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http://biz.yahoo.com/prnews/060511/to221.html?.v=27

SMTC Reports First Quarter Results
Thursday May 11, 4:45 pm ET
Reports 22% Growth in Quarter Over Quarter Revenue and Fourth Consecutive Quarter Of Profitability


TORONTO, May 11 /PRNewswire-FirstCall/ - SMTC Corporation (1) (Nasdaq: SMTX, TSE: SMX), a global electronics manufacturing services provider, today reported revenue of $59.9 million and net income of $1.0 million, or $0.06 per share, for the first quarter ended April 2, 2006, compared with revenue of $49.1 million and a net loss of $2.6 million, or $0.18 per share, for the quarter ended April 3, 2005. In the fourth quarter of 2005, the Company reported revenue of $58.1 million and net income of $1.4 million, or $0.10 per share. Net income in the fourth quarter of 2005 included an income tax recovery of $0.6 million, or $0.04 per share.

"Our first quarter performance demonstrates our continuing progress to attain satisfactory financial results", stated John Caldwell, President and Chief Executive Officer. "Growth in year over year quarterly revenue reflects the strength of our customers' businesses and the positive effect of new customer programs coming on stream. Our improved earnings result from stronger revenue and mix of business."

Gross profit for the first quarter of 2006 was $6.1 million, or 10.1% of revenue, compared with $4.9 million, or 8.4% of revenue, for the previous quarter and $2.0 million, or 4.1% of revenue, for the first quarter of 2005.

"Our first quarter results met our internal targets demonstrating our consistency in generating after tax profits and positive trending in revenue. As expected, we utilized approximately $6.0 million in cash to finance our growth and higher level of activity at the end of the quarter", stated Jane Todd, Senior Vice President and Chief Financial Officer.

"The Company affirms annual guidance provided last quarter indicating that 2006 will be a year of growth in both revenues and earnings", stated John Caldwell.



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(1) Expressed in U.S. dollars
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About the Company: SMTC Corporation is a global provider of advanced electronic manufacturing services. The Company's electronics manufacturing centers are located in; Boston, Massachusetts; San Jose, California; Toronto, Canada; and Chihuahua, Mexico, with a third party facility in Chang An, China. SMTC offers technology companies and electronics OEMs a full range of value-added services. SMTC supports the requirements of a growing, diversified OEM customer base primarily within the industrial, networking, communications and computing markets. SMTC is a public company incorporated in Delaware with its shares traded on the Nasdaq National Market System under the symbol SMTX and on The Toronto Stock Exchange under the symbol SMX. Visit SMTC's web site, www.smtc.com, for more information about the Company.

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.


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Company Financials To Follow



SMTC CORPORATION

Consolidated Unaudited Statements of Earnings (Loss)
(US dollars, in thousands, except share and per share data)


Three months ended
April 2, April 3,
2006 2005
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Revenue $ 59,907 $ 49,110

Cost of sales 53,842 47,109
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Gross profit 6,065 2,001

Selling, general and administrative
expenses, 3,912 3,402
Restructuring charges 0 104
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Operating earnings (loss) 2,153 (1,505)

Interest 1,164 1,105
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Earnings (loss) before income taxes 989 (2,610)

Income tax expense 38 33
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Net earnings (loss) $ 951 $ (2,643)
-------------- -------------
-------------- -------------

Net earnings (loss) per share:
Basic $ 0.06 $ (0.18)
Diluted $ 0.06 $ (0.18)
-------------- -------------
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Weighted average number of shares
outstanding:
Basic 14,641,333 14,641,333
Diluted 14,825,301 14,641,333



SMTC CORPORATION

Consolidated Balance Sheets
(US dollars, in thousands)


April 2, December 31,
2006 2005
-------------- -------------
(unaudited)

Accounts receivable $ 33,900 $ 26,899
Inventories 35,472 33,168
Prepaid expenses 2,133 1,698
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71,505 61,765

Property, plant and equipment 24,817 25,651
Other assets 1,707 2,010
Deferred income taxes 619 619
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$ 98,648 $ 90,045
-------------- -------------
-------------- -------------

Accounts payable $ 34,110 $ 30,939
Accrued liabilities 12,102 13,849
Income taxes payable 1,149 1,203
Current portion of long-term debt 5,466 4,633
Current portion of capital lease
obligations 1,116 1,542
-------------- -------------
53,943 52,166

Long-term debt 29,672 23,857
Capital lease obligations - -

Shareholders' equity 15,033 14,022

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$ 98,648 $ 90,045
-------------- -------------
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Source: SMTC Corporation