World Class - Flexible - Customer Focused

Fiscal Third Quarter 2020 financial results

NASDAQ:SMTX

November 5, 2020

FORWARD-LOOKING STATEMENT

This presentation will include statements about expected future events and financial results that are forward-looking in nature and subject to risks and uncertainties. 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. Discussion of the various factors that may affect future results is contained in the Company's annual report on Form 10-K, quarterly reports on form 10-Q, and subsequent reports on Form 8-K and other filings with the Securities and Exchange Commission. 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.

This presentation includes certain non-GAAP measures, including adjusted gross profit, adjusted net income, EBITDA and adjusted EBITDA. Please refer to the press release we issued yesterday for reconciliations between GAAP and adjusted results. Management believes that these Non-GAAP Financial Measures, when used in conjunction with GAAP financial measures, provide useful information to investors about operating results, enhance the overall understanding of past

financial performance and future prospects, and allow for greater transparency with respect to the key metrics SMTC uses in its financial and operational decision making. The Company's management believes that adjusting for the additional temporary costs attributable to the COVID-19 pandemic allows for a better comparison of the Company's performance to prior periods, which is consistent with the Company's recent amendments to the financial covenants in its financing agreements. These Non-GAAP Financial Measures are used by management to manage and monitor SMTC's performance, and also frequently used by analysts, investors and other interested parties to evaluate companies in SMTC's industry. The

presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP and should not be construed as an inference that SMTC's future results will be unaffected by any items adjusted for in these Non-GAAP Financial Measures.

2

CEO Introductory Remarks

Ed Smith

President & CEO

"Revenue for the third quarter was $99.5 million, up 12.3% from the $88.7 million reported in the same quarter a year ago, and up 10.1% from the $90.4 reported in the prior quarter.

"Customer demand during the third quarter of 2020 continued to track to our internal plans as we expanded our customer base and increased our market share. "

"We've been successful with our end-markets diversification, dedication to putting the customer first and adapting our sales and onboarding processes to address the challenges posed by the COVID-19 pandemic."

3

CEO Introductory Remarks

Ed Smith

President & CEO

"…by carefully managing our expenses and business operations, we were able to once again generate improving bottom line results, including an adjusted EBITDA of $7.5 million, or 7.6% of revenues that enable us to report EPS of $0.04 and an adjusted EPS of $0.13."

"I am pleased by the trust our customers have put in us as our business development teams continue to expand SMTC's market share and expand our sales funnel. We have been successful in securing $46 million in new awards and bookings during the third quarter, primarily from five new customers and one existing customers in the Aerospace, Defense and Industrial IoT markets."

4

CFO Review of Q3 2020

Steve Waszak

CFO & SVP M&A

1Excludes $0.2 million in cash. Effective January 1, 2019, with the adoption of the new lease standard (ASC 842 - Leases), the Company recorded $17.0 million of finance and operating lease obligations (as of Sept. 27, 2020) which includes $3.6 million of new operating lease for extension of the Company's Fremont, CA facility lease effective Q1 2020.

2Net debt excludes $0.2 million in cash as of Sept 27, 2020 and $0.3 million as of June 28, 2020.

Note: Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted Net Income, Adjusted Earnings Per Common Share (Adjusted EPS), EBITDA, Adjusted EBITDA, Adjusted EBITDA Percentage, and Net Debt (each as defined below) are non-GAAP measures. Please refer to the section below labeled "Non-GAAP Information" and the various reconciliations to the applicable most directly comparable GAAP measures included in the press release dated November 4, 2020.

5

CFO Discusses Outlook

Steve Waszak

CFO & SVP M&A

"Based on our current demand and supply chain visibility, and assuming our facilities continue to operate at currently planned levels, we are reaffirming at the higher end of our prior guidance issued on August 5, 2020."

"We now expect revenues to range between $195 million and $205 million and adjusted EBITDA to range between $14 million and $15 million for the second half of 2020."

"With continued sales momentum and planned operational efficiencies, we currently expect 2021 revenue

to range between $430 million and $450 million with adjusted EBITDA to range between $33.0 million and

$37.0 million, consistent with our long-term financial model."

6

CEO Concluding Remarks before Q&A

Ed Smith

President & CEO

"I am pleased that we are starting to see an acceleration of customer programs moving through the customer certification process, into new product introduction phase and entering production that will continue to ramp in 2021."

"Q3 was a strong quarter. Our operations and supply chain teams continued to perform exceptionally well working around the challenges presented by the COVID-19 outbreak. Our business development and sales team continued to expand our business with both existing and new customers."

"Over the last two quarters our engineering and production staff in Boston and Fremont successfully

launched 11 new product introductions, or NPI, programs."

7

CFO Concluding Remarks before Q&A

Ed Smith

President & CEO

"We remain focused on growing our

market share in key markets that play to

our strengths, including Industrial IoT,

the regulated medical markets, and

markets of customers supporting the

defense and aerospace industry.

During the third quarter, continued to

see robust strength with some defense

and space programs, which offset

softness in commercial avionics."

*Several customers were reclassed between Test & Measurement to Industrial IoT, Power & Clean Technology for all periods

8

CFO Concluding Remarks before Q&A

Ed Smith

President & CEO

"We are making progress and remained focused on achieving and maintaining a leadership position in terms of operational performance among our Tier III EMS peers, including revenue growth, gross margin, EBITDA margin

and net margin percentage."

9

Appendix

TTM Adjusted EBITDA

Nortech

Sypris

SMTC

IEC

Key Tronic

Systems

Sigmatron

Solutions

Revenue

375,335

180,191

449,480

114,777

267,557

83,461

Net income

3,986

6,620

4,758

701

(819)

(3,069)

Restructuring

(144)

-

-

-

-

432

Other

3,242

-

-

-

-

-

Stock based comp

713

678

266

29

105

414

Adj net income

11,434

Gross profit

41,938

23,778

35,249

12,736

22,417

10,628

SG&A

28,168

13,869

21,030

10,759

21,525

12,675

Depreciation/Amortization

10,770

3,227

5,621

1,961

5,779

2,523

Unrealized FX (gain)/loss

(720)

3,926

10

(2,037)

Interest

8,234

1,596

2,509

919

1,586

874

Tax

1,039

1,693

(439)

357

182

16

Adj EBITDA

27,120

13,814

16,641

3,977

6,833

(847)

Adjusted EBITDA is not an earnings measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP. SMTC believes that the

presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, can provide useful information to investors

and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations. The

comparison here is done on a consistent basis across these companies and is used by SMTC.

Adjusted EBITDA should be considered in addition to, and not as a substitute for, or superior to, operating income, cash flows, revenue, or other

measures of financial performance prepared in accordance with GAAP. Adjusted EBITDA is not a completely representative measure of either the

historical performance or, necessarily, the future potential of the combined entities. Non-GAAP financial measures should not be considered in isolation

10

and should be viewed in addition to, and not as an alternative for, the company's reported results prepared in accordance with GAAP.

Thank you

Investor Contact

Peter Seltzberg

Managing Director, Darrow Associates, Inc.

516-419-9915 pseltzberg@darrowir.com

November 5, 2020

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SMTC Corporation published this content on 05 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 November 2020 15:06:03 UTC