SMTX - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen, and welcome to the SMTC Second Quarter 2018 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Blair McInnis, Vice President of Finance. Sir, you may begin.

Blair McInnis

you. Thank

the in the include to events available company statements results on are on begin the various everybody And All conference www.smtc.com. XX-Q, and and from Commission. to replay I cautions I'd update at we President to XX-K, and as Form forward-looking over events that and the will This results subject will presentation pass subsequent about a forward-looking by that number call, Investor actual which information. statements we will uncertainties. website Officer. Form intend that be in of to this are X-K required the remind as Discussion future form many like also factors company that now financial risks are call performance Before beyond and and affected foresees. do The nature vary expected Executive future call. the that and contained the for filings substantially what section affect of factors, this Securities not SMTC's and Company's Smith, date of made Exchange on the the the currently call company's on annual results control, law, audio the with in by Relations may of of may report except of is future Eddie reports and be Chief will other company's

Eddie Smith

our year yesterday, high-end call and July reported XXXX, our accelerating exceeding report the EBITDA the am from is at our from past today Steve of After finished prior market up million for the Adjusted revenue, to last you, which of we for business quarter. on was and and XX.X% the second on XX. our million has close in adjusted comparable quarter X.X%, I been line. results improved we that million, I'm compared quarter achieving $X.X the $XX.X of us made We On and and Executive has higher with operational Eddie $X.X our the was are me quarter while margin the performance gentlemen, quarter higher of Welcome, year second as now pleased plan Smith, our significant is important growth. clearly in morning. this top team focus preannouncement President and X.X% good CFO; Chief COO. Richard Ladies bottom SMTC's XXXX. from Thank to SMTC's to The XX.X% Officer. a to here from gross level Waszak Fitzgerald, Blair. of financial the and with progress

In quarters of two our addition release XXXX. guidance to ago, for terms financial of press Offering provided in we the weeks Rights remaining announcing a

ongoing not provide in do Offering we participating information. While an on forward had specifics we intend guidance Rights the wanted that with basis, believe Steve our visibility capacity. later to ensure to in provide have in our guidance to the achieve considering will that and but the me ability confidence that current we we guidance say just of sufficient that let call Stockholders plant

During customers. existing added further the new customers we second and expanded programs quarter, two with

and from growth existing customers semiconductor, and see our in lines. both demand to continue new test/measurement We strong with business medical

our with our on EBITDA adjusted in our business on-time electronic XXXX year Our We excess execution customer for margins and superior industry-leading suppliers to component of attention gross XXXX, crisp operational support full metrics. excellence, detailed intensely plan quality remain delivery. and tightening trends year-over-year in the of and chain focused metrics backlog any further the by XX% barring over supply for of positive should growth revenue

new clients, China time seven sites efficiencies. in first and quarters have improving the collectively. for Both sites earned Fremont won Our their a profit while

to specifically, a and continues labor playing tariff the site against light be of leveling rates rapidly. concerns, China carefully are especially the Mexico monitoring, field the with showcase, in in which Chihuahua to continuing we XXX Our increase China to

Our customers' challenges drive resulting improvements to using MLCCs manufacturing commitments support are to further a of supply XX demands lean, components, meet of industry or of a our ceramic program. reports chain capacitors. continuing despite from certain just-in-time version needs is teams for which multi-layer the some We and highly-efficient, now operations including increasing customers kan-ban,

do the are we achieve achieve to our our I we in progress well have us expand opportunities an as for to-date, to as new Aerospace, programs we're Avionics, pleased While And customers. at to on see our continuing vision, continuing Defense we SMTC. much to the track with customers To existing to accreditation seek additional our more quarter, capitalize facility provide this which for into opportunity Fremont and are on markets. secure our ASXXXX will to

I'll opportunities provide details, explore to enhanced We review value. M&A end synergistic benefits accelerate to then now additional back that Steve to call the Welcome, the with will hand and comments. also over shareholder or come our growth financial Steve and high-value markets some

Steve Waszak

good for you, morning. joining morning, everyone. this Thank Eddie, you and us Thank

over XXXX. a quarter, of impacts gains of same Adjusted or EBITDA percentage saw a electronic second customers to $X foreign ago. orders unrealized As compared the same in of a of was losses, of in were processing period a Operating With compared in added or expenses, $X.X of or million X.X% Eddie negative Revenues revenues from That profits which revenues increase and this million to as for XXXX. the XXXX. added X.X% the currency loss to is year-over-year second $XX.X cost-reduction of quarter administrative same in gross the in million from said, $X.X ASC excludes to XXXX the profit of same same company] or the year was or growth quarters. margins and quarter industry revenue our ago. quarter million was reported has second the later the in positive general communications comprised for of the million million sectors. second X.X% commented, a company same quarter XXX. quarter which medical the was total the for the in net three and $X.X recorded period $X.X period accounting to declines revenues in million the the the $X.X existing of and power, of standards our second the in costs, $X.X quarter in quarter for gross million by [a in higher compared over same or a to million prior compared the Gross improved quarter payment company the Further, The XXXX customers revenue loss in and second increased $X.X $XX We year $XXX,XXX three networking of revenue at year million the for saw in quarter adjusted adjusted in $X.X of X.X% sectors expanding increases XXXX, slight impact quarter quarter year quarter revenues, year-over-year $XX,XXX and the was a selling, of were efforts. XX.X% energy, due than revenues reported accounting we of customers, a in industrial, million XX.X% result remainder the compared same in XX% the XXXX. for ago. second profit quarter lower net compared the revenues. last to the to new The XX% from of new recognition was of customers due second - improvements

the associated increased of In with debt impairment XXXX. addition, certain company’s restructuring in the reoccurred quarter not and second quarter and bad the of XXXX inventory included that are were second

call the we third opportunities recently Offering to talk and to announced. return I back the balance us on the comment I'd like sheet quarter which comment on before Now about Eddie, item, Rights the for

from to line end $XX.X As million $X.X was PNC. borrow net quarters $X.X had of we had and of cash due the as the revenues in for working of to receivable growth we in and quarter cash; million this under inventory our the in primarily credit million capital million the current with both quarter, with preparing flows support for for in well. utilized debt in accounts second expanding $XX.X the available future operations quarter, is

Supplement, quarter prior cash-to-cash of days. annualized of XX DSOs in XX times second $XX X:XX our Stockholders date. Our www.sec.gov. carefully On X.X of all XX with of extends XXXX. PM July Rights was rights should and was Prospectus on to terms our million for to pay the the on on can timing basis the issued offering the close of contains announced the read SEC’s close cycle website, August that the or days DPOs to business XX, of now those exercise the days, business XX. be of in and expire release including at which will our important we holders a information, of days Offering record the period, press turnover stock Inventory XX as Company compared rights. found on on quarter, it the how Unless at common that

As aggregate $XX and well outside current Wynnefield project we members the million with and an Oak, team, and as stockholders, two is we Rights commitments largest than Red in Offering. indicated funded July as of the executive board more press the in from the management other release, investors received about XXrd as our we members of of

release provide make guidance on our that ensure to to guidance not provide Stockholders had we participating mentioned the we press further while Eddie decision. basis, As in do earlier, Rights that intend needed XXrd information to did that ongoing Offering in considering July an

as $XX who same year projected million, $X.X $X.X revenues between up year million same will range quickly QX with from $XX.X $X.X the million me million up $XX.X and million, a XXXX. million range those a the of QX million million, QX between to in $X.X guidance up million, from ranging projected quarter in to $XX QX $X.X provided. EBITDA from to with to For XXXX between XXXX. EBITDA let release, quarter million in to adjusted range ago see in summarize in the million $XX million revenues press $XX from did adjusted from $X.X ago to up not QX we QX

outlooks we year ranging of provided for For the up made million levels. company to full these XXXX XX% Eddie see commented, the levels the million, has to the opportunity today. see $XXX achieve over progress XXXX, to end, us between And with revenues to to higher $XXX XX% the higher expect as

Eddie $XXX next forward As just the currently we of year. capacity we as have million for demand in plans customer in commented, our also over look excess

our as comments to metrics. up are Let includes me a in excellence that by each quarter phases, this wrap financial company driving all we operational reiterating my achieve

and As bottom and top focused lines. we to balance to capital management efforts sheet improvements remain both focused our strengthen remain the improving working making accelerate on additional on

you may hand some Now from additional provide Eddie and the take today’s like that call. to have to I'd to call questions comments certainly back

Eddie Smith

Steve. Thanks,

me Let new demand conclude market are and saying win believe poised by existing customers and remain are trends we strong at global we over taking the share to customers.

exceeding to on operational the off goals, strategic far shortages are, XXXX, the towards in year its its we stockholders may progress year-over-year excellence track superior on a the we is our a strong looks on tariffs. and call. in SMTC The focus of that and impacts call XX% let's mitigate the and is on strong for forward with Our adjusted allowing growth reporting with and With those and adjusted our of the year any from margin have paying from from rewards EBITDA. future impacts in the QX, component XXXX plan. revenue reported. fact, unforeseen take revenue, We short, achieve In I expect service delights continued to that, shareholder of annual us outlook others growth company with or with value. our disruptions enhanced making thus over for look gross in business questions remain had stronger chain customers excess earnings full supply that to balance barring

Operator

[Operator Instructions] Lucas comes question Private first Our a you. Thank Davenport, from Investor.

line Your now is open.

Lucas Davenport

Good, morning. good great quarter. Hi,

Eddie Smith

Lucas. Thank you,

Lucas Davenport

customers you are A to Could to call, the already once this? mentioned I’m say listening the couple started. – I of that questions. it the release? two – sorry, Can in started were Because you listen I if new missed I

Eddie Smith

our they unless to. so don’t name customers us disclose we Yes, let

And we press putting so some But release for our what we do. far new not start and two out customers. customer. on at that is disclosing any new we been But have customers may all we can point say a release not out have and new has put we

Lucas Davenport

I due sure revenue, And of I roughly to understood. from correctly, the Okay, just make growth X% want this to year-over-year correct? understood – quarter this accounting, the was

Steve Waszak

to remainder the accounting, No, due shipments of Only customers. increase to no. revenue million increased all $X.X was was to the due the

Lucas Davenport

Okay, is calculation a Are July like just were going my to sorry, I offerings was future, the ones the you that I thought said there X% – wrong. share be wrong, maybe in maybe this XX? done is

Eddie Smith

plans obviously about share this At is point, anything. offerings, future no there it’s like

we best still way capital we see the any is point, need strategic grow that but As we the and do gone at need our Offering, this there that., go. other what’s then we business; close haven’t or a Rights at take where we’ll opportunities to to and to things past look finance

Lucas Davenport

And Okay. my – kind built my is last you, of that. question thank last on

believe I million bank. capacity that or mentioned borrowing was in is the $XX on So from call it so the roughly there

raise million, right? So to $XX this – offering is approximately going

Eddie Smith

Yes.

Lucas Davenport

believe much XXX this mentioned sales purchase as how by? it over curious used additional And this that I utilized $XX was part bank million approximately that more that I not also can in is XXX How question to of versus the was was offering. is, if the accommodate. second just to regarding to much of equipment, why increase million million Thank the that you. that’s factories that more raised borrowing

Steve Waszak

Sure.

reason can them see different we for the and you the corporate in different Capital release we potential out other money reasons needs. equipment raise is purposes. a corporate went the obviously for that So many put press

So I’ll would the now business opportunity some and question, the to pull lowering the was board so potentially the an to thought it this capital, now. trigger debt there answer that as be recovered decided time – good we a raise was your

to I have say thought in we you there it for. press grow funds as about you is that who and equipment we put the what need pay it this putting into But for. need all no – point customers obviously refer going didn’t to other would release because on also inventory we to things are with to just So at use the

we factories in which As far grows. assets, receivables the grow million are as is inventory from our ABL as our have the is [Asset we a and growth also Lending] and Lucas over Based $XXX way works availability actually more bank

$XX.X or or inventory have may use – other today for to end as that grow continue million quarter we that we the we things. So may number but at that of the grow up

today So, I clumps. grow at normalized want look to we capacity tell you if capacity more state our a in as much and big then

at If money. we that below conversion to okay our we I’d could actually keep and pretty to the this without cash grow would rate We money significantly, we grow say are could one. cash probably XX say use and I anymore rising

as So, raising money, this run the at a option point see, very I business a viable don’t for time. just to long

Steve Waszak

is Waszak. Lucas, And this Steve

back accounting $X.X on Just at to QX about Of QX, revenue we look a if RevRec your that $X.XXX on recognition accounting million. question to revenue related versus the revenues you grew XXXX the standards, million to go was standard. and by of

based So $X is on of increases. all customer number that million demand

just can you was here, clarity. substantial As increase, demand see there for

Lucas Davenport

you. Thank

Operator

Venezia with from comes question next HealthCare Harry Capital. Our Instructions] [Operator

Your line is now open.

Harry Venezia

the appreciate And guidance to in with excellent for quarter. is $X.X the second of quarters. much sure that used quarter. question us the I that million you over really as thing the XX just to Thank need has company capital months. Can the one But is rights the of do performance the in purpose do offering. and next you some to am you. give the few you this company just my primary grow I the see working I next idea expect give was finished the poised the how

Steve Waszak

here, the is This the for question. Steve CFO. you Thank Waszak

and on million exceed $X modeling to for we range would go are inventory far and capital we chain. million forward. working did normally QX we We in we show quarter what We as requirements $X the quarters based outlooks. this QX As of what see of showing our we towards look the supply beyond that increase do

we us are As from that they customers, months look XX forecast give out. at to somewhat six

be to little a that lying the we we chain needed to sure tightening demand have with supply to and did the them. inventory and had ship in customer So we supply not never investment able and that down do to a make fulfill more

as we maybe the as in grow we're the maximum at million that range have this going my look probably working if model to But $X of So in less we capital $X business. look $X going out of to here million of working growth I it's forward in million somewhere in but increase range capital.

Harry Venezia

very much you Thank

Steve Waszak

to would like call the Smith any Thank back Eddie now you. for over Mr. concludes Thank I session. closing today's turn you. remarks. Q&A This to

Eddie Smith

in at Conference about is Investor Thank will posted to remind section Information of the we this tomorrow. Canaccord Growth you you. Relations Annual the I that on participating Boston would XXth Genuity be event website. I thank reporting and and you. investors want forward business employees, distributors support our progress over to partners, several to our our the Thank In leadership, look their next our closing, for the our quarters. like

Operator

for thank Ladies the conclude conference. you program. This gentlemen, in and does participating today's

all may Everyone, disconnect. day. have great a You

SMTC (SMTX) 8 Aug 182018 Q2 Earnings call transcript