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SMTC Corporation, a global electronics manufacturing services provider, today announced second quarter 2018 results.
Q2 Financial Highlights
- Revenues increased 34.8% to $44.5 million, compared to $33.0 million in the second quarter of 2017
- Gross profit was $4.3 million or 9.6% of revenue, which represents a 530-basis point increase over $1.4 million or 4.3% of revenue reported in the second quarter of 2017
- Net loss of $(0.1) million or $(0.01) per share, which represents a $5.9 million improvement, compared to a net loss of $(6.0) million or $(0.36) per share reported in the second quarter of 2017
- Adjusted EBITDA was $1.6 million, which represents a $5.2 million improvement compared to $(3.6) million in the second quarter of 2017
“I am pleased to report that we are exceeding our business plan. During the second quarter we added two new customers and further expanded programs with existing customers. With our focus now squarely on our growth, we continue to see strong demand and an accelerating trend in our backlog metrics with growth in our semiconductor, test/measurement and medical business lines. Our backlog and business pipeline, barring any further tightening of the supply chain by electronic component suppliers, should support year-over-year revenue growth in excess of 25 percent for the full year 2018, and increased gross profits, adjusted EBITDA, and earnings, as we indicated in our July 23, 2018 press release,” said Ed Smith, SMTC’s president and chief executive officer.
“Even against a backdrop of uncertainties with global trade policy and with higher levels of demand in the industry causing supply chain challenges, we believe our robust supply-chain and operating model afford us flexibility to continue to grow our business and support our customers. Our commitment to operational excellence and serving our customers, we believe, will position us to achieve industry-leading quality and superior customer on-time delivery metrics,” Smith added.
Revenue for the second quarter was $44.5 million, up 34.8% from $33.0 million in the second quarter of 2017. Sequentially, revenue increased 19.8% from $37.1 million from the first quarter of 2018. The year-over-year increase from the second quarter of 2017 was the result of strong demand both from existing and new customers in 2018 and was well-diversified among the company’s target end-markets. The adoption of the new revenue recognition standard accounted for $1.3 million or 3.9% of the year-over-year revenue increase.
Gross profit for the second quarter of 2018 was $4.3 million or 9.6% of revenue, compared with $1.4 million or 4.3% of revenue for the second quarter in 2017. Adjusted gross profit for the second quarter of 2018 was $4.4 million or 9.8% as a percentage of revenue, compared to $1.2 million or 3.4% of revenue in the second quarter of 2017. Gross profit for the first quarter of 2018 was $3.9 million or 10.4% of revenue while adjusted gross profit was $3.5 million or 9.5% of revenue.
Adjusted EBITDA was $1.6 million in the second quarter of 2018, compared to $(3.6) million for the second quarter of 2017 and $0.9 million in the first quarter of 2018. The increase in the second quarter of 2018 compared to the prior quarter was primarily due to continued gains from operational efficiencies resulting from site utilization improvements.
Net loss was $(0.1) million for the second quarter of 2018, compared to a net loss of $(6.0) million in the second quarter of 2017. The company reported net earnings of $8 thousand for the first quarter of 2018.
In light of the Company’s increasing growth, $2.7 million was utilized in cash flows from operations in the second quarter, to support working capital growth for accounts receivable and inventory to support expanding revenues.
On July 23, 2018, we issued a press release that announced the terms of $13 million Rights Offering to holders of our common stock of record at the close of business on that date. Stockholders should carefully read the Prospectus Supplement, which can be found on the SEC’s website at www.sec.gov, which contains important information, including how to exercise and pay for the rights exercised. Unless the Company extends the offering period, all rights will expire if not exercised by 4:00 PM EDT on August 22, 2018.
As we indicated in the July 23rd press release, we received commitments from Red Oak Partners LLC, and Wynnefield Funds, two of our largest stockholders, as well as with other members of the board of directors, members of the executive management team, and other outside investors who in aggregate have committed to fund up to the full $13 million, subject to prorations imposed in the Rights Offering.
About SMTC Corporation
SMTC Corporation, founded in 1985, is a mid-size provider of end-to-end electronics manufacturing services (EMS) including PCBA production, systems integration and comprehensive testing services, enclosure fabrication, as well as product design, sustaining engineering and supply chain management services. SMTC manufacturing facilities span a broad footprint in the United States, China and Mexico. 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. SMTC offers fully integrated contract manufacturing services with a distinctive approach to global original equipment manufacturers (OEMs) and emerging technology companies primarily within industrial, networking and computing, power and energy and medical market segments. SMTC is a public company incorporated in Delaware with its shares traded on the Nasdaq National Market System under the symbol SMTX. For further information on SMTC Corporation, please click here.