Circuits Assembly Online Magazine - Amid Falling Sales, SMTC's Bottom Line Improves

SAN JOSE -- SMTC's third quarter sales fell 20% year-over-year to $42.7 million but the company lowered its net loss.

For the quarter ended Oct. 2, the EMS provider cut its net loss to $100,000, from a net loss of $1.3 million a year ago.

The operating income was $100,000, up from a loss of $900,000 last year.

The sales decrease was primarily the result of reduced volumes, including a decrease of $8.8 million from two customers which transferred all business to other contract manufacturers, and a reduction of $8.2 million due to one customer's reduced demand. SMTC gained two new customers representing $6.1 million of additional revenue during the quarter.

Industrial sector revenue decreased to $15.9 million from $26.4 million for the same period in 2015, mainly due to reduced volumes from three customers, two of which have transferred all business to other contract manufacturers. Revenue from the industrial sector as a percentage of total revenue decreased to 37.2% from 49.4% in the third quarters of 2016 and 2015, respectively.

Networking and communications revenue decreased to $16.1 million from $21 million due to reductions in revenues from one customer which experienced lower demand, partially offset by new customer revenue of $1.8 million and volume increases with an existing customer of $1.2 million. Revenue from the networking and communications sector as a percentage of total revenue decreased to 37.7%, from 39.3% in 2015.

Power and energy revenue decreased $500,000 to a total of $2.5 million due to reduced volume from two customers which had reduced demand partially offset by revenue from three new customers.

Medical revenue increased to $8.2 million from $3 million in 2015 primarily on two new customer ramps and increased volume with a longstanding customer. Revenue from the medical sector as a percentage of total revenue increased to 19.2% from 5.7% in 2015.

During the quarter 57.9% of SMTC's revenue was attributable to production from operations in Mexico, 30.5% in China and 11.6% in the US. During the third quarter of 2015, 64.8% of revenue was attributable to production from operations in Mexico, 18.2% in China and 17% in the US.