5,523			242
Loss on extinguishment of debt		613		371		613			371
EBITDA		2,078		1,974		5,370			9,137