TORONTO – SMTC Corp. posted second quarter revenue of $90.4 million, down 0.6% year-over-year and 5% sequentially.

Net income was $1 million, compared to a net loss of $2.5 million in the second quarter of 2019 and net income of $800,000 in the first quarter of 2020. Adjusted EBITDA was $6.4 million, up 5.5% year-over-year and 3.2% sequentially.

During the past three quarters, SMTC had more than $130 million of new orders, including $26 million in the second quarter.

All facilities are open and remain in operation and in compliance with applicable Covid-19 health and safety measures, the firm says.

“Our sales organization continues to gain market share and expand our sales funnel,” said Ed Smith, president and CEO. “Over the last three quarters, we secured over $130 million of new orders, including $26 million in the second quarter, from new and existing customers. During the second quarter, we also launched eight new programs at our new product introduction facilities that will enter production in the second half of 2020.

“By maintaining a strong and diverse customer base and carefully managing our expenses and business operations, we were able to generate improved bottom-line results. Barring any significant new Covid-19-related impacts, we believe we are positioned for an improving financial performance in the second half of the year.

“While our customer demand during the first half of the second quarter of 2020 tracked to our internal plans, we experienced some demand reductions from retail payment systems and commercial avionics programs, among others, and order rescheduling from other customers in the latter part of the quarter. We believe this resulted in part from the Covid-19 pandemic and our customers modifying their requirements in response to the shifting demand of their respective end customers. Our supply chain did an outstanding job working around the logistics issues resulting from the Covid-19 pandemic to ensure we could meet our customers’ changing requirements.

“To ensure the health and safety of our employees and their families as we addressed our customers’ delivery requirements, we incurred approximately $1.2 million in Covid-19-related expenses in the second quarter. These expenses were for the retention of temporary replacement labor, additional sanitation, cleaning and disinfection of facilities, personal protective equipment and supplies and costs related to facilitating social distancing.”

For the three months ended June 28, cash used by operations was $300,000 and capital expenditures were $700,000. During the second quarter, the company amended its credit facilities to provide increased covenant flexibility as it navigates through the Covid-19 pandemic.

As of June 28, SMTC had $30.9 million available for borrowing under its asset-based lending facility.

Subsequent to June 28, the firm implemented certain cost-cutting measures, including layoffs primarily at its Zacatecas, Mexico, facility, a freeze on all nonessential new hiring, curtailed new programs and reduced capital expenditures.

“Although the Covid-19 pandemic continues to present a level of uncertainty to our business, we remain encouraged by the gains we have made adding new customers and the loyalty demonstrated by our existing customer base. Based on our current demand and supply chain visibility, and assuming our facilities continue to operate at currently planned levels, we expect revenue to range between $190 million and $205 million and adjusted EBITDA to range between $13.7 million and $15 million for the second half of 2020.”

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