TORONTO, Aug. 07, 2018 (GLOBE NEWSWIRE) -- SMTC Corporation (Nasdaq:
SMTX), a global electronics manufacturing services provider, today announced second quarter 2018 results.
Q2 Financial Highlights
- Revenues increased 34.8% to $44.5 million, compared to $33.0 million in the second quarter of 2017
- Gross profit was $4.3 million or 9.6% of revenue, which represents a 530-basis point increase over $1.4 million or 4.3% of revenue reported in the second quarter of 2017
- Net loss of $(0.1) million or $(0.01) per share, which represents a $5.9 million improvement, compared to a net loss of $(6.0) million or $(0.36) per share reported in the second quarter of 2017
- Adjusted EBITDA was $1.6 million, which represents a $5.2 million improvement compared to $(3.6) million in the second quarter of 2017
“I am pleased to report that we are exceeding our business plan. During the second quarter we added two new customers and further expanded programs with existing customers. With our focus now squarely on our growth, we continue to see strong demand and an accelerating trend in our backlog metrics with growth in our semiconductor, test/measurement and medical business lines. Our backlog and business pipeline, barring any further tightening of the supply chain by electronic component suppliers, should support year-over-year revenue growth in excess of 25 percent for the full year 2018, and increased gross profits, adjusted EBITDA, and earnings, as we indicated in our July 23, 2018 press release,” said Ed Smith, SMTC’s President and Chief Executive Officer.
“Even against a backdrop of uncertainties with global trade policy and with higher levels of demand in the industry causing supply chain challenges, we believe our robust supply-chain and operating model afford us flexibility to continue to grow our business and support our customers. Our commitment to operational excellence and serving our customers, we believe, will position us to achieve industry-leading quality and superior customer on-time delivery metrics,” Smith added.
Revenue for the second quarter was $44.5 million, up 34.8% from $33.0 million in the second quarter of 2017. Sequentially, revenue increased 19.8% from $37.1 million from the first quarter of 2018. The year-over-year increase from the second quarter of 2017 was the result of strong demand both from existing and new customers in 2018 and was well-diversified among the company’s target end-markets. The adoption of the new revenue recognition standard accounted for $1.3 million or 3.9% of the year-over-year revenue increase.
Gross profit for the second quarter of 2018 was $4.3 million or 9.6% of revenue, compared with $1.4 million or 4.3% of revenue for the second quarter in 2017. Adjusted gross profit for the second quarter of 2018 was $4.4 million or 9.8% as a percentage of revenue, compared to $1.2 million or 3.4% of revenue in the second quarter of 2017. Gross profit for the first quarter of 2018 was $3.9 million or 10.4% of revenue while adjusted gross profit was $3.5 million or 9.5% of revenue.
Adjusted EBITDA was $1.6 million in the second quarter of 2018, compared to $(3.6) million for the second quarter of 2017 and $0.9 million in the first quarter of 2018. The increase in the second quarter of 2018 compared to the prior quarter was primarily due to continued gains from operational efficiencies resulting from site utilization improvements.
Net loss was $(0.1) million for the second quarter of 2018, compared to a net loss of $(6.0) million in the second quarter of 2017. The company reported net earnings of $8 thousand for the first quarter of 2018.
In light of the Company’s increasing growth, $2.7 million was utilized in cash flows from operations in the second quarter, to support working capital growth for accounts receivable and inventory to support expanding revenues.
On July 23, 2018, we issued a press release that announced the terms of $13 million Rights Offering to holders of our common stock of record at the close of business on that date. Stockholders should carefully read the Prospectus Supplement, which can be found on the SEC’s website at www.sec.gov, which contains important information, including how to exercise and pay for the rights exercised. Unless the Company extends the offering period, all rights will expire if not exercised by 4:00 PM EDT on August 22, 2018.
As we indicated in the July 23rd press release, we received commitments from Red Oak Partners LLC, and Wynnefield Funds, two of our largest stockholders, as well as with other members of the board of directors, members of the executive management team, and other outside investors who in aggregate have committed to fund up to the full $13 million, subject to prorations imposed in the Rights Offering.
Financial Results Conference Call
The company will host a conference call at 8:30 a.m., Eastern Time, on August 8, 2018 to discuss its second quarter 2018 results and current business operations. Interested parties can listen to the company's conference call by accessing the Investor Relations’ section of SMTC’s web site on the Investor Events page or dialing 877-878-2794 and international callers should dial 615-800-6849 ten minutes prior to the scheduled start time. A rebroadcast will be available for up to one week following the teleconference by dialing 855-859-2056, Conference ID: 1178467. A replay webcast of the call will also be available from the Investor Relations’ section of SMTC’s web site on the Investor Events page.
Non-GAAP information
Adjusted EBITDA, Adjusted Gross Profit and Adjusted Gross Profit percentage are non-GAAP measures. Adjusted EBITDA is computed as net earnings (loss) from operations excluding depreciation and amortization, restructuring charges, unrealized foreign exchange gains/losses on unsettled forward foreign exchange contracts, stock-based compensation, interest and income tax expense. SMTC Corporation has provided in this release a non-GAAP calculation of Adjusted EBITDA as supplemental information regarding the operational performance of SMTC’s core business. A reconciliation of Adjusted EBITDA to net earnings (loss) is included in the attachment. Adjusted Gross Profit is computed as gross profit excluding unrealized gains or losses on unsettled forward foreign exchange contracts. Adjusted Gross Profit percentage is computed as Adjusted Gross Profit divided by revenue. A reconciliation of Adjusted Gross Profit to gross profit is included in the attachment. Management uses these non-GAAP financial measures 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 these non-GAAP financial measures are useful for management and investors in assessing SMTC’s performance and when planning, forecasting and analyzing future periods. SMTC believes these non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key financial metrics we use in making operating decisions and because investors and analysts use it to help assess the health of our business. Non-GAAP measures are subject to limitations as these measures are not in accordance with, or an alternative for, United States Generally Accepted Accounting Principles (US GAAP) and may be different from non-GAAP measures used by other companies. Because of these limitations, investors should consider Adjusted EBITDA, Adjusted Gross Profit and Adjusted Gross Profit percentage along with other financial performance measures, including revenue, gross profit and net earnings (loss), as reflected in SMTC’s interim consolidated financial statements prepared in accordance with US GAAP.
Forward-Looking Statements
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 “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other 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 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 electronics manufacturing services (EMS) industry, component shortages, and others risks and uncertainties discussed in SMTC's most recent filings 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, or to update the reasons why actual results could differ materially from those projected in the forward-looking statements.
