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Corporate PresentationNASDAQ:SMTX
Corporate Overview
AUGUST 20, 2018
This presentation contains forward-looking statements within the meaning of U.S. federal securities laws. These forward-looking statements include, but are not limited to, statements regarding our expectations, hopes, beliefs, intentions, plans, prospects or strategies regarding the future. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The forward-looking statements contained in this presentation are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
FORWARD-LOOKING STATEMENT
2
Global mid-size provider of end-to-end EMS
PCBA production
Systems integration
Comprehensive testing services
Product design
Vertical integration
Enclosure fabrication
Sustaining engineering
Supply chain management services
Servicing product lifecycle
Industry qualityrecognition
Global EMS Award for Product Quality1
North American EMS Growth Leadership Award2
Customer Value Leadership Award3
OVERVIEW
31 Frost & Sullivan 2012 2 Frost & Sullivan 2013 3 Frost & Sullivan 2016
Support and maintenance from product development to end-of-life transitioning
New leadership team making an impact
YTD 2018 up 23% over YTD 2017
Targeting 28%-plus revenue growth in 2018 (Aug 8, 2018 Form 10Q, 8K)
4
Achieving Top-Quartile Operating Metrics Among Peer EMS Companies
Targeting $200+M Revenues in 2 Years from $139M in 2017
One Vision, One Mission, One SMTC.
Increase Business with Existing Customers Through World Class Service
Achieve Double Digit Growth With Existing Through New Programs
Become Provider of Choice And Win New Customers to Accelerate Growth
Drive Value via M&A, Expand Mix of Lines of Business and Increase TAM with Supply Chain Synergies to Gain Scale
SMTC PILLARS OF SUCCESS
Relentless Pursuit of Profitable Growth through Customer and Employee Excellence
Above Market Returns for our Investors
PROGRESSION TO BE BEST-IN-CLASS PEER METRICS
5
7.7% 8.2%9.1% 9.6%
11.5% 11.9%
19.7%
K E Y T R O N I C S Y P R I S
S O L U T I O N S
S M T C S I G M A T R O N N O R T E C H
S Y S T E M S
I E C S P A R T O N
GROSS PROFIT (%) TTM
$85,773$108,868 $110,328
$154,657
$278,132
$378,906
$447,838
S Y P R I S
S O L U T I O N S
N O R T E C H
S Y S T E M S
I E C S M T C S I G M A T R O N S P A R T O N K E Y T R O N I C
REVENUE ($) TTM
-1.33 %
0.88%1.46%
3.14%
4.33%4.61%
5.78%
S I G M A T R O N N O R T E C H
S Y S T E M S
S M T C I E C K E Y T R O N I C S P A R T O N
ADJ EBITDA (%) TTM
S Y P R I SS O L U T I O N S
-6.24%
-2.53%-2.22%
-1.17% -1.00 %
0.49%
1.85%
K E Y T R O N I C I E C
NET INCOME (%) TTM
S P A R T O NS Y P R I SS O L U T I O N S
N O R T E C H S Y S T E M S
S I G M A T R O N S M T C
Q2189.6%
Q2183.50%
Q218-0.00%
DIFFERENTIATING LEADERSHIP TEAM
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Rich FitzgeraldCOO
18+ years: electronics industry experience
Ed SmithPresident & CEO
25+ years EMS, electronic components distribution industry experience
SMTEK increased from $0.35 to $15.23 at takeout under his stewardship
At AVNET led Americas component operations growing from $ 1.2 to $4.0B Started a global embedded business and grew to $2.2B in 7 years
Steve Waszak CFO & SVP M&A
20+ years finance, strategic M&A development experience
NEW LEADERSHIP TEAM MAKING AN IMPACT
Source: Yahoo! Finance 7
SVP GSC
MAY 1 2018
CFO
MAR 13 2018
VP Customer Acquisition
DEC 18 2017
CEO and COO appointments
MAY 16 2017
Q2 2017 – Initiated a restructuring plan to address customer needs, financial sustainability and operational excellence
Stabilized long-term customer-base
Expanded addressable market
Strengthened the organization with key executives to focus on growth
Q2 2018 – Improving results and 28%-32% top line growth outlook for 2018
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
6/1/20183/1/201812/15/201710/5/20177/26/20175/15/2017
IMPROVING STOCK PERFORMANCE
GLOBAL FOOTPRINTCommon Copy Exact Solutions
Toronto, CanadaDesign & Engineering CenterTechnical Services Group (TSG)
Dongguan, ChinaManufacturing & Repair Facilities150,000 square foot 4 story facility, providing world class engineering, printed circuit board assembly and integration for finished devices globally.
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Approx. 500,000 square feet of manufacturing capabilities globally for best-in-class cost opportunities. More than 40 manufacturing and assembly lines
Frost & Sullivan Award WinnersProduct Quality, Growth Leadership & Customer Value Leadership Awards
GENERAL CERTIFICATIONS/STANDARDS
ISO 9001:2015ISO 13485:2003ISO 14001:2004
IPC-A 610 Class I, II, IIIFDA RegisteredAS9100 (August 2018)
Fremont, USA HQNPI Tech Centerconnected to global production sites for quick-turn prototyping and new production launches
334,000 square foot facility, 17.5 acre campus offers customers, in-house metal fabrication, cable & harness assembly for high quality services in an efficient, cost effective site
Chihuahua, MexicoManufacturing & Repair Facilities
Hong KongGlobal Procurement
Logistics CenterEl Paso, USA
FOCUSED ON ATTRACTIVE END MARKETS
INDUSTRIAL
MEDICAL
TEST & MEASUREMENT
(IoT)
PAYMENT SYSTEMS
OTHER
SEMICONDUCTOR
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LARGE, GROWING, MEANINGFUL
FAVORABLE INDUSTRY TRENDS
Source: SEMI (www.semi.org), November 201710
• North American PMI, SEMI, PCB Indices all show growth through 2018
• Manufacturing and PCB showing projected growth of 5.8% in 2018
• SEMI Book to Bill Ratio currently at 1.06
• PCB Book to Bill Ratio currently at 1.14
1.031.08
-0.99-0.96-0.99
1.04 1.07 1.09 1.05 1.08 1.091.15 1.14
2 0 1 6
S E P
2 0 1 6
O C T
2 0 1 6
N O V
2 0 1 6
D E C
2 0 1 7
J A N
2 0 1 7
F E B
2 0 1 7
M A R
2 0 1 7
A P R
2 0 1 7
M A Y
2 0 1 7
J U N E
2 0 1 7
J U L Y
2 0 1 7
A U G
2 0 1 7
S E P
TREND IN NORTH AMERICAN
PCB BOOK-TO-BILL RATIOMARKET TRENDS IN NORTH AMERICA ELECTRONIC PRODUCTS
3/1
2 G
RO
WT
H R
AT
ES
PU
RC
HA
SIN
G M
AN
AG
ER
S I
ND
EX
U.S New Orders for Computers and Electronics
PCB Sales
EMS Sales
Semiconductor Sales
U.S Purchasing Managers’ Index
2014SEP
2014DEC
2015MAR
2015JUNE
2015SEP
2015DEC
2016MAR
2016JUNE
2016SEP
2016DEC
2017JUNE
2017SEP
80
75
70
65
60
55
50
45
40
35-20%
-10%
0%
10%
20%
30%
40%
FINANCIAL SUMMARY
*50%+ of incremental Manufacturing Value Add dollars contributes to Gross Profit 11
KEY STATISTICS
Stock Price (8/7/18) $2.65 / share
Market Cap (8/7/18) $45.6 M
Total Ent. Value (8/7/18) $65.3 M
Ticker / Exchange SMTX / Nasdaq
Basic Shares (6/30/18) 17.2 M
Diluted Shares (6/30/18) 17.7 M
NET Debt (6/30/18) $ 19.7 M
CAPITALIZATION
In $1,000, except EPS
Long Term TargetModel
Q2 2018 Q2 2017 FY 2017 FY 2016 FY 2015
Revenues 20% growth* 44.5 33.0 139.2 167.9 220.6
Gross Margin 12%-14% 9.6% 4.3% 7.8% 10.6% 8.0%
Adj EBITDA 1.6 (3.6) (1.5) (4.7) 5.7
Adj EBITDA Margin 6%-10% 3.6% NM NM 2.8% 2.6%
EPS (0.01) Nil (0.47) (0.01) (0.00)
INCOME STATEMENT
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(Unaudited) THREE MONTHS ENDED
Expressed in thousands of USD, except number of shares and per share (amounts) JULY 1, 2018 JULY 1, 2017
Revenue $ 44,479 $ 32,995
Cost of Sales 40,196 31,575
Gross Profit 4,283 1,420
Selling, general and administrative expenses 3,647 4,110
Operating income (loss) 540 (5,642)
Interest expense 403 217
Income (loss) before income taxes 137 (5,859)
Income tax expense (recovery)
Current 196 168
Deferred 38 (14)
234 154
Net income (loss) and comprehensive income (loss) $ (97) $ (6.013)
Basic earnings (loss) per share (0.01) (0.36)
Diluted earnings (loss) per share (0.01) (0.36)
Weighted average number of shares outstanding
Basic 17,222,439 16,807,333
Diluted 17,222,439 16,807,333
BALANCE SHEET HIGHLIGHTS
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(in thousands)JULY 1,
2018DECEMBER 31,
2017
Current Assets $69,679 $59,188
Property Plant & Equipment 11,732 10,269
Other Long Term 472 399
Total Assets $81,883 $69,856
Current Liabilities $55,267 $44,693
Long term Debt 5,500 6,000
Other Long term liabilities 450 89
Stockholders’ equity 19,869 19,074
Liabilities and stockholders’ equity $81,883 $69,856
KEY STATISTICS: JULY 1, 2018
Cash-to-Cash Cycle 61 days
DSO 61 days
DPO 74 days
Inv Turns 5.0x
Net Debt $19.7M
INVESTMENT HIGHLIGHTS
14
What is Changing?
New Leadership Team with Demonstrated Track Record
Pursuing operational excellence and focused at SMTC on achieving top-quartile operating metrics among peer EMS companies
Expanding Customer Base and Top-Line Growth
Working Together as a Team to Deliver Premium Shareholder Value
Diversified Customer Base with No Significant Concentration
Strategically Placed Global Footprint Offers Best-of-Class Options to Customers
Focusing on the Most Attractive End Markets
Favorable Industry Trends Provide Backdrop for Strong Performance
Free Cash Flow Generation with Attractive Deleveraging Profile
Accelerating Year-over-Year Revenue Growth
Targeting $200+M in Revenues in 2 Years from $139M in 2017 with Double Digit Gross Margins
THANK YOUContact
Peter SeltzbergManaging Director, Darrow Associates, Inc.516-419-9915 | pseltzberg@darrowir.com
AUGUST 2018