SMTC Corporation (Nasdaq:SMTX), a global electronics manufacturing
services provider and winners of the Frost & Sullivan’s 2019
Best Practices Award for Customer Value Leadership in the
Electronics Manufacturing Services Industry, today announced its
third quarter 2019 results.
Third Quarter Financial Highlights
|
|
|
|
|
|
$s in millions |
Q3 2019 |
Q3 2018(as reported) |
Change |
Q3
2018Proforma1 |
Change |
Revenue |
$88.7 |
$53.7 |
65.2% |
$93.7 |
(5.4%) |
Gross Profit |
$8.9 |
$5.2 |
70.1% |
$10.3 |
(13.3%) |
Gross Profit Percentage |
10.0% |
9.8% |
|
11.0% |
|
Adjusted Gross Profit2 |
$10.8 |
$5.1 |
109.6% |
$10.2 |
5.8% |
Adjusted Gross Profit Percentage2 |
12.1% |
9.6% |
|
10.8% |
|
Net Income (Loss) |
($5.7) |
$0.9 |
|
$1.2 |
nm |
Adjusted Net Income2 |
$2.1 |
$0.9 |
139.3% |
$1.2 |
177.3% |
Adjusted EBITDA2 |
$6.3 |
$2.4 |
161.1% |
$5.5 |
13.6% |
Adjusted EBITDA
Percentage2 |
7.1% |
4.5% |
|
5.9% |
|
Net Debt |
$84.4 |
$11.8 |
|
$3.0 |
|
|
|
|
|
|
|
1Proforma assumes MC Assembly Holdings, Inc. (“MC Assembly”),
acquired on November 9, 2018 had been acquired by SMTC on July 1,
2018, the first day of the third quarter of 2018.
2Adjusted Gross Profit, Adjusted Gross Profit Percentage,
Adjusted Net Income, EBITDA, Adjusted EBITDA and EBITDA Percentage,
Proforma Adjusted Gross Profit, Proforma Adjusted Gross Profit
Percentage, Proforma Adjusted Net Income, Proforma EBITDA, Proforma
Adjusted EBITDA and Adjusted EBITDA Percentage (each defined below)
are non-GAAP measures. Please refer to the section below labeled
“Non-GAAP Information” and the various reconciliations to the
applicable most directly comparable GAAP measures shown below in
this press release.
SMTC Corporation (“SMTC”) reported a 65.2% year-over-year
increase in revenue, compared to the third quarter of 2018.
On a proforma basis, revenue declined 5.4% compared to the
third quarter of 2018. Factors contributing to the year-over-year
revenue decline on a proforma basis included customer inventory
rebalancing as lead-times in the supply-chain shortened, customer
concerns about uncertainties relating to the prolonged impact of
tariffs and macro-economic conditions in certain end-markets,
including the semiconductor sector which was supply constrained in
2018.
Adjusted EBITDA increased from $2.4 million to $6.3 million or
by 161.1% and from $5.5 million to $6.3 million on a proforma basis
or 13.6%, compared to the third quarter of 2018 as noted in the
table above. The improvement in Adjusted EBITDA was due to gains
from operational efficiencies and synergies achieved and increased
scale from the completed integration of MC Assembly following the
November 2018 acquisition.
“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. 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,” said Ed Smith, SMTC President
and CEO. “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,” noted Smith.
“Also, as indicated in our September 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,” said Ed Smith, SMTC President and CEO.
SMTC recorded $5.5 million of charges in the third quarter
related to the closure of its China manufacturing operations which
includes $3.5 million of non-cash accelerated asset write-downs and
$2.0 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 September 19th 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 September 19th and have the
elements are now in place to make 2020 a more profitable year,”
added Smith.
Financial Results Conference Call
SMTC will host a conference call which will start at 5:00 p.m.
Eastern Time on Monday, November 11, 2019. The conference call can
be accessed by visiting the Investor Relations section of SMTC’s
web site on the Investor Relations Calendar page at
https://www.smtc.com/investors/news-events/ir-calendar or dialing
1-877-317-6789 (for U.S. participants) or 1-412-317-6789 (for
participants outside of the U.S ten minutes prior to the start of
the call and request to join the SMTC Corporation’s Third Quarter
2019 Results Conference Call.
The conference call will be available for rebroadcast from the
Investor Relations section of SMTC’s web site on the Investor
Relations Calendar page.
Non-GAAP information
Adjusted Gross Profit, Adjusted Gross Profit Percentage,
Adjusted Net Income, EBITDA, Adjusted EBITDA, Adjusted EBITDA
Percentage, Proforma Adjusted Gross Profit, Proforma Adjusted Gross
Profit Percentage, Proforma Adjusted Net Income, Proforma Adjusted
EBITDA and Adjusted EBITDA Percentage are non-GAAP measures.
Adjusted Gross Profit is computed as gross profit excluding
unrealized gains or losses on unsettled forward foreign exchange
contracts and amortization of intangible assets. Adjusted Gross
Profit Percentage is computed as Adjusted Gross Profit divided by
revenue. Adjusted Net Income is computed as net income (loss)
excluding restructuring charges, unrealized foreign exchange
gains/losses on unsettled forward foreign exchange contracts,
stock-based compensation, change in fair value of warrant
liability, amortization of intangible assets, merger and
acquisition related expenses and change in fair value of contingent
consideration. EBITDA is defined as net income (loss) before
Interest, taxes, depreciation and amortization. Adjusted EBITDA is
computed as net income (loss) from operations excluding
depreciation and amortization, restructuring charges, unrealized
foreign exchange gains/losses on unsettled forward foreign exchange
contracts, stock-based compensation, change in fair value of
warrant liability, interest, income tax expense and merger and
acquisition related expenses and change in fair value of contingent
consideration. Proforma Adjusted Gross Profit, Proforma Adjusted
Gross Profit Percentage, Proforma Adjusted Net Income, Proforma
Adjusted EBITDA and Adjusted EBITDA Percentage are computed as
Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted
Net Income, EBITDA, Adjusted EBITDA and Adjusted EBITDA Percentage,
in each case, after assuming that MC Assembly, acquired on November
9, 2018 had been acquired by SMTC on July 1, 2018, the first day of
the third quarter of 2018. Reconciliations of Adjusted Gross Profit
to gross profit, Adjusted Gross Profit Percentage to gross profit
percentage, Adjusted Net Income to net income (loss) EBITDA to net
income (loss), Adjusted EBITDA to net income (loss), Adjusted
EBITDA Percentage to net income (loss) percentage, Proforma
Adjusted Gross Profit to gross profit, Proforma Adjusted Gross
Profit Percentage to gross profit percentage, Proforma Adjusted Net
Income to net income (loss), Proforma EBITDA to net income (loss),
Proforma Adjusted EBITDA to net income (loss) and Proforma Adjusted
EBITDA Percentage to net income (loss) percentage are each 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 and may be different from
non-GAAP measures used by other companies. Because of these
limitations, investors should consider Adjusted Gross Profit,
Adjusted Gross Profit Percentage, Adjusted Net Income, EBITDA,
Adjusted EBITDA, Adjusted EBITDA Percentage, Proforma Adjusted
Gross Profit, Proforma Adjusted Gross Profit Percentage, Proforma
Adjusted Net Income, Proforma Adjusted EBITDA and Adjusted EBITDA
Percentage along with other financial performance measures,
including [revenue,] gross profit and net income (loss), as
reflected in SMTC’s interim consolidated financial statements
prepared in accordance with GAAP and included in the
attachment.
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 SMTC’s expected growth
and profitability, the benefits of SMTC’s implementation of
operational efficiencies and SMTC’s closure of business operations
in Dongguan, China. 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, integrating acquired companies,
ceasing manufacturing in China, fluctuations in demand for
customers' products and changes in customers' product sources,
competition in the electronics manufacturing services
industry, component shortages, and others risks and uncertainties
discussed in SMTC's most recent filings with the Securities and
Exchange Commission. 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.
About SMTC
SMTC Corporation was founded in 1985 and acquired MC Assembly
Holdings, Inc. in November 2018. SMTC has more than 50
manufacturing and assembly lines in United States, China and Mexico
which creates a powerful low-to-medium volume, high-mix, end-to-end
global electronics manufacturing services (EMS) provider. With
local support and expanded manufacturing capabilities globally,
including fully integrated contract manufacturing services with a
focus on global original equipment manufacturers and emerging
technology companies, including those in the Defense and Aerospace,
Industrial, Power and Clean Technology, Medical and Safety, Retail
and Payment Systems, Semiconductors and Telecom, Networking and
Communications; and Test and Measurement industries. As a mid-size
provider of end-to-end EMS, SMTC provides printed circuit boards
assemblies production, systems integration and comprehensive
testing services, enclosure fabrication, as well as product design,
sustaining engineering and supply chain management services. SMTC
services extend over the entire electronic product life cycle from
the development and introduction of new products through to the
growth, maturity and end-of-life phases. For further information on
SMTC Corporation, please visit our website at www.smtc.com.
|
Consolidated Statements of Operations and Comprehensive
Income |
(Unaudited) |
|
Three months ended |
|
|
Nine months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Expressed in thousands of U.S. dollars, except number of shares
and per share amounts) |
September 29,2019 |
|
|
September 30,2018 |
|
|
September 29,2019 |
|
|
September 30,2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
88,682 |
|
|
$ |
53,677 |
|
|
$ |
282,267 |
|
|
$ |
135,276 |
|
Cost of
sales |
79,776 |
|
|
48,440 |
|
|
255,740 |
|
|
121,906 |
|
Gross profit |
8,906 |
|
|
5,237 |
|
|
26,527 |
|
|
13,370 |
|
Selling, general and
administrative expenses |
6,549 |
|
|
3,682 |
|
|
19,908 |
|
|
10,838 |
|
Change in fair value of
contingent consideration |
- |
|
|
- |
|
|
(3,050 |
) |
|
- |
|
Change in fair value of
warrant liability |
(858 |
) |
|
- |
|
|
(919 |
) |
|
- |
|
Write-down of property,plant
and equipment |
- |
|
|
- |
|
|
- |
|
|
- |
|
Loss on disposal of
property,plant and equipment |
- |
|
|
3 |
|
|
- |
|
|
3 |
|
Restructuring charges |
6,454 |
|
|
58 |
|
|
8,624 |
|
|
154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (loss) |
(3,239 |
) |
|
1,494 |
|
|
1,964 |
|
|
2,375 |
|
Interest expense |
2,679 |
|
|
485 |
|
|
8,349 |
|
|
1,195 |
|
Income (loss) before income
taxes |
(5,918 |
) |
|
1,009 |
|
|
(6,385 |
) |
|
1,180 |
|
Income tax expense
(recovery) |
|
|
|
|
|
|
|
|
|
|
|
Current |
(103 |
) |
|
290 |
|
|
592 |
|
|
596 |
|
Deferred |
(81 |
) |
|
(145 |
) |
|
14 |
|
|
(191 |
) |
|
(184 |
) |
|
145 |
|
|
606 |
|
|
405 |
|
Net
income (loss) and comprehensive income (loss) |
$ |
(5,734 |
) |
|
$ |
864 |
|
|
$ |
(6,991 |
) |
|
$ |
775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per
share |
$ |
(0.20 |
) |
|
$ |
0.04 |
|
|
$ |
(0.28 |
) |
|
$ |
0.04 |
|
Diluted income (loss) per
share |
$ |
(0.20 |
) |
|
$ |
0.04 |
|
|
$ |
(0.28 |
) |
|
$ |
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
Basic |
28,057,763 |
|
|
19,335,253 |
|
|
24,954,875 |
|
|
17,866,399 |
|
Diluted |
28,057,763 |
|
|
19,986,756 |
|
|
24,954,875 |
|
|
18,517,902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets |
(Unaudited) |
|
|
|
|
|
(Expressed in thousands of U.S. dollars) |
September 29, 2019 |
|
December 30, 2018 |
|
Assets |
|
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
Cash |
$ |
601 |
|
$ |
1,601 |
|
Accounts receivable - net |
61,208 |
|
72,986 |
|
Unbilled contract assets |
26,790 |
|
20,405 |
|
Inventories - net |
49,535 |
|
53,203 |
|
Prepaid expenses and other assets |
6,658 |
|
5,548 |
|
Derivative assets |
- |
|
15 |
|
Income taxes receivable |
358 |
|
160 |
|
|
145,150 |
|
153,918 |
|
Property, plant and equipment - net |
26,348 |
|
28,160 |
|
Operating lease right of use assets - net |
3,887 |
|
- |
|
Goodwill |
18,165 |
|
18,165 |
|
Intangible assets - net |
14,403 |
|
19,935 |
|
Deferred financing costs - net |
899 |
|
668 |
|
Deferred income taxes - net |
366 |
|
380 |
|
Total
assets |
$ |
209,218 |
|
$ |
221,226 |
|
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
Revolving credit facility |
34,840 |
|
$ |
25,020 |
|
Accounts payable |
67,082 |
|
76,893 |
|
Accrued liabilities |
13,387 |
|
13,040 |
|
Warrant liability |
1,090 |
|
2,009 |
|
Restructuring liability |
2,736 |
|
- |
|
Contingent consideration |
- |
|
3,050 |
|
Income taxes payable |
94 |
|
12 |
|
Current portion of long-term debt |
1,250 |
|
1,368 |
|
Current portion of operating lease obligations |
1,483 |
|
- |
|
Current portion of finance lease obligations |
1,316 |
|
1,547 |
|
|
123,278 |
|
122,939 |
|
|
|
|
|
|
Long-term debt |
34,154 |
|
56,039 |
|
Operating lease
obligations |
2,818 |
|
- |
|
Finance
lease obligations |
9,105 |
|
9,947 |
|
Total liabilities |
169,355 |
|
188,925 |
|
|
|
|
|
|
Shareholders’
equity: |
|
|
|
|
Capital stock |
507 |
|
458 |
|
Additional paid-in capital |
293,152 |
|
278,648 |
|
Deficit |
(253,796 |
) |
(246,805 |
) |
|
39,863 |
|
32,301 |
|
Total
liabilities and shareholders' equity |
$ |
209,218 |
|
$ |
221,226 |
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows |
(Unaudited) |
|
Three months ended |
|
|
Nine months ended |
|
(Expressed in thousands of U.S. dollars) |
|
|
|
|
|
|
|
|
|
|
|
Cash
provided by (used in): |
September 29, 2019 |
|
|
September 30, 2018 |
|
|
September 29, 2019 |
|
|
September 30, 2018 |
|
Operations: |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(5,734 |
) |
|
$ |
864 |
|
|
$ |
(6,991 |
) |
|
$ |
775 |
|
Items not involving cash: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation on property, plant and equipment |
1,649 |
|
|
883 |
|
|
4,902 |
|
|
2,426 |
|
Amortization of acquired Intangible assets |
1,844 |
|
|
- |
|
|
5,532 |
|
|
- |
|
Unrealized foreign exchange gain on unsettled forward |
|
|
|
|
|
|
|
|
|
|
|
exchange contracts |
- |
|
|
(108 |
) |
|
- |
|
|
(338 |
) |
Write down of property, plant and equipment |
261 |
|
|
- |
|
|
261 |
|
|
- |
|
Loss on disposal of property, plant and equipment |
- |
|
|
3 |
|
|
- |
|
|
3 |
|
Deferred income taxes (recovery) |
(81 |
) |
|
(145 |
) |
|
14 |
|
|
(191 |
) |
Amortization of deferred financing fees |
755 |
|
|
13 |
|
|
1,300 |
|
|
34 |
|
Stock-based compensation |
353 |
|
|
75 |
|
|
538 |
|
|
278 |
|
Change in fair value of warrant liability |
(858 |
) |
|
- |
|
|
(919 |
) |
|
- |
|
Change in fair value of contingent consideration |
- |
|
|
- |
|
|
(3,050 |
) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in non-cash operating working capital: |
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
3,743 |
|
|
(9,081 |
) |
|
11,778 |
|
|
(12,096 |
) |
Unbilled contract assets |
829 |
|
|
(1,695 |
) |
|
(6,385 |
) |
|
(8,183 |
) |
Inventories |
(3,386 |
) |
|
(3,158 |
) |
|
3,668 |
|
|
(6,009 |
) |
Prepaid expenses and other assets |
33 |
|
|
435 |
|
|
(1,095 |
) |
|
(1,002 |
) |
Income taxes payable |
(319 |
) |
|
16 |
|
|
(116 |
) |
|
(32 |
) |
Accounts payable |
285 |
|
|
7,587 |
|
|
(9,845 |
) |
|
16,582 |
|
Accrued liabilities |
1,458 |
|
|
1,088 |
|
|
(265 |
) |
|
2,449 |
|
Restructuring liability |
1,879 |
|
|
- |
|
|
2,736 |
|
|
- |
|
Net change in operating lease right of use asset and liability |
(51 |
) |
|
- |
|
|
414 |
|
|
- |
|
|
2,660 |
|
|
(3,223 |
) |
|
2,477 |
|
|
(5,304 |
) |
Financing: |
|
|
|
|
|
|
|
|
|
|
|
Net advances of revolving credit facility |
21,092 |
|
|
4,725 |
|
|
9,820 |
|
|
4,515 |
|
Repayments of long-term debt |
(22,000 |
) |
|
(500 |
) |
|
(22,625 |
) |
|
(1,500 |
) |
Principal repayments of finance lease obligations |
(390 |
) |
|
(95 |
) |
|
(1,199 |
) |
|
(189 |
) |
Advance of equipment facility |
- |
|
|
735 |
|
|
- |
|
|
2,629 |
|
Proceeds from issuance of
stock options |
45 |
|
|
- |
|
|
45 |
|
|
361 |
|
Proceeds from issuance of
common stock through rights offering |
|
|
|
12,587 |
|
|
14,044 |
|
|
12,587 |
|
Debt issuance and deferred financing fees |
(321 |
) |
|
- |
|
|
(371 |
) |
|
(48 |
) |
|
(1,574 |
) |
|
17,452 |
|
|
(286 |
) |
|
18,355 |
|
Investing: |
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
(1,119 |
) |
|
(1,493 |
) |
|
(3,191 |
) |
|
(3,898 |
) |
|
(1,119 |
) |
|
(1,493 |
) |
|
(3,191 |
) |
|
(3,898 |
) |
Decrease in cash |
(33 |
) |
|
12,736 |
|
|
(1,000 |
) |
|
9,153 |
|
Cash, beginning of period |
634 |
|
|
1,953 |
|
|
1,601 |
|
|
5,536 |
|
Cash,
end of the period |
$ |
601 |
|
|
$ |
14,689 |
|
|
$ |
601 |
|
|
$ |
14,689 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary Information: |
Reconciliation of Adjusted EBITDA |
|
Three months ended |
|
Nine months ended |
|
|
|
Note 1 |
|
|
|
Note 1 |
|
September 29,2019 |
|
September 30,2018 |
|
September 29,2019 |
|
September 30,2018 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(5,734 |
) |
|
$ |
864 |
|
|
$ |
(6,991 |
) |
|
$ |
775 |
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment |
1,649 |
|
|
883 |
|
|
4,902 |
|
|
2,426 |
|
Amortization of Intangible assets |
1,844 |
|
|
- |
|
|
5,532 |
|
|
- |
|
Interest |
2,679 |
|
|
485 |
|
|
8,349 |
|
|
1,195 |
|
Income tax expense (recovery) |
(184 |
) |
|
145 |
|
|
606 |
|
|
405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
$ |
254 |
|
|
$ |
2,377 |
|
|
$ |
12,398 |
|
|
$ |
4,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense |
353 |
|
|
75 |
|
|
538 |
|
|
278 |
|
Fair value adjustment of warrant liability |
(858 |
) |
|
- |
|
|
(919 |
) |
|
- |
|
Restructuring charges |
6,454 |
|
|
58 |
|
|
8,624 |
|
|
154 |
|
Merger and acquisitions related expenses |
68 |
|
|
- |
|
|
232 |
|
|
- |
|
Fair value adjustment of contingent consideration |
- |
|
|
- |
|
|
(3,050 |
) |
|
- |
|
Unrealized foreign exchange gain |
|
|
|
|
|
|
|
|
|
|
|
on unsettled forward exchange contracts |
- |
|
|
(108 |
) |
|
- |
|
|
(338 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
6,271 |
|
|
$ |
2,402 |
|
|
$ |
17,823 |
|
|
$ |
4,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Percentage |
7.1 |
% |
|
4.5 |
% |
|
6.3 |
% |
|
3.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Note 1:
Reflects historical SMTC results as filed |
|
Supplementary Information: |
Reconciliation of Adjusted Gross
Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
September 29,2019 |
|
|
September 30,2018 |
|
|
September 29,2019 |
|
|
September 30,2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
$ |
8,906 |
|
|
$ |
5,237 |
|
|
$ |
26,527 |
|
|
$ |
13,370 |
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
1,844 |
|
|
- |
|
|
$ |
5,532 |
|
|
- |
|
Unrealized foreign exchange gain |
|
|
|
|
|
|
|
|
|
|
|
on unsettled forward exchange contracts |
- |
|
|
(108 |
) |
|
- |
|
|
(338 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Gross Profit |
$ |
10,750 |
|
|
$ |
5,129 |
|
|
$ |
32,059 |
|
|
$ |
13,032 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Gross Profit Percentage |
12.1 |
% |
|
9.6 |
% |
|
11.4 |
% |
|
9.6 |
% |
|
|
|
|
|
|
|
|
|
Supplementary Information: |
|
|
|
|
|
Reconciliation of
Adjusted Net (Loss) Income |
Three months ended |
|
Nine months ended |
|
September 29, 2019 |
|
September 30,2018 |
|
September 29,2019 |
|
September 30,2018 |
Net income (loss) |
$ |
(5,734 |
) |
|
$ |
864 |
|
|
$ |
(6,991 |
) |
|
$ |
775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
add back |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
1,844 |
|
|
- |
|
|
5,532 |
|
|
- |
|
Unrealized foreign exchange gain |
|
|
|
|
|
|
|
|
|
|
|
on unsettled forward exchange contracts |
- |
|
|
(108 |
) |
|
- |
|
|
(338 |
) |
Stock compensation expense |
353 |
|
|
75 |
|
|
538 |
|
|
278 |
|
Fair value adjustment of warrant liability |
(858 |
) |
|
- |
|
|
(919 |
) |
|
- |
|
Restructuring charges |
6,454 |
|
|
58 |
|
|
8,624 |
|
|
154 |
|
Merger and acquisitions related expenses |
68 |
|
|
- |
|
|
232 |
|
|
- |
|
Fair value adjustment of contingent consisderation |
- |
|
|
- |
|
|
(3,050 |
) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income |
2,127 |
|
|
889 |
|
|
3,966 |
|
|
869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary
Information: |
|
|
|
|
Reconciliation of Net
Debt |
|
|
|
|
|
|
|
|
|
|
September 29,2019 |
September 30,2018 |
|
|
|
|
|
Revolver |
$ |
34,840 |
|
16,706 |
|
Term Debt |
39,376 |
|
6,500 |
|
Equipment Facility |
- |
|
2,629 |
|
Discount (Term Debt) |
(3,972 |
) |
- |
|
Capital Lease (Finance) |
10,421 |
|
701 |
|
Capital Lease (Operating) |
4,301 |
|
- |
|
|
$ |
84,966 |
|
26,536 |
|
Cash |
(601 |
) |
(14,689 |
) |
Net Debt |
$ |
84,365 |
|
11,847 |
|
|
|
|
|
|
|
Supplementary
Information: |
Proforma
Consolidated Statements of Operations and Comprehensive
Income |
(Unaudited) |
|
|
|
|
|
|
|
|
SMTC |
|
MC |
|
Proforma |
|
|
September 30, 2018 |
|
September 30, 2018 |
|
September 30, 2018 |
|
|
|
|
|
|
|
|
Revenue |
$ |
53,677 |
|
$ |
40,064 |
|
$ |
93,741 |
|
Cost of
sales |
48,440 |
|
35,034 |
|
83,474 |
|
Gross profit |
5,237 |
|
5,030 |
|
10,267 |
|
Selling, general and
administrative expenses |
3,682 |
|
2,729 |
|
6,411 |
|
Impairment of property,plant
and equipment |
3 |
|
- |
|
3 |
|
Restructuring charges |
58 |
|
(13 |
) |
45 |
|
|
|
|
|
|
|
|
Operating income |
1,494 |
|
2,314 |
|
3,808 |
|
Interest expense |
485 |
|
1,872 |
|
2,357 |
|
Income before income
taxes |
1,009 |
|
443 |
|
1,452 |
|
Income tax expense
(recovery) |
|
|
|
|
|
|
Current |
290 |
|
100 |
|
390 |
|
Deferred |
(145 |
) |
- |
|
(145 |
) |
|
145 |
|
100 |
|
245 |
|
Net
income, and comprehensive income |
$ |
864 |
|
$ |
343 |
|
$ |
1,207 |
|
|
|
|
|
|
|
|
|
Supplementary Information: |
Reconciliation of Proforma Adjusted
EBITDA |
|
|
|
|
|
|
|
|
SMTC |
|
MC |
|
Proforma |
|
|
September 30, 2018 |
|
September 30, 2018 |
|
September 30, 2018 |
|
|
|
|
|
|
|
|
Net income |
$ |
864 |
|
$ |
343 |
|
$ |
1,207 |
|
Add (deduct): |
|
|
|
|
|
|
Depreciation of property, plant and equipment |
883 |
|
816 |
|
$ |
1,699 |
|
Interest |
485 |
|
1,872 |
|
$ |
2,357 |
|
Income tax expense |
145 |
|
100 |
|
$ |
245 |
|
|
|
|
|
|
|
|
EBITDA |
$ |
2,377 |
|
$ |
3,130 |
|
$ |
5,507 |
|
|
|
|
|
|
|
|
Add (deduct): |
|
|
|
|
|
|
Stock compensation expense |
75 |
|
- |
|
75 |
|
Restructuring charges |
58 |
|
(13 |
) |
45 |
|
Unrealized foreign exchange loss (gain) |
(108 |
) |
- |
|
(108 |
) |
on unsettled forward exchange contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
2,402 |
|
3,117 |
|
5,519 |
|
|
|
|
|
|
|
|
|
Supplementary
Information: |
Reconciliation of Proforma Adjusted Gross
Profit |
|
|
|
|
|
|
|
|
SMTC |
MC |
Proforma |
|
Sep 30, 2018 |
Sep 30, 2018 |
Sep 30, 2018 |
|
|
|
|
|
|
|
Gross Profit |
$ |
5,237 |
|
$ |
5,030 |
|
$ |
10,267 |
|
Add (deduct): |
|
|
|
|
|
|
Unrealized foreign exchange gain |
|
|
|
|
|
|
on unsettled forward exchange contracts |
(108 |
) |
- |
|
(108 |
) |
Adjusted Gross Profit |
$ |
5,129 |
|
$ |
5,030 |
|
$ |
10,159 |
|
Adjusted Gross Profit % |
9.6 |
% |
12.6 |
% |
10.8 |
% |
|
|
|
|
|
|
|
Supplementary
Information: |
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Net (Loss) Income |
|
|
|
|
|
|
|
|
|
SMTC |
|
|
MC |
|
|
Proforma |
|
|
Sep 30, 2018 |
|
|
Sep 30, 2018 |
|
|
Sep 30, 2018 |
|
Net Loss |
$ |
864 |
|
|
$ |
343 |
|
|
$ |
1,207 |
|
|
|
|
|
|
|
|
|
|
add back |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
- |
|
|
- |
|
|
- |
|
Unrealized foreign exchange loss (gain) |
(108 |
) |
|
- |
|
|
(108 |
) |
on unsettled forward exchange contracts |
|
|
|
|
|
|
- |
|
Stock compensation expense |
75 |
|
|
- |
|
|
75 |
|
Stock Revaluation of Warrant |
- |
|
|
- |
|
|
- |
|
Restructuring charges |
58 |
|
|
(13 |
) |
|
45 |
|
Merger and acquisitions related expenses |
- |
|
|
- |
|
|
- |
|
Contingent Consideration reversal |
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Adj Net Loss |
889 |
|
|
329 |
|
|
1,218 |
|
|
|
|
|
|
|
|
|
|
Investor Relations ContactPeter
SeltzbergManaging DirectorDarrow Associates,
Inc.516-419-9915pseltzberg@darrowir.com
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