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

Exhibit 99.1

FOR IMMEDIATE RELEASE

Thursday, November 5, 2009

SMTC Reports Third Quarter Results

Sequential Growth of 13% and Continuing Profitability

TORONTO – November 5, 2009 — SMTC Corporation (Nasdaq: SMTX, TSE: SMX), a global electronics manufacturing services provider, today reported 2009 third quarter results. Revenue for the quarter increased sequentially by $5.0 million or 13% to $44.2 million. In comparison to the pre-recession third quarter of 2008, revenue was $8.9 million lower.

Net income for the quarter at $0.2 million compares with net loss of $3.4 million in the second quarter of 2009 and net income of $0.1 million for the comparable period last year. Net income includes a $0.3 million net loss from discontinued operations, the result of the closure of the Company’s Boston facility in the second quarter of 2009. Consequently, the Company recorded net income from continuing operations of $0.5 million. The second quarter of 2009 was also adversely affected by various write-offs and operational losses associated with the now closed Boston operation, without which the Company posted a modest profit. Gross profit for the third quarter was $3.7 million or 8.5% of revenue compared with $4.0 million or 10.2% for the previous quarter and $5.3 million or 9.9% for the third quarter of 2008 reflecting changes in customer and product mix.

“As expected, our third quarter results improved over the second quarter, thought to be the low point of the economic cycle. Earlier in the year, we took aggressive cost reduction actions including the closure of the Boston site to significantly lower our cost structure as we entered the global recession. As evidenced by this quarter’s results, we successfully reduced our break-even cost position to remain profitable at a much lower revenue level,” stated John Caldwell, President and Chief Executive Officer.

-1-

“As stated previously, given the uncertainty in the current economic climate and limited visibility in our customers’ end markets, the Company will not be providing specific financial guidance. However, there are some early signs that the economy is showing some modest improvement. We continue to expect volatility quarter to quarter. We expect sequential growth in the fourth quarter through improved demand from certain longstanding customers and modest revenue from new customers that are ramping to full production in 2010. Our focus will continue to be on solid customer service, new customer acquisition, tight cost containment and working capital management” 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.

-2-

For further information:

Jane Todd,

Senior Vice President, Finance and Chief Financial Officer,

(905) 413-1300,

Email:jane.todd@smtc.com

-3-

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)	October 4, 2009			September 28, 2008			October 4, 2009			September 28, 2008
Revenue	$	44,181		$	53,089		$	128,272		$	152,077
Cost of sales		40,446			47,816			116,622			138,307
Gross profit		3,735			5,273			11,650			13,770
Selling, general and administrative expenses		2,760			3,053			9,362			9,591
Restructuring charges		—			—			783			443
Loss on extinguishment of debt		—			613			—			613
Operating earnings		975			1,607			1,505			3,123
Interest expense		473			567			1,338			2,242
Earnings before income taxes		502			1,040			167			881
Income tax expense (recovery)
Current		23			6			67			163
Deferred		17			23			129			(6	)
		40			29			196			157
Net earnings (loss) from continuing operations		462			1,011			(29	)		724
Net loss from discontinued operations		(297	)		(868	)		(5,744	)		(6,482	)
Net income (loss), also being comprehensive loss	$	165		$	143		$	(5,773	)	$	(5,758	)
Basic earnings (loss) per share
- continuing operations	$	0.03		$	0.07		$	0.00		$	0.05
- discontinued operations	$	(0.02	)	$	(0.06	)	$	(0.39	)	$	(0.44	)
Basic (loss) earnings per share	$	0.01		$	0.01		$	(0.39	)	$	(0.39	)
Diluted earnings (loss) per share
- continuing operations	$	0.03		$	0.07		$	0.00		$	0.05
- discontinued operations	$	(0.02	)	$	(0.06	)	$	(0.39	)	$	(0.44	)
Diluted (loss) earnings per share	$	0.01		$	0.01		$	(0.39	)	$	(0.39	)
Weighted average number of shares outstanding
Basic		14,646,333			14,646,333			14,646,333			14,646,333
Diluted		14,646,333			14,729,485			14,646,333			14,741,627

Consolidated Balance Sheets as of

(Unaudited)

(Expressed in thousands of U.S. dollars)	October 4, 2009			January 4, 2009
Assets
Current assets:
Cash	$	436		$	2,623
Accounts receivable - net		30,133			28,648
Inventories		27,313			36,823
Prepaid expenses		1,458			1,203
		59,340			69,297
Property, plant and equipment		15,001			16,743
Deferred financing fees		745			786
Deferred income taxes		350			479
	$	75,436		$	87,305
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	29,710		$	37,209
Accrued liabilities		6,645			6,909
Income taxes payable		578			504
Current portion of long-term debt		5,338			2,738
Current portion of capital lease obligations		845			1,101
		43,116			48,461
Long-term debt		15,905			15,943
Capital lease obligations		657			1,587
Shareholders’ equity:
Capital stock		7,211			7,456
Warrants		—			10,372
Additional paid-in capital		252,872			249,655
Deficit		(244,325	)		(246,169	)
		15,758			21,314
	$	75,436		$	87,305

Consolidated Statements of Cash Flows

(Unaudited)

	Three months ended						Nine months ended
(Expressed in thousands of U.S. dollars)
Cash provided by (used in):	October 4, 2009			September 28, 2008			October 4, 2009			September 28, 2008
Operations:
Net earnings (loss)	$	165		$	143		$	(5,773	)	$	(5,758	)
Items not involving cash:
Depreciation		695			724			2,093			2,588
Gain on disposition of property, plant and equipment		—			—			(224	)		—
Impairment of property, plant and equipment		—			—			—			4,921
Deferred income taxes		17			23			129			(6	)
Non-cash interest		64			91			192			295
Stock-based compensation		68			(279	)		256			217
Loss on extinguishment of debt		—			613			—			613
		1,009			1,315			(3,327	)		2,870
Change in non-cash operating working capital:
Accounts receivable		(3,987	)		9,364			(1,485	)		8,219
Inventories		173			(2,631	)		9,510			(9,771	)
Prepaid expenses		(384	)		(392	)		(255	)		(855	)
Income taxes payable		61			(22	)		74			(44	)
Accounts payable		1,322			(169	)		(7,499	)		3,485
Accrued liabilities		(675	)		640			(276	)		1,366
		(2,481	)		8,105			(3,258	)		5,270
Financing:
Borrowings of long-term debt - net		2,554			(5,316	)		2,562			(1,807	)
Principal payment of capital lease obligations		(207	)		(245	)		(1,186	)		(654	)
Debt issuance and deferred financing costs		—			(250	)		(151	)		(250	)
		2,347			(5,811	)		1,225			(2,711	)
Investing:
Purchase of property, plant and equipment		(702	)		(294	)		(984	)		(1,009	)
Proceeds from sale of property, plant and equipment		—			—			830			268
		(702	)		(294	)		(154	)		(741	)
Increase (decrease) in cash and cash equivalents		(836	)		2,000			(2,187	)		1,818
Cash and cash equivalents, beginning of period		1,272			—			2,623			182
Cash, end of the period	$	436		$	2,000		$	436		$	2,000

Supplementary Information:

Reconciliation of EBITDA

	Three months ended				Nine months ended
	October 4, 2009		September 28, 2008		October 4, 2009		September 28, 2008
Operating earnings	$	975	$	1,607	$	1,505	$	3,123
Add:
Depreciation		695		724		2,093		2,588
Restructuring charges		—		—		783		443
Loss on extinguishment of debt		—		613		—		613
EBITDA		1,670		2,944		4,381		6,767