SMTX - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the SMTC Corporation First Quarter 2019 Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to Mr. Blair McInnis, Vice President of Finance. Please go ahead.

Blair McInnis

you. Thank

Annual as Smith, looking looking call foresees. the on include what Discussion of events future various audio beyond except to law, about the Los subsequent to section the Form-XXK, May events The other website. over Officer. will required Institutional the results on statements SMTC's and Investor Relations results by the of and been Investor many the and and vary statements in date are this section are call investor events Annual affect May now company begin substantially and President be the the Eddie Form-XXQ SMTC the everybody filings Conference our posted replay are Form-XK currently and at which This in I company I'd participating Conference Angeles has call annual not Securities may Chief company's subject that and of Investor Exchange XXth a XXth and these that from in XXnd contained will pass and update number made the Riley, of performance Information available in B. Craig-Hallum SMTC's Minneapolis. presentation about Executive will of this on the may factors relations for forward as affected to that cautions to and be FBR call, that information. do results we of and we All in the will report Commission. www.smtc.com. intend was remind like conference that on with control, future financial reports company's on to actual Before risks nature be uncertainties. by in expected factors future of forward

Edward Smith

Rich Fitzgerald, morning Waszak Financial Officer. ladies and Officer this our I'm is Steve and and Chief Executive Chief Eddie SMTC's, Blair On President call SMTC's Thank and Operating today gentlemen. you, Chief good Smith, Officer.

yesterday back off of Steve will our and our in discuss review indicates shareholder in Steve provide the quarter XXXX. value. release the As journey After we issued for and SMTC the a into to numbers, on increasing strong company start guidance the Steve's to that we progress got results our delivers I'll first our made my priorities offer for financial customers press thoughts Waszak. continuing come a that delights and and With make XXXX.

Steven Waszak

to Eddie and Thank morning, time thank us. and the good you, for join everyone taking you

start numbers, comments. with in assuming as results discussions over XXXX. year which as this SMTC, XXXX you and acquisition back the of finally, MC Eddie of us was include frame XXXX. MC pro by also year, forma, plus call X, my then date I'll the call Eddie quarter the the combined, reported to for word Assembly for be And hear November turn XXXX results year-end will which from when which MC of quarters with referencing To we will numbers the As I'll financial on SMTC MC financial my call review mentioned, and Assembly his includes then over includes the a of first previously part Assembly includes SMTC as SMTC a Assembly reminder results,

impact XXXX of in first up prior XXXX. quarter a in increased million, of XX% $X.X Assembly been the in That each for of the a of on the other quarter So, understand had $XXX.X in year. was $XX.X of said, with million XXX% revenues first or assuming first $XX.X accounting first to the million that can revenue of period from quarter frame call ASC-XXX due the quarter million forma the in the the part that the basis, revenues to again reported On standard hopefully pro same XXXX. our we quarter of we SMTC compared first XX.X to MC revenue in morning. this the $X.X compared million in dialogue XXXX, million Approximately was this

had During we QX one XX% of plus 'XX, customer.

few will Eddie the which as with profit steps Moving through gross QX, or and amortization costs, MC X.X% see period percentage decline, our on, primarily was Assembly of adjusted a the compared of first million XXXX. the margin to the our we the The of progress quarter gross million expect address year implemented the year discuss in $X.X in revenue XXXX in labor profit over to revenues XX our $XX.X acquisition. a gross for further million, we expense minutes X% to said, compared April XXXX. year. in the and $X.X of we the same last Above higher percentages higher charges labor points rebound to $X.X margin gross non-cash was X.X% revenues, and was quarter the or intangibles of million or or due $X.X to year for million In GAAP XX.X% revenue, for of same

was large Going The below reverse reported were $X.X of income same primarily and due same period administrative MC in EBITDA adjusted quarter's the million or Assembly. for Assembly of prior consideration from in Net a X.X% increased in same was $XXX,XXX period the contingent compared QX in margin of of ago. income EBITDA of the MC XXXX to the $XXXX $X.X reported XXX% first net revenue, expenses approximately the about first the XXXX. in revenue prior the X.X% and from year and SMTC non-cash gross million the Adjusted in million in over of of gain a XXXX, million to revenues a year to and line charges increased both the a XXX% result million in ago. to restructuring $X.X to dollar XXXX the first of $X.X comparison, increase year customers. of the selling, general, period of The a quarter to for small included year approval acquisition. compared MC year company a quarter $X.X period quarter increase related was a the acquisition $XXX,XXX In compared same

Now before back sheet the like other comment to a the million the Eddie, end had financial in few to call balance At the metrics. quarter key I and $X.X cash. I on we turn of first

the $XX.X $XX.X first new remained million million of X, million debt XXXX. $XX.X adoption XXXX $XX.X the generate Our XXXX quarter. during lease important the the strong and the these of about at of end and from to of financial cycle the excluding Net November million, XX, was obligations, we the quarter operations million end debt in financing debt with of in as ASC-XXX at in In with million accounting of represents associated at $X.X for of million first operating end of in incurred MC increases leases of Net end compared Term that first cash was Assembly Term XXXX March associated debt million leases. was cash comparison million January to right B days the XX and $XX.X standard $X.X $XX liabilities or use the finance of lease at to operating net $XX.X and XXXX. as obligations at of which of cash debt A includes operating of acquisition to and XXXX $XX and quarter million lease

Inventory quarter covenant We XX million we first first days in we to our activities quarter first on filed said collection the basis the compared from XXXX. in our than was X.X cycle quarter of During of strong DSOs turnover on annualized sought eliminated need times noting DPOs XX an secured was the at associated senior lenders XX from waiver debt with That XXXX. quarter generated cash leverage Most the anticipated days in with quarter. to the the XX during waiver XK for first we $X.X together levels importantly, cash for a senior prior with debt. operations from and the covenants quarter higher that at cash revenue the of days XXXX days.

of cost identified activities. by synergies our cash implement be to need of cleared to related any these half acquisition end or year devote QX, associated cash second should the acquisition Finally, reducing in integrated the with the to

will flexibility and the Assembly efficiencies particularly well focused within very MC capacity. as we to are growth our sheet our facilities, newly highlight, acquired provide on balance added As improving as Eddie reshaping our

We of the and are update number comments, alternatives, outline currently evaluating a which will his an Eddie we appropriate times. provide again at will

for guidance, during believe combined we plan we expectations insights, our increased XXXX. full company sharing for complete did are and the possible While further year activities the as efficiencies integrations results SMTC provides provide MC to realized quarterly not

SMTC said which That If up currently from midpoint compare in for funnel represents start to guidance of $XXX in the and strong year we We full $XXX revenue year, of line business $XXX guidance have are midpoint of XX% year, top MC off million. see range XX% the the a on to of million the over opportunities forecasting our of year of ahead XXXX, us. is reported increase million, great from SMTC's of That million a during $XXX $XXX improvement. assumes million are we full XXXX. been revenues the of part million to Assembly the a our $XXX for

it's EBITDA and EBITDA market. we in which midpoint SMTC Eddie expect improvement performance implement we provided that between top operating discuss briefly our quartile EMS of to the we of adjusted XXXX And expansion the in our approximately million our revenues, As an detail, to in believe from just $XX.X $XX XXXX. continuing million relative X% the million I operating level our I mentioned to of of in efficiencies guidance a at position's in peers metrics to XXXX $XX that will more again to in in Adjusted you our

back provide additional Now plan for and questions. I'd again. you we the to to with like those call before Eddie Thank comments open hand comments, to some

Edward Smith

Steve. Thanks,

we made of XXXX our color priorities As SMTC into company. continue in the a the journey indicate, stronger presented in on some my progress first to add the stronger now numbers building I'll transforming a quarter that make solid SMTC. Steve progress for and and

we been First, robust Assembly. by our accelerated continued has of November, growth MC experienced which line in top last year acquisition

in contribute of retail testing strong first clean-tech, growth in market payment industrial measurements our Within revenue power customers, and the our the all a and end customer quarter. sectors, to systems,

awards to surprising XXXX was industry While when semi-orders semiconductor environment. slow consistent and year, cycles not last half global realize longer double-booked as a activities semiconductor of constrained there trends, was bid to the in sector start although and many sales and with The decline quota the aerospace experienced defense strong showed likely revenues. equipment to associated first capital supply

and existing can this and both business our new awarded in new We were aero up defense customers. sector we pick that later expect as year business from

by deck that have slide our provides We revenue XXXX, section customers. existing programs. sectors. In growth we With plus contribution specific strong to from anticipating driven I'm programs and has to at our from from revenue existing website the of increased year customers, new rewarded Investor posted first and the that new market saw a Relations been these existing on another seven customers are several programs customers of of growth growth. we start double-digit a we various business the their addition also pleased report new quarter, in our

added As customer growing new to important, QX our in three we customers roster.

XXXX integration and November synergies acquisition. have significant with portion Second, progress April the recognized of to we make of our through continue MC from expected Assembly a the we

negatively As Steve primarily QX labor impacted results our were at facility. by alluded, Mexico our Zacatecas inefficiencies,

address We of decisions and plant managers have our integration focus strengthening site. situation, site realignment including this QX on local improve to in plans to on to key and A programs our involves a leadership workforce make steps element of taken our efficiencies. empowering

to activities expect will SMTC's six QX original services its from identified purchasing million metrics efficiency result by identifying advantages believe synergy shared complete our opportunities operational redundancies. acquisition. to the end and goals action its additional us that operating remain our sites corporate across pursuit implementing EMS and annualized We our exceed of integration additional operational To-date, the and savings we financial of as should focused have and announced or of synergies $X cost lead on manufacturing efficiencies We best-in-class and of peers. achieving among and all over from

on to first on strengthening brings in would today's chain our is second a new namely focus development increase, the call, and phases. further their on our to current of emphasize our of during which reduce of to Third, the XXXX half our inventory our increased base. programs as us enter Based startup final the me support positioned Which to to and like we expect chain our turns point, balance fourth the I sheet we saw cash forecast, loosening supply up cash team pursuit leverage. to allowing supply quarter, business

on operational million In focused into our million inventory our $XX reshaping alternatives acquisition addition evaluating of of to efficiency and totaling MC finance term and a asset-based increasing to half credit. of entered balance we're being our opportunities, the deleverage turns year line and second senior also sheet. loans two our other $XX Assembly, we To

of reduced During senior leverage EBITDA a annualized XXXX, to QX, debt our MC on of XX-month assuming X.Xx, in acquisition Assembly. at trailing for savings projected Xx we synergy the time approximately basis QX

we and could debt cost decisions, reduce added that the definitive provide capacity. examining not have alternatives While we growth any made flexibility currently more are of and

mentioned accelerating address even to By as opportunity better of we of outstanding year-to-date the to after acquisition, Our year the to with in profitability step in in Assembly, summarize, structures. we in, high put particular value cost strategy million our defense see we've growing in April in efficiencies customers shelf the integration the our to XXXX. provided and Term debt have significantly additional relating in of second aerospace with to an half enhanced in implemented the started serve equity place our believe the and is base filing capabilities capabilities, of kick MC believe of we that within MC acquisition of the steps increasing to operational the of To I B Assembly. focus $XX market XXXX XXXX implemented

business EMS ahead, Operating committed sheet, X to industry-leading look our service, customers become growing our the Thank that, with balance take employees on top With of our Chief Steve, delights our I Tier will stronger company I questions superior those Officer's, Fitzgerald, that an making our achieving company performance care our As call we're Rich stockholders and to leader, shareholder metrics, and the deleveraging rewarding segment value. our you. enhanced from taking today. even with

Operator

[Operator Instructions].

question go Mike first Riley, Please from comes The from Crawford FBR. B. ahead.

Michael Crawford

these new programs ramp QX? three sounds customers What customers And affect how can about of tell of the like part the second us is, new second in in with margins, half? you that these are then

Edward Smith

process to get light, Yes, so for you obviously, as you you don't more fact factories the you you right ramp of the efficient, ramping pay have get customers, the because - over is second we time. not But to out like for I what your even overhead found cost is have last overnight though, it pay don't the them an year be. have to

be programs. take think revenue you'll of to I by of other the them defense affected So see is aero of QX and three, even the one these is But starting customer those the QX, part positively that longer.

there. process have We'll QX I'd of qualifications I probably year. that revenue do next So significant QX. Mike, We'll QX, revenue the defense QX go through will aerospace and think and expect then significant

pretty and So we expanding our are customers and also plant well. aerospace going Melbourne in our that's defense

QX, like of half we second the think see what also should of the early at would growing year existing we customers SMTC. I kind so QX, And did primarily late

get efficient winning then has job done First, be a in adding others. and new existing customers company within facilities with great your to the operationally our, Rich then and programs MC some start the

the So we down amount work through kind the balance and customers the we're as through are customers no about. doubt, debt we efficiencies and customers of want But up, new Mike, reshaping slowed just three picked we excited work those and because of we the sheet.

Michael Crawford

SKUs manufacture? then new think a same you the that hands to customers? and is your seven with product you given Okay. better it process is while. the after products little any Thanks, different manufacturing get customers your get about Eddie. think Or customers, new with you on with also And the new I for at that the And existing

Edward Smith

it that's new within a happens it's existing But If reiteration quickly. totally good adding point. if customer. new it's a customer, product a it's Well, existing a pretty customer, an of like

you're normally start at product. efficient months on money you're X very very efficient a not you're more making XX efficient months, little then that to pretty then You're good first, after getting and and

Michael Crawford

latter those seven expansions, in of those so any And followed of that categories?

Edward Smith

really Yes. getting of existing targeting into of products the our them not old new products, Most within been We're new reiterations products. customer. an just fall

So chain doubt type and things, last no the year it supply the excited I'm also much loosening of those up of very half the as about about but the over second it three months. as has

in doubt things. think QX, QX, of some But maybe that some Mike, and I exciting we'll will see no speed by be it'll very exciting. up pretty that,

Michael Crawford

Thanks. Okay.

chain Just supply broad-based? two it mind. there more is Or more, particular Quickly, any if like in just aspect loosening you that's capacitors? don't is

Edward Smith

not was it's over and taken capacitors being met show I the on weeks funny those and a are allocation with electronic lead they're upon XX seem EDS, many out so though, time Monday are anymore. Yes, case distribution XX Tuesday, I you Capacitors being still, days. an Even the two certain normalized be - are and size. orders to depending which or down is to said, now executives but

So see there. to capacitors, think I some starting up loosening you're

very automotive the the overall, in quite specific have think of capacitors you I bit. semiconductor are tight sensors, still up a some markets, most loosening are guys unless and

with do which softening, to supply constrained. negative has has and helped Asia, that is obviously, think the in the Asia Asia significantly, book-to-bill I

Michael Crawford

for Steve. And Okay, thanks, question be then Eddie. last may more

looking you just unnecessarily your million it that fair $XX $XX high to primary and given piece? probably talked address, a As our this about that's B you're structure of coupon is says capital term the say million it small to thing

Steven Waszak

clearly priority. it's first our Mike,

We're hear. so B. through may Because we to trying see really term go eliminate just there's go to forward. trying opportunities, things can we this we that we're other As X and restructure

business working look we toward in in more the of capacity provide the year XXXX. as the second to grow the we On half do capital path, same how

the constraints number One debt or have ratio of $XXX to of structure depth some is we things can we in grow really about have debt around forecast reasons current $XXX a leverage net much how like that, that. and

so year forward, our but that's term But to talked near prepare the term. working highest for we've we be next to tell also first B wanted the in we grow with to thing, And additional you, go look can in I will the only the organically capacity. as our company priority as capital priority

Edward Smith

is other a Mike, the dictating And B for of more one term The the little terms I'll add bit. loan. part

So that term we up need the the to the on change so can we and the the B term. clear and to us part specifically ABL clean it's of terms conditions other

So and I term we look think way have at to the still ABL, we a point, term still some have won't have we'll smaller B. a an

So I and term we're right rest you're we can the very of B the think question, term the in change on the structure of ABL focused so the the

Operator

The next with Retail. Please ahead. question comes Lucas from go Davenport

Lucas Davenport

questions. have I couple of So a

kind one last follows the on first of The caller.

November in I'm the was of for equity. that that working was offering was today from, it November then On But structured, deployed to shall kind the X me. didn't in to filed not - was kind firing the foresee the came there at terms unexpectedly filed and capital there March, future company back in if that, unexpectedly be was of call, way response that also, of sure rights but need where the last need near about asked everything, you a the in question the and there and brought was no obviously,

there bit? or a that little So be seems can am to that? just you misunderstanding I Why elaborate

Edward Smith

No.

hadn't we XX% Assembly. accurate hadn't grown November think Xth, November what But on I you're Xth. we year-on-year. We bought in MC very said

So that a working important. live capital. AR requires inventories are We that more in world obviously, obviously,

X, deal closed, take the closed, on with had have which debt, MC, on it's close. type it any you acquisition different clearly enclosed November we know the we as until and never of not deal of to may So it's had

because acquisition got at SX shelf particular change lenders when point, our baby change we with we the over ABL. reason did that was point, us many stock of we shelf So that But it filed The rules. at our to worked our filed things. reason had already companies we that increase and SX, out an which an out the $X.XX, to

good that So that, it went we decided to was file for through the a shelf us time a SEC. and

rate by the when percent. that X, combined in didn't happened. of of did at year entity way I you're the very out to said, to on November moment. things to percent changes, we of the Xx were business time, the We grow some made - to we need industry reality and was that QX that the would've grew to acquisition, quarter-on-quarter at business same by would've at the At We to the entity And our was been things existing QX average the continue we is in I size going accurate. as something one an we it If XX the structured business growth. transformative year-on-year, XX Clearly, your happens, last our change. grow also that, November that business heard some people our grew predict merger, were the absolutely So of is a mind. business, was time, Lucas, that doubling acquisition probably combined Xx we numbers, middle you

our high certain and very restructure a the is, really the smaller number that But a do. our did our asked number. term change to growing by the We much don't question people for shelf, cost shelf we going big to before, number. we So we double acquisition we many do debt can we the that number. didn't to the company, you We need advised read do Mike in a it an did were are of into Xx if is loan. needed big very we focused for that as - can doing that at you're because the reality what But size so Xx and on a that focus

Lucas Davenport

like just that come around follow When completely you expect estimate that? you that. a down just that So will Can maybe do when expect can up million that, $XX on outstanding. or say, you

Edward Smith

the growing to now, I right because capital more I I'm working wouldn't rate. at if obviously, takes that, grow that it grew estimate rate at even

number. important to is debt end is $XX continue So strategic of attempting right? be goal that before three more I'm ratio not below under the me the million to Xx and leverage my down year leverage end before million, to I'm that's take number $XX the our we any the $X end not $XXX What's do the If of million year, year, by is sense. billion make the to the if of million, would I'm that $XX

we number me, pay that and leverage, usually from By continue it's space. good, be we and our a not of leverage the for to I can have cash are know from leverage it's very below it's So our company going really people now, a for to - debt reasonable went end leverage. but it'll year, the flow, a see, in way to ratio I think, free feel if of the to hey, as very It's the we doing down. now be Xx down. QX continue you the QX, we'll three debt right senior X.Xx

X pretty leverage look one it X normally while. you and We down for will EMS space to at or when the level. space, year very If do a actually in in acquisitions reasonable get that they high a space our stays

that plan to was a mechanism, that use we have we we there the that and whole very shelf will going self comfortable where the a do have not look I'm something So if plans - we was bit take really filed forward. are a know we as with that we Also people's at attention. it. exciting there out where did and We

Steven Waszak

cycle. for levels that the debt cash other the the the Luke, when efficiency as capital stat Steve, we is quite This is working one cash complements to frequently measured

as which companies is go, So better and today industry than far XX. we're many out average the the about XX around we days are

cash XX at So our when our cash pay and cash, we're we're cycle. versus shift to cash means days XX inventory days collect about we and it buy receivables payables, to to

that down from Our monitor to goal weekly perspective. certainly is that But bring further. daily, we that

to of with status, terms cycle hand end complement cash that's is on So eye debt, keep the an in cash while an it. to we important

Lucas Davenport

to question is last I'm same because just higher seems with I one number. this, that wrong, remember accurate? going into approximate then like me entire, than like me tell projections it, million $XXX very it for And to reading but been Is be what future it's conservative - just I'm you're - you've revenue. reading very seems Hopefully, projecting, over for Okay. I you're if things it's it if

I be might that, So about very conservative right a it's estimate?

Edward Smith

we're there's think things. our use I that debt to of now, couple leverage for I thoughtful. have One the reasons. projection word the different ratio I capital is, I take don't use down. the a using We're conserve, word squeezing working - right trying

it. grow more us We're so prudent say may people efficient right with conservative, just working So thoughtful. want we're more to become continue We our profitable, get or grow being taking would and not top I line our some inventory say, down. to capital. to to our want efficient efficient, now, it's more very I the to time

Operator

from from Christian Schwab next Group. comes Craig The question Hallum Capital

Christian Schwab

just that that margin you cause XXXX? are Can improve drivers to the through year. - the throughout gross going you to going start walk Steve, are to Great can

Steven Waszak

thanks questions couple joining call. for Yes, Christian, your the and things, for of thanks and

we commented, labor plants, had Eddie As the of really in Zacatecas. plant large us. some inefficiencies for new one That's plant fairly

total terms of double-digit. clearly in of our probably production. It's XX%, production, percentage of XX% it's So

to first we the going a some has the April in labor of the weeks our of Rich - hands quarter, implemented site, first again, labor some So that forward. had actions and around new the correct two inefficiencies in

facilities. do biggest increase in is what will regaining some other the around we we So Zacatecas, have labor mirror efficiencies which in

Zacatecas because very in now get Rich? to very So of And that direct terms what production disciplined - and us in labor. gross move his on Christian, ask percent we'll well on I'll that that revenue, we're comment is where two detailed, he's key beyond by moving drivers know probably just terms and about or of then the a Rich give perspective. you join maybe labor to from margin are as there plant that of to back with Rich

Rich Fitzgerald

Thanks, Steve, appreciated.

specifically very to So Zacatecas.

we over those six the and took Some acquisition growth challenges with customers. were that put QX. also were with Eddie we customers, and equipment with boarding things of that and faced There maintenance on the factory cost did we actually inefficiencies. some it about like talked we've new faced we around customers into some when were QX that that business accelerated were between some was They corrected. and There the challenges caused as

will up implemented the help prop In both operational Eddie heard we the in accelerated and Zacatecas Steve gross I us but that, that efficiencies for well margins some as the we about because of is talked large in addition, which it business, pop specifically, in addition is that you efficiencies help actually think April talk actually a up year very around and this Steve that margins of actually were between in gross as built the March will synergies other implemented the about. to part factory April of some

Christian Schwab

Okay. That's fantastic.

that more you out, medium you've on talk with on growth you XX% opportunity and for existing greatest have either about, continuation that top highlighted, feel a go can As you long-term revenue Eddie, we of growth line your which a well. of over customers of thank longer-term sectors outlook to to the that for new level top revenue detail industry sectors customers you as you the broke expansion or line XX%

Edward Smith

capital have That's are market system quicker than to space other and as now. us, not just I the in big that Clearly, longer pieces a that think Clearly and payment side And going grow. be been had marketplace is for semiconductor hangover is that secured previously. is right market, equipment systems the of term. concerned to the measurement marketplace, pretty the clearly going been me, equipment robust in to much the we we we're payment the Also, any of continue Sure. market has it the as growing little growing. that already deep

that When is gross next market. I will back profit We the year margin share be actually our is aerospace XXXX what think predominantly. and to it some in, plant single XXXX long-term driving Melbourne, market business will into before digit got me XXXX that outstanding that business. digits But some that good is and and gets reasonable. in we clearly us, that very we're Christian be the market in and start here get double do really Florida defense was the for most late excites

plenty plant. have that room little with very capital into putting expand of to We there

So a capacity. bit of we quite have

to we're is for go aerospace, think doing I quote hear are the takes to and win is to fruition business, the right incredible, just and industrial long-term payment, some are quoting long really think part of extremely you and exciting grow and clearly for that's some test business and us. measurement call be into to We're numbers we reality the but from defense so I time aerospace and when now different And but to going people, it going a those markets defense builds customers.

government we're a we supplier even government year announced direct that qualification and our last through built for also We first are and to that going haven't the we process. the board

early so QX. And either we'll QX for that seeing late or revenue start

year. XXXX another be for growth our that'll So

say, measurement, much would payment assess the and systems defense I aerospace. short-term, So be longer-term to and will bigger going it's be

Christian Schwab

lastly, in to other Is your profitable similar deal well? then those if businesses contract margins that, medical would other most just space. than as of are you to be would with Steve, that the in customers fair And I that assume manufacturers, some say potentially on some which your

Steven Waszak

to Christian, that's one Assembly. of the Yes, it of emphasize that, so MC the is. other clearly, drivers of acquisition And thing the I think

who to told we As on at we plus at I XX target look look acquire. - our you we will crisply before, very as

of one our key was that So points.

progress the other invite to quality to and Eddie backgrounds of - how facility. doing do you come nature. a facilities, to the outfitted and historical things Rich the space, The got qualifications, since It's some how lot now of fitted even made support government and in down the of the terms the - in all we of Melbourne and about talking things how to competencies do bills Eddie is we've acquisition that that for of the in of

terms plant. on and how also that Today, from of we're in And when perspective. SMTC, plants 'XX, So with In almost about of margin the basis in was Majority increases revenue. 'XX Christian, the is factories and last Rich half revenue. X.X-ish year of this he in second clearly, from of benchmark was Rich the about, it efficiencies neutral. running QX where the the Eddie of an into comes came think is that business of X% runs EBITDA it of percent of efficiencies

the along as redoubling Zacatecas keep and with continue to Boston, record and we'll do we some Chihuahua defense, well. will back track Fremont do So but certainly the aerospace the certainly, in of same

will continue is COO, hallmark and our emphasize this of to a we this. So

$XX to that the got going $X.X that's the the and So numbers supreme we've to on a is gets today to we're relative to plan of basis. EBITDA million million at confidence $XX where showing million quarterly where this on

Operator

comes question from Steve from Our Mangrove. next Kohl

Steven Kohl

sheet Can take would about number inventory Are would bit you four some you on I of where much half military, and but trend talk see shipping and that what to second for would obviously, that are? talk a times, stuff of reasonable goes remarkably second, mentioned of a don't stuff think expect a times we I from balance we going on lead little some just I a hold know, at? these Steve, and number, inventory inventory what turns. the Why and the we that the aerospace be holding expectation about that. to can issues kind that to turns? obviously pull how for due more it or not And we

Steven Waszak

keep we constraint in because X.X SMTC, here, which chain. supply of of the I'll with and re-emphasizing running the to Steve, between as again, COO and question, a last year turns we're X came Great in bit acquisition little but inventory, slowed

Rich of on allowed to inventory go some above his buys. Eddie So

we on-time our So the had sure some make right customers we had for kanbans delivery. of key to

we inventory things As turns. acquisition, in we historically the they see run and X.Xx MC about two as came

So as about. from procure will listing ship we talked supply we we under our Eddie look increase how forward, inventory and as The see we Rich, around MCs efficiencies of as things see two chain our well plan, X.X happening. processes,

away some the of from of back won't customers. our with some we So kanbans we put in place

So have run. that metrics we we

some turns and this of planning buy be of year KPIs in customer, turns. Xx we terms exit maybe XXXX probably relative from move of our will the see as to to plant to as X.Xx anticipate We in of process. buy X.Xx terms You these

the there's Supply and an scope of So it Phil real we've plan inheriting loosening SMTC we who well process. business got in how all procurement comes it of our under and Wehrli, reason SMTC to that the applying behind the as MCs and But relative inventory to Chain is deep MC supply Director. process now chain as as

So are and that the steps day-in and happens into these naturally will play, come it day-out.

Steven Kohl

good. Sounds

mentioned. ask just I understand I six Zacatecas Let know it. the another me think question about plants, you we got

of year? we one out that's the you we One years, kind of flexibility take gives moving be for when acquisitions you the the these may I about will able are into actually that, a and and and not at I the happening of plan all shift with are doing you balance of they issues around. your as now, plans it and presume stuff. base what's how to but floating pronounce of actually customers that look that moving, couple now happening, days, can Is the next look profitable year

Steven Waszak

Rich you for ask you Steve, are to it. to mean, address as Zacatecas we as you but spell I that I'm spell, ask soon going can to to going

Rich Fitzgerald

actual Especially, is story factories so all profitable. the neat in, name city if we have the is which is that the But the called Fresnillo. are

as actually the challenges actually site. American we the are the the when first of actually SMTC, part we those the sites, sites created of a into specifically and same springboard We've synergies done MC place the on operational that put with remember efficiencies have part site, for we North both profitable of of a some now. you transformation in two If our came had and

comfortable to business and Steve add, can that I the both for if being And military way. focus continue that for So us. they Eddie Florida emphasize feel will stay aerospace key a to continue I

right as place acquisition, the up putting putting in key to well that be government the continue to as the right focus get a systems did in should also which we direct place, processes, to business, margins As of sure it's procedures, well. the to but to prop and make tools, efficiencies we're controls going mine the operational

Steven Kohl

cost seeing me talk about you I idea getting incurred can start months. the X it and a guess less, to - are bidding Eddie, that's you actually X right. from what qualification for second. I let I but months - earlier looking that being you months, a mentioned look Melbourne shipment. more finish, I of during expensed the X But the that you're mean the sales testing, - forward sole is that's if or do what address to

incurring lift adding not is in will big in the only Am we'll see through those that expenses we revenues in that on right as testing that then qualification are come I getting to a - essentially But So disappear. 'XX you're costs are 'XX, customers much more ramps. going stuff? and

Edward Smith

and have on. goes time inventory time, inventory then a inefficient, couple more bloat hold of so cost as your do and you a - you period so first Yes, some bills for efficient when clearly, of your call of we you your start getting

last a fact be. less to we're is, us as so growth. of the over we it's than we a few a had in But had just customers whole the would qualification answer, efficient the Steve, customers And And on I couple quite bit like customers, way these the process my boarding quarters. of little of

we'll know time. you and you - efficient So a they excess of cost. let and these for for they some the be and efficient the yes, long let less lot will some in general, will But lot less them But you more it can't in takes a more costs. they that of inventory, over these them become lot build bill long-term, time military, of a sometimes have you

efficient So we'll I'm that over excited time. more get

think Scwab I asked Christian the right the question way.

gross we'll will some up it. our up we time, customers margins move of our efficient. in more And get As for with factories profit will and these period EBITDA add move more and

Steven Kohl

what And running Florida nowadays. is

'XX? those Florida, of look the going in potential when the for revenue is opportunity is And on there. window look So when now How you a call a much at not at you contracts XXX% running do that obviously you're through testing what we have? it

Edward Smith

think, through on don't Steve, front I have go don't will honest, look To by I factory in factory. you be to XX-K, me. have we of at Yes, traditionally

send look you that to it it get to I XX-K for you. or or think the in you have I'll So will for

Operator

The next Boods comes [ph], investor. Craig question from a private

Craig Boods

we to if shelf I on insight the that here helpful. ago. What of guess, share where give But is what it was is had little if be, this obviously, we it? wondering a to the was rate share a road like the of the better maybe that calls when that use more I couple little already is just we'd talked you shelf could We'd and to or this down if price intend have anytime use on not a is better. wondering, today that a wondering about how able it bit price could give hoping more I'm I'm was we I'm you're be somewhere obviously little soon. timing something off insight we on to

Edward Smith

my for that's difficult Craig, compensation, whole dilution collect any that Rich. team, my in read can with you as to and Clearly, the it Yes. makes more Steve compensation, me leadership

we significantly So SX filing. was The realize we higher. stock price, the realize the stock

working important. capital is realized also that We our restructuring of

answer where to I wanted it's so my not is, be. And

because So we're probably going to we're needed do. consideration. We'll look But I take earlier, we what guidance a filed into do take at said shelf that. as we bigger that also to will giving a than

We because the rules. baby time particularly they shelf us at out at outside point in also that filed got

on there's will. the as And for so now me nothing report there we thing, soon to right but as is,

Craig Boods

philosophy if so to much it right, mention them is right on your could like on kind for acquisitions, thing the it if as share would not I'm future you acquisition? just do instance. soon the not insight will intend use one with than might wondering I that but previous more see intending use we guess real any it, such for on then call it when the considerably of So maybe, on on on you the did I a you use guess, you I'm it's timing how start i you possibly this better hopefully probably understanding anytime now. And price you're be use to

Edward Smith

plan I, Craig, plan to talk don't I to anything do. we about timing

seeing not will with I'll said will the what that leave time. be as Timing the you're keep be, - I anything. So appropriate saying, is I'm

counterparty an the collateral a we a As didn't for gives have of or far if we to available that as that. have do we and me need weapon it flexibility acquisition when the opportunity for that with to discussing to it an acquisition, using acquisition it's I'm pay us,

At Assembly the like should Things every get business. day the to going MC of acquisition I'm the know. gather we in that want but to fact integrate people to right. looking from So the acquisition I'm Today, get change do. we to finish acquisition, where profitability, up, not me to said remind we just buy looking that point never we're changing you growth, X, I at and that do the November something what anything our want that and to

to It's or that. but point, there, it leave I'll with at don't So SX so... use sits reason any have that we this

Unidentified Analyst

the Definitely going Okay, as like so been far. we had as that results I far have It's I am sounds. definitely concerned.

Edward Smith

you. you. Thank Thank

Steven Waszak

support Craig, Thanks, too. your long-term for

first since us with call I been have around. have been You since the

So thank you.

Operator

Ed over for back question-and-answer remarks. closing conference our like would turn to CEO, any concludes session. Smith, This the I to

Edward Smith

next So Have several In stakeholders great forward our various you today. to operator. support. partners, closing, day. look employees, business I want reporting effort a your investors Thank for our I our thank and the their you, thank leadership our for to distributors for time and team, over progress quarters.

Operator

Thank you conference attending concluded. for today's presentation. has now The

may Have a day. now You disconnect. good

SMTC (SMTX) 9 May 192019 Q1 Earnings call transcript