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TORONTO – SMTC Corp. reported third quarter revenue of $88.7 million, up 65.2% year-over-year.

The company posted a net loss of $5.7 million, compared to net income of $900,000 in the third quarter of 2018. Adjusted EBITDA increased 161.1% year-over-year to $6.3 million.

“One year since closing on the acquisition of MC Assembly, we are pleased to report our results on a higher year-to-date revenue base that is allowing us to scale our business,” said SMTC CEO and president Ed Smith. “During the first nine months of 2019 we achieved an increase in our revenues to $282.3 million or 14.5% on a proforma basis, and we’ve seen an even steeper improvement to our Adjusted EBITDA, which grew 54% to $17.8 million on a proforma basis. The expansion of our customer base was led by important customer wins in the aerospace and defense, industrial, power and clean technology and test and measurement markets over the same period a year ago.

“Also, as indicated in our Sept. 19, 2019, press release, the current geo-political environment caused a number of our customers to re-source their manufacturing away from vendors who are operating in China, and as a result, we have seen a decline in demand for product built in our China site. We have been working with our customers to transfer production out of our Dongguan, China, manufacturing operations, and we are currently winding down this facility, with completion expected by the end of this year. Revenue attributable to the Dongguan manufacturing operations accounted for 5.3% of our revenue in the first three quarters of 2019.”  

SMTC recorded $5.5 million of charges in the third quarter related to the closure of its China manufacturing operations, including $3.5 million of non-cash accelerated asset write-downs and $2 million of cash-based expenses and employee-related costs.

“Despite current challenges facing the EMS industry, we exited the third quarter in a stronger position to support our growth plans by eliminating our previously outstanding Term B debt and expanding our borrowing capacity under our amended asset-based revolving credit facilities from $45 million to $65 million, along with more favorable financial covenants with our lenders. As we look ahead, we expect another year of growth in 2020, as our funnel of new business continues to grow. With $22 million of new orders already secured, including the $15 million of awards referenced in our Sept. 19 press release, the integration of MC Assembly acquisition completed and our plans to implement further operational efficiencies, we are reiterating our prior 2019 and initial 2020 guidance issued on Sept. 19.”

 

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