SMTC Corp to exit China operations, cuts FY19 revenue view to $354M-$362M
Two estimates $392.79M. The prior guidance was $393M-$408M. The company states: "SMTC Corporation announced it plans to wind-down its Chinese manufacturing operations when its current Dongguan, China facility lease expires in December 2019." CEO Ed Smith says: "Customer concerns about uncertainties relating to the prolonged impact of tariffs and macro-economic factors have caused a number of our customers to begin to re-evaluate demand for some of their products and reconsider where they outsource their manufacturing. Revenues attributable to production from SMTC's manufacturing operations in China, which accounted for 5.3% of SMTC's revenue in the first half of 2019, are projected to decline more than 30% for full year 2019 as compared to full year 2018, with continued contraction in 2020 which would result in negative operating margins from our China site. As a result, after more than a decade in the Chinese market, we will use the end of our lease term later this year as an opportunity to exit manufacturing in China as we continue to augment our strong North American manufacturing footprint. In addition to the China closure, we are seeing softness in certain end-markets across semiconductor and data center expansions. Accordingly, we are updating FY19 revenue to range between $354M-$362 million, which excludes $16 million of revenues in 2019 attributable to SMTC's operations in China." The company also lowers its FY19 adjusted EBITDA to $25M-$26M from $27M-$29M.