Reading time ( words)
SMTC Corp., a global electronics manufacturing services (EMS) provider, has announced revenue of $42.7 million for the third quarter of fiscal 2016, compared to $53.4 million in the third quarter of the prior year. The decrease was primarily the result of two customers that exited over the last year as previously disclosed and reduced demand from another customer. The decreases were partially offset by new customer revenue, specifically two new customers which represented $6.1 million of additional revenue during the quarter.
Gross profit was $3.6 million or 8.5% for the third quarter compared to $3.1 million or 5.8% for the same period in the prior year. Adjusted gross profit was $3.6 million or 8.5% for the third quarter compared to $3.9 million or 7.3% for the third quarter of the prior year. While revenues decreased by 20% in the third quarter of 2016 compared to the same period in prior year; the Company improved gross profit percentage. The increase in gross margin was due to a higher margin product mix, reduced manufacturing expenses and significantly reduced labor as a result of headcount reductions.
Net loss was $0.02 million for the third quarter of 2016 compared to a net loss of $1.3 million for the same period in the prior year; the net loss in both of these quarters included unrealized foreign exchange losses of $0.0 and $0.8 million, respectively on unsettled forward exchange contracts.
Despite the reduction in revenue, adjusted EBITDA increased to $1.3 million in the third quarter of 2016 up from $1.0 million for the same period in the prior year mainly due to reduced selling, general and administrative expenses.
Chief Executive Officer Sushil Dhiman stated, "Although revenue levels have declined from 2015 due to previously disclosed transferring customers, we are encouraged with the momentum of new customer wins and new programs wins. Our medical sector business grew to $8.2 million or 19.2% of revenue this quarter as compared to $3.1 million or 5.7% of revenue in the prior year. Our focus remains to continue to add customers with established product lines in key market segments in support of margin expansion initiatives."
Cash flow from operations was $5.1 million in the third quarter compared to $4.8 million in the third quarter of the prior year. Debt, net of cash was $6.0 million as at October 2, 2016 representing a significant improvement from $12.8 million as at September 27, 2015.
Chief Financial Officer Roger Dunfield stated "We continued to manage working capital by improving cash cycle days and paying down debt. We believe this positions us well for future growth."