SMTC Reports First Quarter Results

• Reports first quarter results of $65.4 million in revenue, net income of $1.2 million, $2.3 million in adjusted EBITDA, and $0.04 adjusted EPS.
• Reports quarter end total debt net of cash of $31.4 million, up from $18.2 million in the fourth quarter of 2012.
• Revises 2013 revenue guidance from $275 - $290 million to $260 - $275 million, adjusted EBITDA guidance from $14 - $15 million to $11 - $13 million, adjusted EPS from $0.45 - $0.55 to $0.35 - $0.40, and total net debt from $15 - $16 million to $16 - $18 million.
• On track to discontinue Canadian manufacturing operations in the second quarter 2013, with an estimated $1.8 million in total non-recurring charges associated with the closure for Q1 and Q2 2013.

TORONTO, May 9, 2013 (GLOBE NEWSWIRE) -- SMTC Corporation (Nasdaq:SMTX) ("SMTC"), a global electronics manufacturing services provider, today announced first quarter 2013 unaudited results.

Revenue for the quarter was $65.4 million, an 11% decrease sequentially from the fourth quarter of 2012, and a 10% decrease over the first quarter of 2012. Adjusted EBITDA remained consistent with the prior quarter at $2.3 million and gross margins improved to 10.6% compared to 7.8% in the prior quarter. However, when removing the effects of unrealized foreign exchange on derivative financial instruments gross margins were 9.1% in the first quarter compared to 8.4% in the prior quarter. Adjusted EPS for the quarter was $0.04, down from $0.20 (including a $0.15 per share gain related to the expected future usage of certain tax loss carry-forwards recorded in Q4 2012) in the prior quarter. Total debt net of cash increased to $31.4 million, up from $18.2 million in the fourth quarter of 2012.

"Compared to expectations, we experienced a reduction of $14 million in first quarter orders largely from two customers which led to lower revenues and higher inventories for the quarter. Our margins continued to improve this quarter, and partially offset the impact of the revenue decline. We expect to consume much of this excess inventory in the second quarter, and for debt levels to decline accordingly," stated Co-Chief Executive Officer, Alex Walker.

Co-Chief Executive Officer Claude Germain stated, "We have reduced our full year guidance to reflect the revenue softening we have seen across certain customers. Our focus for the remainder of 2013 is on diversified organic revenue growth, gross margin improvements and improved operating cash flow. We expect our margins and profitability to continue to improve and debt levels to decline throughout the year."

Adjusted EBITDA and adjusted EPS are non-GAAP measures. Adjusted EBITDA is computed as net income from continuing operations excluding depreciation, restructuring charges, loss on extinguishment of debt, unrealized foreign exchange gains/losses on derivative financial instruments, acquisition expenses, interest and income tax expense. Adjusted EPS is GAAP EPS excluding the effect of restructuring charges and unrealized foreign exchange gains/losses on derivative financial instruments. SMTC Corporation has provided in this release non-GAAP calculations of adjusted EBITDA and adjusted EPS as supplemental information regarding the operational performance of SMTC Corporation's core business. Management uses these non-GAAP financial measures internally in analyzing SMTC Corporation'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 Corporation believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing SMTC Corporation's performance and when planning, forecasting and analyzing future periods. SMTC Corporation 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 our investors and analysts use them to help assess the health of our business. Non-GAAP measures are subject to material limitations as these measures are not in accordance with or an alternative for, Generally Accepted Accounting Principles and may be different from non-GAAP measures used by other companies. Because of these limitations, investors should consider adjusted EBITDA and adjusted EPS along with other financial performance measures, including revenue, net income and SMTC Corporation's financial results presented in accordance with GAAP.

Note for Investors: 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 "believes," "expect," "may," "should," "would," "will," "intends," "plans," "estimates," "anticipates" and similar words, and include, but are not limited to, statements regarding the expectations, intentions or strategies of SMTC Corporation. For these statements, we claim the protection of the safe harbor for forward-looking statements provisions 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 and integrating acquired companies, fluctuations in demand for customers' products and changes in customers' product sources, competition in the EMS industry, component shortages, and others discussed in the Company's most recent filings with securities regulators in the United States and Canada. The forward-looking statements contained in this release are made as of the date hereof and the Company 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.

The first quarter results teleconference will be held on Thursday, May 9, 2013 at 5:00 p.m. EDT. Those wishing to listen to the teleconference should access the webcast at the investor relations section of SMTC's website www.smtc.com. A rebroadcast of the webcast will be available on SMTC's website following the teleconference.

Participants should ensure that they have a current version of Microsoft Windows Media Player before accessing the webcast.

Members of the investment community wishing to ask questions during the teleconference may access the teleconference by dialing 877-878-2794 or 615-800-6849 ten minutes prior to the scheduled start time. A rebroadcast will be available for up to one week following the teleconference by dialing 855-859-2056 or 1-800-585-8367, Conference ID 33517560.

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 facilities span a broad footprint in the United States, Canada, Mexico, and China, with more than 2,300 employees. 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, computing and communication market segments. SMTC was recognized in 2012 by Frost & Sullivan with the Global EMS Award for Product Quality Leadership and 2013 with the North American Growth Leadership Award in the EMS industry, as one of the fastest growth companies in 2012.

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 visit our website at www.smtc.com.

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