Strong Cash Flows Results in All-time Low Debt Levels
TORONTO, March 9 /PRNewswire-FirstCall/ - SMTC Corporation (Nasdaq: SMTX) (TSE: SMX), a global electronics manufacturing services provider, today reported 2010 fourth quarter unaudited results. Revenue for the quarter was $64.6 million; $13.4 million or 26.2% higher compared with $51.2 million in the fourth quarter of 2009 and marginally lower than the 2010 third quarter. Net income for the quarter of $4.5 million increased 110.0% or $2.3 million over the fourth quarter of 2009 (excluding discontinued operations) and up $1.9 million over the 2010 third quarter. Net income for the fourth quarter included the recording of a favorable $2.8 million income tax adjustment related to the expected future usage of certain income tax loss carry-forwards.
Gross profit for the fourth quarter was $6.9 million or 10.7% of revenue compared with $7.9 million or a record 12.1% for the previous quarter and $5.9 million or 11.5% for the fourth quarter of 2009.
Revenue for the entire fiscal 2010 increased 46.3% to $262.6 million; up from $179.5 million in fiscal 2009. For fiscal 2010, net income increased by $10.0 million or over 400% over 2009 excluding discontinued operation in 2009 to a record $12.4 million. Gross profit also increased to 11.2% from 9.8% of revenues.
"SMTC had a superb 2010 with revenue growth from both new and longstanding customers. Our cost effective operational footprint and tight cost containment resulted in earnings growth significantly outpacing the strong increase in revenue," stated John Caldwell, President and Chief Executive Officer. "In the fourth quarter, SMTC had continuing strong performance with increased profitability on continuing solid revenues and excellent cash generation from operations. We rebounded from 2009 to achieve strong revenue and earnings growth and significant debt reduction in 2010. Although we see 2010's strong tailwinds moderating somewhat in 2011, we expect to remain solidly profitable and continue to generate strong free cash flow and further reduce debt.""We finished 2010 with net bank debt of $9.9 million, a record low for SMTC. This was achieved through strong earnings combined with effective working capital management particularly in light of accelerated top line growth," stated Jane Todd, Senior Vice President, Finance and Chief Financial Officer. "Our goal is to bring SMTC close to debt-free by year-end. In the fourth quarter, we recorded a $2.8 million recovery to recognize a previously written-off deferred income tax asset, reflecting our confidence that we will utilize certain net operating tax loss ("NOL") carry-forwards in the future. Currently we have approximately $100 million in NOLs that if fully utilized would reduce future income taxes by over $30 million."