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SMTC Offers Financial Numbers

TORONTO — SMTC Corporation (Nasdaq:SMTX) (TSX:SMX), a global electronics manufacturing services provider, today reported 2011 second quarter unaudited results.

Revenue for the quarter was $48.8 million; $7.5 million or 13% lower than the prior quarter and $22.4 million or 31.5% lower than the second quarter of 2010. Revenues declined as the Company experienced demand reductions from customers driven by their end markets. Income for the quarter was $0.7 million before a $1.7 million restructuring charge. After restructuring, the Company recorded a net loss of $1.0 million compared with net income of $0.7 million for the prior quarter and $3.2 million for the same period last year. The restructuring charge related to employee severances in Canada and Mexico. Bank debt net of cash decreased by $3.2 million in the quarter.

“While the results this quarter remain disappointing, we have taken swift and aggressive action to improve Company performance,” stated Claude Germain, Co-Chief Executive Officer. “Since Alex and I started as co-CEOs in April, our priorities have been to rapidly right size our cost structure, reinvigorate our business development activities and push SMTC's culture to be more customer centric. We do not expect these initiatives to show significant results in Q3; however we do anticipate that, barring any major macroeconomic changes, these initiatives combined with new customer wins will result in a much improved Q4.”

Alex Walker, Co-Chief Executive Officer, added, “We came into SMTC with an organization that was top-heavy and in need of focus. We moved rapidly to ensure the business achieves a cost profile that is more suitable for the current level of revenues. As part of this plan, we have taken a $1.7 million restructuring charge relating to a 25% reduction in our workforce and more than achieved our target of reducing costs by an annualized $5 million. On an EBITDA basis, we expect that Q4 will be the best quarter of 2011. We are on target to achieve a $10 million improvement in working capital this calendar year and continue to explore strategic acquisition opportunities. We expect to announce progress on our prioritized initiatives in the coming months.”

Jane Todd, Senior Vice President, Finance and Chief Financial Officer, commented, “Inventory levels were managed down considerably from the first quarter and, despite unusually low payables, we generated over $3 million in cash from operations in the quarter that we used to reduce debt.”

The Company is holding an earnings call today at 5:00 p.m. EDT. Those wishing to listen to the teleconference should access the webcast at the investor relations section of SMTC's website www.smtc.com. A rebroadcast of the webcast will be available on SMTC's website following the teleconference.

Members of the investment community wishing to ask questions during the teleconference may access the teleconference by dialing 877-878-2794 or 615-800-6849 ten minutes prior to the scheduled start time.

{complink 12834|SMTC Corp.}

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