SMTC Reports Year 2006 Results

SMTC Corporation, a global electronics manufacturing services provider, announced today its results for the fourth quarter and year ended December 31, 2006 which are expressed in US dollars.

Fourth quarter and full year highlights

- Growth in fourth quarter revenue to $76.1 million, a 31% increase over fourth quarter 2005.

- Net income of $2.1 million for the fourth quarter, an increase of 49% compared to the fourth quarter of 2005.

- EBITDA of $5.3 million in the quarter, representing a 66% increase over the fourth quarter of 2005.

- Growth led by strengthening diversified customer base of both long-standing and new customers.

- Full year revenue of $262.8 million, an increase of $34.0 million, or 15% over 2005.

- Record net income for the full year 2006 of $10.5 million, including one-time items of $5.0 million compared with a loss of $0.1 million for 2005

- EBITDA of $16.0 million for the full year 2006, representing a 78% increase over 2005. The full year EBITDA for 2006 excludes the impact of one-time items.

SMTC Corporation reported revenue of $76.1 million and net income of $2.1 million, or $0.14 per share, for the fourth quarter ended December 31, 2006, compared with revenue of $58.1 million and net income of $1.4 million, or $0.10 per share, for the fourth quarter of 2005. Revenue for the year ended December 31, 2006 was $262.8 million and net income was $10.5 million, or $0.71 per share compared with revenue of $228.8 million and net loss of $0.1 million, or $0.01 per share for 2005.

Gross profit was $7.7 million, or 10.1% of revenue, and $26.4 million, or 10.1%, for the fourth quarter of 2006 and year ended December 31, 2006, respectively. This compared with $4.9 million, or 8.4% of revenue, and $17.1 million, or 7.5% of revenue, for the fourth quarter and year ended December 31, 2005, respectively.

"Our strong fourth quarter results cap a very successful year for SMTC. For the first time since the year 2000, the Company grew year over year revenue reflecting a combination of growth from long-standing customers and the effect of new customer additions in 2005 and 2006", stated John Caldwell, President and Chief Executive Officer. "As important, SMTC produced seven consecutive quarters of profitability culminating in record net income for 2006."

"Strong fourth quarter and full year gross margins reflect the strength of our business model and continuing diligent cost containment measures", stated Jane Todd, Senior Vice President Finance and Chief Financial Officer. "The Company generated significant cash flow from operations which was invested in working capital and assets to support current and anticipated future growth."

The 2006 full year net income contains certain one time items aggregating $5.0 million including an income tax refund, gain on a sale of surplus real estate, final proceeds from operations discontinued in 2002 and a net adjustment to restructuring accruals.

"We expect continuing revenue and earnings growth in 2007 with improved working capital management to generate positive cash flow to be applied to debt reduction. However, the unpredictable nature of our customers' order patterns may affect our quarterly results. Therefore, we intend to only provide overall and directional guidance on an annual basis. We will continue to monitor and update this guidance on a quarterly basis", stated John Caldwell. -- www.cnxmarketlink.com